* HON’BLE SRI JUSTICE GODA RAGHURAM AND HON’BLE SRI JUSTICE NOUSHAD ALI + C.C.C.A.No.257 of 2008 % 09-09-2010 # T. Krishna Goud, S/o. T. Sambaiah Goud, R/o.2-2-140, M.G. Road, Secunderabad. ..PETITIONER VS. $ Sabiha Kamaluddin, W/o. Kamaluddin Mohammed, R/o.H.No.12-2-458, Mehadipatnam, Hyderabad. ..RESPONDENT ! Counsel For the Petitioner: Sri A. Sudershan Reddy ^ Counsel For Respondent: Sri M.A.K. Mukheed < Gist : Ø Head Note : ? CITATIONS : 1. AIR 1967 SC 868 2. AIR 1979 SC 1241 3. AIR 2003 SC 1390 4. AIR 1964 SC 164 5. 1989 Supplement (1) SCC 628 6. AIR 1963 SC 884 7. AIR 2003 SC 2985 8. 1969 (3) SCr 966 9. AIR 2008 SC 951 10.AIR 1967 SC 868 (1) 11.AIR 1979 SC 1241 12.AIR 2003 SC 1391. HON’BLE SRI JUSTICE GODA RAGHURAM AND HON’BLE SRI JUSTICE NOUSHAD ALI C.C.C.A.No.257 of 2008 JUDGMENT: (per Hon’ble Sri Justice Noushad Ali) The appellant/defendant filed this appeal against the judgment and decree passed in O.S.No.608 of 2007, dated 7.08.2008 on the file of the III Additional Chief Judge, City Civil Court, Hyderabad. Hereinafter, the parties would be referred to as ‘the plaintiff and the defendant’, as arrayed in the suit. The plaintiff instituted suit against the defendant for specific performance to execute and register lease deed for a period of 20 years enabling to run a retail outlet of petroleum products on the suit schedule land based on the terms and conditions under Ex.A1-suit agreement dated 10.11.2006; and for permanent injunction to restrain the defendant from interfering with the possession, enjoyment, establishment and operation of retail outlet. Per plaint, the defendant is the owner of the suit schedule land admeasuring an extent of 1200 sq. yards covered by premises No.3-1-335/B and 3-1-335/C, situated at Nimboliadda, Chaderghat, Hyderabad. The plaintiff sought to obtain lease of the said land for establishing and operating a retail outlet with sub-lease to M/s. Hindusthan Petroleum Corporation Limited (HPCL - the Corporation), after obtaining necessary permissions/licences from the concerned authorities. The plaintiff would run the outlet as a dealer of the Corporation. On the proposal of the plaintiff, the defendant agreed to lease out the premises for a period of 20 years. The defendant accepted Rs.25,00,000/- towards non-refundable deposit through a cheque, and encashed the same, and the conditions of lease were acknowledged in the said receipt. The receipt recites that the lease would commence from 1.11.2006 and the plaintiff would obtain all the clearances and permissions necessary for setting up of the retail outlet, and enter into lease on or before 1.02.2007, failing which the defendant would return the balance amount of deposit after deducting rent for three months. These conditions were reduced into writing on 10.11.2006 (Ex.A1). A draft lease deed (Ex.A3) was also prepared and handed over to the defendant, in which the defendant made some corrections in his own hand writing. The plaintiff vigorously pursued steps for obtaining necessary permissions. An application dated 30.12.2006 was made for clearance from the Fire Services Department and the Commissioner of Police. The Fire Services Department granted “No Objection Certificate” on 6.01.2007. A further application was made to the Commissioner of Police on 17.01.2007 enclosing therewith the “No Objection Certificate” granted by the Fire Services Department. The Commissioner of Police caused an inspection of the site for the purpose of approval on 18.1.2007. The application along with the relevant documents were dispatched to the Deputy Commissioner of Police, Kachiguda for further processing on 25.01.2007. The Superintendent of Traffic Department, thereupon, inspected the site on 7.02.2007 followed by an inspection on 12.02.2007 by the Superintendent of Police (Law and Order). On 19.02.2007, the defendant appeared before the Assistant Commissioner of Police for enabling verification of the original title deeds for onward processing to the Deputy Commissioner of Police, Kachiguda. Thereupon, the “No Objection Certificate” was approved on 27.02.2007 vide, File No.L&O/M8/284/2007. The No Objection Certificate was erroneously rejected. Finally, it was rectified and the Commissioner of Police granted “No Objection Certificate” dated 18.08.2007 vide letter No.L&O/M7/284/2007. The defendant has also addressed a letter dated 14.06.2007 to the Commissioner of Police that he had no objection for establishing a retail outlet in the premises. The defendant was kept informed of the developments and he was cooperating in the process of obtaining the said permissions. All through the defendant never expressed his intention to refund the balance amount deducting monthly rent as per the conditions stipulated. The plaintiff was always ready and willing to perform all the obligations as per the agreement dated 10.11.2006. The plaintiff approached the defendant in the first week of August 2007 and sought execution and registration of the lease deed, but the defendant kept dodging the matter with evasive replies but however, retained the non-refundable deposit of Rs.25,00,000/- with him. The plaintiff had spent substantial amounts for obtaining necessary permissions. As the defendant failed to register the lease deed, the suit was filed for the following reliefs. a) A decree for specific performance directing the defendant to execute and register a lease deed for a period of 20 years in favour of the plaintiff so as to enable the plaintiff/Hindustan Petroleum Corporation to establish and run a retail outlet of Petroleum products in the suit site based on the terms and conditions contained in the suit document dated 10.11.2006 and in default, the Hon’ble Court may execute and register a lease deed in favour of the plaintiff on behalf of the defendant; and b) A permanent injunction requesting the defendant from interfering with the possession, enjoyment, establishment and operation of a retail outlet of Hindustan Petroleum Corporation in the suit premises, and grant such other relief as it deems fit in the circumstances of the case. The defendant contested the suit. Per the written statement, the defendant admittedly agreed for the lease proposed for a period of 20 years on a monthly rent of Rs.1,20,000/- and escalation at 10% for every two years over the then prevailing rent. The plaintiff on being satisfied with the defendants title, deposited Rs.25,00,000/- and obtained signatures on three blank papers for getting no objection letters drafted thereon and submitted to the various departments, for obtaining necessary “No Objection Certificates”. It was agreed that the rent would start from November 2006 onwards subject to the condition that the plaintiff should obtain all the requisite permissions on or before 1.02.2007. On failure to obtain such permissions within the agreed time, the defendant was at liberty to deduct Rs.3,60,000/- representing three months rent and return the balance of the advance amount to the plaintiff. It was denied that the suit premises would be taken on lease by the plaintiff and sub-lease the same to HPCL and the defendant never agreed for such sub-lease. The plaintiff was never ready at any point of time to discharge her obligations of contract. The rent was not paid nor did she choose to talk to him whenever he tried to contact her. Time is the essence of contract and the plaintiff should perform within the agreed time. In the first week of August 2007, the plaintiff expressed her inability in getting the required permissions such as Municipal permission, Explosive, District Collector, Civil Supply Department etc., and resiled from the contract and agreed to take back the money in terms of the understanding dated 10.11.2006. The defendant procured a party and entered into an agreement of sale with him for the entire property admeasuring 4800 sq. yards inclusive of the suit site, and received substantial earnest money. The plaintiff demanded to return the entire deposit of Rs.25,00,000/- and as the defendant wanted to deduct three months rent, the plaintiff went away without taking the amount and filed the suit. The plaintiff although agreed to pay rents from November 2006, did not pay any amount towards rent as agreed and she was never ready and willing to perform her part of contract till the date of filing of the suit. The defendant never agreed for sub-lease to M/s. HPCL as there are number of cases pending before the various Courts, filed by the landlords for eviction against the company after expiry of the lease period. In the event of any sub-lease, M/s. HPCL is a proper and necessary party and since it is not impleaded, the suit is bad for non- joinder of the proper and necessary parties. On the basis of the above pleadings, the trial Court framed the following issues. 1. Whether the defendant received Rs.25,00,000/- towards non-refundable deposit for execution of registered lease deed for a period of 20 years? 2. Whether the defendant had personally shown his original title documents to the concerned officers for issuance of ‘No Objection Certificate’ to establish petrol bunk of the plaintiff? 3. Whether the plaintiff is entitled for specific performance as prayed for? 4. Whether the plaintiff is entitled for perpetual injunction as prayed for? 5. To what relief? The plaintiff got herself examined as PW.1 and also examined K.L.Suresh Babu, one of the attesting witnesses to the draft lease deed (Ex.A.3) as PW.2 and got marked the Original receipt–cum-agreement dated 10.11.2006 (Ex.A1); Annexure to A1 (Ex.A2); Draft Lease Deed (Ex.A3); No Objection Certificate letter given by defendant to the Commissioner of Police (Original) (Ex.A.4); proceedings of District Fire Officer, Hyderabad dated 6.01.2007 granting No Objection Certificate (Original) (Ex.A.5); Bank Statement(Ex.A.6); No Objection Certificate issued by the Commissioner of Police, Hyderabad dated 18.08.2007 (Ex.A.7); Letter issued by M/s.HPCL dated 22.11.2006 (Ex.A.8); letter issued by Auto Prime dated 11.02.2006 (Ex.A.9); Paper publications (Ex.A.10); Legal opinion of Mr. P.V. Sanjay Kumar, Standing Counsel for M/s. HPCL (Ex.A.11); and Letter of pre-approval issued by Government of India dated 27.12.2006 (Ex.A.12). The defendant got himself examined as DW.1 and marked the Certified copy of the order in CCCA Nos.143, 132 of 1997 and 78 of 1998 on the file of the High Court of A.P., Hyderabad, dated 12.09.2002 (Ex.B.1); certified copy of the order in CCCA No.214 and 215 of 2006 on the file of the High Court of A.P. Hyderabad dated 27.09.2006 (Ex.B.2) and the certified copy of the affidavit and petition in W.P.No.5659 of 2006 (Ex.B.3). On consideration of the oral and documentary evidence, the trial Court answered issue No.1 in favour of the plaintiff holding that the defendant agreed to lease out the suit schedule site to the plaintiff on a monthly rent of Rs.1,20,000/- for establishing a petroleum retail outlet and received a non-refundable deposit of Rs.25,00,000/-. On issue Nos.2, 3 & 4 considering the question whether the defendant cooperated with the plaintiff by showing the title deeds to the concerned authorities for issuance of No Objection Certificate and whether time is the essence of contract, held that the defendant had shown all original title deeds to all the concerned authorities and cooperated with the plaintiff and that the parties did not intend that time is the essence of contract and the defendant is bound to perform his part of contract; consequently the plaintiff is entitled for the relief of specific performance. As the plaintiff could not get all the permissions to establish the outlet till August 2007, the trial Court held that the plaintiff should pay the rent from 10.11.2006 till August 2007 and declined the rent from September 2007 onwards till the disposal of the suit. It was also held that the plaintiff is bound to pay the monthly rents from the date of registration of lease deed. The trial Court accordingly decided all the issues in favour of the plaintiff and decreed the suit, granting permanent injunction and the relief of specific performance, to execute and register a lease deed for a period of 20 years in favour of the plaintiff enabling the plaintiff/Hindustan Petroleum Corporation to establish and run retail outlet on the suit site as per the terms and conditions of suit agreement dated 10-11-2006 and in default permitting the plaintiff to get the lease deed executed and registered through the Court on condition to deposit monthly rent of Rs.1,20,000/- from November, 2006 till August, 2007, within three months from the date of judgment. The same is under challenge in this appeal. Heard learned counsel for both the parties. Sri D.Prakash Reddy, the learned Senior Counsel instructed by Sri A.Sudershan Reddy, learned counsel for the appellant-defendant would urge that the lease proposed under Ex.A1 deed does not contemplate sub-lease to the HPCL; sub-lease was not intended by the parties and having regard to the potential litigation with the HPCL as proved by Exs.B1, B2 and B3, the defendant never agreed for the sub-lease. The defendant specifically pleaded in the written statement and denied the alleged sub-lease pleaded in the plaint by the plaintiff. This controversy being a material proposition, the trial Court is duty- bound to frame an issue on this controversy which the trial Court failed to do. He would therefore urge that the impugned judgment and decree is vitiated. The learned counsel would further submit that as per Ex.A1 which stipulated that agreement should be entered into on or before 01-02-2007, time is the essence of contract. Since the plaintiff failed to adhere to the time stipulated, she is not entitled for a decree. It is submitted that the plaintiff failed to make any effort and remained inactive for over a month till 30-12-2006 on which date she applied for permission from the Fire Services Authorities. The plaintiff did not even pay rent as agreed and the default is attributable to the plaintiff herself and therefore the plaintiff is not entitled for the equitable relief of specific performance. Sri Vedula Venkata Ramana, learned Senior Counsel instructed by Sri M.A.K.Mukheed, learned counsel for the Respondent- Plaintiff, in reply, would submit that the intention of the parties on the sub-lease is unequivocal as evident from Exs.A1 and A3 and also the oral evidence of the plaintiff vis-à-vis the oral evidence of the defendant; that both the parties are aware of the controversy which included sub-lease and accordingly participated in the suit proceedings. The decree is valid, notwithstanding that an issue relating to sub-lease was not specifically framed. He would further contend that time is not the essence of the contract as proved and established on the basis of the evidence on record and the conduct of the defendant. The decree for specific performance, being a discretionary relief as per the provisions of Section 10 of the Specific Relief Act, 1963 (for short ‘the Act’) and is granted in equity based on relevant material, the same is not liable to be disturbed in appellate jurisdiction. Reliance has been placed on Gomathinayagam Pillai and Ors. Vs. Pallaniswami Nadar [1]; Prakash Chandra Vs. Angadlal and Ors[2] a n d Manjunath Anandappa Urf Shivappa Hansi Vs. Tammanasa and Ors[3]. In view of the above rival contentions, the following points arise for consideration in this appeal. 1. Whether the sub-lease was intended by the parties? and If so, Whether the defendant is entitled to resile from the agreement? 2. Whether non-framing of an issue relating to sub-lease of the suit land in favour of M/s. HPCL is fatal to the Judgment and Decree under appeal? ; 3. Whether time is the essence of the contract? ; 4. Whether the trial Court exercised the discretion properly and the suit is rightly decreed?; and 5. To what relief ? Point Nos.1 & 2: It is true that the plaintiff in the plaint pleaded that the suit premises would be sub-leased to HPCL after she was granted necessary permissions/licences from the authorities and thereafter she would run the outlet as its dealer. It is stated in the plaint that she explained this to the defendant. The defendant in his Written Statement denied it and stated that he never agreed for such sub- lease, purportedly on the ground that there are number of cases pending before various courts, including the Supreme Court filed by the landlords against the company after expiry of lease period. It is true that even though the parties are at variance on the question of sub-lease, even as the plaintiff asserted that the sub-lease was intended as per Ex.A.1 agreement-cum-receipt and Ex.A.3 draft lease, and the defendant denied the same apprehending future litigation with the HPCL based on Ex.B.1, B.2 and B.3, no issue was framed based on the said pleadings. But non-framing of an issue by itself will not result in illegality of a decree that would per se be fatal to the suit. So long as the parties are aware of the controversy and participated in the proceedings and on understanding the pleadings, proceeded with the trial and produced evidence on such controversy, no exception can be taken if the Court has not framed an issue formally as per Order XIV Rule 1 C.P.C., and if the Court proceeded to adjudicate on such aspect. The undisputed facts are that the lease was agreed to between the parties in terms of Ex.A.1-receipt-cum-agreement dated 10.11.2006, and the same was drafted by the defendant himself. The lease amount was Rs.1,20,000/- per month with escalation of 10% for every two years over the prevailing rent as on that date and the tenure was for a period of 20 years. The lease would commence from 1.11.2006. Indisputably, Ex.A.1 contains a recital that the lease of the land is for the purpose of establishing HPCL retail outlet. It also contains a recital that the plaintiff would obtain all necessary clearances and permissions relating to setting up of retail outlet. Ex.A.3 is the draft lease deed, which was admittedly prepared on 05.11.2006 for eventual execution. The said document though unsigned, the defendant admitted that the corrections therein are in his own hand. The said draft lease deed Ex.A.3 mentions the purpose of lease as storing, selling or otherwise carrying on trade in HPCL petroleum products, oil and motor accessories of HPCL. It also contains a clause permitting the plaintiff to sub-lease the site to HPCL or development related to the subject matter or the business, only by registering a separate lease agreement and that in the event of breach of conditions of lease, the HPCL would step into the shoes of the lessee directly. This document was specifically referred to in the plaint but the defendant did not traverse in his written statement. The plaintiff in her oral evidence also referred to the said draft lease deed. In her cross-examination, she deposed that Ex.A.3 is a typed copy of the lease deed based on the format issued by HPCL and it was reproduced by the defendant and handed over to her. She denied the suggestion that it was prepared by her and handed over to the defendant. Ex.A.3 does not contain the names of lessee and lessor nor the description of property, and the plaintiff accepted the contents therein by incorporating the suggestions made by the defendant. She denied the suggestion that the defendant had not given his consent or approval to Ex.A.3. The defendant in his oral evidence deposed that he never agreed for sub-lease to M/s. HPCL at any point of time as there are number of cases pending before various courts including the Supreme Court filed by the landlords for eviction against the company. He further deposed that he was aware that the plaintiff proposed to shift the petrol pump only after she and M/s. HPCL lost legal battles in higher Courts against her landlords. To prove the disputes between the HPCL and landlords the defendant filed Ex.B.1-the certified copy of the judgment in CCCA Nos.143, 132 of 1997 and 78 of 1998; Ex.B.2- certified copy of judgment in CCCA NO.214 and 215 of 2006; and Ex.B.3-certified copy of the affidavit and petition in W.P.No.5659 of 2006. In cross-examination, he admitted that the plaintiff approached him for relocation of her petrol pump from Mehdipatnam to the suit schedule land and that only in the months of May and June 2007 he came to know that there was a case between the plaintiff and HPCL. He denied the suggestion that he had knowledge about the dispute between the plaintiff and HPCL during the first discussion. He further admitted that his brother also has a petrol pump at Kapra, which was inherited from their father in the year 1970. He has only little knowledge about the letting of petrol pumps and allotment by the company but not full knowledge. He admitted that Ex.A.3 is in his own hand writing, but however denied the suggestion that it was drafted and prepared by him. He further deposed that it was prepared by the plaintiff and that it is a proposed lease deed to be executed between him and the plaintiff. He however added that it was brought by the plaintiff, and most of the conditions were not acceptable. He did not however specify those alleged conditions. A perusal of Ex.A.3 shows substitution of clause (i) relating to periodical escalation of lease amount and the lease period with effect from 05.11.2006 to 04.11.2026. Demonstrably the parties intended the sub-lease. As noted above, the plaintiff specifically referred to the draft agreement Ex.A.3, which admittedly contained the recital relating to the sub-lease to the Corporation. The said plea was not traversed in the written statement of the defendant. Nonetheless, both the parties referred to the same in their respective oral evidence and cross-examined each other. The defendant specifically referred to his apprehensions about subleasing of the land. He also filed Exs.B.1 and B.2 to support his apprehension. He admitted that he drafted Ex.A.1 in his own hand writing, which also refers to the lease of land for the purpose of establishing HPCL retail outlet in the said land. In the above factual situation it is evident that both the parties pleaded and were aware of the controversy as to the subletting, cautiously proceeded with the trial and adduced evidence on this aspect as well. The plaintiff relied upon Ex.A.1 and Ex.A.3 and the defendant upon Ex.B.1 to B.3. Both parties equally referred to the sub- lease in their oral evidence. Ex.A.1 refers that the lease of land is for the purpose of establishing HPCL retail outlet. Clause 1 (J) of Ex.A.3 specifically refers to sub-lease by registering a separate lease agreement. Clause 1(D) again recites that the lessee has been permitted to sub-lease the demised premises to the Corporation. It is specifically stated that failure to comply with any of the terms and conditions of the lease deed by the lessee shall not take away the rights of the sub-lessee who will step into the shoes of the lessee directly in case of any breach of covenants of the lease deed. In such an event all the terms and conditions remain unchanged and the lessor shall give a notice of three months to the sub-lessee for necessary compliance. Clause-3 also refers to sub-lease to the Corporation for all other purposes. Considering the same, the trial court, though succinctly, held that “the defendant was aware that the suit site is being leased out in favour of the plaintiff for establishing of petrol retail outlet and the plaintiff would be the dealer of HPCL.” From a consideration of Ex.A.1 and Ex.A.3 which are the undisputed documents and from the admission of the defendant that both the documents are in his own hand writing and his oral evidence based on Ex.B.1 to B.3, it manifest that both the parties intended sub- lease. The contention of the defendant that he did not agree for sub- lease does not therefore merit acceptance. In a series of decisions of the Apex Court it has been held that omission to frame an issue as required under Order XIV Rule 1 C.P.C. would not vitiate the trial in a suit where the parties went to trial fully knowing the rival case and led evidence in support of their respective contentions and to refute contentions of the other side. I n Kunju Kesavan Vs. M.M. Philip I.C.S. and Ors.[4] the Supreme Court held as follows : “The parties went to trial fully understanding the central fact whether the succession