K.V. Shivakumar and Others vs Aftab Banoo and Others

N. Kumar, J.—This is a plaintiffs'' appeal against the Judgment and Decree of the Trial Court dismissing the suit of the plaintiffs for the relief of specific performance of the contract of sale.

For the purpose of convenience, the parties are referred to as they are referred to in the plaint.

The subject matter of the suit is, property bearing No. 63-64 (old Nos. 118-116 & 117), Commercial Street, Civil Station, Bangalore, morefully described in the schedule to the agreement of sale (hereinafter referred to as Schedule Property). The defendants 1 to 4 acquired the schedule property under a gift. They agreed to sell the schedule property to the plaintiffs under an agreement of sale dated 5th April, 1987 for a consideration of Rs. 46,00,000/-. The sale is to be completed within nine months from the date of the agreement of sale and a sum of Rs. 5,00,000/- was paid on the date of the agreement. A sum of Rs. 10,00,000/- was agreed to be paid within four months from the date of the agreement. The balance amount had to be paid at the time of registration. The defendants agreed to furnish a Certificate of Clearance under Section 230A of the Income-tax Act, permission of the competent authority for alienating the minor''s share in the schedule property and letter of discharge from Jammu and Kashmir Bank Limited, Bangalore Branch, Bangalore, confirming that the schedule property is not a Security to any advance. In terms of the agreement a sum of Rs. 5,00,000/- was paid on 25.11.1987 as against the payment of Rs. 10,00,000/-. The case of the plaintiffs is that they were always ready and willing to perform their part of the contract. In fact more than 50 times the plaintiffs had approached the defendants requesting them to perform their part of the obligations of the contract and receive the balance sale consideration and execute the sale deed. However, the defendants though agreed to comply with the said obligations, did not perform their part of the contract. Further, the plaintiffs were surprised to receive a notice from the Court in respect of a caveat entered by the defendants on 10.08.1990. They also received a legal notice by the defendants canceling the agreement of sale and forfeiting the advance paid, which is dated 10.08.1990. The plaintiffs sent a reply notice dated 28.08.1990 to the legal notice calling upon the defendants to perform their part of the obligation, by receiving the balance sale consideration and executing the sale deed. When they did not comply with the said demand, they were constrained to file a suit for specific performance of the agreement of sale, on 24.11.1990.

The defendants after service of suit summons entered appearance and filed their written statement. They admitted the agreement of sale dated 05.04.1987. They also admitted the payment of Rs. 5,00,000/- advance on the date of execution of the agreement of sale. They contended that in terms of the agreement, plaintiffs have to pay them Rs. 10,00,000/- within four months from 05.04.1987 which, the plaintiffs did not pay. In spite of the defendants approaching the plaintiffs, they did not pay the agreed amount. Consequently, they could not perform their part of the obligations under the contract. Having waited for more than three years, they were constrained to cancel the agreement of sale by issuing a legal notice. They also entered a caveat on 10.08.1990. They specifically pleaded that the plaintiffs were not ready and willing to perform their part of the contract. They were not ready with the balance sale consideration. It is the plaintiffs, who committed breach of the terms of the agreement. Therefore, they are entitled to forfeit the advance amount paid and therefore, they sought for dismissal of the suit.

On the basis of the aforesaid pleadings, the Trial Court framed the following issues:

"1. Whether the cancellation of sale agreement by the defendants by issue of notice dated 10/08/1990 was legally valid/sustainable?

Whether time was the essence of contract? If so, who has violated this term?

Whether the plaintiffs prove they were ready and willing to perform their part of the contract at all time in accordance with the terms of agreement?

Whether the defendants prove that they were legally competent to execute a regular sale deed in accordance with the terms of agreement before the issue of notice dated 10/8/1990?

Whether the defendants prove that the plaintiffs have forfeited their right to enforce the contract under the agreement of sale by not paying Rs. 10,00,000/- within four months from the date of agreement of sale?

Whether the plaintiff''s are entitled to a decree of specific performance of contract under the agreement of sale?

OR

In the alternative are they entitled to the refund of Rs. 10,00,000/- paid under the agreement?

Whether the plaintiffs are entitled to interest at 18 per cent per annum on the advance amount from the date of payment till the date of suit amounting to Rs. 5,96,875/-?

Whether the plaintiffs are entitled to Rs. 5,00,000/- towards liquidated damages as per the terms of the sale agreement?

Whether the suit is barred by limitation?

To what relief/reliefs the parties are entitled.

Additional Issues dated 03.12.2005

Whether the defendants 3 and 4 prove that the suit is not maintainable as contended in the written statement?

Whether the defendants 3 and 4 prove that, they are not bound by any agreement of sale executed by their guardian?"

In order to substantiate their claim, the 1st plaintiff - K.V. Shivakumar was examined as P.W. 1. They have produced five documents, which were marked as Ex. P1 to Ex. P5. On behalf of the defendants Power of Attorney Holder of defendant No. 1 -Mohammed Jabbar was examined as D.W. 1 and 4th defendant - C.M. Navedulla was examined as D.W. 2 and they also produced five documents, which were marked as Ex. D1 to Ex. D5.

The Trial Court, on appreciation of the oral and documentary evidence on record held that the agreement of sale is proved and payment of Rs. 5,00,000/- advance is also established. The plaintiffs have paid a sum of Rs. 5,00,000/- on 25.11.1987 as against the payment of Rs. 10,00,000/- agreed, that too after four months period. The plaintiffs were not ready and willing to perform their part of the contract and hence the suit is barred by the law of limitation. The breach is committed by the plaintiffs and not the defendants and therefore, defendants are entitled to forfeit the amount paid as advance. Thus, the plaintiffs'' suit came to be dismissed. Aggrieved by the said judgment and decree, the plaintiffs have preferred this appeal.

The learned counsel for the appellants-plaintiffs, assailing the impugned judgment and decree contended that though Rs. 10,00,000/- was agreed to be paid within four months from the date of the agreement of sale, when the defendants received Rs. 5,00,000/- on 25.11.1987 without any murmur, they gave up their right to receive the balance of Rs. 5,00,000/-. There is a novation of contract. Under the terms of the agreement, plaintiffs have to obtain permission from a Competent Court for alienating the minor share which, till today, they have not obtained. They have not even made an application. They have also not made any application to the Income-tax Department for permission to sell, without which, the sale could not have been completed. They have not obtained any Certificate from the 5th defendant - Jammu and Kashmir Bank stating that they have no interest in the property. It is only if the defendants performed their obligations under the contract, the obligation of the plaintiffs to pay the said amount agreed would have arisen. Therefore, the Trial Court was not justified in holding that the plaintiffs committed breach of the terms of the agreement. In fact the 1st plaintiff in the witness box has asserted that he and other plaintiffs were ready with the balance sale consideration. He owned several properties. It is not the law that the plaintiffs should show before the Court, the balance consideration payable in terms of cash. He could have raised funds. This aspect has been completely missed by the Trial Court. The suit is in time and the Trial Court has not kept in mind the nine months period stipulated on the Contract for completion of the sale and the period has to be calculated after that nine months time. If so calculated, the suit is in time. The finding of the trial Court that the defendants are entitled to forfeit the advance amount paid is inequitable and contrary to the evidence on record and therefore, he submits that the judgment and decree of the Trial Court be set-aside and the suit for specific performance is to be decreed.

Per contra, the learned counsel appearing for the defendants - respondents supported the impugned judgment and decree.

In the light of the aforesaid facts and the rival contentions, points that arise for our consideration in this appeal are as under:

"(a) Whether the finding of the Trial Court that the plaintiffs were not ready and willing to perform their part of the contract is supported by the legal evidence on record?

(b) Whether the finding of the Trial Court that the suit is barred by time is correct?

(c) Whether the finding of the Trial Court that the defendants are entitled to forfeit the advance amount paid in accordance with law?"

Point (a)

From the material on record, it is clear that the agreement of sale entered into between the plaintiffs and the defendants on 05.04.1987 is not in dispute. Under the agreement, the defendants agreed to sell the schedule property for consideration of Rs. 46,00,000/-. On the date of the agreement, a sum of Rs. 5,00,000/- was paid to the defendants by way of separate cheques. The agreement also stipulates that the plaintiffs have to pay a further advance of Rs. 10,00,000/- within four months from the date of the agreement that is on or before 05.08.1987. The plaintiffs ought to have paid Rs. 10,00,000/-. It is not in dispute that the said amount of Rs. 10,00,000/- was not paid before the said date but the evidence on record discloses that a sum of Rs. 5,00,000/- was paid on 25.11.1987. It is evidenced by a receipt Ex. P2. The contents of the receipt shows that after acknowledging a sum of Rs. 5,00,000/- paid on 25.11.1987, the defendants also acknowledged that they have received aggregate amount of Rs. 10,00,000/- as advance. It is the case of the plaintiffs that the payment of Rs. 5,00,000/- as against Rs. 10,00,000/- payable as agreed in the agreement, the defendants consciously waived the payment of remaining Rs. 5,00,000/-. If the payment of Rs. 5,00,000/- is not acknowledged in writing, probably the said plea would have acquired some reasonability and weight. When the parties have reduced to writing, the receipt of Rs. 5,00,000/- and that receipt conspicuously do not speak about the so-called waiver pleaded by the defendants, any amount of oral evidence in respect of a transaction, which is reduced into writing is inadmissible in evidence. Further, it was contended that when the defendants received Rs. 5,00,000/- as against Rs. 10,00,000/-, the contract also stood negated. The said contention also has no basis and at any rate not supported by legal evidence. These admitted facts show that the plaintiffs committed breach of agreement inasmuch as Rs. 10,00,000/- was not paid on 05.08.1987. Even after 05.08.1987 the plaintiffs did not pay Rs. 10,00,000/- but they paid Rs. 5,00,000/-. Therefore breach is on the part of the plaintiffs. Even if the defendants received Rs. 5,00,000/- without a murmur on 25.11.1987 even after three months, it only shows the helplessness, in which the defendants were placed. So the plaintiffs have taken an undue advantage of their pitiable condition and is virtually breaking the terms of the agreement. The legal notice issued by the defendants shows that there is an blank denial of the facts in the notice. It only shows that the plaintiffs are unwilling to perform their part of the contract right from the inception. That apart, after payment of Rs. 5,00,000/- on 25.11.1987, the contract provides that the balance sale consideration shall be paid at the time of registration of the sale deed. Clause 3 of the agreement says that the sale should be completed within a period of nine months from this date i.e., date of agreement or within a period of two months from the date of Vendors obtaining and furnishing the documents referred to in the clause namely, the Certificate of Clearance under Section 230A of the Income-tax Act; permission of the Competent Court to alienate the minors'' share in the schedule property and a discharge letter from the Bank. Certainly, the obligation to obtain those documents is on the defendants. It is the case of the defendants that it is only on payment of Rs. 10,00,000/- as agreed to, the stipulation of Clause 3 would arise. When the plaintiffs did not pay Rs. 10,00,000/- as agreed to, there is no corresponding obligation on the part of the defendants to perform their part of the obligation as per Clause 3. That apart, to obtain the Clearance Certificate under Section 230A of the Income-tax Act, a draft sale deed is to be enclosed. It is not the case of the plaintiffs that they gave the defendants a draft sale deed to enable them to get the sale certificate. In the reply notice, there is no whisper. However, they have come up with the theory that they have given a copy of the draft sale deed but, the same is not produced before the Court. If they had really given a draft sale deed, they should have followed it up on the expiry of the nine months period from the date prescribed. The normal human conduct is to atleast issue a letter or notice calling upon the defendants to perform their obligations and inform the defendants that they are ready with the balance sale consideration. Such a conduct is not forthcoming. The case of the plaintiffs is after 25.11.1987 more than 50 times the plaintiffs approached the defendants with a request to complete the transaction and that they were ready with the money. If the defendants are not performing their part of the contract, they cannot keep quiet for more than three years. The plaintiffs should have given a legal notice expressing their readiness and willingness to perform their part of the contract. It is not their case that they are ready to pay the balance of Rs. 5,00,000/-. It is their specific case that only after defendants perform their obligation in terms of clause 3 the plaintiffs'' liability to pay the balance amount arises. Admittedly, no legal letter has emanated from the plaintiffs. The defendants entered caveat as per Ex. P3, followed by legal notice dated 10.08.1990 as per Ex. P4 canceling the agreement pointing out the breach committed by the plaintiffs. A reply was given to the legal notice stating that the plaintiffs are ready and willing to perform their part of the contract, which is denied by the defendants.

Though, the law does not require that the plaintiffs have to place before the Court the cash, it is open to them to establish their readiness and willingness in a manner known to law and acceptable. Mere repetition of those words in the witness box is not sufficient as that portion of the evidence has been cross-examined by the defendants denying their readiness and willingness. It is elicited in the cross-examination on this aspect that P.W. 1 has an account with Canara Bank, Town Hall Branch, United Bank in K.G. Road Branch, Vysya Bank at Avenue Road Branch and Vijaya Bank at Chickpet Branch, Bengalooru and the said accounts are maintained since 10 to 20 years. Some of the pass books of these accounts are available with him but not all. He says that he would produce them if the Court directs him. Further, it is also stated that the other plaintiffs also have their Bank accounts but P.W. 1 does not know the details. He further states that except P.W. 1, the other four plaintiffs are doing business. Plaintiff No. 2 was earlier, doing business in Transport. He does not know what she is doing now. Similarly plaintiff No. 3 was earlier doing business in furniture. Now he does not know what he is doing. Plaintiffs 4 and 5 are doing business in Jewellery. There is no whisper in the evidence as to what is the amount available in the Bank, what is the difficulty in producing those pass-books to the Court and his answer that he would produce the same if, the Court directs shows that he was not willing to voluntarily produce the same, which he was legally bound to do. It is also admitted in evidence that the plaintiffs are income-tax assesses and have been filing their returns. Again only if the Court orders, they are prepared to submit the tax returns to the Court. The burden of proving the readiness and willingness to perform the contract is on the plaintiffs. Readiness is that they are in possession of the money at all the relevant points of time from the date of the agreement till the date of the suit and even on the date of hearing. The defendants specifically denied that the plaintiffs were ready and willing to perform their part of the contract. Even the plaintiffs are not expected to produce the cash before the Court. The plaintiffs are under an obligation to prove that they were ready and willing to perform their part of the contract. When P.W. 1 has accounts in four banks and other plaintiffs have accounts in different banks and they are income-tax assessees and all the documents in their possession to establish their readiness and willingness, the plaintiffs ought to have produced all the documents, which are in their possession and should not wait for a Court to direct. Court is not under no obligation to direct the plaintiffs to produce the documents. Court will Just look into the documents produced and see whether the plaintiff has proved his case or not. If a person is in possession of the documents and do not produce the same, only inference is that if those documents are not produced, it would not support his case. Therefore, the aforesaid material on record clearly shows that the plaintiffs had no funds. They were not ready to perform their part of the Contract. Therefore, the Trial Court was fully justified in recording the finding that the plaintiffs were not ready and willing to perform their part of the contract. Therefore, we do not see any justification to interfere in the said finding of fact, recorded by the Trial Court, based on legal evidence.

Point (b)

The said agreement is dated 05.04.1987. Nine months is the period prescribed for completion of the sale transaction.

Article 54 of the Limitation Act, deals with suit for specific performance. The time prescribed is three years from the date fixed for the performance or, if no such date is fixed, when the plaintiff has notice that performance is refused. In the present case, the time fixed is nine months from the date of the agreement. That takes us to 05.01.1988. Three years from the date fixed for the performance is 05.01.1991. The suit is filed on 24.11.1990. Therefore, the finding recorded by the Trial Court that the suit is barred by time is ex-facto is not correct and is hereby set-aside.

Point (c)

Insofar as the forfeiture of the advance amount paid is concerned, the facts in this case disclose that the agreement was entered into on 05.04.1987. The possession of the property was not given to the plaintiffs. It was in possession of the defendants. It is a commercial property situated in Commercial Street, which is a very prominent road or locality in Bangalore. The plaintiffs have parted with nearly Rs. 10,00,000/- which is roughly about 20% of the sale consideration. Though the plaintiffs did not initiate any proceedings for filing of the suit within three years, the defendants also after receiving the said amount had the benefit of enjoying the said amount and doing nothing. It is only after three years, they had to either cancel the agreement or give a clear title.

It is a case where both the parties have slept over their rights for three long years. They have done nothing. In the meanwhile, the property value has gone up considerably in the city of Bangalore. The plaintiffs would submit that the property value probably has multiplied manifold. In the peculiar facts of this case, we are of the view that the defendants should not be permitted to enjoy the benefit of the amount, which he had all these years, coupled with the multiple enhancement of his property value. It would be unjust. Therefore, we are of the view that the forfeiture is unjustified in the facts of this case. Therefore, the finding recorded by the Trial Court that the defendants were entitled to forfeit the amount, cannot be sustained. Hence, that finding is set-aside. The defendants are directed to refund the amount of Rs. 10,00,000/- with interest at * 12% p.a. from 25.11.1987. This amount will be a charge on the schedule property till the amount is paid. Hence, we pass the following order:

"(a) Appeal is partly allowed.

(b) The dismissal of the plaintiffs suit for specific performance is affirmed.

(c) The defendants-respondents are directed to pay Rs. 10,00,000/- with interest at * 12% p.a., from 25.11.1987 till the date of payment to the plaintiffs.

(d) The said amount would be a charge on the schedule property till it is discharged."

Parties to bear their own cost.

*corrected vide court order dated 16.10.2015