A.K. Lakshmipathy (D) & Ors vs Rai Saheb Pannalal H. Lahoti C.T. & Ors

3. The relevant facts leading to the filing of this appeal are:- 1

4. The said contract also mentioned that in case of failure of the appellants to pay the balance amount within the stipulated time, the respondents would forfeit the balance amount.

5. Thereafter, the competent authority under the ULC Act informed the appellants of being granted exemption provided that the land was continued to be used for the purposes of the trust. Due to such intimation, the Appellants sought clarifications from Respondent no. 2 regarding procurement of permissions from the Endowment 3 Department in a telegraphic notice on 29th of May 1979. This was followed by a registered notice on 31st of May 1979. Respondent no.2 sent a reply to the appellants on 4th of June 1979 without clarifying the doubts raised on procurement of permission from the Endowment Department. In response, the appellants sent a detailed communication to the respondent enquiring about the state of affairs on 5th of June 1979. The respondent no. 2 sent a reply on 6th of June 1979 informing the appellants that there was no requirement of obtaining permission from the Endowment Department as the laws of West Bengal, which were applicable in this case, did not require any particular procedure for alienation of the trust property.

6. Thereafter, the appellants sent a communication enclosing a Photostat copy of a cheque of Rs. 5 lakhs, certified by the banker as "good for payment", thus showing their readiness and willingness to complete the contract with the balance consideration but with the condition that the respondent had to obtain a certificate from, the Endowment Department. In reply, on 7th of June 1979 the respondents sent a Photostat copy of a cheque of Rs. 1 lakh towards return of the advance amount simply terminating the agreement and threatening to forfeit the advance amount. The written communication 4 mentioned that Respondent no. 2 was kind enough to offer the earnest amount back to the appellants on the condition that the latter would not agitate the matter further. The appellants were directed to collect the amount within three days of the receipt of the letter; otherwise the earnest money would be forfeited. The said letter mentioned that by this communication the respondents would not be waiving any of their rights to pursue the matter further.

7. The appellants then filed a suit being O.S. No. 317/1985 in the Court of The Principal Subordinate Judge, R.R. District, Hyderabad for specific performance of the said contract for sale by the seller- respondents. The trial court framed no less than 17 issues in all. After examining witnesses, hearing arguments of both the parties and deliberating upon the issues, the Trial Court, inter alia, held that the appellants by insisting upon the trustees to perform additional conditions were not ready and willing to perform their part of the contract and also holding that time was not the essence of the contract. Accordingly, the Trial Court on 25th of August 1993 dismissed the suit for specific performance but passed a decree directing refund of Rs 1 Lakh of earnest money to the appellants. 5

8. Thereafter, the appellants, aggrieved by the decree, filed an appeal before the High Court of Andhra Pradesh at Hyderabad being C. C. C. A. no. 88/1993 and the respondents had filed another appeal A.S. No. 673 of 1995 against the said decree, to the extent that the Trial Court had directed the respondents to refund the advance amount of Rs. 1 lakh. On 23rd of February 2003, the High Court by its judgment and decree affirmed the decree of the Trial Court and held that time was the essence of the contract. Feeling aggrieved, the appellants filed a Special Leave Petition which, on grant of leave, was heard in presence of the learned counsel for the parties.

19. For the reasons aforesaid, we affirm the judgment of the High Court so far as the suit for specific performance of the contract for sale is concerned. Since no appeal has been filed by the respondent against the order regarding the forfeiture of the amount in question, we need not go into the question whether such forfeiture was proper or not.

22. For the reasons aforesaid, the appeal is allowed to the extent indicated above. There will be no order as to costs.