Ashish Gupta vs Monika Devi Khetan

Goutam Bhaduri, J

Challenge in this appeal is to the judgment and decree dated 4-5-2017 passed by the First Additional District Judge, Durg, in civil suit No.33-A/2009 whereby the suit for specific performance brought by the plaintiff/appellant was dismissed.

The facts, in brief, as pleaded by the plaintiff/appellant, are that the defendant No.1 owns land bearing khasra No.656 & 657 area 2.30 hectare (total 5.75 acres) situated at village Basin, PH No.11, R.I. Circle Durg-1, Tahsil & District Durg. The said land was agreed to be sold for a sum of Rs.10.00 lacs and on 16-1-2007 an amount of Rs.1,50,000/- was paid as an earnest money. Thereafter, an agreement was executed on 8-2-2007 in presence of the witnesses wherein it was agreed that the remaining amount of sale consideration would be paid at the time of execution of sale deed. The plaintiff pleaded that at the time of agreement, the defendant agreed to get the land demarcated and would show the original title deed i.e. land papers before the actual sale. The plaintiff further pleaded that he was always ready and willing to perform his part of contract by paying the rest part of sale consideration and to get the sale deed executed, but the defendant never agreed to it. The plaintiff also pleaded that subsequently he came to know that despite receiving Rs.1,50,000/- as an earnest money the defendant wanted to sale the land to someone else as such public notice was made in the newspaper on 15-10-2007 followed by a registered notice on 16-10-2007 to get the sale deed registered, but eventually the defendant failed, therefore, the suit was filed.

The defendant No.1/respondent No.1 admitted receipt of Rs.1,50,000/-, however, it was stated that the sale consideration was not Rs.10.00 lacs, but it was Rs.17,82,000/- and the agreements were executed on 1-2-2007 and 8-2-2007. It was further stated that when the plaintiff failed to pay the amount and was failed to abide by the terms of contract, notice was served upon him stating that the amount of earnest money is forfeited. It was also stated that the plaintiff has failed to perform his part of contract and, in fact, the defendant never intended to sell the land in question to a third party. Despite repeated requests made, the plaintiff failed to pay the amount of sale consideration to get the sale deed executed. It is also stated that till June, 2007 the plaintiff was obliged to execute the sale deed, but since he failed to do it, as such, notice was issued to him on 14-9-2007. According to the defendant, only to protract the proceeding the civil suit was filed, therefore, the plaintiff is not entitled for any relief.

Learned Court below framed primarily seven issues and found that the plaintiff has failed to prove his readiness and willingness and execute the sale deed and eventually dismissed the suit. Hence, this appeal.

Mr. B.P. Singh, learned counsel appearing with Mr. Sudhansu Kumar Singh, learned counsel for the appellant, would submit that the conduct of the parties in the likewise cases would be of utmost important. He would further submit that the contents of the notice (Ex.P/6) would show that the defendant was called upon to execute his part of agreement, but he did not do so and the plaintiff was ready and willing to perform his part of contract. He would also submit that in the written statement before the Court entire execution of the agreement was denied, therefore, the defendant could not have taken the pleading that the plaintiff is not ready and willing to perform his part of contract. He would place reliance upon the decision rendered by the Supreme Court in Kadupugotla Varalakshmi v Vudagiri Venkata Rao & Others 2021 SCC OnLine SC 365.

Per contra, Mr. H.B. Agrawal, learned senior counsel appearing with Ms Richa Dwivedi, learned counsel for the respondent No.1/defendant No.1, would submit that perusal of the agreement (Ex.P/1) would show that the time was the essence of contract. He would further submit that till June, 2007 the sale deed should have been executed but since the plaintiff failed to abide by the terms of contract as such the notice was issued on behalf of the respondent/ defendant apprising the fact. He would, therefore, submit that the finding of the Court below is well merited, which do not call for any interference.

We have heard learned counsel appearing for the parties, perused the pleadings and the evidence available on record.

The agreement in this case is Ex.P/1. Perusal of the original record of the agreement styled as ‘इक़रार नामा’ dated 8-2-2007 would show that the same was executed for sale of the land bearing khasra No.656 & 657 area 2.30 hectare (total 5.75 acres) situated at village Basin, PH No.11, R.I. Circle Durg-1, Tahsil & District Durg. The sale consideration was Rs.10.00 lacs and out of that an amount of Rs.1,50,000/- was paid by cheque, towards earnest money, which was received on 16-1-2007. It further purports that the remaining amount would be paid at the time of registration and the registration date was fixed up till June, 2007. The agreement specifically provides that if the registration is not done within the stipulated time, the earnest money would be forfeited and the seller would be free to execute the sale deed to some other.

Now coming back to the issue of readiness and willingness along with the fact whether the time was essence of contract, the averments of agreement (Ex.P/1) were examined. On plain reading, it is manifest that time was fixed to execute the sale deed up till June, 2007 thereby, prima facie, June, 2007 was made the target date. The notice (Ex.P/2) was issued on behalf of the defendant. The contents of the said notice, which primarily addressed to Ashish Gupta purports that since sale deed was not executed till June, 2007 and no effort was shown to get the sale deed executed and hence claimed compensation of Rs.5.00 lacs.

The question cropped up for consideration is as to whether the time was essence of contract. The said issue came up for consideration before the Supreme Court on number of occasions.

In Rathnavathi and Another v Kavita Ganashamdas (2015) 5 SCC 223, the Supreme Court reiterated the law down in Govind Prasad Chaturvedi v Hari Dutt Shastri (1977) 2 SCC 539 and Gomathinayagam Pillai v Palaniswami Nadar AIR 1967 SC 868 and held thus at paras 35 and 36 :

In Govind Prasad Chaturvedi Vs. Hari Dutt Shastri, this Court placing reliance on the law laid down in Gomathinayagam Pillai, reiterated the aforesaid principle and held as under (Govind Prasad case, SCC pp.543-44, paras 5-6):

“5…….It may also be mentioned that the language used in the agreement is not such as to indicate in unmistakable terms that the time is of the essence of the contract. The intention to treat time as the essence of the contract may be evidenced by circumstances which are sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract.

Apart from the normal presumption that in the case of an agreement of sale of immovable properly time is not the essence of the contractand the fact that the terms of the agreement do not unmistakably state that the time was understood to be the essence of the contract neither in the pleadings nor during the trial the respondents contended that time was of the essence of the contract.”

Again in Chand Rani vs. Kamal Rani, this Court placing reliance on law laid down in aforementioned two cases took the same view. Similar view was taken with more elaboration on the issue in K.S. Vidyanadam v. Vairavan, wherein it was held as under (SCC pp.7&9, paras 10 & 11):

“10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement (which does not provide specifically that time is of the essence of the contract) should be decreed provided it is filed within the period of limitation notwithstanding the time-limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit(s) specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani v. Kamal Rani (SCC p.528, para 25)

“25....it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract, the Court may infer that it is to be performed in a reasonable time if the conditions are (evident?) :

(1) from the express terms of the contract;

(2) from the nature of the property; and

(3) from the surrounding circumstances, for example, the object of making the contract.”

In other words, the court should look at all the relevant circumstances including the time-limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades -particularly after 1973.

“11……Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so…...”

The aforesaid view was upheld in K. Narendra vs. Riviera Apartments (P) Ltd.

The aforesaid judgment would indicate that in an agreement of sale relating to immovable property, time would not be essence unless specifically provided to that effect.

Now coming back to the agreement along with oral evidence adduced by the plaintiff wherein it was stated that the demarcation and showing of the original title deed before execution of the sale deed was a condition precedent do not exist in the agreement. After the target date i.e. 8-6-2007 when the sale deed was not executed initially a notice was served on behalf of the defendant about failure of execution of sale deed at the behest of the plaintiff. It then followed by a notice by the plaintiff attaching condition that the demarcation and show of original title deed was a condition precedent for execution of sale deed. The oral evidence, which was adduced by the plaintiff if are accepted in absence of any ambiguity to the contents of agreement, then Section 92 of the Indian Evidence Act, 1872 would come into play which mandates that when the terms of any such contract, grant or other disposition of property has been reduced in writing, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms.

From the evidence of the plaintiff, it is manifest that time was the essence of contract as it was not required to be pre-qualified by demarcation and display of original title deed. If the contention of the appellant is allowed to sustain it would amount to accepting the oral evidence as against the agreement (Ex.P/1) entered in between the parties by changing the terms of contract. Primary reading of the evidence, therefore, would lead to show that 8-6-2007 was the target date and the time was essence of the contract and specific agreement and terms were settled in between the parties.

So far as the averments made on behalf of the plaintiff that he was ready and willing to perform his part of contract is concerned, as per Section 16(c) of the Specific Relief Act, 1963 it would amount to extension of terms of agreement, which was not agreed in between the parties. Thus, we are of the view that time being the essence of contract it cannot be extended beyond the period as agreed upon by the parties irrespective of other facts and conduct of the parties.

For the foregoing reasons, we do not find any infirmity or illegality in the impugned judgment and decree passed by the Court below, warranting interference in the appeal.

The Supreme Court in the matter of India Council for Enviro-legal Action v Union of India and others (2011) 8 SCC 161 discussed different case-laws. Few of the paras i.e. para Nos.152, 153, 154, 155 & 156 are reproduced hereinbelow:

Unjust enrichment' has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.

Unjust enrichment is "the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience." A defendant may be liable "even when the defendant retaining the benefit is not a wrongdoer" and "even though he may have received [it] honestly in the first instance." (Schock v. Nash (732 A 2d 217) Delware 1999), 232-33.

Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. [1942] 2 All ER 122, Lord Wright stated the principle thus :

"....(A)ny civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi-contract or restitution."

Lord Denning also stated in Nelson v. Larholt, [1947] 2 All ER 751 as under:-

"…...It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular frame-work. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution, if the justice of the case so requires."

The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment.

Perusal of the record of the learned Court below show that after exchange of notices the suit was filed on 7-9-2009. The sale deed could not be executed and the defendant is in hold of Rs.1,50,000/- since 16-1-2007 when the cheque was encashed and deposited in his account. Since we are not inclined to pass a decree for specific performance and the money is in hold of the defendant, we are of view of that the plaintiff has a right of restitution and he cannot be deprived of the said amount. The Supreme Court has observed that the restitution and unjust enrichment have to be viewed in two stages i.e. pre-suit and post-suit. In the pre-suit position the amount is not returned and also in the post-suit the amount is still with the defendant. No efforts have been made to return the amount though the statement has been made that the defendant has suffered certain loss, but nothing is on record to substantiate the same.

Under the circumstances of this case, applying the principles of justice and equity, we deem it appropriate to direct the defendant/ respondent No.1 to pay an amount of Rs.1,50,000/- to the appellant/ plaintiff along with interest at the rate of 6% per annum from today. Ordered accordingly.

In the result, the appeal is disposed of with the above observations. No order as to cost(s).

A decree be drawn accordingly.