SECOND APPEAL 478 OF 2004

22nd April 2019

Petitioner Counsel: Shri S. P. Kshirsagar
Respondent Counsel: Shri Tejas Deshpande

Cases Cited :
Para 5: K.S. Vidyanadam & ors..Vs.. Vairavan, 1997(2) Mh.L.J. 642
Para 7: Saradamani Kandappan..Vs..S. Rajalakshmi and ors, 2011(12) SCC 18

JUDGEMENT

This appeal is prosecuted by the legal heirs of the original defendant in Special Civil Suit 4 of 2002 brought by the plaintiff – respondent herein for specific performance. By judgment and decree dated 9.9.2002 in Special Civil Suit 4 of 2002, the Joint Civil Judge (Junior Division), Washim decreed the suit and by judgment and decree dated 30.4.2004, Regular Civil Appeal 246 of 2002 is dismissed by the Adhoc Additional District Judge, Washim.

2. The suit property is agricultural field admeasuring 1.62 H.R. situated at village Malegaon, District Washim. The plaintiff contends that by and under an agreement to sell dated 8.1.1999, the defendant agreed to sell the suit property to the plaintiff for consideration of Rs 1,92,000/- and received earnest amount of Rs. 5,000/-. The saledeed was to be executed on or before 5.11.1999. The defendant undertook to measure the suit field and hand over the physical possession of the suit field to the plaintiff. The plaintiff contends that the defendant avoided to execute the saledeed and on 5.11.1999, the plaintiff attended the office of the Sub-Registrar, Shirur with the balance consideration of Rs. 1,87,000/- for the execution of the saledeed. However, the defendant did not measure the field nor made the plaintiff aware of the encumbrances and saledeed could not be executed. The plaintiff issued notice dated 24.12.2001 and called upon the defendant to execute the saledeed in response to which notice the defendant took a false plea which has constrained the plaintiff to institute the suit.

3. The defendant set up a plea that the suit agreement was a nominal security document. The defendant contends that the plaintiff is a money lender who advanced loan of Rs. 2,000/and the agreed rate of interest was 5% per month. The defendant contends that he signed on blank stamp paper as security for the loan amount and although the loan together with the interest was repaid, the stamp paper was not returned. The defendant denied the material averments in the plaint including the averment that the plaintiff attended the office of the Sub-Registrar, Shirur on 5.11.1999.

4. The plaintiff entered the witness box and examined the scribe and the witness to the agreement to sell. The defendant examined himself and one Dattatraya Kisan Ingole.

5. The trial Court disbelieved the plea that the suit transaction was a money lending transaction. The trial Court held that the plaintiff proved his readiness to perform his part of the contract. The trial Court repelled the contention that the time was of the essence of the contract. The trial Court noted that the defendant was obligated to measure the land and to deliver physical possession of the suit field to the plaintiff. The finding of the trial Court that the time was not of the essence and that the plaintiff was ready and willing to perform his part of the contract is substantially, if not entirely predicated on the failure of the defendant to measure the suit field. The trial Court deals with the aspect of “readiness” and notes that the plaintiff has deposed that his father is a retired teacher and the gratuity and pension amount available with the father of the plaintiff was the source of funds to pay the balance consideration of Rs. 1,87,000/-. However, the trial Court has failed to consider much less appreciate the aspect of “willingness”. Perusal of the judgment of the trial Court reveals that in the reasons recorded from the paragraph 9 onwards, there is not even a reference to the assertion of the plaintiff that he attended the office of the Sub-Registrar at Shirur on 5.11.1999 with the balance consideration. The trial Court further fails to consider the effect of the admitted fact that the plaintiff issued the notice calling upon the defendant to execute the saledeed two years after 5.11.1999 on which day the plaintiff claims to have attended the office of the Sub-Registrar of documents at Shirur with the balance consideration. The first appellate Court concurs with the finding of the trial Court that the suit transaction was not a money lending transaction. The first appellate Court then holds that the time was not of the essence of the contract. The finding that time was not of the essence of the contract is again predicated on the failure of the defendant to measure the suit field. The first appellate Court framed following points for determination and recorded finding:

Sr.No. Points Findings
1 Does the appellant defendant prove that transaction taken place between him and the plaintiff on 8.1.1999 was purely a loan transaction?
…...No.
2 Does the appellant prove that the plaintiff, while lending him Rs. 2000/as a handloan, obtained his signature on a blank stamp paper towards security of loan?
…...No.
3 Does the appellant prove that he repaid Rs. 2000/- to the plaintiff, but taking the disadvantage of the blank paper, the plaintiff filed a false and vexatious suit against him for specific performance of contract?
…...No.
4 Does the appellant prove that in this backdrop the refund of earnest money would have provide adequate relief to the plaintiff?
…...No.
5 Does the appellant prove that the judgment and decree passed by the trial Court is against the law, facts and probabilities of the case?
…...No.
6 Does the appellant prove that the …...No. judgment and decree of the trial Court is liable to be set aside?
7 What order? As per final order.

The first appellate Court did not frame the point touching readiness and willingness, which failure may have paled into insignificance were the first appellate Court to consider the evidence on record and to record a finding on the readiness and willingness of the plaintiff to perform his part of the contract. Unfortunately, the first appellate Court has inexplicably failed to address the question of readiness and willingness. The reasons recorded by the first appellate Court are found in paragraph 7 onwards. Paragraphs 7 to 10 are devoted to the question whether the plaintiff is a money lender. Paragraphs 11 and 12 deal with the contention raised on behalf of the defendant that the time was of the essence of the contract. Paragraphs 13 to 17 - which is the concluding paragraph consider the several contentions raised on behalf of the defendant to buttress the submission that even if the plaintiff proves that it would be lawful to grant the relief of specific performance, the discretion ought not to be exercised in favour of the plaintiff. It is in this context that a reference is made to the decision of the Hon’ble Apex Court in K.S. Vidyanadam & ors..vs.. Vairavan, 1997(2) Mh.L.J. 642 which articulates that it would be inequitable to grant relief of specific performance to the plaintiff who is guilty of inaction for a period of 2 ½ years in violation of the terms of the agreement. The first appellate Court observes, in the context of the articulation in K.S. Vidyanadam & ors..vs.. Vairavan that it is the defendant who has violated the terms and conditions of the agreement. It is clear, that the aspect of readiness and willingness, is kept out of consideration.

6. The appeal is admitted on the following substantial questions of law:
“(1) Whether there was unreasonable delay on the part of the plaintiff in filing suit for specific performance so as to dis-entitle him to a decree?
(2) Whether the courts should have refused the specific performance because of the payment of only earnest money of Rs. 5,000/- by the present respondent to the appellant while entering into an agreement?”.
The learned counsel Shri S.P. Kshirsagar for the appellant and learned counsel Shri Tejas Deshpande for the respondent were heard extensively. In the light of the discussion supra, the following additional substantial question of law is framed, and the learned counsel are heard on the additional substantial question of law:
“Whether it is necessary to remand the matter in view of the failure of the trial Court to record a finding on willingness of the plaintiff to perform his part of the contract and the failure of the first appellate court to record a finding on “readiness and willingness”?”
The settled position of law is, and in all fairness to the learned counsel no submissions are advanced to the contrary, 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 till the date of hearing of the suit. In the absence of such pleadings and proof, the suit must necessarily fail. Clause (c) of section 16 of the Specific Relief Act, 1963 which was absent in the 1877 Act mandates that the condition precedent for obtaining the relief of specific performance is “readiness and willingness” on the part of the plaintiff. Readiness essentially refers to the capacity to perform the contract and the element of financial capacity would be one of the determinative facts in assessing “readiness”. Willingness on the other hand is a state of mind which must be inferred from the evidence and circumstances established. A decree of specific performance would be illegal in the absence of a finding that the plaintiff was both ready and willing to perform his part of the contract. While the trial Court has considered the aspect of readiness, the aspect of willingness is not touched. The first appellate Court failed to consider both, the aspect of readiness, and the aspect of willingness.

7. Several decisions were cited by Shri S.P. Kshirsagar, the learned counsel for the appellant and Shri Tejas Deshapnde, the learned counsel for the respondent. Suffice it to refer to the following observations of the Hon’ble Apex Court in Saradamani Kandappan..vs..S. Rajalakshmi and ors, 2011(12) SCC 18:
“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 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 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:
(i) 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) 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. 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 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 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.
Re: Question (ii)”

8. It is clear from the observations in paragraph 43 (iii) that one of the aspects which shall have to be considered is whether there was an inordinate delay in filing the suit after the alleged breach / refusal and the effect thereof. The evidence on record shall have to be looked into by the trial Court and a finding on willingness would have to be recorded. It would therefore, be necessary to remand the matter to the trial Court. In this view of the matter, I do not find it necessary to refer to the other decisions cited at the bar.

9. The judgment dated 9.9.2002 in Special Civil Suit 4 of 2002 rendered by the Civil Judge (Senior Division), Washim and the judgment dated 30.4.2004 in Regular Civil Appeal 246 of 2002 rendered by the Adhoc Additional District Judge are set aside.

10. Matter is remitted to the trial Court for fresh decision in the light of the observations in this judgment.

11. Considering that the Civil Suit is of the year 2002, the trial Court is requested to decide the suit as expeditiously as possible and in any event within six months.

12. The appeal is allowed in the aforestated terms.