12 October 1970
Supreme Court


Case number: Appeal (civil) 1776 of 1966






DATE OF JUDGMENT: 12/10/1970


CITATION:  1971 AIR 1238            1971 SCR  (2) 573  CITATOR INFO :  RF         1973 SC 655  (6)  R          1986 SC1912  (14)

ACT: Specific  Perfomance-Suit for by vendee-Vendors’s title  not perfect on date of contract and prior sanction of Government necessary  for sale Whether vendor could claim  that  vendee has not performed his part without perfecting his title  and obtaining  sanction-Decree  of trial  court  only  directing return  of the part of purchase money paid by  vendee-Vendor depositing money in court-If vendee precluded from filing an appeal for specific performance.

HEADNOTE: The  respondents,  who  had  been allotted  a  plot  by  the Rehabilitation Ministry agreed to sell it to the  appellants and  received a part of the purchase money.  On the date  of the  contract the respondents’ title was not perfect as  the lease  deed  in their ’favour had not been executed  by  the Government  nor did the respondents obtain the  sanction  of the Ministry which was necessary for transferring the  plot. Therefore,  the  period for execution of the  sale-deed  was extended  till  after  receipt of  the  sanction.   But  the sanction   was  applied  ’for  more  than  a   year   later. Meanwhile,  the respondents wrote to the appellants  stating that  it  was  uncertain as to when the  sanction  would  be granted,  that  therefore the agreement had become  void  on account  of uncertainty, but that they were willing to  have the  sale-deed registered on payment by the  appellants  of the balance without waiting for the sanction.   Apprehending that  the respondents were trying to dispose of the plot  to someone  else  the appellants  informed  prospective  buyers about the agreement in their favour.  They also wrote to the respondents declaring their readiness and willingness to pay the  balance  of  the  purchase  price  on  the  respondents procuring  the  sanction.   Thereafter,  the  sanction   was granted, but the respondents never informed the  appellants; but  coming  to know about it the appellants  filed  a  suit claiming specific performance of the contract. The trial court held that the respondents, by their  letters made time the essence of the contract and refused to  decree specific  performance, ’out ranted a decree for  refund  of



the amount paid.  Thereafter, the appellants applied to  the trial  court for an injunction restraining  the  respondents from  disposing of the property, but the injunction was  not granted  and  the  plot  was sold to  a  third  party.   The appellants  filed  an appeal in the High Court  against  the decree of the trial court refusing specific performance, and during the pendency of the appeal, the amount decreed by the trial  court  was  deposited by  the  respondents,  but  the appellants  did  not withdraw the amount.   The  High  Court confirmed  the decree of the trial court and also held  that once the appellants obtained satisfaction of the decree  for the amount paid by them, they became disentitled to a decree for specific performance. In appeal to this Court, HELD  : (1) There was no question of time having  been  made the  essence  of  the contract by the letters  sent  by  the respondents;  nor could it be said that the  appellants  had failed  to  perform  their part of the  agreement  within  a reasonable time. 1579 El 5 7 4 As  long as the title of the respondents was incomplete  and sanction for sale was not obtained there was no question  of completing  the sale.  Also, after the sanction  was  given, the  respondents  did  not inform the appellants  so  as  to enable them to perform their part of the agreement. [578  E- F; 579 D-E] (2)There  was nothing to indicate that the  appellants  were not ready and willing to perform their part of the contract. Readiness  and  willingness  must be  determined  ’from  the entirety  of  the facts and circumstances  relating  to  the intention  and conduct-of the party concerned.  In the  pre- sent   case,   the  facts  that  the   appellants   informed prospective  buyers about the existence of the agreement  in their  favour, that they wrote to the respondents  declaring their  readiness and willingness to pay the balance as  soon as  the sanction was obtained, and that they promptly  filed the   suit,  showed  their  keenness  and  readiness.    The appellants were carrying on business and were in a  position to  arrange for the balance of the purchase money.   It  was neither  necessary nor incumbent on them to send  any  draft conveyance   after   the  respondents  had   cancelled   the agreements [579 H; 580 B-C] (3)In  the present case, the rule that the appellants  could not accept satisfaction of the decree of the trial court and yet  prefer  an  appeal against that  decree  cannot  apply, because,  the appellants had by consistent  and  unequivocal conduct  by  applying  for injunction  and  prosecuting  the appeal  in the High Court made it clear that they  were  not willing  to  accept  the  judgment of  the  trial  court  as correct.   The  grant of relief of specific  performance  is discretionary  but  the  discretion  must  be  exercised  in accordance with judicial principles and not arbitrarily.  It could  not  be held that the conduct of the  appellants  was such  that  it precluded them from obtaining  a  decree  for specific performance. [581 F-H; 582 A-B] [It was directed that the subsequent transferee should join, in  the conveyance so as to pass on the title which  resides in him to the appellants.] [582 B-C] Lal  Durga  Prasad  v. Lala Deep Chand,  [1954]  S.C.R.  360 referred to.




1966. Appeal  by special leave from the judgment and decree  dated December 22, 1964 of the Punjab High Court, Circuit Bench at R.F.A. No. 37-D of 1959. Bishan Narain and B. P. Maheshwari, for the appellant. N.   N. Keswani, for respondent No. 2. C.   B. Agarwala and Urmila Kapoor, for respondent No. 3. The Judgment of the Court was delivered by Grover,  J This is an appeal by special leave from a  decree of the Punjab High Court (Circuit Bench, Delhi). On  July 18, 1955, the appellants entered into an  agreement with  the  respondents  for  the  purchase  of  plot  No.  8 measuring  1500  Sq.  Yds in Jangpura B, New Delhi  for  Rs. 22,500/-.  The contract was evidenced by receipt Exhibit P-6 which was in the following terms : 575               "Received  with  thanks from  Messrs.   Ramesh               Chander Chandiok and Kailash Chandra  Chandiok               the sum of Rs. 7,500/- (Rupees Seven  thousand               and five hundred only) as earnest money of the               purchase money of Rs. 22,500/- (Rupees  Twenty               two thousand and five hundred) for the sale of               Plot No. 8 measuring 1500 sq. yds in  Jangpura               B., purchased from the Rehabilitation Ministry               and  owned by us.  The balance of  Rs.  15,000               (Rupees  Fifteen Thousand only) shall be  paid               to  us  by  them  within  one  month  of   the               execution of this receipt on the execution  of               the sale deed by us in their favour." It  is  common  ground  that the  aforesaid  plot  had  been allotted  by the Rehabilitation Ministry to the  respondents and  that its, possession was to be delivered after  payment of rent of lease money up-to-date and after execution of the lease deed.  The lease deed was actually executed in  favour of the respondents oil April 21, 1956.  Meanwhile on  August 11, 1955 the respondents wrote a letter to the appellants as follows               "With  reference to the receipt dated  18’7-55               execute  by us in your  favour,  acknowledging               receipt  of Rs. 7,500/- as earnest  money  for               the sale of Plot No. 8 measuring 1500 sq.  yds               in  Jungpura B. owned by us, and agreed to  be               sold to you by us, since it will take about  a               month   more   to  obtain  sanction   of   the               Rehabilitation  Ministry, the execution of the               sale deed by us cannot    be complete without               the said sanction, it is hereby     mutually               agreed between us or orally that the period     for               execution of the sale deed shall remain ex-               tended  till  the time of the receipt  of  the               said  sanction and we hereby confirm the  said               oral agreement.  We will inform you as soon as               the  said  sanction is received and  within  a               week  thereof, we will execute  the  necessary               sale-deed  in  your favour and  get  the  same               registered against  payment of  the  balance               money.   Please  sign the  duplicate  of  this               letter  in  confirmation  of  the  said   oral               arrangement." A  notice dated June 15, 1956 was served by counsel for  the respondents  on  the appellants saying that the  balance  of consideration according to the terms of the agreement  dated July 18, 1955 was to be paid by the appellants and the  sale deed  was to be got registered within one month of July  18, 1955.   It was further stated that extension had been  given



as desired by the appellants but the balance amount had  not been  paid.   In para 3 it was stated "my  clients  are  not prepared  to  wait indefinitely and  therefore  cancel  your agreement for  want of certainty and hereby  give  you  an offer, without prejudice to their legal rights, to receiver 576 back  the  sum of Rs. 7,500/- paid by you as  earnest  money less the amount of loss suffered by them on account of lease and  interest etc. within one week of the, receipt  of  this letter,  failing  which  my clients  would  be  entitled  to forfeit   the   earnest  money  and  treat   the   agreement cancelled." A  reply  dated June 22, 1956 was sent by  counsel  for  the appellants  in which reference was made to the letter  dated August  11, 1955 and it was pointed out that no  information had  been sent by the respondents about the sanction  having been   obtained  from  the  Rehabilitation  Ministry.    The respondents  were  called  upon  to  obtain  the   requisite sanction  and  to execute the sale deed against  receipt  of balance of purchase money.  On July 4, 1956 counsel for  the respondents  sent a reply saying that sanction had not  been granted till then and inquiries made by respondents revealed that  it might not be forthcoming for an  indefinite  period and that it was absolutely uncertain as to when it would  be granted.  It was claimed that the agreement had become  void on  account  of uncertainty and without prejudice  to  their legal  rights the respondents were prepared "ex  gratia"  to have  the  sale deed registered on payment  of  the  balance within a week of the receipt of the letter without awaiting sanction  of the Rehabilitation Ministry.  On  November  11, 1956 the respondents are stated to have applied for sanction for transfer of the plot and it was granted on November  20, 1956.  The appellants bad themselves made inquiries from the Housing  and  Rent- Officer on August 9, 1956  to  ascertain whether sanction had been granted and how much time it would take  to  accord the sanction.  By a  letter  dated  27/29th November 1956 the aforesaid officer informed the  appellants that  permission to transfer had been given on November  20, 1956.   The appellants had also taken steps to inform  other prospective  buyers about the existence of the agreement  as they apprehended that the respondents intended  transferring the  same  to  some  other  party.   On  July  29,  1956  an advertisement was published by them in the ’Times of  India’ declaring  the  existence  of  the  agreement  entered  into between  the appellants and the respondents with regard  to the  sale  of the aforesaid plot.  On December 4,  1956  the suit out of which the present appeal has arisen was filed by the appellants claiming specific performance of the contract dated July 18, 1955 and in the alternative for refund of Rs. 7,500/-  being the amount of earnest money and Rs.  15,000/- as damages together with interest. Apart from taking all the necessary pleas it was averred  in the plaint that the plaintiffs-appellants had always  been ready-and  ,,willing to perform Their part of the  contract. The suit was con- 5 7 7 tested by the defendants-respondents and among the  material issues  which  were  framed  by the  trial  court  were  the following               "(5)  Whether the specific performance of  the               agreement in suit should be refused u/s 21  or               22 of the Specific Relief Act ?               (b)   Whether  the plaintiffs were  ready  and               willing to perform their part of the  contract               ?"



The  admitted case of the parties was that according to  the conditions   of  the  lease  granted  to  the   respondents, which  had, however, not been produced the transfer  of  the lease-hold  rights could be effected only with the  sanction of the Rehabilitation Ministry.  The trial court was of  the opinion that in spite of this condition the respondents  had a  subsisting though defeasible interest in  the  lease-hold rights which could very well be the subject matter of  sale. It was held that the appellants did not perform the contract for  about  11/2  years  even  though  the  respondents  had repudiated  it  much earlier.  Any party to the  contract  ; could subsequently make time the essence of the contract  by a   reasonable  notice  and  this  had  been  done  by   the respondents  by  Exhibits P-8 and P-12, namely  the  letters dated  June 15, 1955 and August 24, 1956.  Issue No.  5  was thus  decided  against the appellants.  On issue No.  6  the trial  court  found that the appellants were not  ready  and willing  to pay the balance of consideration  in  accordance with the original agreement as they insisted on sanction  of the  Rehabilitation  Ministry  being  obtained  before   the completion  of sale though no such condition existed in  the original  contract.   However, a decree was granted  to  the appellants in the sum of’ Rs. 7,500/- on the ground that the same  constituted part payment of consideration and was  not liable  to be forfeited.  On March 31, 1959  the  appellants filed  an  application before the trial court  stating  that they intended to prefer an appeal against the dismissal’  of the  suit  for specific performance but as  the  respondents were trying to dispose of the plot they should be restrained by  an  injunction  from  doing  so.   It  appears  that  no injunction was granted by the court.  An appeal was filed to the  High Court and during the pendency of the  appeal,  the amount  of  Rs. 7,500/was deposited by  the  respondents  in satisfaction  of  the  decree passed  by  the  trial  court. According  to the respondents the appellants had  taken  out execution of the decree and it was for that reason that  the said  amount was deposited.  It was not, however,  withdrawn by the appellants during the pendency of the appeal. The High Court found that both the respondents were bound by the  letter Exhibit P-7 dated August 1 1, 1 9 5 5  to  which reference 5 78 -has already been made.  It was noticed that sanction of the Rehab ilitation Ministry was required before the sale  could be  ,completed  but it was held that there  was  nothing  to indicate that the absence of such a sanction invalidated the transfer ab initio ,or rendered it void.  In agreement  with the trial court the High ,Court held that oven a  defeasible interest could be the subject matter of sale; in other words the sale could be effected without the sanction having  been previously  obtained.  The view of the High Court  was  that Exhibit  P-7 did not contain any such language  which  would justify  the  importing  of  a  condition  that  until   the respondents  obtained  sanction  for  the  transfer  of  the property  the  appellants  were not bound to  get  the  sale completed.  It was ,also decided that the appellants had not satisfactorily  shown that they had sufficient funds to  pay the  balance amount of Rs. 15,000/- from which it  could  be concluded  that they were not ready and willing  to  perform their part of the contract.  Yet another point was  decided against  the appellants on the basis of  ,certain  execution proceedings stated at the Bar to have been taken during  the pendency  of the appeal.  According to the High  Court  once the  appellants had obtained satisfaction of the decree  for Rs. 7,500/- they became disentitled to a decree for specific



performance. We  are unable to concur with the reasoning or  the  conclu- sions  of  the High Court on the above main points.   It  is significant  that the lease deed was not executed in  favour of  the respondents by the Government until April 21,  1956. So  long  as their own title was incomplete  there  was  no question of the sale being completed.  It is also undisputed that   according  to  the  conditions  of  the   lease   the respondents  were  bound  to obtain  the sanction  of  the Rehabilitation  Ministry  transferring the plot to  any  one else.   The respondents were fully aware and  conscious  ,of this  situaion  much earlier and that is the reason  why  on August 11, 1955 it was agreed while extending the period for execution  of  the  sale deed that the  same  shall  be  got executed after  receipt  of the  sanction.   The  satement contained in Exhibit P-7 that the execution of the sale deed "by  us  cannot be complete without the said  sanction"  was unqualified   and  unequivocal.   The  respondents   further undertook to inform. the appellants as soon as sanction  was received  and  thereafter the sale deed had to  be  executed within  a week and got registered on payment of the  balance amount of consideration.  We are wholly unable to understand how  in the presence of Exhibit P-7 it was possible to  hold that  the  appellants were bound to get the  sale  completed even   before   any  information  was  received   from   the respondents about the sanction having been obtained.  It  is quite  obvious  from the letter Exhibit P-8 dated  June  15, 1956  that the respondents were having second thoughts  and wanted to wriggle 579 out  of  the  agreement because presumably  they  wanted  to transfer it for- better consideration to some one else or to transfer it in favour of their own relation as is stated  to have been done later.  The respondents never applied for any sanction after August 11, 1955 and took up the position that they  were not prepared to wait indefinitely in  the  matter and  were  therefore cancelling the agreement "for  want  of certainty".  We are completely at a loss to understand  this attitude  nor has any light been thrown on  the  uncertainty contemplated  in the aforesaid letter.  It does  not  appear that  there would have been any difficulty in obtaining  the sanction  if the respondents had made any attempt to  obtain it.   This is obvious from the fact that when they  actually applied  for  sanction on November 11, 1956 it  was  granted after a week.  The statement contained in Exhibit P-10 dated July  4, 1956 that the sanction was not forthcoming has  not been substantiated by any cogent evidence as no document was placed  on the record to show that any attempt was  made  to obtain  sanction prior to November 11, 1956.  Be that as  it may  the respondents could not call upon the  appellants  to complete  the  sale  and pay the  balance  money  until  the undertaking  given in Exhibit P-7 dated August 11, 1955  had been fulfilled by them.  The sanction was given in November, 1956  and  even  then the respondents  did  not  inform  the appellants  about it so as to enable them to  perform  their part  of  the agreement of safe.  There was no  question  of time  having ever been made the essence of the  contract  by the  letters  sent by the respondents nor could it  be  said that the appellants had failed to perform their part of  the agreement within a reasonable time. On behalf of the respondents it has been urged that in spite of the letters of the respondent by which the agreement  had been cancelled the appellants did not treat the agreement of sale as having come to an end and kept it alive.  They  were therefore  bound to send a draft of the conveyance and  call



upon  the  respondents to execute the sale deed and  get  it registered  on payment of the balance of the sale  price  as soon as they came to know directly from the Housing and Rent Officer that sanction had been granted.  This they failed to do  and  it must be inferred that they were  not  ready  and willing to perform their part of the agreement Our attention has  been  invited  to a statement  in  Halsbury’s  Laws  of England, Vol. 34, Third Edn. at page 338 that in the absence of agreement to the contrary it is the purchaser who has  to prepare the draft conveyance and submit it to the vendor for approval.   No such point was raised at any prior stage  and in  any case we do not consider that after the  cancellation of  the  agreement by the respondents it  was  necessary  or incumbent  on the appellants to send any  draft  conveyance. The very fact that they promptly filed the suit 580 shows  their  keenness  and  readiness  in  the  matter   of acquiring the plot by purchase.  It must be remembered  that the  appellants  had  not only put in  an  advertisement  in newspapers about the existence of the agreement but had also sent  a letter Exhibit P-13 on September 12, 1956  declaring their  readiness and willingness to pay the balance  of  the purchase  price on the respondents procuring  the  sanction. The  appellants  further made enquiries  directly  from  the authorities   concerned  about  the  sanction.    ’Readiness and,willingness  cannot  be  treated as  a  straight  jacket formula.   These have to be determined from the entirety  of facts  and  circumstances  relevant  to  the  intention  and conduct  of the party concerned.  In our judgment there  was nothing  to indicate that the appellants at any  stage  were not ready and willing to perform their part of the contract. The  High  Court had taken another aspect of  readiness  and willingness  into consideration, namely, the  possession  of sufficient funds by the appellants at the material time  for payment  of  the balance of the sale  price.   Romesh  Chand P.W.6  had  stated that his father was a Head  Master  since 1922 in a High School and he was also doing import business. He  gave up service in 1934.  The son joined the  father  in his  business in the year 1928 and his other brother  appel- lant  No. 2 also joined that business some years  ago.   The bank account was produced which showed that between July 18, 1955 and December 31, 1955 the appellants’ father had in his account a credit of over Rs. 15,000/- but thereafter between January, 1956 and March, 1956 an amount of Rs. 15,000/-  odd had been withdrawn.  According to the High Court after these dates there was nothing to show that the appellants had  any funds.  The evidence of Romesh Chand P.W. 6 that the  family had  an amount of Rs. 40,000/- lying at their house was  not believed.   Now in the first place the relevant  period  for determining whether the appellants were in a position to pay the balance of the sale price was after November, 1956  when sanction had obtained by the respondents for transfer of the plot  from the Rehabilitation Ministry.  The appellants  had admittedly paid without any difficult Rs. 7,500/- as earnest money  and  the bank account of the  father  showed  various credit  and  debit entries from time to time.  On  March  5, 1956  an  amount  of Rs. 12,720/- had been  withdrawn  by  a cheque  in favour of Romesh Chand P.W. 6. According  to  his statement  this amount was withdrawn because his father  was very  ill and it was decided to withdraw the amount at  that time.   It was deposited with his mother and  remained  with her  throughout.  There is no material or evidence  to  show that  this  amount had been expended or spent and  that  the statement  of Romesh Chand was false on the point.  Even  if the  version  that Rs. 40,000/- in cash were  lying  at  the



house  of the appellant is discarded at least an  amount  of Rs.  12,720/- must have been available at the  material  and relevant time.  The appellants were 581 carrying  on business and there is nothing to indicate  that they were not in a position to arrange for the remaining sum to  make up the total of Rs. 15,000/-.  We  are,  therefore, unable to accept that the appellants, who had all along been trying  their utmost to purchase the plot, did not have  the necessary funds or could not arrange for them when the  sale deed  had to be executed and registered after  the  sanction had been obtained. Coming  to the last point, the High Court has held that  the appellants  were  disentitled  to  a  decree  for   specific performance  because, a statement was made at the  Bar  that during  the  pendency of the appeal they  had  executed  the decree  of the trial court and an amount of Rs. 7,500/-  had been deposited by the respondents pursuant to the  execution proceedings.  It is true that the appellant could not accept satisfaction of the decree of the trial court and yet prefer an appeal, against that decree.  That may well have  brought them  within  the  principle that  when  the  plaintiff  has elected  to proceed in some other manner than  for  specific performance  he cannot ask for the latter relief.   This  is what  Scrutton L. J. said in Dexters, Limited v. Hill  Crest Oil Company Bradford Ltd.(1) at page 358 :               "So  in   my opinion , you can  not  take  the               benefit  of a judgment as being good and  then               appeal against it as being bad."               It was further observed               "It  startles  me  to hear it  argued  that  a               person  can say the judgment is wrong  and  at               the   same  time  accept  payment  under   the               judgment as being right." This illustrates the rule that a party cannot approbate  and reprobate at the same time.  These propositions are so  well known  that no possible exception can be taken to them.   In the  present  case,  however, the above  rule  cannot  apply because  the appellants had, by Consistent  and  unequivocal conduct, made it clear that they were not willing to  accept the judgment of the trial court as correct.  It has  already been  mentioned at a previous stage that after the  decision of the trial court the appellants had even applied on  March 31, 1958 for an injunction restraining the respondents  from selling  or  otherwise  disposing  of the  plot  as  it  was apprehended  that they were trying to do so.  It was  stated in this application that the plaintiffs would be  preferring an appeal but it would take time to secure certified copies. An appeal was in fact preferred and seriously pressed before the   High  Court  on  the  relief  relating   to   specific performance. (1) [1926] 1 K.B. 348, 358. O-L435Sup.Cf/71 582 This   relief  is  discretionary  but  not   arbitrary   and discretion  must be exercised in accordance with  the  sound and  reasonable judicial principles.  We are unable to  hold that  the  conduct  of the appellants, which  is  always  an important  element  for  consideration,  was  such  that  it precluded   them  from  obtaining  a  decree  for   specific performance. It is common ground that the plot in dispute has been trans- ferred  by the respondents and therefore the proper form  of the  decree  would be the same as indicated at page  369  in Lala  Durga Prasad & Another v. Lala Deep Chand &  Others(1)



viz.,  "to  direct  specific  performance  of  the  contract between  the  vendor  and  the  plaintiff  and  direct   the subsequent  transferee  to join in the conveyance so  as  to pass on the title which resides in him to the plaintiff.  He does  not  join’ in any special covenants made  between  the plaintiff  and  his vendor; all he does is to  pass  on  his title to the plaintiff".  We order accordingly.  The  decree of  the courts below is hereby set aside and the  appeal  is allowed with costs in this Court and the High Court. V.P.S.                                               Appeal allowed. (1) [1954] S.C.R. 360. 583