M. Rajeswari vs P.R. Gopal

M. Jeyapaul, J.—The suit is filed praying for specific performance of the agreement of sale dated 19.2.1994 and also for permanent injunction restraining the defendant from interfering with and also from alienating the suit property.

The plaintiff would contend that the plaintiff has entered into an agreement with the defendant under the agreement of sale dated 19.2.1994 with respect to the suit property. The total sale consideration agreed upon under the said agreement is Rs. 10,25,000/=. The plaintiff paid the defendant an advance of Rs. 50,000/= at the time of entering into the agreement. The balance sale consideration was to be paid the plaintiff to the defendant on or before the execution of the sale deed. The time frame fixed under the sale agreement was three months. The defendant is bound to sell the suit property free from all encumbrances. The plaintiff had to arrange to get vacant possession of the schedule mentioned property from the defendant. She also had to secure the loan from the Oriental Benefit and Deposit Society Limited, Chennai. The defendant was required to furnish the plaintiff the exact amount due and payable to the Indian Overseas Bank, Sowcarpet Branch, Chennai from where the defendant had already obtained loan to enable the plaintiff to the balance sale consideration released by the Oriental Benefit and Deposit Society Limited, Chennai. There were exchange of notices between the parties. The plaintiff paid a sum of Rs. 27,145.20 towards arrears of Property Tax and Rs. 3270/= towards arrears of Water Charges for the schedule mentioned property. In the meantime, the defendant objected to the payments made by the plaintiff to the Corporation. A sum of Rs. 35,000/= was subsequently paid on 27.6.1994 by the plaintiff to the defendant. The plaintiff also arranged and obtained vacant possession of the tenanted portions viz., third and fourth floors of the schedule mentioned property from the tenant I. Selvam paying a sum of Rs. 1,30,000/= to him. In the meantime, one R. Jeyarani claimed through a lawyer''s notice dated 4.7.1994 that she had entered into an agreement of sale with the defendant on 9.8.1993 with respect to the suit property. The defendant informed the plaintiff that the amounts payable to the Bank and to the Corporation have to be determined in the proceedings pending before the Forum concerned. The defendant has been evading the performance of his part of the contract for the schedule mentioned property has appreciated in value. The defendant is also making efforts to forcibly take possession of the third and fourth floors of the schedule mentioned property from the plaintiff. Hence, the suit, for the aforesaid reliefs.

The defendant has submitted in the written statement that it was agreed that the plaintiff would purchase the suit property for a sale consideration of Rs. 10,25,000/= and would also clear the dues of Rs. 6,75,000/= due to the Indian Overseas Bank, Sowcarpet Branch, Chennai. She also undertook to pay a sum of Rs. 1,30,000/= in addition to the sale consideration by way of cheque separately in favour of the defendant. The defendant entered into an agreement to sell only the ground floor, first floor and second floor of the suit property. The plaintiff, under the agreement, has no right or interest over third and fourth floors of the suit property. The phrase "free from all encumbrances" was employed in the agreement with the specific understanding that the plaintiff would discharge the mortgage created by the defendant with Indian Overseas Bank, Sowcarpet Branch. The defendant obtained Income Tax Clearance certificate. But, the plaintiff was never ready and willing to perform her part of the agreement. The total sale consideration was in the region of Rs. 18,30,000/=. The very fact that the plaintiff approached the Oriental Benefit and Deposit Society Limited, Chennai for securing the balance sale consideration would go to show that the plaintiff did not have adequate funds for the purchase of the suit property. The plaintiff should have ascertained the dues from the bank and cleared the loan payable by the defendant. The parties intentionally mentioned the time frame of three months contemplated under the agreement of sale as the essence of the contract. The plaintiff has not even chosen to deposit the alleged balance sale consideration into court. The defendant denies the receipt of further advance of Rs. 35,000/=. The alleged payment of Rs. 1,30,000/= to the tenant is also denied. The agreement of sale was entered into between the parties without proper identity of the suit property. As there was no meeting of minds, the agreement itself is void. For the aforesaid reasons, the plaintiff is not entitled to the specific performance of the agreement of sale.

The following issues were framed for determination:

Whether the plaintiff is entitled to specific performance of the contract dated 19.2.1994.

Whether the plaintiff was always ready and willing to perform his part of the contract.

Whether the defendant was evading to perform the obligations cast upon him under the agreement of sale.

Whether the plaintiff is entitled to a specific performance.

To what relief?

On the side of the plaintiff, the husband of the plaintiff was examined as PW1 and as many as 18 documents were marked. On the side of the defendant, the defendant was examined as DW1 and 6 documents were marked.

Issues 2 and 3: Learned Counsel for the plaintiff would submit that the entire suit property was agreed to be sold by the defendant to the plaintiff. The quantum of sale consideration also has been specifically referred to in the agreement of sale. The very fact that a further sale advance of Rs. 35,000/= was paid by the plaintiff to the defendant and the same was accepted by the defendant would go to establish that time is not the essence of the contract. The letter correspondence emanated from the defendant would go to show that the defendant has come out with new terms beyond the scope of the written agreement, Ex.A2 and avoided to perform his part of the contract, he would further contend.

Per contra, learned Counsel for the defendant would submit that there is vagueness and uncertainty in the agreement of sale, Ex.A2. There was no meeting of minds as to the exact property which was proposed to be sold. The very fact that the plaintiff has chosen to arrange loan from the Oriental Benefit and Deposit Society Limited, Chennai to meet out the balance sale consideration would establish that he had no adequate funds to clinch the sale transaction. Further, the plaintiff has come before the court with unclean hands claiming the entire suit property when the agreement of sale contemplated sale of only three storeyed building.

First let us take up whether the time prescribed under the agreement of sale dated 19.2.1994 (Ex.A2) is the essence of the contract. Under the agreement of sale, Ex.A2, a maximum period of three months from the date of the agreement for clinching the sale transaction was contemplated. The other conditions are that the sale shall be effected free from all encumbrances whatsoever. A onerous condition also has been imposed on the purchaser to make arrangements to get vacant possession of the property on or before the date of sale. Though a sum of Rs. 50,000/= was paid as sale advance, the waiver of the said amount has not been stipulated in the default clause. On 19.5.1994, the date on which the agreement of sale, Ex.A2 expired, the defendant wrote a letter, Ex.A8 to the plaintiff informing her to clear the bank loan and tax liability only through him. Even on the date of expiry of the time stipulated under Ex.A2, the defendant has requested the plaintiff to get prepared for execution of the sale deed. If the time has been prescribed as the essence of the contract under Ex.A2, the defendant would not have given breathing time to the plaintiff to get herself prepared for the execution of the sale deed even after the expiry of the time stipulated under Ex.A2. To top it all, it is found that the defendant, having received a sum of Rs. 35,000/= towards further advance on 27.6.1994 well after the expiry of the time stipulated under the agreement, Ex.A2, made necessary endorsement on the reverse of the first sheet of the agreement of sale, Ex.A2. Though it has been denied in the written statement that such further sum of Rs. 35,000/= was received from the plaintiff on 27.6.1994, the defendant has categorically admitted during the course of evidence that such endorsement was made by him. The aforesaid facts and circumstances would clinchingly establish that time stipulated under the agreement of sale, Ex.A2 is not the essence of the contract of sale.

The next point that arises for determination is what actually is the quantum of sale consideration contemplated by the parties under Ex.A2. The relevant portion with regard to the quantum of sale consideration in Ex.A2 reads as follows:

WHEREAS the Vendor with a view to discharge the sundry debts and to discharge the loan in Indian Overseas Bank, offered to sell the above property and morefully described in the schedule hereunder for a net price of Rs. 10,25,000/= (Rupees ten lakhs twenty five thousand only) and whereas the Purchaser agreed to purchase the same for the said sum of Rs. 10,25,000/=.

The draft sale deed filed along with form 34A to obtain ''No Objection Certificate'' from the Income Tax authorities is filed as Ex.A5. In the draft sale deed, the defendant has subscribed his signature. In the draft sale deed, a total sale consideration of Rs. 8,55,000/= including a sum of Rs. 6,75,000/= to be paid to Indian Overseas Bank, Sowcarpet Branch to discharge the debts of the vendor has been contemplated. The defendant cannot travel beyond the agreement of sale, Ex.A2 and claim extra consideration. Therefore, the plea of the defendant that the plaintiff is liable to discharge the debt of the defendant to Indian Overseas Bank over and above the sale consideration contemplated under Ex.A2 is found not sustainable. There is no other proof to show that the parties independently clinched a deal imposing the liability on the plaintiff to discharge the bank loan independent of the consideration payable under Ex.A2.

There is a serious dispute as to whether the entire suit property or only a part of the floors along with the site was agreed to be sold. It is quite relevant to again refer to the agreement of sale, Ex.A2 to know the intention of the parties. It has been categorically stated therein that the vendor constructed three storeyed building on a vacant land purchased out of his own self-acquired funds. The vendor has offered to sell the aforesaid property to the plaintiff. In the schedule of property under Ex.A2, it has been mentioned as follows:

House and ground with three storied building bearing Old Door No. 18/1 New No. 10/1 Ebrahim Said Street, Kondithope Madras-79 comprised in T.S.No. 124/94 in Block No. 2 in George Town Village, measuring East to West 50 feet on both sides and North to South 17 feet on Eastern side 16''9" on the Western side, admeasuring a total extent of 844 sq.ft. or thereabouts bounded on the North by Old Door No. 18 and New No. 10/1 South by Raghavan Pandithar House, East by Gopal Chettiar House and West by Ebrahim Sait Street together with well and its Motor Connection corporation tap, all electrical installatins, connections and together with T.N.E.B. Meter Deposit and all service connections thereto situate within the Registration District of North Madras and the Sub-Registration District of Sowcarpet.

''Storey'' means a division of a house or building reached by one flight of stairs. The first storey means the storey of a building which has commenced above the ground storey. There may also be a basement storey. Therefore, by no stretch of imagination, it can be stated that only the ground floor, first floor and the second floor alone were proposed to be sold by the defendant to the plaintiff in terms of the agreement of sale, Ex.A2. What has been referred to under Ex.A2 is not only the first storey, second storey and the third storey, but also, the ground storey.

Under the draft sale deed annexed along with form 34A (Ex.A5), the defendant has proposed to convey the house, land and premises bearing door No. 10/1 which is the suit property. The number of storeys found in the suit property have not been specifically mentioned in the draft sale deed. Such a description of the suit property is found not only in the schedule of property, but also, in the body of the draft sale deed. While furnishing the nature, extent, location and area of the property under Form 34A, the defendant has simply stated as "Location 10/1, Ebrahim Sait Street, Madras-79. The house built up area of about 3400 sqft on land extent of 844 sqft." There had been correspondence between the plaintiff and the defendant right from 9.5.1994 to 2.8.1994. In none of the correspondence, the defendant has chosen to dispute the extent of the property proposed to be conveyed under Ex.A2. Only on 15.4.1994, when he shot off a letter, Ex.A14 through his counsel, he has come out with a novel version taking advantage of the description of the property found in Ex.A2 that third and fourth floors were not meant to be conveyed to the plaintiff by the defendant under Ex.A2.

The plaintiff has categorically mentioned in the plaint that the suit property consists of ground floor plus four floors though the plaint schedule describes the suit property as a three storeyed building. Even before the parties entered into the agreement of sale, Ex.A2, the defendant had filed Rent Control proceedings as against the tenant I. Selvam in the year 1991 itself seeking an order of eviction of the tenant from the third and fourth floors of the premises bearing door No. 10/1, Ebrahim Sait Street, Madras-79. The certified copy of the petition has been marked as Ex.B5 and the counter filed by the tenant I. Selvam admitting his occupation of the third and fourth floors of the suit property is marked as Ex.B6. Therefore, the fact remains that the suit property consists of four floors apart from the ground floor.

The court will have to find what was the intention of the parties as to the extent of the property proposed to be conveyed under Ex.A2. Firstly, it is found that a single floor cannot remain suspended without the support of the ground. Unless there is undivided share of the ground for a floor, such floor cannot independently suspend. If at all, the defendant had proposed to convey only the ground floor and three storeyed building, he would not have categorically stated in Ex.A2 that he had intended to convey the entire superstructure built by him on the vacant site he purchased out of his self-acquisition. One would expect a vendor to reserve his right of a particular floor not intended to be conveyed either in the description of the property or in the body of the agreement. While reserving such a floor, one would definitely carve out the undivided share in the ground floor to sustain the right over the floor retained by him. It is found that only one tenant by name I. Selvaraj had been in possession of the third and fourth floors. As per the terms of the Agreement, Ex.A4 clinched by the plaintiff with the said tenant, the latter had vacated the premises receiving a sum of Rs. 1,30,000/=. There is no evidence on record to indicate whether four floors has been constructed to the fullest extent. It is found that the defendant had disclosed his mind in the draft sale deed annexed with form 34A, Ex.A5 that the entire property bearing door No. 10/1, Ebrahim Sait Street, Chennai-79 is conveyed to the plaintiff. No portion of the suit property was reserved by the defendant even under the draft sale deed. He had not raised his little finger as against the claim of the plaintiff to execute the sale deed for the suit property in very many communications which preceded the pre-suit notice issued by the plaintiff as to the right reserved by him regarding the fourth floor. The above telltale evidence available on record would go to establish that the defendant had intended to convey the entire property consisting of the ground storey and the four storeys built thereon. Therefore, the defendant cannot have any claim over the fourth floor of the suit property having intended to convey the entire property including the fourth floor also. There is no vagueness or uncertainty found in the agreement, Ex.A2.

Now, the court will have to find whether the plaintiff was ever ready and willing to perform her part of the contract. The agreement of sale was entered into on 19.2.1994. Before the expiry of the time stipulated under the agreement, of course, the defendant has secured ''No Objection Certificate'' from the Income Tax authorities. The agreement contemplates conveyance of the suit property free form all encumbrances whatsoever. The fact remains that the suit property was already mortgaged to Indian Overseas Bank, Sowcarpet Branch by the defendant. Though the defendant was liable to pay Corporation Tax, Water Tax and Electricity Consumption charges, as per the agreement, it is found that the defendant had not paid those charges before the expiry of the time stipulated under the agreement. The plaintiff issued a notice dated 9.5.1994 under Ex.A6 calling upon the defendant to pay those Taxes. A reminder also has been sent by the plaintiff under the notice, Ex.A7 on 16.5.1994. But, on 19.5.1994, under Ex.A8, the defendant, having instructed the plaintiff to clear the bank loan and the tax liability through him, directed the plaintiff to prepare the sale deed. In fact, he has instructed the plaintiff to deduct the amounts due to the bank under the collateral security and the exact amounts due towards tax liability before ever taking a sale deed from him paying the balance sale consideration. Therefore, as on 19.5.1994, it is found that the bank dues were not paid by the defendant. The tax liability agreed to be discharged by the defendant was also not paid. Exs.A9 and A10 would show that the plaintiff had to pay the Property Tax and Water Charges. Under Ex.A11 dated 20.6.1994, the defendant having come to know of the payment of the Taxes and Charges to the Corporation, informed the plaintiff that such payments would not bind him as those payments had not been routed through him. In the meantime, it appears that one Jeyarani caused a notice, Ex.A12 through her counsel to be served on the plaintiff contending therein that the defendant had already entered into an agreement of sale with her in respect of the suit property as early as on 9.8.1993. Thereafter, the plaintiff issued a notice under Ex.A13 dated 11.7.1994 calling upon the defendant to furnish the exact amount due to Indian Overseas Bank, Sowcarpet Branch, no due certificate from the Corporation and Water and Sewerage Board and cancellation of the sale agreement alleged to have been entered into between the defendant and one Jeyarani as per the notice he received under Ex.A12. But, surprisingly, the defendant has chosen to give a reply under Ex.A14 dated 2.8.1994 that the exact amount due to the bank will have to be determined by the court and the amount payable to the Corporation and Water and Sewerage Board also will have to be decided by the authorities concerned. Thereafter, there had been exchange of notices through Advocates under Exs.A16 and A17 between the parties.

It is true that the defendant has secured ''No Objection Certificate'' from the Income Tax Authorities even prior to the deadline fixed under Ex.A2. But, quite unfortunately, the defendant has not performed his part of the contract contemplated under Ex.A2. Firstly, he is bound to keep the suit property free from all encumbrances. The fact remains that the suit property had been mortgaged to Indian Overseas Bank, Sowcarpet Branch. Though the said amount was proposed to be discharged by the plaintiff on behalf of the defendant as per the draft sale deed, the defendant had not cooperated by furnishing the exact due payable by the defendant to the said bank. In order to outsmart the plaintiff, the defendant, without furnishing those particulars sought for by the plaintiff, replied that the exact amount due to the bank will have to be fixed by the court and the exact tax and other charges payable to the Corporation and Water and Sewerage Board will have to be decided by the authorities concerned. The above conduct of the defendant would go to show that he had been very evasive in his response to the anxiety expressed by the plaintiff through various communications. The defendant has gone to the extent of disapproving the payment of taxes and other charges made by the plaintiff to the Corporation and ether authorities. Unless the exact due to the bank and the amount payable to the Corporation and other authorities are furnished, the plaintiff would not be in a position to mobilize the fund from the Oriental Benefit and Deposit Society Limited, Chennai.

The plaintiff has taken a stand that Oriental Benefit and Deposit Society Limited, Chennai was prepared to issue cheque to liquidate the debt payable by the defendant to the Indian Overseas Bank, Sowcarpet Branch the moment the exact dues are furnished. Further, the plaintiff had to submit the receipts for payments to Corporation and other authorities in order to convince the financier about the marketability of the property. There is no necessity for the agreement holder to jingle the coin before the court. Only when the court directs the party concerned to deposit the balance sale consideration, he is bound to obey such a direction. The plaintiff had proposed to mobilize the fund through Oriental Benefit and Deposit Society Limited, Chennai. Such proposal of the plaintiff had been recognised in the draft sale deed annexed with Ex.A5. It is not necessary that one should possess hard cash to show his wherewithal to purchase a property. We will have to find whether a party has the potential to mobilize resources. Just because the plaintiff has chosen to bank on Oriental Benefit and Deposit Society Limited, Chennai for the purpose of mobilising the fund, we cannot jump to a conclusion that the plaintiff has no wherewithal to purchase the suit property.

Therefore, it is held that the plaintiff has been ever ready and willing to perform her part of the contract, but, it was only the defendant who has been evading to perform the obligations cast upon him under the agreement of sale. The issues are answered accordingly.

Issues 1, 4 and 5: The plaintiff has established that the entire suit property consisting of ground floor and four floors have been agreed to be conveyed and that the plaintiff has ever been ready and willing to perform her part of the contract. Therefore, the plaintiff is entitled to specific performance of the agreement of sale and also permanent injunction restraining the defendant from (sic) the schedule mentioned property to any third parties and also from (sic) plaintiff''s possession of the third and fourth floors of the schedule mentioned property. The plaintiff, under the agreement, Ex.A2, has agreed to evict the tenant from the premises. No amount has been proposed to be given to the tenant for evicting the premises under the agreement, Ex.A2. As the plaintiff has taken up the responsibility of evicting the tenant from the premises, in all fairness, she has to bear the entire cost attended thereto. Payment of any money to the tenant for vacating the premises cannot form part of the sale consideration. Further, on careful perusal of the agreement, Ex.A4 entered into between the plaintiff and the tenant I. Severaj, the plaintiff has categorically stated therein that she has agreed to vacate the tenant as per the agreement of sale, Ex.A2 at her own cost. Therefore, the amount paid to the tenant for evicting him from the premises does not form part of the sale consideration. The plaintiff has paid, under the agreement, a sum of Rs. 50,000/= plus Rs. 35,000/=. That apart, she has also paid the Corporation Tax and Water Charges under Exs.A9 and A10 to the tune of Rs. 27,145.20 plus Rs. 3270/= in all totaling a sum of Rs. 30,415.20 The plaintiff is liable to pay only the remaining amount of Rs. 9,09,585/= out of the total sale consideration of Rs. 10,25,000/=.

In the result, the suit is decreed as prayed for with costs. The plaintiff shall deposit the balance of sale consideration of Rs. 9,09,585/= within two months from the date of judgment. The defendant is at liberty to withdraw the said amount from the court and shall execute the sale deed in respect of the entire suit property including fourth floor within one month from the date of deposit of the sale consideration into court by the plaintiff. If the defendant fails to execute the sale deed within the aforesaid time stipulated, the Registry shall execute the sale deed on behalf of the defendant within one month from the expiry of three months from the date of judgment.