*HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE B.CHANDRA KUMAR +C.C.C.A.No.418 of 2003 % Date: 22-7-2009 Between: # Syed Quadri. … Appellant and $ Syed Mujeebuddin. … Respondent ! Counsel for appellant: Sri J.Prabhakar. ^ Counsel for respondent : M/s.Ali Farooq. < GIST: >HEAD NOTE: ? Cases referred: 1. AIR 2008 SC 1147 2. (2005) 5 SCC 142 3. (2005) 8 SCC 486 4. (2008) 4 SCC 464 5. (1993) 1 SCC 519 6. AIR 1997 SC 1751 7. AIR 1999 SC 2309 8. AIR 1996 SC 2841 9. AIR 1976 AP 243 10. (2000) 10 SCC 636 11. (1977) 2 SCC 539 12. 1988) 2 SCC 488 13. (2004) 8 SCC 689 14. (1997) 3 SCC P1 THE HON’BLE SRI JUSTICE A.GOPAL REDDY and THE HON’BLE SRI JUSTICE B.CHANDRA KUMAR C.C.C.A.No.418 of 2003 and C.C.C.A.M.P.Nos.262 & 333 of 2009 ORAL JUDGMENT: (Per the Hon’ble Sri Justice A. Gopal Reddy) This is an appeal filed by the plaintiff against the judgment and decree passed by the Additional Judge, City Small Causes Court-cum-VI Senior Civil Judge, City Civil Court, Hyderabad in O.S.No.399 of 1996 dated 04.03.2003 whereby the suit filed by the plaintiff for specific performance of agreement of sale dated 11.08.1995 in respect of the suit schedule property was dismissed. For the sake of convenience, the parties are referred to as arrayed in the Court below. The plaintiff instituted the above suit seeking specific performance of agreement of sale dated 11.08.1995 executed by the defendant in his favour, agreeing to sell the premises to an extent of 200 sq.yds. bearing No.10-3-16/4/3, Humayunnagar, Asifnagar, Golkonda main road, Hyderabad for a total sale consideration of Rs.10,50,000/-; out of which the plaintiff paid an amount of Rs.5,00,000/- on the said date i.e., 11.08.1995 and Rs.50,000/- on 12.08.1995 being the advance sale consideration. The defendant agreed to receive the balance sale consideration within 1½ months from the date of the agreement/at the time of delivery of possession, and on delivery of such possession the plaintiff shall obtain the registered sale deed. With the amount paid by the plaintiff the defendant could settle all his matters in dispute including 26 sq.yds abutting the area agreed to be sold with neighbours. The plaintiff was ready and willing to purchase the said extra land at a reasonable price upon proper demarcation of the land to be sold with proper compound wall. But, as the demand of the defendant for extra 26 sq.yds of land was exorbitant and unreasonable, the plaintiff wanted a proper demarcation of the land covered by the agreement of sale for 200 sq.yds with a proper front wall at its original place before registration of the sale deed and was under the impression that the defendant will take steps for the proper conveyance of the property and would obtain necessary sanction from the concerned authorities before the sale deed is registered and a conveyance is made in his favour. Plaintiff having advanced huge amount for a small piece of land and having ready to purchase extra 26 sq.yds on proper terms and bear all the charges of registration was always ready and willing to pay the balance sale consideration and kept the amount ready for the said purpose. But, he was surprised to receive an unsigned registered letter dated 06.03.1996—Ex.A6 from the defendant with all false allegations, in spite of receiving huge timely advances to mend his fences with his neighbours from a longstanding litigation. The plaintiff sent a reply on 09.03.1996 under Ex.A3 and filed the above suit for specific performance of agreement of sale and in the alternative for a sum of Rs.10,50,000/- by way of damages for breach of contract. The defendant contested the suit by filing a written statement, iner alia, contending that the plaintiff lost his right to enforce the agreement, as he failed to fulfil the mandatory conditions embodied in the agreement of sale dated 11.08.1995. Therefore, the defendant himself got issued notice on 06.03.1996 specifically asserting that since the plaintiff failed to pay the balance sale consideration within the stipulated period, the suit agreement automatically stood cancelled. As per condition No.3 of the sale agreement, time is agreed to be the essence of the contract including the payment of balance of amount within 45 days, and the consequences which flow on failure to pay the balance of sale consideration, the agreement automatically stands cancelled by forfeiting Rs.1,00,000/- for breach of the agreement. Accordingly, he got issued the notice on 06.03.1996 forfeiting Rs.1,00,000/- calling upon the plaintiff to receive the balance amount by specifying the bank account number, so that the defendant could arrange for refund of the amount. On receipt of letter covered under Ex.A.3 dated 09.03.1996, as a reply to Ex.A.6, the defendant replied by way of rejoinder on 19.03.1996. Since the plaintiff was not ready and willing to perform his part of obligation in paying the entire balance amount within the stipulated time and in getting the sale deed registered, the defendant suffered loss. Subsequent to the suit agreement, the defendant entered into an agreement to purchase an immovable property from his vendors Mohd.Saleem and Mohd.Ibrahim and paid earnest money as part performance towards sale consideration. But, as the plaintiff dishonoured the terms of agreement by paying the balance sale consideration, which necessitated him for effecting payment to the said vendors. Due to the breach of agreement on the part of the plaintiff, he suffered loss of Rs.3,00,000/- and the plaintiff has no cause of action and not entitled to any discretionary relief. He admitted about entering into an agreement with the plaintiff under Ex.A1 and receiving of Rs.5,00,000/- on the date of agreement and Rs.50,000/- on the next day towards advance amount. He stated that he never agreed to sell 26 sq.yds of land abutting the area at any point of time and as per the agreement, 200 sq.yds. of land alone was agreed to be sold. The plaintiff with an intention to grab 26 sq.yds of the land put forth the claim that he is agreeable to purchase 26 sq.yds of site. The defendant forfeited Rs.1,00,000/- in terms of the agreement dated 11.08.1995 and was always ready and willing to refund Rs.4,50,000/- to the plaintiff. Later, the defendant got amended the written statement through I.A.No.156 of 2006 allowed on 25.06.2002 stating that subsequent to filing of the written statement, an extent of 54 sq.yds was acquired by the Municipal Corporation for widening of the road from Mehdipatnam junction to Noble Talkies ‘X’ Roads, Hyderabad and as per the concessions available in G.O.Ms.No.483 MA dated 24.08.2001, the defendant gave consent by surrendering 54 sq.yds and constructed four new mulgies on the part of the site occupied by the old existing shed by investing Rs.3,00,000/-. Therefore, the plaintiff is not entitled to the discretionary relief in view of subsequent development. No rejoinder as such was filed by the plaintiff for the said plea. On the above pleadings, the lower settled the following issues for trial:- 1. Whether the plaintiff is entitled for the relief of specific performance of the agreement dated 11.08.1995 as prayed for? 2. To what relief? An additional issue was also framed, which reads thus: - 1. Whether in view of the alleged subsequent events, namely acquisition of 54 sq.yds., (15 X 12 X 35) by Municipal Corporation of Hyderabad out of the suit property, and construction of four new mulgies on the other part of the site occupied by the old existing shed with investment of not less than Rs.3,00,000/-, the plaintiff is not entitled for the equitable and discretionary relief of specific performance under Section 20 of the Specific Relief Act? In order to prove the case of the plaintiff, he himself was examined as P.W.1 and got marked Exs.A1 to A6. The defendant himself was examined as D.W.1 and got marked Exs.B1 to B9. He also got examined a third party as D.W.2 and got marked Exs.X1 to X3. The trial court after evaluating the oral and documentary evidence on issue No.1 held that the plaintiff is not entitled for specific performance of agreement of sale and entitled only for refund of Rs.4,50,000/- from the defendant with interest thereon at 9% p.a. from 25.09.1995 till the date of payment to the plaintiff. On additional issue the trial court held that in view of acquisition of 54 sq.yds of land by the Municipal Corporation of Hyderabad and construction of four new mulgies by the defendant, the plaintiff is not entitled to the discretionary relief of specific performance. During the pendency of the appeal the plaintiff filed C.C.C.A.M.P.No.262 of 2009 under Order XLI Rule 27 read with Section 151 of the Civil Procedure Code, seeking leave of the Court to receive the documents by way of additional evidence as Exs.A7 to A12. The appeal was taken up for hearing along with the above C.C.C.A.M.P. on 13.07.2009. After arguing the matter at length and during the course of hearing, when a query has been raised by the Court that in view of the subsequent development of acquisition of 54 sq.yds of land by the Municipal Corporation, unless the plaintiff relinquishes his claim over the said extent and agreeable to obtain a registered sale deed for the balance extent as available, as per Section 12 (2) (II) of the Specific Relief Act (for brevity, ‘the act’) the plaintiff is not entitled to the discretionary relief of specific performance, the learned counsel for the appellant/plaintiff took time, and on the next day he filed C.C.C.A.M.P.No.333 of 2009 seeking permission to amend the plaint by adding para 7(a), (b), (c) and in the prayer portion seeking specific performance of the agreement of sale for the balance of 144.61 sq.yds along with constructions thereon. Sri J.Prabhakar, learned counsel for the appellant/ plaintiff contended that time is not the essence of the contract where immovable property is involved. He also contended that the defendant is not justified in forfeiting the amount of Rs.1,00,000/- without refunding the balance amount of Rs.4,50,000/-. The acquisition of part of property and construction of mulgies thereon by the defendant would not disentitle the plaintiff from claiming the relief of specific performance of agreement of sale and in such case Section 12(2) of the Act cannot be invoked against the plaintiff, but it can only be for the benefit of the purchaser; when the plaintiff failed to construct the wall as agreed under the agreement of sale and obtain necessary certificates, defendant cannot insist for payment of the balance of sale consideration which can be payable only at the time of registration of sale deed and delivery of possession of the property. When once the plaintiff also entered into agreement of sale for a part of the property that is 14.33 sq.yds., covered by O.S.No.85 of 1996, which fact has been suppressed by the defendant, he cannot forfeit the amount. In such an event, the plaintiff is entitled for specific performance of agreement of sale and till the property is un-encumbered, the defendant cannot insist for payment of balance of sale consideration. Therefore, he is not justified in canceling the agreement and forfeiting Rs.1,00,000/- under the terms of agreement and the lower court is not justified in dismissing the suit for specific performance of agreement of sale. To buttress the above contentions the learned counsel for the plaintiff relied on USHA DEVI v. RIJWAN AHMAD [1]; SURINDER SING v. KAPOOR SINGH [2]; P.C.VARGHESE V. DEVAKI AMMA BALAMBIKA DEVI [3]; BALASAHEB DAYANDEO NAIK v. APPASAHEB DATTATRAYA PAWAR[4]. Per contra, Sri Ali Farooq, learned counsel for the respondent/defendant while supporting the judgment under appeal contended that Ex.A1 agreement was got prepared by the plaintiff himself and he was aware of the fact of pending registration of the property covered by the agreement of sale. When the document was registered on 10.11.1995 in favour of the defendant, the plaintiff has failed to pay the balance sale consideration within 1½ months as agreed. Even as per the terms of agreement, the failure on the part of the plaintiff to pay the amount within 1½ months not only entitles the defendant for cancellation of the agreement but also forfeiture of Rs.1,00,000/- out of the advance amount and that when it is specifically agreed that “time is the essence of the contract”, the plaintiff is not entitled to the discretionary relief of specific performance. Even when a notice was issued on 06.03.1996 under Ex.A6 i.e., nearly after three months waiting for the payment of balance sale consideration, in the reply under Ex.A3 the plaintiff has not averred or expressed his readiness and willingness to pay the balance sale consideration as agreed. Even when the written statement was amended by incorporating the subsequent events and an additional issue has also been framed by the lower court to that effect, the plaintiff has not come forward to purchase the remaining property at the same price and the said additional issue was answered against him. Therefore, the plaintiff is not entitled for the discretionary relief of specific performance and also for amendment of plaint at the appellate stage. When the plaintiff had the knowledge of litigation with regard to the property, which is evident from the agreement itself, his insisting for sale of 26 sq.yds, which is adjacent to the schedule property, shows that the plaintiff is not willing to obtain the registered sale deed unless the defendant agrees to sell the remaining 26 sq.yds as per Ex.A3. In view of the same, dismissal of the suit by the lower court does not call for any interference. To buttress the above submissions, he relied upon Chand Rani v. Kamal Rani[5]; K.S.Vaidyanadam v. Vairavan [6]; K.NARENDRA v. RIVIERA APARTMENTS (P) LTD.,[7]; LOURDU MARI DAVID v. LOUIS CHINNAYA AROGIASWAMY[8]; PUDI LAZARUS v. REV.JOHNSON EDWARD[9]; A.ABDULRASHID KHAN v. P.A.K.A.SHAHUL HAMID[10]. In view of the above rival submissions, the points that arise for consideration in this appeal are: 1) Whether the time can be considered as an essence of contract as per the agreement dated 11.08.1995? 2) Whether the plaintiff is entitled for the relief of specific performance of agreement of sale? 3) Whether the defendant is entitled to forfeit a sum of Rs.1,00,000/- by cancelling the sale agreement? 4) Whether the acquisition of 54 sq.yds of property by the Municipal Corporation and construction of four mulgies by the defendant during the pendency of the suit, would disentitle the plaintiff for the relief of specific performance of agreement of sale? Point No.1 The fixation of period within which the contract is to be performed does not make the stipulation as to time is the essence of the contract. The intention to make time as the essence of contract may be evidenced by either express stipulations or by circumstances, which are sufficiently strong to displace the ordinary presumption that in a contract of sale of land, stipulations as to time are not the essence of the contract. In GOMATHINAYAGAM PILLAI v PALANISWAMI NADAR (AIR 1967 SC 868) the Supreme Court observed that fixation of period within which the contract has to be performed does not make the stipulation as to time being the essence of the contract. If the time was not originally the essence, it was open to the vendor to call upon the other party for performance of his part of the contract and to take conveyance within the time fixed by paying the sale consideration. In GOVIND PRASAD CHATURVEDI V. HARI DUTT SHASTRI (AIR 1977 SC 1005) it was again observed that the fixation of period within which the contract has to be performed does not make the stipulation as to time being the essence of the contract, when a contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. I n JAMSHED KODARAM IRANI V. BURJORJI DHUNJIBHAI (AIR 1915 PC 83) 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 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. It maybe stated concisely in the language used by Lord Cairns in TILEY V. THOMAS (1867) 3 Ch A 61 quoted in AIR 1967 SC 868). ‘The construction is, and must be, inequity the same as in a Court of law. A Court of Equity will indeed relieve against, and enforce, specific performance, notwithstanding a failure to keep the dates assigned by the contract, either for completion, or for the steps towards completion, if it can do justice between the parties, and if (as Lord Justice Turner said in Roberts v. berry (1853) 3 Dc.G.M. and G 284 quoted in AIR 1967 SC 868) there is nothing in the ‘express stipulations between the parties, the nature of the property, or the surrounding circumstances’ which would take it inequitable to interfere with and modify the legal right. This is what is meant, and all that is meant, when it is said that in equity time is not of the essence of the contract. Of the three grounds……mentioned by Lord Justice Turner ‘express stipulations’ requires no comment. The ‘nature of the property’ is illustrated by the case of reversions, mines, or trades. The ‘surrounding circumstances’ must depend on the facts of each particular case.’ Their Lordships will add to the statement quoted these observations. The special jurisdiction of equity to disregard the letter of the contract in ascertaining what the parties to the contract are to be taken, as having really and in substance intended, as regards the time of its performance maybe excluded by any plainly expressed stipulation. But to have this effect the language of the stipulation must show that the intention was to make the rights of the parties depend on the observation of the time-limits prescribed in a fashion which is unmistakable. The language will have this effect if it plainly excludes the notion that these time-limits were of merely secondary importance in the bargain, and that to disregard them would be to disregard nothing that lay as its foundation. “Prima facie, equity treats the importance of such time-limits as being subordinate to the main purpose of the parties, and it will enjoin specific performance notwithstanding that from the point of view of a Court of Law the contract has not been literally performed by the plaintiff as regards the time-limit specified.” From the above observations, it is clear that the intention to treat the time as the essence of the contract may be evidenced by the circumstances which should be sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract. Keeping the above principles in mind, we shall now proceed to consider the stipulations in the agreement-Ex.A-1, which is not in dispute. In page-2 of the agreement it is recited thus: “Whereas the vendor Mr.Syed Mujeebuddin is the absolute owner of property bearing House No.10- 3-16/4/3, Humayun Nagar, Asifnagar Golconda Main Raod, Hyderabad, admeasuring exactly 200 sq.yds., more fully described in the Schedule and hereinafter referred to as the scheduled property, having purchased the same from Smt.T.S.Sarojini Devi, W/o.Late Amrutha Lingam and five others under a ‘pending registered sale deed No.P.3018./93 dated 30.12.1993’.” Further, under the agreement clause, it is recited as under: “SYED MUJEEBUDDIN the Vendor shall sell the Schedule property bearing Municipal No.10-3- 16/4/3, Humayun Nagar Asifnagar Golconda Main Road, admeasuring 200 Sq.Yards (exactly) together with structure (Mulgi) which thereon for a total consideration of Rs.10,50,000/-(Rupees ten lakhs fifty thousand only) out of which the Vendee has paid a sum of Rs.5,00,000/- (Rupees Five lakhs only) as advance, part sale consideration to the Vendor, the receipt of which the Vendor do hereby admit and acknowledges. The balance sale consideration of Rs.5,50,000/- shall be paid within (1½) month from the date of this agreement at the time of delivery of possession and on receipt of possession the Vendee shall obtain Registration of the Sale Deed from the Venodr in his name so as to finalise the sale transaction.” “If the Vendee fails to pay the balance sale consideration of Rs.5,50,000/- (Rupees five lakhs fifty thousand only) within a period of 1½ month, this Agreement shall stand cancelled, and in which event the Vendor shall be entitled to forfeit a sum of Rs.1,00,000/- (Rupees one lakh only) and refund the balance.” “The Vendor assures that the scheduled property is free of all encumbrances, and obtained full registration by paying the balance document No.P.3018/93 by the Vendor and Re-register the plot with the Mulgi in H.No.10-3-6/4/3, Humayun Nagar, Asigfnagar Golconda Main Road, Hyderabad, in favour of the Vendee as per schedule.” “The front wall, subject to measurement needs reconstructing at its original place before Registration of Sale Deed.” “The Vendor hereby assures the Purchaser that the possession of the said scheduled property shall be delivered at the time of execution and registration of sale deed.” The plaintiff in para-4 of the plaint specifically pleaded as under: - “With the above money, the defendant was able to settle all his matter in dispute including 26 sq.yds., abutting the area to be sold. The plaintiff was ready and willing to purchase the said extra land at any reasonable price and a proper demarcation of the land to be sold with proper compound wall. The demand of the defendant for the extra 26 sq.yds., was exhorbitant, unreasonable and therefore, the plaintiff wanted a proper demarcation of the land to be sold consisting of 200 sq.yds with a proper front wall at its original place before the registration of the sale deed.” In para-7 of the plaint it was pleaded that “While the plaintiff believe that the defendant has taken proper steps before the concerned authorities and construct a proper pucca wall in the northern portion, the plaintiff was surprised to receive an unsigned registered letter, dt.06.03.1996. The adverse remarks and allegations are totally denied. The plaintiff has advanced a huge amount for a small piece of land and was also ready to purchase extra 26 sq.yds on proper terms and give all the charges of registration. It has come as a bolt from the blue with this surprising letter within a short time in spite of receiving a huge timely advance to mend his fences with his neighbours from a longstanding litigation.” The plaintiff, who was examined as P.W.1, admitted in the chief examination that on the date of agreement of sale he paid Rs.5,00,000/- to the defendant under a receipt and two days after i.e., on 12.08.1995 he paid Rs.50,000/- and obtained a receipt under Ex.A2. By the date of Ex.A1—11.08.1995 the defendant was not yet full owner of the property and the sale deed Ex.A1 which was executed in favour of the defendant in respect of the property was pending with the Sub-Registrar for registration; that fact is mentioned in Ex.A1. The defendant utilised the amount of Rs.5,50,000/- for the purpose of registration of the sale deed in his favour by his vendor. He further admitted that under Ex.A1 the condition prescribed is that in case plaintiff or defendant failed to perform their obligation under the contract, he has to forego Rs.1,00,000/- out of Rs.5,50,000/- by way of forfeiture and similarly the defendant has to pay Rs.1,00,000/-. The defendant even after deducting Rs.1,00,000/- out of Rs.5,50,000/- paid by him ought to have returned Rs.4,50,000/-