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PETITIONER: DR. JIWAN LAL & ORS.

       Vs.

RESPONDENT: BRIJ MOHAN MEHRA & ANR.

DATE OF JUDGMENT14/09/1972

BENCH: DWIVEDI, S.N. BENCH: DWIVEDI, S.N. SHELAT, J.M. PALEKAR, D.G.

CITATION:  1973 AIR  559            1973 SCR  (2) 230  1972 SCC  (2) 757

ACT: Specific  Relief-Stipulation in contract for benefit of  one party  only-If could be waived by him-Specific  performance- Delay in filing suit for-when material.

HEADNOTE: The  appellant and respondents enterd into a contract  under which,  from  the  very inception,  the  respondents  became liable  to sell their immovable property and the  appellants became  liable to buy it.  One of the terms of the  contract provided that if the property was requisitioned by the  Gov- ernment  prior  to  the registration of  the  sale-deed  the respondents  should  refund the earnest money  paid  by  the appellants  with interest.  The premises were  requisitioned before  the  execution of the  sale-deed.   The  respondents tendered  a cheque for the earnest money with  interest  and filed  an  appeal against the order of requisition  but  the appeal was dismissed.  Notwithstanding the requisition,  the appellants were repeatedly asking the respondents to execute the  sale-deed  in accordance with the  agreement.   As  the respondents  did not do so, the appellants filed a suit  for specific  performance of the contract about two years  after the respondent’s appeal against the order of requisition was dismissed.   The trial court decreed the suit but  the  High Court reversed the decree. Allowing the appeal to this Court, HELD:(1) There is nothing in the agreement to show that non-requisitioning of the property was a condition precedent to the performance of the seller’s (respondent’s) obligation to sell the premises or that the contract came to an end  on the  requisitioning of the premises.  On the  contrary,  the non-requisitioning of the premises was a condition precedent to the performance of the buyer’s (appellants) obligation to buy   the  premises.   That  is,  when  the  premises   were requisitioned, the appellants could rescind the contract  if they  so desired.  As the clause relating to  requisitioning was inserted for the exclusive benefit of the vendee and not for  the benefit of the vendor as well as the vendee and  it did  not  create  any liabilities  against  the  vendee  the appellants (vendee) could waive, unilaterally, the condition precedent specified in the clause. [238D-E, H: 236A]

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Dalsukh  M.  Pancholi v. The Guarantee Life  and  Employment Insurance  Co.  Ltd.  and  Others,  A.I.R.  1947  P.C.  182, Hawksley  v. Outram, [1892] 3 Ch. 259 and Morrell  v.  Studd and Millington, [1913] 2 Ch. 648, referred to. (2)Where  it would be unjust to give a remedy to  a  party either because he has, by his conduct, done that which might fairly  be regarded as an equivalent to a waiver of  it  or, where by his conduct and neglect, be has, though perhaps not waiving  that remedy, put the other party in a situation  in which it would not be reasonable to place him if the  remedy were  afterwards to be asserted, in either of  these  cases, lapse of time and delay are material. [236G-H; 237A] In  the present case, the appellants never  abandoned  their rights  under the contract.  They were justified in  waiting till the date of disposal of the appeal against the order of requisition in the hope that the order of 231 requisition might be set aside in appeal.  Thereafter,  they were  pressing  the respondents to execute  the  sale  deed. Therefore,   they  never  waived  the  remedy  of   specific performance. Further  there is no allegation in the respondent’s  written statement  that  they would be prejudiced  by  the  specific performance, nor is there any evidence to that effect. Therefore, the delay in the institution of the Suit had  not caused any disadvantage to the respondents. Linadsay Petroleum Co. v. Hurd, L.R., 5 P.C. applied. [Directions regarding execution of the sale deed given]

JUDGMENT: CIVIL APPELLATE JURISDICTION : C.A. No. 1100 of 1967. Appeal  by  certificate from the judgment and  decree  dated January  25, 1966 of the Punjab High Court at Chandigarh  in Civil Regular First Appeal No. 362 of 1964. C.K. Daphtary, M. C. Chagla, S. K. Mehta, K. R. Nagaraja, ill.   Oamaruddin,  K.  S. Suri and R. K.  Melita,  for  the appellants. W.C. Setalvad, S. T. Desai and I. N. Shroff, for  respon- dent No. 1. The Judgment of the Court was delivered by DWIVEDI,  J.   This is an appeal against  the  judgment  and decree  of  the  High Court of  Punjab  and  Haryana,  dated January 25, 1966.  The High Court reversed the judgment  and decree of the Subordinate Judge, 1st Class, Amritsar,  dated August  17,  1964.  The Subordinate Judge  had  decreed  the plaintiffs’ suit for possession of the premises by  specific performance  of  the  agreement to  sell.   The  High  Court dismissed the suit. Brij Mohan Mehra, one of the respondents, was the defendant, and  the appellants were the plaintiffs in the suit.   There was an agreement between Dr. Jiwan Lal, the first appellant, Shri  Krishan Das the second appellant, and one  Bal  Kishan Das, the predecessor in interest of the appellants Nos. 3 to 8  and  Brij Mohan Mehra.  It was concluded on  December  9, 1959.   By  that  agreement Brij Mohan agreed  to  sell  the premises  in suit to Dr. Jiwan Lal, Shri Kishan Das and  Bal Kishan  Das.  The sale consideration was Rs. 122500/-.   The prospective vendees paid Rs. 10,000/- as earnest money.  The balance of the sale consideration was to be paid by them  at the time of the registration of the sale deed.  The material terms  incorporated in cls. 5, 6, 7 and 9 of  the  agreement are set out here               5.    The  sale  deed shall  be  executed  and

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             registered  by  the vendor in  favour  of  the               purchasers within three               232               months  from  the date when the  premises  are               vacated  by  the  Income-tax  Authorities  and               intimation  is given to the purchasers by  the               vendor per registered post.               6.In the event of the above said premises,               which is the subject matter of sale not  being               vacated  by the Income-tax Authorities  or  is               subsequently  requisitioned by the  Government               prior to the registration of the sale deed the               vendor  shall refund to the purchaser the  sum               of  Rs.  10,000/- (Rupees ten  thousand  only)               received  by the vendor as earnest money  plus               interest at the rate of 6 per cent per annum.               7.If   even   after  the   vendor   having               satisfied the purchasers regarding, the  title               of  the premises which are the subject  matter               of  sale, the Purchasers do not  complete  the               sale-deed  and have it registered  within  the               stipulated period as mentioned in clause No. 5               above,  the  earnest  money  so  paid  by  the               Purchasers to the Vendor shall stand forfeited               for  non-performance  of  the  contract  here-               inbefore entered into, and the Vendor shall be               at liberty to retain or resell the property.               9.From the date from which the above  said               premises   are  vacated  by   the   Income-tax               Authorities  to  the  date  of  execution  and               registration of the sale-deed the Vendor shall               affect  such repairs as may be necessary  with               the  consent of the Purchasers at the  expense               of  the Purchasers.  The purchasers  shall  be               liable  to  pay after such  repairs  etc.  are               effected.   all   expenses   and   incidentals               incurred in connection therewith by the vendor               before the sale deed is executed and  tendered               for  registration.  The purchasers shalt  also               pay  for  and on account of the  Chowkidar  to               look after and maintain the condition of  ,the               premises in good order till the execution  and               registration of the sale-deed. The  premises were requisitioned by the Additional  District Magistrate,  Amritsar on January 23, 1960.  Thereafter  Brij Mohan Mehra refused to execute the sale-deed in spite of the requests  of  the prospective vendees.   So  the  plaintiffs instituted  their  suit.  Their case was that  the  premises were requisitioned on the manipulation of Brij Mohan  Mehra, that  clause 6 of the agreement was intended to be  for  the benefit  of  the prospective vendees, that  the  prospective vendees waived the condition in cl. 6, that Brij Mohan Mehra could  not put an end to the contract by relying on  cl.  6, and  that the plaintiffs have always been ready and  willing to perform their part of the obligation under the agreement. 233 Brij Mohan Mehra contested their claim.  His case was that the  agreement  was a contingent agreement, that  it  became void on the requisitioning of the premises, that no contract ever  came to existence prior to the requisitioning  of  the premises, that he did not manipulate for the requisition  of the  premises,  that  the plaintiffs  could  not  waive  the condition in cl. 6, that they were not ready and willing  to perform  their obligation under the agreement and that  they were guilty of laches and should be deemed to have abondoned

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their rights under the agreement. The  Subordinate Judge held that the plaintiffs were  always ready  and  willing to perform their  obligation  under  the agreement.   The  agreement  did  not  become  void  on  the requisitioning  of  the premises and Brij  Mohan  Mehra  had manipulated  for  the requisitioning of  the  premises.   He could  not  rescind the contract by relying on  cl.  6.  The plaintiffs  waived  the condition in cl. 6 and  insisted  on buying  the  property.  They were not guilty of  laches  and they  did not abondon their claim under the  agreement.   On those   findings,   the  Subordinate   Judge   decreed   the plaintiffs’ suit. On  appeal by Brij Mohan Mehra, the High Court reversed  the decree and dismissed the suit.  The High Court held that cl. 6  of the agreement imposed obligations on Brij Mohan  Mehra to sell and on the prospective vendees to buy only if vacant possession  could  be  delivered  to  the  latter  and   not otherwise.   As soon as the premises were requisitioned  the entire contract fell through and thereafter there  subsisted no  enforceable obligation on either side.  The  prospective vendees  could  not waive the condition in cl. 6.  On  those findings and without expressing any opinion about the  other findings  of the Subordinate Judge, the High Court  reversed his decree. The following points arise for determination by this Court.               (1)   Was there a concluded contract?               (2)   Was   the  non-requisitioning   of   the               premises   a   condition  precedent   to   the               performance of the seller’s obligation to sell               ?               (3)   Was   the  non-requisitioning   of   the               premises   a   condition  precedent   to   the               performance of the buyers’ obligation to buy?               (4)   Could the buyers waive the condition and               insist  on  the performance  of  the  seller’s               obligation ?               (5)   Were the buyers guilty of laches and was               there abondonment of their claim ? 234 Re.  Point No. 1. Neither party has argued that there was no formation of  the contract  between  the parties.  The contract was  not  made ’subject to the non-requisitioning of the premises’.  By cl. 1  of  the  agreement, the vendor agreed  to  sell  and  the purchasers agreed to purchase the premises.  Clause 5 makes the  vendor liable to execute a sale deed within  a  certain time.   So  there  was  a  concluded  contract  between  the parties.   The  seller became liable to sell and  the  buyer became  liable  to  buy  from  the  very  inception  of  the contract. Re.  Point No. 2. Even  though the agreement was drawn on the legal advice  of one Mohan Singh, a lawyer for both parties, clause 6 of  the agreement does not expressly subject the seller’s obligation to sell to the contingency of the non-requisitioning of the premises.   Nor does it say that the contract would come  to an  end on the requisitioning of the premises.   Brij  Mohan Mehra  has taken care to use clear and specific language  in cls.  7  and  9  to safeguard his  interests.   If  it  were intended  that his obligation to sell should come to an  end on  the requisitioning of the premises, there is  no  reason why  cl. 6 should not have expressed that  intention  fairly clearly.   Brij  Mohan Mehra, the prospective vendor,  is  a businessman.  It is difficult to conceive that he would have negotiated  for  the right to rescind the  contract  in  the

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event  of the requisitioning of the premises, for  the  sale price  of a vacant premises is usually higher than the  sale price of an occupied premises.  By subjecting his obligation to  sell to the non-requisitioning of the premises he  would have put himself at a disadvantage.  It is evident from  cl. 6  that the object of the prospective vendees was to  obtain vacant  possession  of the premises.  But we are  unable  to discern  anything in the agreement to show that it was  also the object of the prospective vendor.  As already indicated, he stood to gain nothing from that object.  Clause 9 of  the agreement  provides  that  the  vendor  would  make  repairs between the date of vacating the premises by the  Income-tax Authorities  and the date of the execution of the sale  deed with the consent of the vendees at their expense.  The  want of  a provision in the agreement fixing  responsibility  for the  repairs after the requisitioning of the premises  would not suggest that the non-requisitionin of the premises was a condition  precedent  to  the performance  of  the  seller’s obligation  to  sell.   After the  requisition,  the  repair expenses  would  be  a  matter to  be  settled  between  the requisitioning  authority  and the owner  of  the  premises. Accordingly  a provision like the one in cl. 9 could not  be inserted  in the agreement.  According to cl. 6, the  vendor becomes liable on the 235 requisitioning  of the premises to refund the earnest  money of Rs. 10,000/- with interest at 6% per annum.  The term for payment of interest should not present any difficulty in the calculation  of  interest if it is held  that  the  seller’s obligation to sell was not subject to the contingency of the non-requisitioning  of the premises.  We are satisfied  that the  interest became payable not from the date of  the  non- requisitioning  of  the premises, but from the date  of  the payment of the earnest money.  In other words, the  interest would  accrue from December 9, 1959, the date on  which  the agreement was executed.  That it is so, is also evident from the  conduct of Brij  Mohan Mehra.  When the  premises  were requisitioned  he sent a letter on February 11,  1960  along with a cheque for Rs. 10,103.28 to the prospective  vendees. In the letter he has expressly stated that the interest  has been calculated from December 9, 1959 to, February 11, 1960. The accrual of interest after the date of the requisitioning of  the premises could be prevented by tendering the  amount of  the earnest money to the prospective vendees.  The  term for interest in cl. 6 would not therefore indicate that  the seller’s obligation to sell was subject to the condition  of the  non-requisitioning of the premises.  In our view  there is  nothing  in  the agreement in general and in  cl.  6  in particular  to  show  that the,  non-requisitioning  of  the premises was a condition precedent to the performance of the seller’s  obligation  to  sell the  premises,  or  that  the contract  came  to  an  end on  the  requisitioning  of  the premises. Re.  Point No. 3 Mohan  Singh is a lawyer.  The agreement was drawn with  his legal  advice.  He has appeared as a witness for Brij  Mohan Mehra.  He has stated that the prospective vendees wanted to purchase  the premises for setting up a  hotel.   Naturally, they  would  be  keen on getting vacant  possession  of  the premises.  Accordingly they would negotiate for the right to rescind  the contract in the event of the requisitioning  of the  premises.  Clause 6 expressly imposes an obligation  on the vendor to refund the earnest money with interest.  There is  impliedly created thereby a. corresponding right in  the buyers to demand back the earnest money with interest.   The

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right  to demand back the earnest money necessarily  implies the right to rescind the contract.  The refund could not  be claimed as long as the contract remained in force.  We think that the non-requisitioning of the premises was a  condition precedent  to the performance of. the buyers’ obligation  to buy the premises.  When the premises were requisitioned  the buyers could rescind the contract, if they so desired. Re.  Point No. 4 As  already discussed, cl. 6 was inserted in  the  agreement for  the, exclusive benefit of the vendees and not  for  the benefit of the 236 vender  as well as the vendees.  So the vendees could  waive the  condition precedent specified in el. 6. In  Dalsukh  M. Pancholi v. The Guarantee Life and Employment Insurance Co., Ltd.  and  others(1),  there was an agreement  for  sale  of immovable property.  The property was under attachment by an order  of  the  Court and was about to  be  sold  by  public auction.   A  certain  amount was paid  by  the  prospective vendee as earnest money.  Clause 4 of the agreement provided that,  the balance of the sale consideration would  be  paid before the Sub-Registrar at the time of the registration  of the sale deed within 30 days of the approval of the Court to the  agreement.   The  Court  did  not  Approve  the  offer. Thereupon the vendor asserted that the contract has come  to an  end,  while the vendee counter-claimed that  as  he  has waived the condition in cl. 4, the contract subsisted.  The, Privy  Council held that as the condition in cl. 4 "was  not exclusively  for the benefit of the purchaser" it could  not be waived by him and that the entire contract fell  through. It  would  follow  that  where  a  stipulation  is  for  the exclusive  benefit  of one contracting party  and  does  not create liabilities against him he can waive it unilaterally. (See  also  Hawksley v. Outram(2) and Morrell v.  Studd  and Millington (3) Re.  Point No. 5 The  agreement was made on December 9, 1959.   The  premises were requisitioned by an order dated January 23, 1960.  Brij Mohan   Mehra   filed  an  appeal  against  the   order   of requisition.  It was dismissed on August 1, 1960.  The  suit was  instituted  on  November 5, 1962.  As  the  appeal  was pending,  the plaintiffs could reasonably wait until  August 1,  1960 in the hope that the order of requisition might  be set  aside  in ’appeal.  So no legitimate objection  can  be taken on the score of delay until August 1, 1960.  The  suit was instituted within two years, three months and four  days of the dismissal of appeal on August 1, 1960.  It is now  to be  seen whether this delay is such as would disentitle  the plaintiffs  to  the relief of specific  performance  of  the contract. In Iindsay Petroleum Co. v. Hurd(4), Lord Selborne said :               "The doctrine of laches in courts of equity is               not an arbitrary or technical doctrine.  Where               it  would  be  practically unjust  to  give  a               remedy  either  because the party has  by  his               conduct  done  that  which  might  fairly   be               regarded  as an equivalent to a waiver of  it,               or  where by his conduct and neglect  he  has,               though perhaps not waiving that remedy put the               other  party in a situation in which it  would               not be reasonable to place him if the (1)  A.I.B,. 1947 P.C. 182. (3)  [1913] 2 Ch. 648 at page 660. (2)  [1892] 3 Ch. 359 at page 376 (4) Law Reports 5 P.C. 221 (at page 239)

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237               remedy  were  afterwards to  be  asserted,  in               either of these cases lapse of time and  delay               are most material." In  his  written  statement Brij Mohan  Mehra  pleaded  only waiver and not also that he would be prejudiced by  specific performance.  There was considerable correspondence  between the  parties between February 1 1, and April 27,  1960.   In their letters the prospective vendees repeatedly asked  Brij Mohan  Mehra to execute a sale deed in accordance  with  the agreement.  They also said that they were ready and  willing to  pay the sale consideration stipulated in the  agreement. But Brij Mohan Mehra persisted in his refusal to execute the sale  deed.   Eventually on April 17, 1960 one  Sardari  Lal Sachdev, Advocate, gave notice on behalf of the  prospective vendees  to Shri Hans Raj Mittal, Advocate, for  Brij  Mohan Mehra.   It  is  said in that notice  that  the  prospective vendees  would  attend  the  office  of  the  Sub-Registrar, Amritsar  on April 30, 1960 between 10 A.M. and 12 noon  and that  Brij  Mohan Mehra should reach there to get  the  sale deed  registered.   As  April 30, 1960 was  a  holiday,  the prospective  vendees  later sent a telegram  to  Brij  Mohan Mehra to appear before the Sub-Registrar and produced before him  a sum of Rs. 1,12,500/-.  The money was counted by  the clerk of the Sub-Registrar.  Brij Mohan Mehra did not appear before  the Sub-Registrar on that date.   The  Sub-Registrar has  supported  this version of the plaintiffs.   Dr.  Jiwan Lal,  one  of the plaintiffs, has deposed  that  even  after April  29,  1960,  he had been asking Brij  Mohan  Mehra  to execute a registered sale deed but he had been evading.  One Mr. Ranbir Mehta went along with him to Brij Mohan Mehra for the same purpose.  But Brij Mohan Mehra told him that as the premises had been attached by the Rani of Kashmir he  should wait for some time.  Dr. Jiwan Lal then added :  "Thereafter I  went and asked him to complete the same but he  continued to evade." There appears to be no cross-examination on  this part  of his statement on behalf of Brij Mohan  Mehra.   Dr. Jiwan   Lal  denied  in  his  cross-examination   that   the plaintiffs had abondoned their claim.  It is not possible to believe  that the plaintiffs, who were so insistent  on  the execution  of  the  sale deed in their favour  and  who  had actually   appeared  before  the  Sub-Registtar   with   the requisite  amount of money for payment to the vendor,  would abandon their claim after April 29 or August 1, 1960.  There is  no reason to disbelieve Dr. Jiwan Lal’s  statement  that even  after April 29, 1960, he had been pressing  upon  Brij Mohan  Mehra  to  execute a registered sale  deed.   In  our opinion  the plaintiffs did not abandon their  rights  under the agreement.  The institution of the suit after two  years does  not  appear to have caused any  disadvantage  to  Brij Mohan  Mehra.  As already stated earlier, there is  no  such allegation in 238 his  written  statement nor is there any  evidence  to  that effect.   Brij  Mohan  Mehra  has  admitted  in  his  cross- examination   that   the  prices   of   properties   started depreciating in or about October 1962 when there was Chinese aggression  on  India.  The suit was  instituted  after  the Chinese aggression.  So it cannot be said that the  specific performance,  of  the  agreement was  likely  to  cause  any prejudice to Brij Mohan Mehra on the date of the institution of  the suit.  The suit cannot accordingly be, dismissed  on account of delay.  In  view  of our earlier findings, it is not  necessary  to decide  whether  the requisitioning of the  premises  was  a

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manoeuvre  of  Brij  Mohan  Mehra to  slide  back  from  the agreement. We set aside the judgment and decree of the High Court.  The suit  of  the plaintiffs is decreed.  Brij  Mohan  Mehra  is directed to execute a sale deed in favour of the  plaintiffs in  terms of the agreement, dated December 9, 1959,  on  the plaintiffs  tendering  to  him a sum  of  Rs.  112500/-  and necessary  expenses  for execution and registration  of  the sale deed within two months from today.  If Brij Mohan Mehra fails  to  execute  the sale  deed,  the  plaintiffs  should deposit the requisite amount in the trial court within three months from today and apply for the execution of the  decree for  execution of the sale deed.  The plaintiffs  shall  get their costs throughout from Brij Mohan Mehra. V.P.S                           Appeal allowed. 239