A. Ramalakshmi Sethu Rao (died) and Others vs D. Bheemeshwara Rao and Others

S. Dasaradha Rama Reddy, J.—This appeal which was earlier dismissed on 24-11-1992 was reopened on 1-10-1993 on the ground that it was earlier disposed of without notice to all the legal representatives of the 1st appellant. The appellants 1 and 2 are defendants 1 and 2 in O.S.1067/88 on the file of the Court of the IV Addl. Judge, City Civil Court, Hyderabad filed by the respondents 1 to 3 herein for specific performance of contract of sale dated 29-12-1975 (Ex.A-2) by directing the defendants 1 and 2 execute the sale deeds in the name of the plaintiffs 1 to 3, and put them in possession of the plots 1, 2 and 3. Pending suit one Gopinath Sidhanti, 4th respondent herein was added as 4th plaintiff who was the nominee of Plaintiff No. 2, while Defendant No. 3 who was the other party to the Ex.A-2 and who is respondent No. 5 herein was given up as no necessary party to the appeal.

The relevant facts which are necessary for the disposal of this appeal may be stated thus:

On 10-11-1975, the respondents 1, 2 and 3 together with respondents 5 and 6 agreed to purchase from A.K. Sethu Rao and his son Gopala Krishna 2100 Square Yards situated in rear portion of the House bearing No. 6-1-117, Padmarao Nagar, Secunderabad at Rs. 30/- per Sq.Yard. They paid earnest money of Rs. 800/- each/ After the death of Sethu Rao on 25-11-1975, his wife Ramalakshmi, the 1st appellant herein and her son Gopalakrishna, 2nd appellant entered into agreement Ex.A-2 on 29-12-1975 with the respondents 1, 2, 3 and 5 for sale of Plot Nos. 1, 2, 3 and 5 respectively to them. The 6th respondent was not party to this agreement., though he earlier agreed to buy one plot from late Sethu Rao on 10-11-1975. Clause-1 of the agreement says that late Sethu Rao and Gopalakrishna have already submitted lay-out plan to Municipal Corporation, Hyderabad for sanction after dividing the land into 5 plots and that the purchasers agree to do all the things necessary on their responsibility and risk to get the lay-out sanctioned. Clause-2 acknowledges receipt of Rs. 12000/- from the purchasers at Rs. 3000/- each (paid in addition to Rs. 3200/- paid already) while in Clause-3 it was mentioned that respondents 1 to 3 and 5 shall take plots 1, 2, 3, and 5 respectively and that they will pay the balance consideration within 30 days after the lay-out is sanctioned. As per Clause-4, if for any reason, the vendors failed to execute the sale deeds, they shall refund to the purchasers the entire earnest money of Rs. 15,200 /- within 60 days from the date of knowledge of such liability or failure. Under Clause-5, in the event the lay-out as submitted by the vendors is not sanctioned by the Municipal Corporation of Hyderabad, the purchasers agreed to forfeit a sum of Rs. 4000/- from out of the advance money paid so far and will be entitled to the refund of the balance. Clause-6 provides that in the event of failure on the part of the purchasers to pay the balance consideration after the lay-out is sanctioned, the purchasers agreed to forfeit a sum of Rs. 12000/-. It was also agreed that in case the vendors do not register the sale deeds after the lay-out is sanctioned, the vendors shall refund the entire amount received by them together with Rs. 12000/- as liquidated damages. The Municipal Corporation of Hyderabad informed the vendors on 2-8-1976 (Ex.A-6) that the lay-out plan submitted by Sethu Rao and his son has been communicated to them for the demarcation of boundaries, roads and open space and that this communication does not however confer any right of sale, lease or allotment of plots and that the lay-out plan will be released only on the payment of entire betterment charges. On 3-8-1976, the vendors submitted an application (Ex.X-2) to the State Government seeking exemption u/s 20 of the Urban Land (Ceiling and Regulation) Act, 1976 (for short the ''Ceiling Act'') which came into force on 17-2-1976 so that they can sell the land in respect of which late Sethu Rao has already entered into agreement with the 5 buyers. Earlier, in January, 1975, late Sethurao was granted permission under A.P. Vacant Land in Urban Areas (Prohibition of Alienation) Act, 1972 for sale of his land in favour of different parties including the respondents herein. The vendors filed their declaration u/s 6 of the Ceiling Act in September, 1976. As desired by the competent authority, the respondents 1,3 and 4 filed an application on 25-4-1978 before him to release 2100 Sq. Yards from the holdings of appellants 1 and 2 for the purpose of sale in their favour .The 5th respondent did not, however, join in this application. The appellants failed to receive the balance sale consideration offered by the respondents, who consequently filed the suit on 28-12-1978. After receipt of the summons, the 2nd appellant wrote Ex.X-1 on 27-1-1979 to the State Government requesting it not to pass orders releasing 2100 Sq. Yards for sale in favour of the respondents. However, the Government issued G.O.Ms.No. 358 dated 26-2-1979, (Ex.A-8) granting exemption in respect of 1,757-87 Sq.Metres (2100 Sq. Yards) so as to enable the defendants 1 and 2 to alienate the same in favour of the respondents 1,2,3 and 5.Duringthe pendency of the suit, the appellants gave reply to the notice issued by the respondents prior to filing of the suit and also returned 4 cheques for Rs. 2800/- each to the respondents 1,2,3 and 5 who in turn sent the same back to the applicants on 15-3-1979.

The suit was dismissed and on appeal the learned single Judge allowed the appeal filed by the respondents. Against this order, the defendants have brought in this L.P.A. Pending L.P.A; the 1st appellant died on 12-9-1990 leaving behind her four daughters and son who is already on record. But this fact was not brought to the notice of the Division Bench which heard the appeal earlier. After the dismissal of the appeal, the appellants 3 to 6 filed C.M.P.No. 6771/93 for review, which was dismissed on 1-10-1993 in view of the separate order passed by the Division Bench setting aside the order passed earlier dismissing the appeal on the ground that no notice was given to all the Legal Representatives of the 1st appellant. The four daughters are now brought on record in CM. P.No. 3602/95 by order of this Court dated 18-9-1995.

Mr. M.R.K. Choudary, the learned counsel for the appellants contends that:

(1) As Ex.A-2 is indivisible contract, the respondents are not entitled to seek specific performance in part;

(2) The agreement cannot be enforced u/s 12(3) of the Specific Relief Act as the appellants 1 and 2 are not the exclusive owners of the property;

(3) The respondents have committed breach of contract by not paying the balance sale consideration within 30 days after the sanction of the lay out and hence are not entitled to seek specific performance of the contract.

(4) As the lay-out plan submitted by the appellants has not been sanctioned in the format it was submitted, the appellants are under no obligation to execute the sale deed.

Contention No: (1)

As already seen, Ex.A-1 receipt refers to 5 plots to be purchased by the buyers and advance payment of Rs. 800/- each. Ex.A-1 is referred to in Ex. A-2 where only 4 parties are shown as buyers. The contention of the learned counsel for the appellants is that the conditions incorporated in Clauses-2, 4, 5, 6 and 7 of Ex. A-2 show that the contract is an indivisible one and cannot be enforced by three purchasers only separately for their specified plots. For example, the advance payments to be made as well as forfeiture of advance amounts, refunds due to the buyers and payment of liquidated damages are all shown in aggregate amounts. The counsel for the respondents contended that as per Clause-3, the four purchasers will take 4 different specific plot after due measurement and that there are in effect 4 contracts.

Clause-3 of Ex.A-2 says that the purchasers have paid a sum of Rs. 12000/- to the vendors as further advance of sale consideration at the rate of Rs. 3000/- each and the vendors will execute separate sale deeds in favour of the buyers. Merely because the advance payments made by the purchasers, refunds due to the purchasers, the amounts agreed to be forfeited and the damages to be paid to the purchasers are all shown in aggregate amounts, it cannot be inferred that the contract is indivisible. On the other hand, Clauses-2, 4, 5, 6 and 7 if read harmoniously with Clause-3, show that the contract is divisible. As already seen, in the lay-out Plan (Ex.Y-1), submitted by the vendors to the Municipal Corporation, four plots were shown in the measurements. Thus, we are of the view that Ex.A-2 is a composite agreement entered into by the respondents-1, 2, 3 and 5 with the appellants 1 and 2 each one having the right of obtaining sale deed in respect of a specific plot and merely because all the purchasers are not seeking specific performance of the entire contract, the three buyers are not disentitled claim specific performance of the specified plots.

Contention No: (2)

As already seen, the appellants 3 to 6 who are daugthers of late Sethurao and late Ramalakshmi have rights in the property which originally belonged to late Sethu Rao who died intestate leaving behind his widow, his son and four daughters. Thus, the appellants 3 to 6 have got 4/6th share i.e., 2/3rd in the property which is the subject matter of Ex.A-2. It is obvious that the appellants 1 and 2 had no right to execute agreement agreeing to sell the property belonging to appellants 3 to 6. Mr. M.R.K. Choudary, learned counsel for the appellants contends that u/s 12(3) of the Specific Relief Act, the respondents are not entitled for specific performance of even a part of the property.

Section 12(3) reads as follows:

"Where a party to a contract is unable to perform the whole of his part of it and the part which must be left unperformed either-

(a) forms a considerable part of the whole, though admitting of compensation in money; or

(b) does not admit of compensation in money; he is not entitled to obtain a decree for specific performance, but the Court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party-

(i) in a case falling under Clause (a), pays or has paid the agreed consideration for whole of the contract reduced by the consideration for the part which must be left unperformed and in a case falling under Clause (b) the consideration for the whole of the contract without any abatement; and

(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all rights to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant."

The learned counsel submits that in the instant case, the part which is left unperformed forms considerable part of the whole, namely 2/3rd and thus Clause (a) of Section 12(3) applies. He further submits that under the exception to Section 12(3)(a), the respondents are not entitled to direct the appellants to perform even a part of the contract since they have not relinquished all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by them due to the default of the appellants, as required by Section 12(3)(ii). Clause (ii) is not satisfied as there is no statement by the respondent agreeing to relinquish all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or damage sustained by them due to the default of the appellants. No doubt any such averment could not have been made in the plaint as the right of the daughters is for the first time made known to the respondents during hearing of the L.P.A. But even after this was brought to the notice of the respondents as early as in September, 1993, when the review petition was filed, there is no amendment to the plaint sought for by the respondents relinquishing their right for the unperformable part of the agreement and relinquishing compensation for the loss or damage.

Mr. K. Raghava Rao, the learned counsel for the respondents relied upon Kartar Singh Vs. Harjinder Singh and others, , In that case, a brother entered into agreement with a party for the sale of the property in which both himself and his sister had half share. It was mentioned in the agreement that he would execute sale deed not only for his share but also for his sister''s share and that he would be responsible for getting the sale deed executed by his sister. As his sister refused to sell the property, he took the defence in the suit that it was not possible for him to execute the sale deed. In those circumstances, the Supreme Court held that Section 12 of the Apecific Relief Act does not apply as this is not a case of performance of part of the con tract but of the whole of the contract so far as the contracting party i.e., brother is concerned. The Supreme Court held that the agreement has to be construed as comprising of two contracts, one in respect of the brother''s share and the other relating to his sister''s share, severable from each other. Accordingly, the Supreme Court directed decree for the specific performance of half of the property belonging to the brother. As rightly contended by Mr. M.R.K. Choudary, this case is distinguishable. In the present case, the appellants 1 and 2 while entering into agreement led to the respondents to believe that they are the absolute owners of the property. Thus, the contract cannot be bifurcated into two contracts, one in respect of the share of the appellants 1 and 2 i.e., 2/6th share (1/3rd share) and the other in respect of the share of the daughters i.e., 1/3rd share, though as already held by us, there are four contracts by the appellants 1 and 2 with the four purchasers. Accordingly, we uphold the contention of the learned counsel for the appellants and on this ground itself, the suit has to be dismissed. However, as arguments were advanced both before the learned Single Judge and before us, regarding the other contentions, we proceed to discuss them as under:

Contention No:3

The learned counsel for the appellants has contended that the respondents have failed to perform their part of the contract by not paying the balance sale consideration within the time stipulated. Subsequent to the date of agreement of sale dated 29-12-1975, the Urban Land Ceiling Act came into force on 17-2-1976. u/s 26 of that Act, clearance by the Ceiling Authorities has to be obtained before the holder of the land sells the land. The exemption in respect of the land was granted to the appellants u/s 20 by the State Government by G.O.Ms.No. 358 dated 26-2-1979 i.e., after the suit. P.W.1, who is the 1st respondent, deposed that when the respondents approached the appellants 1 and 2 offering balance of sale consideration and requested them to execute sale deeds, the appellants refused to receive the balance consideration stating that they would receive the same after clearance from the Urban Land Ceiling Authorities. As the period of limitation of 3 years for filing the suit was about to expire the suit was filed or 28-12-1978. The requisite permission was granted by the Government by G.O.Ms.No. 358 dated 26-2-1979 i.e., after filing of the suit. There is no evidence whether clearance certificate u/s 26 of the Ceiling Act has been received by the appellants or not Clearance certificate u/s 26 is different from exemption granted u/s 20. Even after the suit, the appellants 1 and 2 returned the cheques sent by the respondents. It is obvious that the parties agreed that the balance sale consideration can be paid at the time of registration which can be only after clearance is obtained from the Urban Land Ceiling Authorities. Further as this is an agreement of sale of Immovable property, time is not the assence of the contract in the absence of any stipulation to that effect. Thus, we have no hesitation to hold that there is no default on the part of the respondents in performing their part of the contract. We accordingly decide this question in favour of the respondents.

Contention No: (4)

The last contention is that since the lay out submitted by the appellant 1 and 2 has not been sanctioned in the form in which it was submitted, by the Municipal Corporation of Hyderabad, the appellants 1 and 2 are under no obligation to execute the sale deed. We see no force in this contention. Clause-5 of the contract, no doubt, says that in case lay out plan as submitted by the vendors is not sanctioned, the purchasers agreed to forfeit the sum of Rs. 4000/- paid by them towards advance payment. The contention advanced by the learned counsel for the appellants is that the proposal sent by the Municipal Corporation under Ex.B-2 and the tentative sanction granted under Ex.A-5 and A-6 are at variance with the plan Ex.Y-1 submitted by them and as per the tentatively sanctioned lay out, 20 feet wide road was changed to 30 feet wide road cutting 10 feet into their land resulting inevitable demolition of four rooms constructed by them on their land. But the respondents'' plea is that 30 feet wide road may be entirely laid in the land agreed to be sold and that they are willing to pay the price for the entire site in which the road is laid. Accepting this offer of the respondents, the learned single Judge held that the appellants 1 and 2 cannot have any reasonable objection to submit their fresh lay out plan to the Municipal Corporation for laying of 30 feet road without encroaching upon their site and accordingly directed the appellants 1 and 2 to apply for fresh sanction of lay out. We see no infirmity in this direction and the appellants 1 and 2 are not justified in raising a technical plea that merely because the layout as submitted by them has not been sanctioned by the Municipal Corporation, they cannot sell the land and execute the sale deeds. Thus, we reject this contention of the appellants.

As we have upheld the contention No. 2, namely that the respondents cannot enforce specific performance of even a part of the contract u/s 12(3) of the Specific Relief Act, we allow the appeal and dismiss the suit. Each party to bear its own costs.