IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.09.2008 CORAM: THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN A.S.No.151 of 2001 P.K.Jayakumar .. Appellant/Defendant -vs- 1. R.Padamchand Jain 2. Ujwala Jain .. Respondents/Plaintiffs This appeal is filed under Section 96 of CPC against the Judgment and Decree dated 19.4.2001 passed in O.S.No.9315 of 1995 on the file of VIII Assistant Judge, City Civil Court, Chennai. For appellant : : Mr. R.Thiayagarajan,Senior Counsel for Mr.N.C.Ramesh, Advocate For respondents : : Ms.Meera Gupta,Advocate for M/s Surana & Surana JUDGMENT This appeal has been directed against the decree and Judgment in O.S.No.9315 of 1995 on the file of VIII Assistant Judge, City Civil Court, Chennai. The defendant who lost his defence before the trial Court is the appellant herein. 2. The short facts of the plaint sans irrelevant particulars are as follows: The defendant is the owner of the property,a house and premises comprising the entire first and second floors of the premises bearing door No.44/3, Landons Road, Kilpauk, Madras-10 together with 2/3rd share in the land measuring 2520 sq.ft which is the plaint schedule property. The defendant approached the plaintiffs and offered to sell the immovable property. The plaintiffs agreed to purchase the said property for a sum of Rs.8,50,000/-. The plaintiffs have entered into an agreement of sale with the defendant on 29.10.1993 duly registered as Document No.1675 of 1993 in the office of the Sub Registrar, Periamet, Madras. On 29.10.1993, the first plaintiff made payment of Rs.1,00,000/- by cash to the defendant under the agreement as advance. On the same day, the second plaintiff also paid a sum of Rs.1,00,000/- to the defendant in cash under the agreement as advance. Thus, in all the plaintiffs paid a sum of Rs.2,00,000/- as advance. As per Clause 2(c) of the agreement of sale dated 29.10.1993, the defendant agreed to receive the balance of the sale consideration at the time of registration of the sale deed. As per Clause 8 of the agreement of sale, the defendant agreed to complete the sale within three months. The defendant failed and neglected to obtain the Income Tax Clearance for the sale of the said property and he has also failed to perform his https://hcservices.ecourts.gov.in/hcservices/ part of the contract within the time stipulated under the sale agreement. By letter dated 30.1.1994, the defendant sought time till 31.7.1994 to complete the transaction of the sale. But the sale was not completed even by 31.7.1994. Inspite of several requests, the defendant failed and neglected to complete the sale. Thereupon, the first plaintiff sent a telegram dated 15.10.1994 calling upon the defendant to register the sale deed relating to the schedule property. For the said telegram dated 15.10.1994, the defendant sent a reply dated 25.10.1994 wherein for the first time , the defendant raised a plea stating that the agreement dated 29.10.1993 was entered into only for the purpose of financing his wife who was indulged in film production. The said letter of the defendant contained all frivolous and vexatious contentions. Thereafter, the plaintiffs issued a suit notice on 27.1.1995 calling upon the defendant to execute the sale deed in respect of the plaint schedule property. The defendant sent a reply dated 8.2.1995 contending all false allegation which are no way connected with the agreement of sale dated 29.10.1993. The plaintiffs are no way connected with the transaction referred to in the reply notice dated 8.2.1995. The said plea has been raised by the defendant only to cheat the plaintiffs after having taken an advance of Rs.2,00,000/- for selling the immovable property. The plaintiffs are always ready and willing to perform their part of the contract. The defendant has not furnished Income Tax Clearance Certificate to effect the sale. The defendant had incurred a loan of Rs.3,50,000/- from the Life Insurance Corporation of India and a simple mortgage for Rs.50,000/- in favour of one Mr.T.M.P.Griffin Kangoo. As per Clause 3 of the agreement of sale dated 29.10.1993, the defendant had authorised the plaintiffs to pay and discharge the loan due to the Life Insurance Corporation of India and the said T.M.P.Griffin Kangoo out of the sale proceeds, but at the time of registration of the sale deed. The plaintiffs are always ready and willing to perform their part of the contract. The defendant has neglected to complete the sale transaction. Hence the suit. 3. The Defendant in his written statement would contend that basis of the claim in the suit is alleged to be the sale agreement entered into between the plaintiffs and the defendant on 29.10.1993 for a consideration of Rs.8,50,000/- and that a sum of Rs.2,00,000/- were paid as advance on 29.10.1993. The defendant's wife is a film producer. When the film was half way through, the finance was required for the completion of the said film. It is only with that purpose the defendant approached the plaintiffs some time in January 1993. The first plaintiff agreed to advance upto a sum of Rs.12,00,000/- for completing the film. That amount was agreed to be advanced in stages. On 25.1.1993, a sum of Rs.1,00,000/- was advanced by the first plaintiff and the defendant had issued ten post dated cheques each for Rs.10,000/-. In respect of four cheques, the defendant had repaid a sum of Rs.40,000/-. However, no payment was made in respect of the remaining cheques. The first plaintiff had not honoured his commitment to advance the money to the extent of Rs.12,00,000/-. However, after very great pressure on the first plaintiff, the latter had paid a sum of Rs.75,000/- on 10.5.1993 after taking six post dated cheques from the plaintiffs each for Rs.12,500/-. Since the defendant was awaiting further payment from the first plaintiff as promised by him, the defendant did not arrange https://hcservices.ecourts.gov.in/hcservices/ for repayment of the sum of Rs.75,000/- advanced by the plaintiff on 10.5.1993. After prolonged and persistent request to fulfil his promise the first plaintiff paid a further sum of Rs.25,000/- on 30.5.1993 after taking a post dated cheque for the said amount. The mode of repayment followed by the first plaintiff inspite of his agreeing to advance a sum of Rs.12,00,000/- for the completion of the picture was not at all helpful to the defendant to complete the picture. It is only in such circumstances, the first plaintiff insisted upon the defendant giving substantial immovable property security towards the further advance of funds by the first plaintiff for completing the picture. The alleged agreement of sale dated 29.10.1993 was executed only for giving security towards further payments to be made by the first plaintiff and not for selling the property to the first plaintiff. The reference to the consideration of Rs.8,50,000/- was never thought about or fixed nor was the sum of Rs.2,00,000/- paid by the first plaintiff on several occasions was treated as advance. Even the discharge of Encumbrance Certificate was introduced only with a view to make the agreement appear as if it is one for sale. The defendant further states that at no point of time there was any understanding between the parties to convey the property to the first plaintiff. The extension of time was to enable the first plaintiff to fulfil his promise viz., to make further advance as agreed to. The telegram dated 15.10.1994 of the first plaintiff was duly replied by the defendant by letter dated 25.10.1994 setting out the true and correct position regarding the alleged agreement. The defendant again reiterates that the agreement was entered into only to provide for security in favour of the first plaintiff to enable him to advance further amounts to the defendant. There is no agreement to sell the suit property as claimed by the plaintiffs and the alleged agreement was not entered into with a view to sell the suit property to the plaintiffs. There was no obligation on the defendant to get the Income Tax Clearance Certificate since there was no transaction for sale of the suit property. There was no other occasion for the first plaintiff to make any such payment since there was no transaction for sale of the suit property in favour of the plaintiffs. The plaint is silent as to any demand in writing having been made to the defendant as claimed by the plaintiffs. The plaintiffs sent a notice dated 27.1.1995 containing false and incorrect allegations and the same was duly replied by the defendant through his advocate on 8.2.1995 . Even assuming that the agreement was true, the plaintiffs were not ready and willing to perform their part of the obligation under the agreement. The defendant was not under an obligation to get the Income Tax Clearance Certificate. The plaintiffs having undertaken to make further advance of money has miserably failed to make the same despite several requests by the defendant. The plaintiffs have no cause of action to file the suit. Hence the suit is liable to be dismissed. 4. On the above pleadings, the learned trial Judge has framed as many as four issues for trial. On the side of the plaintiffs, the plaintiff has examined himself as P.W.1 besides examining one Anub Chand Jain as P.W.2 and exhibited Exs A1 to A5. On the side of the defendant, the defendant was examined as D.W.1 besides examining one P.V.Kumar as D.W.2 and Exs B1 to B17 were marked. After scanning the evidence both oral and documentary, the learned trial Judge has https://hcservices.ecourts.gov.in/hcservices/ decreed the suit for Specific Performance of contract giving one month time for executing the sale deed. Aggrieved by the findings of the learned trial Judge, the defendant has preferred this appeal. 5. Now the points for determination in this appeal are i) Whether Clause 3 of the sale agreement dated 29.10.1993 under Ex A1 has been complied with by the plaintiffs so as to infer that the plaintiffs have already performed their part of the contract in terms of ExA1 sale agreement entered into between the plaintiffs and the defendant? Iii)Whether the Judgment and decree in O.S.No.99315 of 1995 on the file of VIII Assistant Judge, City Civil Cout, Chennai is liable to be set aside for the reasons stated in the memorandum of appeal? 6. Heard the learned Senior counsel appearing for the appellant as well as the learned counsel appearing for respondents and considered their submissions. 7. Point No 1: Clause 3 to Ex A1 sale agreement reads as follows:"The Vendor authorised the purchaser to pay and discharge the loan due to LIC and T.M.P.Griffin Kangoo out of the sale price at the time of registration of the sale deed. If any deficiency, the Vendor will pay the same out of his own funds." In the earlier paragraph to Ex A1 the recital reads that the vendor has borrowed a sum of Rs.3,50,000/- from LIC by deposit of title deeds of the said property. Whereas the vendor also borrowed a sum of Rs.50,000/- from T.M.P.Griffin Kangoo under a simple mortgage deed dated 31.12.1992 registered as document No.154 of 1993 on the file of SRO, Periamet. The above said two subsisting encumbrance in respect of the suit property were agreed by the vendees/plaintiffs to discharge the same from out of the sale price at the time of registration of the sale deed. So before the registration of the sale deed, it is the duty of the plaintiffs/vendees under Ex A1 to discharge the subsisting loans ie., Rs.3,50,000/- to LIC and Rs.50,000/- to T.M.P.Griffin Kangoo. Even though three months time was stipulated under Ex A1 sale agreement to execute the sale deed, the time has been extended upto 31.7.1994 as seen from Ex A2. Ex A3 letter addressed to the first plaintiff by the defendant dated 25.10.1994 reveals that under an earlier promissory note, the defendant had borrowed Rs.2,00,000/- from the plaintiffs on 25.1.1993, he had paid a sum of Rs.40,000/- for the said loan and also given post dated cheques for the said loan. But under Ex A3, the defendant would undertake to repay the balance of amount of Rs.1,60,000/-. It is seen from the conduct of parties that both of them have not intended to execute the sale deed in terms of Ex A1 before the stipulated time ie., on or before 31.7.1994. Ex A4 is the suit notice dated 27.1.1995 issued by the plaintiffs through their counsel to the defendant. At paragraph 6 of the said notice, the plaintiffs would state that for preparing a draft sale deed and to get clearance Certificate under Section 230-A of the Income Tax Act for registration of the sale deed, it will be sent to the defendant for approval. Further the plaintiffs would https://hcservices.ecourts.gov.in/hcservices/ admit that under Clause 3 of the sale agreement, the plaintiffs have been directed to pay the loan due to the LIC and T.M.P.Griffin Kangoo ( to be paid by the defendant), he has asked the defendant to forward a letter from the LIC and T.M.P.Griffin Kangoo as to show the amounts due to them upto 15.2.1995 to enable the plaintiffs to discharge the same. But no where in Ex A1, it has been agreed between the parties that the defendant has to furnish the necessary particulars regarding the loans due to LIC and T.M.P.Griffin Kangoo to enable the plaintiffs to discharge the same. Even in Ex A1 it has been recited that a sum of Rs.3,50,000/- was the amount due by the defendant to LIC and a sum of Rs.50,000/- to T.M.P.Griffin Kangoo. As per Clause 3 to Ex A1, the vendor had to discharge the said loan before the registration of the sale deed after adjusting the same towards the sale consideration. It is further agreed between the parties that if there is any deficiency to discharge the said amount from out of the sale consideration, the vendor /defendant undertake to pay the same out of his own funds. There is absolutely no material placed before the trial Court to show that the plaintiffs had made any attempt to know what was the amount due under LIC loan and also what was the amount due under the mortgage created in favour of T.M.P.Griffin Kangoo, from the respective persons who had advanced those loans in favour of the defendant. 8. Section 16 of the Specific Relief Act 1963 reads as follows: " Personal bars to relief: Specific Performance of a contract cannot be enforced in favour of a person- (a) who would not be entitled to recover compensation for its breach;or (b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of the relation intended to be established by the contract, or (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 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." For Ex A4 notice, the defendant has sent Ex A5 reply notice dated 8.2.1995 wherein the last but one paragraph, he has in clear terms stated that the plaintiffs were never ready and willing to perform their part of contract at any point of time and that there is no need for them to do anything in respect of the sale of the property and there is no question of defendant writing any letters to either https://hcservices.ecourts.gov.in/hcservices/ LIC or T.M.P.Griffin Kangoo to ascertain the amount due to them and that he has no obligation to get any I.T.Clearance Certificate since very purpose of the agreement is not for sale of property . Nodoubt the defendant cannot go beyond the terms of Ex A1 sale deed. But only thing is whether the plaintiffs have performed their part of the contract. In violation to Clause 3 of the sale agreement, the plaintiffs have sent Ex A4 notice demanding the defendant to collect particulars from LIC and also from T.M.P.Griffin Kangoo so as to ascertain the amount due to them from the defendant. As per Clause 3 , it is the duty of the plaintiffs to ascertain the amounts due from the defendant towards LIC loan and also towards mortgage loan with T.M.P.Griffin Kangoo and then to discharge the same and if there is any deficiency in discharging those loans, he is entitled to claim the deficit amount from the defendant. But there is absolutely no evidence on record to show that the plaintiffs have performed their part of the contract in terms of Clause 3 to Ex A1 sale agreement. Under such circumstances, under Section 16(b) of the Specific Relief Act 1963, the plaintiffs are not entitled to any relief particularly for a relief of Specific Performance of Contract in terms of Ex A1 Sale agreement. 9. The learned Senior Counsel while drawing the attention of this Court to Section 20 of the Specific Relief Act 1963 would contend that the jurisdiction of the Court while decreeing the suit for Specific Performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles. As per Section 20(2) of the said Act, the Court can exercise its discretion while granting decree for specific performance only in the following cases. "a) Where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, thought not voidable, gives the plaintiff an unfair advantage over the defendant ; or (b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non -performance would involve no such hardship on the plaintiff; (c)where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.. Explanation 1: Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause(b) Explanation 2: The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause(b) shall except in cases where the hardship has resulted from any act of the plaintiff subsequent https://hcservices.ecourts.gov.in/hcservices/ to the contract, be determined with reference to the circumstances existing at the time of the contract." The learned Senior counsel would contend that the failure on the part of the plaintiffs to discharge the subsisting loans to LIC and to T.M.P.Griffin Kangoo within a reasonable time will cause irreparable hardship to the plaintiffs and along with the interest the amount due to them will exceed the sale consideration under Ex A1 itself. The learned Senior Counsel would further state that if the plaintiffs have discharged those loans, the defendant will be relieved all the burden of making any payment over and above the sale consideration. Relying on a decision reported in S.Sankaran(died) and four others- vs- N.G.Radhakrishnan(1994-2 L.W.642), the learned Senior counsel would contend that the Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also be considered and that the sale agreement Ex A1 shall not be allowed to use as an instrument of oppression to have an unfair advantage to the plaintiffs and would contend that since the plaintiffs have failed to discharge the subsisting loans due to L.I.C and T.M.P.Griffin Kangoo by the defendant, it cannot be construed that the plaintiffs have performed their part of the contract in terms of Ex A1. 10. The learned Senior Counsel relying on Ibrahimpatnam Taluk Vyavasaya Coolie Sangam -vs-K.Suresh Reddy and others(2003(7) S.C.C.667) would contend that under Clause 3 to Ex A1 the plaintiffs cannot take their own time to discharge the subsisting loans but within a reasonable time they should have taken steps to discharge the loans. The passage relied on by the learned Senior counsel in the above said ratio runs as follows: "Use of the words"at any time" in sub-section (4) of Section 50-B of the Act cannot be rigidly read letter by letter. It must be read and construed contextually and reasonably. If one has to simply proceed on the basis of the dictionary meaning of the words" at any time"., the suo motu power under sub-section (4) of Section 50-B of the Act could be exercised even after decades and then it would lead to anomalous position leading to uncertainty and complications seriously affecting the rights of the parties, that too, over immovable properties. Orders attaining finality and certainty of the rights of the parties accrued in the light of the orders passed must have sanctity. Exercise of suo motu power" at any time" only means that no specific period such as days, months, or years are not prescribed reckoning from a particular date. But that does not mean that "at any time" should be unguided and arbitrary. In this view," at any time" must be understood as within a reasonable time depending on the facts and circumstances of each case in the absence of prescribed period of limitation." https://hcservices.ecourts.gov.in/hcservices/ 11. Admittedly Ex A1 sale agreement entered into between the parties on 25.10.1993. The suit was filed in the year 1995. So for nearly two years, the plaintiffs have not taken any steps to discharge the subsisting loan due from the defendant to L.I.C and to T.M.P.Griffin Kangoo. Relying on Mohamad Kavi Mohamed Amin-v- Fathmbai Ibrahim(1997(6) Supreme Court Cases,71 at page 72), the learned Senior counsel would contend that even 1 ½ years delay was construed as not a reasonable time. The relevant observation in the above said ratio runs as follows: " But in view of the settled position by several judgments of this Court that wherever a power is vested in a statutory authority without prescribing any time-limit, such power should be exercised within a reasonable time. In the present case the transfer took place as early as in the year 1972 and suo motu enquirey was started by the Mamlatdar in September 1973. If sale deeds are declared to be invalid the appellant is likely to suffer irreparable injury, because he has made investments after the aforesaid purchase. . . . . . .In the case of State of Gujarat.v.Patil Raghav Natha(1969) 2 SCC 187: (1970) I SCR 335) and in the case of Ram Chand-v- Union of India(1994) 1 SCC 44) has impressed that where no time limit is prescribed for exercise of a power under a statute it does not mean that it can be exercised at any time and ultimately held that 1 ½ years delay in exercising power cannot be considered as the power has been exercised within the reasonable time." 12. Relying on B.R.Mulani-v- Dr.A.B.Aswathanarayana and others (AIR 1993 Karnataka 257), the learned Senior Counsel would contend that the failure to discharge the subsisting loan in respect of the plaint schedule property by the plaintiffs will not entitled them to get a decree for Specific Performance of contract. The relevant observation in the above said dictum relied on by the learned Senior Counsel runs as follows: " Where the prospective vendee though was bound, as per the terms of the agreement of sale to discharge the mortgages executred by the vendor, only got them assigned to him which is not the same thing as discharging