M. Cheluvaiah vs Amruthamma and Others

Anand Byrareddy, J.—The appellant was the plaintiff before the trial court in a suit for specific performance. It was the case of the plaintiff that defendant No. 1 was the owner of the suit property and defendant No. 2 was the husband of defendant No. 1. The suit schedule property consisted of a cinema hall known as "Bramaramba talkies'' which was more fully described in the suit schedule. The plaintiff had agreed to purchase the same along with 20 guntas of land in Survey No. 219/3 and vacant sites situated over the suit property. The sale consideration agreed upon was Rs. 12,50,000/- and an advance amount of Rs. 25,000/- was paid under the agreement dated 12.9.2005 and further, it was agreed that the sale deed would be executed within one month pursuant to the agreement.

The first defendant was under an obligation, at that point of time, to secure income-tax clearance certificate and a ''No Objection Certificate'', by the Karnataka State Financial Corporation. But however, it transpires that defendants 1 and 2, to meet certain urgent financial crisis, had agreed to initially sell 5 items of the properties by way of a registered sale deed dated 3.5.1996 and delivered possession to the plaintiff. However, it transpires that the sale transactions pertaining to ''Bramaramba Talkies'' and the land referred to hereinabove, were not completed. The defendants had delayed and postponed the execution of the sale deed and therefore, the plaintiff was constrained to restrain them by filing a suit for injunction from alienating the suit property. However, it transpires that defendant No. 1 sought to mortgage the property to defendants 3 and 4 on 4.1.1999. The plaintiff being ready and willing to complete the transactions referred to above, had filed yet another suit in O.S. No. 91/1999 for permanent injunction restraining defendant No. 1, from alienating the property by way of mortgage. And thereafter legal notices dated 2.9.1998 and 3.12.2001 were issued, demanding the defendant No. 1 to execute the sale deed. By a reply dated 9.12.2001, the defendant No. 1 is said to have denied the execution of the regular sale deed. It is this which, according to the plaintiff, gave him a cause of action to initiate proceedings for specific performance of contract.

On receiving the suit summons, the defendants had entered appearance and defendants 1 to 3 had filed a common written statement and the same was adopted by defendant No. 4 as well. The execution of the sale agreement between the plaintiff and defendant for a sum of Rs. 12,50,000/- was admitted. It was admitted that a sum of Rs. 25,000/- was paid in advance. It was however denied that there were any further obligations on the part of the defendants, which ought to have been completed preceding the execution of the sale deed and it was sought to be contended that it was the plaintiff, who was not ready and willing to complete the transaction and hence, by sheer efflux of time, the agreement has spent itself out and no longer enforceable. It was contended that the suit filed was beyond the period of limitation and hence, the suit ought to be dismissed on the ground of limitation.

It was also denied that the plaintiff had paid several sums of money over a period of time totaling to a sum of Rs. 11,37,000/- after taking into account the sale consideration in respect of five sites, which was the subject matter of the sale deed referred to above. The plaintiff was due to pay only a sum of Rs. 1,13,000/- was specifically denied by the defendants and in that background, the court below had framed the following issues:

"1. Whether plaintiff proves that defendant No. 1 had agreed to execute registered sale deed in respect of suit property in his favour pursuant to agreement of sale dated 12.9.1995 by obtain clearance certificate from Income Tax department and no objection from KSFC?

Whether defendants prove that due to willful default committed by plaintiff the alleged agreement of sale executed in his favour stood cancelled and not in force?

Whether plaintiff was/is always ready and willing to perform is part of contract?

Whether suit is barred by limitation?

Whether valuation made in the plaint is incorrect and court fee paid thereon is insufficient?

Whether plaintiff is entitled for the reliefs as prayed?"

The court below has answered issue Nos. 1, 3 and 6 in the negative and other issues in the affirmative and dismissed the suit. It is that which is under challenge in the present appeal.

The learned Counsel for the appellant has filed an application seeking to amend the suit prayer, to the effect that the plaintiff was also in the alternative, entitled to refund of the sale consideration paid by him in advance, if the suit was to be defeated on any ground whatsoever. The learned Counsel would also point out that there being specific claim of the plaintiff that he had paid a total sum of Rs. 11,37,000/- out of Rs. 12,50,000/- and that he was due to pay only a sum of Rs. 1,13,000/-, the court below has not chosen to frame any issue. In the light of Section 22 of the Specific Relief Act, 1963 (Hereinafter referred to as the ''SR Act'', for brevity), which provides that the plaintiff in a suit for specific performance, would be entitled to specific performance of contract or in the alternative, refund of the earnest money or the advance price paid, provided he asks for such relief. However, the court is not precluded from granting such relief on amendment of the plaint at any stage of the proceedings.

Given this provision of law, it would be in the fitness of things that atleast the prayer of the plaintiff for refund of the earnest money that he has paid be considered. Consequently, the application is allowed. The appellant is permitted to amend his plaint, to include the prayer for refund of the earnest money. However, insofar as the contention that the plaintiff had paid the amounts from time to time and in addition to the advance amount of Rs. 25,000/-, which is indicated in the sale deed, is vehemently denied by the respondent. The plaintiff seeks to rely upon certain documents, supporting such a contention that the plaintiff was due to pay only the remaining amount of Rs. 1,13,000/- and that he had paid a substantial amount of the sale consideration of Rs. 12,50,000/- There is no direct evidence of payment of these monies. Since the monies were paid from time to time by way of cash, which is not established by other documents.

The learned Counsel for the appellant would submit that there is indeed material, which could be produced, if the appellant is granted an opportunity to adduce additional evidence. Since there is no issue framed by the trial court in this regard, exercising power under Order XLI Rule 25, the following issue is framed:

"Whether the plaintiff proves that he has paid the total sum of Rs. 11,37,000/-, out of total sale consideration of Rs. 12,50,000/-, of which Rs. 25,000/- was paid in advance under an agreement of sale dated 12.9.1995 apart from Rs. 1,32,000/- under the sale deed dated 3.5.1996, Ex. P-2, in respect of five sites and rest of the amount out of Rs. 11,37,000/- by way of cash?" Therefore, it would be necessary for the plaintiff to adduce such additional evidence. Therefore, the appellant is granted liberty to adduce additional evidence in support of the issue now framed, which the trial court shall thereafter consider after recording the evidence and pass judgment insofar as the alternative prayer that is now included in the plaint.

Insofar as the dismissal of the suit on the ground of limitation is concerned, it is pointed out that the court below has dismissed the suit on the ground of limitation computing the period of limitation as running from the date of agreement, which provided that the sale transaction shall be completed within one month from the date of the agreement. However, it is pointed out that it is the settled legal position that insofar as the sale of immovable property is concerned, the period prescribed in the agreement may not be generally enforceable unless three years has elapsed from the date of the agreement or three years from the date of refusal on the part of the sale deed to execute the sale transaction. If this proposition is accepted, the finding of the trial court is not sustainable. Therefore, the suit shall be adjudicated without reference to the period of limitation on other aspects. Hence, the trial court shall adjudicate as to the entitlement or otherwise of the enforcement of the sale agreement or in the alternative, consider the refund of the advance amounts paid.

With that observation, the appeal is allowed and the matter is remanded to the trial court.

The aspect as to whether the time for filing the suit for specific performance had indeed expired would have to be dealt with, with reference to the decided cases, as for instance in the case of Indira Kaur and Ors Vs. Sheo Lal Kapoor, , it is expressed that the time shall not be the essence of contract in relation to transactions involving immovable property and notwithstanding that there is time prescribed in the preceding sale agreement between the parties, whereby the sale transaction was to be completed within one month from the date of sale agreement and even three years had expired from the date of the agreement, there is a claim that there were sale deeds in respect of portions of the property, which would indicate that the parties intentionally postponed the transaction and further, there is a claim that the amounts, which were paid from time to time, have been received by the defendant, which would again explain the period of limitation, which aspects are required to be established and considered with reference to additional evidence that may now be tendered in order to address the question of limitation.

Hence, leaving open the question of limitation, the matter is remanded for a fresh consideration. Consequently, the appeal is formally allowed. The judgment and decree of the trial court is set aside. The parties shall tender evidence on the additional issue and the court shall thereafter adjudicate on the matter.