IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07 .07. 2008 CORAM THE HONOURABLE MR.JUSTICE V.DHANAPALAN A.S.No.1051 of 1994 A.Gunasekaran ... Appellant/Plaintiff vs. K.Damayanthi ... Respondent/Defendant Appeal filed under Section 96 of the Code of Civil Procedure praying to set aside the judgment and decree dated 05.08.1994 on the file of the learned Subordinate Judge, Erode in O.S.No.249 of 1990. For Appellant : Mr.P.Valliappan For Respondent : Mrs.AL.Gandhimathi J U D G M E N T The unsuccessful plaintiff in the suit in O.S.No.249 of 1990 on the file of the Subordinate Judge, Erode has preferred this appeal challenging the judgment and decree dated 05.08.1994. 2. The case of the appellant/plaintiff, as put forth before the Court below, is, as under: (a) The suit property belongs to the respondent/defendant. She agreed to sell the same to the appellant at the rate of Rs.10/- per square feet, fixing the sale price tentatively at Rs.40,100/- and for the said sale consideration, an agreement of sale was written between the appellant and the respondent on 03.05.1987; on the same day, a sum of Rs.5,000/- was given to the respondent as advance. As per the sale agreement, the sale has to be completed before the end of Tamil month 'Aavani' 1987. When the respondent demanded a sum of Rs.5,000/- in the month of August 1987, the appellant paid the same on 22.08.1987. According to the appellant, he has to pay Rs.30,100/- towards the balance sale consideration and he is having sufficient money with him and is always ready and willing to perform his part of the contract. (b) On 17.04.1989, the appellant issued a notice through his counsel to the respondent demanding her to execute the sale deed in his favour at her cost on receipt of the balance sale consideration https://hcservices.ecourts.gov.in/hcservices/ of Rs.30,100/-; on receipt of the registered notice, the respondent issued a reply notice, admitting the receipt of a sum of Rs.10,000/- as advance and alleging that she had sent a notice to the appellant on 27.02.1988. According to the appellant, no such notice was either tendered or served on him. (c) Since the respondent did not come forward to complete the sale, the appellant filed a suit in O.S.No.249 of 1990 for a direction to the respondent to execute the sale deed in his favour for Rs.40,100/- receiving the balance of Rs.30,100/- and put him in possession of the property, failing which, direct an officer to perform the said part of the execution of the sale deed on behalf of the respondent in favour of the appellant and put the appellant in possession thereof. 3. The respondent in her written statement has denied the averment of the appellant that he is always willing and ready to execute the sale deed. According to her, she entered into a contract for sale of the suit property under an agreement dated 03.05.1987 with the appellant as she was having a pressing need for money at that time; her sons were young and she had to incur heavy expenditure for their education and her husband was also unemployed then. Since the appellant had not performed his part of the contract as per the terms and conditions embodied in the agreement dated 03.05.1987, the respondent had sent a notice on 27.02.1988 to the appellant asking him to execute the sale by paying the balance amount of Rs.34,180/- within a period of 15 days from the date of notice. She had further notified the appellant that the original document of Sale Deed dated 01.07.1981 should be returned to her in the event of his not complying with the demand made in the notice dated 27.02.1988. 3a. According to the respondent, the period fixed in the agreement had expired and the claim is barred by time, as time was made the essence of contract and therefore, the appellant is not entitled to a decree for specific performance. She has further stated that she is an illiterate woman, doing coolie work and leading a hard life and the suit property is the only property which she possesses, which she banks for putting up a dwelling shelter. It is her further case that if the suit property is knocked away by the appellant, then she will be in great difficulties. 4. The Trial Court on consideration of the facts and circumstances of the case and on analysis of the material records, framed issues and dismissed the suit in favour of the respondent, thereby directing the respondent to pay the advance amount of Rs.10,000/- to the appellant with interest at the rate of 12% from the date of suit till the date of payment. Hence, this appeal. https://hcservices.ecourts.gov.in/hcservices/ 5. Learned counsel for the appellant has contended that the learned Subordinate Judge has erred in law in dismissing the suit for specific performance in respect of sale agreement dated 03.05.1987, particularly when the sale agreement is admitted and the contract sought to be enforced is a valid one. He also contended that the Court below failed to appreciate that it is well settled law that in respect of sale of immovable property the ordinary presumption is "time is not the essence of the contract". According to the learned counsel, the Court below ought to have seen that the question of hardship must be judged as on the date of the contract and not on the subsequent events, the hardship should be one collateral to the contract and not in relation to a term of the contract such as quantum of consideration. 5a. It is also the contention of the learned counsel for the appellant that the Court below ought to have seen that neither in the reply notice marked as Ex.A-4 nor in the plaint, the appellant has come forward with the case that the transaction is a commercial transaction as such time is the essence of the contract; when there is neither plea nor evidence to support the case of commercial transaction, the learned Subordinate Judge erred in law in assuming that the transaction is a commercial one and time is the of the essence of the contract. 5b. Learned counsel for the appellant in support of his contentions has relied on the following decisions: (i) In 65 L.W. 25 (DB) in the case of S.V.Sankaralinga Nadar vs. P.T.S.Ratnaswamy Nadar, this Court has held as under: "Where in a suit for specific performance of an agreement to sell certain properties the defendant alleged that the plaintiff was guilty of inordinate delay and laches in bringing the suit and therefore was not entitled to the discretionary relief of specific performance. ... Under S.22(2) of the Specific Relief Act the question of hardship must be judged as on the date of the contract and not on the subsequent events. The hardship should be one collateral to the contract and not in relation to a term of the contract such as quantum of consideration. Where at the time when a transaction was entered into, it was for proper consideration the fact that the value of the properties had considerably risen subsequently will not be a basis for the Court to refuse a relief for specific performance." (ii) In 1977 (4) SCC 2262 in the case of Chander Kali Bai and others v. Jagdish Singh Thakur and another, the Supreme Court has held as under: https://hcservices.ecourts.gov.in/hcservices/ "6. ... In Siddik Mahomed Shah v. Mt Saran1 it has been pointed out that where a claim has never been made in the defence presented on amount of evidence can be looked into upon a plea which was never put forward. If it could be so even at the trial stage, undoubtedly, such a new question of fact could not be entertained at any appellate stage. This decision has been followed by this Court in Bhagat Singh v. Jaswant Singh. To the same effect is the view expressed in another decision of this Court in Bachan Singh v. Dhian Dass. Hegde, J. pointed out in para 6 of the judgment that a contention involving determination of questions of fact ought not to have been allowed to be raised for the first time in the second appeal in the High Court. In this case we may add further that neither any issue was struck nor was any evidence adduced by the parties on this question. The case proceeded to trial on the admitted footing that the business which the plaintiff wanted to shift to the suit shop was his business." (iii) This Court, in yet another judgment in 1995 Supp. MLJ 599 in the case of Rajam Gopalakrishnan vs. Kumudam and another, has held as under: "12. ... The appellant contends that time was the essence of the contract and the sale ought to have been concluded within the extended period under Ex.P2. Ex.P1 agreement of sale was executed between the plaintiff and the defendant on 12.07.1979 in respect of the suit property to sell the same for a consideration of Rs.2,05,000. A sum of Rs.25,000 was paid as advance by the plaintiff to the defendant on the same day. Three months' time was fixed in Ex.P1 for completion of the sale. Again, the period for completion of sale was extended by 45 days i.e. From 12.10.1979 to 25.11.1979 by mutual agreement between the parties under Ex.P2. The sale was not completed till 25.11.1979. For the notice sent by the plaintiff under Ex.P3 dated 08.02.1979 calling upon the defendant to approve the draft sale deed, and register and document after receiving the balance of sale consideration, the defendant has sent reply under Ex.P5 stating that the defendant is prepared to sell the property without vacant possession as she is unable to get vacant possession. So, the conduct of the defendant as evidenced by Ex.P5 is to the effect that the parties were willing for extension of time and there was no mutual understanding between the parties that time was made essence of the contract. The agreement is with regard to sale of immovable property. https://hcservices.ecourts.gov.in/hcservices/ So, the principle, time is the essence of the contract is not normally applicable. Further, there is no recital in Ex.P1, agreement that time is the essence of contract. Clause 5 of Ex.P1 recites that the sale should be completed within a period of three months from the date thereof unless otherwise agreed upon is writing. Clause 3 of Ex.P1 states that the vendor shall deliver vacant possession of the suit property on or before the date of registration of the sale deed. Clause 6 of Ex.P1 states that the vendor shall discharge the mortgage debt due under the deed of mortgage in faovur of South Madras Co-operative Housing Society. The defendant who has received the advance amount of Rs.25,000/- from the plaintiff has discharged that mortgage. She has got back the original mortgage deed document Ex.P12 on 16.10.1979 with the endorsement of discharge dated 16.10.1979." (iv) The Bombay High Court in AIR 2000 Bombay 410 in the case of Swarnam Ramachandran and another vs. Aravacode Chakungal Jayapalan has held as under: "14. ... The law on the point is well settled. Ordinarily, time is not the essence of a contract for the sale of immovable property. The parties, in a given case may make time of the essence either expressly in terms which unmistakably provide unmistakably that they intended to do so. Alternately, making of time as the essence of a contract may be inferred from the nature of the contract, the property or the surrounding circumstances. A mere stipulation in a contract laying down the time for performance is not sufficient to make time the essence of a contract for sale of immovable property. A party to a contract cannot by his unilateral act make time of the essence unless the circumstances are such as would establish that the other party to the contract had delayed or defaulted in the performance of his obligations under the agreement." (v) In yet another judgment of the Supreme Court reported in AIR 2002 SC 771 in the case of P.Purushottam Reddy and another vs. M/s.Pratap Steels Ltd., it was held as under: "The issue as to whether time is of the essence of the contract in contracts for sale of immovable property came up for the consideration of the Constitution Bench and it was held: It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being of the essence of the https://hcservices.ecourts.gov.in/hcservices/ contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language. * * * 25. ... in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are: 1. From the express terms of the contract; 2. from the nature of the property; and 3. from the surrounding circumstances, for example: the object of making the contract.” (vi) In AIR 2003 SC 1905 in the case of Bondar Singh and others vs. Nihal Singh and others, it was held by the Supreme Court as follows: "7. As regards the plea of sub-tenancy (shikmi) argued on behalf of the defendants by their learned counsel, first we may note that this plea was never taken in the written statement the way it has been put forth now. The written statement is totally vague and lacking in material particulars on this aspect. There is nothing to support this plea except some alleged revenue entries. It is settled law that in the absence of a plea no amount of evidence led in relation thereto can be looked into. Therefore, in the absence of a clear plea regarding sub- tenancy (shikmi), the defendants cannot be allowed to build up a case of sub-tenancy (shikmi). Had the defendants taken such a plea it would have found place as an issue in the suit. We have perused the issues framed in the suit. There is no issue on the point." (vii) In one another judgment of the Supreme Court reported in AIR 2003 SC 4319 in the case of Rajagopal (dead) by L.Rs. vs. Kishan Gopal and another, it was held as under: https://hcservices.ecourts.gov.in/hcservices/ "9. ... As such a case was never pleaded in the plaint, there was no occasion for the defendants to plead in the written statement as to who gave Goverdhan Das in adoption and accordingly, the defendants in the written statement only denied that adoption was in “dwyamushyayana” form and according to them, the same was in ordinary form. In the absence of any pleading whatsoever on the question as to whether Goverdhan Das was given in adoption by his father Moti Lal or brother Kishan Lal, there was no lis between the parties on this question, as such courts could not have gone into the same even if some evidence was adduced and the lower appellate court rightly decided this question against the plaintiffs. Reference in this connection may be made to a decision of the Privy Council in the case of Siddik Mahomed Shah v. Mt. Saran1 in which it was held (AIR p. 57) that “where a claim has been never made in the defence presented no amount of evidence can be looked into upon a plea which was never put forward”. The said case has been referred to by this Court with approval in the case of Bhagat Singh v. Jaswant Singh2. In that case, some evidence was led but the High Court refused to go into the question observing that where no plea was taken, it cannot be said that there was any lis between the parties thereon. This Court upheld the decision of the High Court observing that the same was supported by a decision of the Judicial Committee in the case of Siddik Mahomed Shah1. Thus we do not find any error in the findings recorded by the first appellate court on this point." 6. In response, learned counsel for the respondent submitted that the allegation of the appellant that he was ready and willing to perform his obligation is totally false. She further submitted that the period fixed in the agreement has expired and therefore, the appellant is not entitled to the relief of specific performance under the agreement. According to the learned counsel, the Trial Court has rightly dismissed the suit taking into the account the fact that the appellant has committed a breach of contract by not executing the sale within the time fixed in the agreement and also within the period given in the notice. Learned counsel finally submitted that the appeal deserves dismissal on the ground that "time is the essence of contract". 6a. In support of her case, the counsel for the respondent has relied on the following judgments: (i) In the case of AIR 1967 SC 868 in the case of Gomathinayagam Pillai and others vs. Palaniswami Nadar, the Supreme Court has held as under: https://hcservices.ecourts.gov.in/hcservices/ "Section 55 of the Contract Act which deals with the consequences of failure to perform an executory contract at or before the stipulated time provides by the first paragraph: “When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee if the intention of the parties was that time should be of the essence of the contract.” It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable: it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence. In Jamshed Khodaram Irani v. Burjorji Dhunjibhai 1 the Judicial Committee of the Privy Council observed that the principle underlying Section 55 of the Contract Act did not differ from those which obtained under the law of England as regards contracts for sale of land. The Judicial Committee observed: “Under that law equity, which governs the rights of the parties in cases of specific performance of contracts to sell real estate, looks not at the letter but at the substance of the agreement in order to ascertain whether the parties, notwithstanding that they named a specific time within which completion was to take place, really and in substance intended more than that it should https://hcservices.ecourts.gov.in/hcservices/ take place within a reasonable time. Their Lordships are of opinion that this is the doctrine which the section of the Indian Statute adopts and embodies in reference to sales of land."" (ii) In yet another judgment reported in AIR 1993 SC 1742 in the case of Chand Rani (dead) by L.Rs. vs. Kamal Rani (dead) by L.Rs., the Supreme Court has held as under: "19. ... When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee if the intention of the parties was that time should be of the essence of the contract. It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable: it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specific period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence. ... "24. From an analysis of the above case-law it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract the Court may infer that it is to be performed in a reasonable time if the conditions are: 1. From the express terms of the contract; 2. from the nature of the property; and https://hcservices.ecourts.gov.in/hcservices/ 3. from the surrounding circumstances, for example: the object of making the contract. " (iii) In yet another judgment of the Supreme Court reported in 1997 (1) CTC 628 in the case of K.S.Vidyanandam and others vs. Vairavan, it was held as under: "10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement (which does not provide specifically that time is of the essence of the contract) should be decreed provided it is filed within the period of limitation notwithstanding the time-limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to