IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.10.2011 C O R A M THE HONOURABLE MR.JUSTICE K.MOHAN RAM AND THE HONOURABLE MR.JUSTICE G.M.AKBAR ALI A.S.No.811 of 2008 & M.P.Nos.3, 4 and 5 of 2011 T.R.K. Saraswathy ... Appellant/Plaintiff -Vs.- 1.R. Kandasamy 2.P.K.Venkatesan 3.K.Devarajan 4.K.Kannappan 5.K.Rajamani @ Mani 6.K.Selvaraj 7.K.Prema 8.M/s.ABT Limited represented by its Director, M.Hariharasudhan NO.180, Race Course Road, Coimbatore -641 018 ... Respondents/Defendants R8 impleaded as party respondent vide order of court dated 3.2.11 made in MP No.1/10 in appeal 811/08 Prayer:- Appeal Suit filed under Section 96 of the Code of Civil Procedure against the judgment and decree, dated 17.12.2007, made in O.S.No.420 of 2006 on the file of the Additional District Judge/Fast Track Court No.I, Coimbatore. For Appellant : Mr. S.V.Jayaraman, Senior Counsel, for, Mr. S. Thangavel For Respondents : Mr. M.S. Krishnan, Senior Counsel, for, Nos.1 to 7 M/s. Sarvabhauman Associates For Respondent No.8 : Mr.S.Parthasarathy, Senior Counsel for Mr.R.Bharathkumar. https://hcservices.ecourts.gov.in/hcservices/ J U D G M E N T (JUDGMENT OF THE COURT WAS DELIVERED BY MR. JUSTICE K.MOHAN RAM The plaintiff in O.S.No.420 of 2006 on the file of the Additional District Judge, Fast Track Court No.I, Coimbatore is the appellant in the above appeal. 2. The appellant filed O.S.No.420 of 2006 seeking for a decree of specific performance of sale agreement , dated 20.1.2005 directing the respondents to execute the sale deed in favour of the appellant after receiving the balance sale consideration and to put the appellant in possession of the suit property and alternatively, a decree for the refund of advance amount of Rs.25,00,000/- together with interest at the rate of 18% p.a. The appellant also sought for a decree for permanent injunction restraining the respondents from in any manner alienating or encumbering the suit property. 3. The suit was dismissed by the trial Court by a judgment and decree, dated 17.12.2007. Being aggrieved by that the plaintiff has filed the above appeal. 4. The case of the plaintiff/appellant is as follows:- a. The appellant and the respondents 1 to 7 entered into a sale agreement, dated 20.1.2005. Under the sale agreement, the respondents 1 to 7 agreed to convey the total extent of 44 cents together with buildings bearing door Nos.527 to 530 comprised in S.F.No.531/1 situated in Sowripalayam Village, Coimbatore Taluk. The total sale consideration fixed as Rs.2,30,00,000/-. A sum of Rs.10,00,000/- was paid as advance towards sale consideration on the date of the agreement. The suit property was under the occupation of the tenants at the time of the agreement. In the agreement, for completing the sale, four months time was stipulated from the date of the tenants vacating the suit property. However, the time is not considered to be an essence of the agreement. The following amounts have been paid by the appellant to the respondents 1 to 7, namely, Rs.5,00,000/- on 2.2.2005, Rs.4,00,000/- on 24.2.2005, Rs.1,00,000/- on 5.6.2005 and Rs.5,00,000/- on 24.7.2005 and all the above payments received by the respondents have been endorsed at the back of the sale agreement. Thus, totally, a sum of Rs.25,00,000/- have been paid by the appellant towards sale consideration. The fact that the respondents have received the payments even after the expiry of the time stipulated will show that the time is not the essence of the agreement of sale. b. According to the appellant, she was always ready and willing to perform her part of the agreement and she was keeping https://hcservices.ecourts.gov.in/hcservices/ the sale price ready. The respondents 1 to 7 agreed to execute the sale deed after the tenants are vacated. It was represented by the respondents 1 to 7 that they have filed R.C.O.P.No.85 of 2005 on the file of the Principal District Munsif Court, Coimbatore against the tenant Balakrishnan for evicting him and after getting delivery of possession, they agreed to execute the sale deed free of encumbrance. The appellant was awaiting the result of the eviction proceedings. The appellant was parking her college buses in the adjacent vacant portion. c. According to the appellant, she received a letter, dated 23.2.2006 from the respondents 1 to 7, in which it had been falsely contended that the time of four months stipulated was from 20.1.2005 and as the appellant had failed to pay the balance sale consideration, the agreement of sale stood cancelled. The appellant sent a reply, dated 24.2.2006 refuting all the averments of that letter. The respondents 1 to 7 are bound to execute the sale deed only after all the tenants vacated the suit property. One Mr.Sivasankar, as the representative of the appellant tried to contact the respondents 1 to 7 but they were evading to give proper answer. The appellant expressed her readiness to complete the sale. Thereafter, the respondents 1 to 7 sent a rejoinder, dated 2.3.2006 reiterating the contents of their earlier letter, dated 23.2.2006. While so, the fourth respondent sent a telegram on 11.3.2006 stating that they are ready to sell the suit property and demanded the appellant to complete the sale before 24.3.2006. As the appellant was away from Coimbatore, she sent a letter on 18.3.2006 expressing her readiness to complete the sale and called upon the respondents 1 to 7 to bring the original documents and encumbrance certificate pertaining to the suit property to enable her advocate to prepare the sale deed. The respondents 1 to 7 sent a reply, dated 23.3.2006 stating that the original documents could not be shown as the xerox copies of the documents were already handed over to the appellant. It was the respondents 1 to 7, who were postponing the execution of the sale deed under one pretext or the other. The respondents 1 to 7 did not even intimate about the result of the eviction proceedings. d. On 25.3.2006 the respondents 1 to 7 sent a legal notice stating that seven days time was given to the appellant to pay the sale consideration. A reply notice, dated 29.3.2006 was sent by the appellant enclosing a draft sale deed and also demanding to hand over the encumbrance certificate for the period from 14.9.2001 to 31.12.2004, for which the respondents 1 to 7 sent a rejoinder, dated 6.4.2006 stating that within five working days, the sale has to be completed. e. According to the appellant, the respondents 1 to 7 had not handed over the original parent documents for the perusal of the appellant and the appellant directly spoke to the fourth https://hcservices.ecourts.gov.in/hcservices/ respondent herein to bring the original parent documents for inspection. The appellant sent a notice, dated 22.4.2006 to the counsel for the respondents 1 to 7 requesting him to advise the respondents 1 to 7 to bring the parent documents for verification of her counsel at the office of the counsel for the respondents 1 to 7 on 26.4.2006. But the said legitimate demand was not complied with, instead, they sent a legal notice, dated 26.4.2006 alleging that the agreement stood cancelled. The appellant in her letter, dated 18.3.2006 called upon the respondents 1 to 7 to collect the pay order, dated 11.2.2006 for Rs.25,00,000/- from her office, but they did not come and collect the same. Therefore, the appellant send a letter, dated 10.8.2006 enclosing the pay order to the respondents 1 to 7. After receiving the said letter, the respondents 1 to 7 sent a reply, dated 14.8.2006 containing false and frivolous allegations, however, they retained the said pay order. f. The above correspondence clearly shows that the time is not the essence of the agreement of sale. It has been specifically averred in the plaint that the appellant through out has been ready and willing to perform her part of the contract. It is also stated that near the vicinity of the suit property, the appellant has got other properties. Since the respondents 1 to 7 refused to execute the sale deed, the suit has been filed. g. In the plaint, it is further averred that the respondents 1 to 7 are making attempts to alienate the suit property suppressing the sale agreement in favour of the appellant and therefore, the relief of permanent injunction was also sought for. 5. The respondents 1 to 7 contested the suit inter alia contending as follows:- a. The appellant is guilty of suppressio vari and suggestio falsi. The appellant has made several false statements and claims. The appellant is not entitled to the relief of specific performance or the refund of the advance amount. The receipt of a total sum of Rs.25,00,000/- towards sale consideration has been admitted. It is contended by the respondents 1 to 7 that the time is the essence of the agreement as the same has been specifically stipulated in the agreement itself. At the time of entering into the sale agreement itself, they produced the xerox copies of the title deeds and relevant documents for the perusal of the appellant and she was fully satisfied about the genuineness of the title of the respondents 1 to 7. The mere fact that the payment made by the appellant a couple of months after the four months time would not mean that the time is not the essence of the agreement. The period of four months would not commence from the date on which the tenants vacated the premises, but the said time commenced from the date of the agreement, namely, 20.1.2005. b. The appellant was repeatedly made aware that the period of four months time was drawing to a close and the appellant was not paying the balance sale consideration. But the appellant was https://hcservices.ecourts.gov.in/hcservices/ biding her time and making part payments on the ground that adequate funds were not made immediately available. The respondents 1 to 7 did not want to precipitate the matters, but were urging the appellant to hasten the payment of the balance sale consideration as the time had already elapsed. The appellant wants to make it appear as if she was always having the funds ready and she was only waiting for the eviction proceedings but the said contention of the appellant is not true as the appellant was not ready and willing to perform her part of the contract. c. It is the further contention of the respondents 1 to 7 that they had vacated the tenants on 2.2.2006 itself and the appellant was duly informed of the same. The appellant was also informed that the period of the agreement had already elapsed but the appellant had not taken any steps to pay the balance sale consideration and there was no response. In such circumstances, the respondents 1 to 7 issued a letter, dated 11.2.2006 pointing out that the appellant had never come forward to get the sale deed registered and they also returned the sum of Rs.25,00,000/- , which was received as advance by way of the pay order. Only on receipt of the letter, the appellant had come forward with a reply, dated 24.2.2006 containing untenable contentions. d. In the letter, dated 24.2.2006, it was alleged by the appellant that the tenants had vacated only few days prior to the date of the letter and that she was prepared to obtain sale deed within three days from the date of the letter and in response to the said letter, the respondents 1 to 7 issued a telegram, dated 26.2.2006 stating that the agreement has been cancelled and there can be no question of going back. The telegram was followed by a letter, dated 2.3.2006. On 11.3.2006, the respondents 1 to 7 decided to give the appellant one last opportunity to get the sale deed executed and hence, they issued a telegram, dated 11.3.2006 calling upon the appellant to pay Rs.25,00,000/- and also to pay the balance sale consideration and register the sale deed on or before 24.3.2006 but without expressing her readiness to pay the balance sale consideration and get the sale deed registered, the appellant issued a reply, dated 18.3.2006 stating that the period of four months shall commence only from 4.3.2006 when the letter dated 2.3.2006 issued by the respondents 1 to 7 was received by her. The appellant had shifted the period of agreement from 20.1.2005 to 4.3.2006. This is a clear breach of contract as the appellant had deviated from the terms of the agreement. The allegation that the vacating of the tenants was informed officially by the respondents 1 to 7 only on 4.3.2006 is not correct. Since the appellant was not having the funds readily with her, she was dragging on and in the very same letter, dated 18.3.2006, the appellant called upon the respondents 1 to 7 to collect a demand draft for Rs.25,00,000/- from her office. e. Thereafter, a legal notice, dated 25.3.2006 was issued explaining all the background facts and has called upon the appellant to pay the entire sale consideration of RS.2,30,00,000/- https://hcservices.ecourts.gov.in/hcservices/ within seven days from the date of receipt of the same. The appellant could have made use of the opportunity afforded to her under the legal notice, dated 25.3.2006. But she did not choose to do so since there was no funds ready even on that date. Therefore, the appellant issued a reply, dated 29.3.2006 on some technicalities. There was no condition in the sale agreement that encumbrance certificate for the suit property should be furnished upto date. But as a matter of abundant caution, the respondents 1 to 7 enclosed the encumbrance certificate to facilitate the appellant's cause, but instead of completing the sale transaction, the appellant had sought time by demanding the encumbrance certificate for the period from 14.9.2001 to 31.12.2004. The appellant called upon the respondents 1 to 7 to produce the original documents pertaining to the suit property. In commercial practice, the original documents will be handed over only at the time of the sale and no vendor would hand over the original documents prior to sale. The appellant has to satisfy as to the title to the suit property from the xerox copies of the title deeds and for that the original title documents are not needed. The appellant was putting one condition after another to gain time. f. According to the respondents 1 to 7, there is no condition in the sale agreement to give the original documents and the encumbrance certificate. A rejoinder, dated 6.4.2006 was sent explaining the true and correct facts and giving the appellant further five days time to complete the sale. On 22.4.2006, the appellant gave a reply making it appear as if the time was running out on account of the respondents 1 to 7, but did not give any explanation for her failure to verify the original documents. Therefore, the respondents 1 to 7 treated the contract as cancelled as the appellant was not having the balance sale price readily with her. g. It has been stated in the written statement that the appellant as the Chairman of Hindustan Engineering College, was out of station and returned only on 18.3.2006 to issue a letter expressing her readiness is not true. It is also totally false to state that the respondents 1 to 7 never intimated the result of the eviction proceedings. The demand for encumbrance certificate and original documents is unrighteous and the same would work only against the appellant. The demand draft for Rs.25,00,000/- was returned to the appellant and it was never taken back by the respondents 1 to 7. It is false to state that along with the letter, dated 10.8.2006, the appellant sent the same to the respondents 1 to 7. The appellant instead of pleading that she is ready and willing to pay the entire sale consideration of Rs.2,30,00,000/-, she pleaded in the plaint that she is ready and willing to pay the only a sum of Rs.2,05,00,000/- on the ground that it is the sale consideration to be payable. Thus, the appellant has not satisfied the requirement of the Specific Relief Act. It is possible that the appellant could have encashed the demand draft after it was returned to her. https://hcservices.ecourts.gov.in/hcservices/ h. It is the further case of the respondents 1 to 7 that in Coimbatore, the real estate price increased manifold over the past one and a half years and especially in the area where the suit property is situated and the appellant wants to take advantage of the increase in the price by projecting the theory that the time is not the essence of the contract. In the agreement of sale, time was made as essence of the agreement. The appellant was in breach of agreement during the entire period as the price has increased manifold and the extension of such an opportunity would cause incalculable harm to the seller. Therefore, the appellant is not entitled for the discretionary relief of specific performance. 6. On the aforesaid pleadings, the Court below framed the following issues:- a. Whether the agreement of sale, dated 21.2.2005 is true, valid and legally enforceable? b. Whether as per the agreement of sale, the plaintiff was ready and willing to pay the balance sale consideration and get the sale deed executed? c. Whether the plaintiff is entitled for a decree directing the defendants to receive the balance sale consideration and execute the sale deed? d. Whether the plaintiff is entitled to the alternative relief of refund of Rs.25,00,000/- with 18% interest p.a. from the defendants? 7. Before the trial Court, on the side of the appellant, the plaintiff was examined as P.W.1 and her husband was examined as P.W.2 and Exs.A1 to A35 were marked. On the side of the respondents, the fourth defendant was examined as D.W.1 and Exs.B1 to B4 were marked. 8. On a consideration of the evidence on record and the contentions of both the parties, the trial Court held that the time is not the essence of the agreement of sale and further held that the appellant was not ready and willing to perform her part of the contract and she was not having requisite amount in cash and on such findings, the trial Court refused to grant the decree for specific performance. The trial Court also denied the alternate remedy of the refund of the advance money paid by the appellant by way of pay order since it has not been proved that the pay order had been encashed by the respondents 1 to 7. 9. Being aggrieved by that the above appeal has been filed. 10. Heard both. 11. Mr. S.V.Jayaraman, learned Senior Counsel appearing for the appellant has made the following submissions:- https://hcservices.ecourts.gov.in/hcservices/ a. According to the learned Senior Counsel, taking into consideration of the fact that even after the expiry of the period of four months as stipulated in the agreement of sale Ex.A1, the respondents 1 to 7 have received payments from the appellant, the Court below has rightly come to the conclusion that the time is not the essence of the contract. The learned Senior Counsel submitted that the appellant is an income tax assessee from the year 1984; she is the proprietrix of M/s.Standard Power Distributors and M/s. Electromech Industries and as the Correspondent of M/s.Hindustan College of Arts and Science, M/s. Hindustan College of Engineering and Technology and M/s. Hindustan Matriculation and Higher Secondary School; she is also the shareholder of M/s. R.K.Revathi Industries, M/s.Standard Wire Products and M/s. Hindustan Transformer and Oil Products and she is the Director of M/s.Vivin Controls Private Limited and as such, the appellant could easily arrange the balance sale consideration of Rs.2,05,00,000/-. b. According to the learned Senior Counsel, the appellant was always ready and willing to perform her part of the contract. The learned Senior Counsel submitted that it is not the case of the respondents 1 to 7 that the appellant is not in possession of sufficient means to raise necessary funds to complete the sale transaction, but it is the case of the respondents 1 to 7 that she was not having money either in her hands or bank account. The learned Senior Counsel submitted that it is not necessary that the appellant should either hold the required amount in cash in hand or in the bank account from the date of the sale agreement. The learned Senior Counsel further submitted that it is sufficient if the appellant proves her readiness and willingness and her capacity to raise necessary funds at the time of completing the the sale transaction. The learned Senior Counsel submitted that the finding of the Court below that the appellant was never ready and willing to perform her part of the contract as she was not having necessary funds readily with her is not correct. The observation of the trial Court that the appellant was imposing one condition after another only to gain time is not correct. The learned Senior Counsel submitted that the appellant wanted the respondents 1 to 7 to produce encumbrance certificate upto date and also wanted them to make available the original title deed pertaining to the suit property to verify the title to the suit property. Even, if there is no stipulation in the agreement of sale that the vendors should produce the encumbrance certificate upto date and produce the original title deeds for the inspection of the appellant for satisfying the title of the vendors. It is the bounden duty of the vendors to prove to the satisfaction of the purchaser that they have got valid title and the property agreed to be sold is free from encumbrance and for that they should produce the original title deed and the encumbrance certificate upto date for the inspection of the appellant and therefore, the aforesaid request made by the https://hcservices.ecourts.gov.in/hcservices/ appellant cannot be termed as imposing new conditions or making new demands contrary to the terms of the agreement. c. The learned Senior Counsel submitted that a perusal of Ex.A.23, dated 21.3.2005 will show that the husband of the appellant had sold his immovable property for a consideration of Rs.1,49,77,000/- and under Ex.A24, dated 21.3.2005, the husband of the appellant had sold his another property for a sale consideration of Rs.1,75,23,000/-. Thus, as on 21.3.2005, the husband of the appellant had in his hand, a total sum of Rs.3,25,00,0000/-. Even according to the respondents 1 to 7, the last tenant Balakrishnan had vacated and handed over the possession of the suit property only on 2.2.2006. As per the terms of agreement of sale Ex.A1, the respondents 1 to 7 before the execution of the sale deed should vacate the tenants and hand over the possession of the suit property to the appellant at the time of the execution of the sale deed. Therefore, according to the learned Senior Counsel, it was uncertain as to when the tenants will be vacated and only after vacating the tenants, the respondents 1 to 7 can put the appellant on notice that the tenants have vacated and they are ready to execute the sale deed and hand over the vacant possession of the suit property and thereafter, only four months time stipulated in the sale agreement will commence. d. According to the learned Senior Counsel, though the last tenant, namely, Balakrishnan was said to have been evicted and possession had been taken from him on 2.2.2006, the same was not informed to the appellant immediately either orally or in writing, but only under Ex.A4, dated 2.3.2006, the same was informed to the appellant. The learned Senior Counsel pointed out that in Ex.A2, dated 23.2.2006 also, there is no mention about the vacating of the tenants by the respondents 1 to 7. In Ex.A3 letter, dated 24.2.2006, the appellant has clearly pointed out that the time was not considered as essence of the agreement as the respondents 1 to 7 have received part payment of Rs.5,00,000/- even on 24.7.2005, i.e., after the expiry of the period of four months from the date of Ex.A1 sale agreement and she was keeping the balance sale price ready and it appears that only few days ago, the above said tenant has vacated and the