1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.657 OF 2010 WITH CIVIL APPLICATION NO.1687 OF 2010 Smt.Rosalie Roy ..Appellant Vs. Balasaheb Bapurao Tupe and another ..Respondents ......... Mr.Sandeep K. Shinde, for appellant. Mr.Abhishek P. Deshmukh i/b.Mr.Sanjeev A. Sawant, for respondents. ......... CORAM: R.G.KETKAR, J. RESERVED ON : 15 th JULY, 2010 PRONOUNCED ON : 18 th AUGUST, 2010 JUDGMENT: Heard Mr.S.K.Shinde, learned counsel for the appellant and Mr.A.P.Deshmukh, learned counsel for the respondents. 2] Admit. Mr.A.P.Deshmukh waives service. By consent of the parties, Appeal is taken up forthwith for final hearing. 3] This appeal is preferred by the original defendant challenging the judgment and decree dated 15 th March, 2010 passed by the learned 3 rd Addl. Judge, Small Causes Court, Pune in Special Civil Suit No.1409 of 2006. By that judgment, the learned trial Judge decreed the suit instituted by respondents (hereinafter referred to as plaintiffs) and directed the 2 appellant (hereinafter referred to as defendant) to execute the registered sale deed of Flat No.104, Wing E admeasuring 74.72 sq.metres along with parking No.P.26, situate at Sunder Sankul, Hadapsar, Pune (for short “the suit flat”) within thirty days from the date of decree. The learned trial Judge further held that if defendant fails to execute the registered sale deed of the suit flat within the stipulated period, plaintiffs shall apply to the court for execution of the sale deed of the suit flat and plaintiffs shall be entitled to possession of the suit flat after execution of the sale deed. After delivery of possession of the suit flat, defendant is entitled to receive balance amount of consideration of Rs.8 lacs which was been deposited by plaintiffs in the court as per application exhibit 21. The facts and circumstances which gives rise to the filing of first appeal are as follows. 4] It is not in dispute that defendant is the owner of the suit flat and she had purchased the suit flat from builder M/s.Syndicate Shelter vide registered deed bearing Serial No.6539 of 2004 dated 19 th October, 2004. Defendant intended to acquire larger premises and, therefore, she desired to transfer the suit flat and plaintiffs were also interested to purchase the suit flat. There were negotiations between the parties. Accordingly, defendant entered into an agreement of sale of the suit flat in favour of plaintiffs for total consideration of Rs.Ten lacs. To that effect, registered agreement of sale was executed on 30 th November, 2005 which was registered at Serial No.7257 of 2005 in the office of Sub-Registrar, Haveli- VI. It is the case of plaintiffs that they paid Rs.Two lacs to defendant before the execution of the said agreement and further agreed to pay balance consideration of Rs.Eight lacs to defendant within one month from 3 the date of agreement. The agreement stipulated that if plaintiffs fail to pay Rs.Eight lacs within one month, that is to say, on or before 30 th December, 2005, then defendant shall be entitled to recover the said amount together with interest at the rate of 12% per month. It was also agreed that if plaintiffs failed to pay balance consideration amount within extended period, then defendant has right to cancel or terminate the agreement and defendant shall return the amount of Rs.Two lacs without any interest and defendant shall be entitled to sale or dispose of or transfer the suit flat to any person. 5] Plaintiffs further contended that as per clause 2 of the agreement, defendant had given assurance that the suit flat is free from encumbrance and the suit flat is not transferred to any one by way of sale, gift, lease or mortgage for raising loan from bank or financial institution. As per clause 4 of the agreement, defendant assured to clear the marketable title of the said flat within 30 days of the agreement. It is the case of plaintiffs that defendant had mortgaged the suit flat with Canara Bank for obtaining loan for Rs.Five lacs. At the time of executing the agreement of sale, defendant falsely represented that there is no encumbrance of whatsoever nature over the suit flat and the same is having clear and marketable title. Defendant has paid Rs.5 lacs to the Canara Bank on 22 nd February, 2006. Without disclosing this fact, defendant issued notice on 31 st March, 2006 alleging that the period of one month expired on 30 th December, 2005 and even concessional period for payment at the rate of 12% on the balance consideration of Rs.Eight lacs also expired on 30 th January, 2006. Consequently, she terminated the contract. Plaintiffs 4 replied the said notice and also enclosed copy of demand of Rs.Eight lacs drawn on 13 th April, 2006 and called upon defendant to execute the registered sale deed in their favour. Plaintiffs called upon defendant to complete the transaction by accepting the balance consideration amount and deliver the possession of the suit flat in their favour. Defendant did not comply with the reply dated 22 nd June, 2006. On 27 th June, 2006, defendant called upon plaintiffs to collect amount of Rs.Two lacs and requested to return the original documents as the agreement had been revoked or cancelled. Defendant thereafter issued notice on 27 th July, 2006 calling upon plaintiffs to collect the amount of Rs.Two lacs and return of the original documents failing which the advance money will be forfeited. Plaintiffs thereafter instituted the suit on 12 th September, 2006 for specific performance of contract and for possession of the suit flat. 6] Defendant resisted the claim by filing say at exhibit 16 which was adopted as written statement as per purshis exhibit 28. It was not disputed that she agreed to sale the flat to plaintiffs for Rs.10 lacs and the payment of Rs.Two lacs was paid by plaintiffs towards the part consideration. She has also not disputed that the agreement dated 30 th November, 2006 is duly registered. She contended that time was the essence of contract and plaintiffs did not complete the transaction within one month from 30 th November, 2005 and even during the extended one month, that is to say, on or before 30 th January, 2006. Accordingly, she legally terminated the agreement on 31 st March, 2006 and expressed her willingness to refund the amount of Rs.Two lacs paid by plaintiffs. She further asserted that she had given all necessary information regarding 5 the suit flat and also had delivered all the documents to plaintiffs. It was only after the termination of the agreement by issuing notice on 31 st June, 2006, plaintiffs raised objection about the title of the suit flat. She further contended that plaintiffs committed breach of agreement by not making payment within stipulated time and, therefore, she validly terminated the contract. 7] On the basis of the rival contentions, the learned trial Judge framed necessary issues. The parties led oral as well as documentary evidence. On the basis of material on record, the learned trial Judge decreed the suit by the impugned judgment and decree against which defendant has preferred the above first appeal. 8] On behalf of the appellant Mr.S.K.Shinde, learned counsel submitted that plaintiffs committed breach of the agreement of sale by not paying the amount within one month from the date of execution of sale. Even thereafter by not paying Rs.8 lacs together with interest at the rate of 12 per cent per month within concessional period of one month, that is to say, on or before 30 th January, 2006. He further submitted that plaintiffs were aware about the encumbrance over the suit flat and therefore it is not open for them to contend that the time for performing their part was not essence of contract. Defendant had handed over all the necessary documents to the plaintiffs and therefore plaintiffs are not entitled to relief of specific performance of the agreement. 6 9] On the other hand, Mr.Deshmukh, learned counsel for plaintiffs supported the impugned judgment and decree. He submitted that defendant did not disclose encumbrance over the suit flat. Defendant had paid dues of Canara Bank on 22 nd February, 2006 and thereafter she had issued notice on 31 st March, 2006. Immediately, after the receipt of notice, plaintiffs had sent a Demand Draft on 30 th April, 2006 for Rs.8 lacs and thus, plaintiffs did not commit any breach of agreement. This also shows readiness and willingness on the part of the plaintiffs to complete the transaction. 10] I have heard learned counsel for both the side, at length. Defendant has tendered compilation of all the relevant documents. Considering this, I deem it appropriate to dispense with the calling of the Record and Proceedings of the case as per Order 41 Rule 11 of the Code of Civil Procedure, 1908. I have carefully gone through the material on record. Considering the submissions advanced at the bar, following points arise for my consideration:- 1) Whether plaintiffs prove that they were and are ready and willing to perform their part of contract ? Answer : In the affirmative. 2) Whether plaintiffs prove that defendant has committed breach of the agreement ? Answer : In the affirmative. 7 3) Whether defendant proves that she has validly terminated the agreement? Answer : In the negative. 4) Whether plaintiffs are entitled to specific performance of agreement of sale dated 30 th November, 2005? Answer : In the affirmative. 11] Since all the points are interlinked, I will consider them together. Before considering the controversy between the parties, some of the facts which are not in dispute are that defendant is the owner of the suit flat. She agreed to sale the suit flat to plaintiffs and for that purpose entered into an agreement of sale on 30 th November, 2005 for a total consideration of Rs.Ten lacs. Plaintiffs have paid amount of Rs.Two lacs to defendant towards the part consideration of the agreement and the said agreement is duly registered at Serial No.7257 Sub-Registrar, Haveli-VI. Clause 1 of the agreement provides that defendant agreed to sale the suit flat to plaintiffs for a total consideration of Rs.Ten lacs and Plaintiffs paid Rs.Two Lacs. Defendant agreed and admitted about the receipt of the said amount. The remaining amount of Rs.Eight lacs was to be paid within a period of one month from the date of contract i.e.till 30 th December, 2005 and the time for payment was treated as the essence of the contract. It is further provided that if plaintiffs failed and/or neglected to pay the balance amount of Rs.Eight Lacs within the stipulated time of 8 one month, defendant shall be entitled to recover the said amount together with interest at the rate of 12% per annum, subject to limitation of one month by way of concession and if within the said extended concessional period also plaintiffs failed and/or neglected to pay the balance consideration together with interest, defendant shall have right to treat the agreement as terminated and cancelled and in that event, defendant shall return to plaintiffs the amount of Rs.2 lacs without interest and in such event defendant shall be entitled to sale or dispose of or transfer the said suit flat to any person. Clause 2 thereof provided that defendant declared that the premises agreed to be sold and agreed to be transferred is free from encumbrances. Defendant further declared that neither the suit premises nor any part thereof are agreed to be sold, conveyed, transferred or assigned by way of sale, gift or otherwise and the same is not mortgaged for raising any loan or finance from any bank or financial institution. Clause 4 thereof provided that defendant shall satisfy plaintiffs that she has got clear and marketable title in respect of the suit property, within a period of thirty days from the date of deed. 12] From the material on record, it is more than clear that when defendant agreed to sale the suit flat on 30 th November, 2005, the suit flat was not free from encumbrances. Even, as per clause 4 of the agreement, defendant did not get clear and marketable title in respect of the suit property within thirty days from the date of agreement of sale. It is also seen from the record that defendant has cleared the dues of Canara Bank on 22 nd February, 2006 and, to that effect, the letter of Canara Bank is on record at exhibit 32. Mr.Shinde relied upon the undertaking dated 9 28 th November, 2005 given by defendant to M/s.Syndicate Promoters and Builders wherein defendant had set out that she had agreed to sale the suit flat to plaintiffs for Rs.Ten lacs and that she had borrowed home loan of Rs.4,68,010/- from Canara Bank and it was her responsibility to repay the said amount to Canara Bank. She, therefore, requested M/s.Syndicate Promoters and Builders to issue no objection certificate and grant permission to dispose of the suit flat. Relying upon this undertaking, Mr.Shinde submitted that plaintiffs were aware of this undertaking as also the fact that defendant has availed home loan from Canara Bank. I do not find any substance in this submission. In the first place, defendant did not step into the witness box to substantiate this fact. Secondly, the said undertaking does not bear signature of plaintiffs so as to attribute knowledge of this undertaking to plaintiffs. Thirdly, no case is made out by defendant in the written statement attributing knowledge to plaintiffs about this undertaking dated 28 th November, 2005. Even otherwise, there is no material on record to indicate that plaintiffs were knowing about the undertaking dated 28 th November, 2005. In fact, in the notice dated 31 st March, 2006 exhibit 29 neither there is reference to the undertaking dated 28 th November, 2005 nor about the fact that defendant cleared the dues of Canara Bank on 22 nd February, 2006. Thus, there is no material on record to indicate that as per clause 4 of the agreement, defendant satisfied plaintiffs that she had got clear and marketable title in respect of the suit flat within 30 days from the date of agreement of sale dated 30 th November, 2005. 13] From the material on record, it is abundantly clear that defendant 10 had cleared dues of Canara Bank and, to that effect, Canara Bank issued a letter on 22 nd February, 2006 which is at exhibit 39. After clearing the dues on 22 nd February, 2006, instead of calling upon plaintiffs to complete the transaction, defendant issued notice on 31 st March, 2006 terminating the agreement on the ground that plaintiffs did not perform their part of contract within the stipulated time. The said notice is at exhibit 29. Immediately after receipt of the said notice, plaintiffs replied on 22 nd April, 2006. The said reply is at exhibit 30. Along with this reply, plaintiffs enclosed a Demand Draft dated 13 th April, 2006 of Rs.8 lacs. Even after receipt of this Demand Draft of Rs.8 lacs, instead of completing the transaction, defendant issued notice on 27 th June, 2006. It has also come on record that plaintiffs had deposited balance consideration of Rs.8 lacs in the court. In my opinion, this clearly establishes that plaintiffs were and are ready and willing to perform their part of contract. On the other hand, defendant tried to avoid performing her part of contract. 14] Mr.Shinde submitted that plaintiffs committed breach of terms of the agreement by not making payment initially within period of one month i.e.on or before 30 th December, 2005 and, subsequently, by paying balance consideration of Rs.8 lacs together with interest at the rate of 12% on or before 30 th January, 2006. Therefore, defendant validly cancelled the agreement of sale by issuing notice dated 31 st March, 2006. I do not find any substance in the aforesaid submission. As pointed out earlier, defendant cleared the dues of Canara Bank on 22 nd February, 2006 and issued notice on 31 st March, 2006 which was replied by plaintiffs on 22 nd April, 2006 enclosing therewith the Demand Draft of Rs.8 lacs towards 11 balance consideration. In my opinion, if the date 22 nd February, 2006 is taken as a starting point for complying the part of contract by plaintiffs, the period of one month would expire on 21 st March, 2006 and the grace period of one month for payment of balance consideration of Rs.8 lacs together with interest at the rate of 12% will expire on 21 st April, 2006. As observed earlier, plaintiffs had replied the notice on 22 nd April, 2006 and along with reply, enclosed Demand Draft dated 13 th April, 2006 for Rs.8 lacs. In these circumstances, even if we accept that the time was essence of the contract, plaintiffs had performed their part of contract within time and, therefore, plaintiffs are entitled to decree of specific performance. 15] In view of aforesaid decision, I am clearly of the opinion that plaintiffs were ready and willing to perform their part of contract and they have established that it is defendant who committed breach of the agreement. Defendant has failed to establish that she validly terminated the agreement as she did not enter into the witness box. During the course of the hearing, I suggested to the learned counsel for defendant to accept certain amount over and above Rs.8 lacs which has been deposited by plaintiffs in the trial court. The learned counsel for defendant took time and, on the next date of hearing, gave counter proposal to plaintiffs of paying Rs.20 lacs to give up the claim for specific performance of the contract. Learned counsel for plaintiffs after obtaining instruction submitted that the said proposal is not acceptable to them. 16] In view of the aforesaid discussion, in my opinion, the appeal is 12 devoid of any substance and the same is liable to be dismissed. First Appeal is dismissed with no order as to the costs. In view of the dismissal of the First Appeal, Civil Application No.1687 of 2007 for stay of the impugned judgment and decree does not survive and the same is also dismissed with no order as to the costs. [R.G. KETKAR, J.]