Sri P. Purushotham Reddy and Another vs Pratap Steels Limited

B. Sudershan Reddy, J.—The defendants in OS No. 1159 of 1989 on the file of the V Additional Judge, City Civil Court. Hyderabad are the appellants. The respondent''s suit for specific performance has been decreed by the trial Court.

For the sake of convenience, the parties shall be referred to as plaintiff and defendants throughout this appeal.

On 31-10-1987 an agreement for sale was entered into between the defendants and the plaintiff, where under they agreed to sell and purchase the house property together with the land admeasuring 4820 Sq. Metres for a consideration of Rs.40,25,000/- (Forty lakhs twenty five thousands). In all a sum of Rs. 6 lakhs (six lakhs) has been paid by the plaintiff as and by way of earnest money. The plaintiff agreed to pay a further sum of Rs.2 lakhs (two lakhs) to the defendants as and by way of further earnest money before 15-12-1987. The balance of sale consideration of Rs.32,25,000/- (thirty two lakhs twenty five thousands) to be paid by the plaintiff to the defendants before the Registering Officer at the time of registration of the document.

The relevant recitals of the agreement, which may have an important bearing on the issues that arise for consideration, read as follows:

(1) ................

(2) ................

(3) It is hereby expressly agreed that the Vendors with at their own cost and on their own responsibility obtain, if necessary, exemption from the State Government under the provisions of the Urban Land (Ceiling & Regulation) Act, 1976 in respect of the entire house property, and also permission of the Competent Authority under the said Act, if necessary, for the sale of the said house property together with all the buildings standing thereon, which are the subject matter of this agreement, before the 30th June, 1988.

(4) ...................

(5) ...................

(6) .....................

(7) The time for obtaining the said exemptions and permissions will, if necessary, be extended by mutual agreement of both the parties. However if the Vendors are not able to get the said Urban Land Ceiling sanction within the stipulated period they shall return the said earnest money so paid by the purchaser within 3 months thereafter or 3 months after the expiry of such extended time, as the case may be, without any interest. If for any reason whatsoever the said amount of earnest money is not paid by the vendors to the purchaser within the stipulated period, the Vendors undertake to pay to the purchaser interest at 12% p.a. from the expiry of the said stipulated period till the entire amount is cleared, on the said amount or such balance thereof as may be outstanding. Apart from the refund of the said earnest money in the manner aforesaid the purchaser shall not have any claim or demand against the Vendors.

(8) .................

(9) It is hereby expressly agreed between the parties that if for any reason the requisite exemption/permission under the Urban Land (Ceiling and Regulation) Act, 1976 as aforesaid shall not be forthcoming by 30th June, 1988 or within such extended period as may be mutually agreed to, this agreement shall become inoperative and unenforceable and in such an event the Vendors shall refund to the Purchaser the said earnest money, paid by the Purchasers to the Vendors without any interest within a period of 3 months thereafter. Only thereupon the Vendors shall be at liberty to sell the said house property to any third party and the Purchaser shall have no right or claim demand or objection to the same.

We may also notice that earlier to Ex. A1-agreement for sale dated 31-10-1987 the parties have entered into an agreement for sale with regard to the same property on 26-9-1986. The total consideration as per the agreement was Rs.30 lakhs (thirty lakhs). An amount of Rs.3 lakhs (three lakhs) was paid in two instalments of Rs.51,000/- (fifty one thousands) and Rs.2,49,000/- (Two lakhs forty nine thousands) in March and September, 1986 under the said agreement for sale. As per the recitals, the defendants are required to obtain necessary permission for sale of the property as is required under the provisions of Urban Land (Ceiling and Regulation) Act, 1976 (for short ''the Act'') on or before 31-3-1987. It is not necessary to notice the further details and various terms and conditions incorporated in the said agreement for sale entered into by and between the parties. The fact remains that the first agreement entered between the parties dated 26-9-1986 came to an end on 31-3-1987.

We are also required to notice that the earnest monies paid under the first agreement was taken into consideration and a further sum of Rs.5 lakhs paid on various dates as per the terms of Ex. A1 agreement for sale dated 31-10-1987. A total amount of Rs.8 lakhs was paid by the plaintiff and in acknowledgment of receipt of the said amount, the defendants issued receipts Exs.A2, A3 and A4.

It is the case of the plaintiff that the defendants having received the advance money under Ex.A1 agreement for sale neither moved the Government for obtaining the requisite permission under the provisions of the Act nor the Income Tax authorities to obtain necessary clearance in order to execute the sale deed and register the same in favour of the plaintiff. The plaintiff at all points of time was ready and willing to perform its part of the contract. It is alleged that the defendants intended to take advantage of Clauses 7 and 9 of the agreement, whereby it is provided that in case, the defendants are not able to get the permission within the stipulated time or the extended period as may be mutually agreed, then the amount may be refunded with interest at 12% p.a. and the agreement can be avoided. According to the plaintiff, the said clauses are intended to safeguard the interest of the plaintiff and the plaintiffs are always willing to extend the time that may really be necessary for obtaining the permission. The said clauses are not intended to enable the defendants to take advantage of their own wrongs or inaction or complacency and to avoid the contract.

On 22-6-1988 the plaintiff addressed Ex.A5-letter to the first defendant granting him another one year time for arranging the exemption from the appropriate authorities. The said letter is sent under certificate of posting-Ex.A6. There is any amount of dispute about this letter and about which we shall advert to at the appropriate stage.

Meanwhile the first defendant wrote Ex.B4 letter dated 1-12-1988 informing the plaintiff company to the effect that Ex.A1 agreement stood cancelled even by 30-6-1988 as the required permission could not be obtained by 30-6-1988. Two cheques of Rs. 1 lakh (one lakh) towards the part refund of earnest money were enclosed along with the said letter. The plaintiff was required by the defendants to return Ex.A1 agreement and take back the balance of earnest money. This letter was returned with an endorsement Ex.B3 by the postal authorities that the plaintiffs factory at Patancheru was under lockout On 2-1-1989 the plaintiff addressed Ex.A7 letter to the first defendant referring to their earlier letter dated 22-6-1988 (Ex.A5) extending the period up to 30-6-1989 for obtaining the required permission from the Government as well as the Income Tax authorities. In this letter the plaintiff demanded to arrange to handover the possession of the said property". Immediately thereafter the plaintiff got issued two publications in the newspapers on 6-1-1989 (Exs.A10 and A11) informing the public that the plaintiff has entered into an agreement with the defendants for the purchase of the suit property. Thereafter the plaintiff filed the suit for specific performance of Ex.A1 agreement for sale on 29-6-1969.

The trial Court decreed the suit as prayed for.

In this appeal Sri Vilas Afzal Purkar, learned Counsel appearing on behalf of the defendants contends that the parties mutually agreed the time to be the essence of the contract under Ex.A1 agreement for sale. Since the defendants could not obtain the requisite permission from the Government under the provisions of the said Act by 30-6-1988, Ex.A1 agreement became inoperative and unenforceable. It is also contended that there is no evidence and material available on record to prove that the plaintiff was ready and willing to perform his part of the contract. The plaintiff did not have the requisite money at its disposal for completing the transaction as agreed under Ex.A1 agreement. Learned Counsel further contends that the plaintiff has approached the Court with a false plea and unclean hands and therefore, not entitled for the discretionary relief of specific performance and the suit is liable to be dismissed on that ground alone.

Sri P.M. Gopal Rao, learned Counsel for the plaintiff submits that under Ex.A1 agreement for sale time is not the essence of the contract. The plaintiff was always ready and willing to perform its part of the contract. The learned Counsel strenuously contends that the party committing default is not entitled to raise the plea of equity in its favour. It is the submission of the learned Counsel that the defendants cannot be permitted to take advantage of their own deliberate inaction in the matter of obtaining the requisite permission from the Government as well as the Income Tax authorities. The defendants are the defaulting parties. It is also contended by the learned Counsel that no permission as such was required to be obtained, since there is no restriction on transfer of any urban or urbanisable land if the building is within the ceiling area.

In view of the rival submissions, the first and foremost question that falls for consideration is as to whether under Ex.A1 agreement for sale, the parties have agreed the time to be the essence of the contract? In case of agreement for sale relating to immovable property, time is not the essence of the contract?

We have already referred in extenso to the terms and conditions incorporated in Ex.A1 agreement for sale. The defendant specifically agreed to the effect that "at their own cost and on their responsibility obtained exemption from the State Government under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976 in respect of the entire house property and also permission of the competent authority under the said Act, if necessary.... before 30th June, 1988." It is thus clear that the duty and responsibility is that of the defendants. The recitals in Ex.A1 agreement speak of exemption from the State Government as well as the permission of the competent authorities under the provisions of the said Act. Both the parties are aware that the declaration filed in the year 1976 under the provisions of the said Act by the defendants for the entire suit property was pending before the competent authority. The defendants obviously could not have executed sale deed until the adjudication and disposal of the declaration so filed by them before the competent authority and without obtaining exemption from the Government if necessary. Obtaining of permission from the Government obviously depended upon the result of the determination of the total extent of vacant land held by the defendants. Precisely for the said reason, the parties have agreed for extension of time for obtaining of the said exemptions and permissions by mutual agreement of both the parties. The parties have expressly agreed among themselves that if for any reason the requisite exemption/ permission under the Act is not forthcoming by 30th June, 1988 or within such extended period as may be mutually agreed to, the agreement shall become inoperative and unenforceable and in such an event the defendants shall refund to the plaintiff the earnest money paid by the plaintiff within a period of three months thereafter. Of course, the defendants were restrained from setting the said property to any third party without returning the earnest money as agreed, it is specifically agreed that apart from the refund of the said earnest money in the manner provided, the plaintiff shall not have any claim or demand against the defendants.

The question is as to whether the defendants made any effort or attempt at all for getting the necessary exemptions. The defendants obviously could not have filed an application for grant of exemption under the provisions of the Act until the disposal of the declaration filed by them and pending before the competent authority. No application for grant of exemption u/s 20 of the Act could have been filed by the defendants until the determination of the declaration filed by them. The declaration is disposed of by order dated 22-12-1989 i.e., after filing of the suit (the said proceeding is marked as Ex.A1 in CRP No. 1960 of 1996 which is being disposed of along with this appeal).

PW1 is the Senior General Manager of the plaintiff company. There is no whisper in his evidence that the defendants deliberately failed to prosecute the proceedings before the competent authority and Special Officer for expeditious disposal of their case. All that is stated in his evidence is that "the defendants did not produce the Income Tax clearance certificate and the Urban Land Ceiling Certificate. I have been asking but they were evading." On the other hand, the first defendant who is examined as DW2 in categorical terms stated in his evidence that he was pursuing the matter before the Urban Land Ceiling authority to get the matter decided. He was asked to wait for some time, since there were other cases pending before the authorities. He stated that "there was no delay on my part in providing any information regarding the suit schedule property." No doubt in the cross-examination he admitted that he did not file any application before the Urban Land Ceiling authority or before the Government seeking exemption to sell the land to the plaintiff. No such application could have been filed before the State Government in the absence of disposal of the declarations filed by the defendants. There is no other evidence available on record to conclude that the defendants have deliberately postponed the hearing of the declarations filed by them. There is no such allegation levelled by the plaintiff in any one of the notices exchanged by and between the parties. Even in the plaint a bear allegation is made that "the defendants neither moved the Government nor the Income Tax authorities to obtain necessary clearance for the same." In the circumstances, it is not possible to hold that the defendants deliberately and with a view to defeat the rights of the plaintiff under Ex. A1-agreement for sale did not prosecute the matter properly before the authorities.

On the other hand, it is the case of the plaintiff that there is no such permission required for completing the sale transaction under Ex. A1-agreement for sale. This plea of the plaintiff is totally untenable and unsustainable for more than one reason; firstly, that the parties have clearly agreed under Ex.A1 agreement for sale that the said permission is necessary for concluding the transaction, secondly, huge extent of land admeasuring 4820 Sq. meters could not have been alienated by the defendants without the clearance from the authorities under the provisions of the Urban Land Ceiling Act. It was necessary to determine as to what exactly the vacant land held by the defendants. Mere allegation that the whole of the land is protected and the sale deed could have been executed treating the whole of the property as the house property is totally unacceptable. This belated contention runs counter to the very recitals and covenants in Ex.A1 agreement.

The next question that fails for consideration is as to whether the parties have mutually agreed to extend the period for obtaining the requisite permission from the authorities. The sheet anchor of the case of the plaintiff is Ex. A5-letter purported to have been written by the plaintiff addressed to the defendants extending the time for obtaining the exemption.

Ex.A5 letter dated 22-6-1988 itself makes an interesting reading, it is addressed by the plaintiff to the first defendant. The title of the letter is ''extension of time for requisite exemption/permission under the Urban Land (Ceiling and Regulation) Act, 1976. It refers to Ex.A1 agreement for sale. It is admitted that the defendants were required to arrange the exemption/permission under the Act on or before 30-6-1988. The plaintiff in the said letter states that "we are still interested to give effect to the said agreement and hereby grant you another one year for arranging the said exemption from the appropriate authorities . You are requested to arrange the said exemption on or before 30th June, 1989. A plain reading of the said letter would make it clear that the plaintiff on its own accord extended the time by one more year for obtaining and arranging the exemption from the appropriate authorities.

We have already noticed that under Clause 7 of Ex.A1 agreement for sale both the parties have declared and agreed that the time for obtaining the said exemption and permission will, if necessary, be extended by mutual agreement of both the parties. The unilateral extension of time by the plaintiff by no stretch of imagination can be considered to be extension of time by mutual agreement of both the parties. Be that as it may Ex.A5 letter is alleged to have been sent by the plaintiff under certificate of posting (Ex.A6). It does not contain any letter number or dispatch number. It is alleged to have been sent from Ballabgarh Post office in Haryana. The defendants in categorical terms denied to have received any such letter. PW1 in his evidence says that he signed Ex.A5 letter at Delhi and the same was posted by the staff of his office. No explanation is forthcoming as to why the said letter has been dispatched from Haryana, though it was signed by PW1 at Delhi. The letter does not contain any dispatch number, Ex.A7 dated 2-1-1989 is another letter from the plaintiff addressed to the first defendant, wherein there is a reference to Ex.A5 letter. The plaintiff once again reiterated about extension of time for obtaining necessary permission. In the said letter, it is categorically stated that the plaintiff extended the said time period without putting any additional liability upon the defendants. It reads "we extend the said time period without any additional liability on you." This letter contains the despatch number and the same is sent under registered post acknowledgment due from Haryana. The defendants have received the said letter. In the circumstances, we find substantial force in the submission made by the learned Counsel for the defendants that Ex.A5 is subsequently got prepared and pressed into service by the plaintiff. The said letter does not contain any despatch number. The certificate of posting Ex.A6 does not disclose as to from which post office, the same has been dispatched. No explanation is offered by PW1 as to why the said letter has been sent from an obscure camp post office in Haryana while he admittedly signed the said letter at his Delhi office. These are all the circumstances which undoubtedly lend support to the plea taken by the defendants that they have never received Ex.A5 letter and the same has been brought into existence subsequently in order to suit the claim of the plaintiff.

Be that as it may, that unilateral extension of time by the plaintiff cannot be construed as agreement to extend the time by mutual consent. There is nothing on record to suggest that the defendants have positively responded to the same and accordingly agreed to such extension. No doubt in Ex.A7 letter dated 2-6-1989 there is a reference to Ex.A5 letter. But that itself is of no significance since Ex.A7 emanated by the plaintiff and obviously a reference is made about Ex.A5 to confer some legitimacy upon the same in order to show that such a letter was addressed by the plaintiff to the defendants. In Ex.A7 while extending the time, the plaintiff has set up entirely a new case requiring the defendants to "arrange to hand over the possession of the property by accepting ....balance payment" There is no clause in Ex. A1 agreement for sale for delivery of possession of the property sought to be purchased under any circumstances whatsoever. In Ex.A12 dated 12-1-1989 the defendants in categorical terms denied of their ever having received Ex.A5 letter mentioned in Ex.A7 dated 2-1-1989. The first defendant in categorical terms stated that he is not aware of the contents of Ex.A5, it is further averred that there were several, meetings between him and PW1 after 22-6-1988 and at no point of time PW1 mentioned anything about Ex.A5 letter. The circumstances would make Ex.A5 letter a suspicious one. These circumstances would clinchingly established that the parties never agreed mutually for extension of time, though Ex.A1 agreement provides for such extension of time by mutual agreement for obtaining the requisite permission.

Now the crucial question that falls for consideration is as to whether under Ex.A1 agreement for sale the parties have agreed the time to be essence of the contract? Under Clause 9 of Ex.A1 agreement for sale, the parties in specific terms agreed and declared that if for any reason the requisite exemption/permission under the Act is not forthcoming by 30th June, 1988 or within the said extended period as may be mutually agreed to, the agreement shall become inoperative and unenforceable. The only obligation on the part of the defendants is to refund the earnest money without any interest within a period of three months. We have already adverted to Clause 7 of the agreement. A combined reading of Clauses 7 and 9 of the agreement for sale would make it abundantly clear that the parties have agreed the time to be the essence of the contract. Ex.A1 agreement even provides for the consequence in case the permissions are not forthcoming by 30th June, 1988 or within such extended period as may be mutually agreed to. Nothing is left to any guesswork.

In Smt. Chand Rani (dead) by LRs. Vs. Smt. Kamal Rani (dead) by LRs., , a Constitutional Bench of the Supreme Court after referring to its earlier decisions observed that an intention to make the time as the essence of the contract must be expressed in unequivocal language. There is no presumption as to time being the essence of the contract "even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are: (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example: the object of making the contract.

In K.S. Vidyanadam and Others Vs. Vairavan, , the Supreme Court held that the Court should look at all the relevant circumstances including the time-limit specified in the agreement and determine whether its discretion to grant specific performance should be exercised. The time limit prescribed by the parties in the agreement has its own significance and value, it would not be reasonable to say that because the time is not made the essence of the contract, the time limit specified in the agreement has no relevance and be ignored altogether. It is observed that "we are inclined to think that the rigor of the rule evolved by Courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so."

It is clear from the reading of the judgment of the Supreme Court that the Courts should bear in mind that when the parties agree and prescribe certain time-limit for taking steps by one or the other party, it must have some significance and that the said time-limit cannot be ignored altogether on the ground that time has not been made the essence of the contract. It is not necessary to state in the agreement itself that time to be the essence of contract. The express covenants themselves in the contract may disclose the same.

In the facts and circumstances of the case, is it possible to hold that the time limit specified under Ex.A1 agreement for safe has no significance or meaning? It is not for nothing the parties have agreed and accordingly specified the period within which the transaction is required to be completed. Clauses under the agreement even provides the consequence in case if for any reason the requisite exemption/permission is not forthcoming by 30th June, 1988 or within such extended period as may be mutually agreed to. The consequence is that the agreement will become inoperative and unenforceable. In such view of the matter, we have no doubt whatsoever to hold that the parties have specifically agreed the time to be the essence of the contract.

Sri P.M. Gopal Rao, learned Counsel for the plaintiff however, contends that the time was specified in the agreement for the benefit of the plaintiff. Clauses 7 and 9 were intended to safeguard the interest of the plaintiff. This submission of the learned Counsel runs counter to the covenants in Ex.A1 agreement for sale.

There is nothing on record to suggest that Clauses 7 and 9 were intended to exclusively safeguard the interest of the plaintiff. Parties were obviously aware of the rapid rise and escalation of the value of urban property. It is under those circumstances, both the parties have mutually agreed time to be the essence of the contract. Precisely for the said reason defendant No. 1 wrote Ex.B4 letter dated 1-12-1988 informing the plaintiff company that the agreement stands cancelled, as the ULC permission could not be obtained by 30th June, 1988. Two cheques of Rs. 1 lakh (one lakh) each towards part refund of earnest money were also enclosed along with the letter. The defendants required the plaintiff to return the cancelled agreement and take back the amount of earnest money. The said letter was however returned with an endorsement (Ex.B3) that the factory was under lockout. The fact remains that the said letter was sent by the first defendant addressed to the plaintiff under registered post acknowledgment due to the usual address of the plaintiff company at Patancheru of Medak District where its Administrative office is also located. But for whatever reasons, the letter remained unacknowledged. PW1 in his evidence admitted that the office of the plaintiff company was functioning from Nazeer Manzil, Hyderabad during the lockout period.

But the management did not inform the postal authorities to redirect the post from the Administrative office at Patancheru to their office at Nazeer Arcade at Hyderabad, ft is difficult to believe that the management did not take any steps whatsoever to redirect the posts addressed to their Administrative office to their functioning office at Hyderabad. We are not inclined to accept the submissions made by the learned Counsel for the plaintiff that Ex.B4 letter is the creative evidence. On the other hand there is a presumption dispatch of a letter sent under registered cover, if the same is returned back with a postal endorsement that the same could not be served on the addressee for whatever reasons. No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the Court to rebut the presumption by showing that the address mentioned on the cover was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same. The burden to rebut the presumption lies on the party, challenging the factum of dispatch of letter itself. In the instant case, the plaintiff miserably failed to discharge his burden, as he failed to place material before the Court to show that the endorsement made by the postal authorities was wrong and incorrect. Mere denial by the plaintiff in the circumstances of the case was not sufficient to rebut the presumption.

Sri P.M. Gopal Rao, learned Counsel for the plaintiff however submits that the breach, if any, in complying with the terms and conditions of the agreement is on the part of the defendants. The defendants having committed the breach by diligently not prosecuting the matter to get the requisite permission cannot take advantage of their own default to avoid agreement for sale. It is contended that the agreement is voidable at the option of the plaintiff but not at the instance of the defendants. The learned Counsel relied upon the Doctrine that "a man shall not be permitted to take advantage of a condition which he himself brought about." Learned Counsel relied upon the Judgment of the Privy Council in New Zealand Shipping Company Limited v. Societe Des Ateliers Et Chantiers De France 1919 App Cas 1, in support of his submission. The Privy Council succinctly laid down the principle which is to the following effect:

"It is undoubtedly competent for the two parties to a contract to stipulate by a clause in it that the contract shall be void upon the happening of an event over which neither of the parties shall have any control, cannot bring about, prevent or retard. For instance, they may stipulate that if rain should fall on the thirtieth day after the date of the contract, the contract should be void. Then if rain did fall on that day the contract would be put an end to by this event, whether the parties so desire or not. Of course, they might during the currency of the contract rescind it and enter into a new one, or on its avoidance immediately enter into a new contract. But if the stipulation be that the contract shall be void on the happening of an event which one or either of them can by his own act or omission bring about, then the party, who by his own act or omission brings that event about, cannot be permitted either to insist upon the stipulation himself or to compel the other party who is blameless, to insist upon it, because to permit the blameable party to do either would be to permit him to take advantage of his own wrong, in the one case directly, and in the other case indirectly in a roundabout way, but in either way putting an end to the contract.

The application to contracts such as these of the principle that a man shall not be permitted to take advantage of his own wrong thus necessarily leaves to the blameless party an option whether he will or will not insist on the stipulation that the contract shall be void on the happening of the named event. To deprive him of that option would be but to effectuate the purpose of the blameable party. When this option is left to the blameless party, it is said that the contract is voidable, but that is only another way of saying that the blameable party cannot himself have the contract made void, cannot force the other party to do so, and cannot deprive the latter of his right to do so. Of course, the parties may expressly or impliedly stipulate that the contract shall be voidable at the option of either party to it."

Reliance is also placed upon the Judgment of the Madras High Court in Ramani Ammal Vs. Susilammal, , in support of the submission that even in respect of the default committed both by plaintiff and the defendant there is no bar to grant of specific performance.

The case on hand is not one of breach of terms and conditions by the defendants. For the reasons beyond the control of the defendants they could not obtain the requisite permission within the specified time in the agreement and the agreement as mutually agreed by and between the parties became unenforceable. It would have been a different story altogether had the defendants deliberately postponed the hearing and adjudication of their declaration under the provisions of the said Act. It is not as if the defendants created any situation to their advantage by their own act of omission or commission. There is no evidence let in by the plaintiff in this regard to the effect that the defendants deliberately postponed the adjudication of their declaration and did not take any steps for obtaining the permission.

Admittedly, the Special Officer and competent authority, Urban Land Ceiling, Hyderabad disposed of the declaration filed by the defendants by order dated 22-12-1989 (additional evidence marked as ExA1 in IA No. 515 of 1995 filed after the disposal of the suit). We are required to notice that by the time, the plaintiff has already filed the suit on 29-6-1989. It is not as if the declaration filed by the defendants has been disposed of even prior to the filing of the suit and the same was concealed by the defendants. From the perusal of the order passed by the competent authority it does not appear as if the defendants were responsible in any manner whatsoever for the delay in disposal of the case by the competent authority. The Enquiry Officer appears to have submitted the report only on 28-10-1989 as is evident from one of the references in the order. Proceedings before the Competent Authority could not have been completed in the absence of the verification report.

Here is the case where the parties mutually and expressly agreed that the contract becomes unenforceable in the event of the defendants failing to get the requisite permission on or before the specified time. It is true there is a provision for mutual extension of period. But the same did not materialise. For the aforesaid reasons, we are of the considered opinion that the decisions upon which reliance is placed by the learned Counsel for the plaintiff are of no help to resolve the issue that arises for consideration.

The next question that falls for consideration is as to whether the plaintiff has approached the Court with a false plea and unclean hands and therefore not entitled for the discretionary relief. We have already discussed about Ex.A5 letter purported to have been sent by the plaintiff from an obscure camp post office in Haryana under which the plaintiff on its own accord unilaterally extended the time for obtaining the necessary permission. The said letter is obviously brought into existence subsequently. If the said letter is excluded from consideration, the plaintiff for the first time moved in the matter vide letter Ex.A7 dated 2-1-1989 i.e., more than six months after expiry of specified time under Ex.A1 agreement for sale. The suit itself has been filed without even issuing prior notice to the defendants. It is very well settled that the party who seeks to avail of the equitable jurisdiction of a Court and specific performance being equitable relief, must come to the Court with clean hands. The party who makes false allegation does not come with clean hands and is not entitled to the equitable relief. (See Lourdu Mari David and others Vs. Louis Chinnaya Arogiaswamy and others, ).

The plaintiff in the instant case deliberately avoided to receive Ex.B4 letter sent by the defendants. The plaintiff brought Ex.A5 into existence and had taken a false plea. These are the relevant facts, which we are required to take into consideration. In the circumstances, we hold that the plaintiff has not approached the Court with clean hands. Therefore, it is not entitled for the equitable relief of specific performance from this Court.

Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Court as to decreeing specific performance. The Court is not bound to grant specific relief merely because it is lawfully to do so. It is true, the discretion conferred upon the Courts is not arbitrary but is required to be exercised in a reasonable and sound manner guided by judicial principles. While exercising the discretion, the Court is required to meticulously consider all the facts and circumstances of the case. "The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff (See Parakunnan Veetill Joseph''s Vs. Nedumbara Kuruvila''s and Ors, ).

In the instant case, the agreement for sale has been entered into by and between the parties on 31st October, 1987. The total consideration under the agreement is fixed at Rs. 40,25,000/- (Forty lakhs twenty five thousands). It is an admitted fact that the parties have entered into the agreement for the first time in respect of the very same property on 26-9-1986. The total consideration was Rs. 30 lakhs (Thirty lakhs). The total consideration fixed at Rs.40,25,000/-(forty lakhs twenty five thousands) is in excess to a tune of Rs.10,25,000/- (Ten lakhs twenty five thousands) of the consideration fixed just a year ago under the agreement dated 26-9-1986. This itself would reveal the rapid rise in value of the urban property. We can safely take judicial notice that there has been further rapid increase in the price and value of the urban properties. Out of the agreed total consideration of Rs.40,25,000/- (Forty lakhs twenty five thousands) the plaintiff altogether paid a meager amount of Rs.8 lakhs (eight lakhs) i.e., less than l/5th of the total consideration. In the circumstances we are of the considered opinion that grant of specific relief in the instant case would be unjust. We accordingly refuse to exercise our jurisdiction to grant specific performance of Ex.A1 agreement for sale.

The next question that falls for consideration is as to whether the plaintiff has proved its readiness and willingness throughout to perform its part of the contract. No doubt in the plaint, it is averred that the plaintiff at all points of time was ready and willing to perform its obligation under Ex.A1 agreement for sale. In the written statement, it is specifically pleaded that the plaintiff had neither the money nor the plaintiff was otherwise ready and willing to proceed with the transaction as per the suit agreement at any time. PW1 in his evidence stated that the company has "means to pay the balance consideration at any time and now also we are ready to perform the contract by paying the amount." The plaintiff did not produce any concrete evidence in support of its assertion that it has the requisite money at its disposal and to pay the same to the defendants. There is nothing on record to show that the plaintiff had the money to pay the balance of consideration to the defendants. On the other hand, the order dated 14-10-1996 passed by the BIFR (marked as additional evidence Ex.B-9) reveals the state of affairs of the company. The BIFR declared the plaintiff company to be a sick industrial company within the meaning of Section 3(1)(o) of SICA (Special Provision) Act, 1985 and accordingly appointed IDBI as the operating agency u/s 17 of SICA to prepare rehabilitation report keeping in view the guidelines prescribed thereunder. In the said order, the plaintiff company has been directed not to alienate any of its assets in terms of Section 22-A of SICA. Practically its net-worth is negative.

It is very well settled and needs no reiteration in our hands that continuous readiness and willingness on the part of the plaintiff is the condition precedent to grant the relief of specific performance. Right from the date of the execution till the date of the decree the plaintiff must prove that he is ready and is always willing to perform his part of the contract. This circumstance is material and relevant and is required to be considered by the Court while granting or refusing to grant the relief (See N.P. Thirugnanam (D) by L.Rs., Vs. Dr. R. Jagan Mohan Rao and others, , and His Holiness Acharya Swami Ganesh Dassji Vs. Shri Sita Ram Thapar, ). The plaintiff miserably failed to establish its capacity to perform the contract. There is no evidence on record about its financial capacity and position to pay the balance of sale consideration. For this reason also we are not inclined to exercise our discretion to grant specific relief to the plaintiff.

For all the aforesaid reasons, we are of the considered view that the plaintiff failed to make out any case for grant of specific relief. Grant of any such relief to the plaintiff, in our considered view, would be oppressive and would result in serious injustice.

However, the plaintiff is entitled for the refund of earnest money of Rs.8 lakhs (eight lakhs) together with interest thereon at the rate of 12% p.a. The plaintiff is entitled for the return of the said amount in the following manner.

(a) interest @ 12% p.a. with effect from 26-9-1986 on a sum of Rs.3 lakhs (three lakhs) paid under the first agreement for sale which has been adjusted as the sale consideration under the second agreement.

(b) Further sum of Rs. 5 lakhs (five lakhs) together with interest @ 12% p.a. with effect from 31-10-1987 i.e., the date of execution Ex. A1 agreement for sale till realization.

(c) The amounts, if any, already deposited pursuant to the directions of this Court and the interest accrued thereon shall be given credit to.

The decree and judgment of the trial Court is accordingly set aside. The appeal is allowed with costs throughout.