Ramathal vs Maruthathal .

Civil Appeal No. 10741/2017 (Arising out of SLP (C) No. 18738/2014)

RAMATHAL …Petitioner

Versus

Maruthathal & Ors. …Respondent(s)

JUDGMENT

N. V. RAMANA, J.

1. Leave granted.

2. This appeal by special leave is directed against the

judgment and decree, dated 14.03.2014, passed by the

High Court of Judicature at Madras in Second Appeal

No. 1819 of 2001, wherein the High Court has allowed

the second appeal by setting aside the concurrent

findings of the courts’ below.

Signature Not Verified SUKHBIR PAUL KAUR Date: 2017.08.23

3. At the outset it is to be noted that during the pendency Digitally signed by

09:17:34 PKT Reason:

of this appeal, respondent no. 1 and respondent no. 3

1 have settled the disputes by compromise deed dated

04.08.2014. In light of the aforesaid compromise, this

appeal is pursued only against respondent no.2.

4. A brief reference to facts which are necessary for

disposal of the appeal before us are, Appellant herein

who is the plaintiff in the suit [hereinafter ‘Buyer’ for

brevity] and respondent no. 2 who is the defendant

[hereinafter ‘Seller’ for brevity unless context otherwise

requires] entered into an agreement of sale in respect of

suit schedule property on 10.12.1986. The sale

consideration was fixed at Rs. 1,01,000/- per acre. An

amount of Rs.40,000/- was paid as earnest money. As

per the terms of the agreement one year was stipulated

for completion of the sale by executing an absolute sale

deed. Additionally the agreement stipulated that the

seller has to conduct a survey for the identification of

the boundaries of the suit schedule property. As the said

condition was not complied with by the seller, the buyer

issued a notice dated 26.09.1987 calling upon the seller 2 to comply with the stipulated obligation without any

further delay. Confronted by continuous denials by the

seller, buyer having left with no option has filed the

instant suit seeking specific performance of the

agreement of sale dated 10.12.1986.

5. Trial court after a full fledged trial has decreed the suit

for specific performance. On an appeal by the

unsuccessful seller/defendant appellate court dismissed

the appeal by confirming the judgment of the trial court.

Both the courts concurrently found that the survey was

not conducted by the seller as no material was placed in

support of the same. Moreover, the statements of DW1

and DW2 were held to be unbelievable. Courts’ below

relied upon the fact that in CRP No. 2195 of 1989, the

High Court has given a categorical finding that the

property was not surveyed and the price was also not

ascertained. As the aforesaid factual finding had become

final, the trial court as well as the appellate court came

3 to the conclusion that plaintiff/buyer seller/defendant

failed to fulfill his part of the contract.

6. High Court in second appeal, while overturning the

concurrent findings, set aside the judgment and decree

of the court below. A perusal of the impugned judgment

reveals that the High Court was persuaded by the fact

that buyer was unable to prove by reliable oral and

documentary evidence that the suit property was not

measured and demarcated by the seller. Aggrieved by

the aforesaid judgment of the High Court in second

appeal, buyer is in appeal before this Court.

7. The Ld. Counsel, Mr. T. Harish Kumar, for the buyer

submits that:

i. The High Court in second appeal could not have reversed the findings of fact, as the same was beyond the scope of the second appeal under section 100 of the Code of Civil Procedure, 1908 [hereinafter ‘CPC’ for brevity].

ii. The Agreement mandated seller to conduct survey and affix boundaries. Conducting the survey being a

4 condition precedent for payment of the agreed consideration, non-fulfillment of such condition was a breach of the contract committed by the seller herself.

iii. The seller has not adduced any documentary evidence to prove that the survey was conducted.

iv. The perusal of plaint and the supporting affidavit by the buyer establishes that there was sufficient pleading and evidence on record to show that they were ready and willing to perform their part of the contract.

8. Per contra Ld. Senior Counsel Ms. Indu Malhotra,

appearing for the seller submits that-

i. The equitable remedy of specific performance should not be ordered by this court as readiness and willingness has not been pleaded or proved by the Petitioner.

ii. The condition of measurement was not a condition precedent for the execution of the contract as the property was sufficiently identified and measured which is apparent from the schedule of property appended with the sale agreement.

iii. The High Court has correctly relied upon the evidence of DW-1 and DW-2 which proves that a surveyor was appointed and accordingly, the land was surveyed.

5 iv. The buyer has not adduced any evidence to prove that he was having sufficient financial means to complete the sale transaction.

9. The preliminary objection raised by the Ld. Counsel for

buyer is that the High Court has exceeded its appellate

jurisdiction in the second appeal under Section 100 of

CPC, when it came to a different set of conclusion on

facts, in utter disregard to the reasoning of the courts

below. It is to be noted that the trial court and the lower

appellate court concurrently found that the buyer was

ready and willing to perform the contract which was

apparent from both pleadings as well as oral and

documentary evidence available on record.

10. Before we dwell into this issue, whether the high

court went wrong in interfering with a question of fact in

a second appeal it would be necessary to look into

certain clauses of the agreement in order to effectively

deal with this issue. The agreement stipulated Rs.

1,01,000/- per acre as the sale consideration. A time

6 period of one year was stipulated for buyer to execute

the sale. Further it narrates that if the seller commits

any default or denies to execute the sale deed in favor of

buyer, then buyer shall have the right to remit the

balance amount in the court and go for compulsory

registration, provided the buyer was ready to pay the

balance amount deducting the advance amount and

ready to execute the sale deed. It is to be noted that in

such a case, the seller had agreed to bear the entire

expense of litigation. Moreover in order to convert the

property into marketable plots, possession was also

given to the buyer from the date of contract.

11. The seller had agreed for conducting a survey of the

scheduled property at their own cost and also agreed to

demarcate the boundaries by affixing stones.

Additionally the sale consideration was agreed to be

calculated according to the extent of land found in the

survey. On the other hand the buyer had agreed to pay

the entire sale consideration within six months from the 7 date of the contract. It is to be noted that the seller had

agreed to rectify any hindrance which might occur in

selling of the land other than those related to

Government, Panchayat, and Housing Board and to

extend the period of the agreement on happening of

such hindrances. Moreover the schedule of the property

mentions the extent of property to be 1.87 ¾ acres.

12. Perusal of various conditions stipulated in the

agreement makes it clear that the reciprocal promises

were dependent on each other and must be determined

on the true construction of the contract in the order

which the nature of transaction requires. The view taken

by the High Court, regarding the interpretation of the

contract wherein the execution of the contract was

independent of the payment obligation, is erroneous and

cannot be sustained in the eyes of law as the contract

needs to be read as whole and not in a piecemeal

approach as undertaken by the High Court. Therefore

the buyer’s payment obligation and the obligation to 8 execute the contract, was dependent upon the

measurement to be conducted by the seller.

13. The factual aspect which was supposed to be

considered was whether the survey was conducted by

the seller or not. It is on record that DW1 and DW2 have

stated that the survey was conducted subsequent to the

execution of the agreement, but no documents were

marked on behalf of the seller evidencing the fact that

survey was undertaken. When both the courts below

took a view that evidence of the witness was not

believable on detailed consideration of their cross

examination and non availability of documentary

evidence to prove that survey was conducted, then the

High Court should not have interfered with such factual

findings by taking into consideration the oral evidence of

witnesses without there being any documentary

evidence. The crucial fact that the survey was not

conducted had attained finality by the earlier judgment

of the High Court in CRP No. 2195 of 1989. Therefore, 9 once trial court and first appellate court which are the

fact finding courts have come to the specific conclusion

that the plaintiff is entitled for specific performance of

the agreement of sale, the High Court on re-appreciation

of evidence could not have upset the factual findings in

second appeal.

14. It was not appropriate for the high court to embark

upon the task of re appreciation of evidence in the

second appeal and disturb the concurrent findings of

fact of the court below which are the fact finding courts.

At this juncture for better appreciation we deem it

appropriate to extract section 100 and 103 of CPC which

reads as follows:

Section 100:

(1) Same as otherwise provided in the body of this court or by any other law for the time being in force, an appeal shall lie to high court from every decree passed in appeal by any court subordinate to the high court. If the high court is satisfied that the case involves a substantial question of law.

(2) An appeal may lie under this section from an appellate decree passed ex-part.

10 (3) In an appeal under this section the memorandum of appeal shall precisely state the substantial question of law involved in the appeal.

(4) Where the high court is satisfied that the substantial question of law is involved in any case it shall formulate that question.

(5) The appeal shall be heard on the question so formulated and the respondent shall at the hearing of the appeal he allowed to argue that the case does not involve such question.

Section 103:

“Power of high court to determine issues of fact” In any second appeal the high court may, if the evidence on record is sufficient, determine any issue necessary for the disposal of the appeal.

(a) Which has not been determined by the lower appellate court or both by the court of first instance and the lower appellate court Or

(b) Which has been wrongly determined by such court by reason for decision on such question of law as referred in section 100.

15. A clear reading of section 100 and 103 of the CPC

envisages that a burden is placed upon the appellant to

state in the memorandum of grounds of appeal the

11 substantial question of law that is involved in the

appeal, then the high court being satisfied that such a

substantial question of law arises for its consideration

has to formulate the questions of law and decide the

appeal. Hence a prerequisite for entertaining a Second

appeal is a substantial question of law involved in the

case which has to be adjudicated by the high court. It is

the intention of the Legislature to limit the scope of

second appeal only when a substantial question of law is

involved and the amendment made to section 100

makes the legislative intent more clear that it never

wanted the High Court to be a fact finding court.

However it is not an absolute rule that high court

cannot interfere in a second appeal on a question of fact,

Section 103 of the CPC enables the High Court to

consider the evidence when the same has been wrongly

determined by the courts below on which a substantial

question of law arises as referred to in Section 100.

When appreciation of evidence suffers from material 12 irregularities and when there is perversity in the

findings of the court which are not based on any

material, court is empowered to interfere on a question

of fact as well. Unless and until there is absolute

perversity, it would not be appropriate for the High

Courts to interfere in a question of fact just because two

views are possible, in such circumstances the High

Courts should restrain itself from exercising the

jurisdiction on a question of fact.

16. When the intention of the legislature is so clear the

courts have no power to enlarge the scope of Section

100 for whatsoever reasons. Justice has to be

administered in accordance with law. In the case on

hand the High Court has exceeded its jurisdiction by

reversing the well considered judgment of the courts

below which is based on cogent reasoning. The learned

judge ought not to have entered the arena of re

appreciation of the evidence, hence the whole exercise

13 done by the high court is beyond the scope and

jurisdiction conferred under section 100 of CPC.

17. Although this specific ground is sufficient to set

aside the judgment and decree of the High Court, but we

tend to examine the case on other issues in view of the

elaborate submissions made by the respective counsels.

Now we shall embark upon the issue, whether the time

is the essence of the contract.

18. We are mindful of the fact that the agreement

contained a provision stipulating time for payment and

completion of the contract. It is to be noted that Clause

3 of the agreement makes execution of the contract by

the buyer contingent on the payment which ultimately

hinges on the performance of seller’s obligation to

conduct survey and affix boundaries. Additionally the

conduct of the seller especially taking into consideration

the reply notice, dated 05.10.1987, by the seller wherein

they admit that the 6 month time frame was not binding

as the payment obligation may be performed by the end 14 of one year i.e., before completion of the sale. Further by

the aforesaid reply notice the sellers were agreeable to

accept delayed payment subject to payment of extra

interest clearly indicates that the time was not the

essence of the contract. Moreover the sellers were

unwilling to perform their part of the contract in any

case.

19. As per the law laid down by this Court in respect of

sale of immovable property there is no presumption as

to time being the essence of the contract. Even when

there is no stipulation courts may infer that it has to be

performed within a reasonable time taking into

consideration the terms of the contract, the nature of

the property and other surrounding circumstances. We

feel that this proposition needs to be revisited in an

appropriate case, as the value of an immovable property

rate is fluctuating in recent times.

20. At the cost of repetition, it should be noted that,

whether the time is an essence of the contract would 15 depend on facts and circumstances of each case. In this

case, after taking into consideration the terms of the

contract, the conduct of the parties and other material

placed before us, the contention of the seller that the

time is the essence of the contract is negated.

21. The Ld. Senior Counsel appearing for seller

contends that the Specific performance being an

equitable remedy, condition precedent of ‘readiness and

willingness’ has to be specifically pleaded and proved by

the buyer for enforcement of the specific performance

[refer K. Prakash v. B. R. Sampath Kumar, 2015 (1)

SCC 597]. She further submits that there are only vague

averments in the pleading that the buyer was ready and

willing to perform his part of the contract. There is no

dispute with regard to the proposition that in a suit for

specific performance burden is always on the plaintiff to

aver and prove that they are always ready and willing to

perform their part of the contract throughout. Section

16 (C) of the specific relief act mandates that not only 16 there be a plea of readiness and willingness but it also

has to be proved by acceptable evidence. Requirement of

fulfilling the conditions under section 16 (C) of the

Specific Relief Act, 1963, is a condition precedent for

obtaining the relief of specific performance. Whereas in

the instant case the plaint as well as the documents

available on record goes to show that it was specifically

pleaded that buyer was ready and willing to perform his

part of the contract. Additionally the evidence of PW1

also proves readiness and willingness on the part of the

buyer. In light of the aforesaid discussion, the

contention of the Ld. Senior counsel appearing on behalf

of the seller is repelled as being meritless.

22. Lastly, it is vehemently contended by the Ld. Senior

counsel appearing on behalf of the seller that this Court

should not exercise its discretion to grant specific

performance in favor of the buyer, as the same would be

inequitable for the seller. It was submitted that the price

of the property has increased manifold and further 17 during the pendency of litigation, the seller has executed

another contract of sale with another person. There is

no dispute that the execution of the contract was made

subject to satisfactory survey which is a binding

obligation upon the seller and he has failed to perform

his part of the obligation to the satisfaction of the buyer.

Although the measurement was mentioned in the sale

deed, but from perusal of other clauses in the agreement

would reveal that the said measurement of 1.87 ¾ Acres

was a tentative figure mentioned under the agreement.

23. The buyer has taken prompt steps to file a suit for

specific performance as soon as the execution of the sale

was stalled by the seller. From this discussion, it is clear

that the buyer has always been ready and willing to

perform his part of the contract at all stages. Moreover it

is the seller who had always been trying to wriggle out of

the contract. Now the seller cannot take advantage of

their own wrong and then plead that the grant of decree

of specific performance would be inequitable. Escalation 18 of prices cannot be a ground for denying the relief of

specific performance. Specific performance is an

equitable relief and granting the relief is the discretion of

the court. The discretion has to be exercised by the

court judicially and within the settled principles of law.

Absolutely there is no illegality or infirmity in the

judgments of the courts below which has judicially

exercised its discretion and the High Court ought not to

have interfered with the same.

24. In light of the above discussion, while allowing this

appeal, we set aside the judgment of the High Court and

restore back the judgment of the trial court. There will

be no order as to costs.

……………….J. (N. V. Ramana)

…………………J. (Prafulla C. Pant)

NEW DELHI DATE- AUGUST 22, 2017 19 ITEM NO.1501 COURT NO.10 SECTION XII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No.10741 of 2017 @ Petition(s) for Special Leave to Appeal (C) No(s). 18738/2014

RAMATHAL Petitioner(s)

VERSUS

MARUTHATHAL . & ORS. Respondent(s)

(HEARD BY HONBLE N.V. RAMANA AND HONBLE PRAFULLA C. PANT, JJ.)

Date : 22-08-2017 These matters were called on for pronouncement of judgment today.

For Petitioner(s) Mr. T. Harish Kumar, AOR Mr. Navnnet Dugar, Adv.

For Respondent(s) Ms. Anushree Menon, Adv.

For Mr. Vikas Mehta, AOR

Mr. Pukhrambam Ramesh Kumar, AOR

Mr. V. Ramasubramanian, AOR

Mr. R. C. Gubrele, AOR

Hon'ble Mr. Justice N.V. Ramana pronouced the judgment of the Bench comprising His Lordship and Hon'ble Mr. Justice Prafulla C. Pant.

Leave granted.

The appeal is allowed in terms of the signed reportable judgment.

There will be no order as to costs.

(SUKHBIR PAUL KAUR) (S. SIVARAMAKRISHNA) AR CUM PS ASST.REGISTRAR

(Signed reportable judgment is placed on the file)

20