Case: Jaswinder Kaur (Now Deceased) Through Her Lrs. &amp; Others Vs. Gurmeet Singh &amp; Others

The defendants (theare before us having succeeded before the trial court and in the first appellate court. The High Court has unfortunately invented a new method of decreeing the suit for specific performance in part only in respect to the payment of the earnest money of Rs. 50,000/(Rupees Fifty Thousand Only) and advance money of Rs. 14,50,000/(Rupees Fourteen Lakhs and Fifty Thousand Only) without reversing the findings of the trial court as well as that of the first appellate court on the vital aspects that the plaintiffswere not ready and willing to perform their part of the contract apart from that they did not had the balance consideration to purchase the disputed land within the time stipulated in the agreement.The facts unfold that initially an agreement dated 13.01.1990 was entered into, in which it was agreed that for the sum of Rs. 55,00,000/(Rupees Fifty Five Lakhs only), defendants would sell the property in area 10.75 acres situated at village Mehmoodpura, Tehsil and District Ludhiana, State of Punjab, and on that day a sum of Rs. 50,000/(Rupees Fifty Thousand only) was paid as earnest money. Later on, at the time of payment of Rs. 14,50,000/(Rupees Fourteen Lakhs and Fifty Thousand only) on 31.1.1990 further agreement was entered into which was also reduced in writing in which it was stipulated that sale deed would be executed by 30.10.1990. It would be open to the plaintiffs to construct boundary wall between 24.4.1990 to 15.5.1990 at their own cost and the possession of the land would be delivered to the purchaser at the time of registration of the sale deed. This agreement has referred the prior agreement dated 13.1.1990 on which date a sum of Rs. 50,000/(Rupees Fifty Thousand Only) had been paid as earnest money. It was also stipulated that sale deeds would be registered in the name of anyone suggested by the plaintiffs and the land had been mortgaged with Punjab National Bank (for short, "the Bank"). It would be necessary for the defendants to clear the amount and to obtain No Objection Certificate from the Bank and only thereafter sale deed to be executed.The plaintiffs filed suit for specific performance of the agreement to sale dated 31.1.1990 or in alternative, refund of earnest money with interest and damages were claimed. It was averred by the plaintiffs that they were ready and willing to purchase property and were present before the Sub Registrar on the date fixed i.e. 30.10.1990 with the balance amount whereas the defendants did not turn up to execute the sale deed. Plaintiffs served telegraphic notice but in futile.The defendants in the written statement contended that plaintiffs had failed to perform their part of the agreement and as such the agreement stood cancelled and earnest money forfeited. Defendants were ready and willing to execute the sale deed and were present before theon 30.10.1990. Telegram was also sent to the plaintiffs but they were not ready and willing to perform their part of the contract. Plaintiffs did not raise the boundary wall as agreed and possession was with the defendants. The defendants got the property redeemed from the Banks in order to execute sale deed on 2.7.1990 and intimated the same to the plaintiffs vide legal notice (Ex.which was duly replied. The trial court held that the plaintiffs were not ready and willing to perform their part of the agreements dated 13.01.1990 and 31.1.1990. Defendants have cancelled the agreement and forfeited the earnest money. Thus, the plaintiffs could not be said to be entitled to specific performance of the aforesaid agreement. It was also found that the plaintiffs were not having the required money in order to purchase the property. The submissions urged as to demarcation and permission under Urban Land Ceiling Act were found to be untenable. Plaintiffs were not ready and willing to perform their part of the contract, hence agreements stood cancelled after service of another noticeby defendants and the suit was dismissed.Aggrieved thereby the plaintiffs preferred First Appeal. The first appellate court also examined the evidence of the plaintiffs in extenso and the legality of the findings recorded by the trial court and came to the conclusion that plaintiffs were not ready and willing to perform their part of the agreement neither they were having the required balance amount for the purchase of the property in question as per the aforesaid agreements. It was also one of the circumstance which was taken into consideration that only one plaintiff Kanwaljit Singhhad entered in the witness box not other two appellants. Plaintiff Kanwaljit Singh had stated that he was maintaining account books from 1989 but he had failed to file Income Tax Assessment Orders, the Income Tax Returns or account books. It was admitted by the plaintiffs that the time limit was fixed for constructing the boundary wall under the agreement and the parties were bound by the same and the time was the essence of the contract. There was no explanation offered for not constructing the boundary wall within the stipulated period in the month of1990. Plaintiffs also admitted that there was already demarcation when the plaintiffs entered into the agreement thus the guise of demarcation taken for not constructing the boundary wall was also found to be flimsy. It was also found by the first appellate court that notice (P9) dated 23.10.1990 had been served upon the plaintiffs intimating the factum of the redemption made from Bank by the defendants. They had also obtained income tax clearance certificate from the Income Tax Department which fact was mentioned in the said notice, notice was admittedly received by the plaintiffs. Again a notice (P14) was served upon the plaintiffs in which it was informed that permission under the Urban Land Ceiling Act was not required as it was agricultural land. This notice was also received on 6.12.1990. But even thereafter the plaintiffs failed to get the sale deed executed. The part of deposition of the plaintiff PW1Kanwaljit Singh had been reproduced by the first appellate court in which he had stated that the defendants did not show the jamabandi indicating that they were the owner of the property, and for that reason sale deed could not be registered and there was no other reason. He also admitted the fact in extracted portion that provisions of Urban Land Ceiling Act were not applicable as the land was agricultural land and he also admitted that plaintiffs were informed that the land had been redeemed from the Bank. Considering the deposition of PW1, the findings of the trial court had been affirmed by the first appellate court. The stand of the plaintiffs that they were present on 30.10.1990 beforewas not substantiated by as PW 1Kanwaljit Singh, he had not uttered even a word about his presence in the office of Sub Registrar on the said date. For non production of the documents i.e. bank accounts and Income Tax Statements etc., adverse inference had been drawn and findings had been recorded by the first appellate court, after discussing the entire evidence in detail to the effect that plaintiffs had miserably failed to prove that they had financial capacity to pay the balance sale consideration required for the execution of the sale deed. They did not produce necessary documents, bank account, ledger book and income tax statements etc. to prove their financial capacity so as to indicate that they had in fact raised the loan amount allegedly from various persons as stated by PW1 in his cross examination.The High Court without discussing evidence and the correctness of the aforesaid findings as recorded by the trial court and affirmed by the first appellate court had referred to Section 12 of the Specific Relief Act, 1963 (hereinafter referred to as the Act) and on the ground that a sum of Rs. 15,00,000/(Rupees Fifteen Lakhs Only) had been accepted by the defendants decreed the suit partly. It observed at one go that the readiness and willingness has to be seen from the conduct of the parties. The High Court has only made following relevant discussion to reverse the findings of two courtsmy view, the provisions of subsection (3) of Section 12 of 1963 Act, vehemently relied upon by Mr. Sarin, would not come in the aid of theto show that for specific performance of the agreement to sell,payment of Rs.fs are required to deposit the entire amount of sale consideration, i.e. Rs.The readiness and willingness has to be seen from the act, conduct and intention of the parties. Once thehad received the sale consideration of Rs.nothing prevented them for offering sale of a part of the land. Both the Courts below have completely been swayed away from the fact that thefailed to prove the bank account or payment of the receipt of the balance sale consideration, which is not essential requirement of law as per the judgment of the Honble Supreme Court (supra) and as well asof Section 20 of 1963in view the aforementioned facts and circumstances, the judgments and decrees of both the courts below are partly modified. The suit of theis partly decreed by granting specific performance of the agreement to sellthe area for which sale consideration of Rs. 14,50,000/had been paid and relief of specific performance qua other area is declined, much less findings of the courts below are affirmed. The substantial questions of law are answered in favour of theand against theto the aforementionedappeal is accordingly partly allowed.In the earlier part of the judgment, the High Court had noted the facts, submissions, quoted Agreement, Section 12 of the Act, the decisions which were cited and thereafter discussion had followed in the extracted portion.

Reasoning:
11. After hearing learned counsel for the parties and having perused the judgment and the documents on record, we are of the considered opinion that the judgment and decree passed by the High Court is not sustainable for a moment on a bare perusal of the judgment passed byour opinion, no readiness and willingness could have been inferred even if it is assumed that High Court by aforesaid passing observation intended to hold that the plaintiffs were ready to perform their part by making payment of part consideration on 31.1.1990, readiness and willingness has to be seen in the context of the entire agreement not with respect to portion of contract. Plaintiffs had stated that they had borrowed the amount but had failed to produce the accounts indicating that in fact money was borrowed as stated by the plaintiff for effecting the purchase.In the instant case, it is apparent that the plaintiffs had no arrangement of balance consideration. PW1Kanwaljit Singh himself stated in his cross examination that they had borrowed the amount from someone to purchase the property but failed to produce the ledger account books which used to be maintained and also did not produce the Income Tax Returns Assessment Orders to support their averments. Thus, the finding which had been recorded by the trial court and affirmed by the first appellate court were based on sound reasoning and on proper appreciation of the evidence. The finding had also not to be adverted to by the High Court. Thus, when the balance consideration was not available with the plaintiffs obviously they were not entitled even in part for the decree of specific performance of agreement to sale as ordered by the High Court. High Court had acted in flagrant violation of the law while decreeing the suit in part for specific performance without reversing the aforesaid finding recorded by the trial court and the first appellate court. It was not within the jurisdiction of the High Court to decree the suit for specific performance on the basis of the elementary principles relating to specific performance as envisaged under the Act.It is necessary under Section 16 (c) of the Act not only to aver the readiness and willingness but also to prove it. The plaintiffs only pleaded it, but they have utterly failed to prove it as rightly held by the trial court as well as by the first appellate court. The defendants had done everything which was possible for them to require the plaintiffs to get the sale deed executed. They got the property redeemed from the Bank on 2.7.90 and issued a noticeto the plaintiffs intimating them of the factum of redemption. They also informed that the permission under the Urban Land Ceiling Act was not required as the land was agricultural land.On the other hand plaintiff Kanwaljit Singhhad deposed that the only reason for not purchasing the property was that the defendants had failed to show jamabandi to them regarding their names as owners if that be so the same indicates unwillingness of the plaintiffs to purchase the property for defect in title of the defendants. When they had entered into an agreement, the defendants had clearly disclosed to the plaintiffs that as a matter of fact the property had been mortgaged with the Bank. It was for the plaintiffs to ascertain whether the defendants were owner or not before entering into agreement. The stand of the plaintiff is unsound and unworthy of credence and they had tried to take guise of defects of the title of the property in untenable manner.The trial court as well as the first appellate court had also found that in spite of the notice given by the defendants to the plaintiffs to be present for the execution of the sale deed in office ofon 30.10.1990 none of the plaintiffs was present in the office of the Sub Registrar on the date on which the sale deed had to be executed. It shows that they were not ready and willing to purchase the property in spite of the notice having been given by the defendants to them to keep them present for the execution of the sale deed on the stipulated date of the agreement failing which the earnest money had to be forfeited.A bare perusal of the aforesaid provision contained in Section 12 of the Act makes it clear that it is not open to the High Court to direct specific performance of a part of contract except otherwise provided in the Section in absence any of the exigencies available under the provisions of sub Sections 2, 3, and 4 of Section 12 so as to decree the suit. The High Court could not have decreed the suit with an purview of Section 12.Applying the aforesaid principle, if a party is not ready and willing to perform whole of the contract, specific performance with respect to the part of the contract could not have been ordered in view of the aforesaid decision and Section 16 (c) of the Act. In the instant case, the High Court has ignored aforesaid basic principles that the party cannot claim specific performance.Reliance had rightly been placed by appellants on the decision of Privy Council in William Grahams case (supra) in which it had been laid down that it is not for the High Court to make out a new contract, when specific performance is possible with respect to the entire contract. It has to be ordered for the entire contract not for part as has been ordered in this case by the High Court.