M/S Chetanya Buildcon Pvt. Ltd. v. Shri Lalit Mohan Tewari & Ors.

6. Based on the representations made by the defendants, the suit property is possessed by the defendants as under:-

(i) Defendant No. 1 is in actual physical possession of the entire ground floor in the suit property excluding the garage. It is stated that the Second Floor (Mezzanine & Barsati) is rented to another tenant and the rent from the same is being paid to Defendant No. 1.

(ii) Defendants No. 3 (a), (b), and (c) are in physical possession of the first floor, mezzanine floor and one garage on the ground floor.

(iii) Defendants No. 2, 4 & 5 are stated to not be in physical possession of any portion. It is stated that one garage in the suit property had been rented to the Punjab National Bank whereby the rent was being received by Defendant No. 4.

7. Subsequently, the defendants and the plaintiff with the intention to develop the suit property entered into a Collaboration Agreement dated 08.04.2005 wherein broadly the following was agreed between the parties:

(i) The plaintiff would demolish the suit property and thereafter develop a new building on the said land consisting of a Basement, Ground Floor, First Floor, and Second Floor with an open terrace, at its own costs and expenses, after getting the building plans sanctioned from the concerned authorities.

(ii) The defendants shall execute a Specific Power of Attorney/

Special Power of Attorney in favour of the plaintiff for the plaintiff to apply for necessary sanctions and approvals to the authorities concerned and the defendants shall also cooperate with the plaintiff in order to obtain the necessary sanctions from the concerned authorities. It was also agreed that the Builder/ Plaintiff shall give a written request in the said regard to the Owners/ First Party as to in whose name he wishes the Power of Attorney to be given.

(iii) In terms of clause 7, the plaintiff was entitled to pay a sum of

Rs 3,25,00,000/- to all the defendants in an arrangement as mentioned under the Collaboration Agreement for acquiring entire Basement, entire First Floor, entire Second Floor, entire terrace above the Second Floor and Car Parkings, (excluding one car parking of the defendant No. l) and 75% undivided impartible ownership rights in the proposed building to be constructed in the suit property. At the time of execution of the Agreement, the plaintiff paid the defendants a sum of Rs. 43,00,000/- under the Collaboration Agreement (Ex. P[1]) and the balance amount was payable within 12 months. Clause 7 of the Collaboration Agreement dated 08.04.2005 (Ex. P-1) reads as under: “7. That in addition to the Builder incurring the entire costs and expenses etc. shall pay to the Owner No.1 a sum of Rs.10,00,000/- (Rupee Ten Lacs only), Owner No. 3 a sum of Rs.1,20,00,000/- (Rupees One Crore Twenty Lacs Only) and to the Owner No. 2,[4] and 5 a sum of Rs.1,95,00,000/- (Rupees One Crore Ninety-Five Lacs Only) in equal shares (i.e. Rs.65,00,000/- to Owner No. 2, Rs.65,00,000/- to the Owner No. 4 and Rs.65,00,000/- to the Owner No. 5). The above payments shall form consideration against the rights, in the property to be transferred in favour of the Builder or its nominee(s). Out of the above consideration, the Builder has paid to the Owners/First Party the following payments as mentioned below, as earnest money:- Owner No. 1(Defendant no. 1): Rs 1,00,000/- (Rupees One Lac Only) vide pay order No. 906629 dated 08.04.2005 Owner No. 2(Defendant No. 2): Rs 10,00,000/- (Rupees Ten Lacs Only) vide pay order No. 906631 dated 08.04.2005 Owner No. 3(Defendant no. 3(a)): Rs 12,00,000/- (Rupees Twelve Lacs Only) vide pay order No. 906634 dated 08.04.2005 Owner No. 4(Defendant No. 4): Rs 10,00,000/- (Rupees Ten Lacs Only) vide pay order No. 906632 dated 08.04.2005 Owner No. 5(Defendant No. 5): Rs 10,00,000/- (Rupees Ten Lacs Only) vide pay order No. 906632 dated 08.04.2005 The receipt of which the Owners/First Party hereby admit and acknowledge. The payment of the balance consideration of Rs.2,73,00,000/- (Rupees Two Crores Seventy Three Lacs Only) shall be made by the Builder to the Owner No. 2, 3, 4 and 5, within 12 months from the date hereof. It is further specifically agreed that the fact that the property has not been substituted or mutated in favour of the Owners/ First Party in all or any relevant records, shall be of no consequence & it shall be obligatory for the Builder/ Second Party to make the said payment to the Owner No. 2 to Owner No. 5, under all circumstances. If the Builder/ Second Party fails to make the balance payment to the Owners/ First Party within 12 Months from the date of execution of this Agreement all its rights whatsoever by virtue of this agreement shall stand forfeited and the amounts paid by the Builder/ Second Party to the Owners/ First Party at the time of execution of this Agreement shall stand forfeited and the Builder shall be left with no rights, titles or interests whatsoever in the above said property irrespective of any amount spent by the Builder in any regard or manner whatsoever.”

(iv) In terms of clause 19 and 20 of the Collaboration Agreement

(Ex. P-1), after the receipt of the entire balance payment, the defendants No. 2,3,4, and 5 would not be entitled to any portion in the suit property. The defendant No. 1 under the collaboration agreement was entitled to the entire Ground Floor with one car parking and 25% undivided impartible ownership rights in the proposed building.

(v) Under the collaboration agreement (Ex. P-1), the defendant

No.1 also had to get the second floor vacated from the other tenant and had to deliver the possession of the entire property to the plaintiff.

8. On 08.04.2005, a Supplementary Agreement (hereinafter referred to as Supplementary Agreement-I) was executed between Defendant No.1 and the plaintiff wherein it was decided that in addition to the obligations of the plaintiff towards the defendant no. 1, the defendant No. 1 will be further entitled to a consideration of Rs 40,00,000/- and the entire basement floor of the proposed building. The plaintiff paid 9 lakhs vide pay order no. 906630 dated 08.04.2005 at the time of signing this agreement.

9. Another Supplementary Agreement dated 08.04.2005 (hereinafter referred to as Supplementary Agreement-II) was also executed between Defendant No.3 (a), (b) and (c) and the plaintiff wherein it was agreed that apart from the consideration of Rs 1, 20,00,000/- payable to defendant No. 3 (a), (b) and (c) in terms of the Collaboration Agreement, the defendant No. 3 (a), (b) and (c) will be entitled to an additional amount of Rs 1,76,00,000/-.

10. Thereafter certain communications took place between the parties regarding the payment and possession of the suit property and pursuant to this, a Second Supplementary Agreement dated 21.12.2006 (hereinafter referred to as Second Supplementary Agreement-I) was executed between the plaintiff and defendant No. 3(a) wherein consideration payable to defendants No. 3 ((a), (b), (c)) was enhanced to Rs 5,25,00,000/- by an additional consideration of Rs. 2, 29,00,000/-.

11. The Second Supplementary Agreement dated 29.12.2006 (hereinafter referred to as Second Supplementary Agreement-II) was executed between the plaintiff and Defendant No. 1 wherein the consideration payable to Defendant No. 1 was enhanced to Rs 85,00,000/- (i.e. Rs. 10,00,000 + 40,00,000/- + Rs, 35,00,000/-) along with the entire Basement, out of which Rs. 45 Lakhs was paid as earnest money to Defendant No. 1 vide 2 pay orders bearing No. 906629, 906630 dated 08.05.2005 and a cheque NO. 164987 dated 22/12/2006.

12. The plaintiff submits that despite signing of the main Collaboration Agreement and the repeated Supplementary Agreements, the defendants did not discharge any part of their obligations, including the defendants did not give any authority/attorney nor signed any documents to enable the plaintiff to mutate and convert the property from leasehold to freehold. The defendants also failed to settle their pending litigation/disputes.

13. The plaintiff submits that it has always been and is still ready and willing to perform its part of the obligations, which can be seen by the various pay orders issued by the plaintiff in terms of the Agreement.

14. It is stated that the plaintiff also issued a letter dated 23.03.2006 to all the defendants calling upon them to ask about the status of the portion of the suit property under the possession of a tenant.

15. It is submitted that the defendants have been acting only towards finding a cause to further bargain with the plaintiff and to further increase the consideration. It is stated that against the initial agreed consideration of Rs.3,25,00,000/-, the plaintiff has already paid a sum of Rs.87,00,000/- (which is about 27% of initially agreed sale consideration).

16. The plaintiff submits that it is still ready and willing to make the further payments as per the agreed terms, including the payments agreed to be paid under the various Supplementary Agreement, though the same were executed under duress.

17. Hence the present suit came to be filed.

WRITTEN STATEMENT BY THE DEFENDANTS

18. The defendants contested the suit by filing three written statements:-

(i) written statement on behalf of defendant No. 1; (ii) written statement on behalf of defendants No. 3(a), (b) and (c); and (iii) a joint written statement on behalf of defendants No. 2, 4 and 5. WRITTEN STATEMENT ON BEHALF OF DEFENDANT NO. 1

19. Defendant No. 1 in his written statement has denied the averments made by the plaintiff and pleaded that the Collaboration Agreement dated 08.04.2005, Supplementary Agreement-I dated 08.04.2005 and Second Supplementary Agreement-II dated 29.12.2006 have expired due to lapse of time on 31.03.2007.

20. It is further submitted that these agreements were conditional agreements, wherein certain obligations had to be completed on behalf of the Plaintiff which the Plaintiff failed to do so.

21. As per the Collaboration Agreement dated 8.4.2005 read with Supplementary Agreement-I dated 8.4.2005 and Second Supplementary Agreement-II dated 29.12.2006 executed between the plaintiff and defendant No.1, the plaintiff was to pay a sum of Rs 85 lakhs to defendant No. 1 however only an amount of Rs. 45 lakhs was paid as earnest money and the plaintiff defaulted on the remaining payments.

22. It is stated that that Defendant No.1 in compliance of its obligations got the second floor of the suit premises vacated from the occupation of the tenant on 01.04.2006. This clearly shows that defendant No.1 complied with the terms and conditions of the agreement and it was plaintiff who evaded its obligation under the agreement.

23. It is stated that as per recital O and S of the Collaboration Agreement, it was the duty of the plaintiff to get the suit property mutated and carry out the necessary paperwork for registration of the suit property and however, the plaintiff failed to perform its obligations. Clauses O and S of the Collaboration Agreement dated 08.05.2004 read as under:

“O. AND WHEREAS the parties have mutually agreed that the Builder shall unconditionally ensure that the formal lease is executed and registered jointly in favour of the Owners/ First Party at the earliest, at the expenses of the Builder/ Second Party and also that the exclusive responsibility to have/ obtain the requisite mutation carried out in all statutory records in respect of the said property shall be also be solely of the Builder who has also undertaken with the Owners/ First Party to ensure that the said property is converted into freehold (from leasehold as present) as soon as possible and that all the expenses whatsoever in the said regard shall be payable and borne by the Builder, from its own resources. ……

S. AND WHEREAS after examining the relevant documents the

Builder has assured the Owners/ First Party that it would be in a position to get the property substituted, mutated and transferred in favour of the Owners/ First Party and also get the property converted into freehold and that getting all these jobs done shall be solely and exclusively his responsibility and at the Builder's expense and initiative.”

24. It is stated that despite the plaintiff failing to comply with the requirements of the Agreements executed between the Plaintiff and Defendant No. 1, the Defendant No. 1 was always ready and willing to fulfill his obligations and comply with the same.

WRITTEN STATEMENT ON BEHALF OF DEFENDANT NO. 3 (A), (B) AND (C)

25. Defendant No. 3. (a), (b), and (c) by way of a written statement denied the averments made by the Plaintiff and pleaded that the Plaintiff cannot be granted relief of specific performance as the Plaintiff failed to carry out its part of obligation under the Collaboration Agreement dated read with the Supplementary Agreement-II and Second Supplementary Agreement-I whereby the plaintiff had to pay a sum of Rs 5.25 crore to Defendant No. 3. (a), (b), and (c) in terms of Clause 9 of the Second Supplementary Agreement-I which reads as under:

26. It is stated that from a bare perusal of letter dated 23.03.2006 by the plaintiff that on the said date the plaintiff was not ready and willing to perform its part of the obligation under the agreement's dated 08.04.2005 as the plaintiff itself admits that he has neither been able to get the property mutated nor has the plaintiff been able to get the Punjab National Bank to vacate a portion of the ground floor. Even otherwise, the Collaboration Agreement stands cancelled vide defendant no. 3’s letter dated 15.04.2006.

27. It is submitted that the Second Supplementary Agreement-I was entered into subsequent to the cancellation of the Collaboration Agreement by the defendant no. 3(a, b, c), when the plaintiff approached the defendants and requested that he was willing to renegotiate and pay the entire consideration within 3 months, i.e. on or before 31.03.2007. Despite entering into the said agreement of his own free will, the plaintiff has pleaded commercial duress, which is belied by the terms of the Second Supplementary Agreement-I.

28. It is stated that the plaintiff is seeking specific performance of the Collaboration Agreement, which stands superseded by Supplementary Agreement-I and 2nd Supplementary Agreement I and the said agreement stands cancelled and terminated vide the Answering Defendants letter dated 03.04.2007.

WRITTEN STATEMENT ON BEHALF OF DEFENDANT No. 2, 4 AND 5

29. Defendant No. 2, 4, and 5 submit that they agreed to sell their share of the property for a paltry sum of Rs.65,00,000/- each since they were made to believe that the consideration of the defendant No.3(a) to 3(c) was fixed at Rs. 1,20,00,000/- and the consideration which was being given to the Defendant No.1 was Rs. 10,00,000/- alongwith the entire ground floor with one Car Parking right in the driveway of the proposed building along with 25% undivided, indivisible and im-partible ownership rights in the plot of land. It is stated that from a perusal of the documents filed by the Plaintiff along with the present suit the defendants no. 2, 4 and 5 learnt for the first time that the Plaintiff and the defendants No. 1 & 3 had on 08.04.2005 itself executed Supplementary agreements whereby the Plaintiff had agreed to give an additional sum of Rs. 1,76,00,000/- to defendant no. 3(a) and the defendant No.1 was not only getting the entire ground floor but was also getting the entire basement of the proposed building and additional monetary consideration of Rs. 40,00,000/-. It is submitted that on account of the concealment, the entire agreement was based on misrepresentation.

30. Additionally, the defendant No. 2, 4, and 5 further pleaded that time was the essence of the contract. By way of the Collaboration Agreement dated 08.04.2005, the plaintiff had to pay the remaining amount of the entire sale consideration within 12 months from the date of the agreement, and if the plaintiff defaulted in terms of Clause 7 of the Collaboration Agreement dated 08.04.2005, then the agreement would itself stand terminated and the plaintiff would be left be with no rights, titles or interest in the suit property.

31. Defendant No. 2 had also issued a letter dated 04.05.2007 whereby Defendant No. 2 stated that the Collaboration Agreement 08.04.2005 between the parties stood terminated and the money paid by the Plaintiff stood forfeited on account of the non-fulfillment of the obligations by the Plaintiff.

ISSUES

32. The following issues were framed vide order dated 28.11.2008: (1) Whether the time was essence of the contract in the agreements and the effect thereof? OPP (2) Whether the plaintiff was ready, willing, and able to perform his obligations under the agreements and the effect thereof? OPP (3) Whether the defendant Nos. 2, 4, and 5 can validly rescind the agreements on the ground of fraudulent representation? OPD (4) Whether the plaintiff is entitled to a decree of specific performance as prayed for? OPP (5) Relief EVIDENCE LED BY PARTIES

33. The Plaintiffs examined one witness that is PW[1] – Vinod Kumar Saluja, Director of M/S Chetanya Buildcon Pvt. Ltd (Plaintiff) who tendered his evidence by way of affidavit, PW1/A and Evidence in Rebuttal, i.e. PW1/B, and was cross-examined. PW[1] has relied on the following documents: a) Exhibit PW 1/1 – Copy of Certificate of Incorporation by the Plaintiff b) Exhibit PW 1/2 – Copy of Board resolution dated 08.09.2007 wherein the Plaintiff has duly authorized PW 1 as his authorized representative. c) Exhibit P–1 – The Original Collaboration Agreement dated 08.04.2005. d) Exhibit P –5 – Original Supplementary Agreement-II dated 08.04.2005 executed between Plaintiff and defendant No 3 (a). e) Exhibit PW 1/3 – Original Supplementary Agreement-I dated 08.04.2005 executed between the plaintiff and defendant No. 1. f) Exhibit PW 1/ 4 – Original Second Supplementary-II dated 29.12.2006 executed between the Plaintiff and despondent No. 1 g) Exhibit P – 9 – Original Second Supplementary-I Agreement dated 21.12.2006 executed between the plaintiff and Defendant No. 3 (a). h) Mark A – Photocopy of 4 pay orders dated 07.04.2006 i) Mark B/Exhibit PW 1/6/ Exhibit PW1/D1/ Exhibit DW2/P[1] – Office copy of Plaintiff’s letter dated 30.03.2007. j) Exhibit P – 10 –Office copy of Letter dated 23.03.2006 sent by the plaintiff to the defendants k) Exhibit P – 6; Exhibit P – 8 – Original Letters dated 01.04.2006, 15.04.2006 and 03.04.2007 sent by Defendant No. 3. l) Exhibit P – 7- Original Letter dated 15.04.2006 by defendant no. 3(1) terminating the Collaboration Agreement and Supplementary Agreement-II. m) Exhibit PW 1/7; Exhibit PW 1/8; Exhibit PW 1/9 – Original letters dated 28.03.2007, 02.04.2007 & 15.05.2007 sent by defendant No. 1 to the plaintiff. n) Exhibit P – 2; Exhibit P – 3; Exhibit P – 4 – Original letters dated 30.03.2006, 04.05.2006, 04.05.2007 sent by defendant No. 2 and defendant no. 5 o) Exhibit PW 1/10 – Original Letter dated 18.02.2007 by husband of Defendant No. 5

34. The defendants to prove its case examined the following witnesses: (1) DW[1] –Sh. Lalit Mohan Tewari has tendered his Evidence by way of an Affidavit and was cross-examined. (2) D2W[1] – V. Ramakrishnan, UDC in L&DO was cross-examined on 23.11.2012. (3) D2W[2] – Akshay Joshi s/o defendant no. 2 has tendered evidence on behalf of defendant no. 2 by way of an affidavit and was cross examined. D2W[2] has relied on the following documents: a) Exhibit DW 2/1 - Copy of the General Power of Attorney executed by defendant no.2 in favour of Mr. Akshay Joshi. b) Exhibit DW 2/2 – Copy of the General Power of Attorney given by Defendant No.4 in favour of Defendant No. 2 dated 27.08.2004. c) Exhibit DW 2/3 – Copy of the General Power of Attorney given in favour of the Defendant no. 5 in favour of Defendant no. 2 dated 14.08.2004. d) Exhibit P – 10 – Office Copy of letter dated 23.03.2006 sent by the plaintiff to the defendants e) Exhibit P – 2 - Original letter dated 30.03.2006 sent by defendant no. 2 and 5. f) Exhibit P – 4 – Original letter dated 04.05.2006 sent by defendant no. 2 and 5. g) Ex. DW-2/4 – Copy of the affidavit dated 22.06.2005 sworn by Defendant No. 2 h) Ex. DW-2/5 – Copy of the alleged forged and fabricated affidavit dated Affidavit dated 27.06.2005 obtained by defendant no, 2 from the L&DO. i) Ex. DW-2/6 – Copy of forged and fabricated Affidavit dated 01.08.2005 purportedly sworn by the Defendants 4 obtained by Defendant No.2 from the L&DO. j) Ex. DW-2/8 and Ex. DW-2/9- Copy of the passport of Defendant No. 4 and Defendant No. 5 (4) DW3(a) – Mrs. Bulbul Tiwari has tendered evidence by way of an affidavit and was cross-examined and has relied on the following documents: a) Exhibit P – 1 – Copy of the Original Collaboration Agreement dated 08.04.2005. b) Exhibit P – 5 – Copy of the Supplementary Agreement dated 08.04.2005 executed between Plaintiff and Respondent No 3 (a). c) Exhibit P – 6 – Original letter dated 01.04.2006 d) Exhibit P – 7 – Original letter dated 15.04.2006 e) Exhibit P – 9 - Original supplementary Agreement dated 21.12.2006 executed between the plaintiff and Respondent No. 3 (a). f) Exhibit P – 8 – Original letter dated 03.04.2007 whereby Defendant No. 3(a) terminated the Second Supplementary Agreement-II and Collaboration Agreement.

35. I have perused the material on record and heard the arguments advanced by the learned counsels for the parties.

36. On the basis of the pleadings and evidence on record, the issues are decided as under:- ISSUE No. 1: Whether the time was essence of the contract in the agreements and the effect thereof?

37. In the present case, there is no dispute regarding the factual matrix and most of the documents are admitted between the parties.

38. Mr. Kailash Vasdev, the learned senior counsel for the Plaintiff submits that the terms of the Collaboration Agreement (Exhibit P-1) were altered from time to time, according to the convenience of the defendants, which categorically shows that time was not of the essence of this contract since the said alterations/amendments resulted in repeated changes in the time schedule of the payment of the sale consideration by the plaintiffs.

39. The learned senior counsel for the plaintiff submits that as per Clause 27 of the Collaboration Agreement, the time for completion of the building was 12 months from the date of sanctioning of the building plans or from the date of handing over of the physical possession by the owners, whichever is later, and since no GPA was provided to the Plaintiff for obtaining Sanctioned Building Plan, the Building could not be constructed. The Defendants cannot expect the Plaintiff to pay the balance consideration while the defendants have themselves failed to come forward and perform their obligations under the written agreements.

40. Further, the learned counsel for the Plaintiff submits that it is a settled proposition that time is not the essence in contracts relating to immovable properties and in case of any defaults carried out under such a contract by the defendant, specific performance will be granted. Reliance is placed on the judgments of the Hon’ble Supreme Court in Chand Rani vs Kamal Rani 1993(1) SCC 519 and Sarodamani Kandapan vs S. Rajalakshmi 2011 (12) SCC 18 alongwith section 55 of the Indian Contract Act, 1872 to state that time is not of the essence of the contract in contracts relating to immovable properties. In addition, 27% of the sale consideration was paid under the Collaboration Agreement (Ex. P-1) and hence a decree of specific performance can be granted. The operative portion of Saradamani Kandappan vs S. Rajalakshmi 2011 (12) SCC 18 relied on by the plaintiff reads as under: -

41. The learned counsel for Defendant Nos. 2, 4, and 5 vehemently opposes the contentions raised by the plaintiff and states that time was the essence of the contract as per the agreed terms of the Collaboration Agreement (Exhibit P-1). Under Clause 7 of the Collaboration Agreement, it was agreed that the plaintiff shall pay the entire sale consideration within a period of 12 months from the date of execution of the Collaboration Agreement (Exhibit P-1) and any default to make the balance payment shall result in forfeiture of the agreement.

42. In this regard, D2W[2] in his evidence has deposed as under:-

amounts payable by the plaintiff to them within the stipulated period agreed upon in terms of the Collaboration Agreement.

15. That thereafter the Director of the Plaintiff namely Mr. Vinod Saluja called upon the Defendant No. 2 and the husband of the Defendant No. 5 for a meeting. There was a meeting between Mr. Saluja, the Defendant No. 2 and the husband of the Defendant NO. 5 Pursuant to the said meeting the Defendant No. 2 wrote a letter dated 4th May 2006 which has been exhibited by the Plaintiff as Ex.P-4 to Mr. Vinod Saluja, Director of the Plaintiff wherein she recorded that Mr. Vinod Saluja had a meeting with her and Mr. Vivek Pande, (the husband of Mrs. Mridula Pande, Defendant No.5 ) and that they had categorically informed him that the Plaintiff was under all circumstances obliged to make all the payments to the Defendants No. 2, 4 and 5 on or before 7th April 2006 and reiterated that the agreement clearly recorded that the plaintiff was to make payments to each one of the Defendants No. 2, 4 & 5 independently of the others and it was in this view of the matter that it had been written in Clause U that the Plaintiff would be making the payment under all circumstances to owners No. 2, 4 and 5 as provided therein and it was further recorded in clause 7 that the balance consideration would be paid within 12 months and on the failure of the Plaintiff to do so all its rights would stand forfeited and it would be left with no rights, titles or interests whatsoever in the Property. The Defendant No. 2 also clearly recorded in the said communication dated 4th May 2006 that the same was without Prejudice to the rights and contentions and only as a one time accommodation, that the Defendants No. 2, 4 and 5 had agreed to accommodate the Plaintiff for a limited period of two months only beyond 7th April 2006 subject to its unequivocally agreeing to giving each one of the Defendants No. 2, 4 & 5 compensation @ Rs. 2.50 lakhs per month for each month's delay. It was further recorded in the said communication that by virtue of the said Communication the two months accommodation was subject to the Plaintiffs paying compensation of Rs. 2.50 lakhs per month each and was under no circumstance to be construed as diluting the basic term of the agreement that time was the essence of the agreement.”

43. Further, the learned counsel for Defendant Nos. 2, 4, and 5 draws my attention to the cross-examination of PW 1 on 13.04.2010, which reads as under: - 13.04.2010

44. Learned counsel for defendant No. 3 (a), (b), and (c) states that the mere admission by PW[1] indicates that the time was the essence of the contract between the parties and the same is also evident from a plain reading of the Second Supplementary Agreement-I (Ex. P[9]). The operation portion reads as under:- “AND WHEREAS the First Party and the Second Party have renegotiated between themselves and it has been mutually agreed between the First Party and the Second Party that an additional sum of Rs. 2,29,00,000/- (Rupees Two Crore and twenty nine Lakhs Only) will be paid by the Second Party to the First Party over and above the already agreed amount of Rs. 2,96,00,000/- (Rupees Two Crores Ninety Six Lakhs Only). Therefore, the aforesaid two agreements have been agreed to subsist and continue for a period till on or before 31.03.2007 subject to the payment of a total amount of Rs. 5,25,00,000/- (Rupees Five Crore twenty five Lakhs only) by the Second Party to the First Party as per the following terms and conditions. …

1. The Parties to the present agreement agree that upon the execution of the present agreement and the parties adhering to the terms thereof the Collaboration Agreement and the Supplementary Agreement dated 08.04.2005 shall stand revived and shall subsist for a period till on or before 31.03.2007. The agreements dated 08.04.2005 shall however operate only insofar as they are not in conflict with this agreement. …

9. In case the Second Party fails to adhere to the term of making the payment of Rs. 5,28,00,000/- (Rupees Five Crore twenty eight Lakhs only) to the First Party within the time stipulated, the First Party shall be entitled to revoke this Agreement and forfeit the money(s) paid till the said date.”

45. In view of the plaintiff’s failure to pay the abovesaid consideration of Rs. 5.28 crores within the stipulated time, the defendant no. 3(a) revoked the agreement vide letter dated 03.04.2007 in terms of clause 9 of the Second Supplementary Agreement-I (Ex. P[9]). The letter dated 03.04.2007 (Ex. P-8) reads as under:-

46. Similar stands have been taken by the learned counsel for the defendant no.1, wherein it is submitted that that all the agreements executed between the defendant no.1 and plaintiff, i.e. Collaboration Agreement (Ex. P-1), Supplementary Agreement-I (Ex. P 1/3) and Second Supplementary Agreement-II (Ex. P1/4), were contingent upon certain obligations of the plaintiff to be completed by 31.03.2007. The defendant no. 1 in compliance of his obligation got the second floor Mezzanine and Barsati vacated from the tenants on 01.04.2006 which was before the due date of 07.04.2006 under the collaboration agreement. However, the plaintiff did not take any steps to get the Garage vacated from Punjab National Bank which was its obligation under the agreement. As per recital O and S of the collaboration agreement, it was the exclusive responsibility of the plaintiff to have the suit property substituted, mutated and carryout other necessary paperwork in the L&DO in respect of the suit property but the plaintiff failed to do the same. Further, the plaintiff had to pay an amount of 85 lakhs to defendant no.1 by 31.3.2007, as per the collaboration and supplementary agreements however only 45 lakhs have been received by the defendant no. 1 till date. Since the plaintiff failed to comply with its obligations under the agreements, the agreements have expired due to lapse of time.

47. Admittedly, the present suit is based on the fact that on 08.04.2005, the plaintiff and the defendants entered into a Collaboration Agreement (Ex P-1) with respect to the suit property wherein it was agreed that the Plaintiff shall pay a consideration of Rs 3.25 crore to the defendants to be entitled to the entire Basement, entire First Floor, entire Second Floor, the entire terrace above the Second Floor and Car parking, (excluding one car parking of the defendant No. l) and 75% of the undivided impartible ownership rights in the proposed building to be constructed in place of the suit property.

48. The entire sale consideration was payable to the defendants within a period of 12 months from the date of execution of the Collaboration Agreement (Exhibit P-1) dated 08.04.2005, as specified under clause 7. The Operative portion of Clause 7 reads as under:

irrespective of any amount spent by the Builder in any regard or manner whatsoever.”

49. A perusal of clause 7 of Ex.P-1 categorically shows that the obligation to make payments by the plaintiff was regardless of whether the property had been substituted or mutated. The obligation of the plaintiff to make the balance sale consideration was not dependent on any pre-condition to be performed by any of the defendants. PW[1] has himself admitted to the same in his cross-examination dated 13.08.2009 which reads as under:- “It is wrong to suggest that plaintiff had to make the entire payment within a period of one year irrespective of plaintiff fulfilling its obligation or not. ( Vol. Payment was ready but not paid as defendant failed to handover the possession). It is correct that plaintiff had to make the payment as per clause 7 of the agreement. After seeing clause 7 of the collaboration agreement Ex. P.[1] dated 8.4.2005, witness states "Plaintiff had to make the payment as per clause 7 of the agreement". It is correct that specific time period was provided in Ex. P.[1] for fulfilling the obligations for all the parties.”

50. Further, even in case of the subsequent supplementary agreements, the plaintiff has admitted that the payment of the balance amount was also not contingent upon fulfilling any other obligations under the agreements. The operative portion of cross-examination of PW[1] dated 03.09.2009 reads as under:- “It is correct that as per agreement I had to make the payment of Rs. 5.25 crore to the defendant 3(a) irrespective whether I had fulfilled my obligation as per the agreement or not. ( Vol. However payment was to be made at the time of taking the possession of the premises).”

51. In view of the above, the submission of the plaintiff to say that plaintiff cannot be expected to pay the balance consideration when the defendants have not come forward for performing their end of the of the obligations is meritless.

52. Even otherwise, clause 6 of the Collaboration Agreement (Ex. P-1) notes that it was the obligation of the plaintiff to send a written request for the execution of the power of attorney while informing the name of the person in whose favour Power of attorney was required to be made to the defendants. Clause 6 of the Ex. P– 1 reads as under: “6. The Owners/ First Party shall execute a Specific Power of Attorney/ Special Power of Attorney in favour of the nominee(s) of the Builder/ Second Party, to only apply for necessary sanctions and permissions, approvals to the authority or authorities concerned. And the Owners/ First Party shall also pursue and cooperate with the Builder in obtaining such or all other permission, approvals as may be necessary or required for ensuring the due execution of the proposed work of development and construction of the proposed new building at the site in question. The Builder/ Second Party shall give a written request in the said regard to the Owners/ First Party as to in whose name he wishes the Power of Attorney to be given.”

53. PW[1] in his cross-examination dated 13.08.2009 has himself admitted that the plaintiff had never requested the defendants in writing to execute the GPA and also did not inform them in whose favour it was to be executed. The operative portion of the cross-examination of PW[1] dated 13.08.2009 “It is correct that plaintiff had to inform the defendant in writing if GPA was required and was also required to inform them in whose favour it was to be prepared. ( Vol. GPA was sent to the defendants for their signature). It is wrong to suggest that plaintiff had not sent the GPA to the defendants for their signature. I cannot say on which date GPA was sent to them. It is correct that 1 have never requested the defendants in writing to execute GPA and also did not inform them in writing in whose favour it was to be executed.”

54. Additionally, it was the responsibility of the plaintiff to get the property vacated from the tenancy of Punjab National Bank as per Clause M of the Collaboration Agreement (Ex. P – 1). Clause M of Exhibit P – 1 reads as under:

“M. AND WHEREAS it has also been specifically inter-alia agreed that after the execution of these presents the mere fact that the said portion is not vacated by the bank or by the other occupiers (be it for any reason whatsoever) shall be of no consequence for the purposes of ensuring compliance of the mutual obligation of the parties hereto and the Builder shall be obliged to diligently comply with all his obligations whatsoever under this agreement. It is been specifically agreed that all or any expense whatsoever for getting / recovering back the actual physical possession from the bank (M/s Punjab National Bank), shall be the sole liability of the Builder. It is further specifically agreed that the possession of the said portion would be taken by the Owner No. 4 or her General Power of Attorney Smt Manjula Joshi, the Owner No. 2, from M/s Punjab National Bank, and would be retained by them and given to the Builder if and only after the entire payment as stipulated herein is made by the Builder to them within 12 (Twelve) months from the date hereof, as stipulated in this agreement.”

55. Perusal of Clause M clearly indicates that whether the property was vacated by the Punjab National Bank or any other tenant was of no consequence for the plaintiff to perform its obligations in terms of the Collaboration Agreement. The same is also evident from the PW1’s own admission in the above reproduced cross-examination dated 13.08.2009 and dated 03.09.2009.

56. More importantly, PW[1] in his cross-examination dated 13.04.2010 has categorically stated that “time was of the essence of the contract”. Once the same is admitted by the plaintiff itself, there is nothing else that is required to be seen. The same is also evident from the factual matrix of the present case.

57. Since the time for making payment in the present case was 1 year from 08.04.2005 and the same was expiring on 07.04.2006, the plaintiff on 23.03.2006 (Ex. P-10) very cleverly and in order to absolve himself of the liabilities under the Collaboration Agreement (Ex. PW-1) wrote a letter, which is reproduced as under:-

58. A perusal of the letter shows that it was totally contrary to the terms of the agreement. The plaintiff in the letter sought status of the second floor of the property asked the defendants as to when they would like to conclude transactions before 07.06.2006. This appears to be merely a lip service and cannot be construed as an extension of time between the parties.

59. In the supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4), even though time was extended, it was categorically stated that the transactions have to be concluded on or before 31.03.2007, which admittedly was not done.

60. Even otherwise, the plaintiff had no supplementary agreement with defendant Nos. 2, 4 and 5 and hence there was no reason for the plaintiff to delay making payments to defendant Nos. 2, 4 and 5 beyond 07.04.2006, which was once again admittedly not paid.

61. The reliance of the Plaintiff on the judgment of the Hon’ble Supreme Court in Saradamani Kandappan (supra) to say that time is not of essence in contracts relating to immovable properties is also misconstrued since the Hon'ble Supreme Court in the same judgment, inter-alia, held as under:

contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now

37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and „non-readiness‟. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for Rs. One lakh and received Rs. Ten Thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining Rs. Ninety Thousand, when the property value has risen to a crore of rupees ….

42. Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani [(1993) 1 SCC 519] and other cases. Be that as it may.

43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam [(1997) 3 SCC 1]:

(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.

(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was “ready and willing” to perform his part of the contract.

(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also “frown” upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part-performance, where equity shifts in favour of the purchaser.”

62. The judgment of Sarodamani Kandapan (supra) holds that concept of time not being the essence of contract regarding immovable properties was the concept of the past. Today, it would be unfair to the owner of the property to be asked to sell the property at an earlier rate because in today’s real estate scenario prices of properties are not static and increase exponentially over a period of time.

63. The suit property is in Jor Bagh, which is known to be one of the most posh and affluent neighbourhoods of Delhi, where the prevalent market prices for property as of today would be more than five times of the prices envisaged under the Collaboration Agreement (Ex. P-1) or the supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4), To hold that time was not of essence to the agreement and to hold that defendants must execute sale deed of the suit property on the prices agreed to about 20 years ago would be travesty of justice.

64. Hence, I am of the view that in the present case time was of the essence of the contract and the issue is answered accordingly.

ISSUE No. 2: Whether the plaintiff was ready, willing, and able to perform his obligations under the agreements and the effect thereof? ISSUE No. 4: Whether the plaintiff is entitled to a decree of specific performance as prayed for?

65. The issues are interrelated and dealt with together:-

66. The case as set out by the plaintiff is mentioned under paras 12, 13, 14, and 15 of the plaint. It reads as under:

executed under duress, as aforesaid. On the other hand, the defendants never did any act towards discharge of their part of obligations. The plaintiff also submits that all the Supplementary Agreements were got executed from the plaintiff under commercial duress as aforesaid which the plaintiff had signed and has althrough been ready and willing to perform in order to avoid the delay. However, since the defendants still delayed the matter and are not even forthcoming to perform their part of obligations, the purpose of execution of Supplementary Agreements is defeated and the plaintiff is not bound to give extra consideration or the benefit to the defendants in terms of Supplementary Agreement(s) and has become entitled to completion of transaction on the terms as mentioned in main Collaboration Agreement dated 08.04.2005. This averment is being made in view of the act and conduct of the defendants, inter alia, as set out in the plaint and is not to be construed as refusal on part of the plaintiff to perform its part of obligations under the Supplementary Agreements. The plaintiff is still ready and willing to complete the transaction.

15. That since the defendants failed to perform their part of obligations inspite of their repeated promises and assurances and inspite of having agreed repeatedly under repeat agreements, the plaintiff is left with no option except to approach the Court to get the said Agreement specifically performed.”

67. The learned senior counsel for the plaintiff submits that the Plaintiff had always been ready and willing to perform its obligations. It is rather the Defendants that have been delaying to perform their part of the obligation because of one or the other reason. The Plaintiff submits that it got the SPA, GPA and other requisite documents and plans drafted/prepared and sent the same to the Defendants for their signatures/execution and registration, but the Defendants failed to do so which is evident from the letters dated 01.04.2006, 15.04.2006 and 03.04.2007 of Defendant No.3 (a) (EX.P 6 -8); letters dated 28.03.2007, 02.04.2007 and 15.05.2007 of Defendant No. 1 (EX.PW 1/7, EX.PW 1/8, EX.PW 1/9); letters dated, 30.03.2006, 04.05.2006 and 04.05.2007 of Defendant No. 2 and 5 (Ex. P 2-4); and the letter dated 18.02.2007 written by the Husband of Defendant No. 5(Ex. PW- 1/10).

68. The plaintiff submits that instead of performing their part of the obligation the defendants acted only towards attempting to further increase the sale consideration. ⁠The plaintiff has paid Rs.87 Lacs (being 27% of the agreed consideration as per Collaboration Agreement (Ex.P-1)) and an additional Rs.6.[3] Lacs, which the Plaintiff paid for conversion of the suit property from Leasehold to Freehold under Clause O of the Collaboration Agreement (Ex.P-1) thereby showing the readiness and willingness of the plaintiff. In this regard, PW[1] in his evidence has also deposed verbatim averments of para 13 and 14 of the plaint.

69. The learned senior counsel for the plaintiff submits it is the defendants who have on one occasion or another delayed and avoided the performance of their obligations under the contract. The plaintiff has been precluded from paying the amounts, as agreed, since the defendants have been approbating and reprobating the performance of their obligations. The plaintiff had prepared bankers drafts in favour of the defendants, which had to be cancelled as the defendants were deliberately avoiding discharging their obligations by obfuscating issues and taking inconsistent pleas.

70. Further it is also submitted that as per Clause 27 of the Collaboration Agreement (Ex.P-1), the time for completion of the building was 12 months from the date of sanctioning of the building plans or from the date of handing over of the physical possession by the owners whichever is later and since no GPA was provided to the Plaintiff for obtaining Sanctioned Building Plan, the Building could not be constructed.

71. The learned senior counsel for the plaintiff also submits that all the Supplementary Agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) were executed by the plaintiff under commercial duress which the plaintiff had signed in order to avoid the delay. However, since the defendants still delayed the matter and were not even forthcoming to perform their part of obligations, the purpose of execution of Supplementary Agreements (Ex. P- 5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) was defeated and the plaintiff is not bound to give extra consideration or the benefit to the defendants in terms of Supplementary Agreements and the plaintiff has become entitled to completion of transaction on the terms as mentioned in main Collaboration Agreement dated 08.04.2005 (Ex. P-1).

72. PW1’s cross-examination dated 12.08.2009 in this regard reads as under:- 12.08.2009

73. The plaintiff has relied on the judgment of the Hon’ble Supreme Court in P. D'souza vs Shondrilo Naidu 2004 (6) SCC 649. The operative portion

findings are binding upon this Court as it had not been shown that while arriving at the said finding the High Court had taken into consideration any irrelevant fact or failed to take into consideration any relevant fact.

21. It is not a case where the plaintiff had not made the requisite averments in the plaint. The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale. The plaintiff was a tenant of the defendant.”

74. The learned counsel for the defendants no. 2, 4 and 5 submits that the Plaintiff was neither ready nor willing nor able to perform its obligations under the Collaboration Agreement, which was the only agreement entered into between the plaintiff and the defendant no. 2, 4 and 5. Vide communication dated 30.03.2006 (Ex. P-2) sent by the defendant no. 2, 4 and 5 to the Plaintiff, they informed the plaintiff that the time was of the essence of the contract and that they were looking forward to receiving the amount payable by the Plaintiff to them within the stipulated period, agreed upon in terms of the collaboration agreement. The defendant no. 2, 4 and 5 in the said letter requested the Plaintiff to intimate them at the earliest as to when the Plaintiff would be making the payment to in terms of the collaboration agreement (Ex. P-1). The Plaintiff admittedly did not reply to the said communication nor made payment of the entire stipulated amount. The letter dated 30.03.2006 (Ex. P-2) is reproduced as under:-

75. The learned counsel for the defendant Nos. 2, 4, and 5 relies on the cross-examination of PW[1] and the operative portion of which reads as under:- 03.09.2009 “It is correct that I had not written any letter to the defendants asking them the documents which are required to be submitted by me with the L & DO. It is correct that I have not written any letter to the defendants informing them whether I had submitted any application with the L&DO or not. {Vol. The said application was signed by defendants) … At this stage attention of witness is drawn towards original letter dated 30.03.2006 Ex. P.2. The said letter was received by me. Without seeing the record I cannot say whether I responded the said letter or not. After seeing the judicial file witness states that " I have not sent any reply to the said letter". Same is my reply qua Ex. P.6. Since pay orders were prepared, thus letter must have been sent to the defendant informing that payment is ready, but I have to check the record.” 10.12.2009 “It is correct that defendant no.2 had sent the notice Ex. P.[4] and I received the same. It is wrong to suggest that 1 did not intimate the defendants about the pay orders. I intimated them through letter. (After seeing the court record, witness says that it is not on the court record). I have sent the only letter which is marked Ex. P. 10. It is wrong to suggest that 1 got prepared pay order just to create a false defence in the suit. It is wrong to suggest that, due to said reason, 1 did not inform the defendants about the pay orders.” 13.04.2010 “Without checking my record, I cannot say whether I tendered the pay orders to defendants No. 2,[4] and 5 or whether I intimated to them or not. Without checking my record, I cannot say that I have never intimated defendants No.2,[4] and 5 about the pay order and I also cannot say whether defendants No.2,[4] and 5 called upon me to make the payment. I want to see the letters, which I sent to the defendants. (Witness sees the court record) After seeing the court record witness states "I have not tendered the pay order to defendants No.2,[4] and 5. However, I intimated defendants No.2,[4] and 5 about the pay orders". I did not intimate them through letter. It is wrong to suggest that I did not intimate to defendants No.2,[4] and 5 through any mode.”

76. In view of the above, learned counsel for the defendant no. 2, 4 and 5 submits that plaintiff cannot be said to be ready and willing to perform its obligations under the agreement since the payment due was not made by it. The pay orders (Mark A) mentioned by the plaintiff were never tendered to them. Therefore, the plaintiff is not entitled to specific performance.

77. The learned counsel for the defendant no. 3(a) to (c) submits that out of the total agreed sale consideration of Rs.5.28 crores, Plaintiff has paid to Defendant no.3(a) a sum of Rs. 12 lakhs on which the Plaintiff has been prosecuting this suit for last 14 years, therefore the plaintiff has neither performed its obligations under the contract nor has it shown its financial competence to pay the amounts liable to be paid under the agreements between the parties. No bank statements, ITRs or even Profit and loss accounts for relevant years were produced by the Plaintiff to show that it had more than Rs. 7 crores to pay sale consideration to all Defendants.

78. The learned counsel for defendants 3(a) to 3(c) submits that the Plaintiff never had the wherewithal to comply with terms of said agreements either for completing its other obligations or making the payment. Except for photocopies of pay orders dated 07.04.2006 (Mark A) which were never proved on record, which PW 1 admits never to have tendered to any of Defendants and also admits to have cancelled after few days, nothing is produced on record to show that Plaintiff had the consideration to be paid under agreement dated 21.12.2006. The operative portion of the crossexamination of PW[1] on 03.09.2009 reads as under:- “It is correct that as per agreement I had to make the payment of Rs. 5.25 crore to the defendant 3(a) irrespective whether I had fulfilled my obligation as per the agreement or not. ( Vol. However payment was to be made at the time of taking the possession of the premises). It is wrong to suggest that the pay orders got prepared on 7.4.2006 were never tendered by me to the defendants. It is correct that after some time I had got cancelled the said pay orders but I do not know whether the said pay orders were cancelled after about 10 to 12 days. It is correct that I had not written any letter to the defendant after execution of Ex.P.[9] informing that draft is ready for payment ( Vol. As 1 used to meet the defendant regularly). It is wrong to suggest that no meeting was held between me and defendant no.3(a) after 21.12.1996.”

79. The defendant no. 1 has also stated that the defendant no. 1 never tried to commercially exploit the plaintiff regarding signing the supplementary agreements (Ex. PW 1/3 and Ex. PW 1/4). It is submitted that any monetary consideration received by the plaintiff was out of its own volition and not by any duress or coercion. However, since the plaintiff failed to comply with its obligations under the agreements to all the defendants within the stipulated time period, the plaintiff cannot be said to be entitled to a decree of specific performance. The defendant no. 1 in his evidence has deposed as under:- “3. I state that the abovementioned agreements were, i.e. contingent upon certain events but the plaintiff failed to comply with those conditions causing huge damage to DW-1.

8. I state that Defendant No.1 never tried to commercially exploit the plaintiff regarding signing the 1st and 2nd supplementary agreement. The plaintiff was taking part in the negotiation process at his free will and resultantly signed the agreements out of his own volition. Plaintiff is not appreciating the sanctity of a written contract for the reason that he finds it difficult to deal with other defendants.”

80. In a suit seeking specific performance, readiness and willingness of the parties to uphold their end of the agreement are essential considerations. It is a settled proposition of law that continuous readiness and willingness are often viewed as prerequisites for granting specific performance relief. In this regard, Section 16 of the Specific Relief Act, 1963 reads as under:

(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 the 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.”

81. Firstly, the plea of the plaintiff having executed the Supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) under commercial duress is meritless. PW[1] in his cross-examination dated 17.04.2009 has stated that the supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) are integral part of the main collaboration agreement (Ex. P-1) and are executable since the plaintiff has signed it. The plaintiff seeks to take benefit of extension of time under the supplementary agreements but at the same time wishes to give a go-bye to its obligation of enhanced payment on account of alleged coercion cannot be accepted. It appears that the allegation of commercial duress is made only to absolve itself from payment of extra consideration due to the defendants in terms of Supplementary Agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4). The plaintiff has admitted that it was involved in the negotiations ongoing between the parties. The crossexamination of PW[1] dated 17.04.2009 in this regard reads as under:- “It is correct that at the time of negotiating, I was aware that litigation was going on among the defendants pertaining to the property in question. It is correct that I negotiated the deal with defendant no.1 separately and I also negotiated deal with defendants no.2,[4] and 5 separately and I also negotiated deal with defendant no. 3 (a) to defendant no.3 (c) separately. It may be possible that main collaboration agreements as well as two supplementary agreements were signed by the parties at my office at Vasant Vihar. It is correct that the draft of the said agreements were prepared by my advocates.”

82. In view of the above, it is clear that all the agreements were drafted consequent to the terms and conditions negotiated between the parties by the plaintiff, therefore the averment by the plaintiff that the Supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) were executed under commercial duress is rejected.

83. As regards the readiness and willingness of the plaintiff is concerned, it is an admitted position that the plaintiff did not pay the agreed amount within stipulated time. The only ground raised by the plaintiff is that that certain part payments were released to the defendants in pursuance of the agreements between the parties.

84. The Collaboration Agreement dated 08.04.2005 (Ex. P-1) required payment of the total consideration of Rs 3,25,00,000/-, out of which, admittedly, Rs. 87,00,000/- has been paid. It is this amount which the plaintiff alleges being 27% of the consideration amount. However, a closer scrutiny of the factual matrix shows that Supplementary agreement-I and Second Supplementary Agreement-II (Exhibit PW 1/3 and Exhibit PW 1/4) were executed between the plaintiff and defendant No.1, wherein the amount to be paid to defendant No.1 was firstly enhanced to Rs. 40,00,000/- and then to Rs 85,00,000/-. Supplementary agreement-I and Second Supplementary Agreement-II (Exhibit P-5 and Exhibit P-9) were also executed between the plaintiff and defendant No.3, wherein the amount to be paid to defendant No.3 was firstly increased by a sum of Rs 1,76,00,000/- and was later enhanced to a sum of Rs 5,25,00,000/-.

85. Hence, the total agreed amount to be paid by the plaintiff to the defendants under the 5 agreements amounted to Rs 8,05,00,000/-, (Eight crore five lakhs only) out of which the said amount of Rs 87,00,000 as alleged by the plaintiff only constituted about 11% of the total sale consideration amount. Thus, it cannot be said that the plaintiff had paid a considerable amount to complete its obligations in terms of the Agreements executed between the parties.

86. This court in Smt. Laxmi Devi vs Shri Mahavir Singh 2012 SCC OnLine Del 2478 considered the aspect of part payment by the Plaintiff and effect of the same in a suit seeking specific performance. The operative portion reads as under:-

87. Further, in order to show its readiness and willingness, the plaintiff has to show that right from the date of execution of the agreement till the disposal of the suit, the plaintiff has been always ready and willing to perform its obligations under the agreement, meaning thereby that the plaintiff always had sufficient funds/resources to make the payment.

88. The plaintiff in the present case has filed photocopies of four pay orders dated 07.04.2006 (Mark A) totalling to an amount of Rs. 2,73,00,000/to state that the plaintiff has always been ready and willing to perform its obligations.

89. The said pay orders are the only photocopies and the originals have never seen the light of the day. No bank witness was produced to prove the said pay orders were ever made or to show that the required funds were available in account of the plaintiffs. More importantly and in view of the admissions made by PW[1] in cross-examination dated 10.12.2009 and 13.04.2010, it is clear that the plaintiff never intimated the defendants that the pay orders (Mark A) were prepared and ready. The plaintiff never shared a copy of the pay orders with any of the defendants or tendered the same to the defendants for encashment. Rather, the plaintiff has itself admitted in the cross-examination date 03.09.2009 that it got the draft pay orders (Mark A) cancelled before the same were tendered.

90. Hence, I have no hesitation in holding that the pay orders were, if at all prepared, were only prepared to create a bogey defence and a false narrative to show the court plaintiff’s financial capability.

91. In these circumstances, there is nothing before this court to hold that the plaintiff was ready and willing to perform its obligations under the agreements between the parties. Only bald averments have been made by the plaintiff regarding its readiness and willingness. The Hon’ble Supreme Court in U.N. Krishnamurthy (since deceased) through Legal heirs vs A.M. Krishnamurthy (2023) 11 SCC 775 has held that mere statements/averments in the plaint would not suffice and readiness will have to be proved by adducing evidence, including documents to show availability of funds. The operative portion reads as under: “45. It is settled law that for relief of specific performance, the Plaintiff has to prove that all along and till the final decision of the suit, he was ready and willing to perform his part of the contract. It is the bounden duty of the Plaintiff to prove his readiness and willingness by adducing evidence. This crucial facet has to be determined by considering all circumstances including availability of funds and mere statement or averment in plaint of readiness and willingness, would not suffice”.

92. The plaintiff has not filed any ITR, Bank Account Statement, Profit and Loss accounts for the relevant years, Statement of Witness, etc to show that the plaintiff had the financial capacity to arrange the balance consideration in favor of the defendants.

93. Further, the plaintiff has itself admitted, as observed previously, that it was the obligation of the plaintiff to get the garage vacated by PNB within one year, admittedly the same was not done. PW[1] in his cross-examination dated 13.08.2009 has admitted that the plaintiff had never requested the defendants in writing to execute the GPA as well as failed to inform the defendants in whose favour it was to be executed.

94. In view of the above, there is nothing to show that the conduct of the plaintiff was such wherein the plaintiff was ready and willing to comply with its obligations under the agreements between the parties.

95. Since, the plaintiff failed to perform its obligations under the agreements, it resulted in the termination of the agreements by the defendants as under:

(i) Defendant No. 3(a) terminated the Collaboration Agreement

(Ex. P-1, Supplementary Agreement-II (Ex. P-5) and Second Supplementary Agreement –I (Ex. P-9) by way of letter dated 03.04.2007 (Ex. P-8).

(ii) Defendant 2 and 5 had also intimated the plaintiff vide letter dated 04.05.2006 (Ex. P-3) that if the payment of balance consideration alongwith compensation for delay is not paid to them within 07.05.2006, the rights under Ex.P-1 shall stand forfeited.

(iii) Defendant no. 1 vide handwritten letter dated 02.04.2007 (Ex.

96. The plaintiff has not sought a declaratory decree seeking setting aside of the aforementioned termination letters. The law is settled in this regard. The Hon’ble Supreme Court in I.S. Sikandar v. K. Subramani, (2013) 15 SCC 27 has held as under:-

97. In view of the above, it is clear that the plaintiff was never ready, willing or able to perform its obligation. Hence, this court cannot grant specific performance of the agreements between the parties.

98. Accordingly, issue no. 2 and 4 are held against the plaintiff.

ISSUE No. 3: Whether the defendant Nos. 2, 4, and 5 can validly rescind the agreements on the ground of fraudulent representation? OPD

99. The defendant no. 2, 4 and 5 submit that the defendant no. 2, 4 and 5 are co-owners of the suit property along with the other defendants, however the plaintiff along with the remaining defendants clandestinely entered into supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) whereby the consideration which was ostensibly being paid to the Defendants 1 and 3 was substantially increased. The said fact was concealed from the defendants no. 2, 4 and 5 for ulterior objectives and malafide reasons.

100. The defendant no. 2, 4 and 5 rely on the cross-examination of PW[1] dated 10.12.2009. The operative portion reads as under:- “……It is correct that Ex. P 10 was sent by me to the defendants. It is correct that no reference of supplementary agreement dated 08.04.2005 is mentioned in Ex. P 1 0. I did not mention the same in Ex. P10 as I had apprehension if it came in to the notice of other defendants, i.e. defendants no. 2, 4 & 5, they would also pressurise me for the execution of such agreement.”

101. The defendant no. 2, 4 and 5 have also relied on the cross-examination dated 12.05.2017 of DW[4] on behalf of defendants no. 3(a) to (c) wherein the following was deposed:- “It is correct that on 08.04.2005, a collaboration agreement Ex.P- 1 was executed between the plaintiff and five persons mentioned in the said collaboration agreement. It is correct that I did not inform the defendant no.2,[4] & 5 that apart from the purported consideration of Rs. 1.20 crore, I was getting a further sum of Rs.

1.76 crore in addition to the consideration mentioned in the collaboration agreement Ex.P-1. Vol. there was no occasion for me to inform them about the same. The supplementary agreement Ex.P-5 was executed at the same time when original collaboration agreement Ex.P-1 was executed. Vol. I was informed at that time only that both the said agreements have to be executed, again said the said fact may have been informed to me one day before execution of the said two agreements. It is correct that defendant no.2,4&5 had no way to know that I was getting Rs.1.76 crore over and above the purported consideration mentioned in Ex.P-1. Vol. we were not meeting.

102. The only defence that the plaintiff has taken against the allegation of fraudulent representation by it is that the plaintiff is not bound to inform defendant no. 2, 4 and 5 in respect of any supplementary agreements (Ex. P- 5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) executed between the plaintiffs and the other defendants no. 1 and 3.

103. Section 19 of the Indian Contract Act, 1872 reads as under:-

104. It is an admitted position that the parties have an equal share in the suit property. A perusal of the facts shows that admittedly each defendant has 20 percent of the undivided share in the suit property. The plaintiff along with the defendant no. 1 and 3(a) to (c) entered into subsequent agreements wherein the sale consideration payable to the defendant no. 1 and 3(a) was enhanced. This enhancement gave an undue advantage to defendants no 1 and 3(a) over defendants no. 2, 4, and 5.

105. From the evidence available on record, it is apparent that the plaintiff has taken advantage of the strained relationship between the defendants. The plaintiff has been unable to demonstrate as to why certain supplementary Agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) were executed between defendant No. 1 and defendant No. 3 enhancing the amount to be paid by the plaintiff to them and not with defendant no. 2, 4, an 5.

106. The only apparent reason for the execution of the supplementary Agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) enhancing the amount to be paid is that the plaintiff wanted to show the Collaboration Agreement dated 08.04.2005 (Ex. P-1) to the defendants No. 2, 4, and 5 to represent that defendant No. 1 and defendant no.3 are also selling their share of the suit property in terms of the Collaboration Agreement (Ex. P-1) at a lesser amount.

107. PW[1] has himself admitted that it concealed information regarding the execution of supplementary agreements (Ex. P-5, Ex.P-9, Ex. PW1/3. Ex. PW1/4) from the defendant no. 2, 4 and 5 since it did not want to enhance their consideration alongwith the other defendants.

108. Hence, I am of the view that the consent of defendant no. 2,[4] and 5 was obtained by fraud and misrepresentation by the plaintiff. Therefore, the agreement is hit by the provisions of section 19 of the Indian Contract Act,

1872.

109. The issue is decided in favour of the defendant no. 2, 4 and 5 and against the plaintiff.

110. In view of my findings in issue 1, 2, 3 and 4, the plaintiff is not entitled to any relief in the present suit.

111. The present suit, alongwith pending applications, if any, is dismissed.

112. Despite time being of the essence of the contract and despite the plaintiff being neither ready nor willing to perform its obligations, the plaintiff has dragged a valuable property in litigation for more than 17 years. The defendants being owners of considerable wealth (in the form of 20% share each in the suit property) were unable to enjoy the fruits of the property on account of the pendency of the present litigation, the defendants could not enter into any other agreement to sell the suit property, as every intending purchaser buying a valuable property (such as the present one being in Jor Bagh, New Delhi, i.e. is one of the most affluent areas in Delhi) would have asked for a declaration “that the property is free from all previous agreements to sell, encumbrances, litigation etc”. The defendants could not have given that declaration and hence, were unable deal with the property in any way or manner

113. Had the plaintiff performed its obligations within time, the defendants could have utilized the money in buying their own individual alternative properties in different areas in Delhi.

114. The mala fides of the plaintiff is also evident from the fact that even though the plaintiff had filed the present suit, the plaintiff did not file any application for stay because as a condition of stay, the court may have asked the plaintiff to deposit the entire balance consideration with the Registrar General of this Court, which from the evidence of the plaintiff is clear that the plaintiff did not have.

115. Hence, the present case is a fit case for exemplary costs so as to deter mischievous and vexatious litigations filed only with the intention to harass owners of the property. The plaintiff shall pay Rs. 2 lakhs as costs to each of the defendants (Defendant no. 3(a) to 3(c) shall equally share the costs of Rs 2 lakhs).

116. Since the present suit is dismissed, Decree sheet be prepared accordingly.