HON’BLE SRI JUSTICE N.R.L. NAGESWARA RAO APPEAL SUIT Nos.4 OF 1988 AND 102 OF 1994 COMMON JUDGMENT: The plaintiffs in O.S.No.253 of 1980 on the file of the II Additional Subordinate Judge, Visakhapatnam, are the appellants in A.S.No.4 of 1988. Defendants Nos.2 and 3 in O.S.No.231 of 1985 on the file of the I Additional Subordinate Judge, Visakhapatnam, are the appellants in A.S.No.102 of 1994 and they are the plaintiffs in O.S.No.253 of 1980. 2. O.S.No.253 of 1980 on the file of the II Additional Subordinate Judge, Visakhapatnam, is a suit filed for specific performance of the contract of sale, dated 05.12.1977 executed by the defendant in favour of the plaintiffs or in the alternative for refund of the advance of Rs.20,000/- with interest and damages of Rs.1,00,000/-. 3. The allegations in the plaint go to show that the defendant is owner of the schedule property, which is a house and he executed an agreement of sale on 05.12.1977 agreeing to sell the property for a consideration of Rs.1,55,000/- and received a sum of Rs.20,000/- as an advance. The sale deed has to be executed within six months and the balance of consideration would be paid at the time of registration. It was further agreed that both the plaintiffs and defendant have to apply to the Urban Ceiling Authority for necessary permission and income tax clearance has to be obtained by the defendant and in the event of the Urban Land Ceiling Authority refusing to grant permission to the defendant for the sale of the buildings, the defendant should refund the advance amount of Rs.20,000/-. The plaintiffs have been always ready and willing to perform the part of the contract and several times approached the defendant to execute the sale deed but the defendant has been postponing. The plaintiffs also handed over the defendant necessary forms for obtaining the permission from the Urban Land Ceiling Authority. The defendant has not informed about the permission. On 26.03.1980 a notice was given to the defendant but it was returned as refused. Again on 15.04.1980 the defendant sent a notice informing that the Urban Land Ceiling Authority permission was declined and consequently, contract would not be enforced and sent a sum of Rs.20,000/- by pay order enclosing copy of the proceedings of the Urban Land Ceiling Authorities dated 10.04.1980. On 29.04.1980 the plaintiffs sent a reply notice informing that there is no refusal of the permission and consequently, the amount was not accepted. The defendant again sent a reply on 08.07.1980 reiterating the earlier stand. The defendant has not taken steps for completion of the enquiry by Urban Land Ceiling Authorities and therefore, the suit is filed for specific performance of the contract. 4. The defendant has filed a written statement admitting the transaction and also the terms incorporated there-under. The defendnat claims that if for any reason Urban Land Ceiling Authority permission is not granted the contract cancels and there is no need for specific refusal. The allegation that the defendant has not pursued the permission is not correct. No sale transaction can be effected without the necessary permission from the Urban Land Ceiling Authority and consequently, the contract has become un-enforceable. 5. On the basis of the above pleadings, the following issues have been framed by the trial Court, for trial: 1) Whether the plaintiff is entitled to the specific performance of the agreement, dated 05.12.1977 executed by the defendant? 2) Whether the plaintiff sustained damages of Rs.1,00,000/- due to non-performance of the suit agreement by the defendant and whether the plaintiff is entitled to claim the said amount? 3) Whether the agreement of sale dated 05.12.1977 is void and unenforceable as per Section 27 of the Urban Land Ceiling Act as per the contention of the defendant? 4) Whether the agreement of sale is opposed to public policy under Section 23 of the Indian Contract Act as contended by the defendant? 5) Whether the suit is premature? 6) To what relief? 6. On behalf of the Plaintiffs, PWs.1 and 2 were examined and marked Exs.A.1 to A.30 and also Ex.C.1. On behalf of the defendant, DW.1 was examined and marked Exs.B.1 to B.5. After considering the material on record, the learned II Additional Subordinate Judge has refused the relief of specific performance but granted the refund of advance of Rs.20,000/-. The damages were also not granted. Aggrieved by the said judgment, A.S.No.4 of 1988 was filed. 7. The suit O.S.No.231 of 1985 on the file of the I Additional Subordinate Judge, Visakhapatnam, was filed by the children of the 1st defendant for declaration that the subject matter of the suit in O.S.No.253 of 1980 is the joint family property and the plaintiffs have got 2/3rd share and for a permanent injunction restraining the alienation of the same in favour of defendants Nos.2 and 3, who are the plaintiffs in O.S.No.253 of 1980 on the file of the II Additional Subordinate Judge, Visakhapatnam. 8. The defendants contended that the suit is a collusive one and the property is not the joint family property and it was the self-acquired property of the 1st defendant. 9. On the basis of the above pleadings, the following issues have been framed by the trial Court, for trial: 1) Whether the suit house is the self acquisition of late G.K.Padmaraju and subsequently became the absolute property of the 1st defendant? 2) Whether the orders in I.A.No.414 of 1984 in O.S.No.253 of 1980 on the file of the II Additional Subordinate Judge’s Court, Visakhapatnam operate as res judicata? 3) Whether the suit is not entitled into next friend? 4) Whether the plaintiffs are entitled the declaration as prayed for? 5) Whether the plaintiffs are entitled for the injunction prayed for? 6) To what relief? 10. On behalf of the Plaintiffs, PW.1 was examined and marked Exs.A.1 to A.7. On behalf of the defendants, DW.1 was examined and marked Exs.B.1 to B.7. After considering the material on record, the learned I Additional Subordinate Judge has decreed the suit of the plaintiffs. Aggrieved by the said judgment, A.S.No.102 of 1994 was filed. 11. The parties are referred as arrayed in O.S.No.253 of 1980 on the file of the II Additional Subordinate Judge, Visakhapatnam, concerning A.S.No.4 of 1988. 13. The points that arise for consideration are: 1) Whether the schedule property is absolute property of the defendant in O.S.No.253 of 1980 on the file of the I Additional Subordinate Judge, Visakhapatnam? 2) Whether the appellants are entitled for the specific performance of the contract of sale instead of the refund of the consideration? 3) Whether the contract has become impossible of performance? 14. POINTS: The undisputed facts are that Ex.A.1 agreement of sale was entered on 05.12.1977 with regard to the residential property and the total consideration was Rs.1,55,000/- and only a sum of Rs.20,000/- was paid. There is also no dispute about the fact that as per the stipulation under the agreement both the parties shall apply for Urban Land Ceiling clearance and within six months the sale deed is to be executed and it was further stipulated that the parties treated time as essence of the contract. There is no dispute that Ex.A.1 contains a condition that for any reason permission of the Urban Land Ceiling Authority is not granted, it is agreed that the amount has to be refunded. 15. It is not in dispute when the agreement was entered into the provisions of the Urban Land Ceiling Act are applied and a registration was not effected without a clearance from the Urban Land Ceiling Authority. The parties are conscious about that fact and for that reason only the stipulation has been made and it was further stated that for any reason permission is not granted the amount has to be refunded. The question whether there should be a refusal of the permission or not is not very much material since a close reading of Ex.A.1 shows that the parties intended time as essence of the contract and the formality and getting Urban Land Ceiling clearance and also the income tax clearance have to be completed within six months. It is to be noted that the Urban Land Ceiling clearance has to be obtained by both the parties. It is not in dispute that under Ex.B.1 proceedings dated 10.04.1980 the order was passed by the Urban Land Ceiling Officer, which is as follows: “Sri G.Kamaraju, son of G.K. Padmaraju filed two applications under Section 27 of the Urban Land Ceiling Act to sell his residential building located in S.T. Ward Door No.22-69-31 extent of 660 sq.mts in favour of two persons Smt. Mattapally Rukmini, wife of Subbarayudu and Mattapalli Andalamma, wife of Rama Jagannadham of Visakhapatnam. He previously filed statement under Section 6(1) of the Act and it is pending enquiry in this office. The purchasers were also declared as surplus land holders in this office C.C.No.349 and 350 of 1976 and the appeal filed by them is pending before the Commissioner for Land Reforms and Urban Land Ceiling, Andhra Pradesh, Hyderabad. In these circumstances, the request of Sri G.Kamaraju for permissions under Section 27 of the Act to sell his building cannot be complied with until his statement under Section 6(1) is finalized and the surplus land is finally determined under Section 10(1) of the Act”. 16. This clearly goes to show that the competent authority expressed inability to grant permission to sell the property under Section 27 of the Urban Land Ceiling Act (for short, ‘the Act’). Important aspect to be noted is that from 05.12.1977, the date of agreement, for a period of several months, the plaintiffs have not moved in the matter and did not inform the readiness and willingness and call upon the defendant to obtain the necessary permission. The legal notice has emanated for the first time on 26.03.1980 under Ex.A.3. It is also to be borne in mind that to the knowledge of the plaintiffs that alienations were said to have been effected under Exs.A.10 to A.13 by the defendant after obtaining necessary permissions in the years 1978 and 1979 and if such fact is in the knowledge of the plaintiffs, there is no reason as to why the plaintiffs have not called upon the defendant to comply with the obligations under the agreement. In fact, even by the date of the suit, there is no material to show that the plaintiffs have got clearance from the Urban Land Ceiling Authorities. A reading of Ex.B.1 corresponding to Ex.A.5 clearly goes to show that the plaintiffs were also found to be surplus land holders and the appeal filed by them is pending before the Commissioner. That being so, it is quite clear that the plaintiffs themselves did not get the clearance apart from the failure to get a permission as required under Section 27 of the Act for the defendant to alienate the property. 17. It is needless to say that when a party seeks to enforce specific performance of the contract of sale, he should abide by the terms of contract. Any deviation from the terms of the contract without the consent of the other party will not be accepted. In this case, when time was fixed as six months for performance of the contract, within the period of six months the plaintiffs have not offered the money towards the balance of sale consideration. It is useful to note that when the property is covered under the Urban Land Ceiling, naturally the price that is quoted will be less. When the property is free from the restrictions of the law and when a clearance under Urban Land Ceiling Act is not necessary, there can be a free market value for the property. Therefore, that may be the reason as to why the price quoted in the agreement of sale Rs.1,55,000/- under Ex.A.1 for the property situated in developing locality. It is also to be noted that even by the date of filing of the suit, the clearance was not obtained. There is no serious dispute about the fact that the prohibition applies for the alienation under Ex.A.1. But the contention of the counsel for the appellants is that the property being house property, the judgment of the Hon’ble Supreme Court lays down that no permission is required for alienation since it is not a vacant land and consequently, the relief of specific performance cannot be refused on that ground. The lower Court has considered this aspect and found that the Judgment of the Hon’ble Supreme Court reported in Maharao Sahib Shri Bhim Singhji Vs. Union Of India (Uoi) and others (AIR 1981 SC 234) has no application and it is only applicable to cases where the holding is less. Whatever may be the reason given by the lower Court the fact remains that a subsequent change of law sought to be relied on by the plaintiffs cannot be allowed to be given an advantage. The Court has to see whether by the date of the agreement between the parties what was the law, which existed and also to see as to what was the law that was applicable by the date of the suit. In fact, in the plaint it was not pleaded that the permission of the Urban Land Ceiling Authority is not needed. The plaintiffs cannot be allowed to take advantage of a subsequent pronouncement to the detriment of the interest of the vendor when there is a lack of evidence of readiness and willingness to perform the contract and having kept quiet for a period of nearly three years for not seeking the enforcement of the contract. It is quite clear that the plaintiffs kept quiet for a longer time being conscious of the fact that the permission of the Urban Land Ceiling Authority is required for the registration of the document. Since by the date of the suit, the order under Ex.B.1 has not been varied and as the permission was not granted, the parties are bound by the terms under agreement of sale. If the Urban Land Ceiling Authority has not passed any order it is a different matter. But, a positive order has been passed under Ex.B.1 stating that the permission cannot be granted since the other proceedings have to be finalized. Therefore, in view of the above circumstances, the contract has become impossible of performance for want of necessary permission and any advantage given to the plaintiffs by virtue of the subsequent pronouncement of the judgment will be only benefiting him ignoring the equities, which have to be considered in enforcing the contract of sale. The lower Court has considered all these aspects and I have no hesitation in holding that the readiness and willingness on the part of the plaintiffs is also not proved and the time stipulated under Ex.A.1 was intended to be acted upon since the consequential condition of refund of the money was mentioned. It is not a case where time was casually mentioned without any consequences of the breach or failure of the contract. Therefore, for the above reasons, the judgment of the lower Court in refusing the specific performance cannot be faulted. Further-more, the relief of specific performance is a discretionary one and the Court below has exercised the discretion after giving sound reasons and keeping in view the law as existed by the date of the agreement and sitting in appeal, there are no special reasons to substitute the relief. 18. So far as another suit for partition is concerned, the appellants can challenge it only when the right of specific performance with regard to the schedule properties is accepted. It is to be mentioned even by the date of the trial of the suit for partition, the suit for specific performance was dismissed and therefore, the appellants have no locus standi to participate in the trial for the partition of the properties between the family members, but, however, he was permitted to participate. In view of the fact that the relief of specific performance cannot be granted, the appellant cannot also challenge the said decree. 19. Therefore, there are no merits in both the appeals and the appeals are liable to be dismissed. Points are answered accordingly. In the result, both the appeals are dismissed. There shall be no order as to costs. _______________________________ JUSTICE N.R.L. NAGESWARA RAO Date:13.10.2011 INL