Urvashi Aggarwal vs Kushagr Ansal

1 | Page Aggarwal) took the first and second floors of the property

at 82, Jor Bagh, New Delhi on rent from Smt. Suraj Kumari

(since deceased). After the death of Justice Chander Bhan

Aggarwal in 1973, the tenancy of first and second floors of

the property was transferred to M/s Vinod Industries

Limited (of which the First Plaintiff was a Director). On

05.10.1974, the First Plaintiff and her son Rajiv Chander

Aggarwal (since deceased) entered into an agreement with

Smt. Suraj Kumari (original Defendant No.1) for the sale of

the above property (‘Agreement’). The consideration for

the sale of the property was fixed at Rs.1,85,000/-. The

relevant conditions pertaining to the payment of the

amount of consideration and the other rights that were

conferred on the parties were mentioned in the plaint.

According to the Plaintiffs, the sale deed had to be

executed by the Defendant No.1-Smt. Suraj Kumari after

obtaining permission from the Land and Development

Office (L&DO) and from the Income Tax Department. It

was stated that the Plaintiffs paid an amount of

Rs.20,000/- on 05.10.1974, Rs.40,000/- on 31.01.1975 and

Rs.10,000/- on 26.12.1975. According to them, they were

2 | Page put in proprietary possession of the premises on payment

of Rs.70,000/- as stipulated in the Agreement.

3. M/s Vinod Industries stopped paying the rent to Smt.

Suraj Kumari as it had become a tenant of the Plaintiffs as

per the Agreement. The tenant of the ground floor- Shri

A.C. Deb had to pay the rent to the Plaintiffs as per the

Agreement. The Plaintiffs permitted the First Defendant to

collect the rent from Shri Deb, the tenant of the ground

floor which would be adjusted later against the balance

amount payable by them towards the sale consideration.

Shri Deb died in 1985 and his wife continued to live on the

ground floor. Mrs. Deb vacated the ground floor premises

at the end of September, 1987. After Mrs. Deb vacated the

ground floor, the Defendants started making repairs. On an

enquiry made by the Plaintiffs, the Defendants informed

them that the Defendant No.4 intended to occupy the

ground floor for which reason the repairs were being made.

The Plaintiffs demanded specific performance of the

Agreement on 13.10.1987 but the Second Defendant

refused to convey the property which gave rise to a cause

of action to file the suit. The Plaintiffs stated that from

1975 onwards the First Plaintiff’s husband was

3 | Page continuously enquiring with the Second Defendant about

the status of the permission by the L&DO. He was being

informed that the permission was not granted. The

Plaintiffs pleaded that they were always ready and willing

to perform their part of the Agreement and alleged that

the Defendants were guilty of breach of the Agreement.

On the basis of the said averments, the Plaintiffs sought a

decree for specific performance and a direction to the

Defendants to execute the sale deed for the suit property,

a prohibitory injunction restraining the Defendants from

occupying or permitting others to occupy the ground floor

of the said property, and a mandatory injunction to the

Defendants to remove the wall constructed on the side

gate of the property.

4. The Defendants filed a written statement in which

they contended that the suit was barred due to laches and

that it was liable to be dismissed as the Plaintiffs were not

ready and willing to perform the essential terms of the

Agreement. There was no denial about the execution of

the Agreement dated 05.10.1974 but the averment

pertaining to the Plaintiffs complying with the conditions of

the Agreement was seriously disputed by the Defendants.

4 | Page According to the Defendants, time for payment was of the

essence of the contract and the Plaintiffs failed to make

the payment as stipulated in the Agreement. The

allegation made by the Plaintiffs that inquiries were being

made about the status of the application before the L&DO

was denied. The Defendants categorically stated in the

written statement that the Agreement was never changed,

varied, or modified. The Defendants asserted that the

Plaintiffs were never put in proprietary possession of any

part of the property, the tenant on the ground floor

continued to pay the rent to the First Defendant, the

house-tax, ground rent etc. were being paid by the First

Defendant, and M/s Vinod Industries stopped paying rent

to the First Defendant. Apart from the other averments, the

Defendants also stated in the written statement that a

petition for eviction against the tenant on the ground floor

was filed by the Defendants and they ultimately settled the

matter with Mrs. Deb who vacated in 1987. Finally, the

Defendants pleaded that the Plaintiffs were never ready

and willing to perform their part of the contract and hence,

the suit was liable to be dismissed.

5. The Trial Court framed the following issues:

5 | Page “1. Whether the suit is within limitation?

2. Whether the suit is not bad for misjoinder of parties in cause of action?

3. Whether the Agreement to sell dated 5/10/74 was amended and varied by the parties with regard to payment of Rs. 50,000/- upto 31/10/74 and the balance sale consideration in installments of Rs.7,000/-

commencing from January 1975 till full payment of the sale consideration as alleged? If so, to what effect?

4. Whether the amount of Rs. 10,000 paid by the plaintiffs was towards installment of Rs. 50,000 as alleged by the plaintiff?

5. Whether the plaintiff was put into proprietary possession of the entire suit property by defendant no. 1 as alleged in para 15 of the plaint?

6. Whether there is a subsisting Agreement to sell capable of specific performance as alleged?

7. Whether the defendant committed breach of the contract?

8. Whether the plaintiff has been ready and willing to perform the Agreement to sell?

9. Whether time for payment was not the essence of the contract, as alleged by the plaintiff?

10. Whether the Agreement to sell was breached, repudiated, abandoned, and given up, as alleged by the defendant?

11. Whether the plaintiffs are entitled to specific performance of the Agreement to sell dated 5/10/74 and to what other relief or reliefs are the plaintiffs entitled to and against whom?

12. Relief.”

6. The Trial Court dismissed the suit by concluding that

time was of the essence of the Agreement. The Plaintiffs

were held to be neither ready nor willing to perform their

part of the Agreement and that the suit was filed beyond

the prescribed period of limitation. The High Court

dismissed the Plaintiffs’ appeal and affirmed the judgment

of the Trial Court agreeing with the submissions of the

Defendants that the suit was barred by limitation and that

6 | Page the Plaintiffs failed to prove their readiness and willingness

to perform the essential terms of the Agreement.

7. Before embarking upon the adjudication of the

dispute, it would be relevant to refer to the relevant terms

of the Agreement entered into between the Plaintiffs and

the Defendants. The suit property was agreed to be sold

at a price of Rs.1,85,000/-. The first instalment of

Rs.20,000/- was to be paid at the time of signing the

Agreement and the second installment of Rs.50,000/- was

due by 31.10.1974. Balance amount was payable in

instalments of Rs.7,000/- per month beginning from the 1st

week of January, 1975 until the total amount was paid. No

interest was payable on the deferred payment schedule till

December, 1975. A simple interest at the rate of 12% p.a.

was payable on the balance amount from January, 1976

every month along with the installments of Rs.7,000/- per

month. The rate of interest was increased from 12% to

24% if all the payments were not made as per the

schedule. On payment of the first two installments of

Rs.20,000/- and Rs.50,000/-, the Plaintiffs were entitled to

receive the rents from Shri A.C. Deb who was residing on

the ground floor as a tenant and M/s Vinod Industries. The

7 | Page liability for payment of the house tax, ground rent and all

other outgoings had to be borne by the Plaintiffs after the

Plaintiffs started receiving the rents from Shri A.C. Deb and

M/s Vinod Industries. The Plaintiffs were made responsible

for taking steps to evict the tenants. The Defendants had

to get the necessary permission to sell the property from

the L&DO before the date of execution of the sale deed as

well as the necessary permission from the Income Tax

Authorities. Clause 10 of the Agreement provided that the

sale deed shall be executed before 31.03.1975. In case of

failure on the part of the Defendants to execute the sale

deed, the Plaintiffs were given the right to get the suit

property conveyed by specific performance through the

Court.

8. We have heard Mr. Jayant Bhushan, learned Senior

Counsel for the Appellants/Plaintiffs and Mr. Sachin Datta,

learned Senior Counsel for the Respondents/Defendants.

Mr. Jayant Bhushan submitted that the suit was filed within

the prescribed period of limitation and the findings of the

Courts below that the suit was barred by limitation are

unsustainable. According to him, no cause of action

accrued for filing a suit on 31.03.1975, which was the date

8 | Page fixed for execution of the sale deed, as there was no

permission granted by the L&DO for transfer of the

property as on that date. He submitted that a sale deed

could not have been executed without the permission from

the L&DO. He relied upon Section 63 of the Indian Contract

Act, 1872 to urge that the date fixed for execution of the

sale deed could be extended. There is no dispute about the

pendency of the application filed by Smt. Suraj Kumari

before the L&DO even on 31.03.1975. He argued that the

conduct of both the Plaintiffs and the Defendants after

31.03.1975 would show that the date fixed for execution of

the sale deed on 31.03.1975 stood extended. He stated

that once the date fixed in the Agreement was extended

and no new date was fixed, the second part of Article 54 of

the Schedule to the Limitation Act, 1963 (Limitation Act)

would apply and the limitation for filing the suit would start

from the date of refusal to perform the Agreement. There

was no refusal to perform the Agreement by the

Defendants until 1987 and thereafter, the suit was filed

within the period of limitation. Mr. Bhushan contended that

Section 16(c) of the Specific Relief Act, 1963 stood

complied with as the Plaintiffs pleaded and proved their

9 | Page readiness and willingness to perform the essential terms of

the Agreement. He submitted that there was no doubt

about the financial capacity of the Plaintiffs in paying the

balance sale consideration due to their affluent

background. In view of the friendly relations between Vinod

Chander Aggarwal, the husband of the First Plaintiff and

Sushil Ansal, Defendant No.2 (not a party to the

Agreement), it is submitted by Mr. Bhushan that the

Plaintiffs believed that the application for permission

before the L&DO was still pending and in any event, the

Defendants did not inform the Plaintiffs about the

permission granted by the L&DO in the year 1977.

Assuming that time is the essence of the Agreement,

according to Mr. Bhushan, Section 55 of the Indian

Contract Act provides for the contract becoming voidable

at the instance of the Plaintiffs which option was not

exercised by them. In case, time is not the essence, the

Plaintiffs are entitled for damages. He further stated that

the Defendants did not terminate the Agreement and did

not refund the amount paid by the Plaintiffs toward part of

the sale consideration.

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9. Mr. Sachin Datta, learned Senior Counsel appearing

for the Defendants submitted that the limitation for filing

the suit started on 31.03.1975, which was the date fixed

for performance of the Agreement. As the suit was not filed

within three years from that date, it was barred by

limitation. He referred to the findings recorded by the

Courts below that the agreement was neither varied nor

modified. He further submitted that the non-fulfilment of

the condition pertaining to obtaining permission cannot be

an excuse for the Plaintiffs to not file a suit for specific

performance within the prescribed period of limitation.

According to him, the second part of Article 54 of the

Schedule to the Limitation Act is not applicable to this

case. He asserted that there was an inordinate delay in

filing the suit which by itself is a ground for dismissal of the

suit. The torpid silence of the Plaintiffs in not resorting to a

legal remedy within a reasonable period tantamounts to

their abandoning the Agreement. Finally, Mr. Datta

submitted that the findings of fact on the point of

readiness and willingness cannot be interfered with by this

Court in exercise of its jurisdiction under Article 136 of the

Constitution of India.

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10. There are essentially two points that arise for our

consideration in this case. The first relates to limitation. A

specific date i.e. 31.03.1975 was fixed for performance of

the Agreement, i.e. execution of the sale deed. As per

Article 54 of the Schedule to the Limitation Act, when a

date is fixed for performance of the contract, the period of

limitation is three years from such date. The cause of

action has arisen on 31.03.1975 and the suit ought to have

been filed within three years from that date. Admittedly,

the suit was filed only in the year 1987. However, the

submission of the Plaintiffs is that the date fixed for

performance of the Agreement stood extended by the

conduct of the parties. It was submitted that even after

31.03.1975, the Defendants were pursuing the application

filed for permission before the L&DO with the cooperation

of the Plaintiffs. The further submission of the Plaintiffs is

that without the permission of the L&DO, the sale deed

could not have been executed on 31.03.1975. Therefore,

the Plaintiffs submit that the date fixed by the agreement

for the execution of the sale deed stood extended. It is

settled law that the vendee cannot claim that the cause of

action for filing the suit has not arisen on the date fixed in

12 | P a g e the contract on the ground that certain conditions in the

contract have not been complied with. (See: Fateh

Nagpal & Co. v. L.M. Nagpal1, Vishwa Nath Sharma

v. Shyam Shanker Goela2 and K. Raheja

Constructions Ltd. v. Alliance Ministries3).

11. On a detailed consideration of the evidence on record,

the Courts below have come to the conclusion that the

clauses in the Agreement have neither been amended nor

varied. Merely because the Defendants were pursuing the

application filed for permission before the L&DO, it cannot

be said that the date fixed for performance of the

Agreement stood extended. We agree with the findings of

the Courts below that the suit ought to have been filed

within three years from 31.03.1975 which was the date

that was fixed by the Agreement. The submission made on

behalf of the Plaintiffs that part II of Article 54 of the

Schedule to the Limitation Act applies to this case and that

the suit was filed within limitation as the refusal by the

Defendants was only in the year 1987 is not acceptable.

Moreover, the Plaintiffs have not performed their part of

the Agreement within a reasonable period. As per the

1 (2015) 8 SCC 390, para 6 2 (2007) 10 SCC 595, para 12 3 1995 Supp (3) SCC 17, para 4

13 | P a g e Agreement, the Plaintiffs were given the right to get the

sale deed executed through the Court in case of failure on

the part of the Defendants to execute the sale deed by

31.03.1975. The Plaintiffs filed the suit 12 years after the

date fixed for performance. It is relevant to refer to the

judgment of this Court in K.S.Vidyanadam v. Vairavan4

wherein it was held as follows:

“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.”

12. The silence maintained by the Plaintiffs for about 12

years amounted to abandonment of the Agreement and we

approve the finding in this regard made by the Trial Court.

13. The Courts below have found that the Plaintiffs failed

to prove their readiness and willingness to perform their

part of the Agreement. The failure on the part of the

Plaintiffs in not paying the monthly instalments of

Rs.7,000/-, not collecting the rent from the tenant on the

ground floor, not paying the house tax etc., and not taking

any action for eviction of the tenant on the ground floor

are some of the points held against the Plaintiffs by the

Courts below which show that they were not ready and 4 (1997) 3 SCC 1

14 | P a g e willing to perform their part of the Agreement. There is no

compelling reason to re-examine the said findings of fact

by the Courts below in exercise of our jurisdiction under

Article 136 of the Constitution of India. We are in

agreement with the view of the Courts below that the

Plaintiffs have not proved their readiness and willingness

to perform their part of the Agreement and, therefore, are

not entitled to a decree of specific performance.

14. The High Court directed a refund of Rs.70,000/- which

was paid by the Plaintiffs to the Defendants in 1975 with

interest at the rate of 24% p.a.. In view of the peculiar

facts of this case in which the Plaintiffs have paid

Rs.70,000/- way back in 1975 and the steep increase in the

price of the property over time, we are of the considered

opinion that the Plaintiffs are entitled to a higher amount

than what was granted by the High Court. Instead of the

refund of Rs.70,000/- with interest at the rate of 24% p.a.,

we direct the Defendants to pay Rs. 2,00,00,000/- (Rupees

Two Crores) to the Plaintiffs within a period of eight weeks

from today.

15. Subject to the above modification, the appeal is

dismissed.

15 | P a g e ..............................J. [L. NAGESWARA RAO]

..............................................J. [MOHAN M. SHANTANAGOUDAR]

New Delhi, March 06, 2019.

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