REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1077 OF 2009

(Arising out of SLP (C) No.6949 of 2005)

Azhar Sultana … Appellant

Versus

B. Rajamani & Ors. … Respondents

J U D G M E N T

S.B. Sinha, J.

1.Leave granted.

2.Subsequent purchasers who were arrayed at a later stage in a suit for

Specific Performance of Contract are before us aggrieved by and

dissatisfied with a judgment and order dated 21.12.2004 passed by a learned

Single Judge of the High Court of Andhra Pradesh at Hyderabad allowing

the appeal from a judgment and order dated 21.7.1993 passed by the First

Additional Judge, City Civil Court, Hyderabad in OS No.1436 of 1981

dismissing the suit of the plaintiff—appellant herein.

3.The factual matrix involved herein is as under :

The property in question admittedly belonged to one Ramesh Chand

Khanna, the original defendant. An agreement of sale was entered into by

and between the appellant and the said Ramesh Chand Khanna in terms

whereof the suit land was agreed to be sold at the rate of Rs.325/- per sq. yd.

A sum of Rs.30,000/- was paid by way of advance.

4.It now stands admitted that on or about 7.12.1981, an application was

filed in terms of Section 27 of the Urban Land Ceiling and (Regulation) Act,

1970. The said application was rejected.

It is also not in dispute that a suit was filed by one Bahadur Hussain

against the original defendant. The said suit was decreed in favour of the

said Shri Bahadur Hussain.

5.Defendant Nos. 5 and 6 entered into a deed of sale dated 31.10.1981

with the said Ramesh Chand Khanna (since deceased) for a land measuring

217 sq. yds. for a consideration calculated at the rate of Rs.48,000/- per

bigha wherefor negotiation had to be entered into for settlement of the

dispute by and between Ramesh Chand Khanna and the said Bahadur

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Hussain. Only after execution of the deed of sale, a notice was issued by

the appellant asking Shri Khanna to execute a deed of sale in his favour.

The suit for specific performance was filed on or about 7.12.1981.

As indicated hereinbefore, in the original suit the defendant Nos.5 and 6

were not impleaded as parties. A written statement was filed by Shri

Khanna on or about 30.8.1983 wherein he disclosed the factum of execution

of the deed of sale dated 31.10.1981. The said defendants were impleaded

as parties. One of the contentions raised by the said impleaded defendants

was that they were subsequent purchasers for value and without notice to

the original agreement for sale entered into by and between the appellants

and the said Shri Khanna.

6.In view of the pleadings of the parties, the learned Trial Judge framed

the following issues :

“1)Whether the plaintiff is entitled for specific

performance of agreement in respect of suit

schedule property?

2)Whether the suit is barred by limitation?

3)To what relief?

Additional issues were also framed, viz. :

1)Whether the defendant No.6 is a bona fide

purchaser of the suit property for value

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without notice of the suit agreement of sale

in favour of the plaintiff?

2)Whether the suit agreement of sale is not

binding on the defendants including the

defendant Nos.5 and 6?”

The learned trial Judge decreed the suit, inter alia, opining that

defendant Nos.5 and 6 had knowledge about the agreement of sale entered

into by and between the plaintiff and Khanna and, thus, the provision of

Section 19(b) of the Specific Relief Act was not attracted.

Indisputably, before the learned Trial Judge, the plaintiff-appellant

did not examine herself. On her behalf, her husband who was also the

holder of a General Power of Attorney was examined.

The learned Trial Judge held the agreement dated 4.12.1978 to be

enforceable. It was furthermore held that the suit was not barred by

limitation. It was observed that although grant of a decree for specific

performance of a contract is discretionary in nature but as the plaintiff had

paid a substantial amount, she should be held to be entitled thereto.

The defendant Nos.5 and 6 preferred an appeal thereagainst. By

reason of the impugned judgment, as noticed hereinbefore, the High Court

allowed the said appeal. The High Court formulated the following points

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for its consideration in terms of Order 41 Rule 31 of the Code of Civil

Procedure, which are as under:

“1)Whether plaintiff is entitled to seek

enforcement of specific performance of

Ex.A1, agreement of sale?

2)Whether sixth defendant is bona fide

purchaser of the suit schedule property

having paid her consideration in good faith

and without notice of the original contract?

And

3)Whether the discretion of this Court ought

not to be exercised in favour of the plaintiff

for specific performance of Ex.A1?”

7.The Court in a suit for specific performance of contract is required to

pose unto itself the following questions, namely:

(1) Whether the agreement of sale is valid and binding on both the

vendor and the vendee; and

(2) Whether the plaintiff has all along been and still is ready and willing

to perform his part of the contract as envisaged under Section 16(c) of

the Specific Relief Act, 1963 (hereinafter referred to for the sake

brevity as ‘the Act’).

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8.It was, however, held that readiness and willingness on the part of the

plaintiff to perform her part of contract having been conveyed in a

telegraphic notice (Exhibit A3); it was obligatory on the part of the plaintiff

—appellant to examine herself in the suit and as she did not examine

herself, the legal requirements envisaged under Section 16(c) of the Act

cannot be said to have been complied with. It was furthermore held that as

no evidence was adduced to establish that the amount of consideration

which was required to be paid to the defendant was available with the

plaintiff, she was not ready and willing to perform her part of contract. It

was observed that for the aforementioned purpose, contents of the legal

notice dated 16/20.11.1981 (Ex.A3) would not be decisive. Noticing that

despite the fact that Section 27 of 1976 Act was declared ultra vires by this

Court in Maharao Sahib Shri Bhim Singhji; Anantalakshmi Pathabi

Ramasharma Yeturi & Ors.; Jodhan Real Estate Development Co. (P) Ltd.

& Anr.; Rajendra Garg Etc.; Shamshul Islam etc. v. Union of India & Anr.

[AIR 1981 SC 234] it was opined that as the said provision was very much

on statute book at the relevant time, the deed of sale could not have been

executed without obtaining such permission and even on that score, the

plaintiff appellant cannot derive any advantage to establish that she had

been ready and willing to perform her part of the contract.

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The learned Judge was of the opinion that as no leave was obtained

by the plaintiff—appellant in terms of Order VIII Rule 9 of the Code of

Civil Procedure to file subsequent written statement wherein, inter alia, it

was alleged that defendant Nos.5 and 6 were subsequent purchasers with

notice of the earlier agreement, no cognizance thereof should have been

taken and, thus, the trial court must be said to have committed an error in

considering the same. It was furthermore opined that the trial Court

committed an error in concluding that there had been a collusion between

the first defendant, 6

th

defendant and Bahadur Hussain as would appear from

the fact that neither PW1 nor PW3 who examined themselves to support the

case of the plaintiff made any statement in that behalf nor was there any

pleading in the plaint to that effect.

It was furthermore opined that as the said defendants were in

possession of the property which would amount to a notice within the

meaning of Section 3 of the Transfer of Property Act, the plaintiff would be

deemed to have knowledge thereabout.

As regards the second point, the High Court opined that having

regard to Section 19(b) of the Act, the plaintiff could not be granted specific

performance of the contract as against the said respondent who was a

subsequent bona fide purchaser for value and without notice in as much as

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DW1 categorically stated that defendant No.1 had no knowledge of the said

agreement for sale.

So far as the third point which fell for determination of the learned

Judge of the High Court is concerned, it was held that as the 6

th

defendant

had purchased the property as far back as on 31.10.1981 and had been in

possession enjoyment thereof for more than 30 years, it was not a case

where the discretionary jurisdiction in terms of Section 20 of the Act should

be exercised in her favour.

10.Mr. Uday .U. Lalit, learned senior counsel appearing on behalf of the

appellant, in support of this appeal would urge :

1)It was not necessary for the plaintiff to examine herself as her

husband who was her General Power of Attorney holder was

examined and particularly having regard to Section 120 of the Indian

Evidence Act.

2)For the purpose of establishing the plea of readiness and willingness

on the part of the vendee, it was not necessary to prove that she had

enough liquid cash in her hand inasmuch as for the said purpose it

would be sufficient to show that she could arrange such an amount

for payment of consideration at the appropriate stage.

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3)Collusion by and between Shri Khanna and Defendant Nos.5 and 6 is

evident from the fact that the deed of sale was executed three years

after the execution of the agreement for sale only for a sum of

Rs.48,000/- although the amount of consideration on the basis of the

agreement for sale dated 4.12.1978 would have come to Rs.65,000/-

and out of which a sum of Rs.35,000/- had already been paid.

4)Defendant Nos.5 and 6 prior to their purchase of the lands in suit

having not made any enquiry nor having issued any public notice, the

onus of proof that they were bona fide purchasers for value and

without notice, was on them.

5)The approach to the entire case on the part of the High Court was

wrong as would appear from the fact that although the subsequent

pleadings were held to be irrelevant, the statements made in

paragraph 9 thereof were relied upon by the High Court for the

purpose of showing that the statements made in paragraphs 5 and 6 of

the written statement had not been adverted to and, thus, would be

deemed to have been admitted, which even otherwise would amount

to misreading and misinterpretation of para nine of the rejoinder.

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11.Mr. Ranjit Kumar, learned senior counsel appearing on behalf of the

respondent, on the other hand, urged :

1)Keeping in view the peculiar facts and circumstances of this case, it is

not a fit case where this Court should exercise its jurisdiction under

Section 20 of the Specific Relief Act and in particular the fact that the

respondent had been living in the premises since 1981.

2)Reasons for payment of a lower amount of consideration in respect of

the suit premises must be considered as Shri Khanna had already lost

his suit in respect of the property to Bahadur Hussain and it was only

because of the intervention of the said respondents, Shri Khanna

could execute the aforementioned deed of sale.

3)Since the agreement for sale dated 4.12.1978 itself stipulates that in

the event any defect in title is found, the vendee was only entitled to

obtain refund of the entire amount of consideration, a decree for

specific performance of contract could not have been granted to the

appellant.

4)Readiness and willingness on the part of a vendee must be judged

from the entire backdrop of events upon taking into consideration the

fact that the plaintiff did not issue any notice and/or filed any suit for

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a a period of three years wherefrom it would be evident that he was

not at all material times ready and willing to perform his part of

contract.

12.Execution of the agreement and/or genuineness thereof is not in

question. Plaintiff indisputably in view of Section 16(c) of the Specific

Relief Act, 1963 was required to make requisite averments that she had all

along been and still is ready and willing to perform her part of the contract

and also establish the same. Shri Khanna in his written statement took a

specific defence that as the property was in litigation, plaintiff developed

cold feet and did not evince any interest to complete the sale transaction by

paying the balance of sale consideration. Even after selling the property,

allegedly, the plaintiff’s representative was asked to take back the amount of

Rs.30,000/-.

13.We would, at this stage, notice the averments made in the said

agreement for sale dated 4.12.1978 :

“(i)That after obtaining the permission from

Celing Officer, I shall execute registration

in favour of the Purchaser within 2 months.

It shall be my responsibility to obtain the

permission from the Ceiling Office.

(ii)That the sale property is free of all private

and public charges and dues. If any

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detected, I shall be responsible to clear the

same. If any defect in title is found, the

entire advance money shall be returned.

(iii)That at the time of the registration, I shall

hand over the possession of the entire

property to the purchaser. The expenses of

the Registration shall be borne by the

purchaser.”

14.Indisputably, Khanna filed an application for grant of approval for

sale of the premises in question. It was necessary as only in 1981, the said

provision was declared ultra vires. In view of the fact that approval was

required to be obtained from the competent authority, the plaintiff could not

have proceeded on the assumption that the suit could be filed within a

period of three years from the date of refusal on the part of the original

defendant to execute the said deed of sale in terms of the agreement.

15.Defendant Nos.5 and 6 were in possession of the properties. The

deed of sale was a registered one. Plaintiff, therefore, must be deemed to

have notice thereof in terms of Section 3 of the Transfer of Property Act.

She, however, neither in her notice nor in her plaint raised any question with

regard to the bona fide or otherwise of the transaction of sale entered into by

and between Shri Khanna and the respondent Nos.5 and 6. Prior to

execution of the said deed of sale dated 30.10.1981, the suit filed by Khanna

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against Bahadur Hussain was dismissed by the appellate court by a

judgment and decree dated 30.11.1978. There does not appear to be any

reason as to why the plaintiff cannot be said to have been not aware thereof.

It was, therefore, expected that not only the subsequent purchasers but also

Bahadur Hussain be impleaded as parties in the suit. It is of some

significance to notice that replication to the said written statement was filed

wherefor no leave was obtained.

16.Indisputably again, although the written statement was filed by Shri

Khanna on 30.8.1983, defendant Nos.5 and 6 were impleaded as parties

only in the year 1987. It is for the first time in the replication, the plaintiff

alleged that there had been a collusion by and between Khanna and Bahadur

Hussain. Bahadur Hussain, however, was not impleaded as a party.

Replication was filed in 1991. Such a contention has been raised only in

1991 which was impermissible in law.

17.It may be true that the name of the purchaser was not disclosed but

then it was open to the plaintiff to ask for other and better particulars of the

said statements. Why she had to wait for a period of more than three years

for impeading the subsequent purchasers as parties has not been explained.

Even an application for injunction was filed only in September 1985.

According to her husband, she came to learn about the sale of property in

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the name of defendant No.5 only on 29.9.1986. Why an inquiry was not

made in the Registration Office although the deed of sale was a registered

one again defies anybody’s comprehension. Readiness and willingness on

the part of the plaintiff, therefore, is required to be considered from the

aforementioned backdrop of events.

18.Section 16(c) of the Specific Relief Act, 1963 postulates continuous

readiness and willingness on the part of the plaintiff. It is a condition

precedent for obtaining a relief of grant of specific performance of contract.

The court, keeping in view the fact that it exercises a discretionary

jurisdiction, would be entitled to take into consideration as to whether the

suit had been filed within a reasonable time. What would be a reasonable

time would, however, depend upon the facts and circumstances of each

case. No hard and fast law can be laid down therefor.

The conduct of the parties in this behalf would also assume

significance.

In Veerayee Ammal v. Seeni Ammal [(2002) 1 SCC 134] it was

observed :

“11. When, concededly, the time was not of the

essence of the contract, the appellant-plaintiff was

required to approach the court of law within a

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reasonable time. A Constitution Bench of this

Hon’ble Court in Chand Rani v. Kamal Rani held

that in case of sale of immovable property there is

no presumption as to time being of the essence of

the contract. Even if it is not of the essence of

contract, the court may infer that it is to be

performed in a reasonable time if the conditions

are (i) from the express terms of the contract; (ii)

from the nature of the property; and (iii) from the

surrounding circumstances, for example, the

object of making the contract. For the purposes of

granting relief, the reasonable time has to be

ascertained from all the facts and circumstances of

the case.”

It was furthermore observed :

“13. The word “reasonable” has in law prima facie

meaning of reasonable in regard to those

circumstances of which the person concerned is

called upon to act reasonably knows or ought to

know as to what was reasonable. It may be

unreasonable to give an exact definition of the

word “reasonable”. The reason varies in its

conclusion according to idiosyncrasy of the

individual and the time and circumstances in

which he thinks. The dictionary meaning of the

“reasonable time” is to be so much time as is

necessary, under the circumstances, to do

conveniently what the contract or duty requires

should be done in a particular case. In other words

it means, as soon as circumstances permit. In P.

Ramanatha Aiyar’s The Law Lexicon it is defined

to mean:

‘A reasonable time, looking at all the

circumstances of the case; a reasonable time

under ordinary circumstances; as soon as

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circumstances will permit; so much time as

is necessary under the circumstances,

conveniently to do what the contract

requires should be done; some more

protracted space than ‘directly’; such length

of time as may fairly, and properly, and

reasonably be allowed or required, having

regard to the nature of the act or duty and to

the attending circumstances; all these

convey more or less the same idea.’ ”

19.It is also a well settled principle of law that not only the original

vendor but also a subsequent purchaser would be entitled to raise a

contention that the plaintiff was not ready and willing to perform his part of

contract. [See Ram Awadh (Dead) by LRs. & Ors. v. Achhaibar Dubey &

Anr. [(2000) 2 SCC 428 para 6]

20.We are, however, in agreement with Mr. Lalit that for the

aforementioned purpose it was not necessary that the entire amount of

consideration should be kept ready and the plaintiff must file proof in

respect thereof. It may also be correct to contend that only because the

plaintiff who is a Muslim lady, did not examine herself and got examined on

her behalf, her husband, the same by itself would lead to a conclusion that

she was not ready and willing to perform her part of contract.

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21.If the plaintiff has failed to establish that she had all along been ready

and willing to perform her part of contract, in our opinion, it would not be

necessary to enter into the question as to whether the defendant Nos.5 and 6

were bona fide subsequent purchasers for value without notice or not.

22.Furthermore, grant of decree for specific performance of contract is

discretionary. The contesting respondents herein are living in the property

since 1981 in their own right. There is absolutely no reason as to why they

should be forced to vacate the said property at this juncture.

23.The plaintiff herself has taken a positive plea that there had been a

collusion between Khanna and Bahadur Hussain. Such a case has neither

been pleaded nor proved. No issue in this behalf was framed. Even

otherwise, the question of the defendant’s discharging the burden would

arise provided the plaintiff is found to be entitled to a decree for specific

performance of contract.

24.We, however, agree with Mr. Lalit that the conduct of the respondent

was not good but, similarly, we cannot lose sight of the conduct of the

appellants as well. She had also not brought any evidence to show that she

did not have the notice of the said deed of sale.

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We, therefore, are of the opinion that interest of justice would be

subserved if this Court refuses to exercise its discretionary jurisdiction in

terms of Section 20 of the Act, directing the defendant to pay a sum of

Rs.60,000/- to the plaintiff which sum would include the amount of advance

paid by her.

25.The appeal is disposed of. In the facts and circumstances of this case,

however, there shall be no order as to costs.

...………………………J.

[S.B. Sinha]

...………………………J.

[Cyriac Joseph]

New Delhi;

February 17, 2009

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