908.567.11 app ISM IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 567 OF 2011 WITH NOTICE OF MOTION NO. 1749 OF 2011 IN SUIT NO. 1720 OF 1998 1. Smt. Shanta Jagjeevan Patel } 2. Shri. Ramesh Jagjeevan Patel } 3. Shri. Hasmukh Jagjeevan Patel } …. Appellants All residing at 186/2840, Group } No. 8/B, Tagore Nagar, Vikhroli (E), } Bombay – 400 083 } Vs. 1. Mr. Rajesh Balkrishna Kadam } R/at: Room No. 816, Building No. 26, } Tagore Nagar, Vikhrolli (E), } Bombay – 400 083 } } 2a. Smt. Meenakshi Gunwant Patel } 2b. Mr. Hemant Gunwant Patel } 2c. Smt. Deepika Gunwant Patil } All residing at 186/2840, Group No. 8/B, } Tagore Nagar, Vikhroli (East), } Mumbai – 400 083. } …. Respondents } 3. Shri. Suresh Jagjeevan Patel, } At present residing at X84/8, } Godrej Station Side Colony, } Phirojshah Nagar, Vikhroli (E), } Mumbai – 400 079. } } 4. Maharashtra Housing Area Development } Board having its Head office at Kalalnagar, } Bandra (E) Bombay – 400 050. } 1 of 15 908.567.11 app Mr. V. S. Kapse a/w Mr. Rajesh Dharapa, Mr. Akshay Sawanat for the appellants. Mr. Drupad S. Patil for respondent no. 1. CORAM : NARESH H. PATIL AND NITIN W. SAMBRE, JJ. RESERVED ON : 31/01/2018 PRONOUNCED ON : 23/04/2018 JUDGMENT: (PER: NITIN W. SAMBRE, J.) This appeal is arising out of the Judgment and Order dated 27/08/2009 delivered by the learned Single Judge in Suit No. 1720 of 1998 granting decree for specific performance in favour of the respondent against the appellants. 2 The facts necessary for deciding the present appeal are as under: 3 The suit property consist of tenement located in MHADA Colony, bearing no. 186/2840, Group No. 8B , Tagore Nagar, Mumbai. The suit property was agreed to be purchased by the respondent/plaintiff vide unregistered agreement of sale dated 25/12/1997. As per the said agreement, total consideration agreed between the parties was Rs. 6,80,000/-. 4 Present appellant no. 1 who claim to be owner of the suit property 2 of 15 908.567.11 app has received an amount of Rs. 5,000/- towards earnest money and it was agreed between the parties that the balance amount will be paid on or before 25/02/1998 by the respondent. 5 There is stipulation in the agreement of sale that in case, if the respondent failed to pay the amount as agreed, the appellant shall forfeit the earnest money. 6 The respondent/plaintiff, so as to take the agreement to its logical end, borrowed Rs. 50,000/- from Punjab and Maharashtra Co-operative Bank. His mother, an employee also made financial arrangement for applying for loan from Provident Fund, L.I.C. against her investments. 7 Appellant/defendants requested the plaintiff to pay an amount of Rs. 1,00,000/- so as to make arrangement for their alternate residence, as they have to vacate the suit premises. Against the said demand of Rs. 1,00,000/-, defendant claimed to have paid Rs. 75,000/- for which the appellant and defendant no. 2 and others have executed a valid receipt counter signed by the property broker. 8 Though assured, defendants have failed to vacate the suit premises on 02/01/1998 and respondent/plaintiff had made arrangement of balance consideration after obtaining loan, visited the 3 of 15 908.567.11 app appellants/defendants for getting the sale deed executed. As the appellants/defendants failed to execute the sale deed and vacate the suit premises, respondent/plaintiff caused notice on 04/03/1998 on appellant no. 1 through registered post with acknowledgment due, which remained unclaimed. 9 As a consequence, respondent initiated suit in question praying for a decree for specific performance of the agreement of sale dated 25/12/1997. 10 The suit preferred by the present respondent came to be decreed by the impugned order dated 27/08/2009. As such, this first appeal. 11 The learned counsel for the appellants/original defendants while inviting the attention of this Court to the provisions of Section 20 and 21 of the Specific Relief Act, 1963 would urge that the learned Trial Judge has committed an error of law in decreeing the suit by exercising discretion in favour of the plaintiff. According to him, in terms of agreement of sale, instead of specific performance, compensation could have been awarded. The learned counsel for the appellants would urge that there was no readiness and willingness on the part of the respondent/plaintiff to perform his part of contract pursuant to the agreement of sale dated 25/12/1997 as it is not demonstrated as to 4 of 15 908.567.11 app whether respondent/plaintiff was armed with entire consideration so as to get the sale deed executed in his favour. The learned counsel would then urge that the stipulations in agreement provides for time to be essence of the contract. Consequences of not honouring the conditions of the agreement, is over looked by the learned Single Judge. According to him, at the most, pursuant to the provisions of section 21 of the Act, compensation can be awarded in favour of the respondent. The learned counsel then would invite attention of this Court to the fact that the suit property is allotted by the Maharashtra Housing, Area and Development Authority (MHADA) and in such case, MHADA was necessary party to the suit. He would urge that the procedure prescribed by the MHADA contemplates prior permission for effecting the transfer of the suit property which is admittedly not complied by the respondent/plaintiff and as such the suit should have been dismissed by the learned Trial Judge. The learned counsel for the appellants so as to substantiate his contentions would rely upon the Judgment of the Hon'ble Apex Court in the matter of Saradamani Kandappan V/s. S. Rajalakshmi and others 1 so as to demonstrate the scheme of Section 20 & 21 of the Specific Relief Act establish that specific performance ought not to have been granted. 1 (2011) 12 Supreme Court Cases 18 5 of 15 908.567.11 app 12 Per contra the learned counsel for the respondent/plaintiff would urge that though appellant was served with the suit summons, the appellant and all the original defendants chose to remain absent before the learned Trial Judge. Appellants neither filed their written statement nor cross-examined the witness of the plaintiff. According to him it is for the first time, the appellants are raising the plea of fact and evidence before this Court. In addition, the learned counsel for the respondent/plaintiff would urge that it is sufficiently demonstrated before the learned Trial Court as regards readiness and willingness to perform their part of contract by producing appropriate oral and documentary evidence. The learned counsel then would urge that so as to claim benefit under Section 20 & 21 of the Specific Relief Act, least that was expected of the appellant was to counter the pleadings and evidence put forth by the respondent/plaintiff before the Trial Court. According to him, MHADA was added as defendant no. 6 to the suit and said defendant no. 6 neither raised any objection to the transaction in question nor filed any appeal. According to the respondent, present appeal, in absence of any interim order has rendered infructuous as the Prothonotary, pursuant to the order passed by this Court which is under challenge has already executed the sale deed. The respondents have deposited the entire consideration before this Court as ordered by the learned Trial Judge. 6 of 15 908.567.11 app According to him, Appropriate support can be drawn from the Judgment of the Apex Court in the matter of Chand Rani (Smt) (Dead) by Lrs V/s. Kamal Rani (Smt (Dead) by LRs2 so as to claim that the time was never an essence of the contract. According to him it was appellant/defendant who was not ready and willing to perform his part of contract which has prompted him to file the suit. He submits that the appeal needs to be dismissed. 13 Considered rival submissions, execution of the agreement of sale in relation to suit property of 25/12/1997 and the agreed consideration of Rs. 6,80,000/- is not in dispute. 14 So as to substantiate the case before the Trial Court, respondent/plaintiff has specifically pleaded that he has taken loan of Rs. 50,000/- from the Co-operative bank while his mother arranged an amount of Rs. 1,00,000/-. It is also brought on record that an amount of Rs. 75,000/- was paid to the appellant no. 1. 15 So far as the claim of the appellant is concerned, appellants herein suffered initial ad-interim order of injunction on 29/04/1998. The suit summons were served on the appellant as is apparent from the affidavit of the Bailiff dated 29/03/2007. The amended copy of the 2 (1993) 1 Supreme Court Cases 519 7 of 15 908.567.11 app plaint was also served on the appellant as is apparent from the record. 16 Mother of the respondent/plaintiff Sangeeta, Power of Attorney holder of plaintiff, has filed affidavit of evidence, produced original documents viz. agreement of sale dated 25/12/1997, part amount of consideration receipt dated 02/01/1998, Advocates notice dated 04/03/1998 along with unclaimed packet sent by post. 17 The learned Single Judge, in absence of any written statement and counter evidence, proceeded to analyze the case of the respondent/plaintiff and recorded finding about existence of agreement of sale, payment of part consideration and readiness and willingness to pay balance consideration of Rs. 6,00,000/- and decreed the suit. The appellant herein has failed to demonstrate any convincing reason so as to infer that there was sufficient cause which prevented appellants from appearing before the learned Trial Judge. Even before this Court appellants have failed to establish their case either by producing cogent evidence by taking shelter of Order 41 Rule 27 of Code of Civil Procedure or otherwise. Appellants have tried to contest the Judgment of specific performance in this appeal on the basis of existing pleadings and evidence. The fact remains that the appellants have not cross-examined the witness of the plaintiff and as such the case built up by the plaintiff 8 of 15 908.567.11 app was not demolished by the appellants before the Trial Court and also before this Court. 18 So as to appreciate the appellants' claim, that the decree for specific performance ought not to have been ordered pursuant to the provisions of Section 21 of the Specific Relief Act, we hardly notice any basis in support of such contentions, as for the first time, such plea is sought to be raised before this Court. The respondents/plaintiffs have demonstrated before the learned Trial Judge about their readiness and willingness by disclosing their source of arranging the entire consideration. 19 It is established through evidence by the respondent that his mother obtained loan of Rs. 2,95,000/- and he himself has obtained loan of Rs. 50,000/- and balance amount was arranged from alternate modes. 20 This Court has taken Judicial note of the fact that already sale deed pursuant to the decree for specific performance is executed in favour of the respondent and what remained is handing over possession. The sale deed is executed in compliance with decree passed by the learned Trial Judge after depositing the entire balance consideration in terms of the order passed by the learned Trial Judge. 9 of 15 908.567.11 app 21 In the wake of above, reliance placed by the learned counsel for the appellants so as to draw benefit under section 21 of the Specific Relief Act on the Judgment of Saradamani Kandappan (cited supra) will be of hardly any assistance. It is not open for the appellants herein to claim before the first Appellate Court, based on defence which was never raised before the learned Trial Judge that the decree as prayed should not have been granted, particularly without setting up any defence to that effect. 22 The respondents were right in inviting attention of this Court to para nos. 19, 20, 21, 23 & 25 of the Judgment in the matter of Saradamani Kandappan (cited supra) which read thus: “19. The learned Single Judge and the Division Bench, after exhaustive consideration of the evidence, have recorded the following findings of fact: (a) Respondents 1 to 3 entered into an agreement dated 17.1.1981 agreeing to sell 24 acres 95 cents of land to the Plaintiff for a consideration of Rs. 3,75,000/- and received in all, Rs. 2,25,000 as advance. (b) Plaintiff had paid an additional consideration of Rs. 1,25,000 for the movables and taken a letter from the fourth Respondent describing it as 'commission', by way of security, with the understanding that if the sale did not take place, the amount should be refunded. (c) The time for payment of the balance sale price stipulated in Clause (4) of the agreement of sale was the essence of the contract. 10 of 15 908.567.11 app (d) Plaintiff's claim that in March, 1981, Clause (4) regarding payment schedule was modified by oral agreement under which it was agreed that the installments due on 6.4.1981 and 30.5.1981 could be paid after the Defendants satisfied the Plaintiff about their title to the property agreed to be sold, was not established by Plaintiff. The terms of the agreement remained unaltered. (e) Plaintiff committed breach by failing to pay the sum of Rs. 1,00,000 due on 6.4.1981 (except Rs. 25,000 paid on 2.4.1981) and the sum of Rs. 75,000 due on 30.5.1981 and the Defendants were therefore justified in cancelling the agreement on 2.8.1981. (f) The Defendants did not deliver possession of the properties agreed to be sold, to the Plaintiff in part performance of the agreement of sale dated 17.1.1981. The Defendants delivered the property to the Plaintiff in trust to hold the same as caretaker, until the vendors received the entire sale price and delivered possession. Therefore when the agreement was cancelled and consequently the appointment as caretaker came to an end, the Plaintiff became liable to return the suit schedule properties to the Defendants. (g) The Plaintiff and her husband had knowledge of the existence of mortgage, before entering into the agreement of sale on 17.1.1981; and the case put forth by the Defendants that as per the understanding between the parties, the Defendants had to discharge the mortgage debts and secure the original title deeds after receiving the entire consideration, merited acceptance. As per the term of the agreement, the Defendants had no obligation to produce the original title deeds or proof of clearance of loans, before Plaintiff paid the entire sale consideration. (h) The Plaintiff failed to establish her readiness and willingness to complete the sale in terms of the agreement and she was not entitled to the relief of specific performance. 20 Feeling aggrieved by the judgment of the division bench, the Appellant has filed these appeals (CA Nos. 7254 to 7256 of 2002), challenging the findings of fact arrived at by the High Court and also raising some legal contentions. Where findings of fact recorded by the learned single Judge (trial court) are affirmed by the appellate bench of the High Court in appeal, this Court will be reluctant to interfere with such findings in exercise of jurisdiction under Article 136 of the Constitution, unless there are very strong reasons to do so. On the 11 of 15 908.567.11 app contentions urged, the following questions arise for our consideration: (i) Whether the time stipulated for payment of balance consideration was the essence of contract and whether the Defendants were justified in cancelling the agreement, when the time schedule stipulated for such payment was not adhered to? (ii) Whether the parties had agreed upon sequence of performance, which required payment of balance consideration by Appellant, as stipulated in Clause (4) of the agreement, only after the Respondents satisfied the Appellant regarding their title to the lands? (iii) Whether the Respondents had failed to disclose the encumbrances over the properties and thereby committed fraud, entitling the Appellant for extension of time stipulated for payment corresponding to the delay caused by the fraud and consequently the cancellation of the agreement by notice dated 2.8.1981 is illegal and invalid? (iv) Whether an adverse inference ought to be drawn on account of the non-examination of Defendants 1 to 3 who were the vendors under the agreement of sale? 21 The Appellant contends that time is not the essence of the agreement of sale dated 17.1.1981. She contends that where the vendors fail to give the documents of title to satisfy the purchaser about their title, and the purchaser is ready and willing to perform the contract, the termination of the agreement of sale by the vendors is illegal and amounts to breach of contract. They submit that High Court had failed to apply Section 55 of the Contract Act, 1872. 22 Section 55 of the Contract Act, 1872. Section 55 of Contract Act deals with the effect of failure to perform at a fixed time, in contract in which time is essential. Said Section is extracted below: Section 55. Effect of failure to perform at a fixed time, in contract in which time is essential.-- When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before a specified time, and fails to do such thing at or before a specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promise, if the intention of the parties was that time should be of essence of the contract. 12 of 15 908.567.11 app Effect of such failure when time is not essential: If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promise is entitled to compensation from the promissory for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than agreed upon: If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promise accepts performance of such promise at any time other than agreed, the promise cannot claim compensation of any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of acceptance, he give notice to the promissory of his intention to do so. 23 The above section deals with the effect of failure to perform at a fixed time, in contracts in which time is essential. The question whether time is the essence of the contract, with reference to the performance of a contract, what generally may arise for consideration either with reference to the contract as a whole or with reference to a particular term or condition of the contract which is breached. In a contract relating to sale of immovable property if time is specified for payment of the sale price but not in regard to the execution of the sale deed, time will become the essence only with reference to payment of sale price but not in regard to execution of the sale deed. Normally in regard to contracts relating to sale of immovable properties, time is not considered to be the essence of the contract unless such an intention can be gathered either from the express terms of the contract or impliedly from the intention of the parties as expressed by the terms of the contract. 25 The legal position is clear from the decision of a Constitution Bench of this Court in Chand Rani v. Kamal Rani 1993 (1) SCC 519, wherein this Court outlined the principle thus: It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is a presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the 13 of 15 908.567.11 app contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language. 23 In the wake of above, this Court has re-appreciated the entire gamut of the matter and would hardly noticed any material illegality in the Judgment delivered by the learned Single Judge. The learned Single Judge rightly recorded finding of readiness and willingness of the respondent/plaintiffs so as to perform their part of contract. 24 Some of the defendants against whom suit was decreed have not questioned the Judgment and Decree and have accepted the same. 25 In the wake of above, no interference is warranted. Appeal must fail and is accordingly dismissed. 26 In view of the disposal of the appeal, notice of motion stands disposed of accordingly. [NITIN W. SAMBRE, J.] [NARESH H. PATIL, J.] 14 of 15 908.567.11 app 27 After pronouncement of the judgment, the learned counsel for the appellants prays that the operative order be stayed for a period of 4 weeks. 28 The learned counsel for the respondent submits that in case, the Court is likely to stay the operative order at the request of the learned counsel for the appellants, as the appellants are in possession, they shall submit an undertaking to the Court that they shall not create third party interest of whatsoever nature in respect of the subject property. 29 The counsel for the appellants agrees to the same and submits that such an undertaking will be filed within a week from today. 30 On submission of such an undertaking and in view of the request made, we direct that this order shall not be operative for a period of 4 weeks from today. [NITIN W. SAMBRE, J.] [NARESH H. PATIL, J.] 15 of 15