RSA No.4931 of 2003 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No.4931 of 2003 Date of Decision: 15.05.2009 Sampat & Ors. ..Appellants Vs. Lakshmi Narain & Ors. ..Respondents Coram: Hon'ble Mr. Justice Vinod K.Sharma Present: Mr.C.B.Goel, Advocate, with Mr.Nitin Jain, Advocate, for the appellants. Mr.Harkesh Manuja, Advocate, for the respondents. --- 1. Whether Reporters of Local Newspapers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in Digest? --- Vinod K.Sharma,J. (Oral) This regular second appeal is directed against the judgment RSA No.4931 of 2003 2 and decree dated 28.4.2003 passed by learned courts below decreeing the suit for possession by way of specific performance filed by the plaintiff/respondents. The plaintiffs i.e. legal representatives of Matadin filed a suit for possession by way of specific performance of agreement to sell dated 15.9.1989. In the alternative, relief of recovery of Rs.1,05,000/- was also sought. The plaintiff/respondents brought a suit by pleading that defendant No.1 Sampat was owner of agricultural land measuring 23 kanals 16 marlas situated in the revenue estate of village Mauza Muzzafra, Tehsil Pataudi District Gurgaon. The said land was under mortgage for a sum of Rs.45,000/- with predecessors-in-interest of the appellants. An agreement to sell for a total consideration of Rs.1,05,000/- was entered into between the parties, out of which a sum of Rs.60,000/- was paid as earnest money. The sale deed was agreed to be executed on or before 15.6.1990. It was also agreed that the amount of mortgage was to be adjusted, and balance was to be paid before the Sub-Registrar at the time of registration of the sale deed. Matadin son of Ram Sarup died on 11.1.1991, it was pleaded that before his death Matadin was ready and willing to perform his part of the contract by paying the balance amount of consideration. Matadin appeared before the Sub-Registrar on 15.6.1990 with sufficient funds to cover the payment of balance amount, but defendant No.1 did not come present to the office of Sub Registrar. After the death of Matadin plaintiff/ respondents being legal heirs, are said to have approached the appellant/ defendants to perform their part of agreement to sell but it was postponed; RSA No.4931 of 2003 3 hence the suit. On notice suit was contested by raising preliminary objection that the plaintiffs had no cause of action to file the present suit. Locus standi of the plaintiff respondents to file the suit was also challenged. The defendant/appellants also raised a plea of estoppel. On merit, it was stated that the defendant No.1 was neither owner nor in possession of the suit land at the time of alleged agreement as land bearing Killa No.7/1 (7-16) of Rect. Killa No. 38 was sold by him to Abhey Singh vide registered sale deed dated 11.2.1986 and Rect. No. 14 Killa No. 8 (8-0) and Rect No.38 Killa No. 6 (8-0) were owned and possessed by Devinder Singh, Shamsher Singh etc. Defendant No.1 even denied having entered into agreement to sell dated 15.9.1989. Other averments made in the plaint were also denied. Defendants No.2 to 5 filed a separate written statement wherein it was alleged that they are owners in possession of the property in dispute since the year 19.4.1972 on the basis of decree passed in their favour. They also claimed to have installed a tube-well and constructed a kotha over the land in question, to which electric connection was also provided. They also denied having sold the property in question to any body. In the replication averments made in the plaint were reiterated and that of the written statements were denied. On the pleadings of the parties the learned trial court was pleased to frame the following issues:- 1. Whether the defendants had agreed to sell the land in RSA No.4931 of 2003 4 dispute to Shri Matadin for consideration of Rs.1,05,000/- vide agreement in writing dated 15.9.1989? OPP 2. Whether Shri Matadin had paid to the defendant the sum of Rs.60,000/- on 15.9.89 on account of part payment of the price payable for the land? OPP 3. Whether Shri Matadin and after him the plaintiffs are ready to perform the part of agreement to sell dated 15.9.89? OPP 4. If issue No.1 is proved, whether the defendant was not owner of the land in suit on 15.9.89? 5. Whether the defendant had ceased to be owner of the suit land after the year 1972? OPD 6. Whether the plaintiffs are successor in interest and heirs of Matadin? OPD 7. Relief. On appreciation of evidence learned courts below have recorded a concurrent finding of fact, that the defendants had agreed to sell the land in dispute to Matadin, for a consideration of Rs.1,05,000/- vide agreement dated 15.9.1989. The learned courts also held that payment of earnest money of Rs.60,000/- on 15.9.1989 as part payment of price payable also stood proved. The learned courts also held that Matadin and after him the plaintiff/respondents were always ready and still ready to perform their part of agreement to sell dated 15.9.1989. RSA No.4931 of 2003 5 On issue No.4 it was held that the defendants were owners of the land in dispute on 15.9.1989. In view of the fact that relief, qua Abhey Singh was given up it was held that with respect to the said part of property the defendants ceased to be owners after 1992. On issue No.6, it was held that the plaintiff/respondents were successors-in-interest being heirs of Matadin. Consequently, the suit was partly decreed for possession by way of specific performance qua the land of Khewat No.65/77 min Rect. No.14 Killa No.8 (8-0) Rect. No.38 Killa No. 6 (8-0) decree was passed in favour of the plaintiff/respondents and against the defendants. The appellant/defendants were also directed to execute the sale deed in favour of the plaintiffs within a period of 2 months. The plaintiffs were thereafter given option to get the sale deed executed by execution through court. In appeal findings recorded by the learned trial court have been affirmed by the learned lower appellate court. Mr.C.B.Goel, learned counsel appearing on behalf of the appellants contends that this appeal raises the following substantial questions of law for consideration by this court: “1. Whether the learned courts below were required to consider the question of delay while deciding whether relief of specific performance was to be granted to the plaintiff/respondents? 2. Whether in view of the fact that the suit to enforce the agreement dated 15.9.1989 was filed on RSA No.4931 of 2003 6 15.9.1`992, therefore, in view of delay, the suit was liable to be dismissed? In support of the substantial questions of law, learned counsel for the appellants vehemently contends that the relief of specific performance is an equitable relief, therefore, merely on account of delay the suit of the plaintiff/respondents was liable to be dismissed. The contention is based on the ground that there has been steep rise in the prices of land during this period, therefore, it was inequitable for the learned courts to have decreed the suit for specific performance of agreement to sell, on payment of a meager amount of Rs.1,05,000/-. The contention of the learned counsel for the appellants, therefore, is that in the facts and circumstances of the case the courts ought to have given alternative relief of recovery of earnest money along with compensation, instead of decreeing the suit for specific performance. In support of the contention raised the learned counsel for the appellants has placed reliance on the judgment of Hon'ble Supreme Court in the case of Ram Niwas Gupta Vs. Mumtaz Hasan and Ors. 2002 (1) PLJ 175, wherein Hon'ble Supreme Court was pleased to lay down as under:- “8. It is not disputed before us that the question of delay is a relevant consideration in a suit for specific performance of a contract of sale of immovable property. The Court is to consider the question while taking a decision on the point, whether the relief of specific performance of the contract of RSA No.4931 of 2003 7 sale should be granted to the plaintiff. In this connection we may notice the decision of this Court in K.S. Vidanadam and Ors. Vs. Vairavan JT 1997 (2) SC 375, and Motilal Jain Vs. Smt.Ramdasi Devi and others, JT 2000 (8) SC 59(:2000 (2) PLJ 171) in which this Court observed: “The first ground which the High Court took note of is the delay in filing the suit. It may be apt to bear in mind the following aspects of delay which are relevant in a case of specific performance of contract for sale of immovable property: (i) delay running beyond the period prescribed under the Limitation Act; (ii) delay in cases where though the suit is within the period of limitation, yet:(a) due to delay, the third parties have acquired rights in the subject-matter of the suit; (b) in the facts and circumstances of the case, delay may give rise to plea of waiver or otherwise it will be inequitable to grant a discretionary relief. Here none of the above-mentioned aspects applies. That apart factually also, the High Court proceeded on an incorrect assumption with regard to cause of action, Exhibit 2 was executed on 20.2.1977 and under it the sale deed was to be executed on or before 19.7.1977. The last notice was issued on 26.11.1978 and from that date, RSA No.4931 of 2003 8 the suit was filed only after nine months and not after more than a year, as noted by the High Court. Therefore, on the facts of this case, the ground of delay cannot be invoked to deny relief to the plaintiff.” 9. On perusal of the judgment of the trial Court, it is clear that the Court neither framed a specific issue on the question of delay nor discussed the question, whether on the materials on record it can be held that delay defeats the relief of specific performance which was sought by the plaintiff. The High Court has also not discussed the question in the judgment. The High Court while deciding the first appeal should have considered the entire case, both on facts and the points of law. In the case in hand it was at all the more necessary since the trial court had not dealt with the question and the High Court felt persuaded to accept the contention raised by the defendant on that score. Therefore, the judgment of the High Court is vitiated on this count.” Reliance was also placed on the judgment of Hon'ble Supreme court in the case of K.S.Vidyanadam & Ors. Vs. Vairavan JT 1997 (2) SC 375, wherein also Hon'ble Supreme Court has been pleased to lay down as under:- “9. Article 54 of the Limitation Act prescribes three years as the period within which a suit for specific performance can be filed. The period of three years is to be calculated from the date RSA No.4931 of 2003 9 specified in the agreement for performance or in the absence of any such stipulation, within three years from the date the performance was refused. 10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, it does not follow that any and every suit for specific performance of the agreement which does not provide specifically that time is of the essence of the contract should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit(s) specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani Vs. Kamala Rani JT 1993 (1) SC 74 = 1993 (1) SCC 519), “it is RSA No.4931 of 2003 10 clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are (evident?): (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example, the object of making the contract”. In other words, the court should look at all the relevant circumstances including the time-limit(s) specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades- particularly after 1973. In this case, the suit property is the house property situated in Madurai, which is one of the major cities of Tamil Nadu. The suit agreement was in December 1978 and the six months' period specified therein for completing the sale expired with 15th of June, 1979. The suit notice was issued by the plaintiff only on 11.7.1981, i.e., more than two years after the expiry of six months' period. The question is what was the plaintiff doing in this interval of more than two years? The plaintiff says that he has been calling upon defendants 1 to 3 to get the tenant vacated and execute the sale deed and that the defendants were postponing the same representing that the RSA No.4931 of 2003 11 tenant is not vacating the building. The defendants have denied this story. According to them, the plaintiff never moved in the matter and never called upon them to execute the sale deed. The Trial Court has accepted the defendants' story whereas the High Court has accepted the plaintiff's story. Let us first consider whose story is more probable and acceptable. For this purpose, we may first turn to the terms of the agreement. In the agreement of sale, there is no reference to the existence of any tenant in the building. What it says is that within the period of six months, the plaintiff should purchase the stamp papers and pay the balance consideration whereupon the defendants will execute the sale deed and that prior to the registration of the sale deed, the defendants shall vacate and deliver possession of the suit house to the plaintiff. There is not a single letter or notice from the plaintiff to the defendants calling upon them to get the tenant vacated and get the sale deed executed until he issued the suit notice on 11.7.1981. It is not the plaintiff's case that within six months', he purchased the stamp papers and offered to pay the balance consideration. Defendants' case is that the tenant is their own relation, that he is ready to vacate at any point of time and that the very fact that the plaintiff has in his suit notice offered to purchase the house with the tenant itself shows that the story put forward by him is false. The tenant has been examined by the defendant as DW 2. He stated RSA No.4931 of 2003 12 that soon after the agreement, he was searching for a house but could not secure one. Meanwhile (i.e., on the expiry of six months from the date of agreement), he stated, the defendants told him that since the plaintiff has abandoned the agreement, he need not vacate. It is equally an admitted fact that between December 15, 1978 and July 11, 1981, the plaintiff has purchased two other properties. The defendants' consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2½ years, the prices went up by three times and that only because of the said circumstance has the plaintiff who had earlier abandoned any idea of going forward with the purchase of the suit property turned round and demanded specific performance. Having regard to the above circumstances and the oral evidence of the parties, we are inclined to accept the case put forward by defendants 1 to 3. We reject the story put forward by the plaintiff that during the said period of 1½ years, he has been repeatedly asking the defendants to get the tenant vacated and execute the sale deed and that they were asking for time on the ground that tenant was not vacating. The above finding means that from 15.12.1978 till 11.7.1981, i.e., for a period of more than 2 ½ years, the plaintiff was sitting quiet without taking any steps to perform his part of the contract under the agreement though the agreement specified a period of six months within RSA No.4931 of 2003 13 which he was expected to purchase stamp papers, tender the balance amount and call upon the defendants to execute the sale deed and deliver possession of the property. We are inclined to accept the defendant's case that he value of the house property in Madurai town was rising fast and this must have induced the plaintiff to wake up after 2½ years and demand specific performance.” Mr.Harkesh Manuja, learned counsel appearing on behalf of the respondents controverts the arguments raised by the learned counsel for the appellants primarily on the ground that in order to seek equitable relief it was incumbent upon the defendant/appellants to have pleaded equity as envisaged under Section 20 of the Specific Relief Act. In the absence of case having been set up to claim that relief was inequitable it is not open for the defendant/appellants to raise the plea for the first time in regular second appeal. Learned counsel for the respondents further contends that the judgments relied upon by the learned counsel for the appellant/defendants can be of no help in view of the law laid down by Hon'ble Supreme Court in the case of Mademsetty Satyanarayana Vs. G.Yelloji Rao and others AIR 1965 SC 1405, which is a decision of Larger Bench wherein Hon'ble Supreme Court has been pleased to lay down as under:- “6. At the outset we shall construe the relevant, sections of the Specific Relief Act and the Limitation Act unhampered by judicial decisions. RSA No.4931 of 2003 14 Specific Relief Act: Section 22.-- The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so, but the discretion of the Court is not arbitrary but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal. The following are cases in which the Court may properly exercise a discretion not to decree specific performance:- “I. Where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant,though there may be no fraud or misrepresentation on the plaintiff's part. Illustration. Xx xx xx II. Where the performance of the contract would involve some hardship on the defendant which he did not forsee, whereas its non-performance would involve no such hardship on the plaintiff. Illustrations. Xx xx xx The First Schedule to the Limitation Act. Description of suit Period of Time from which period begins to run Limitation Art.113. For Specific Three years The date fixed for the performance,or, RSA No.4931 of 2003 15 performance of a if no such date is fixed, when the contract plaintiff has notice that performance is refused.” Under S.22 of the Specific Relief Act, relief of specific performance is discretionary but not arbitrary: discretion must be exercised in accordance with sound and reasonable judicial principles. The cases providing for a guide to Courts to exercise discretion one way or other are only illustrative; they are not intended to be exhaustive. As Art. 113 of the Limitation Act prescribes a period of 3 years from the date fixed thereunder for specific performance of a contract, it follows that mere delay without more extending up to the said period cannot possibly be a reason for a Court to exercise its discretion against giving a relief of specific performance. Nor can the scope of the discretion, after excluding the cases mentioned in S.22 of the Specific Relief Act, be confined to waiver, abandonment or estoppel. If one of these three circumstances is established, no question of discretion arises, for either there will be no subsisting right or there will be a bar against its assertion. So, there must be some discretionary field unoccupied by the three cases, otherwise the substantive section becomes otiose. It is really difficult to define that field. Diverse situations may arise which may induce a Court not to exercise the discretion in favour of the plaintiff. It may better RSA No.4931 of 2003 16 be left undefined except to state what the section says, namely, discretion of the Court is not arbitrary, but sound and reasonable guided by judicial principles and capable of correction by a Court of appeal. 7. Mr.Lakshmaiah cited a long catena of English decisions to define the scope of a Court's discretion. Before referring to them, it is necessary to know the fundamental difference between the two systems – English and Indian – qua the relief of specific performance. In England the relief of specific performance pertains to the domain of equity; in India, to that of statutory law. In England there is no period of limitation for instituting a suit for the said relief and, therefore, mere delay-- the time lag depending upon circumstances-- may itself be sufficient to refuse the relief, but, in India mere delay cannot be a ground for refusing the said relief, for the statute prescribes the period of limitation. If the suit is in time, delay is sanctioned by law; if it is beyond time, the suit will be dismissed as barred by time; in earlier case, no question of equity arises.” The judgment in the case of Madamsetty Satyanarayana (Supra) being of a Larger Bench is to be preferred on the doctrine of 'stare decisis” to the judgments relied upon by the learned counsel for the defendant/appellants. The Hon'ble Supreme Court in the case of Commissioner of RSA No.4931 of 2003 17 Income Tax, Bihar Vs. Trilok Nath Mehrotra (1998) 2 SCC 289 has been pleased to lay down as under:- “4. We do not find any conflict in the law laid down in the case of R.M.Chidambaran Pillai with the law laid down i n the earlier two cases. The decision in the case of Raj Kumar Singh Hukam Chandji was rendered by a Bench of three Judges. Therefore, even assuming that there was a conflict between that decision and the decision rendered in Chidambaram Pillai case which was rendered by a Bench of two Judges, the decision of the larger Bench will prevail.” Once it has been held on appreciation of evidence, that the agreement to sell was executed, on receipt of earnest money, and that plaintiffs always remained and were still willing to perform their part of contract, the relief could not be denied merely on account of delay, as the suit was admittedly filed within the period of limitation. In view of the authoritative pronouncement substantial questions of law raised are answered against the defendant/appellants. Consequently, finding no merit in the appeal it is ordered to be dismissed but with no order as to