Mahani Dibya vs Prahallad Swain

S.K. Ray, J.—This is a Plaintiff''s second appeal from the reversing decision of the Subordinate Judge of Puri in a suit for specific performance of contract.

The Plaintiff being in need of money sold the suit property to the Defendant under a registered sale deed dated 8-7.1964 for a consideration of Rs. 1500/ - and gave delivery of possession of the same to him. Contemporaneously, the vendee entered into an agreement with the Plaintiff, vendor, to recover the suit property to the Plaintiff for the same consideration of Rs. 1500/ - within two years therefrom, that is, on or before 8.7.1966. Pursuant to this agreement of reconveyance the Plaintiff offered money (Rs. 1500/ -) to the Defendant and demanded execution of a sale deed, but the Defendant, on some pretext or other, postponed the execution of the reconveyance deed and finally on 7.7.1966 refused performance of his part of the contract by accepting the money tendered and executing a sale deed in favour of the Plaintiff. Plaintiff, therefore, filed the present suit on 8.7.1966, immediately after expiry of the stipulation period Jar reconveyance. This is the Plaintiff''s case.

The Defendant in his written statement admitted to have executed the agreement for reconveyance for a consideration of Rs. 1500/., but denied the plaint allegations that the Plaintiff had approached him with the stipulated consideration amount several times and had requested him to reconvey the property after receiving the consideration of Rs. 1500/ - from her.

The trial Court decreed the suit holding that the Plaintiff was ready and willing to perform her part of the contract at least by 6.7.1966, if not earlier, but the Defendant refused to carry out his part of the contract.

The lower appellate Court reversed the decision of the trial Court on the sale ground that the Plaintiff did neither make any allegation in the plaint nor proved that she was continuously ready and willing to perform her part of the contract as required by Section 16, Clause (c) read with Explanations (i) and (ii) of the Specify Relief Act, 1963 (hereinafter referred to as the ''Act''). On perusing paragraphs 4 and 6 of the plaint and oral evidence adduced by the Plaintiff, he concluded that the Plaintiff'' has not specifically pleaded that she was ''continuously ready and willing to perform her part of the contract from the date of contract to the time of hearing of the suit'', although be found that the trial Court did not examine the evidence and give a clear and definite finding as to whether the Plaintiff was continuously ready and willing to perform her part of the contract from the date of contract till the date of hearing but seemed to have worked under the impression that even least minute offer of the money would fulfil the requirements of the law and, accordingly, held that it was amply borne out by the proved facts and circumstances that the Defendant was unwilling to abide by the terms of the contract though the Plaintiff was willing to perform her part by 8-7-1966 at the latest, if not earlier. He further found on an analysis of oral testimony adduced on behalf of the Plaintiff that till two months before the expiry of the stipulated period of two years: she was not in a position t(;) offer Rs. 1500}- to the Defendant and that clearly indicated that the Plaintiff was not ready with money at least for a period of one year and ten months after the date of the contract, that is 8-7-1964, and that, as such, it cannot be said that she was ready and willing to perform her part of the contract from the date of contract till the date of hearing.

The sole point, therefore, is whether the Requirements of Section 16(c) of the Act have been complied with. There can be no controversy that the Specific Relief Act, 1963 is applicable, and not the preceding old statute, as the contract, the specific performance of which is sought for, had been entered into subsequent to the commencement of the Act.

Before reading and construing the aforesaid statutory provision and analysing the preceding case law on the subject, it is proper to extract the relevant portions of the contract which is sought to be specifically enforced and paragraphs 4 and 6 of the plaint.

The contract is in Oriya and relevant portions thereof, when translated into English, run as follows:

Whereas you, the vendor, had sold, the "lands enumerated in the schedule to this document to us, the vendee, for a consideration of Rs. 1500/. and on receipt of the consideration money executed and registered sale deed No. 9025 before the Sub-Registrar; and put us in possession thereby making us the owners in possession of the said land; whereas you, the vendor, expressed your desire to take back the vended properties on repayment of the consideration money within a period of two years from today, we, having agreed to that proposal hereby convenient that on receipt of the consideration money on 8-7-1966 on expiry of period of two years from today we would execute a deed of reconveyance. We also stipulate that if we decline to receive the consideration money within the period of two years, you, the ''vendor, will deposit the money in appropriate Court and with the help of the Court get a deed of reconveyance executed and take such damages from us on account of the breach of this contract.

The Plaintiff, being in need of money, had sold her land and, apparently, she could not be immediately ready thereafter to repurchase the property. She, therefore, stipulated for two years'' time to be able to repurchase the property, the last date 8-7-1966. The contract was, therefore, one for reconveyance, if money was tendered at any time on or before 8-7-1966. To insist on the Plaintiff being ready with money for repurchase from the very date of commencement of contract will make fixing a period for performance of her part of the contract meaningless.

The Plaintiff in paragraphs 4 and 6 her plaint averred that she offered Rs. 1500/ - to the Defendant, pursuant to the aforesaid agreement, a number of, times, but the latter instead of receiving the amount postponed it on some pretext or other from time to time and ultimately refused on 7-7-1966 to receive the money and to execute the deed of reconveyance. Accordingly, she prayed that Rs. 1500/ - may be taken from her and the Defendant be directed to execute the sale deed in her favour and if the Defendant refused to execute the sale deed, the said sum of Rs. 1500/ - may be accepted from her and the sale deed be executed by the Court and also possession be delivered to her through Court. In paragraph-6 of the plaint the, first date of cause of action has not been noted but-only, the last date of cause of action, i. e. 7-7-1966, has been mentioned.

Section 10 of the Act provides that except as otherwise provided in Chapter II thereof the specific performance of any contract may be enforced and until and unless the contrary is proved, the Court shall presume that the'' breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money. Section 16 which is an exception to Section 10 deals with personal bars to reliefs for specific performance of contract. Such portions of the section as are relevant for the present purpose are extracted hereinbelow:

Personal bats to relief: Specific performance of a contract cannot be enforced in favour of a person:

(a) ...; or

(b) ...; or

(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him other than terms of performance of which has been prevented or waived by the Defendant.

Explanation: For the purposes of clause(c):

(i) where a contract involves the payment of money, it is not essential for, the Plaintiff to actually tender to the Defendant or to deposit in Court any, money except when so directed by the Court;

(ii) the Plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.

The corresponding, section of the old Act was Section 24 which did not incorporate the extracted portion of Section 16 of the Act; but Forms 47 and 48 of the First Schedule of the Code of Civil Procedure, 1908 which were parts of the Code since its commencement were in the field and prescribed two alternative modes which the Plaintiff had to adopt in his plaint for specific performance of contract. According to them the Plaintiff had to aver either that he has been and still is ready and willing-specifically'' to perform the agreement on his part of which the Defendant has had notice or, that he is still ready, and willing to pay the purchase money of the said property to the Defendant.:

Before the, present Act came on the statute book various judicial decisions laid down the requirements which a Plaintiff in a suit for specific performance of contract of sale had to comply, in order to succeed.

In the case of Ardeshir H. Mama v. Flora Sassoon AIR 1928 P.C. 208, there was a contract for sale of immovable property. Before commencement of trial the Plaintiff''s solicitor intimated that the Plaintiff was no longer interested in specific performance of the contract and would claim damages for breach of the contract. The trial Court granted damages, but in appeal the High Court reversed it holding that there was no binding agreement between the parties. The Privy Council also confirmed this finding of the High Court. But while discussing about the legality and propriety of the trial Court''s order in amending the suit to one for damages, their Lordships of the Judicial Committee said:

The Plaintiff had to allege, and if that fact was traversed, he was required to prove a continuous readiness and willingness from the date of contract to the time of heating to perform the contract on his part.

However, their Lordships indicated in the middle para of second column at page 209 that if the Plaintiff alleged that he had throughout been ready and willing, that allegation would import a continuous readiness and willingness up to the time of hearing.

In the case of Gomathinayagam Pillai and Others Vs. Pallaniswami Nadar, , the facts were that Appellants 1 and 2 agreed to sell the suit property to the Respondent for Rs. 15,000/ - and odd and received Rs. 1,000/ - and odd in part payment thereof. No time was stipulated for completion of the sale. A month later the Appellants received a further sum of Rs. 2,000/ - from the Respondent and executed a document stating that the sale deed would be executed on or before 15.4.1959. As no sale deed was executed on the latter date another agreement was executed stipulating that the sale would be effected within 30-4-1959. The second default also occurred. Thereafter, the Appellants addressed a letter to the Respondent stating that as the time was the essence of the agreement and since the Respondent had failed to carry out the agreement it stood cancelled. Thereafter as the applicants agreed to sell the property to another person the Respondent deposited the balance amount of the agreed consideration in bank and called upon the Appellants to execute the sale deed with in three days and as it was not done, the suit was filed for specific performance. The trial Court found that the Plaintiff was not ready to complete the sale by 30-4-1959 and committed default by not carrying out the contract on that date and that even thereafter he was not willing to have the contract completed. This finding was accepted by the High Court and also by the Supreme Court. From the discussion of the merits of the case made by the Supreme Court in paragraphs 7 to 12 of the judgment it appears that their Lordships were considering the readiness and willingness of the Plaintiff to execute the sale deed on 30-4-1959. In other words, the relevant date with reference to which readiness and willingness was to be considered was the date by which the contract was to be completed or a reasonable period thereafter when the time was not the essence of the contract. This was a case of contract for sale of property where time had been fixed for effecting sale.

In the case of Quseph Varghese v. Joseph Aley and Ors. 1969 (1) S.C.C. 539, their Lordships dealt with a suit for specific performance of contract filed by the Plaintiff on the basis of alleged agreement between him and the first Defendant under which the latter was to reconvey the property sold for the very price. Dealing with the legal requirements which the Plaintiff in a suit for specific performance of contract was to conform to, they referred to forms 47 and 48 of the First Schedule of the CPC and said:

In a suit for specific performance it is Incumbent on the Plaintiff not only to set out agreement on the basis of which he sues in all its details, he must go further and plead that he has applied to the Defendant specifically to perform the agreement pleaded by him but the Defendant has not done so. He must further plead that he has been and is still ready and willing to specifically perform h is part of the agreement. Neither in the plaint nor at any subsequent stage of the suit the Plaintiff has taken those pleas.... It is well settled that in a suit for specific performance the Plaintiff should allege that he is ready and willing to perform his part of the contract and in the absence of such an allegation the suit is not maintainable.

Same view has also been taken by this Court in a series of cases, always referring to the Privy Council decision in Ardeshir''s case'' as the leading case on the point.

On a reference to forms 47 and 48 of the First Schedule of CPC it appears that what the law required the Plaintiff to state in the plaint was that he never gave up his desire to enforce his contract and that on the date of suit and thereafter he was still ready and willing to perform his part of the contract. The decided cases referred to above also are to the same effect.

Next question is what sort of recital is needed in the plaint to amount to a compliance of the aforesaid legal requirement. Some Courts have taken a liberal view of the matter and have held that it would be sufficient compliance if the Plaintiff indicated within the four corners of his plaint that he has been treating the contract as subsisting all along and he is still ready and willing to perform his part of the contract. This averment can be made in various forms (see the case of Bhagaban Parida v. Hari Bal and Ors. 1971 (1) C.W.R 535.

The plaint allegations of readiness and willingness to perform her part of the contract having been traversed it is for the Plaintiff to prove the same. It has been held in the case of R.C. Chandiok and Another Vs. Chuni Lal Sabharwal and Others, , that:

.... Readiness and willingness cannot be treated as a strait-jacket formula. These have to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned....

In the case of S.P. Narayanaswami Pillai v. Dhanakoti Ammal AIR 1867 Mad. 220, it has been held:

In my view when time is provided for performance, readiness and willingness on the part of the person seeking performance can only mean that on his part he has throughout the period kept the contract as a subsisting one with a preparedness to fulfil his obligations and accept performance when the time came. This does not mean that the purchaser should besides show that he had command of the necessary finance throughout the life of the contract. Such an insistence will make the fixing of a time for performance meaningless.

At page-223 their Lordships proceeded to say:

Failure to find money or prove possession of money before the time for performance has arrived can never be taken as a breach entitling the vendors to resile from the contract.

In the case of Jitendra Nath Roy Vs. Sm. Maheswari Bose, , their Lordships have said:

In my opinion this means that the Plaintiff must allege and prove that he had taken all the essential steps which he was required to take under the agreement for sale when he filed his suit. ''Readiness and willingness'' has also to be considered from another point'' of view namely whether the Plaintiff as a purchaser was in a position to pay the money and take the conveyance in terms of the contract. This, however, does not mean that the purchaser has gut to put the money by and be able to show that he had command of the necessary finance throughout the life of the contract.... In my opinion, if the Plaintiff can show that he was in a position to raise the money required at or" about the time when the contract was to be performed he discharges the obligation of proving readiness and willingness so far as the financial aspect is concerned....

In the case of Kandaswami Mudaliar Vs. Munuswamy Udayar and Others, , referring to a Plaintiff''s readiness and willingness to perform his part of the contract in a suit for specific performance of contract, their Lordships have said:

.... In other words, the Plaintiff will not lose his right to get specific performance merely because he had not the necessary funds before the-last date provided under the contract but he will not be entitled to specific performance if he was not ready and willing to perform his part of the contract. Thus it is clear that it is not essential that the Plaintiff should have money ready in contracts where time is not the essence but should always stand by and be ready and willing to perform his part of the contract.

(Quoted from head _note)

In Ramesh Chandra Chandiok''s cases, the Appellant agreed to purchase from the Respondent a lease-hold plot on 18-7-1955 of which the Respondent was not in possession nor had he obtained a lease deed from the Government. But the earnest money had been received from the Appellant by the Respondent and stipulation was for payment of the balance consideration within a specified time. One of the conditions of the lease deed ultimately executed by the Government in favour of the Respondent was that the lessee had to obtain sanction from the Government before transfer. The Respondent being aware of this condition informed the Appellant that the sale deed would be executed only after obtaining the required sanction. The Respondent without taking any step for applying for sanction demanded payment of the balance consideration money within a specified time in default whereof Appellant would forfeit the earnest money. The Respondent subsequently obtained the required sanction on 20-11-1956 but without informing the Appellant cancelled the contract. On these facts the High Court held that after March, 1956 there was nothing to show that the Appellant had any funds. The Supreme Court, however, observed that the relevant period for determining whether the Appellant was in a position to pay the balance of the sale price was after November, 1956 when sanction had been obtained by the Respondent for transfer of the plot from the Rehabilitation Ministry. Their Lordships say:

.... We are, therefore, unable to accept that the Appellants, who had all along been trying their utmost to purchase the plot, did not have the necessary funds or could not arrange for them when the sale deed had to be executed and registered after the sanction had been obtained.

They further say at page 1242 that:

.... Readiness and willingness cannot be treated as a strait-jacket formula. These have to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned.

On a consideration of the aforesaid decisions, which have dealt with pre-Act contracts of sale, the following principles appear to me to have been laid down:

(a) In case of a simple contract for sale, without any time fixed for its performance, the Plaintiff must allege and, if traversed, prove that he was ever ready and willing to perform the contract, in other words, he has an along been treating the contract as a subsisting one and that he did not abandon it, and if he is the intending vendee, he must further allege and prove that he was ready with money.

(b) In case of a contract for sale, where time has been fixed for performance by a party to the contract, he must also allege and, if traversed, prove that he did not abandon the contract at any time since it was entered and further that be had, if he be the intending purchaser, money ready for payment when the time came or in accordance with the terms of contract for payment. In the latter case, he need not show that he had command of the necessary finance throughout the life of contract irrespective of the fact that a time has been fixed in the contract for payment.

(c) In both the aforesaid kinds of contract the Plaintiff must further aver that he is still ready and willing to perform his part of the contract. If the Plaintiff is the purchaser, be must show his readiness with the consideration money from the time fixed for payment till the date of hearing.

(d) Readiness and willingness have to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned.

(e) There is no cut and dried formula for making averment of readiness, and willingness. The law will be treated as complied if on a construction of the plaint in its entirety, such a conclusion can be reasonably arrived at.

Section 16(c) read with Explanations (i) and (ii) of the Act have incorporated some of the aforesaid principles. On a bare reading of the relevant provisions of Section 16 as already extracted it appears that Clause (c) comprises of two parts. First part deals with persons who fail to aver and prove that they have performed the essential terms of the contract which are to be performed by them, and the second alternative part speaks of persons who have failed to aver and prove that they always have been ready and willing to perform their part of the contract which are to be performed by them. The Explanation makes the position clear by stating that for the purpose of Clause (c) the Plaintiff must aver, performance of, or readiness and willingness to perform, the contract according to its true construction. When this averment has been made and proved, that would be a sufficient compliance of Clause (c), even though the Plaintiff, if a purchaser, has not actually tendered the money to the Defendant. Thus where a contract specifies an ultimate date for performance by an intending purchaser and the Plaintiff avers and proves that before that last date he has tendered money and demanded execution of the sale deed, all the requirements of Section 16(c) of the Act would appear to be sufficiently complied with.

The present case involves a contract for sale where under a definite period has been fixed for performance of the contract. As per its term the Plaintiff is entitled to make payment at any time before the period expires. Paragraphs 4 and 6 of the plaint contain averments indicating that the Plaintiff treated the contract, all through its life, as a subsisting one and, shortly before the expiry of the period providing for its performance she performed her part by tendering the money and calling upon the Defendant to execute the sale deed, and that the Defendant for the last time refused to perform his part on 7-7-1966. She, therefore, filed her present sui t for specific performance of the contract on the next day, i. e., on 8-7-1966. As the finding of the lower appellate Court stands, the Plaintiff has been able to prove that she had the necessary funds sometime before the last date fixed under the contract for its performance and showed her readiness and willingness to perform her part 10 it by tendering the same to the Defendant more than once before expiry of the last date specified for payment. In other words, the Plaintiff has not only averred but also proved that she performed her part under the contract before the period fixed under it had run out. Her institution of the present suit on the day following the day of refusal by the Defendant to perform his part of the contract on the aforesaid averments is also dearly indicative of her continuing readiness and willingness to perform her part of the contract till the date of hearing. Though the Plaintiff had not the command of necessary finance throughout the life of the contract, that would not amount to a breach of the contract so as to entitle the Defendant to resile from it as it is not a legal requirement, in view of the case laws noticed above and Section 16 of the Act, that she has got to put the money by and be able to show that she had command of the necessary finance throughout the life of the contract to prove her readiness and willingness to perform her part of the contract. The learned lower appellate Court was undoubtedly in error in saying that the Plaintiff having failed to prove that she had necessary funds throughout the life of the contract must necessarily be non-suited. That is a wrong view of law. In my opinion, the Plaintiff has sufficiently complied with all the legal requirements, both in the matter of averment and proof.

In the result, the appeal must succeed. Accordingly, the judgment and decree of the lower appellate Court are set aside and that of the trial Court are restored.