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PETITIONER: V.S. PALANICHAMY CHETTIAR FIRM

       Vs.

RESPONDENT: C. ALAGAPPAN & ANOTHER

DATE OF JUDGMENT:       03/02/1999

BENCH: S.Saghir Ahmad, D.P.Wadhwa

JUDGMENT:

D.P. WADHWA, J.

       Leave granted.

     These  are  judgment-  debtors  two  appeals  against common  judgment dated December 24, 1997 of the Madras  High Court,  passed  in  revision of the order of  the  executing court  dismissing  execution  applications   filed  by   the respondent  decree-holders.   The decrees are  for  specific performance  of two agreements of sale of certain  immovable properties.

     The  appellant,  as  owner of the property  being  two plots  of  land, each measuring 60 x 40, entered into  two separate  but similar agreements of sale dated February  16, 1980   with  the  respondent   decree-holders.   Since   the judgment-debtor   failed   to  perform   his  part  of   the agreements,   decree-holders   filed   suits  for   specific performance  of  the  contract of sale in the court  of  the District  Munsif,  Pudukottai.   The suits were  decreed  in favour  of  the  respondents  with a direction  to  them  to deposit the balance amount of consideration and with further direction  to the appellant to execute the sale-deeds.   The suits  were  decreed  on January 31, 1983  and  the  balance consideration  amount was to be deposited on or before March 31,  1983.   Against  the judgment and order  decreeing  the suits  the  appellant filed appeals in the High Court  which were  dismissed  on  February 28, 1985.   High  Court  while dismissing  the appeals of the judgment-debtor did not grant any  extension of time to the respondents for deposit of the balance amount of consideration.

     The  respondent decree- holders filed applications for execution of the decrees of specific performance of contract after five years of the decrees by the trial court and three years after dismissal of the appeals by the High Court.  One of  the contentions raised by the appellant  judgment-debtor was that the respondent decree-holders had failed to deposit the balance amount of consideration in terms of the decrees. In  one case the balance consideration amount was  deposited much after the period granted in the decree and in the other case  no  amount  of the balance consideration  was  at  all

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deposited.

     The  executing court by order dated September 2,  1984 dismissed  the  execution  applications  of  the  respondent decree-  holders holding that they did not pay the amount of balance  consideration within the time stipulated under  the decrees.

     Against  this  order two revisions were filed  in  the High  Court  by the respondent decree-holders.  It  was  not disputed that there was delay in complying with the terms of the  decrees  which  were  conditional.  In  the  course  of proceedings  before the High Court respondent decree-holders filed  separate  applications  seeking   extension  of  time granted  under the decrees by the trial court to deposit the amount.  When the appellant judgment- debtor objected to the filing of the application on the ground that these could not be  maintained in the High Court and no such application was filed in the trial court, the High Court remitted the matter to  the  executing  court  with a  direction  to  treat  the applications  as interlocutory applications in the execution proceedings  and to dispose them of in accordance with  law. At  the  same time High Court also said that in view of  the decision  of this Court in Sardar Mohar Singh through  Power of Attorney Holder, Manjit Singh vs.  Mangilal alias Mangtya (1997  (2) M.L.J.  88 (SC) :  1997 (9) SCC 217), the  Lower Court has got power to extend the time.

     Aggrieved  the  appellant judgment-debtor filed  these appeals.

     Under Section 16 of the Specific Relief Act, 1963 (for short  the  Act) there are certain grounds which  bar  the relief  of  specific  performance  of  the  contract.   This Section, insofar it is relevant, is as under :-

     16.   Personal bars to relief.- Specific  performance of a contract cannot be enforced in favour of a person --

     (a) .........

     (b) .........

     (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 purposes 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.

     Under  Section  28  of  the Act  after  a  decree  for specific  performance of contract for the sale of  immovable property  has been made and the purchaser decree-holder does not, within the period allowed by the decree or such further

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period  as the court may allow, pay the purchase money which the court has ordered him to pay, the vendor judgment-debtor may  apply in the same suit in which decree is made, to have the  contract rescinded.  Section 28 of the Act is as  under :-

     28.  Rescission in certain circumstances of contracts for  the  sale or lease of immovable property, the  specific performance of which has been decreed.  - - (1) Where in any suit a decree for specific performance of a contract for the sale  or  lease  of  immovable property has  been  made  and purchaser  or lessee does not, within the period allowed  by the  decree  or such further period as the court may  allow, pay  the  purchase  money or other sum which the  court  has ordered  him  to pay, the vendor or lessor may apply in  the same  suit in which the decree is made, to have the contract rescinded  and on such application the court may, by  order, rescind  the contract either so far as regards the party  in default  or  altogether,  as  the justice of  the  case  may require.

     (2)  Where  a contract is rescinded under  sub-section (1), the court --

     (a)  shall  direct the purchaser or lessee, if he  has obtained  possession of the property under the contract,  to restore such possession to the vendor or lessor, and

     (b)  may direct payment to the vendor or lessor of all the  rents and profits which have accrued in respect of  the property  from the date on which possession was so  obtained by  the purchaser or lessee until restoration of  possession to  the vendor or lessor, and, if the justice of the case so requires, the refund of any sum paid by the vendee or lessee as earnest money or deposit in connection with the contract.

     (3) If the purchaser of lessee pays the purchase money or  other  sum which he is ordered to pay under  the  decree within  the period referred to in sub-section (1), the court may,  on  application  made  in the  same  suit,  award  the purchaser  or  lessee  such  further relief  as  he  may  be entitled  to,  including in appropriate cases all or any  of the following reliefs, namely --

     (a)  the execution of a proper conveyance or lease  by the vendor or lessor;

     (b)  the  delivery  of possession,  or  partition  and separate  possession,  of the property on the  execution  of such conveyance or lease.

     (4)  No  separate suit in respect of any relief  which may  be claimed under this section shall lie at the instance of  a  vendor, purchaser, lessor or lessee, as the case  may be.

     (5)  The  costs of any proceedings under this  section shall be in the discretion of the court.

     In the present case no such application has been filed by  the  respondent  decree-holders before the  trial  court seeking  extension  of  time to deposit the  balance  amount under  the decrees.  The applications which have been  filed in  the  High Court have been transmitted to  the  executing

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court  with  a direction to the executing court  to  dispose them  of  by restoring the execution applications which  had been dismissed.

     It  was submitted by Mr.  K.K.  Mani, learned  counsel for  the  respondent decree- holders that this Court  should not  interfere  in the order of the High Court  inasmuch  as matter  has  only  been remanded to the executing  court  to dispose of the applications for extension of time to deposit the  balance amount of consideration in terms of the  decree in accordance with law.  Reliance was placed on the decision of  this  Court in Sardar Mohan Singhs case (1997  (9)  SCC 217).   There cannot be any dispute with the proposition  of law laid in that judgment which states :-

     From  the language of sub-section (1) of Section  28, it  could  be  seen  that  the   court  does  not  lose  its jurisdiction  after  the  grant of the decree  for  specific performance  nor it becomes functus officio.  The very  fact that  Section  28  itself  gives power  to  grant  order  of rescission  of the decree would indicate that till the  sale deed is executed in execution of the decree, the trial court retains  its power and jurisdiction to deal with the  decree of  specific  performance.  It would also be clear that  the court  has  power  to  enlarge the time  in  favour  of  the judgment-debtor  to  pay  the  amount   or  to  perform  the conditions mentioned in the decree for specific performance, in  spite  of  an application for rescission of  the  decree having  been filed by the judgment- debtor and rejected.  In other words, the court has the discretion to extend time for compliance  of  the conditional decree as mentioned  in  the decree for specific performance.

     Again,  while considering the provisions of Section 28 of  the Act as applicable to the facts of the case before it this   Court   in  K.    Kalpana  Saraswathi   vs.    P.S.S. Somasundaram Chettiar [AIR 1980 SC 512] said :

     It  is  perfectly open to the court in control  of  a suit  for  specific  performance  to  extend  the  time  for deposit,  and  this court may do so even now to  enable  the plaintiff  to get the advantage of the agreement to sell  in her  favour.  The disentitling circumstances relied upon  by the  defendant-respondent  are  off-set by the  false  pleas raised  in  the  course  of  the suit  by  him  and  rightly negatived.   Nor  are we convinced that the application  for consideration  and  extension of time cannot be read, as  in substance  it  is, as a petition for more time  to  deposit. Even  so, specific performance is an equitable relief and he who  seeks equity can be put on terms to ensure that  equity is  done  to  the  opposite party even  while  granting  the relief.   The final end of law is justice, and so the  means to  it too should be informed by equity.  That is why he who seeks equity shall do equity.

     In  K.S.   Vidyanadam & Ors.  vs.  Vairavan (1997  (3) SCC  1)  this  Court  referred to the  circumstances  to  be considered  in  exercising  the discretionary power  of  the Court  to  decree specific performance of agreement for  the sale  of immovable property.  The Court was of the view that in  spite of the fact that suit was filed within the  period of  limitation as prescribed in Article 54 of the Limitation Act,  1963,  the Court can nevertheless see that even  where

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time  is not the essence of the contract, the plaintiff must perform  his part of the contract in reasonable time and  by looking  at  all  the relevant circumstances  including  the express  terms of contract and nature of the property.   The case  before  the  Supreme  Court   was  an  appeal  by  the defendants-vendors  who  had  suffered  decree  of  specific performance  of  agreement  for   sale  of  their  immovable property located in Madurai in the State of Tamil Nadu.  The Court  noticed that in case of urban properties in India, it is  well-known that their prices have been going up  sharply over the last few decades.  The Court then held as under :

     In the case before us, it is not mere delay.  It is a case  of total inaction on the part of the plaintiff for  2½ years  in  clear violation of the terms of  agreement  which required  him to pay the balance, purchase the stamp  papers and  then ask for execution of sale deed within six  months. Further,  the  delay  is coupled with  substantial  rise  in prices  - according to the defendants, three times - between the  date  of  agreement and the date of suit  notice.   The delay  has  brought  about  a situation where  it  would  be inequitable  to  give the relief of specific performance  to the plaintiff.

     The Court relied upon the decision of the Constitution Bench in Chand Rani vs.  Kamal Rani [(1993) 1 SCC 519].

     In  N.P.   Thirugnanam  (Dead) By LRS.  vs.   Dr.   R. Jagan  Mohan  Rao  &  Ors.  [(1995) 5 SCC  115]  this  Court observed  with reference to Sections 16[c] and 20 of the Act that the continuous readiness and willingness on the part of the  plaintiff is a condition precedent to grant the  relief of  specific  performance  and  that  this  circumstance  is material  and  relevant and is required to be considered  by the  Court  while granting or refusing to grant the  relief. If plaintiff fails to either aver or prove the same, he must fail.  To adjudge whether the plaintiff is ready and willing to  perform  his part of the contract, the court  must  take into  consideration  the conduct of the plaintiff prior  and subsequent  to  the  filing  of the suit  along  with  other attending  circumstances.   The Court is not bound to  grant the relief which is discretionary merely because there was a valid  agreement of sale.  It is equitable remedy and is  in the  discretion of the Court which discretion, however,  has to  be exercised according to the settled principles of  law and not arbitrarily.

     In Ramankutty Guptan vs.  Avara [(1994) 2 SCC 642] the appellant  was  the judgment-debtor in a suit  for  specific performance  agreement for sale of immovable property.   The question  before  the  Court was whether  application  under Section 28 of the Act was maintainable on the execution side in  a decree passed in the same suit by the appellate court. Plaintiff-respondents  suit for specific performance though dismissed  by  the trial court was decreed by the  appellate court  which  granted one month time to deposit the  balance amount  of consideration.  The judgment-debtor filed  second appeal  in  the  High  Court against the  decree  which  was dismissed.  The decree-holder deposited the amount after the time  fixed  by  the appellate Court but before  the  second appeal  was dismissed.  Decree- holder applied for execution of  the decree.  The judgment-debtor filed an application in these  very  proceedings  under Section 28 of  the  Act  for rescission  of the contract which had resulted in passing of

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the  decree on the ground that the balance consideration was not  deposited  within one month of the decree by the  trial Court.  the Executing Court dismissed the application on the ground  that  deposit  had been made within the  time  while holding  that  the application was not maintainable  on  the execution  side.  The High Court on revision also held  that the application was not maintainable in the executing court. This  led  the judgment-debtor to come to this Court.   This Court  observed that when the decree specifies the time  for performance  of the conditions of the decree, on its failure to  deposit  the money, Section 28(1) itself gives power  to the  court to extend the time on such terms as the court may allow to pay the purchase money or other sum which the court has  ordered him to pay.  The Court held, after noticing the conflict  of  decisions  by the Bombay High  Court  and  the Andhra  Pradesh High Court, that when the court which passed the  decree and the executing court is the same, application under  Section  28  can  be filed in  the  executing  court. However,  where  decree  is transferred for execution  to  a transferee  executing then certainly the transferee court is not  the  original court and the executing court is not  the same  court  within the meaning of Section 28 of the  Act. But  when an application has been made in the court in which the  original  suit  was filed and the  execution  is  being proceeded  with, then certainly an application under Section 28 is maintainable in the same court.  Then dealing with the contention  of  the  judgment-debtor that  deposit  was  not within  the  time allowed by the appellate Court, the  Court said :

     The question then is whether it is a fit case for our interference.   It  is  seen that the  decree  for  specific performance  became  final.   While the  second  appeal  was pending,  the  balance  consideration was deposited  and  no steps  have been taken to bring it to the notice of the High Court   that  the  respondent   had  committed  default   in compliance  of  the appellate decree depositing  within  the given  time  the  balance   consideration.   Moreover,   the respondent  has  been in possession of the land for  a  long time.    The   execution   is  on   midway.    Under   these circumstances,   the   command  of   Article  136   of   the Constitution   is  to  draw  the   curtain  and  allow   the application  to lie in quietus where it was laid and dismiss the appeal.

     In  view  of the decision of this Court in  Ramankutty Guptans case (supra) when the trial court and the executing court   are   same,  executing   court  can  entertain   the application  for extension of time though the application is to  be  treated as one filed in the main suit.  On the  same analogy, the vendor judgment-holder can also seek rescission of  the contract of sale or take up this plea in defence  to bar  the  execution of decree.  One of the grounds on  which the trial court dismissed the execution application was that the  decree holder did not pay the balance of  consideration as  per  the sale agreement and also did not pay within  the time  stipulated  by  the court in the decree.   High  Court could   have   certainly  gone   into  this  question   when applications  for  extension  of time was filed  before  it. However,  on the objection by the judgment- debtor, it chose to  send back the matter to the executing court for decision on   these   applications,  which   was  perhaps,   in   the circumstances,  was  not  correct procedure to  adopt.   But then,  at the same time, the High Court put shackles on  the

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discretion  of the executing court by observing that  vendor might  have  felt that after the appeal filed by the  vendor judgment-holder  against the decree for specific performance was  disposed of they can even then deposit the amount or at the time of seeking the execution of the sale deed.

     The  agreement of sale was entered into as far back on February  16,  1980, about 19 years ago.  No explanation  is forthcoming  as  to why the balance amount of  consideration could  not be deposited within time granted by the court and why  no  application  was made under Section 28 of  the  Act seeking  extension of time of this period.  Under Article 54 of  the  Limitation  Act, 3 years period is  prescribed  for filing the suit for specific performance of contract of sale from  the date of the agreement or when the cause of  action arises.   Merely  because  a  suit   is  filed  within   the prescribed  period  of  limitation   does  not  absolve  the vendee-plaintiff from showing as to whether he was ready and willing  to  perform his part of agreement and if there  was non-performance  was that on account of any obstacle put  by the  vendor  or  otherwise.  Provisions  to  grant  specific performance  of an agreement are quite stringent.  Equitable considerations  come  into play.  Court has to see  all  the attendant   circumstances  including  if   the  vendee   has conducted  himself in a reasonable manner under the contract of sale.  That being the position of law for filing the suit for  specific  performance,  can the court as  a  matter  of course allow extension of time for making payment of balance amount  of consideration in terms of a decree after 5  years of  passing of the decree by the trial court and 3 years  of its confirmation by the appellate court?  It is not the case of  the  respondent-  decree holder that on account  of  any fault on the part of the vendor- judgment-debtor, the amount could  not  be deposited as per the decree.  That being  the position, if now time is granted, that would be going beyond the  period of limitation prescribed for filing of the  suit for  specific  performance  of  the  agreement  though  this provision   may   not  be   strictly  applicable.    It   is nevertheless  an important circumstance to be considered  by the  Court.  That apart, no explanation whatsoever is coming from  the decree-holder- respondents as to why they did  not pay  the  balance amount of consideration as per the  decree except  what  the High Court itself thought fit  to  comment which  is  certainly not borne out from the record.   Equity demands  that  discretion be not exercised in favour of  the decree  holder-respondents  and  no  extension  of  time  be granted to them to comply with the decree.

     These  appeals  are,  therefore, allowed  with  costs. Judgment  of  the  High Court is set aside and that  of  the executing court confirmed.