*HON'BLE SRI JUSTICE G. BHAVANI PRASAD +A.S. No.2378 of 2001 % 23/10/2009 # Smt. A. Marikar ..... APPELLANT Vs. $ Sri Satyanarayana Films, a registered Partnership firm represented by its Managing Partner Sri Konathala Apparao .....RESPONDENT ! COUNSEL FOR THE APPELLANT: Sri P. Satyanarayana ^ COUNSEL FOR THE RESPONDENTS: Sri V.V.L.N. Sarma < Gist : Ø Head Note: ? CITATIONS: 1. 1998 (5) ALT 412 (D.B.) 2. (1995) 5 Supreme Court Cases 115 3. AIR 1996 SUPREME COURT 2150 4. 2000 (2) CCC 455 (AP) 5. AIR 1996 SUPREME COURT 2095 6. 2007 (2) ALD 496 (DB) 7. AIR 1997 SUPREME COURT 1751 8. AIR 2002 SUPREME COURT 2290 9. AIR 2006 SUPREME COURT 40 10. AIR 1965 SUPREME COURT 1405 11. AIR 1973 SUPREME COURT 2457 12. AIR 1979 SUPREME COURT 1241 13. AIR 2006 SUPREME COURT 2172 14. AIR 2004 SUPREME COURT 3940 15. AIR 2005 SUPREME COURT 3503 16. AIR 2001 SUPREME COURT 1392 17. 2007 (4) ALT 492 18. 2007 (4) ALT 784 19. 2007(2) ALT 41 20. 2006 (TLS) 434445 21. AIR 2000 SC 3106 22. AIR 2001 ALLAHABAD 224 23. AIR 1982 MADRAS 108 HON’BLE SRI JUSTICE G. BHAVANI PRASAD A.S. No.2378 of 2001 JUDGMENT: The decree of the suit with costs for specific performance by the judgment and decree dated 18-06-2001 in O.S. No.93 of 1993 on the file of the Principal Senior Civil Judge’s Court, Visakhapatnam led the unsuccessful defendant to file the present appeal. The plaintiff filed the suit for specific performance of the agreement of sale dated 03-06-1989 in respect of the vacant site of 1500 square yards with a compound wall in S.No.11/4F of Butchirajupalem village within Visakhapatnam Municipal Corporation limits. The plaintiff claimed that the defendant executed the suit agreement in favour of the plaintiff, a registered partnership firm represented by its Managing Partner Konathala Apparao agreeing to sell the suit site for Rs.3,80,000/- and delivered possession under the agreement on receiving an advance of Rs.20,000/-. A registered sale deed was agreed to be executed within three months and urban land clearance certificate, income tax clearance certificate, etc., were undertaken to be obtained by the defendant. The plaintiff kept Nalu Appanna as watchman who is living in the suit land in a thatched and A.C. sheet shed and the plaintiff got a compound wall constructed all around at a height of 5 feet for protection against illegal encroachments. The plaintiff was always ready and willing to perform its part of the contract and was demanding the defendant to execute a registered sale deed. But the defendant was postponing on some pretext or the other and did not obtain the clearance certificates as agreed. To the lawyer’s notice dated 06- 03-1992 issued by the plaintiff, the defendant gave a reply claiming the consideration to be different and possession to be not delivered. The plaintiff sent a rejoinder on 18-05-1992 enclosing a copy of the sale agreement as requested by the defendant, on which the defendant remained silent and hence, the suit. The defendant resisted the suit contending that the plaintiff has to strictly prove its registration and the authority of Konathala Apparao. The defendant executed the suit agreement, but it was neither duly stamped nor registered as per the law in force. The possession of the suit site was never delivered to the plaintiff and the suit agreement is unenforceable, inoperative and void. The plaintiff had to obtain the clearance certificates and the plaintiff miserably failed to perform its part of the contract though time was essence of the contract under the inadmissible and void document. The defendant never undertook to obtain any clearance certificates and any unauthorised construction of any compound wall does not confer any right, title or interest on the plaintiff. The defendant gave proper and prompt reply to the notice dated 06-03- 1992 and the suit is barred by time. The suit has no cause of action and is incorrectly valued. The plaintiff is not entitled to any relief and hence, the defendant sought for the dismissal of the suit with costs. On such pleadings, the trial Court settled the following issues for trial: 1. Whether the plaintiff-firm is registered under Indian Partnership Act ? 2. Whether the suit sale agreement dated 3-6-1989 is not valid and enforceable ? 3. Whether the plaintiff is in possession of the suit schedule property ? 4. Whether the plaintiff performed or ready and willing to perform his part of contract ? 5. Whether the suit is barred by time ? 6. Whether the valuation of the suit is not correct ? 7. Whether the plaintiff is entitled for the specific performance of suit sale agreement dated 3-6-1989 ? 8. To what relief ? P.W.1, P.W.2, D.W.1 and D.W.2 were examined and Exs.A.1 to A.7 and B.1 to B.4 were marked during trial. The trial Court rendered the impugned judgment firstly holding the plaintiff to be a registered firm as proved by Ex.A.1 firm registration certificate and Ex.A.7 copy of Form-A. The trial Court noted that the plaintiff got Ex.A.2 agreement of sale impounded and paid the stamp duty and penalty imposed by the Collector. The trial Court further noted that Ex.A.2 sale agreement coupled with Ex.A.3 photos and negatives showing the constructed compound wall all around, corroborated by the evidence of P.W.2, the watchman, provided cogent and acceptable evidence in contrast with the interested and uncorroborated evidence of D.W.1, the defendant, and D.W.2, her husband, who did not produce any document to probablise continuance of their possession. The trial Court also observed that the defendant is estopped from denying the contents of Ex.A.2 agreement of sale after admitting its execution. The trial Court refused to accept the recitals in Ex.B.2 draft sale deed filed by the plaintiff in the execution proceedings that the possession will be delivered at the time of registration of sale deed as neutralizing Ex.A.2 and concluded the plaintiff to have established its possession of the suit property since Ex.A.2. The claim of D.Ws.1 and 2 about the agreement being for Rs.5,00,000/- with Rs.50,000/- being paid as advance, was rejected in the absence of any plea, and any oral evidence about fabrication of Ex.A.2 sale agreement on blank papers with defendant’s signatures, was also not accepted for similar reason. The trial Court also noted the conduct of the defendant in changing her advocate from time to time and considered her to be estopped from raising any plea contrary to the pleadings. The trial Court further noted that Ex.A.2 was attested by D.W.2, sister of D.W.1 and another relative of D.Ws.1 and 2. It also noted that the other two attestors being the sister and relation of D.W.1 could have been examined to probablise the defence if it were true and it also observed that the defendant did not examine any disinterested or independent witness to probablise the escalation in the price of the suit land from Rs.6,00,000/- to Rs.10,00,000/- and later to Rs.20,00,000/-. It is also calculated that if the suit land was agreed to be sold for Rs.275 per square yard as shown in Ex.B.3, the market value will be only Rs.4,12,500/- and not Rs.5,00,000/-. The trial Court further observed that the evidence of P.W.1 shows that the plaintiff demanded the defendant to register a sale deed and that the defendant did not obtain the necessary clearances. It also noted that the plaintiff purchased the adjacent piece of land from D.W.1’s sister on 03-06-1989 probablising the capability of the plaintiff to purchase. It also noted that the plaintiff deposited the entire sale consideration after an ex parte decree granted earlier. The trial Court distinguished the decisions relied on by the defendant as inapplicable to the facts as it considered the plaintiff’s readiness and the defendant’s inaction to be probablised. The trial Court also considered the suit to be within time both from the date of Ex.A.2 agreement and also from the date fixed for performance at three months from Ex.A.2. The suit was held to be correctly valued and a decree for specific performance was granted directing the defendant to register a sale deed and in default, entitling the plaintiff to get the sale deed executed at the expense of the defendant. The defendant challenged the said judgment and decree contending that grant of specific performance is discretionary depending on the conduct of the parties and the comparative advantages and disadvantages. When time was the essence of the contract under Ex.A.2 which fixed three months as the time for performance, the plaintiff, who took no steps to get the clearances and who issued a notice and filed the suit at the fag end of the third year, is not entitled to specific performance. The plaintiff, who paid Rs.20,000/- only out of Rs.3,80,000/- and did not pay the balance for years and did not even pay or offer any interest, cannot demand specific performance after 2 years 9 months claiming to be ready and willing always. The plaintiff utilized the money due to the defendant in its commercial activities, while the defendant was deprived of the use of and interest on such money. The value of the house sites in Visakhapatnam tremendously increased in the meanwhile, which can be taken judicial notice of, putting the defendant to a highly disadvantageous position. The plaintiff, who did not come with clean hands, cannot get the discretionary relief on some lacunae in the defendant’s version and the plaintiff’s Managing Partner did not even examine himself. He examined his son only to avoid cross-examination on material aspects and he did not even pray for alternative relief of refund. Hence, the defendant sought for reversal of the impugned judgment. During the course of hearing of the appeal, the appellant/defendant filed a memo dated 07-09-2007 stating that the market value of the site as per the basic value register is Rs.15,000/- per square yard and the property of an extent of 1500 square yards is of a value of Rs.2.25 crore. The appellant offered to pay Rs.1.25 crore to the respondent within eight weeks from the date of the order of the Court in addition to the refund of the advance amount of Rs.20,000/-. The respondent filed a memo, in response, stating that K. Apparao, the Managing Partner of the family firm, purchased another extent of 1500 square yards from V. Sakuntala, the appellant’s sister, under a registered sale deed and then the suit land, which is adjacent, to enable all his six sons to carry on business at one place jointly enjoying the property. The plaintiff never had any intention to part with the suit land or resell the same for higher consideration and hence, the plaintiff had instructed its counsel to persuade the Court on merits of the case. Sri P. Satyanarayana, learned counsel for the appellant and Sri V.V.L.N. Sarma, learned counsel for the respondent reiterated their contentions respectively and relied on various precedents, which will be referred to in due course. The learned counsel for the appellant referred extensively to the pleadings and evidence on record to probablise the disentitlement of the plaintiff to the discretionary relief of specific performance. He also strongly pleaded in the alternative to accept the offer of the defendant for payment of Rs.1.25 crore in addition to refund of the advance of Rs.20,000/- in the interests of justice to avoid undue hardship, disadvantage and deprivation to the defendant. The learned counsel for the respondent defended the impugned judgment and decree on merits and further argued that the present day market rate cannot be a guide for determining the right of the plaintiff to specific performance as on the date of the suit and if the plaintiff were to be considered entitled to the discretionary relief as on the date of the suit, the benefit of any increase in the value of the property should enure to the plaintiff and not the defendant. With such background, the following points arise for consideration in the appeal. 1. Whether the offer of the defendant to pay Rs.1.25 crore plus Rs.20,000/- in lieu of specific performance needs to be accepted to avoid unjust deprivation of property to the defendant ? 2. Whether the plaintiff is entitled to specific performance, and if so, only subject to appropriately compensating the defendant of the undue and heavy loss sustained due to abnormal escalation of prices in the meanwhile keeping in view the conduct of the parties and over all facts and circumstances ? 3. To what relief ? Points 1 and 2: Before adverting to the facts, it may be useful to refer to the precedents cited and the principles deducible from the same. Sri P. Satyanarayana, learned counsel for the appellant referred to the following precedents. In Sardar Amarjeet Singh v. Nandu Bai[1], the vendee did nothing for 2 years 9 months to act in furtherance of the agreement and though the suit was filed well within the period of limitation, the same was held to be not enough. The Court can legitimately take into account the long, unexplained silence and inaction on the part of the plaintiff in assessing the question of readiness and willingness of the party to perform his/her part of the contract. It was further held that the readiness and willingness on the part of the plaintiff cannot be inferred merely because at the fag end of the period of limitation a notice was issued calling upon the vendor to execute sale deed and that readiness and willingness must have an element of continuity. The delay was considered to have brought about a situation where it would be inequitable to give the relief of specific performance. In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao[2], it was pointed out that specific performance is an equitable remedy and is in the discretion of the Court and the Court is not bound to grant the relief just because there was a valid agreement of sale. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. The Court must take into consideration the conduct of the plaintiff prior to and subsequent to the filing of the suit along with other attending circumstances. The Court may infer from the facts and circumstances whether the plaintiff was always ready and willing to perform his part of the contract. In Kanshi Ram v. Om Prakash Jawal[3], the Supreme Court noted that it is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration for refusing to decree the suit for specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable property is not automatic. It was noted that when the Court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties and considered from that perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, the Apex Court thought that the Courts would have been well justified in granting alternative decree for damages instead of ordering specific performance which would be unrealistic and unfair. In Chunduru Padmavathi v. Chunduru Narasimha Rao[4] also, there was total inaction and silence on the part of the plaintiff for more than two years and there was no explanation whatsoever for the long delay. The plaintiff was held to have failed to perform his part of the contract within a reasonable time and there was undue delay in filing the suit. The plaintiff was noted to have paid only a meagre sum as advance and consequently, the suit for specific performance was dismissed. In His Holiness Acharya Swami Ganesh Dassji v. Shri Sita Ram Thapar[5], there was no documentary proof that the plaintiff had ever funds to pay the balance consideration and the draft sale deed was not returned after being duly approved within seven days of the agreement as agreed. The Apex Court assumed the absence of readiness and willingness to perform the essential terms of the contract and refused the specific relief. I n C. Manohar Reddy v. Alopi Shanker[6], it was observed that when the time schedule is fixed for payment in the agreement, it is for the plaintiffs to make payments as per the terms of the agreement in order to show that they were always ready and willing to perform their part of the contract. When the plaintiffs did not offer those amounts, did not deposit the amounts in any bank under intimation to the defendants and did not, thus, show their readiness and willingness to perform their part of the contract though time was the essence of the contract, the defendants are entitled to resile from the contract and the plaintiffs are not entitled to the discretionary relief of specific performance. K.S. Vidyanadam v. Vairavan[7] is the decision followed in Sardar Amarjeet Singh’s case (1 supra) and Chunduru Padmavathi’s case (4 supra). The Apex Court noted therein that even if time 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 evident from the express terms of the contract, from the nature of the property, and from the surrounding circumstances. The Court should look at all the relevant circumstances including the time limits specified in the agreement and determine whether its discretion to grant specific performance should be exercised. The Apex Court further noted that the plaintiff was sitting quiet for a period of more than two and half years without taking any steps to perform his part of the contract though the agreement specified a period of six months. The Apex Court also noted that the constant and continuous rise in the values of the urban properties is a reality to which they cannot be oblivious and the Court should bear in mind that prescribing a time limit under the agreement must have some significance. The Apex Court held that the delay coupled with substantial rise in prices brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff. In Nirmala Anand v. Advent Corpn. Pvt. Ltd.[8], it was held by Hon’ble Sri Justice Doraiswamy Raju that the purchaser cannot be allowed to have for her alone, the entire benefit of manifold mega increase of the value of real estate property in the locality. It was observed that specific performance being an equitable relief, balance of equities have also to be struck taking into account all these relevant aspects of the matter, including the lapses which occurred and parties respectively responsible therefor. In the case before the Apex Court, there were offers to pay higher sums and demands to pay much higher sums and Hon’ble Sri Justice Doraiswamy Raju directed the appellant to pay Rs.40,00,000/- to the respondents in addition to the amount already paid as balancing measure. Hon’ble Sri Justice Ashok Bhan on the contrary held that delay by itself due to pendency of the suit/appeal in the Courts is no ground to refuse the relief of specific performance unless certain compelling circumstances are brought on record to take a view to the contrary. His Lordship observed that escalation of price during the period may be a relevant consideration under certain circumstances for either refusing to grant the decree of specific performance or for decreeing the specific performance with a direction to the plaintiff to pay an additional amount to the defendant and compensate him. Noting that it would depend on the facts and circumstances of each case, His Lordship observed that the appellant was always ready and willing to perform her part of the contract at all stages and did not take any advantage of her own wrong and was in no way responsible for the delay at any stage of the proceeding. His Lordship further noted that it was the respondents who have always been and are trying to wriggle out of the contract and cannot take advantage of their own wrong. His Lordship further observed that requiring the appellant to pay further sum of Rs.40,00,000/- would/may amount to frustrating the agreement itself and it would be unfair to grant the decree of specific performance by one hand and take it back by the other. Therefore, His Lordship was of the view that the appellant was entitled to the specific performance of the agreement on the price mentioned in the agreement itself subject to other terms specified in the judgment. The learned counsel for the respondent Sri V.V.L.N. Sarma referred to the following precedents. S. Brahmanand v. K.R. Muthugopal[9] decided that where the original agreement fixed a date for performance and the defendants made a request to postpone the performance to a future date without fixing any further date for performance, the act of forbearance by the plaintiffs not insisting on performance forthwith makes the contract one in which no time is fixed for performance of the contract making the contract governed by the second part of Article 54 of the Limitation Act, 1963, shifting it from the first part. Consequently, the Apex Court held that only when the plaintiffs had notice of refusal of performance, the period of limitation starts to run. In Mademsetty Satyanarayana v. G. Yelloji Rao[10], the Apex Court held that mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant, does not empower a Court to refuse the relief of specific performance. It was also held that it is not possible or desirable to lay down the circumstances under which a Court can exercise its discretion against the plaintiff. But they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief. M.L. Devender Singh v. Syed Khaja[11] laid down that mere proof that a sum is specified as liquidated damages or penalty for a breach should not be enough to prove that a contract for the transfer of immovable property could be adequately compensated by the specified damages or penalty. The jurisdiction of the Court to decree specific relief is discretionary and must be exercised on sound and reasonable grounds guided by judicial principles and the jurisdiction cannot be curtailed or taken away by merely fixing a sum even as liquidated damages. It was observed that equity helps honest plaintiffs against the defendants who break solemnly given undertakings. In Prakash Chandra v. Angadlal[12], it was pointed out that the ordinary rule is that specific performance should be granted and it ought to be denied only when equitable considerations point to its refusal and the circumstances show that damages would constitute an adequate relief. When the plaintiff acted fairly throughout and did not commit any act or omission to secure unfair advantage and when performance of the contract does not involve some hardship, which the defendants did not foresee, the relief of specific performance will be granted. In Sugani v. Rameshwar Das[13], the Apex Court held that the suit filed within a few months after the denial of the agreement by the defendants is not barred by limitation, when the agreement did not fix any date for performance. It was also held that the basic principle behind Section 16(c) of the Specific Relief Act is that any person seeking benefit of the specific performance of the contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief and if the pleadings manifest that the conduct of the plaintiff entitles him to get the relief on perusal of the plaint, he should not be denied the relief. Akbar Ali v. Vinod Khanna[14] is a case where the agreement was contended to be unconscionable, as the price of the land at