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CIVILAPPEAL NOS. 3353-3354 OF 2018
(ARISING OUT OF SLP (CIVIL) Nos. 22018-22019 OF 2014)
P. Meenakshisundaram ….Appellant
JUDGMENT
1. Leave granted.
2. These appeals by special leave challenge the correctness of the judgment and order dated 07.01.2014 passed by the High Court of Madras in Appeal Suit (MD) Nos. 218-219 of 2010.
3. The facts leading to the filing of these appeals in brief are as under:-
(Ex.A[1]) intending to sell the suit property to respondent No.1. The consideration agreed was Rs.19 lakhs out of which Rs.[1] lakh was paid by way of advance. This agreement recited an assurance on the part of the appellant, “…that there is no encumbrance over the Schedule mentioned property” but went on to state:- “The 2nd Party says that the original Parent Document in respect of the property is not available with the 2nd party and it is in the bank. In case, there is any loan availed by the 2nd party either on the schedule property or on other property, then the 2nd party has to pay the said loan amount by getting it from the 1st party and to get the Original Parent Document and other supportive records in respect of the schedule property and the 2nd party has to hand over the same to the 1st party.”
22.09.2001 till 29.07.2002 when a legal notice was issued by respondent No.1 through his advocate. According to respondent No.1 this was responded by the advocate for the appellant and in the ensuing discussion it was agreed that possession of the suit property be handed over to respondent No.1. According to respondent No.1, out of the balance amount of Rs.19.[5] lakhs, Rs.13.[5] lakhs was to be made over by respondent No.1 to the bank directly and the remaining sum of Rs.[6] lakhs was agreed to be paid to the appellant in cash on the day the document was to be registered. According to respondent No.1, possession of the suit property was handed over to him by the appellant on 03.08.2002. The aforesaid case set up by respondent No.1 is disputed and denied by the appellant and according to him, with the intervention of local police and other hirelings, the possession was forcibly taken by respondent No.1 on 16.09.2002.
I. In his written statement, the appellant denied relevant assertions made by respondent No.1. As regards readiness and willingness on the part of respondent No.1, it was stated:- “It is submitted that in spite of defendant’s repeated demands the plaintiff has not come forward either to pay balance sale price or to complete the sale immediately. Even though specific condition to complete the sale on or before 20.03.2001 is mentioned in the sale agreement and time is mentioned as essence of the contract, the plaintiff has not completed the sale within the stipulated time. The plaintiff was not ready and willing to perform his part of contract even though the defendant was ready to clear the encumbrance over the suit property.” The matter regarding handing over of possession was elaborated as under: “On 16.09.2002, the plaintiff came with his men and threatened the defendant that why he had cancelled the sale agreement and if he did not execute sale deed in his favour he would not permit the defendant to enjoy the suit property. The defendant immediately went to the office of the Police Commissioner, Madurai City wherein he was asked to come tomorrow. On 17.09.2002 he presented a petition to the Police Commissioner, Madurai City and it was forwarded to SP, Madurai Rural. When the defendant was in the office of the SP, Madurai Rural, at the instigation of the plaintiff one Karthick Muniasamy of Pudur with his men namely Rajesh, Kannan, Muniasamy and other attacked the watchman of the suit property and illegally trespassed into the suit property and damaged the property and took illegal possession of the suit property. On coming to know about the illegal taking over possession of the suit property by the plaintiff’s men, the defendant immediately told this matter to the SP, Madurai Rural who made endorsement on the petition directing the Inspector of Police, Oomachikulam to register F.I.R. against the plaintiff and his men..….”
4. This Court issued notice on 25.08.2014 in petitions for special leave to appeal. The parties exchanged the pleadings and also filed documents on record.
We heard Ms. V. Mohana, learned Senior Advocate in support of the appeals and Mr. V. Prabhakar, learned Advocate for respondent No.1. After conclusion of hearing, written submissions were filed by respondent No.1 submitting inter alia:- “Apart from having averred regarding the readiness and willingness, respondent No.1 by his conduct had proved the same which are as below:i) Payment of an advance of Rs.6,00,000/- on 20.09.2000. ii) Further advance of Rs.2,00,000/- paid on 21.01.2001. iii) Further advance of Rs.10,00,000/- paid on 22.09.2001. iv) Notice dated 22.09.2001 issued by the respondent to the petitioner to execute the sale deed. v) Holding a meeting of the petitioner, his counsel with the respondent and his counsel for determining the manner of performance of the Agreement. The said factum of the meeting and the outcome thereof as set out in the Plaint in Para 6 at Page 136 of Volume II stood admitted by the respondent in the Notice dated 29.07.2002 issued on his behalf which had been marked as Exhibit A15. vi) Taking possession of the property on 03.08.2002. vii) Seeking impleadment in the Debt Recovery proceedings with a view to settle the debt due from the Respondent. viii) Filing of the Suit within 9 days after the telegram dated 03.09.2002 issued by the petitioner cancelling the agreement. Suit had been filed on 12.09.2002. …………….. The non deposit of the balance consideration by respondent No.1 cannot be put against respondent No.1 inasmuch as the encumbrance came to light after the agreement to sell which ought to have been cleared by the petitioner by demanding the amount for the discharge in terms of the recital at page 37 of the SLP paper book[2] which was never done by the petitioner. As per the recital in the Agreement to sell the petitioner had to handover the original parent title deed and other supportive documents which was again not done despite having received nearly half of the sale consideration. Since the parent title deed had not been given as required under the agreement, possession was given to respondent No.1.”
5. In Gomathinayagam Pillai and Others v. Pallaniswami Nadar[3] after referring to the observations of the Privy Council in Ardeshir Mama v. Flora Sassoon[4], this Court laid down that in a suit for specific performance of an agreement, the plaintiff must plead and prove that he was ready and willing to perform his part of the contract since the date of the contract, right upto the date of the hearing of the suit. The observations by this Court in that behalf were as under:- “But the respondent has claimed a decree for specific performance and it is for him to establish that he was, since the date of the contract, continuously ready and willing to perform his part of the contract. If he fails to do so, his claim for
2 As quoted in Paragraph 3(B) above 3 (1967) 1 SCR 227 4 L.R. 55 I.A. 360 specific performance must fail. As observed by the Judicial Committee of the Privy Council in Ardeshir Mama v. Flora Sasson [ L.R. 55 I.A. 360, 372 ] “In a suit for specific performance, on the other hand, he treated and was required by the Court to treat the contract as still subsisting. He had in that suit to allege, and if the fact was traversed, he was required to prove a continuous readiness and willingness, from the date of the contract to the time of the hearing, to perform the contract on his part. Failure to make good that averment brought with it the inevitable dismissal of his suit.” The respondent must in a suit for specific performance of an agreement plead and prove that he was ready and willing to perform his part of the contract continuously between the date of the contract and the date of hearing of the suit.”
6. Similarly in J.P. Builders and Another v. A. Ramadas Rao and Another[5], it was observed by this Court in paragraphs 21 and 25 as under:- “21. Among the three clauses, we are more concerned about clause (c). “Readiness and willingness” is enshrined in clause
(c) which was not present in the old Act of 1877. However, it was later inserted with the recommendations of the 9th Law Commission’s Report. This clause provides that the person seeking specific performance must prove that he has performed or has been ready and willing to perform the essential terms of the contract which are to be performed by him.
25. Section 16(c) of the Specific Relief Act, 1963 mandates “readiness and willingness” on the part of the plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. It is also clear that in a suit for specific performance, the plaintiff must allege and prove a continuous “readiness and willingness” to perform the contract on his part from the date of the contract. The onus is on the plaintiff.”
7. The assurance given by the appellant at the time when the agreement dated 30.06.2000 (Ex.A[1]) was executed that there was no encumbrance over the suit property was not a correct statement of fact. The further recital that the “Original Parent Document” was in the Bank again was not a fair and complete disclosure. It is true that these averments were copied in the subsequent suit agreement dated 20.09.2000. However the communication dated 22.09.2001 (Ex.A[6]) emanating from respondent No.1 records that by the time the suit agreement was entered into the existence of the encumbrance was a well known fact. For the purposes of the present matter what is important is the common understanding with which the parties had entered into the transaction. If respondent No.1 was well aware about the existence of encumbrance over the suit property at the time when suit agreement was entered into, he cannot thereafter submit to the contrary. In the face of such clear understanding under which the suit agreement was entered into, the High Court was completely in error in observing that the entire case put forth on the part of the appellant was required to be summarily thrown out. Further, reliance on the decision in S.P. Chengalveraya Naidu (supra) was also misplaced. That case did not arise from a suit for specific performance and more over the plaintiff in that case was found to have withheld relevant documents and as such the judgment rendered by the trial Court dismissing his claim was restored by this Court. The principle laid down therein cannot apply either on facts or in law to the present case.
8. As regards suit for specific performance, the law is very clear that the plaintiff must plead and prove his readiness and willingness to perform his part of the contract all through i.e., right from the date of the contract till the date of hearing of the suit. If respondent No.1 was well aware about the encumbrance and the parties had chosen that the balance consideration be paid to the appellant before 20.03.2001 so that the sale deed could be registered without any encumbrance, it was for respondent No.1 to have taken appropriate steps in that behalf for completion of transaction. The facts on record disclose that the first step taken by respondent No.1 after the suit agreement was well after four months, when further amount of Rs.[2] lakhs was paid on 21.01.2001. Thereafter nothing was done till 20.03.2001 by which the transaction had to be completed. The record is completely silent about any communication sent around 20.03.2001 towards completion of transaction. As a matter of fact the first step thereafter was six months after the deadline namely on 22.09.2001 when the communication (Ex.A[6]) was sent along with amount of Rs.10 lakhs. The written submissions filed on behalf of respondent No.1 also do not indicate any steps till this time so as to say that he was all the while ready and willing to complete the transaction.
9. The assertion made by respondent No.1 in paragraph 7 of the plaint is a mere assertion without any relevant details as to what exactly he had done towards fulfillment of his obligations and completion of the transaction. The factual aspects as detailed above are quite clear that respondent No.1 had completely failed in his obligations and was not ready and willing to perform his part of the contract. Even going by the case set up by respondent No.1, that around 29.07.2002 an arrangement was arrived at, under which out of the balance amount Rs.19.[5] lakhs, Rs. 13.[5] lakhs were to be made over by respondent No.1 to the Bank directly and rest of the sum of Rs.[6] lakhs was to be paid to the appellant in cash, the facts do not indicate any observance of these conditions. Beyond filing an application for impleadment which came to be dismissed, respondent No.1 did not take any step. The amount of Rs.13.[5] lakhs was independently deposited and discharge was obtained by the appellant.
10. If respondent No.1 was put in possession of the suit property pursuant to the arrangement as suggested by him, his corresponding obligation under such arrangement was also twofold namely to pay off the dues to the Bank directly and pay rest of the sum to the appellant. There is nothing on record which could be consistent with discharge of such obligation on the part of respondent No.1.
11. The case put up by respondent No.1 that he was put in possession pursuant to an arrangement arrived at on or around 29.07.2002 is not free from doubt. In a matter where Rs.19.[5] lakhs were still outstanding, it is not possible to accept that the vendor may put the purchaser in possession when the original agreement did not contemplate handing over of the possession even before execution of the sale deed. The contemporaneous facts including the aspects that the appellant had initiated criminal proceedings and made complaints to various authorities about forcible possession having been taken by respondent No.1, also indicate falsity in the claim of respondent No.1. Be that as it may the basic issue is whether respondent No.1 was ready and willing to perform his part of the contract which in our considered view has to be answered against him. We are conscious that two Courts have arrived at a finding of fact but in our view such finding is completely opposed to and contrary to the facts on record and is completely unsustainable.
12. We, therefore, reject the claim of respondent No.1 and hold that the suit for specific performance preferred by respondent No.1 is required to be dismissed. At the same time we accept the counter claim made by the appellant and hold that he is entitled to recovery of possession. It appears that the assertions in the counter claim that the Kalyana Mandapam was fetching Rs.1,80,000/- per annum were not disputed or denied by respondent No.1. On the score that the appellant was wrongfully denied and deprived of the earnings from Kalyana Mandapam for the last 16 years, he would be entitled to reasonable return. But at the same time he had retained and enjoyed sum of Rs.18 lakhs which he had received by way of advance from respondent No.1. In the circumstances, though we would direct refund of the sum of Rs.18 lakhs, we further deem it appropriate to direct that in the circumstances neither would respondent No.1 be entitled to any interest on the sum of Rs.18 lakhs which was given by way of advances under the suit agreement to the appellant nor would appellant be entitled to any sum by way of mesne profits for last 18 years of wrongful possession of the suit property by respondent No.1.
13. Allowing the appeal, we therefore direct:- (a) The suit for specific performance filed by respondent No. 1 is dismissed. Respondent No.1 shall be entitled to the refund of sum of Rs.18 lakhs paid by way of advance under the suit agreement. Said sum shall be refunded by the appellant within three months from the date of this judgment. No interest shall be payable on said sum. However, if the said sum is not paid within three months from today as directed, it shall carry interest @ 7½ per cent from the date of expiry of said period of three months. (b) Counter claim preferred by the appellant is allowed. Respondent No.1 shall deliver vacant and peaceful possession of the suit property to the appellant within one month from the date of this judgment. The appellant shall however not be entitled to any mesne profits in respect of wrongful possession of the suit property by respondent No.1.
(c) The decree passed by the trial court and affirmed by the High
14. The appeals stand allowed in the aforesaid terms. ………………….J. (R. Banumathi) ….……………….J. (Uday Umesh Lalit) New Delhi March 28, 2018