Umanarayan and Others vs Sant Kumar

Alok Aradhe, J.—This appeal is by the defendants, which was admitted on following substantial questions of law: (i) Whether the absence of readiness and willingness on the part of the plaintiff, is liable to be inferred on account the plaintiff putting an additional burden of diversion on the defendant (prospective vendor)?

(ii) Whether the lower Appellate Court has acted illegally in holding that time was not the essence of the contract?

Facts giving rise to filing of the appeal briefly stated are that on or about 4-4-1986, the plaintiff filed a suit seeking the relief of specific performance of the contract. The claim in the suit was based on the ground that the plaintiff had entered into an agreement with the defendant No. 1 dated 23-2-1983 (Ex.P/1) for purchase of 0.028 hectare of land for a consideration of Rs. 7,500/- and a sum of Rs. 1,500/- was paid as earnest money on 23-2-1983. It was agreed that on payment of remaining amount of sale consideration, the sale-deed would be executed upto 31-5-1983. It was pleaded by the plaintiff that he was ready and willing to perform his part of the contract, however, the defendants did not execute the sale-deed. Accordingly, the suit seeking the relief as aforesaid was filed.

The defendant No. 1 filed the written statement, in which inter alia it was pleaded that the defendant No. 1 was ready and willing to perform his part of the contract and the time was essence of the contract. However, the sale-deed could not be executed as the plaintiff was not in possession of sufficient funds.

The trial Court by the judgment and decree dated 29-1-1994 inter alia held that the plaintiff has failed to prove readiness and willingness to perform his part of the contract and that the time was essence of the contract as the sale-deed was to be executed on or before 31-5-1983- It was further held that the suit suffers from mis-joinder of parties. Accordingly, the relief of specific performance of contract was denied. However, the claim of the plaintiff for refund of the amount paid by way of earnest money along with the interest at the rate of 6% p.a. with effect from 1-6-1983 was decreed. The appellate Court vide impugned judgment dated 7-1-2004 inter alia held that time was not the essence of the contract and the plaintiff was ready and willing to perform his part of the contract. It was further held that defendants have failed to establish that the plaintiff was not in possession of sufficient funds to perform his part of the contract. Accordingly, the claim of the plaintiff was decreed.

Learned counsel for the appellants submitted that the agreement was executed on 23-2-1983 and the sale-deed was to be executed upto 31-5-1983. However, after a period of nearly two years and three months, notice dated 7-8-1985 (Ex.P/2) was sent by the plaintiff to the defendants asking them to execute the sale-deed. Thereafter, the suit was filed on 4-4-1986. It was further submitted that the sale-deed was not executed, as the plaintiff was not in possession of sufficient funds. It was also submitted that neither the agreement dated 23-2-1983 (Ex.P/1) nor the notice dated 7-8-1985 (Ex.P/2) contains a stipulation that the sale-deed was to be executed after the land was diverted. However, by way of amendment in the plaint, which was allowed by the trial Court on 20-4-1988. the plaintiff incorporated the plea that the sale deed was to be executed after diversion of land, which is afterthought and was not a condition of the agreement. It was further submitted that if a date is specified for execution of the sale-deed, some sanctity has to be attached to it. In support of his submissions, learned counsel for the appellants has placed reliance on the decisions in cases of Damroolal Harchand and others Vs. Laxminarayan Ramanujdas Brijpuria and others, , Gyaneshwar Vs. Smt. Moongabai @ Muneshwaribai and Another, Mrs. Saradamani Kandappan Vs. Mrs. S. Rajalakshmi and Others,

On the other hand, learned Senior Counsel for the respondent submitted that the Lower Appellate Court has rightly found that the plaintiff was ready and willing to perform his part of the contract. It is further submitted that in the facts of the case, the time was the essence of the contract. The findings recorded by the Lower Appellate Court are based on material available on record. In support of his submissions, learned Senior Counsel for the respondent has placed reliance on the decisions of the Supreme Court in the cases of Madamsetty Satyanarayana Vs. G. Yellogi Rao and Others, , Motilal Jain Vs. Smt. Ramdasi Devi and Others, , Parmanand Soni and Others Vs. Radhakrishna Dharmartha Private Trust and Others, and Laxman Tatyaba Kankate and Another Vs. Smt. Taramati Harishchandra Dhatrak,

I have considered the respective submissions made by learned counsel for the parties and have perused the record. From the perusal of the agreement (Ex.P/1), it is evident that it does not contain a stipulation that the sale deed would be executed only after the land in question is diverted. Similarly, in the notice (Ex.P/2), which was sent on behalf of the respondent/plaintiff, there is no mention that the defendants are under an obligation to get the land diverted. It is also pertinent to mention here that when a suit was filed on 4-4-1986, there was no averment made in the plaint that diversion was a condition precedent for execution of the sale deed. However, subsequently by way of an amendment which was allowed on 20-4-1988, the plea with regard to diversion of the land before the execution of the sale deed was incorporated for the first time, which is obviously an afterthought. The plaintiff was insisting on the performance of a condition which was not a part of the agreement. The plaintiff was not ready and willing to go ahead with the agreement on the terms and conditions stipulated therein. Therefore, it can safely be inferred that the plaintiff was not ready and willing to perform his part of the contract. Accordingly, the first substantial question of law framed by this Court is answered.

In Jamshed Kodaram Irani vs. Burjorji Dhunjibhai, AIR 1915 PC 83, it has been held that under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should take place within a reasonable time.

The aforesaid decision was referred to with approval by the Supreme Court in the case of Gomathinayagam Pillai and Others Vs. Pallaniswami Nadar, and it was held that fixation of period within which contract is to be performed does not make stipulation as to time essence of contract. In case of Govind Prasad Chaturvedi Vs. Hari Dutt Shastri and Another, it was held that if the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. The intention to treat time as the essence of the contract may be evidenced by circumstances which should be sufficiently strong to displace the normal presumption that in a contract of sale of immovable property stipulation as to time is not the essence of the contract. Similar view has been expressed in case of Indira Kaur and Ors Vs. Sheo Lal Kapoor,

In the case of Smt. Chand Rani (dead) by LRs. Vs. Smt. Kamal Rani (dead) by LRs., , it has been held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time, if the conditions are evident from the express terms of the contract, from the nature of the property and from the surrounding circumstances for example the object of making the contract. Similar view has been taken in the cases of K.S. Vidyanadam and Others Vs. Vairavan, and in Veerayee Ammal Vs. Seeni Ammal,

In the backdrop of aforesaid well settled legal position, facts of the case may be seen. The agreement (Ex.P/1) was executed on 23-2-1983. As per the terms and conditions of the agreement, the sale deed was to be executed upto 31-5-1983. However, the plaintiff gave a notice to the defendants after a period of two years and three months i.e. on 7-8-1985 and thereafter filed a suit on 4-4-1986. Thus, the suit has not been filed within the reasonable time. The conduct of the plaintiff, itself shows that time was not the essence of the contract as the plaintiff did riot file the suit within reasonable time. Accordingly, the second substantial question of law framed by this Court is answered. In view of preceding analysis, the judgment and decree passed by the Lower Appellate Court is set aside and that of the trial Court is restored. In the result, the appeal succeeds and is hereby allowed. However, there shall be no order as to costs.