M. Rajeswari - Petitioner @HASH P.R. Gopal

This petition is directed against judgment dated 04.08.2008 of the Division Bench of the Madras High Court whereby the appeal filed by the respondent was allowed and the decree passed by the learned Single Judge for specific performance of agreement dated 19.02.1994 was set aside.

The petitioner filed suit for specific performance by making the following assertions:

(i) that she had entered into an agreement with the respondent for purchase of the suit property bearing Door No. 10/1 (old Door No. 18/1) Ebrahim Sait Street, Kondithope, Madras comprised in T.S. No. 124/94, Block No. 2, George Town Village;

(ii) that the total price of the suit property was Rs. 10,25,000/-;

(iii) that she had paid Rs. 50,000/- to the respondent and agreed to pay the balance amount within next three months subject to the condition that the respondent shall obtain clearance from the Income Tax Department and get the title deeds after clearing the dues of the bank from which he had taken loan;

(iv) that even though she was always ready and willing to perform her part of the agreement, the balance price was not paid because the respondent failed to get the requisite certificate from the Income Tax Department and he did not clear the bank''s dues.

In his written statement, the respondent pleaded that the petitioner had undertaken to clear the outstanding dues of the bank and to pay Rs. 1,30,000/- in addition to the sale consideration, which she did not do; that he had agreed to sell only the ground floor, first floor and the second floor of the suit property but the petitioner was claiming all the floors; that the petitioner was not ready and willing to perform her part of the agreement and that she did not have adequate funds for paying the balance consideration.

On the pleadings of the parties, the learned Single Judge framed the following issues :

"1. 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?"

After considering the evidence produced by the parties, the learned Single Judge decreed the suit.

In the appeal filed by the respondent, the Division Bench formulated the following points:

"(i) Whether the plaintiff was entitled for the specific performance of the contract dated 19.2.1994?

(ii) Whether the plaintiff was ready and willing to perform her part of the contract?

(iii) Whether it is correct that the plaintiff is not entitled to the equitable relief of specific performance for her conduct?

(iv) To what relief?"

While considering the second point, the Division Bench observed as under:

"The decision in the case rests upon three aspects as to (i) whether time is essence of the contract; (ii) whether the plaintiff was ready and willing to perform her part of the agreement; and (iii) the conduct of the parties."

As pointed out above, the parties have agreed that the transaction should be completed within a period of 3 months from the date of the agreement. True it is, ordinarily time is the essence of the contract insofar as the sale of an immovable property. In the present case, certain circumstances are noticed. A reading of the agreement would clearly reveal that the property which was the subject matter of sale, was actually mortgaged with the Indian Overseas Bank, Sowcarpet Branch. It is also made clear in the agreement that the defendant was under necessity to enter into such a transaction for clearance of the said mortgage debt. At this juncture, 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 more fully 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/-."

It would be abundantly clear that so long as the remainder of the sale consideration was not paid, he could not clear the encumbrance at all; on the contrary, he has to make payment of interest that would be going on increasing. What was done by the plaintiff was that she has paid the water tax and corporation tax. Though it was not agreed by the plaintiff for making such payments, she has paid so. It is pertinent to point out that even before the agreement was entered into on 19.2.1994, the Indian Overseas Bank, Sowcarpet Branch, has already filed a suit in C.S. No. 1542/93 based on the mortgage, for recovery of the mortgage dues, and hence when the agreement was entered into between the parties, the plaintiff should have got the clear knowledge about the pendency of that suit. But, what was all contended by the plaintiff before the trial Court and equally here also is that the amounts due towards the mortgage came to her knowledge for the first time as determined in C.S. No. 1542/93, which cannot be accepted. The parties clearly knew that the property was to be sold by the defendant for clearance of the mortgage debt, and further the suit in C.S. No. 1542/93 was earlier in point of time. Hence the circumstances necessitated the early payment of the balance of sale consideration; but, except the payment of advance of Rs. 50,000/- and also the payment of water taxes and corporation tax, the plaintiff did not come forward to make any payment towards the consideration. Therefore, the contention put forth by the plaintiff that time was not the essence of the contract, and she need not make the payment of the remainder within the stipulated time or within a reasonable time cannot be accepted in view of the circumstances attendant and noticed above.

As far as the other two aspects as stated supra, are concerned, this Court is of the considered opinion that they stand against the plaintiff. As could be seen from the agreement entered into between the parties, the defendant''s property was mortgaged with the Indian Overseas Bank, Sowcarpet Branch, in respect of which a suit filed by the bank, was pending. Under the agreement, the defendant was to clear the encumbrance. At one stage, since the plaintiff did not come forward to part with any payment, on 19.5.1994 under Ex. A8, the defendant instructed the plaintiff to clear the bank loan and tax liability through him and also directed the plaintiff to prepare a sale deed. He also further directed 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 of sale consideration. From the evidence available, it would be quite clear that the defendant was under the compelling circumstances to sell the property in order to discharge the mortgage, and the plaintiff has paid only Rs. 50,000/- out of the total consideration; but, she did not come forward to make any further payment enabling the defendant to clear the mortgage.

Hence the defendant was constrained to issue Ex. A8 whereby he gave specific instructions to the plaintiff to clear the mortgage and also deduct the amounts from the consideration; but, the plaintiff did not do so. On the contrary, she was all along telling that the exact amount was not known, and hence she could not satisfy the mortgage claim. At this juncture, it is pertinent to point out that already the Indian Overseas Bank had filed a suit, and it is pending in C.S. No. 1542/93 on the file of this Court, and it was filed even before the agreement was entered into. From this angle also, it is to be seen that the plaintiff did not come forward to make any further payment or to perform her part of the contract.

It is further to be noticed that at the time when she entered into the agreement, the plaintiff had no funds, and she was to raise funds from Oriental Benefit and Deposit Society Limited.

From the evidence of P.W.1, it would be quite clear that she also raised the funds from that Society, and she has also purchased the nearby property in the same street under Exs. B1 to B3. It is further pertinent to point out that she has mortgaged the very same property with the bank on the same day; but, on the contrary, she did not come forward to make any payment further towards the sale consideration all along the period.

All would go to show that the plaintiff who originally had no sufficient funds, came forward to apply to the Society, availed the loan and also purchased some other property out of that, but did not show any interest in making further payment, nor had she paid the amount to the defendant enabling him to clear the mortgage deed, and even after instructions, she did not clear the mortgage. At this juncture, it remains to be stated that the conduct of the plaintiff was detrimental to the interest of the defendant since the interest on the mortgage was going on swelling. Thus, the mere averment in the plaint that the plaintiff was ready and willing to perform her part of the contract in a suit for specific performance or the evidence of P.W.1 which is self serving and interested, will not suffice; but, sufficient proof is required which, in the considered opinion of the Court, is not available in this case. Hence, the plaintiff will not be entitled to say that she was ready and willing to perform her part of the contract."

We have heard Shri V. Balachandran, learned counsel for the petitioner and Shri V. Prabhakar, learned counsel for the respondent and scanned the record.

In our view, the detailed reasons recorded by the High Court for coming to the conclusion that the petitioner had failed to plead and prove that she was ready and willing to perform her part of the agreement are legally correct. In paragraph 7 of the plaint, the petitioner did aver that she was ready and willing to perform her part of the agreement but it was not pleaded that she had sufficient funds for paying the balance consideration or that she had offered to pay the amount to the respondent.

Therefore, it is not possible to find any fault with the findings and the conclusion recorded by the Division Bench of the High Court and the impugned judgment does not call for interference under Article 136 of the Constitution.

With the above observations, the special leave petition is dismissed.