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CASE NO.: Appeal (civil)  937 of 2006

PETITIONER: R.K. Parvatharaj Gupta

RESPONDENT: K.C. Jayadeva Reddy

DATE OF JUDGMENT: 02/02/2006

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T [Arising out of S.L.P. (Civil) No. 18120 of 2005]

S.B. SINHA, J :

       Leave granted.

       This appeal is directed against a judgment and order dated 09.03.2005   passed by a learned Single Judge of the High Court of Karnataka dated  09.03.2005 in RSA No.266 of 2000 whereby and whereunder the Second  Appeal filed by the Respondent herein was allowed decreeing the suit for  specific performance filed by the plaintiff-respondent.   

The facts relevant for this case are as under :

       The Appellant was at all material times, the owner of agricultural  lands bearing Survey Nos.12, 13, 14 and 16 situated in Village  Sheganayakanahalli Village, Sarjapur Hobli, Anekal Taluk.  The parties  hereto entered into an agreement for sale on or about 13.10.1982, wherefor a  sum of Rs.65,000/- was fixed as consideration.   Allegedly, a sum of  Rs.16,500/- was paid to the Appellant  by way of earnest money whereupon  the Respondent was put in physical possession of the lands in question.   Allegedly, a sale deed was to be executed and registered  upon  disposal of  an appeal pending before the Karnataka High Court.   

       It is not in dispute that the Appellant had taken a sum of Rs.42,000/-  by way of loan from the Central Bank of India wherefor the original title  deeds were deposited therewith.  The Plaintiff-Respondent was to deposit  the mortgage amount in the Bank in terms of the said agreement for sale.   On or about 24.04.1984, the Appellant herein served a notice upon the  Respondent herein, alleging that he had not performed his part of the  contract, having not deposited the requisite amount in the Central Bank of  India towards the agricultural loan raised by him on the security of the  property.  In connection with the said loan, the Central Bank of India had  filed a suit wherefor a notice was served upon him.  In that situation, the  aforementioned notice was issued asking the Respondent to deposit the  amount to the Central Bank of India forthwith and  get the sale deed  executed within fifteen days from the date of receipt of the notice failing  which the agreement to sell would stand cancelled and the Appellant would  be at liberty to deal with the property to the best of his advantage and in such  case, if he suffers any damages, the Respondent would be responsible  therefor.   

The amount admittedly was not paid to the Central Bank of India by  the Respondent in terms of the said notice.  He allegedly deposited a sum of  Rs.10,000/- on 25.05.1985.  The said sum of Rs.10,000/- evidently was not

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the entire amount required  to be deposited by way of repayment of the  agricultural loan raised by the Appellant herein.  A suit for specific  performance of the contract and injunction, was filed by the Respondent on  26.09.1989.  The said suit was decreed by the trial court, inter alia, holding  that the same was not barred by limitation.  It was further held that though  there had been a stipulation for completion of  the  deed of sale within a  period of four months from the date of the agreement; in view of the fact that  the Appellant was also to perform his obligation to inform the Respondent  about the disposal of the case pending before the High Court and as no such  information was given as regard the status of the case, a decree for  permanent injunction had to be passed in his favour.  The Appellant herein  preferred an appeal thereagainst and by the judgment and order dated  01.01.2000, the said appeal was allowed on the ground that the suit was  barred by limitation.   A Second Appeal came to be filed by the Respondent  herein wherein the following purported substantial question of law had been  framed :        

"Whether the finding of the first appellate Court that the  suit of the plaintiff is barred by time by reversing the  judgment of the trial court is perverse, is contrary to law  and the material on record?

       The High Court reversed the judgment and decree passed by the First  Appellate Court and came to the conclusion that as the time was not of the  essence of the contract, the suit was not barred by limitation.   The High  Court while allowing the second appeal remitted the matter back to the First  Appellate Court  with the direction to dispose of the same insofar it related  to the relief for specific performance of the agreement of sale dated  13.10.1982 in accordance with law.

       Mr. S.N. Bhat, learned counsel appearing on behalf of the Appellant,  would draw our attention to the aforementioned notice dated 24.04.1984 and  submit that in view of the fact that the contract stood repudiated, the  Respondent was required to file a suit within a period of three years  therefrom

       Mr. P.R. Ramasesh, learned counsel appearing on behalf of the  Respondent, on the other hand, would submit that on a bare perusal of the  agreement dated 13.10.1982, it would be apparent that the time was not of  the essence of the contract.  It was urged that the contract was  a contingent  contract and, thus, a sale-deed could be executed by the parties pursuant  thereto only upon fulfilment of the conditions stipulated  therein, namely, (i)  furnishing of information by the Appellant to the Respondent about the  status of the suit; and (ii) permission of the competent authority for sale of  land; and in that view of the matter, the trial court and the High Court must  be held to have correctly held that the suit was not barred by limitation.

       Article 54 of the Limitation Act reads thus :

               " 54. For specific  performance of  a contract Three  years The date  fixed for the  performance,  or, if no such  date is fixed,

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when the  plaintiff has  notice that  performance  is refused.                                                                                "                                                                                                                                                  In terms of the said Article, a suit for specific performance of a  contract is required to be filed within three years;  in the event no date is  fixed for the performance,  within a period of three years from the date when  the plaintiff has notice that performance is refused.  The notice dated  24.04.1984, thus, is required to be construed in the context of the agreement  dated  13.10.1982 entered into by and between the parties.   

       There cannot be any doubt whatsoever that in respect of a contract for  sale of immovable property, time is not of the essence of the contract, but  the question as regard the conduct of the Appellant must be considered in the  backdrop of the events noticed hereinbefore.   

He had taken an agricultural loan from the Bank.  He deposited the  original title deed with the Bank.  He was to pay interest on the said amount  of loan.  A dispute was pending between the Appellant and one  Chikkanarayanappa in the High Court.  The Central Bank of India obtained a  decree for a sum of Rs.42,000/- against the Appellant.  As per the agreement  for sale, the Respondent was to pay the said amount on behalf of the  Appellant and get the loan discharged.  The Appellant was to get only such  amount from the Respondent which might have been remaining after  discharge of  the loan taken by him from the Central Bank of India.          The sale deed was to be executed within a period of four months.  However, if the dispute between the Appellant and the said  Chikkanarayanappa was not disposed of within the said period, the  Appellant was required to have permission from the State.

       It is now accepted  that no permission at the relevant point of time was  required to be obtained from the State, for sale of the land.  It is furthermore  not in dispute that the litigation pending between the Appellant and the said  Chikkanarayanappa had not been disposed of within a period of four  months.  Even if the said dispute, in terms of the stipulation contained in the  agreement for sale, was not to come to an end, the sale deed was  to be  executed and the balance sale consideration was  to be left with the  Appellant after deducting the advance amount so as to enable the  Respondent to pay the same to the Bank till the said dispute comes to an end  wherefor a separate agreement was to be entered into.

       The notice dated 24.04.1984 must be construed having regard to the  aforementioned backdrop of facts.  From a perusal of the said notice, it  appears that prior thereto,  the Appellant had received notice from the court  of the  Civil Judge, Bangalore, in connection with the said loan. From 1982  to 1984, the Respondent did not take any steps to make any inquiry as regard  the disposal of the said litigation before the High Court.  He did not pay any  amount to the Bank.

       The Appellant, therefore, had good reasons to serve the  aforementioned notice calling upon the Respondent to deposit the entire  amount to the Bank.  There is nothing on record to show that despite  receipt   of the said notice dated 24.04.1984, the Respondent took any step to deposit  the said amount. He was, thus, not ready and willing to perform his part of  contract. He has, as noticed hereinbefore, deposited a sum of Rs.10,000/-  only in the year 1985,  i.e.  after more than one year thereafter.

       Evidently, he was not interested in payment of the loan amount to the  Bank on behalf of the Appellant as  he was appropriating the usufructs from

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the land as he was in possession thereof.   Thus, even though the time for performance was not fixed in the  agreement for sale, on receipt of the notice, the respondent had notice that  the performance was being refused, if he failed to fulfil his obligation under  the contract within 15 days of receipt of the notice.   

The suit was, therefore, in terms of the requirement of Article 54 of  the Limitation Act, should have been filed within a period of three years  from the date of expiry of fifteen days from the date of receipt of the said  notice.

       In this view of the matter we are of the opinion that the impugned  judgment of the High Court cannot be sustained, which is set aside  accordingly.  The appeal is allowed and the decree of the appellate court is  restored.   No costs.