Case: FERRODOUS ESTATES (PVT) LTD Vs. P.GOPIRATHNAM (DEAD) AND ORS

consideration has been paid to the vendor and possession has been delivered in part- performance, where equity shifts in favour of the purchaser. In Nanjappan v. Ramasamy, (2015) 14 SCC 341 , the suit for specific performance was filed many years after the agreement dated 30.09.1987, which agreement was extended by three years twice and thereafter, by another two years. It was only after these extensions and exchange of legal notices between the parties that the respondents filed a suit for specific performance. It was in this factual background that the Court held: 10. In a suit for specific performance, the plaintiff has to aver and prove with satisfactory evidence that he was always ready and willing to perform his part of contract at all material time as mandatorily required under Section 16(c) of the Specific Relief Act, 1963. The first appellate court and the High Court recorded findings that the plaintiff was always ready and willing to perform his part of the contract. By a careful reading of the recitals in the agreement, the concurrent findings so recorded do not seem to reflect the conduct of the parties. As per recitals in Ext. P-1 agreement dated 30-9-1987, an amount of Rs 25,000 was paid by the respondent-plaintiffs to the appellant-defendant. Balance amount of Rs 20,000 was to be paid within 2½ years thereafter and get the sale executed. In the second agreement of sale (Ext. P-2 dated 21-3-1990) it is stated that the plaintiffs were unable to pay the balance amount within the stipulated period and get the sale deed executed and therefore the second sale agreement was executed extending the period for execution of sale deed for a further period of three years. As could be seen from the recitals from Ext. P-2, the respondents were unable to pay the balance sale consideration and get the sale deed executed. It is pertinent to note that the time for performance of contract was extended again and again totalling period of eight years. Even though the first appellate court and the High Court recorded findings that the respondent-plaintiffs were ready and willing to perform their part of contract, the fact that time was extended for eight years is to be kept in view while considering the question whether discretion is to be exercised in favour of the respondent-plaintiffs. xxx xxx xxx 13. The first sale agreement was executed on 30-9-1987 about twenty-seven years ago. The property is situated in Coimbatore City and over these years, value of property in Coimbatore City would have considerably increased. In Saradamani Kandappan v. S. Rajalakshmi [(2011) 12 SCC 18 : (2012) 2 SCC (Civ) 104] , this Court has held that the value of the property escalates in the urban areas very fast and it would not be equitable to grant specific performance after a lapse of long period of time. In the instant case, the first agreement was executed on 30-9- 1987 i.e. twenty-seven years ago. In view of passage of time and escalation of value of the property, grant of specific relief of performance would give an unfair advantage to the respondent-plaintiffs whereas the performance of the contract would involve great hardship to the appellant-defendant and his family members. 14. Considering the totality and the facts and circumstances, in our view, it is not appropriate to grant discretionary relief of specific performance to the respondent-plaintiffs for more than one reason. Admittedly, the suit property is the only property of the appellant-defendant and the appellant is said to have constructed a house and where he is currently residing with the family. As compared to the respondents, the appellant will suffer significant hardship if a decree for specific performance is granted against the appellant. Considering the circumstances, such as the construction of the residential house over the suit property, sale consideration, passage of time and hardship caused to the appellant, makes it inequitable to exercise the discretionary relief of specific performance and the concurrent finding of the first appellate court and the High Court decreeing the suit for specific performance is to be set aside. 31. The resultant position in law is that a suit for specific performance filed within limitation cannot be dismissed on the sole ground of delay or laches. However, an exception to this rule is where immovable property is to be sold within a certain period, time being of the essence, and it is found that owing to some default on the part of the plaintiff, the sale could not take place within the stipulated time. Once a suit for specific performance has been filed, any delay as a result of the court process cannot be put against the plaintiff as a matter of law in decreeing specific performance. However, it is within the discretion of the Court, regard being had to the facts of each case, as to whether some additional amount ought or ought not to be paid by the plaintiff once a decree of specific performance is passed in its favour, even at the appellate stage. 32. Shri Giris fervent appeal that we should not exercise our discretionary jurisdiction under Article 136, given the fact that Rs.2 crores plus interest is to be paid almost by way of solatium to the appellant, has also to be rejected. As has been found earlier in this judgment, the defendants were held to have taken up dishonest pleas and also held to have been in breach of a solemn agreement in which they were to obtain the Urban Land Ceiling permission which, if not obtained, would, under the agreement itself, not stand in the way of the specific performance of the agreement between the parties. He who asks for equity must do equity. Given the conduct of the defendants in this case, as contrasted with the conduct of the appellant who is ready and willing throughout to perform its part of the bargain, we think this is a fit case in which the Division Bench judgment should be set aside.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Shri Giri is right in arguing that it is not open to the appellant to go behind the Full Bench judgment as it is inter-parties, as a result of which the law laid down by the Full Bench judgment must apply to the parties, res judicata clearly attaching even to issues of law based on the same cause of action – see Mathura Prasad Bajoo Jaiswal v. Dossibai N.B. Jeejeebhoy, (1970) 3 SCR 830  at p. 836.15. The Full Bench judgment, while stating that section 6 of the Tamil Nadu Urban Land Ceiling Act prohibited even agreements to sell, as a result of which there would be no transaction at all in the eyes of law, was careful thereafter to point out:40. …… While considering suit for specific performance, Court is only concerned whether purchaser has come to Court for enforcing the agreement in terms thereof. Asking vendor to get exemption and then to execute the agreement will be deviating from the terms of contract and the Court will not enforce such a contract. That will mean that purchaser is not willing to purchase the land as per agreement, but only with deviation, i.e., vendor must get exemption and execute the sale deed.16. In paragraph 41, the Full Bench also went on to state that it is possible to obtain exemption under the Tamil Nadu Urban Land Ceiling Act, over which the Court has no control, but despite that, the relief of specific performance is not usually granted as it would be going beyond the contract. Equally, after holding that section 6 prohibits a proposed transfer, the Full Bench went on to hold that a decree for specific performance cannot be granted conditionally upon the vendor satisfying certain conditions if it is not part of the agreement.17. When these portions of the Full Bench judgment are applied to the agreement in question, it is clear that the agreement itself contains a specific clause, namely, clause 4, in which it is for the vendor to obtain permission from the competent authority under the Tamil Nadu Urban Land Ceiling Act. This agreement, therefore, cannot be said to be hit by the decision of the Full Bench judgment as the Full Bench itself recognises that there may be agreements with such clauses, in which case it is the Courts duty to enforce such clause. That is all that the learned Single Judge has done in the facts of this case – he has correctly held that it was for the defendants to obtain exemption from the authorities under the Tamil Nadu Urban Land Ceiling Act which they did not, as a result of which they were in breach of the agreement.18. Viewed slightly differently, it is clear that the Full Bench judgment cannot stand in the way of the appellant for another reason. There can be no doubt that the suit property, admeasuring roughly 2002 sq. metres, was part of a larger property of 30 grounds, and that the defendants, being four in number, were entitled to retain 2000 sq. metres of the land owned by them. It was for this reason that it was incumbent upon the defendants to have obtained the Urban Land Ceiling permission to sell the land that was within their ceiling limit, which they failed to do.19. It is clear, therefore, that the agreement to sell cannot be said to be void ab initio, as a result of which the basis of the Division Bench judgment under appeal goes. Resultantly, the judgments in Jacques v. Withy, 1 H. Bl. 65, Hitchcock v. Way, (1837) 6 A & E 943 : 112 ER 360, and Ram Kristo Mandal v. Dhankisto Mandal, (1969) 1 SCR 342 ( at p. 349) cited by Shri Giri in support of the proposition that the repeal of a statute which makes void an agreement cannot revive such void agreement have no application on the facts of this case. In view of this, it is unnecessary to go into whether section 5(3) of the Tamil Nadu Urban Land Ceiling Act, together with its proviso, applies to the facts of this case.21. That conditional decrees for specific performance have been passed and upheld by this Court cannot be denied. Thus, in Vishwa Nath Sharma v. Shyam Shanker Goela, (2007) 10 SCC 595 [ Vishwa Nath Sharma], this Court held:12. The Privy Council in Motilal v. Nanhelal [(1929-30) 57 IA 333 : AIR 1930 PC 287 ] laid down that if the vendor had agreed to sell the property which can be transferred only with the sanction of some government authority, the court has jurisdiction to order the vendor to apply to the authority within a specified period, and if the sanction is forthcoming, to convey to the purchaser within a certain time. This proposition of law was followed in Chandnee Widya Vati Madden v. Dr. C.L. Katial [AIR 1964 SC 978 ] and R.C. Chandiok v. Chuni Lal Sabharwal [(1970) 3 SCC 140 : AIR 1971 SC 1238 ]. The Privy Council in Motilal case [(1929-30) 57 IA 333 : AIR 1930 PC 287 ] also laid down that there is always an implied covenant on the part of the vendor to do all things necessary to effect transfer of the property regarding which he has agreed to sell the same to the vendee. Permission from the Land and Development Officer is not a condition precedent for grant of decree for specific performance. The High Court relied upon the decisions in Chandnee Widya Vati Madden v. Dr. C.L. Katial [AIR 1964 SC 978 ] and Bhim Singhji v. Union of India [(1981) 1 SCC 166 : AIR 1981 SC 234 ] to substantiate the conclusion. In Chandnee Widya [AIR 1964 SC 978 ] this Court confirmed the decision of the Punjab and Haryana High Court holding that if the Chief Commissioner ultimately refused to grant the sanction to the sale, the plaintiff may not be able to enforce the decree for specific performance of the contract but that was not a bar to the court passing a decree for that relief. The same is the position in the recent case. If after the grant of the decree of specific performance of the contract, the Land and Development Officer refused to grant permission for sale, the decree- holder may not be in a position to enforce the decree but it cannot be held that such a permission is a condition precedent for passing a decree for specific performance of the contract.13. In R.C. Chandiok v. Chuni Lal Sabharwal [(1970) 3 SCC 140 : AIR 1971 SC 1238 ] it was held that proper form of decree in a case like the instant one would be to direct specific performance of the contract between the defendant and the plaintiff and to direct the subsequent transferee to join in the conveyance so as to pass on the title residing in him. This is because Defendant 2, son of Defendant 1 cannot take the stand that he was a transferee without notice. Admittedly, he is the son of Defendant 1. The view in R.C. Chandiok [(1970) 3 SCC 140 : AIR 1971 SC 1238 ] was a reiteration of earlier view in Durga Prasad v. Deep Chand [AIR 1954 SC 75 ] . This Court has repeatedly held that the decree can be passed and the sanction can be obtained for transfer of immovable property and the decree in such a case would be in the way the High Court has directed. (See Motilal Jain v. Ramdasi Devi [(2000) 6 SCC 420] , Nirmala Anand v. Advent Corpn. (P) Ltd. [(2002) 5 SCC 481] , HPA International v. Bhagwandas Fateh Chand Daswani [(2004) 6 SCC 537] and Aniglase Yohannan v. Ramlatha [(2005) 7 SCC 534] .)The judgments of Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739  and Narayanamma v. Govindappa, 2019 SCC OnLine SC 1260 cited by Shri Giri in support of the proposition that no court will lend its aid to a man who founds his cause of action upon an illegal act has no application in a situation covered by the judgments contained in Vishwa Nath Sharma (supra) and Van Vibhag (supra).In Van Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit v. Ramesh Chander, (2010) 14 SCC 596 [ Van Vibhag], this Court referred to a suit in which specific performance was not claimed on the ground that in view of the Urban Land (Ceiling & Regulation) Act, 1976, the appellant could not have made such claim. This was turned down specifically by this Court, stating:26. The appellant, on noticing the same, filed a suit on 11-2-1991 but he did not include the plea of specific performance. The appellant wanted to defend this action by referring to two facts (i) there was an acquisition proceeding over the said land under the Land Acquisition Act, and (ii) in view of the provisions of the Ceiling Act, the appellant could not have made the prayer for specific performance.27. The aforesaid purported justification of the appellant is not tenable in law. If the alleged statutory bar referred to by the appellant stood in its way to file a suit for specific performance, the same would also be a bar to the suit which it had filed claiming declaration of title and injunction. In fact, a suit for specific performance could have been easily filed subject to the provision of section 20 of the Ceiling Act.28. Similar questions came up for consideration before a Full Bench of the Gujarat High Court in Shah Jitendra Nanalal v. Patel Lallubhai Ishverbhai [AIR 1984 Guj 145 ]. The Full Bench held that a suit for specific performance could be filed despite the provisions of the Ceiling Act. A suit for specific performance in respect of vacant land in excess of ceiling limit can be filed and a conditional decree can be passed for specific performance, subject to exemption being obtained under section 20 of the Act (AIR paras 11-13).29. We are in respectful agreement with the views of the Full Bench in the abovementioned decision and the principles decided therein are attracted here.It is clear that as no steps whatsoever were taken under the Tamil Nadu Urban Land Ceiling Act, the savings clause will not apply.24. It is settled law that an appeal is a continuation of a suit, as a result of which a change in law will become applicable on the date of the appellate decree, provided that no vested right is taken away thereby. This was felicitously put in Rameshwar v. Jot Ram, (1976) 1 SCR 847  as follows:In P. Venkateswarlu v. Motor & General Traders [(1975) 1 SCC 770, 772 : AIR 1975 SC 1409 , 1410] this Court dealt with the adjectival activism relating to post-institution circumstances. Two propositions were laid down. Firstly, it was held that it is basic to our processual jurisprudence that the right to relief must be judged to exist as on the date a suitor institutes the legal proceeding. This is an emphatic statement that the right of a party is determined by the facts as they exist on the date the action is instituted. Granting the presence of such facts, then he is entitled to its enforcement. Later developments cannot defeat his right because, as explained earlier, had the court found his facts to be true the day he sued he would have got his decree. The Courts procedural delays cannot deprive him of legal justice or right crystallised in the initial cause of action. This position finds support in Bhajan Lal v. State of Punjab [(1971) 1 SCC 34] .(emphasis in original)The impact of subsequent happenings may now be spelt out. First, its bearing on the right of action, second, on the nature of the relief and third, on its impotence to create or destroy substantive rights. Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments subsequent to the suit or even during the appellate stage, it is but fair that the relief is moulded, varied or reshaped in the light of updated facts. Patterson [Patterson v. State of Alabama, (1934) 294 US 600, 607] illustrates this position. It is important that the party claiming the relief or change of relief must have the same right from which either the first or the modified remedy may flow. Subsequent events in the course of the case cannot be constitutive of substantive rights enforceable in that very litigation except in a narrow category (later spelt out) but may influence the equitable jurisdiction to mould reliefs. Conversely, where rights have already vested in a party, they cannot be nullified or negated by subsequent events save where there is a change in the law and it is made applicable at any stage. Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri [1940 FCR 84 : AIR 1941 FC 5 ] falls in this category. Courts of justice may, when the compelling equities of a case oblige them, shape reliefs — cannot deny rights — to make them justly relevant in the updated circumstances. Where the relief is discretionary, courts may exercise this jurisdiction to avoid injustice. Likewise, where the right to the remedy depends, under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the Court, even in appeal, can take note of such supervening facts with fundamental impact. Venkateswarlu [P. Venkateswarlu v. Motor & General Traders, (1975) 1 SCC 770 : AIR 1975 SC 1409 ], read in its statutory setting, falls in this category. Where a cause of action is deficient but later events have made up the deficiency, the Court may, in order to avoid multiplicity of litigation, permit amendment and continue the proceeding, provided no prejudice is caused to the other side. All these are done only in exceptional situations and just cannot be done if the statute, on which the legal proceeding is based, inhibits, by its scheme or otherwise, such change in cause of action or relief. The primary concern of the Court is to implement the justice of the legislation. Rights vested by virtue of a statute cannot be divested by this equitable doctrine (See Chokalingam Chetty [54 MLJ 88 (PC)]). The law stated in Ramji Lal v. State of Punjab [AIR 1966 Punj 374 : ILR (1966) 2 Punj 125] is sound:Courts, do very often take notice of events that happen subsequent to the filing of suits and at times even those that have occurred during the appellate stage and permit pleadings to be amended for including a prayer for relief on the basis of such events but this is ordinarily done to avoid multiplicity of proceedings or when the original relief claimed has, by reason of change in the circumstances, become inappropriate and not when the plaintiffs suit would be wholly displaced by the proposed amendment (see Steward v. North Metropolitan Tramways Company [(1885) 16 QBD 178] ) and a fresh suit by him would be so barred by limitation.One may as well add that while taking cautious judicial cognisance of post-natal events, even for the limited and exceptional purposes explained earlier, no court will countenance a party altering, by his own manipulation, a change in situation and plead for relief on the altered basis.(emphasis in original)(at pp. 851-852)25. This judgment follows the hallowed principle that an appellate proceeding is in continuation of an original proceeding, as laid down in Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, AIR 1941 FC 5 , also followed in later judgments of this Court.26. However, Shri Giri referred to the judgment in Keshavan Madhava Menon v. State of Bombay, 1951 SCR 228  in order to buttress the proposition that a repealing Act cannot be retrospectively applied so as to destroy a fundamental right. For this purpose, he relied upon Mahajan J.s concurring judgment at pp. 249-250. This judgment is wholly distinguishable given the fact that there is no fundamental right involved of the defendants in the present case and the fact that no vested right of the defendants has been affected by the Repeal Act. Equally, the judgment in John Lemm v. Thomas Alexander Mitchell, [1912] A.C. 400 correctly lays down the principle stated by Tindal, C.J. in Kay v. Goodwin, 130 E.R. 1403 [1830] as follows:I take the effect of repealing a statute to be to obliterate it as completely from the records of the Parliament as if it had never been passed; and it must be considered as a law that never existed, except for the purpose of those actions which were commenced, prosecuted, and concluded whilst it was an existing law.(at p. 406)In that case, since it was held on facts that persons had vested rights acquired by them in actions duly determined under the repealed law, these could not be affected. This is wholly distinguishable from the fact situation in the present case.27. This being the case, on the date on which the appellate decree was passed, in any case, the Tamil Nadu Urban Land Ceiling Act having been repealed would not stand in the way of a decree for specific performance. It must be remembered that there is no vested right under the Tamil Nadu Urban Land Ceiling Act in favour of the respondents. Any right, if at all, is in favour of the State Government, which, like Pontius Pilate, has washed its hands off this matter by a report submitted to this Court on 17.08.2015.28. The Division Bench judgment is also wholly incorrect in stating that for no fault of the appellant, since the court process has taken 27 years to decide the specific performance suit, specific performance being a discretionary relief ought not to be granted.Section 20, as it then stood, makes it clear that the jurisdiction to decree specific performance is discretionary; but that this discretion is not arbitrary but has to be exercised soundly and reasonably, guided by judicial principles, and capable of correction by a court of appeal – see section 20(1). Section 20(2) speaks of cases in which the court may properly exercise discretion not to decree specific performance. Significantly, under clause (a) of sub-section (2), what is to be seen is the terms of the contract or the conduct of the parties at the time of entering into the contract. Even other circumstances under which the contract was entered into refers only to circumstances that prevailed at the time of entering into the contract. It is only then that this exception kicks in – and this is when the plaintiff gets an unfair advantage over the defendant. Equally, under clause (b) of sub- section (2), the hardship involved is again at the time of entering into the contract which is clear from the expression which he did not foresee. This is made clear beyond doubt by Explanation II of section 20 which states that the only exception to the hardship principle contained in clause (b) of sub-section (2) is where hardship results from an act of the plaintiff subsequent to the contract. In this case also, the act cannot be an act of a third party or of the court – the act must only be the act of the plaintiff. Clause (c) of sub-section (2) again refers to the defendant entering into the contract under circumstances which makes it inequitable to enforce specific performance. Here again, the point of time at which this is to be judged is the time of entering into the contract.29. Given section 20, the courts have uniformly held that the mere escalation of land prices after the date of the filing of the suit cannot be the sole ground to deny specific performance.30. It is settled law that mere delay by itself, without more, cannot be the sole factor to deny specific performance – See Mademsetty Satyanarayana v. G. Yelloji Rao, (1965) 2 SCR 221  at pp. 229-230. Thus, in K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1 , this Court made it clear that if property prices have risen dramatically within a period of two and a half years before filing of the suit for specific performance, and it is coupled with violation of the agreement by the plaintiff, specific performance will not be decreed. The Court held:10. … 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 [It is a well-known fact that the steep rise in the price of oil following the 1973 Arab-Israeli war set in inflationary trends all over the world. Particularly affected were countries like who import bulk of their requirement of oil]. 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 15-6-1979. 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 defendants consistent refrain has been that the prices of house properties in Madurai have been rising fast, that within the said interval of 2 1/2 years, the prices went up 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 2 1/2 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 1/2 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 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 defendants case that the values of the house property in Madurai town were rising fast and this must have induced the plaintiff to wake up after 2 1/2 years and demand specific performance.11. Shri Sivasubramaniam cited the decision of the Madras High Court in S.V. Sankaralinga Nadar v. P.T.S. Ratnaswami Nadar [AIR 1952 Mad 389 : (1952) 1 MLJ 44 ] holding that mere rise in prices is no ground for denying the specific performance. With great respect, we are unable to agree if the said decision is understood as saying that the said factor is not at all to be taken into account while exercising the discretion vested in the court by law. We cannot be oblivious to the reality — and the reality is constant and continuous rise in the values of urban properties — fuelled by large-scale migration of people from rural areas to urban centres and by inflation. Take this very case. The plaintiff had agreed to pay the balance consideration, purchase the stamp papers and ask for the execution of sale deed and delivery of possession within six months. He did nothing of the sort. The agreement expressly provides that if the plaintiff fails in performing his part of the contract, the defendants are entitled to forfeit the earnest money of Rs 5000 and that if the defendants fail to perform their part of the contract, they are liable to pay double the said amount. Except paying the small amount of Rs 5000 (as against the total consideration of Rs 60,000) the plaintiff did nothing until he issued the suit notice 2 1/2 years after the agreement. Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties — evolved in times when prices and values were stable and inflation was unknown — requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so. The learned counsel for the plaintiff says that when the parties entered into the contract, they knew that prices are rising; hence, he says, rise in prices cannot be a ground for denying specific performance. May be, the parties knew of the said circumstance but they have also specified six months as the period within which the transaction should be completed. The said time-limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time-limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no significance or meaning or that they are as good as non-existent? All this only means that while exercising its discretion, the court should also bear in mind that when the parties prescribe certain time- limit(s) for taking steps by one or the other party, it must have some significance and that the said time-limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract (relating to immovable properties).xxx xxx xxx13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 1/2 years in clear violation of the terms of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices — according to the defendants, three times — between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff.14. Shri Sivasubramaniam then relied upon the decision in Jiwan Lal (Dr) v. Brij Mohan Mehra [(1972) 2 SCC 757 : (1973) 2 SCR 230 ] to show that the delay of two years is not a ground to deny specific performance. But a perusal of the judgment shows that there were good reasons for the plaintiff to wait in that case because of the pendency of an appeal against the order of requisition of the suit property. We may reiterate that the true principle is the one stated by the Constitution Bench in Chand Rani [(1993) 1 SCC 519] . Even where time is not of the essence of the contract, the plaintiffs must perform his part of the contract within a reasonable time and reasonable time should be determined by looking at all the surrounding circumstances including the express terms of the contract and the nature of the property.Likewise, this Court, in Saradamani Kandappan v. S. Rajalakshmi, (2011) 12 SCC 18 , made it clear that given the steep rise in urban land prices, it may not be correct now to say that time is not of essence in performance of a contract of sale of immovable property. Thus, where time can be said to be of the essence in the facts of a given case, and the purchaser does not take steps to complete the sale within the stipulated period and the vendor is not responsible for any delay, the steep rise in price within the stipulated time would be a circumstance which would make it inequitable to grant the relief of specific performance. This Court held:36. The principle that time is not of the essence of contracts relating to immovable properties took shape in an era when market values of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and non- readiness. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.xxx xxx xxx41. A correct perspective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this Court in K.S. Vidyanadam v. Vairavan [(1997) 3 SCC 1] (by Jeevan Reddy, J. who incidentally was a member of the Constitution Bench in Chand Rani [(1993) 1 SCC 519] ). This Court observed: (SCC pp. 7 & 9, paras 10-11)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. … 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. …11. … We cannot be oblivious to the reality— and the reality is constant and continuous rise in the values of urban properties—fuelled by large-scale migration of people from rural areas to urban centres and by inflation. … Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties—evolved in times when prices and values were stable and inflation was unknown—requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so.(emphasis in original)42. Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani [(1993) 1 SCC 519] and other cases. Be that as it may.43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam [(1997) 3 SCC 1] :(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was ready and willing to perform his part of the contract.(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also frown upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, where31. The resultant position in law is that a suit for specific performance filed within limitation cannot be dismissed on the sole ground of delay or laches. However, an exception to this rule is where immovable property is to be sold within a certain period, time being of the essence, and it is found that owing to some default on the part of the plaintiff, the sale could not take place within the stipulated time. Once a suit for specific performance has been filed, any delay as a result of the court process cannot be put against the plaintiff as a matter of law in decreeing specific performance. However, it is within the discretion of the Court, regard being had to the facts of each case, as to whether some additional amount ought or ought not to be paid by the plaintiff once a decree of specific performance is passed in its favour, even at the appellate stage.32. Shri Giris fervent appeal that we should not exercise our discretionary jurisdiction under Article 136, given the fact that Rs.2 crores plus interest is to be paid almost by way of solatium to the appellant, has also to be rejected. As has been found earlier in this judgment, the defendants were held to have taken up dishonest pleas and also held to have been in breach of a solemn agreement in which they were to obtain the Urban Land Ceiling permission which, if not obtained, would, under the agreement itself, not stand in the way of the specific performance of the agreement between the parties. He who asks for equity must do equity.Likewise, this Court, in Saradamani Kandappan v. S. Rajalakshmi, (2011) 12 SCC 18 , made it clear that given the steep rise in urban land prices, it may not be correct now to say that time is not of essence in performance of a contract of sale of immovable property. Thus, where time can be said to be of the essence in the facts of a given case, and the purchaser does not take steps to complete the sale within the stipulated period and the vendor is not responsible for any delay, the steep rise in price within the stipulated time would be a circumstance which would make it inequitable to grant the relief of specific performance. This Court held:36. The principle that time is not of the essence of contracts relating to immovable properties took shape in an era when market values of immovable properties were stable and did not undergo any marked change even over a few years (followed mechanically, even when value ceased to be stable). As a consequence, time for performance, stipulated in the agreement was assumed to be not material, or at all events considered as merely indicating the reasonable period within which contract should be performed. The assumption was that grant of specific performance would not prejudice the vendor defendant financially as there would not be much difference in the market value of the property even if the contract was performed after a few months. This principle made sense during the first half of the twentieth century, when there was comparatively very little inflation, in India. The third quarter of the twentieth century saw a very slow but steady increase in prices. But a drastic change occurred from the beginning of the last quarter of the twentieth century. There has been a galloping inflation and prices of immovable properties have increased steeply, by leaps and bounds. Market values of properties are no longer stable or steady. We can take judicial notice of the comparative purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of the immovable properties between then and now. It is no exaggeration to say that properties in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now.37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and non- readiness. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees.xxx xxx xxx41. A correct perspective relating to the question whether time is not of the essence of the contract in contracts relating to immovable property, is given by this Court in K.S. Vidyanadam v. Vairavan [(1997) 3 SCC 1] (by Jeevan Reddy, J. who incidentally was a member of the Constitution Bench in Chand Rani [(1993) 1 SCC 519] ). This Court observed: (SCC pp. 7 & 9, paras 10-11)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. … 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. …11. … We cannot be oblivious to the reality— and the reality is constant and continuous rise in the values of urban properties—fuelled by large-scale migration of people from rural areas to urban centres and by inflation. … Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties—evolved in times when prices and values were stable and inflation was unknown—requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so.(emphasis in original)42. Therefore there is an urgent need to revisit the principle that time is not of the essence in contracts relating to immovable properties and also explain the current position of law with regard to contracts relating to immovable property made after 1975, in view of the changed circumstances arising from inflation and steep increase in prices. We do not propose to undertake that exercise in this case, nor referring the matter to a larger Bench as we have held on facts in this case that time is the essence of the contract, even with reference to the principles in Chand Rani [(1993) 1 SCC 519] and other cases. Be that as it may.43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam [(1997) 3 SCC 1] :(i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.(ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was ready and willing to perform his part of the contract.(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. The courts will also frown upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases, as for example, wherethe major part of the consideration has been paid to the vendor and possession has been delivered in part- performance, where equity shifts in favour of the purchaser.Thus, in Nirmala Anand v. Advent Corporation (P) Ltd., (2002) 8 SCC 146 , a three-Judge bench of this Court held:3. The appeal was heard by a two-Judge Bench. The learned Judges have concurred that the appellant is entitled to specific performance of the agreement dated 8- 9-1966. There has, however, been difference of opinion between learned Judges on the condition in respect of additional amount that may be paid by the appellant to Respondents 1 and 2 and, therefore, the matter has been placed before this three-Judge Bench. The opinions of the learned Judges are reported in Nirmala Anand v. Advent Corpn. (P) Ltd. [(2002) 5 SCC 481] In the opinion expressed by Brother Justice Doraiswamy Raju, the appellant has been directed to pay a sum of Rs 40,00,000 in addition to the sum already paid to Respondents 1 and 2 and in the view of Brother Justice Ashok Bhan, it would be unfair to impose the condition of payment of Rs 40,00,000 and the appellant is entitled to specific performance of agreement to sell on the price mentioned in the agreement.xxx xxx xxx5. The appellant is prepared and willing to take possession of the incomplete flat without claiming any reduction in the purchase price and would not hold Respondents 1 and 2 responsible for anything incomplete in the building. It has been concurrently held that she did not commit breach of the agreement to sell. She has always been ready and willing to perform her part of the agreement. The appellant is ready and willing to pay to Respondents 1 and 2 interest on the sum of Rs 25,000. The breach was committed by Respondents 1 and 2 as noticed hereinbefore. It is evident that the appellant is ready to take incomplete flat and pay further sum as noticed, most likely on account of phenomenal increase in the market price of the flat during the pendency of this litigation for over three decades. We see no reason why the appellant cannot be allowed to have, for her alone, the entire benefit of manifold mega increase of the value of real estate property in the locality. In our view, it would not be unreasonable and inequitable to make the appellant the sole beneficiary of the escalation of real estate prices and the enhanced value of the flat in question. There is no reason why the appellant, who is not a defaulting party, should not be allowed to reap to herself the fruits of increase in value.6. It is true that grant of decree of specific performance lies in the discretion of the court and it is also well settled that it is not always necessary to grant specific performance simply for the reason that it is legal to do so. It is further well settled that the court in its discretion can impose any reasonable condition including payment of an additional amount by one party to the other while granting or refusing decree of specific performance. Whether the purchaser shall be directed to pay an additional amount to the seller or converse would depend upon the facts and circumstances of a case. Ordinarily, the plaintiff is not to be denied the relief of specific performance only on account of the phenomenal increase of price during the pendency of litigation. That may be, in a given case, one of the considerations besides many others to be taken into consideration for refusing the decree of specific performance. As a general rule, it cannot be held that ordinarily the plaintiff cannot be allowed to have, for her alone, the entire benefit of phenomenal increase of the value of the property during the pendency of the litigation. While balancing the equities, one of the considerations to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether a party is trying to take undue advantage over the other as also the hardship that may be caused to the defendant by directing specific performance. There may be other circumstances on which parties may not have any control. The totality of the circumstances is required to be seen.xxx xxx xxx8. Having regard to the totality of the circumstances, we would direct the appellant to pay to Respondents 1 and 2 a sum of Rs 6,25,000 instead of Rs 25,000. The amount of Rs 40,00,000 wherever it appears in the opinion of Justice Doraiswamy Raju, would be read as Rs 6,25,000. All other conditions will remain.Given the conduct of the defendants in this case, as contrasted with the conduct of the appellant who is ready and willing throughout to perform its part of the bargain, we think this is a fit case in which the Division Bench judgment should be set aside.