IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 13.11.2009 CORAM: THE HONOURABLE MR. JUSTICE K.K.SASIDHARAN A.S. No.1157/1995 1.R.Rajaram 2.R.Rajagopal : Appellants/Defendants 1 & 2 Vs. T.R.Maheswaran : Respondent/Plaintiff Appeal filed against the Judgment and Decree dated 05.04.1995 made in O.S.No.116/1991 on the file of the learned Subordinate Judge, Tindivanam. For appellants : Mr.G.R.Lakshmanan For respondent : Mr.D.Ravichandran J U D G M E N T Introduction :- Whether a plaintiff who failed to deposit the balance sale consideration for a period of four years after obtaining lodgment schedule from the trial Court to deposit the amount, which was a pre- condition for instituting a suit for specific performance as per the Agreement entered into between the parties, and made the trial Court to believe that such deposit was in fact made, can be said to be a person who was always ready and willing to perform his part of the contract and entitled for an equitable remedy of specific performance, is the core question to be decided in this first appeal. 2. Challenge in this first appeal is to the Judgment and Decree dated 05 April, 1995 in O.S.No.116/1991 on the file of the learned Subordinate Judge, Tindivanam, whereby and whereunder a Decree for specific performance was granted in favour of the respondent/ plaintiff. 3. The parties to this appeal are hereinafter referred to as plaintiff and Defendants as per their status before the trial Court. https://hcservices.ecourts.gov.in/hcservices/ Background facts :- The Plaint :- 4. The suit in O.S.No.116/1991 was instituted by the plaintiff against the Defendants praying for a Decree of specific performance on the basis of the sale Agreement dated 29 June 1990 or in the alternative, directing the Defendants to refund the advance consideration of Rs.1,60,000/- with interest @ 18% termed as damages. 5. In the plaint in O.S.No.116/1991, plaintiff has inter-alia contended thus:- (a) The property described in the schedule to the plaint absolutely belongs to the defendants. They have decided to sell the property to raise funds for their business. The plaintiff was ready and willing to purchase the property and accordingly, after negotiation, defendants offered to sell the property for a sum of Rs.1,75,000/-. The said offer was accepted by the plaintiff and an agreement was entered into on 29 June 1990. As per the said agreement, the plaintiff agreed to purchase the suit property for a total consideration of Rs.1,75,000/- and a sum of Rs.1,50,000/- was paid as advance, the receipt of which was duly acknowledged by the defendants. As per the terms and conditions of the agreement, the balance amount of Rs.25,000/- has to be paid within one year and the plaintiff has to get the document executed. It was further stipulated that in case the plaintiff fail to pay the balance sale consideration and get the conveyance executed and registered within one year from the date of agreement, plaintiff would lose the advance and in case of failure on the part of the defendants to perform their part of the contract, the plaintiff is at liberty to sue the defendants for specific performance of the agreement after depositing the balance sale consideration and get the conveyance executed and recover possession of the suit property through Court. (b) Since the defendants were hard pressed for money, a further sum of Rs.10,000/- was paid on 15 July 1990 and in token of acceptance of the said amount, the defendants also issued a receipt cum acknowledgment dated 15 July 1990. In the said receipt also, they have reiterated the terms and conditions of sale. According to the plaintiff, he was ready and willing to perform his part of the contract at all point of time. He was having sufficient funds to pay the balance sale consideration of Rs.15,000/-. Though repeated requests were made to the defendants to receive the balance consideration and to execute the deed of conveyance, they were not prepared for the same. Therefore, plaintiff was constrained to issue notice to the defendants through his lawyer on 05.04.1991. The said notice was returned unserved which made the plaintiff to send a telegram on 26.04.1991 calling upon the defendants to execute the sale deed after receiving the balance sale consideration. Though the telegram was received by the defendants, there was no follow up action to register the sale deed. The plaintiff was ready and willing https://hcservices.ecourts.gov.in/hcservices/ to pay the balance consideration of Rs.15,000/- and to show the bona fides, lodgment schedule was also filed along with the plaint for depositing the balance consideration in Civil Court deposit. Accordingly, the suit was instituted for specific performance. (c) Plaintiff has claimed an alternative relief of damages, as according to him, he would have earned at least 18% from the date of payment, if he had invested the said amount in any approved financial institution and in the event of the Court coming to a conclusion that he was not entitled to a decree of specific performance, he should be given a decree to refund the advance consideration with interest at the rate of 18% which was termed as damages. The written statement :- 6. Defendants on appearance before the trial Court filed their Written Statement. The material contentions as found in the Written Statement would read thus :- a) It is true that an Agreement was entered into between the parties to sell the suit property for a sum of Rs.1,75,000/-. However, the plaintiff was not in a position to obtain the Sale Deed from the Defendants by paying the balance sale consideration within the time stipulated in the Agreement. It was only on account of the failure on the part of the plaintiff to pay the balance amount, the Sale Deed was not executed. Since the default was on the part of the plaintiff, Defendants have not contributed for the delay, and as such, plaintiff is not entitled for a Decree of Specific Performance. It was further contended that they have not received the notice from the plaintiff. Since the plaintiff has committed breach of contract, he is not entitled to get any kind of relief from the Court and accordingly, the Defendants prayed for dismissal of the suit. The Issues :- 7. In accordance with the pleadings, the trial Court framed the following issues for consideration :- "1. Is it the plaintiff or the defendants who had violated the conditions in the sale agreement ? 2. Are the defendants liable to execute the sale deed after accepting the sale consideration ? 3. Are the defendants liable to repay Rs.1,60,000/- with interest at 12% to the plaintiff, as damages ? 4. To what relief, the plaintiff is entitled to ?" Proceeding before Trial Court :- 8. Before the trial Court, plaintiff was examined as PW-1. Witness to the Agreement was examined as PW-2. Exs.A-1 to A-6 were marked on the side of the plaintiff. The first defendant was examined as DW-1 and they have also examined DW-2 to prove the value of the suit property as on the date of the Agreement as well as its present rate. However, no exhibits were marked on the side of the Defendants. https://hcservices.ecourts.gov.in/hcservices/ Judgment of the Judge :- 9. Though specific performance is a discretionary remedy, and the plaintiff was bound to prove that he was ready and willing to perform his part of the contract at all point of time, no specific issue to that effect was framed by the trial Court. 10. The learned Trial Judge recorded the submissions made by the counsel for the plaintiff and the Defendants. After recording the submissions advanced on the side of the plaintiff, the Court observed that the submission of the counsel has to be accepted. However, there was no independent assessment made by the learned Trial Judge with respect to the pleadings as well as evidence adduced on the side of the parties to come to a definite conclusion that the plaintiff was entitled to a Decree of Specific Performance. 11. The learned Trial Judge by agreeing with the contentions raised on the side of the plaintiff, observed that the Defendants could have given a reply to the telegram and the fact the Defendants have not taken any steps to execute the documents proved that there was no merit in their contention that non availability of the balance consideration with the plaintiff was the reason for the failure to execute the document. 12. The counsel for the plaintiff also argued before the trial Court that as per the sale agreement marked as Ex.A-1, in case the Defendants failed to register the document, the plaintiff was permitted to deposit the balance consideration before the trial Court and seek a Decree of Specific Performance. According to the learned Counsel, the plaintiff has taken steps to deposit the amount before the trial Court. The Trial Court accepted the said contention and indicated that deposit of the amount after taking a challan from court shows the bonafides of the plaintiff. The learned Judge by accepting the contention of the counsel for the plaintiff again made an observation that in view of Ex.A-3 and A-6 being notice and telegram respectively, it cannot be said that the plaintiff was not having the resources to pay the balance consideration and accordingly, the contention raised by the counsel for the Defendants to that effect was negatived. The Court ultimately observed that as per the evidence of PW-1 and PW-2, and in the light of documents, Exs.A-1 to A-6, as well as the admission made by PW-1 during his cross examination, it could be concluded that the plaintiff was entitled to a Decree for Specific Performance. Accordingly, the suit was Decreed as prayed for and the Defendants were directed to execute the Sale Deed after receiving the balance sale consideration. Since the main prayer was granted, prayer for granting alternative relief was dismissed. The Trial Court also granted thirty days time to the plaintiff to deposit the balance sale consideration. In short, the plaintiff was granted the equitable remedy of Specific Performance. It is the said Judgment and Decree which is impugned in the appeal at the instance of the Defendants. https://hcservices.ecourts.gov.in/hcservices/ Submissions :- 13. The learned Counsel for the Defendants attacked the Judgment and Decree of the trial Court on the following grounds :- "a) Plaintiff was not ready and willing to perform his part of the contract. This was proved by the conduct of the plaintiff. There was no documents produced before the trial Court to substantiate the contention that he was having sufficient funds to complete the transaction by tendering the balance consideration. b) The plaintiff has claimed damages in the plaint itself. Therefore, it was evident that he was more in favour of getting an alternative remedy of damages than a decree for specific performance, and in such circumstances, he is not entitled to the discretionary remedy of Specific Performance. c) The Agreement was entered into in the year 1990. The property is situated in a prime locality at Tindivanam and land value has gone up considerably during the interregnum and as such, specific performance of the contract would give the plaintiff an unfair advantage over the defendants. 14. The learned Counsel for the plaintiff supported the Judgment and Decree of the trial Court. He also contended that major portion of the consideration was already paid and as such, it cannot be said that the plaintiff was not having sufficient money with him for payment of the balance consideration. Similarly, the suit was also filed even before the expiry of the time granted in Ex.A-1 and as such, it cannot be said that there was undue delay in approaching the Court. The core issues in this appeal :- 15. The following points arise for consideration in the present appeal :- a) Whether the plaintiff was ready and willing to perform his part of the contract at all point of time? b) Whether the plaintiff is entitled to the discretionary remedy of Specific Performance in the facts and circumstances of this case ? c) whether the plaintiff is entitled to the alternative remedy of refund of the advance consideration with interest ? Discussion :- 16. The execution of the agreement dated 26.09.1990 as per Ex.A- 1 is not in dispute. Similarly, the subsequent payment of Rs.10,000/- on 15.07.1990 and the execution of the document in Ex.A-2 is also admitted. https://hcservices.ecourts.gov.in/hcservices/ 17. The plaintiff has agreed to purchase the suit property on a total consideration of Rs.1,75,000/-. Terms and conditions of the agreement was reduced into writing. The said document was marked as Ex.A-1. 18. As per Ex.A-1, plaintiff was bound to pay the balance consideration of Rs.25,000/- within one year and to get the sale deed executed. It was also stipulated that in case plaintiff failed to pay the balance consideration and get the sale deed executed in his favour, he would lose the advance consideration. Similarly, in the event of the failure of defendants to execute the sale deed in spite of tendering the balance consideration by the plaintiff, liberty was granted to the plaintiff to deposit the balance consideration in Court and to file a suit for specific performance. Since the defendants were in dire need of money, a further sum of Rs.10,000/- was paid by the plaintiff on 15.07.1990. Plaintiff has also obtained a further agreement on 15.07.1990 as per Ex.A-2 acknowledging the subsequent payment. In Ex.A-2, the terms and conditions of the sale was reiterated. It was also stated that plaintiff has to produce the stamp papers and tender the balance sale consideration of Rs.15,000/- within the time stipulated in Ex.A-1 and in such an event, the document has to be registered by the defendants. There was a further stipulation in Ex.A-2 which was a reproduction of the conditions as found in Ex.A-1. As per the said condition, in case the defendants failed to register the document in spite of the readiness on the part of the plaintiff to pay the balance sale consideration, plaintiff was given the right to deposit the balance sale consideration before the Court and to file a suit for specific performance. 19. Though the balance sale consideration was only a sum of Rs.15,000/-, and the defendants were in dire need of money, which was indicated in Ex.A-2 as well as in the plaint, no steps appears to have been taken by the plaintiff to pay the balance sale consideration immediately and to get the sale deed executed. It was only during the fag end of the time fixed for completion of the transaction, plaintiff has sent the notice in Ex.A-3 dated 05 April 1991 followed by telegram as per Ex.A-6 dated 26 April 1991. According to the plaintiff, the telegram was received by the defendants, and even then, they have not taken any action to conclude the sale. However, very strangely, the suit was filed two months after the telegram and that too, just two days prior to the expiry of the time prescribed in Ex.A-1 to conclude the transaction. 20. Before the trial Court, plaintiff was examined as PW-1 and during his evidence, he deposed that he was a licensed pawn broker doing business at Tindivanam. He was also maintaining accounts of the business transactions. It was the further evidence of PW-1 that he was having documents to prove his financial capacity to raise the sale consideration of Rs.1,75,000/- and as such, it cannot be said that he was not having sufficient money for the purpose of payment of balance sale consideration. https://hcservices.ecourts.gov.in/hcservices/ 21. The first defendant in his evidence as D.W.1 specifically stated that the plaintiff never approached him or the second defendant to complete the transaction with the balance amount. D.W.1 maintained that it was only the plaintiff who was at fault. D.W.1 expressly denied the contention raised on the side of the plaintiff that he was doing finance business. According to D.W.1, plaintiff has no property much less house property in Pondicherry or in Tindivanam. He was not doing finance business. In short, the contention raised by the plaintiff with regard to his sound financial position was challenged by the defendants. 22. Before the trial Court, it was the contention of the plaintiff that he was having sufficient funds with him to pay the balance consideration and to get the sale deed executed. He also contended that in spite of sending a notice as well as telegram to the defendants, they have not turned up to register the document. The plaintiff attempted to project his bona fides by contending that the application for lodgment schedule to deposit the balance sale consideration has already been filed in the Court which shows that he has performed his part. The learned Trial Judge without making any attempt to find out the bona fides in the contention, simply agreed with the views expressed by the learned counsel for the plaintiff; and by way of a passing remark, observed that the learned counsel for the plaintiff was perfectly correct in his submission that it was only the defendants who were not ready and willing to perform their part of the contract, which was also substantiated by the fact that they have not taken any steps to register the property even after receipt of notice as well as telegram. 23. Since the trial Court has not framed any issues with respect to the entitlement of the plaintiff to obtain a decree of specific performance as well as his readiness and willingness at all point of time, the said vital issue has to be considered in the first appeal. 24. The agreement in Ex.A-1 was executed on 29.06.1990. Plaintiff paid a sum of Rs.1,50,000/- as advance. The time limit for completion of the transaction was specifically mentioned in Ex.A-1. The defendants were in dire need of money and as such, a further sum of Rs.10,000/- was paid on 15.07.1990 and a receipt cum agreement was entered into on 15.07.1990, as per Ex.A-2. In the said document, there was a mention that the defendants were hard pressed for money. When the defendants were eager to get the balance sale consideration, nothing prevented the plaintiff to pay the balance and to get the sale deed executed immediately. Therefore, it is evident that the prescription of one year as the time for completion of the transaction was made only at the instance of the plaintiff. In case he was having the entire sale consideration with him and as the defendants were in dire need of money, he could have paid the balance sale consideration also and there was no need to wait for the stipulated period of one year to complete the transaction. In Ex.A-2 as well as in the plaint, there was a specific statement about the https://hcservices.ecourts.gov.in/hcservices/ financial difficulties faced by the defendants. Plaint also proceeds on the factual basis that it was only to raise funds for the business, defendants have agreed to sell the property. When it was their urgent necessity to raise funds for their business, the defendants would be eager to complete the transaction at the earliest point of time. There was no necessity so far as the defendants were concerned to fix such a longer time for completion of the transaction. It was also not the contention of the plaintiff that the defendants were not having the title deeds with them for the purpose of executing the sale deed and that was the reason for fixing a longer time for completion of the transaction in spite of the fact that major portion of the sale amount has already been paid. Therefore, the only possible conclusion that could be arrived at from the given facts is that the period of one year was prescribed only at the instance of the plaintiff as he has to arrange the balance sale consideration. 25. The subsequent payment of Rs.10,000/- was made as early as on 15.07.1990 and that too within a short time from the date of execution of Ex.A-1. This shows the imminent need of the defendants for money. Even after paying a sum of Rs.1,60,000/- plaintiff has waited till 05.04.1991 to send the notice in Ex.A-3 calling upon the defendants to receive the balance sale consideration and to execute the sale deed. Even after issuing notice followed by telegram and knowing perfectly well that the defendants were not coming forward to register the document, plaintiff has waited for about two months to file the suit. In fact, the suit was filed just two days prior to the expiry of the time limit. 26. In Ex.A-2, there was a specific recital that the plaintiff has to purchase stamp papers for the purpose of executing the document. However, other than sending notice in Ex.A-3 and telegram in Ex.A-6, there was nothing to show that the plaintiff has taken active steps for concluding the sale. 27. Plaintiff has stated in paragraph 5 of the plaint that he was always ready and willing to perform his part of the contract. The fact that he has applied for issuance of challan along with the plaint was also taken as a ground to prove his bona fides. However, even after obtaining a challan from the Court, he has not deposited the money. In fact, deposit of the balance sale consideration in court was agreed to be a pre-condition for instituting a suit for specific performance. The application for issuance of challan was only to comply with the said mandatory condition. The non deposit of the amount even after the order passed by the court shows the falsity of the case of readiness and willingness, as pleaded by the plaintiff. Therefore, it is evident that he was not possessed of the balance consideration. 28. The defendants had in clear terms challenged the financial capacity of the plaintiff to pay the balance sale consideration. According to them, plaintiff was not having the sufficient means, https://hcservices.ecourts.gov.in/hcservices/ which alone was the reason for delay. Though in his evidence PW-1 stated that he was having substantial property as well as money and that his accounts would show that substantial amount was with him, not even a scrap of paper was produced before the Court to prove the contention. It cannot be said that the plaintiff should be having cash with him at all point of time. However, when there was a serious dispute raised by the defendants about the financial position of the plaintiff in the light of the period prescribed in the agreement to complete the transaction, plaintiff should have produced sufficient materials before the Court to substantiate his contention that he was always ready and willing to perform his part of the contract. 29. Time agreed between the parties to perform the contract expired by 29.06.1991. The suit was instituted on 27.06.1991 and on the very same day, plaintiff obtained a challan for deposit of a sum of Rs.15,000/-, being the balance sale consideration. However, no deposit was made. The amount was deposited on 07.04.1995 by way of demand draft dated 06.04.1995. The deposit made on 07.04.1995 before the Court cannot be considered to be a valid deposit made during the currency of the agreement and in pursuance of the agreement, and on the basis of the challan submitted on 27.06.1991. The deposit made by way of demand draft dated 06.04.1995 was clearly out of time. The deposit made subsequent to the decree does not satisfy the condition of pre-deposit of the balance amount before filing the suit for specific performance. 30. Plaintiff who approached the Court with a pair of unclean hands was not entitled for an equitable remedy. Plaintiff projected his case that he was always ready and willing to comply with the terms and conditions of the sale agreement. He also contended that he has applied for challan to deposit the balance sale consideration. During his evidence as PW-1, it was further stated on oath that he has applied for challan. The learned counsel for the plaintiff has also made his submission before the trial Court that the plaintiff was