IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 4-8-2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.No.9 of 2008 P.R.Gopal .. Appellant vs M.Rajeswari .. Respondent Original side appeal preferred under Clause 15 of the Letters Patent read with Order XXXVI Rule 1 of the Madras High Court Original Side Rules against the judgment and decree of this Court in C.S.No.273 of 1996 dated 3.8.2007. For Appellant : Mr.C.Venkatesalu For Respondent : Mr.K.P.Gopalakrishnan JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) Challenge is made to a judgment of the learned Single Judge of this Court made in C.S.No.273 o 1996, a suit for specific performance, granting a decree in favour of the plaintiff. 2.The plaint averments are stated as follows: (a) An agreement, dated 19.2.1994 was entered into between the plaintiff and the defendant to sell the property more fully described in the schedule annexed to the plaint, to the plaintiff. In the said agreement, the defendant has also disclosed the fact of the loan availed from the Indian Overseas Bank, Sowcarpet Branch, Madras. The agreed sale consideration was Rs.10,25,000/-, and the plaintiff has paid Rs.50,000/- as advance to the defendant. The sale transaction was to be concluded within the maximum period of three months from the date of agreement. The plaintiff had to arrange to get the vacant possession of the schedule property from the tenant on or before the date of sale. The understanding between the parties was that the balance of sale consideration was to be secured by the plaintiff from the Oriental Benefit & Deposit Society Limited, Madras, and the plaintiff has paid the necessary fees to the society on 23.2.1994. The defendant obtained income tax clearance on 28.4.1994. It was never agreed that the society will pay the bank for the release of https://hcservices.ecourts.gov.in/hcservices/ the title deeds, and the defendant ought to have made necessary arrangements for the same. The plaintiff wrote to the defendant on 9.5.1994, calling upon him to fulfill his obligations under the agreement, and she also sent a reminder on 16.5.1994, to which the defendant gave a reply on 19.5.1994, claiming performance by the plaintiff in a manner not visualized in the agreement. (b) On 31.5.1994, the plaintiff paid a sum of Rs.27,145.20 towards arrears of property tax and Rs.3,270/- towards arrears of water charges for the schedule mentioned property, but the defendant objected to the said payments and stated that the same are not binding on him. The defendant wanted a further advance of Rs.35,000/- and the plaintiff also paid the same on 27.6.1994. The plaintiff also arranged for obtaining the vacant possession of the tenanted portions, namely the third and fourth floors of the schedule property from the tenant, one Thiru I.Selvam, paying him a sum of Rs.1,30,000/-. Meanwhile, the husband of the plaintiff received a lawyer's notice dated 4.7.1994 issued on behalf of one R.Jeyarani, claiming that the defendant had entered into an agreement on 9.8.2003 to sell to her the schedule property. The plaintiff also wrote to the defendant on 11.7.1994 informing the same. But the defendant denied the same by a reply dated 2.8.1994. The defendant alleged for the first time that the amounts payable to the Bank have to be determined in C.S.No.1542 of 1993 filed by the bank against the defendant. The defendant further demanded vacant possession of the floors occupied by the plaintiff and also damages for use and occupation of the same. There was exchange of notices. The plaintiff was ready and willing to perform her part of the agreement. The defendant is also taking steps to forcibly take possession of third and fourth floors of the schedule property from the plaintiff. Hence the plaintiff has filed the suit for specific performance and also for permanent injunction. 3.The suit was resisted by the defendant by filing a written statement stating that on 19.2.1994, the defendant and the plaintiff undertook for sale and purchase of the suit property; that it was agreed that the plaintiff would purchase the suit property for a sale consideration of Rs.10,25,000/-, and she would clear the amounts due to the Indian Overseas Bank, Sowcarpet Branch, which was Rs.6,75,000/- at that time; that she also agreed that she would pay Rs.1,30,000/- in addition to sale consideration by way of cheque separately in favour of the defendant; that the agreement was entered into between the plaintiff and the defendant only in the presence of one Mr.Balasubramanian, Branch Manager of the said Bank, who has filed C.S.No.1542/1993 against the defendant for recovery of the said loan amount; that the defendant had agreed to sell only the ground floor, first floor and the second floor of the suit property, but the plaintiff claims third and fourth floors, over which the plaintiff has no right whatsoever; that the defendant obtained the income tax clearance certificate, but it was the plaintiff who was not ready and willing to perform her part of the agreement; that the statement of the plaintiff that she was processing a house loan would show that she did not have adequate funds and therefore, her readiness and willingness to perform her part of the agreement is false and untenable; that no steps were taken by the plaintiff for clearing the bank loan; that even at the time of filing the suit, the plaintiff had not deposited the alleged balance consideration; that the receipt https://hcservices.ecourts.gov.in/hcservices/ of further advance of Rs.35,000/- and the alleged payment of Rs.1,30,000/- to the tenants are denied by the defendant; that no such right was conferred on the plaintiff to make payment to the tenants; that the defendant was always ready and willing to perform his part of the contract; that the plaintiff had obtained loan from a financial institution and from and out of the funds so raised, the husband of the plaintiff has purchased Door No.11, Ibrahim Sait Street, Madras, in his name and that this would show that the plaintiff is not interested in performing the terms of the agreement entered into between the plaintiff and the defendant; that the plaintiff was not ready to purchase the suit property, and hence the plaintiff is not entitled for specific performance of the agreement, dated 19.2.94. 4.On the above pleadings, the trial Court framed 5 issues. At the time of trial, the plaintiff examined her husband as P.W.1 and marked 18 documents. The defendant examined himself as D.W.1, and 6 documents were marked. The learned trial Judge decreed the suit as prayed for with costs. Hence, this appeal at the instance of the defendant. 5.The points for determination are: (i) Whether the plaintiff was entitled for the specific performance of the contract dated 19.2.1994? (ii) Whether the plaintiff was ready and willing to perform her part of the contract? (iii) Whether it is correct that the plaintiff is not entitled to the equitable relief of specific performance for her conduct? (iv) To what relief? 6.Advancing the arguments on behalf of the appellant, the learned Counsel inter alia would submit that the plaintiff was never ready and willing to perform her part of the contract; that the plaintiff who was party to Ex.A2, agreement for sale, has not examined herself as witness, but her husband was examined; that he has categorically admitted that the plaintiff was to obtain loan from Oriental Benefit and Deposit Society Limited to pay the balance of consideration which would clearly indicate that the plaintiff had no sufficient money at the time of entering into the contract; that it is further pertinent to point out that out of the fund so raised from the said Society, the plaintiff's husband has purchased another property bearing Door No.11 in the very same street under three sale deeds dated 15.9.1994, which were marked by the defendant as Exs.B1 to B3, and has mortgaged the very same property to the said Society and has raised funds; that the mortgage was covered under Ex.B4 document; that the conduct of the plaintiff would clearly indicate that though she has entered into an agreement for sale by making payment of advance of meager sum, she was never ready and willing to pay the remainder or perform her part of the contract; that even from the agreement Ex.A2, it would be quite clear that the property which is the subject matter of the agreement, was under mortgage with the Indian Overseas Bank, and it was to be cleared; that under the https://hcservices.ecourts.gov.in/hcservices/ circumstances, the time was also stipulated in the agreement; that since the plaintiff has not come forward to make the payment of the balance of consideration, the mortgage could not be redeemed; that the interest amount was mounting day by day; that apart from that, the plaintiff was fully aware that the Indian Overseas Bank, the mortgagee under the deed, has filed a suit in C.S.No.1542 of 1993 against the defendant for recovery of the loan amount; that under the circumstances, the contention put forth by the plaintiff that the amounts which were due by the defendant to the bank, were not known and hence, she could not make the payment was simply a ruse invented. 7.Added further the learned Counsel that P.W.1 has categorically admitted that one Mr.Balasubramaniam, the then Branch Manager of Indian Overseas Bank, Sowcarpet Branch, had arranged the dealing; that the original title deeds were actually deposited in the Indian Overseas Bank, Sowcarpet Branch, to create equitable mortgage; that under the circumstances, the Indian Overseas Bank should have been impleaded as party, but not done so; that it was a suit for specific performance asking for an equitable remedy; that if the defendant is directed to execute a sale deed, it would cause hardship to him; but, on the contrary, the non-execution of the sale deed would not cause any hardship or prejudice to the respondent/plaintiff; that no doubt, the price has risen in the past 10 years; that apart from that, interest insofar as the bank loan which is the subject matter of the suit, has risen up; that the plaintiff had got the clear knowledge that only with a view to discharge the bank loan, the defendant offered to sell the property which is also quite evident under Ex.A2 agreement; that on the other hand, the plaintiff who obtained loan from the said Society, instead of making payment of the balance of consideration and getting the sale deed executed, has purchased some other property; that from the very reading of the agreement, it would be quite clear that the time was understood as essence of the contract; that the same would be quite evident from the evidence adduced by the parties, and hence the finding of the trial Court that time was not the essence of the contract was not correct. 8.It is further submitted by the learned Counsel that at the time when the property was leased out, the third and fourth floors were actually occupied by a tenant in respect of which RCOP No.2798/91 was also filed, and hence what was understood under the agreement Ex.A2 was only the ground floor and first floor and not the subject matter of RCOP No.2798/91; that it is pertinent to point out that when the RCOP was pending, a counter was filed by the tenant as found under Ex.B6; that even at the time of Ex.A2, agreement, RCOP proceedings were pending; and that it remains to be stated that the RCOP is not referred to in the agreement. 9.Added further the learned Counsel that after the agreement was entered into, the plaintiff has made corrections in the Clause No.6 to her advantage and thereafter, she has entered into an agreement with the tenant under Ex.A4; that by making payment of Rs.1.35 lakhs, she has taken possession of the third floor and fourth floor which was the subject matter of RCOP, and thus, the plaintiff without knowledge has taken possession of the property which was the subject matter of the sale agreement; that as far as this amount of Rs.1.35 lakhs was concerned, nowhere it is mentioned in the plaint that this https://hcservices.ecourts.gov.in/hcservices/ amount would form part of the sale consideration, and thus, she has taken possession of the property when the agreement was in force and also made payment of the said amount without any authorisation from the defendant who is the owner of the property; that the plaintiff has not even chosen to deposit the balance of sale consideration from the date of filing of the plaint till the date of final hearing of the suit, and thus, the plaintiff was never ready and willing to perform her part of the contract; that there were laches on the part of the plaintiff; that the conduct of the plaintiff would clearly indicate that it was not blemishless; that in such circumstances, the trial Court should have denied the discretionary relief, and hence, the appeal has got to be allowed setting aside the judgment of the trial Court. 10.Contrary to the above contentions, the learned Counsel for the respondent/plaintiff would submit that in the instant case, it is not in controversy that an agreement as could be seen under Ex.A2, was entered into between the parties on 19.2.1994, whereby the appellant/defendant contracted to sell the entire property namely the three storied building in Door No.10/2, Ebrahim Sait Street, Kondithope, Madras, which was also referred to in the schedule of property, and thus, it would be quite clear that it was the three storied building; that under the circumstances, the first contention that what was agreed to be sold was only the ground floor, first floor and second floor was rightly rejected by the trial Court; that the defendant came with a false defence; that the original consideration agreed between the parties was Rs.1.25 lakhs; that an advance of Rs.50,000/- was paid at the time of entering into the agreement; that the balance of consideration was to be paid on or before the execution of the sale deed to be made ready by the plaintiff at her expenses; that it is true that though it was agreed that the transaction must be concluded within a period of 3 months from the date of agreement i.e., 19.5.1994, the time was not the essence of the contract; that the learned trial Judge has expatiated the evidence in this regard and found that the time was not the essence of the contract; that it was also understood between the parties under the sale agreement that it was for the vendor to make payment of the corporation taxes, water charges and also electricity consumption charges; but, he has not done so; that under the circumstances, all these amounts were paid by the plaintiff, and receipts have also been produced therefor; that it was also understood that the property must be sold free of encumbrances; but, the property was actually under the mortgage with Indian Overseas Bank; that the plaintiff was very eager to know the bank balance and has issued communication calling for the exact figure; but, the defendant did not reply in that regard till the end; and that on the contrary, the Indian Overseas Bank who was the mortgagee, has filed a suit. 11.Added further the learned Counsel that apart from the above, the defendant though agreed to give the encumbrance certificate and also the income tax clearance certificate had never furnished the same to the plaintiff; that it is true that it was clearly understood between the parties that the balance of sale consideration was to be paid by the plaintiff by securing loan from the Oriental Benefit and Deposit Society Limited, Madras; that the plaintiff has actually paid https://hcservices.ecourts.gov.in/hcservices/ the necessary fees therefor in 1994 itself; that though the amounts were sanctioned, the plaintiff could not get the amount and pay since the defendant was not ready and willing; that apart from that, in the instant case, the purchase of the next property from and out of the amount availed from the Society, could not be an impediment felt by the defendant for not performing his part of the contract; that it is not correct to state that any alteration was made in the agreement for sale in Clause 6 by the plaintiff unilaterally; that this contention as if a correction was made by the plaintiff unilaterally was false; that the defendant in Ex.A8 has categorically pointed out that pursuant to the understanding found in the agreement, the plaintiff has taken possession of the property from the tenant, and thus, the plaintiff had neither taken possession of the property nor paid the amount without the knowledge of the defendant; that it was alleged in order to escape from the clutches of law; and that as could be seen, the conduct of the defendant, as spoken to by D.W.1 the defendant himself, would clearly indicate that all along the period, the defendant did not come forward to get the remainder of the consideration and execute the sale deed. 12.The learned Counsel would further submit that it is pertinent to point out that the plaintiff's husband received a lawyer's notice dated 4.7.94 issued on behalf of one Jeyarani claiming that the defendant had entered into an agreement with her on 9.8.93 to sell the schedule property; that immediately, the plaintiff wrote a letter to the defendant on 11.7.94 informing about the said notice and also requiring to get the said agreement cancelled and further to complete the formalities in furtherance of the agreement with the plaintiff; but, the defendant has replied that there was no such agreement at all; that it is pertinent to point out that for the first time, the amounts payable to the bank were determined in C.S.No.1542/93 filed by the bank against the defendant; that though the plaintiff was willing to clear the encumbrance namely the mortgage with the bank, the defendant did not come forward to state the amount enabling the plaintiff to clear the mortgage; that as far as the amount of Rs.1.30 lakhs which was paid by the plaintiff to the tenant by name Selvam in order to get possession of the property, was concerned, it has nothing to do with the sale consideration and the plaintiff never demanded that amount; that the plaintiff was ready and willing to pay the balance of consideration excepting the advance of Rs.50,000/- and also the water charges and corporation tax paid; that the same is also made clear in the evidence; that under the circumstances, the false defence that was put forth by the defendant has been rightly rejected by the trial Court, and hence, the judgment of the trial Court has got to be sustained. 13.The Court paid its anxious consideration on the submissions made and also looked into the materials available. 14.Admittedly, an agreement for sale of an immovable property was entered into between the plaintiff and the defendant on 19.2.1994 under Ex.A2. The property description given in the agreement reads: https://hcservices.ecourts.gov.in/hcservices/ "House and ground with three storied building bearing Old Door No.18/1 New No.10/1 Ebrahim Said Street, Kondithope, Madras-79 comprised in T.S.No.124/94 in Block No.2 in George Town Village, measuring East to West 50 feet on both sides and North to South 17 feet on Eastern side 16'9" on the Western side, admeasuring a total extent of 844 sq.ft. or thereabouts bounded on the North by Old Door No.18 and New No.10/1 South by Raghavan Pandithar House, East by Gopal Chettiar House and West by Ebrahim Sait Street together with well and its Motor connection corporation tap, all electrical installations, connections and together with T.N.E.B. Meter Deposit and all service connections thereto situate within the Registration District of North Madras and the Sub-Registration District of Sowcarpet." 15.From the reading of the agreement, Ex.A2, it could be seen that the consideration that was agreed between the parties was Rs.10,25,000/-. The plaintiff has paid an advance of Rs.50,000/- which is also incorporated in the agreement itself. The parties have also agreed that the transaction should be concluded within a maximum period of 3 months from the date of the agreement i.e., on or before 19.5.1994. 16.The decision in the case rests upon three aspects as to (i) whether time is essence of the contract; (ii) whether the plaintiff was ready and willing to perform her part of the agreement; and (iii) the conduct of the parties. 17.As pointed out above, the parties have agreed that the transaction should be completed within a period of 3 months from the date of the agreement. True it is, ordinarily time is the essence of the contract insofar as the sale of an immovable property. In the present case, certain circumstances are noticed. A reading of the agreement would clearly reveal that the property which was the subject matter of sale, was actually mortgaged with the Indian Overseas Bank, Sowcarpet Branch. It is also made clear in the agreement that the defendant was under necessity to enter into such a transaction for clearance of the said mortgage debt. At this juncture, Ex.A2 reads as follows: "WHEREAS the Vendor with a view to discharge the sundry debts and to discharge the loan in Indian Overseas Bank, offered to sell the above property and morefully described in the schedule hereunder for a net price of Rs.10,25,000/- (Rupees ten lakhs twenty five thousand only) and whereas the Purchaser agreed to purchase the same for the said sum of Rs.10,25,000/-." It would be abundantly clear that so long as the remainder of the sale consideration was not paid, he could not clear the encumbrance at all; on the contrary, he has to make payment of interest that would be going on increasing. What was done by the plaintiff was that she has paid the water tax and corporation tax. Though it was not agreed by the plaintiff for making such payments, she has paid so. It is pertinent to point out that even before the agreement was https://hcservices.ecourts.gov.in/hcservices/ entered into on 19.2.1994, the Indian Overseas Bank, Sowcarpet Branch, has already filed a suit in C.S.No.1542/93 based on the mortgage, for recovery of the mortgage dues, and hence when the agreement was entered into between the parties, the plaintiff should have got the clear knowledge about the pendency of that suit. But, what was all contended by the plaintiff before the trial Court and equally here also is that the amounts due towards the mortgage came to her knowledge for the first time as determined in C.S.No.1542/93, which cannot be accepted. The parties clearly knew that the property was to be sold by the defendant for clearance of the mortgage debt, and further the suit in C.S.No.1542/93 was earlier in point of time. Hence the circumstances necessitated the early payment of the balance of sale consideration; but, except the payment of advance of Rs.50,000/- and also the payment of water taxs and corporation tax, the plaintiff did not come forward to make any payment towards the consideration. Therefore, the contention put forth by the plaintiff that time was not the essence of the contract, and she need not make the payment of the remainder within the stipulated time or within a reasonable time cannot be accepted in view of the circumstances attendant and noticed above. 18.As far as the other two aspects as stated supra, are concerned, this Court is of the considered opinion that they stand against the plaintiff. As could be seen from the agreement entered into between the parties, the defendant's property was mortgaged with the Indian Overseas Bank, Sowcarpet Branch, in respect of which a suit filed by the bank, was pending. Under the agreement, the defendant was to clear the encumbrance. At one stage, since the plaintiff did not come forward to part with any payment, on 19.5.1994 under Ex.A8, the defendant instructed the plaintiff to clear the bank loan and tax liability through him and also directed the plaintiff to prepare a sale deed. He also further directed the plaintiff to deduct the amounts due to the bank under