Mukhtiar Singh vs M.L.Goel and another

R.N. Mittal, J.

This is a first appeal of the defendant against the judgment and decree of the Subordinate Judge, Ist Class, Chandigarh, dated 28th May, 1981.

Briefly,the facts are that Mukhtiar Singh defendant is the owner of House No. 171, sector 20A, Chandigarh. He agreed to sell it to the plaintiffs vide agreement dated 21st May, 1977 (Exhibit P.4) for an amount of Rs. 78,000/. The amount of Rs. 20,000/ as earnest money was paid at the time of execution of the agreement. It was agreed between the parties that the saledeed was to be executed on or before 21st September, 1977, and the balance amount of Rs. 58,000/ was to be paid by the plaintiffs before the Sub Registrar at the time of registration of the document. It was also agreed that the defendant would hand over all the necessary papers which were required to be produced before the Life Insurance Corporation, Chandigarh, by the plaintiffs, for obtaining loan for purchase of the house. On 20th September, 1977, the plaintiffs paid an amount of Rs. 9000/ more as earnest money to the defendant and the latter agreed to extend the time for execution of the saledeed upto 21st April, 1978. The agreement, Exhibit P.6 in that regard was executed between the parties. It is averted by the plaintiffs that they had always been ready and willing to perform their part of the agreement. The defendant failed to perform his part of the agreement. It is also averred that they requested the defendant several times to execute the sale deed but he did not do so. Consequently, they filed a suit for specific performance of the agreement and in the alternative for recovery of Rs. 69,310/ (Rs. 58,000/) on account of damages and Rs. 11,310/ on account of interest at the rate of 18 per cent per annum upto 20th May, 1979 with future interest at the rate of 19% per cent per annum from the date of filing of the suit till its realisation.

The suit was contested by the defendant who inter alia pleaded that the plaintiffs were not ready and willing to perform their part of the agreement, whereas he was always ready and willing to perform their part of the agreement. It is next averred that plaintiff No. 1 gave an affidavit dated 13th February, 1978, that he had paid Rs. 29,000/ to the defendant in two instalments as loan free of interest and that the same could be paid back by him in easy instalments. In view of the said affidavit, it is stated that the plaintiffs could ask only for the refund of the amount of Rs. 29,000/ only. Some other pleas were also taken but those do not survive in appeal.

The learned trial court held that the plaintiffs were always ready and willing to perform their part of the agreement and the defendant failed to perform his part of the agreement. In view of the aforesaid finding,the suit of the plaintiffs for specific performance was decreed on payment of Rs. 49,000/ and the defendant was directed to execute the sale deed in their favour on 2nd July, 1981. The defendant has come up in appeal against the said judgment and decree to this court.

The only issue which has been challenged by the defendant in this court is issue No. 4, which is as follows:

"Whether the plaintiffs were always ready and willing to perform their part of the contract ?" O.P.P.

Therefore, the question that arises for determination is as to whether the plaintiffs were ready and willing to perform their part of the contract. The learned counsel for the appellant has vehemently contended that it was incumbent on the plaintiffs to prove that they had the requisite money with them to pay to the defendant on 21st April, 1978 and meet the expenses of the sale deed. According to him, the plaintiffs had not the required amount and, therefore, they backed out of the contract.

I regret my inability to accept the contention. As already stated above, the sale amount was Rs. 78,000/ out of which the plaintiffs had paid Rs. 29,000/ as earnest money. The balance amount of Rs. 49,000/ was to be paid by the plaintiffs at the time of execution of the saledeed. It was one of the terms of the agreement to sell dated 21st May, 1977, Exhibit P.4, that the defendant would produce and sign all papers/documents required by the plaintiffs for submissiion to the Life Insurance Corporation of India, Chandigarh, for obtaining loan for purchase of the house without any hesitation and delay. It was also provided that he would cooperate with the purchasers for obtaining the loan from the Corporation.From the clause it is clear that the plaintiffs did not have full amount of Rs. 49,000/ with them and that they had to raise some loan from the Corporation. They were intimated by Corporation vide letter dated 17th March, 1978, Exhibit P.1 that the Corporation had agreed to advance a loan of Rs. 39,000/ to them subject to their acceptance of the terms and conditions of the loan. They were requested to deposit all the title deeds, original sanctioned plan, etc to enable it to get the property evaluated from an architect and the title of the property investigated from the legal adviser. After receiptof the letter, the plaintiffs requested the defendant to hand over the documents to them which he failed to do. Consequently, they got served a notice dated 21st March, 1978, exhibit P.11, on him through their counsel in which they made a grievance that on account of their failure to hand over the documents, they were suffering loss due to the fact that the Corporation had started charging from the interest. They consequently, requested that the original documents be handed over to them within seven days from the receipt of the notice. In spite of the said notice, the defendant failed to hand over the documents to them. From the circumstances, it is evident at the plaintiffs had made arrangement for a loan of Rs. 39,000/ from the Corporation and it was on account of noncooperation of the defendant that they were unable to get the same. Had he handed over the documents to the plaintiffs, they would have been able to draw the loan amount from the Corporation. Clause (c) of section 16 of the Specific Relief Act, 1963 provides that the plaintiffs is bound to prove that he had always been ready and willing to perform the essential terms of the contract which were to be performed by him other than the terms the performance of which had been prevented by the defendant. As already observed above, the loan of Rs. 39,000/ could not be obtained by the plaintiffs on account of nonco operation of the defendant. Therefore, they are relieved of the burden to show that they had not been able to make arrangement for Rs. 39,000/ out of the total amount.

Now, it is to be seen whether they had the balance amount with them for performing their part of the agreement. The first thing to be determined is as to what was the total amount which the plaitiffs were required to have on 21st April, 1978. The sale consideratiion was Rs. 78,000/, out of which an amount of Rs. 29,000/ was paid by the plaintiffs and Rs. 39,000/ could not be obtained by them because of the noncooperation of the defendant. The balance amount comes to Rs. 10,000/. Besides, they were liable to pay the stamp duty and registration charges which amount to Rs. 6,940/ .Thus, they had to show that they had Rs. 16,940/ with them on 21st April, 1978. Exhibits D.2 and D.3 are the copies of the accounts of plaintiff No. 1 with the State Bank of Patiala and the Punjab National Bank, both situated in Sector 17C, Chandigarh. In exhibit D.2 an amount of Rs. 6,213.20 was standing to his credit on 21st April, 1978. Later, on 24th April, 1978, an amount of Rs. 3,200/ was deposited by him. Thus, the total amount became Rs. 9,413.20. In Exhibit D.3, an amount of Rs. 7,474 / was lying to his credit on 21st April, 1978. Thus, on 21st April, 1978, he had Rs. 13,687/ and on 24th April, 1978, Rs. 16,887/ to his credit in the Banks.

Learned counsel for the appellant has urged that the crucial date is 21st April, 1978, on which date he was short of Rs. 3,200/. There is no substance in this contention. As already observed, the plaintiffs showed that Rs. 16,887/ were lying in the account of plaintiff No. 1 on 24th April, 1978, three days after the alleged crucial date. Plaintiff No. 1 appeared in the witnessbox and deposed that the plaintiffs had the requisite amount on the relevant date.There is no ground to disbelieve his statement. An amount of Rs. 3,200/ was not such a huge amount which the plaintiffs were expected to keep in the bank and not with themselves. Therefore, I am of the view that the plaintiffs had requisite money with them to pay to the defendant and to meet the expenses of the saledeed on 21st April, 1978.

It is next contended by the learned counsel for the appellant that the plaintiffs had to show that they had the requisite amount from the date of execution of the saledeed till the date of the decree which they failed to show.

I do not find any force in this submission too. No provision of law or any precedent has been brought to my notice in that regard. The relevant date for showing that the plaintiffs had the funds to pay the consideration was the date when, according to the agreement, the contract was to be performed. Therefore, I reject the submission of the counsel.

Mr. A.N. Mittal then sought to urge that the plaintiffs did not aver that they specifically applied to the defendantappellant to perform his part of the agreement nor tendered the consideration to him and demanded transfer of the property. Thus, they did not conform to the requirements prescribed in Forms Nos. 47 and 48 of the Appendix `A'' to the First Schedule of the Code of Civil Procedure nor proved the said facts.He, in support of the contention, made a reference to Ouseph Varghese v. Joseph Aley, 1969(2) S.C.C 539, Rajendra Prasad Rai and another v. Rajdeva Rai and another, A.I.R 1974 Allahabad 294 and Smt. Raj Rani Bhasin and others v. S. Kartar Singh Mehta, A.I.R 1975 Delhi 137.

The argument of the learned counsel has also not impressed me. Reference in this regard may be made to section 16(c) of the Specific Relief Act, 1963, which reads as follows:

"16. Specific performance of contract cannot be enforced in favour of a person .... (c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.

Explanation For the purpose of clause (c),

(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;

(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction."

From a reading of the above provision, it is clear that the plaintiff has to aver and prove that he has performed or that he has always been ready and willing to perform his part of the contract. Paragraph No. 2 of Form No. 48 ibid says that the plaintiffs has to state that he tendered the money to the defendant and demanded a transfer of the property by an instrument. Paragraph No. 2 of Form No. 47 ibid provides that the plaintiff is required to say that he applied to the defendant specifically to perform his part of the agreement but the defendant failed to do so. It is next provided in both the forms that he has further to aver that he was ready and willing to perform his part of the agreement. From the language of the forms, it is evident that they conform to section 16(c) ibid. It may be relevant to point out that there was no provision similar to section 16(c) of the 1963 Act in the Specific Relief Act, 1877. It was, however, consistently held by the courts that the plaintiff is required to aver and prove the aforesaid ingredients in a suit for specific performance. I get some support in that view from Quseph Varghese''s case (supra), wherein it has been held that a suit for specific performance has to conform to the requirements prescribed in Forms 47 and 48 of the First Schedule. In a suit for specific performance, it is incumbent on the plaintiff not only to set out agreement on the basis of which he sues in all its details, he must go further and plead that he has applied to the defendant specifically to perform the agreement pleaded by him but the defendant has not done so. It is then observed that he must further plead that he has been and is still ready and willing to specifically perform his part of the agreement.

Now, it is to be seen whether the plaintiffs have complied with the provisions of section 16(c) of the 1963 Act read with forms Nos. 47 and 48. In para 8 of the plaint they have averred that they informed the defendant regarding the sanction of the loan vide registered notice dated 21st March, 1978, through their counsel Shri Tilak Raj Arora, which was received by the defendant. However, the defendant was not ready to perform his part of the agreement. It is further averred by the plaintiffs that they were always ready to do so. It may be highlighted that when the defendant did not give the documents which the plaintiff were required to hand over to the Life Insurance Corporation, the latter served a notice dated 21st March, 1978 (Exhibit P.11) through their counsel requiring him to file the original documents to the Corporation. It was further stated in the notice that the plaintiffs had approached him for supply of the documents even on that date but he abused them and shunted them out from his residence. The defendant neither supplied the documents to the plaintiffs nor replied to the notice. It is evident from the notice that the plaintiffs complied with clause (2) of Form 47. As the defendant failed to provide them with the documents, it did not become necessary for them to tender the money and make allegations in the plaint in that regard. The above conclusion finds support from clause (c) of section 16 and Explanation (i) to that clause of the Specific Relief Act, 1963. It is specifically provided in clause (c) that the plaintiff need not perform those terms of the contract which have been prevented by defendant. Explanation (i) further provides that in case a contract requires payment of money,it is not necessary for the plaintiff to actually tender to the defendant any money except when so directed by the Court. The provision is incorporated for the first time in the 1963 Act. The plaintiffs could if they liked,file a suit at that stage against the defendant for directing him to supply the documents. They could also wait till the date when the contract was to be actually performed and file a suit for specific performance. They adopted the latter course.

In Rajendra Prasad Rai''s case (supra), the plaintiff did not specifically plead that he had been ready and willing to perform his part of the agreement. For that reason, it was observed by the learned judge that he had not complied with paragraph 3 of Form 47 which provides that the plaintiff ought to make an averment that he had been and was ready and willing to perform his part of the agreement. He even did not make a statement to that effect when he appeared as a witness. Therefore, the aforesaid case is distinguishable and the learned counsel cannot derive any benefit from the observations therein.

The observations in Smt. Raj Rani Bhasin''s case (supra) were that by readiness was meant the capacity of the plaintiff to perform the contract.That included his financial ability to pay the purchase price. There is no dispute about the proposition. I have already held that the plaintiffs in the instant case had the requisite money with them to pay to the defendant and to meet the expenses of the saledeed on 21st April, 1978.

The learned counsel for the appellant also made a reference to Saral Kumar Chatterjee v. Madhusudan Auddy, A.I.R 1964 Calcutta 556, wherein it was held that the fact that the defendant had repudiated the contract and refused to perform his part of the bargain would not relieve the plaintiff of his obligation to perform his part of the contract. In such a case, the plaintiff had two remedies open to him. It was further observed that he might sue in equity for specific performance or at law for the breach. There is no dispute about the said proposition too. In the facts and the circumstances of the case, it was held that the plaintiff had failed to establish his readiness and willingness to perform his part of the contract and consequently the suit for specific performance was dismissed. The above case is also not helpful to the appellant.

Consequently, I reject the above submission of the learned counsel for the appellant.

The learned counsel for the appellant further submits that the plaintiff respondent No. 1 gave an affidavit on 13th February, 1978, to the defendant to the effect that he had given loan to the defendant to the tune of Rs. 29,000/ in two instalments of Rs. 20,000/ and Rs. 9,000/, respectively, free of interest, which was payable to him in easy instalments. According to the counsel, the original contract came to an end because of the affidavit and, therefore, the plaintiffs are not entitled to specific performance of the agreement.

The argument has also no substance. Plaintiff No. 1 has stated that the affidavit was obtained by fraud. The argument finds support from the petition (exhibit P.8), dated 17th April, 1978, filed by the appellant under section 34 of the Arbitration Act in objection petition under Order 21, Rule 58,Code of Civil Procedure, moved by the plaintiffrespondents in execution case Smt. Swaran Kaur v. Mukhtiar Singh. Therein he prayed that the objection petition was liable to be stayed. It may be mentioned that the property in dispute was under mortgage with Smt. Swaran Kaur and she obtained a decree for recovery of a sum of Rs. 47,000/. In execution of that decree, objections were filed by the plaintiffrespondents. The appellant, in view of the arbitration clause in the agreement, made the abovesaid prayer of stay. In case the agreement had come to an end, the appellant would not have relied upon the clause and prayed for staying the proceedings in the objection petition which is dated 17th April, 1978. There is also on the record a draft saledeed dated 3rd May, 1978, Exhibit P.3, which was filed by the parties in the Estate Office with an application for seeking permission to transfer the property in favour of the plaintiff respondents. It bears the signatures of both the parties. There is nothing regarding the affidavit in this document too. If the agreement had ceased to exist, there was no reason as to why the defendant would have signed the document. After taking into consideration all the aforesaid circumstances, I am of the opinion that the appellant cannot take benefit from the affidavit, Exhibit D.I.

The last contention of the learned counsel for the appellant is that the contract cannot be enforced partially and, therefore, instead of a decree for specific performance, a decree for compensation be granted.

I do not agree with the above contention of the learned counsel. It is true that the appellant had to hand over the documents of title to the respondents for obtaining loan and thereafter he had to execute the sale deed, but both the terms stand on independent footing. It is provided in sub section (4) of section 12 of the 1963 Act that when part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part. The contract in the present case can be split up in two parts and each part stands on a separate and independent footing from the other. It is also well settled that where the contract itself contains a provision for its piecemeal execution, the contract is treated as divisible. After taking into consideration the aforesaid circumstances, I am of the view that the contract for specific performance is enforceable. It is common knowledge that when the prices of the properties are going up, the sellers generally want to back out of the contracts of sale on one pretext or the other. The defendant is no exception to this. The ordinary rule, as held in Parkash Chandra v. Angadlal etc., A.I.R 1979, Supreme Court 1241, is that specific performance should be granted; and that it ought to be denied only when equitable considerations point to its refusal and the circumstances show that the damages would constitute an adequate relief. In the present case, there are no circumstances to show that the relief of specific performance should be refused to the plaintiff respondents. The damages would not constitute an adequate relief as well, as there is phenomenal rise in the price of real estate, especially in Chandigarh.

After taking into consideration all the aforesaid facts and circumstances, I do not find any merit in the appeal and dismiss the same with costs.