R Lakshmikantham vs Devaraji

‘REPORTABLE’ IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2420 OF 2018

R LAKSHMIKANTHAM Appellant(s)

VERSUS

DEVARAJI Respondent(s)

J U D G M E N T

R. F. NARIMAN, J.

In the present appeal, despite service of notice,

nobody appears for the respondent. We have heard Dr. (Ms.)

Pooja Jha, learned counsel appearing for the appellant.

The High Court, in the present appeal, has, by the

impugned judgment dated 03.02.2017, set aside the concurrent

judgments of the Courts below, and allowed the appeal of the

erstwhile defendant, who is the respondent before us, and

hence, set aside the decree for specific performance that

was passed in the plaintiff’s favour.

By an agreement to sell dated 22.09.2002, the suit-

property was to be sold for a sum of Rs.3,65,000/-. Certain

clauses of the agreement are important and are set out

Signature Not Verified hereinbelow: Digitally signed by R NATARAJAN Date: 2019.07.25 10:44:30 IST Reason: “1. The sale price of the property mentioned in the schedule hereunder shall be Rs.3,65,000/-(Rupees Three Lakhs and Sixty Five Thousand only).

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2. The party of the second part has paid a sum of Rs.5,000/-(Rupees Five Thousand only) towards advance by cash and the party of the first part hereby admit and acknowledge the receipt of the same.

3. The balance sale consideration shall be paid by the party of the second part to the party of the first part within three months from today. The party of the first part agrees to execute sale deed on the day on which the balance sale consideration is paid.

4. The party of the second part agrees to pay part of the sale consideration of Rs.60,000/-(Rupees Sixty Thousand only) to the party of the first on or before 10th day of October.

5. The party of the first part had handed over the original title documents to the mortgagee and the party of the second part shall settle the loan, receive the documents from the mortgagee and keep the same in his custody.

…………………………………………………………………………………… ………………………………………………………………………………….

8. If there is no encumbrance to the schedule property and when the party of the second part is willing to pay the balance sale consideration, the party of the first shall execute sale deed in favour of the party of the second part or her nominee. If the party of the first part refuses to do so, the party of the second part is entitled to take legal action.”

It is stated that at the time of the sale agreement,

the suit property was worth roughly a sum of Rs.6 lakhs, but

the parties finally agreed and the defendant, in particular,

agreed to sell the aforesaid property for Rs.3.65 lakhs. A

perusal of the agreement to sell would show that though

clause 3 requires that the balance sale consideration will

be paid within three months from the date of the agreement

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and that the seller will execute the sale deed on the date

on which balance sale consideration was paid yet, clauses 5

and 8 clearly show that the original title deeds which are

with the mortgagee had yet to be handed over and the

mortgage had yet to be redeemed. It is only when this is

done that clause 3 would kick in, showing that the time of

three months is obviously not of essence.

Soon after the agreement, the plaintiff sent a

registered letter dated 18.12.2002 to the present address of

the defendant reminding the defendant that Rs.5000/- had

been received on the date of signing the agreement and

Rs.60,000/- had been received on 14.10.2002. Despite this,

the original title documents were not obtained from the

mortgagee and hence the mortgage could not be discharged.

The letter then goes on to state that repeated calls were

made and that the plaintiff is ready with the balance money,

and that the defendant should come forward immediately to

discharge the mortgage, get all documents from the

mortgagee, and register the sale deed. This registered A.D.

letter was returned to the sender stating that the addressee

did not receive the same for the past one week. The same

was the fate of another legal notice on the very next date,

i.e., 19.12.2002. Finally, on 07.07.2003, the plaintiff

sent a legal notice referring to the earlier legal notice of

19.12.2002 and called upon the defendant to immediately

comply with the terms of the agreement. To this notice,

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which was admittedly received by the defendant at the very

same address, no reply was given. Thereafter, the present

suit for specific performance was filed by the plaintiff in

February, 2005.

Given these facts, the trial Court, by its judgment

dated 12.09.2008, held that the suit agreement was proved

and that three notices sent by the plaintiff were also

proved, it being clear that the defendant was attempting to

wriggle out of his obligations under the agreement. Though

the suit was filed belatedly, the trial Court felt that as

the defendant did not furnish the address of his mortgagee

or take steps to clear the mortgage, it was clear that the

defendant was attempting to wriggle out of the agreement.

Further, the plaintiff’s readiness and willingness was

proved by the fact that he has necessary funds as on the

date of the agreement, and thereafter, as was stated by him

in his letter dated 18.12.2002. This being the case, the

Court ordered specific performance as the balance sale

consideration had already been deposited into the Court on

the date of the filing of the Suit. The first appeal from

the aforesaid judgment was dismissed on 20.12.2010 by the

Principal District Judge. The District Judge found

concurrently for the plaintiff on all the points argued and

hence dismissed the first appeal.

By the impugned judgment, the High Court reversed the

concurrent judgments and held, on a construction of the

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agreement, that since only three months were given to

complete the sale transaction, time was of essence. It also

went on to hold that the two letters dated 18.12.2002 and

19.12.2002 could not have been said to have been served on

the defendant and hence were not proved. The High court

recorded the defendant’s advocate’s statement that it was

not going into other aspects except that plaintiff was not

ready and willing throughout to perform the sale agreement.

Despite this, the High Court held that since the Suit itself

was filed belatedly, it would not be enough for the

plaintiff to show that he had the necessary funds. It would

also have been necessary for him to show that he was

otherwise ready and willing throughout, which cannot be said

to be correct considering that there was a long time gap

between 22.09.2002 and 07.07.2003 inasmuch as the

intermediate letters/notices were not proved. The High

Court also further stated that the property value was Rs.10

lakhs on the date of the sale agreement, though this was not

proved by the defendant, and then went on to state that

since readiness and willingness had to be held against the

Plaintiff, and since the Suit itself was belated, specific

performance cannot be granted on the facts of this case and,

as stated earlier, reversed the concurrent findings of the

Courts below.

We have heard learned counsel for the appellant.

The High Court has, in the second appeal, obviously

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gone wrong on a number of counts. First, to hold that time

was of essence in the agreement, is wholly incorrect.

Clause 3 has to be read along with clauses 5 and 8, which

clearly show that in the nature of reciprocal promises, the

promise made by the seller in clause 5 has to be performed

first, viz., that the title documents have to be obtained

from the mortgagee after the mortgage is cleared. It is

only then that the consideration above Rs.70,000/-, being

the balance consideration for the sale, has to be paid.

Secondly, the High court is wholly incorrect in stating that

the two letters of 18.12.2002 and 19.12.2002 cannot be said

to have been proved. Both the letters were registered

A.D. letters sent to the very address of the defendant,

which the defendant states is the address on which it

received the legal notice dated 07.07.2003. Further, the

moment the registered letter once sent is returned with the

remarks mentioned hereinabove, it shall be deemed to have

been served on the defendant on the address so stated,

unless the contrary is proved. The defendant did not come

forward with anything to show that this was not the proper

address. In fact, that this is the proper address is shown

by the fact that he acknowledged the receipt of the legal

notice dated 07.07.2003 on this very address.

The High Court order is not correct in stating that

readiness and willingness cannot be inferred because the

letters dated 18.12.2002 and 19.12.2002 had not been sent to

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the defendant. The High Court also erred in holding that

despite having the necessary funds, the plaintiff could not

be said to be ready and willing. In the aforesaid

circumstances, the High Court was also incorrect in putting

a short delay in filing the Suit against the plaintiff to

state that he was not ready and willing. In India, it is

well settled that the rule of equity that exists in England,

does not apply, and so long as a Suit for specific

performance is filed within the period of limitation, delay

cannot be put against the plaintiff – See Mademsetty

Satyanarayana v. G. Yelloji Rao and others AIR 1965 Supreme

Court 1405 (paragraph 7) which reads as under:

“(7) Mr. Lakshmaiah cited a long catena of English decisoins to define the scope of a Court’s discretion. Before referring to them, it is necessary to know the fundamental differnece 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 either case, no question of equity arises.”

The High Court also went into error in stating that

the value of the property was Rs.10 lakhs at the time of the

sale agreement. PW-1 in his cross examination admitted that

it was Rs.10 lakhs on the date when PW1 was cross-examined.

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The value of the property on the date of the sale agreement

was only Rs.6 lakhs, and it was open for the parties to

negotiate the said price upwards or downwards, which was

what the parties did in the facts of the present case.

Nothing can, therefore, be derived from the erroneous

assumption that a valuable property had been sold at a

throwaway price.

For all these reasons, therefore, we allow the appeal

and set aside the judgment of the High Court and restore

that of the Courts below.

……………………………………………………………., J.

[ R. F. NARIMAN ]

……………………………………………………………., J.

[ SURYA KANT ]

New Delhi;

July 10, 2019.

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