IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 23.05.2006 CORAM: THE HON ‘BLE MR. JUSTICE K.MOHAN RAM A.S.No.98 of 1992 Kaleeswara Mills Limited (A Unit of National Textile Corporation Tamil Nadu & Pondicherry) 10/8 Anuppar Palayam, Coimbatore – 9. … Appellant (1st defendant) -Vs- 1. M/s. Lakshmi Steals Rep. By its Partner, Mr. R.Rajasekaran 85, C.Rankonar Street, Kattur, Coimbatore – 9. 2. M/s. Kumar Enterprises, Kaleeswarar Nagar, Kattur, Coimbatore – 9. … Respondents. (Plaintiff & 2nd defendant) Appeal against the Judgment and Decree made in O.S.No.561 of 1985 on the file of the III-rd Additional Sub-Court, Coimbatore dated 27.06.1991. For Appellant : Mr. N.Sridhar, for Mr.S. Kadarkarai, For Respondents : Mr. S.Parthasarathy, Senior Counsel, for Mr. S.Thangasivam for R-1 and Mr. J.Raja kalifullah for R-2. - - - J U D G M E N T Being aggrieved by the judgment and decree dated 27.06.1991 made in O.S.No.561 of 1985 on the file of the III Additional Sub-Court, Coimbatore the first defendant has filed the above appeal. 2. For the sake of convenience, the parties are referred to as per their ranking in the suit. 3. The case of the plaintiff as pleaded in the plaint is set out below: (i) The first defendant in or about January 1985 called for tenders and invited offers from the general public for the purchase of two building sites Nos.2 and 10 of an extent of about 9 cents each, the former at the minimum rate of https://hcservices.ecourts.gov.in/hcservices/ Rs.18,000/- per cent and the latter at the minimum rate of Rs.15,000/-, fixing 14.02.1985 as the last date for receiving tender. The plaintiff sent its tender forms for the purchase of plot No.10B measuring about 8.425 cents and enclosed a banker’s cheque, dated 13.02.1985 for Rs.10,000/- representing initial deposit amount. (ii) The first defendant accepted the plaintiff's offer by sending its letter of confirmation, dated 11.05.1985 and required the plaintiff to remit the balance price of Rs.1,97,338/- by means of a demand draft and further required the plaintiff to purchase the necessary stamp papers to enable the first defendant to prepare and execute the document early. The plaintiff by letter dated 23.05.1985 requested the first defendant to send the plan of the site showing the measurements and boundaries so that the plaintiff could prepare and send the draft sale deed for the first defendant’s approval and indicated thereby that it was ready and willing to perform its part of the obligation. (iii) Ever since the time when the contract was concluded and confirmed, viz, on and from 11.05.1985 the plaintiff was, has been and continues to be ready and willing to perform its part of the obligation under the contract and the plaintiff even now has the money ready, in the form of bank deposit receipts standing in the names of the partners. (iv) The plaintiff bona fidely expected the first defendant to furnish the plan of the suit property to enable the plaintiff to incorporate the description of the property in the sale deed and the partners of the plaintiff were in touch with the officers of the first defendant between 11.05.1985 and 22.06.1985. The first defendant made the plaintiff to understand that its office would send the needed particulars in due course and the plaintiff could wait to discharge its obligations till then. (v) While so the plaintiff received the first defendant’s letter, dated 22.06.1985 on 24.06.1985, stating that in view of the alleged non-compliance of clauses (8) and (9) of the tender terms, the plaintiff's offer was treated as cancelled and the deposit amount of Rs.10,000/- was forfeited. The plaintiff was made to believe that it would take some time for finalizing the draft sale deed itself and the question of payment of balance price could arise only after approval of the draft sale deed. The first defendant’s cancellation of the contract is untenable in law, unreasonable and unjustified in the light of their confirmation letter, dated 11.05.1985, in and by which, the plaintiff was required to pay the entire balance price and not as per clauses (8) and (9). The first defendant ought to have given the notice of cancellation before 30 days from 11.05.1985, expressing its intention to avoid the contract for the alleged non-performance of payment, assuming without admitting that time was the essence of the contract. In contracts relating to immovable property, time is not the essence of the contract. In the instant https://hcservices.ecourts.gov.in/hcservices/ case, time was never agreed to be the essence of the contract and at any rate not expressly agreed to be so. Nor did the first defendant purport to treat time as the essence of the contract at any time before 22.06.1985. (vi) The plaintiff immediately approached the first defendant on 26.06.1985 itself with the bank draft for Rs.1,97,338/- drawn in favour of the first defendant and tendered it to the first defendant, but the first defendant refused to receive it. Thereupon, the legal notice dated 29.06.1985 was sent enclosing the bank draft for Rs.1,97,338/- and requiring the first defendant to execute the sale deed. The first defendant sent a belated reply dated 24.07.1985 to the plaintiff, returning the bank draft therewith. The first defendant’s purported act of treating the deposit amount as having been forfeited is untenable. The second defendant is the next tenderer and so the second defendant is also impleaded. The plaintiff has prayed for a judgment and decree directing the first defendant to execute the sale deed in plaintiff’s favour in respect of the suit property; to put the plaintiff in possession of the suit property or in the alternative to direct the first defendant to pay Rs.50,000/- by way of damages to the plaintiff; to refund the deposit amount of Rs.10,000/- and to pay future interest on Rs.60,000/- till date of realization and for costs. 4. The first defendant has filed a detailed written statement containing the following defence:- (i) The plaintiff is not entitled to the discretionary relief of specific performance. The plaintiff has committed breach with regard to the terms and conditions of the tender. As per Clause No.8, on receipt of intimation of acceptance of tender, the successful tenderer shall within a period of 20 days from the date of such a letter, remit 50% of the value of the site allotted to him by Demand Draft and shall within a period of 30 days from the date of the said letter arrange to pay the balance of the price and take the sale deed at its cost. As per Clause No.8, the plaintiff should have further remitted the balance of 50% of the value within 30 days from 11.05.1985 i.e. on or before 10.06.1985 and since the plaintiff failed to make the remittances as per Clause No.8 of the tender conditions there is no concluded contract at all, which can be enforced in a Court of law. (ii) The plaintiff did not make any request for any plan of the suit property. Even otherwise the plaintiff had all the particulars available with them before the offer was made and even if such request was true it was only made to gain time. The plaintiff was not ready and willing to perform its part of the contract. The plaintiff and its partners were not periodically in touch with the first defendant between 11.05.1985 and 22.06.1985. The averment that the first defendant made the plaintiff to https://hcservices.ecourts.gov.in/hcservices/ understand that the details sought for by it will be sent in due course and the plaintiff can await for discharging its obligations is not true. There is no need to issue notice of cancellation before 30 days from 11.05.1985. The belated bank draft manipulated by the plaintiff would not advance their case. 5. The second defendant has filed a written statement with the following contentions:- (i) The plaintiff failed to perform conditions stipulated in clauses 8 and 9 of the tender contract. This defendant being the next highest tenderer is entitled to compel the first defendant to accept their offer and confirm the sale in their favour. The contract in favour of the plaintiff stands rejected on account of default committed by the plaintiff and as such the plaintiff is not entitled to compel the first defendant to convey the property. (ii) The plaintiff has committed breach of contract and the second defendant had always been ready and willing and continue to be ready and willing to perform the terms and conditions by remitting the entire sum due. The plaintiff ought to have invoked the arbitration clause. A tender contract is different from ordinary enforceable contract and tender contract is subject to condition and stipulation as agreed to and it gives right to the tenderer either to accept it or to reject it. The first defendant has rejected the tender of the plaintiff rightly having regard to the terms and conditions of the contract on the ground of non-fulfillment of the essential condition.(emphasis supplied) The second defendant has adopted the written statement filed by the first defendant, which is not in variance with the contentions of the second defendant. The sum of Rs.1,97,338/- said to have been sent by the plaintiff was not within time and in accordance with the conditions of the contract. The plaintiff having committed breach of contract, with a view to cover up his omission, appears to have created a make belief story or readiness by creating self serving draft sale deeds and other correspondence. Even if the first defendant had given any assurance to the plaintiff against the right of the second defendant it is not binding on him. The plaintiff is not entitled to a decree for specific performance and the first defendant is liable to accept the tender of the second defendant and confirm it in its favour. 6. On the above said pleadings, the following issues have been framed by the Trial Court viz.: i) Whether time was the essence of the contract entered into between the plaintiff and the first defendant? ii) Whether the plaintiff is entitled to a decree for specific performance? iii) Whether this Court has got jurisdiction to try the suit? iv) To what other relief the plaintiff is entitled to? https://hcservices.ecourts.gov.in/hcservices/ 6. On the above said issues, the parties went into trial. On the side of the plaintiff, one of its partner Thiru. Rajasekar has been examined as P.W.1 and Exs.A-1 to A-11 have been marked. On the side of the first defendant, no witness has been examined, but Ex.B-1 has been marked. On the side of the second defendant, its accountant Thiru. Govindaraj has been examined as D.W.1 and no documents have been marked. 7. On a consideration of the oral and documentary evidence adduced in the case, the Trial Court has granted a decree for specific performance in favour of the plaintiff and has also awarded costs. Being aggrieved by that, the first defendant in the suit has filed the above appeal. 8. I heard Mr. N.Sridhar, learned counsel for the appellant, Mr.S.Parthasarathy, learned Senior Counsel for the first respondent and Mr.J.Raja Kalifullah, learned counsel for the second respondent. 9. Mr.N.Sridhar, learned counsel appearing for the appellant/first defendant submitted that the first defendant by the paper advertisement Ex.A2 called for tenders and invited offers from the general public for the purchase of the suit property and another property. The plaintiff sent its tender form for the purchase of the suit property and the first defendant under Ex.A-3 dated 11.5.1985, accepted the offer of the plaintiff. As per clause 8 of the terms and conditions incorporated in Ex.B1, on or before 31.5.1985 i.e. within 20 days from 11.5.1985 the plaintiff should have paid 50% of the sale consideration and thereafter on or before 10.6.1985 i.e. within 30 days from 11.05.1985, should have paid the remaining balance amount, but without making the above said two payments, the plaintiff wrote a letter Ex.A4 dated 23.5.1985 requesting the first defendant to furnish the plan copy of the suit property to incorporate the description of the property in the sale deed. According to the learned counsel, the full description of the suit property and the particulars of other property have been furnished in the annexure to Ex.B1. He further submitted that in Ex.A2, the paper publication, it has been specifically stated that the intending purchasers may inspect the suit property between 2 p.m.and 4 p.m. on all working days from 30.1.1985 to 6.2.1985 and as such there was no need for the plaintiff to seek for the copy of the plan and other details, but only with a view to gain time, the plaintiff has sent Ex.A4. The learned counsel further submitted that clauses 8 & 9 of the tender conditions are special conditions, which should be construed as making time as the essence of the contract. Since the plaintiff failed to remit the initial payment of 50% and also the balance payment within the stipulated time as per clause 8 of the terms and conditions of tender, the first defendant invoking clause 9 of the terms and conditions of tender, vide Ex.A5 letter dated 22.6.1985, addressed to the plaintiff informed it that the offer is treated as cancelled and forfeited the Earnest Money Deposit of Rs.10,000/-. 10. The learned counsel further submitted that there is no concluded contract between the plaintiff and the first defendant. In support of his submission, the learned counsel relied upon the https://hcservices.ecourts.gov.in/hcservices/ decision reported in AIR 1999 MADRAS 304 (M/s. Veera Property Development Pvt. Ltd. And etc., Vs. Tamil Nadu Slum Clearance Board). 11. The leaned counsel further submitted that time is of the essence of the contract and the finding of the trial Court that in this case time is not of the essence of the contract, is erroneous. The learned counsel submitted that the trial Court has failed to see that the contract of sale in this case is not a regular contract of sale, but it is a tender sale and as such the legal principles applicable for deciding the question as to whether time is of the essence of the contract in a regular contract of sale, should not be applied in respect of a tender sale. The trial Court has failed to note this vital distinction between a tender sale and a regular contract of sale. In support of the said submission, the learned counsel relied upon the decision in the case of P.S.DURAIKANOO Vs.M.SARAVANA CHETTIYAR AND ANOTHER reported in AIR 1963 MADRAS 468 (DB). 12. Further, Mr.N.Sridhar, learned counsel for the appellant/first defendant submitted that P.W.1 in his cross examination has deposed as follows: **blz;lhpd;; condition go elf;fhjjhy; vdf;F ve;jtpj chpika[k; ,y;iy** On the basis of the said admission of P.W.1, it was submitted that the plaintiff has understood that time is of the essence of the contract in this case and therefore, the finding of the trial Court is erroneous. 13. On the other hand, Mr.Rajakalifulla, learned counsel appearing for the second defendant / second respondent submitted that there is no equity in the contract between the plaintiff and the first defendant and Ex.A3 is only a confirmation of the highest bid and not an acceptance letter and as such there is no concluded contract between the plaintiff and the first defendant. The learned counsel in support of his submissions relied upon the following Judgments: i) 1996 (10) SCC 405 – RAJASTHAN COOPERATIVE DAIRY FEDERATION LTD. Vs. MAHALAXMI MINGRATE MARKETING SERVICES PVT. LTD AND OTHERS. ii) 1999 (1) SCC page 1 – RICKMERS VERWALTUNG GMBH Vs INDIAN OIL CORPORATION LTD. iii) Volume 96 LAW WEEKLY page 88 H.G.KRISHNA REDDY AND CO. Vs. M.M.THIMMIAH AND ANOTHER He further submitted that he is adopting the arguments of the learned counsel for the Appellant and submitted that the offer of the second defendant being the second highest, the same should have been accepted when the plaintiff failed to perform his part of the contract within the stipulated time and when the first defendant chose to cancel the contract of sale with the plaintiff. https://hcservices.ecourts.gov.in/hcservices/ 14. Per contra, Mr.S.Parthasarathy, learned Senior Counsel appearing for the plaintiff / first respondent submitted that by Ex.A- 3, dated 11.05.1985 the first defendant had accepted the offer of the plaintiff and as on 11.05.1985 a concluded contract had been made. He further submitted that nothing further remained to be done either by the plaintiff or by the first defendant. The learned counsel further submitted that neither the learned counsel for the appellant nor the learned counsel for the second respondent submitted as to what remained to be done by the plaintiff or the first defendant after Ex.A-3 and submitted that the submissions of both the learned counsel on this aspect are not legally sustainable. The learned senior counsel submitted that though in paragraph 10 of the plaint the plaintiff has stated that time was not of the essence of the contract, the first defendant, though has adverted to the averments made in paragraph 10 of the plaint, in paragraph 10 of the written statement, it has not specifically denied the same. Based on that the learned senior counsel submitted that under Order 8 Rule 5 CPC, since the facts stated in the plaint are not denied they should be taken as admitted. The learned senior counsel referred to paragraph 8 of the plaint and submitted that the plaintiff had met the officers of the first defendant for gathering particulars between 11.05.1985 and 22.06.1985 and the first defendant made the plaintiff to understand that the particulars would be sent in due course and the plaintiff can wait to discharge its obligations till then. The general presumption in a contract relating to immovable property is that time is not of the essence of the contract and the conduct of the officers of the first defendant referred to in paragraph 10 of the plaint would show that time was not treated as essence of the contract of sale. The learned senior counsel further submitted that in Ex.A-3 the first defendant had not stated the manner in which the sale consideration should be paid. Though the plaintiff had written a letter Ex.A-4 dated 23.05.1985 and the last date for paying the 50% of the sale consideration was 31.05.1985 and though the amount was not paid by the plaintiff, the first defendant did not send any reply for Ex.A-4 and also did not cancel the contract of sale on the basis of non-payment of the 50% of the sale consideration within 20 days from the date of Ex.A-3 and no notice was sent by the first defendant to the plaintiff calling upon him to make the said payment. The learned senior counsel further submitted that even though Ex.A-4 is referred to in Ex.A-5 dated 22.06.1985 under which the first defendant sought to cancel the contract of sale, nothing has been said about the request made by the plaintiff in Ex.A-4. The learned senior counsel further submitted that the plaintiff is the promisor and the first defendant is the promisee and under Section 63 of the Indian Contract Act, the promisee, viz., the first defendant, may extend time for performance of the contract and as such the conduct of the first defendant in not insisting for the payment of 50% of the sale consideration within 20 days from the date of Ex.A-3 and the non cancellation of the contract of sale for non-payment within 20 days would show that the first defendant had extended the time for performance of the contract of sale. The learned senior counsel further submitted that the 30 days time from the date of Ex.A-3 expired on 10.06.1985 and though the plaintiff had not paid the balance 50% of the sale consideration, the first defendant did not immediately cancel the contract. But yet the first defendant while canceling the contract by issuing Ex.A-5 dated https://hcservices.ecourts.gov.in/hcservices/ 22.06.1985 relied upon Clause–8 of the tender conditions. According to the learned Senior counsel, the above said facts are the distinguishing features from the facts of the case relating to A.I.R. 1963 Madras 468. 15. The learned Senior Counsel further submitted that when the plaintiff pleaded that time is not of the essence of the contract and the first defendant did not deny it either in the written statement or in the evidence, the Court is bound to accept the plea of the plaintiff. In support of the said submission, the learned Senior Counsel relied upon the Judgment rendered in the case of SWARNAM RAMACHANDRAN & ANOTHER Vs. ARAVACODE CHAKUNGAL JAYAPALAN reported in (2004) 8 SCC 689. 16. The learned Senior Counsel further submitted that when P.W.1 has deposed that he met Thiru Arunachalam, General Manager of the first defendant Company and he promised to give the details sought for by the plaintiff and asked the plaintiff to pay the balance amount after finalisation, the first defendant has not chosen to examine the said Arunachalam and thereby failed to produce the best evidence to substantiate its claim. In support of his submission, the learned Senior Counsel relied upon the Judgment rendered in the case of GOPAL KRISHNAJI Vs. MOHD. HAJI LATIF reported in AIR 1968 SC 1413 at 1416. 17. The learned Senior Counsel further submitted that time is not of the essence of the contract in so far as this case is concerned and relied upon the following decisions: i) VOLUME 30 MLJ 186 (part V) KHODARAM IRANI Vs BURJORJI DHURIJIBHAI CONTRACTOR. ii) AIR 1958 SC 512 KESHAVLAL LALLUBHAI PATEL & OTHERS VS. LALBHAI TRIKUMLAL MILLS LTD. III) (1993) 1 SCC 519- CHAND RANI Vs. KAMAL RANI The learned Senior Counsel further submitted that the intention to treat the time as the essence of the contract may be established by circumstances to displace the normal presumption and in support of that, he relied upon the decision rendered in the case of Govind Prasad Chaturvedi Vs. Hari Dutt Shastri and another and reported in AIR 1977 SC 1005 (para 5 & 6 at page Nos.1007 & 1008). 18. The learned Senior Counsel further submitted that reasonable notice was not given by the first defendant to the plaintiff before issuing Ex.A5 cancellation letter and he further submitted that no prejudice would have been caused to the first defendant if the demand draft sent by the plaintiff had been accepted and the sale deed had been executed in favour of the plaintiff. 19. The learned Senior Counsel by relying upon the Judgment rendered in the case of BORAMMA Vs. KRISHNA GOWDA reported in (2000) 9 SCC 214 (para No.10), submitted that it will not be a sound rule of appreciation of evidence to pick up an answer from the cross- examination of a witness and draw an inference taking it in isolation but the court must see as to how consistent the testimony of the witness is and as to how that answer fits in with the rest of the evidence and probabilities of the case. The learned Senior Counsel https://hcservices.ecourts.gov.in/hcservices/ therefore submitted that the argument advanced by the counsel for the appellant based on the isolated answer elicited from P.W.1 is liable to be rejected. 20. By way of reply, Mr.N.Sridhar, learned counsel appearing for the first defendant/appellant submitted that 10.06.1985 was the last date for payment of the sale consideration and hence the first defendant treating time as of the essence of the contract cancelled the contract of sale within 12 days from 10.6.1985 by Ex.A5 dated 22.6.1985. The learned counsel further submitted that both the plaintiff as well as the first defendant understood that time is of the essence of the contract. The learned counsel also submitted that the plaintiff, only after fully understanding the terms and conditions, made the offer and the plaintiff had understood the fact that time is of the essence of the contract. He further submitted that clauses 8 & 9 should be viewed as offeror's conditions and that is the difference between the regular contract of sale and a tender sale. He further submitted that the subject matter of sale in the case