Narasimhan vs Balammal

Srinivasan, J.—This revision petition is filed by the legal representative of the defendant in the suit O.S. No. 1798 of 1974 on the file of the

Fifth Assistant Judge, City Civil Court, Madras, against an order dismissing an application under S.28 of the Specific Relief Act to rescind the

contract. The suit was filed by the respondent herein for specific performance of an agreement dated 29-11-1973. Under the agreement the

consideration agreed was Rs. 12,300/-, out of which a sum of Rs. 500/- was paid in advance. It was agreed that the respondent should discharge

the mortgage over the property executed by the vendor, the father of the present petitioner. It was further agreed that the transaction should be

completed within three months from the date of the agreement and that after discharging the mortgage and paying certain taxes the balance should

be paid before the Sub-Registrar at the time of the registration of the sale deed. The respondent averred in the suit that in spite of her notice before

the suit, the defendant was not willing to perform his part of the contract and consequently the filing of the suit was necessitated.

The trial court held that the respondent was ready and willing to do her part of the contract and, she was entitled to a decree for specific

performance.

With regard to the payment of the balance of sale price, the trial Court took note of the fact that under the agreement the plaintiff was to

discharge the mortgage debt and pay the arrears of tax and pay the balance only before the Sub-Registrar at the time of registration of the

document. Hence, the trial court did not think it necessary or proper to give a direction to the plaintiff to deposit the balance of sale price into

Court. Consequently a decree was passed by the trial Court, directing the defendant to execute a sale deed in favour of the plaintiff as per the

agreement dated 29-11-1973 for Rs. 12,300/-. The decree contained a clause that if the defendant failed to execute the sale deed, the plaintiff

was at liberty to take out necessary steps to have the deed executed by the Court.

This decree was passed on 8-7-1976. The plaintiff filed a petition for execution of the decree on 29-1-1979. The defendant died on 28-2-1979

before service of notice in the execution proceedings. The plaintiff filed a petition to bring the legal representatives on record and the petitioner

herein and his sister, who died later, were brought on record as legal representatives. The petitioner had filed a counter affidavit, contesting the

execution proceedings On 28-11-1980 the executing Court passed an order in the following terms:-

Enquiry and deposit of amount by 20-12.

The matter was posted to 20-12-1980. It is not in dispute that the respondent deposited a sum of Rs. 11,800/- on 18-12-1980 into Court within

the time specified. The said amount was calculated by deducting the sum of Rs. 500/- paid by way of advance at the time of the agreement from

the total consideration of Rs. 12,300/-

The execution petition was dismissed on 14-12-1981 on the ground that the relief was sought in the execution proceedings against the dead

person and, therefore, it was not maintainable. The executing Court made an observation that the decree holder had not deposited the sale price

into Court or disclosed his willingness obviously the deposit made on 18-12-1980 was not taken into account by the executing Court. However,

the respondent in this Court against the order dated 14-12-1981 filed C.R.P. No. 3754 of 1981 and it was allowed on 25-8-1982. The execution

proceedings were remanded to the executing Court with a direction to dispose of the same in accordance with law. That execution proceeding is

stated to be still pending.

The petitioner herein filed I.A. No. 15777 of 1986 in the trial Court u/s 28 of the Specific Relief Act for rescinding the contract. The application

was dismissed by the trial court. It is against the said order of dismissal that the present revision petition is filed.

Learned counsel for the petitioner contends that the deposit made by the decree holder on the direction given by the executing Court could not

be treated as a valid deposit, as the executing Court had no jurisdiction to extend the time for making deposit. According to learned counsel for the

petitioner, though the decree had not fixed any time for deposit of the consideration amount the decree holder ought to have made the deposit

within a reasonable time. Learned counsel points out that under the agreement of 1973 the parties had agreed to complete the transaction within

three months from the date of the agreement. It is submitted that the decree holder ought to have made the deposit within three months from the

date of the decree. It is urged that the decree holder was bound to discharge the mortgage before paying the balance of consideration and before

insisting upon the execution of a sale deed and the decree holder has not so far discharged the mortgage. It is not in dispute that the mortgage has

filed a suit O.S. No. 609 of 1980 and obtained a degree against the petitioner as well as the respondent on the foot of the mortgage. It is the

contention of learned counsel for the petitioner that the respondent not having performed her part of the contract and there being no explanation for

her inaction from 8-7-1976, the date of the decree till 29-1-1979 the date on which the execution petition was filed, the trial Court ought to have

rescinded the contract.

Learned counsel for the respondent contends that the decree had not fixed any time for making any payment or deposit and the decree holder

was entitled to make the payment within the period of limitation prescribed for executing the decree and she had filed the execution petition in time.

It is submitted by Learned Counsel for the respondent that on the direction given by the executing Court, she had made the deposit on 18-12-

1980 and the order of the executing Court was not challenged by the petitioner herein by was of revision or appeal and it is not now open to the

petitioner to contend that the deposit should not be considered to be a valid deposit. Learned counsel on both sides invited my attention to several

decisions on the question of recession of contract after passing of the decree. I will refer to them later.

Section 28 of the Specific Relief Act, in so far as it is relevant here, is in the following terms:-

28(1) where in any suit a decree for specific performance of a contract for the sale or lease of Immovable property has been made and the

purchaser or lessee does not, within the period allowed by the decree or such further period as the Court may allow, pay the purchase money or

other sum which the Court has ordered him to pay, the vendor or lesser may apply in the same suit in which the decree is made, to have the

contract rescinded and on such application the court may, by order, rescind the contract either so far as regards the party in default or altogether,

as the justice of the case may requite.

The section contemplates the failure on the part of the purchaser to pay the purchase money or other sum which the Court has ordered him to pay

within the period allowed by the decree or such further period as the Court my grant. Even though the section does not by its terms apply to a

decree where no time limit is fixed or no time is granted for payment of money, it is now well settled that the principles of the section would apply

even to cases in which the decree has not fixed any time for payment of money.

The statement of the law relating to the decrees in suits for specific performance is found in the decision of a Division Bench of this Court in

Abdul Shakar Sahib v. Abdul Rahib Sahib ILR 46 Mad 148. The Division Bench held that a decree in a suit for specific performance is in the

nature of a preliminary decree and the Original Court keeps control over the action. The relevant passage in the judgment is found at page 154

which reads thus:-

In my judgment, this decree is in the nature of a preliminary decree, the Original Court keeping control over the action and having full power to

make any just and necessary orders therein, including in appropriate cases the extension of the time. If I am wrong in this and the proper

interpretation of this decree is as contended for by the appellant, then, in my judgment, this decree is wrong and I should, if necessary, order that it

be set right by eliminating the condition which ought not to have been imposed upon the successful plaintiffs, except at a much later date and upon

definite refusal by him to complete. Even in that case such condition could only be imposed at the request of the defendant who, as I have pointed

out, has other various remedies.

This has been accepted to be the correct position in a number of subsequent decisions.

In Anandilal Poddar Vs. Gunendra Kr. Roy and Another, the Calcutta High Court has referred to the decision of the said Division Bench and

followed the principles of law laid down therein. Dealing with this question of recession of contracts, the learned Judge of the Calcutta High Court

has stated thus:-

The true character of a decree for specific performance has been discussed in the decisions of AIR 1923 Mad. 284 corresponding to ILR 46

Mad. 148 and Akshayalingam Pillai Vs. Avyambalammal and Others, . Schwabe C.J. in Abdul Shaker Sahib Vs. Abdul Rahiman Sahib and

Another, said that a decree for specific performance was in the nature of a preliminary decree and the original Court kept control over the action

and had full power to make any just and necessary orders therein, including in appropriate cases an extension of time. An application in the suit in

which the decree for specific performance was made was held competent in that case. In Akshayalingam Pillai Vs. Avyambalammal and Others, it

was held relying on the authority of the decision of the Judicial Committee in AIR 1928 208 (Privy Council) that the section of the specific Relief

Act both as to substantive law and practice should be interpreted in the light of the principles recognised by the English Courts, and if there is any

express divergence, then the Act will be strictly adhered to whatever be the English law. Secondly, it was held that a decree for specific

performance operates in favour of both parties. Thirdly, that the passing of the decree does not terminate the suit.

The Supreme Court had an occasion to deal with this aspect of the matter in H.I. Trust v. Hardas Mundhra AIR 1972 S.C. 1326. The

relevant observation found in paragraph 26 of the judgment, which reads thus:-

The fact that the decree did not fix time for completing the contract did not prevent either party from demanding performance from other party

within a reasonable time and thus made time essential, as the parties had that liberty before the decree was passed and the decree did not abrogate

that liberty in any way, and if the party from whom performance was demanded evinced by his conduct that he was unwilling to perform his part,

then it was open to the party claiming performance to rescind the contract and obtain an order from the Court adjudging rescission of the contract

and the ""decree"" thereon. We do not think, in case the Court comes to the conclusion that the party moved against has by conduct evinced an

intention not to perform his part of the contract, the fact that no time has been fixed in the decree would preclude it from adjudging the contract as

rescinded. The observation of Fry already quoted does not mean that unless a time is specified in the decree there can bono default. It only means

that if the conduct of the party moved against is equivocal, as order for rescission will be made only in default or completion within a specified time.

Nor can the observation quoted above from Halsbury''s Law of England bear any other construction.

A Division Bench of the Madhya Pradesh High Court laid down a similar proposition in Kanhaiyalal Vs. Mulla Abdul Hussain (deceased by

L.R.S.) and Others, . The Bench observed in the following terms:-

It is true that no time to pay or deposit was fixed in the decree for specific performance of the contract but the question of fixing the time by the

High Court in the decree passed in First Appeal No. 13 of 1962 did not arise as it was not an appeal against the decree for specific performance

of the contract but an appeal by the plaintiff only for enhancement of the compensation under S. 19 of the Specific Relief Act. When no time for

payment or deposit is fixed in the decree for specific performance the law implies a reasonable time within which the contract is to be performed.

When the (sic) if it should be performed within reasonable time. The decree or contract is silent as to the performance reasonable time depends

upon the facts and circumstances of each case. In the present case, the contract as stated earlier was entered into on 25th May 1958 and the sale

deed had to be obtained on payment of balance of consideration within a month. The non-payment of balance of consideration till 1-10-1959 is

understandable as the Madhya Bharat Tenancy and Land Revenue Act was in force under which the permission of the Collector was to be

obtained for sale of land and as no permission was obtained the defendant could not be said to be sit fault. But on 2-10-1959 the above Madhya

Bharat Tenancy and Land Revenue Act was repealed and Madhya Pradesh Land Revenue Code, 1959 came into force under which there was no

provision by which the permission of the Collector was necessary. As discussed above, the defendant had either any funds nor any means to make

the payment of consideration right from the year 1959 upto the date of passing of the decree for specific performance The defendant could not pay

the money even up to the date of decree rescinding the contract. Thus more than sufficient time had elapsed within which the defendant could have

made the payment but he failed to do so. In these circumstances, it could not be said that the contract was rescinded before the expiry of the

reasonable time, see Dinkerrai Lalit Kumar Vs. Sukhdayal Rambilas, .

In Abdul Shaker Sahib Vs. Abdul Rahiman Sahib and Another, Sahib a Division Bench took the view that it is a well established principle that

persons who desire the assistance of the Court in obtaining equitable relief must come quickly. In the present case not only the defendant failed to

come quickly but he absolutely failed to come forward with the amount at any stage of the relevant proceedings.

Bearing in mind the above principles if the facts of the case are looked into, it is seen that the respondent herein waited for nearly 3 years

before initiating the execution proceedings. There is no explanation on her part for inaction for such a long period. No doubt, under the decree, she

was not bound to pay any amount before the registration of the document. She could have insisted upon the registration of the document and paid

the balance of money in the presence of Sub-Registrar. Even for insisting on the registration of the document the respondent ought to have

performed her part of the contract under the agreement viz., the discharge of the mortgage which was outstanding. If she had paid the mortgage

amount and called upon the vendor to execute a sale deed and if the vendor failed to do so, the respondent could have filed an execution petition.

But, the respondent did not care to discharge the mortgage and allowed the mortgagee to file a suit and obtain a decree. In the absence of any

explanation whatever for the failure on the part of the respondent to perform her part of the contract from 8-7-1976 to 29-1-1979, the date on

which the execution petition was filed, it cannot be said that the respondent had proved her readiness and willingness to perform her part of the

contract. As the decree passed in the suit is only a preliminary decree and the Court has got control over the action, it would be open to the trial

court to pass appropriate orders. Learned counsel for the respondent places strong reliance on the factum of deposit of the money pursuant to the

direction of the executing Court. The deposit was actually made on 18-12-1980, Learned Counsel for the respondent contend, that the order,

directing the respondent to deposit, could be taken as an order fixing time for deposit or extending the time for deposit. That contention cannot be

accepted. The order directing the respondent to deposit the amount could be made only by the trial Court and not by the executing Court. The

executing Court had no jurisdiction to direct the respondent to deposit the money. As the respondent had not performed his part of the contract

within the reasonable time, the question of rescinding the contract has arisen.

Reliance is placed upon a decision in Vaiyapuri Reddy v. Sivalinga Reddiar 82 L.W. 703= (1970) I.M.L.J.-92. In that case the decree-holder

did not deposit the money within the time granted by the Court. An application was filed for rescinding the decree under S.28 of the Specific Relief

Act. While dealing with that application, the trial Court passed an order extending the period for making the deposit. That order was challenged by

way of revision in this Court. The Learned Judge dismissed the revision petition, upholding the order of the trial Court extending the period.

Learned Counsel contends that if the Court had the power to extend the time even on an application under S.28 of the Act, in the present case the

deposit made by the respondent long before the filing of the application under S.28 of the Act, in the present case the deposit made by the

respondent long before the filing of the application under S.28 of the Act should be treated as proper compliance with the decree. The fact in the

above case are entirely different from the facts of the present case. In that case the application was made to the trial Court which passed the

decree. That court had certainly jurisdiction either to grant further time or to rescind the decree. On the facts of the case the Court chose to grant

further time to the decree-holder for making deposit. That order was upheld by this Court. The learned judge held that op the facts of the case,

there was no positive refusal by the decree-holder to perform this part of the contract and in the absence of such positive refusal, the Court could

not rescind the contract. The support of the said conclusion, the learned judge relied on the following observation of Schabe, C.J. in Abdul Shaker

Sahib v. Abdul Rahiman Sahib ILR 46 Madras 148 at page 153.

...If the default is made by the purchaser in paying the purchase money there are several remedies open to the vendor. (1) He may on motion in the

action obtain an order fixing a definite time and place for payment and delivery over of the conveyance and title-deeds and can, after the expiration

of that time, levy execution for the amount, if not paid (2) He may apply by action in the action for an order to succeed in such a motion he has to

satisfy the Court that there has been a positive refusal to complete, which it may be observed in the present case, the respondent has certainly not

proved...

As regards the requirement of positive refusal by the decree-holder for the purpose of rescinding the contract, a later Division Bench of this

Court in Saraswathi alias Kalpana v. P.S.S. Somasundaram Chettiar 90 L.W. 454 expressed its dissent from the observations made in Abdul

Shukar''s case ILR 46 Mad 148. After referring to the earlier Bench Judgment, the Utter Bench observed thus:

Thus, the real point which the Bench considered was whether such a decree should be treated to be a preliminary decree, the trial Court retaining

full control over the suit, or it should be treated as a final decree. Only because the learned Judges took the view that such a decree must be

treated as a preliminary decree, they observed that if it was intended to be a final decree, the learned judge had no jurisdiction to pass such a final

decree. Therefore, the decision relied on by the learned counsel for the appellant cannot be said to have laid down any proposition that the trial

Court which passes a decree for specific performance has no jurisdiction at all to fix a time-limit for depositing the money due by the decree-

holder, provided the decree is trusted as a preliminary decree and the Court retains control over the entire action. If at all, the only passage in the

judgment of Wallace, J. with which we do not agree is that which regards the decree itself as a contract. Equally, we do not agree with the learned

Chief Justice when he observed that the vendor can succeed in his motion for rescission of the contract only when there has been a positive refusal

on the part of the vendee to complete and a default on his part to comply with the direction of the Court is not sufficient.

In my view, the opinion of the Division Bench in the later case is more correct and in accord with law than the opinion of the Division Bench in

the earlier case. I prefer to follow the Division Bench Judgment in the later case. It must also be pointed out that the judgment of the Division

Bench in Saraswathi alias Kalpana v. P.S.S. Somasundaram Chettiar, 90 L.W. 454, has been affirmed in so far as the principles of law are

concerned by the Supreme Court in K. Kalpana Saraswathi Vs. P.S.S. Somasundaram Chettiar, The principles of law laid down were left

undisturbed by the Supreme Court though the Supreme Court thought fit to grant some time to the decree-holder to deposit the balance of

consideration.

From the facts of the case it is seen that the proceedings before the Division Bench arose out of a decree for specific performance. The

plaintiff, who obtained a decree for specific performance, filed an appeal as against the directions contained in the decree, fixing a time limit for

depositing the amount of consideration. It was contended that the Court had no jurisdiction to fix a time-limit for depositing the consideration. That

contention was rejected by the Bench. The Bench, however, accepted the second contention that the court had no jurisdiction to include a default

clause in the decree. There was an application before the Bench for extension of time to pay the amount of consideration. That application was

dismissed by the Bench. The Supreme Court accepted that application and granted further time to the decree-holder for deposit of amount of

consideration. In other respects, the judgment of the Bench was affirmed by the Supreme Court.

On the facts of this case, the respondent has not proved her readiness and willingness to perform her part of the contract within a reasonable

time after the decree. Though the decree in the present case has not specified any time to deposit the amount, it was the duty of the plaintiff to have

performed her part within a reasonable time. The time taken, viz. 3 years and odd cannot be said to be reasonable by any standard. Hence, the

contract has to be rescinded as prayed for by the petitioner. The Court below is wrong in dismissing the application filed by the petitioner. The

application filed under S.28 of the Specific Relief Act will have to be allowed.

However, the amount having been deposited by the respondent in Court in December 1980, equity requires that she should be compensated

for the loss of interest which she has suffered. S.30 of the Specific Relief Act empowers the Court, which rescinds the contract, to provide for

compensation to the decree-holder. Hence the petitioner is directed to pay interest on the sum of Rs. 11,800 at the rate of 18% per annum from

18-12-1980 till the date of payment to the respondent by way of compensation. The petitioner prays for time to pay the amount. The petitioner

shall pay the amount to the respondent on or before 31-1-1989 failing which it is open to the respondent to execute this order and recover the

amount from the petitioner. The respondent is entitled to withdraw the amount of Rs. 11,800 already deposited by her in the executing Court. The

Civil Revision Petition is allowed in the above terms. The parties will bear their respective costs revision petition.