G.Jayashree & Ors vs Bhagwandas S.Patel & Ors on 19 December, 2008
• Summary of the Case
1. Plaintiffs in a suit for grant of decree for specific performance of contract are before us aggrieved by and dissatisfied with the judgment and decree dated 13.11.2007.
2. The basic facts of the matter are not in dispute.
3. Respondents entered into an agreement for sale with Mohammed Kasim Ali and G. Srinivas Reddy, whose heirs and legal representatives are the appellants, for sale of the said property for a sum of Rupees. 18,00,000/-, out of which a sum of rupees. 1,00,000/- was paid as earnest money.
4. Indisputably, besides the above agreement of sale, the said two vendees had also entered into an Agreement of sale with one S. Yadagiri, his sons and some others for sale of land measuring 90 Acres in Survey No. 643 to 658, which is adjacent to the land of the respondents.
5. Indisputably, the owners filed an application for grant of layout not only in respect of Survey No. 36 but also for grant of layout permission in respect of other plots. By a communication dated 26.4.1985, the said Shri Yadagiri was informed about the grant of layout not only in respect of the land of which he was the owner but also in respect of Survey No. 36 subject to the condition of building a road.
6. Admittedly, no road was constructed. Plaintiffs wanted to have a fresh layout only in respect of Survey No.36
7. At this stage the owners of the land served a notice to the defendant no.1 to 3 through their advocate requesting them to build the road as per layout or the agreement of sale will be forfeited.
8. The vendees responded to the said notice stating that the joint layout had resulted in much inconvenience. was stated that the vendees `were ready and prepared to develop the said land immediately as and when the owners obtain a separate layout for the land held by them'.
9. Indisputably, Mohammed Kasim Ali did not want to involve himself in the matter of purchase of the said land in terms of the said agreement of purchase. Alleging breach of the terms of the said agreement on the part of 8 the defendant Nos. 1 to 3, he filed a suit bearing O.S. No. 19 of 1986 in the Court of V Additional Judge, City Civil Court at Hyderabad.
10. Indisputably, an interim order was passed therein. The matter was taken to the High Court. The said Mohammed Kasim Ali died on 19.4.1987 and after his death his wife, the legal representative, entered into a compromise with the owners of the land out of the court.
11. Indisputably, G. Srinivas Reddy filed a suit bearing O.S. No. 171 of 1986 on the file of the Munsif Magistrate, West and South, Ranga Reddy, for grant of mandatory injunction.
12. The owners also filed a suit for damages being O.S. No. 679 of 1986. The said suit was, however, dismissed for default.
13. Indisputably, O.S. No. 171 of 1986 filed by G. Srinivas Reddy on the file of the Munsif Magistrate, West and South, Ranga Reddy, for grant of mandatory injunction was transferred to the Court of Additional Subordinate Judge, Ranga Reddy district at Saroornagar and was renumbered as O.S. No. 21 of 1993.
14. G. Srinivas Reddy, thereafter filed another suit for specific performance of the agreement of sale bearing O.S. No. 191 of 1987 in the Court of Additional Subordinate Judge Ranga Reddy district at Saroornagar through his constituted attorney.
15. Issues were framed in both the suits separately. Issue No. 2 framed in O.S. No. 21 of 1993 reads as under: Whether the Defendants 1 to 3 are liable under the suit agreement of sale to obtain a separate layout for the suit land from the Urban Development Authority concerned?
16. No doubt it is for the plaintiff and D4 to pay the necessary expenses and also make efforts to obtain the sanction from HUDA being the vendees. The responsibility of D1 to D3 or their G.P.A. is to sign the necessary documents required for obtaining layout sanction and also to deposit the amounts paid by the Plaintiff and D4 required for the fee and charges as they did in the instant case. Since the Defendants 1 to 3 agreed to convey the suit property in favour of plaintiff and D4 or their nominees, D1 to D3 are bound to obtain a separate layout for the suit land, at the request of the Plaintiff and D4.
17. Moreover it cannot be said that each bit of the suit land got equal potentiality. The suit land consists of more than 11 acres and it is revealed that the suit land is adjacent to the road. Therefore, the piece of land which is quite adjacent to the road will have more value than the land beyond the land adjacent to the road. Therefore, the Plaintiff can opt for the specific performance of the entire suit agreement and the suit filed by the 4th Defendant vide O.S. No. 19 of 1986 on the file of the 5th Additional Judge, City Civil Court will not have any adverse effect on the rights of the Plaintiff. At the most the plaintiff can be compelled to pay the balance of sale consideration which remained to be paid after the amount paid by the Plaintiff as earnest money.
18. As regards the issue as to whether the appellants were ready and willing to perform their part of the contract, it was opined that as plaintiffs could purchase the land even without layout and keeping in view the fact that the sale deed was to be executed within a period of eight months from the date of grant of approval for tentative layout plan, the learned trial judge held that there was not much delay in filing the suit for enforcement of the agreement on the part of the plaintiff and he had all along been ready and willing to perform his part of the contract. The learned judge, furthermore, opined that a suit for specific performance of contract at the instance of the plaintiff alone was maintainable although Mohammed Kasim Ali was not to be a party to the deed of sale. The High Court, on the other hand, reversed the said findings of the learned trial judge holding that: (1) in terms of Clause 3 of the agreement, it was for the vendees to obtain the tentative layout plan; (2) in view of the stand taken by Mohammed Kasim Ali resulting in entering into a compromise between him and the owners of the land, the contract was not kept alive and in view of the fact that the suit was instituted by the joint purchaser, the plaintiff could not enforce agreement of sale against the wish of the joint purchaser; and
(3) the suit for specific performance of the contract having been filed five days before expiry of three years from the date of expiry of contract was a clear pointer to show that the plaintiff was not ready and willing to perform his part of contract.
19. 17. Mr. R.F. Nariman, learned Senior Counsel appearing on behalf of the appellants raised the following contentions:
i. A suit for specific performance can be instituted even at the instance of any of the joint promisees as a common layout work was not contemplated under the agreement and, thus, the High Court committed a serious error in arriving at a finding that the appellants were not ready and willing to perform his part of the contract.
ii. The suit having been filed within the prescribed period of limitation, the High Court committed a serious error of law in opining that time was of essence of the contract and, thus, the suit for specific performance was not maintainable and it should have been filed much earlier, although in fact the same had been filed within a period of one and half years from the date of refusal on the part of the owners - defendants 1 to 3, to abide by the terms of the contract.
iii. Order II Rule 2 of the Code of Civil Procedure being not applicable in a case of this nature, the High Court committed a serious error in applying the principles thereof.
20. 18. Mr. P.P. Rao, learned Senior Counsel appearing on behalf of the respondents, on the other hand, urged:
i.The agreement in question being a development agreement should be construed having regard to the purport and object for which the same was executed.
ii. All parties having proceeded on the basis that development agreement in respect of two different plots of land would be given effect to jointly and a layout having been obtained for both the plots together, the plaintiff could not have been insisted at a later stage for individual or separate layout in respect of the plot in Survey No. 36.
iii. In any event, in a case of this nature, this Court should not exercise its discretionary jurisdiction under Article 136 of the Constitution of India as the High Court has refused to pass a decree of specific performance of contract.
21. The learned trial judge applied the principle of novation of contract having regard to the subsequent conduct of the parties. The said principle, in our opinion, is applicable as against the said G. Srinivas Reddy. The agreement in question is not an agreement for sale simplicitor. The parties thereto were aware that only for the purpose of development of the said plot the agreement had been entered into. If that be so, the vendors were right in enforcing the terms of the said agreement/contract keeping in view the aforementioned purpose in mind. The joint promisee might not have rescinded the contract prior to the filing of the suit for damages against the defendants 1 to 3 but then when he filed the suit claiming refund of the amount of advance which he had paid by way of his share as also the damages, the contract stood rescinded so far as he was concerned. His claim might have been based on the purported breach of the terms of the contract on part of defendants No. 1 to 3, but they had arrived at a compromise. True it is that G. Srinivas Reddy filed a written statement in the suit filed by the Mohammed Kasim Ali. He expressed his intention to pay the amount of consideration for the entire land but evidently the suit did not go to trial. He did not insist therefor. When an application for settlement arrived at between Mohammed Kasim Ali and the defendant Nos. 1 to 3 was filed, he did not object thereto. As he had appeared even before the High Court through counsel, it was obligatory on his part to oppose the said compromise between the vendors and his co-vendee.
22. It may, however, immediately be noticed that the court therein proceeded on the basis that the original contract was required to be enforced just as it was made even though one of their co-vendees refused to join them then and only on that basis the said principle was evolved.
23. Reliance has also been placed by Mr. Nariman on Jahar Roy (Dead through L.Rs.) and Anr. v. Premji Bhimji Mansata and Anr. : 1SCR770 wherein, in terms of the agreement, defendants were to be entitled to all box-office collections, but they were to contribute a sum of Rs. 5275/- every month towards the expenses and was also to pay the same within the time prescribed. This Court, having regard to the provisions contained in Section 45 of the Indian Contract Act.
24. Grant of a decree for specific performance of contract is a discretionary relief. There cannot be any doubt whatsoever that the discretion has to be exercised judiciously and not arbitrarily. But for the said purpose, the conduct of the plaintiff plays an important role. The courts ordinarily would not grant any relief in favour of the person who approaches the court with a pair of dirty hands.
25. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 1/2 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.
26. Keeping in view the facts and circumstances of this case, we think, it is not a case where we should exercise our discretionary jurisdiction under Article 136 of the Constitution of India. We refuse to interfere with the discretionary jurisdiction exercised by the High Court particularly when the learned trial court had not adverted to this aspect of the matter at all.
27. For the views we have taken, we do not think it necessary to deal with other contentions raised by Mr. Rao including the applicability of the provisions of Order II Rule 2 of the Code of Civil Procedure. The appeals are dismissed with costs. Counsel fee assessed at Rs. 25,000/-.