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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 3570 OF 2015

(Arising out of S.L.P.(C) No. 1169 of 2008)

PADMAKUMARI & ORS. ... APPELLANT(S)

VERSUS

DASAYYAN & ORS. ...RESPONDENT(S)

J U D G M E N T

V. GOPALA GOWDA, J.

Leave granted.

2. The concurrent finding of fact recorded by the High

Court of Madras, Bench at Madurai, in Appeal Suit No. 646 of

1994 affirming the judgment and decree dated 15.06.1994 passed

in O.S. No. 63 of 1993 on the file of Sub Court, Kuzhithurai

District is under challenge in this appeal by defendant Nos.

12 to 15 urging various legal grounds.

3. For the sake of convenience, the ranks of the parties

assigned in the plaint filed before the trial court is

adverted to in this judgment.

4. Defendant Nos. 1 to 11 entered into an agreement of

sale on 19.04.1992 in favour of the plaintiff and executed an

unregistered agreement agreeing to sell the suit schedule

property measuring 2.08 acres of land belonging to them. The

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total sale consideration amount is Rs. 65,000/-. Advance

amount of Rs. 2,000/- was agreed to be paid for execution of

sale and the remaining balance consideration is agreed to be

paid within nine months from the date of agreement of sale.

Undisputedly, the remaining balance sale consideration is not

paid on or before 18.04.1993. On 3.02.1993, defendant Nos. 12

to 15 entered into an unregistered agreement (marked as

Exhibit B-1) with defendant Nos. 1 to 11 to purchase the suit

schedule property. As per the said unregistered agreement, the

property is agreed to be sold for Rs. 80,000/-. Advance amount

of Rs. 10,000/- was also paid to defendant Nos. 1 to 11. On

19.04.1993, the suit schedule property Sale Deed No. 75 of

1993 (marked as Exhibit B-3) was executed by defendant Nos. 1

to 11 in favour of defendant Nos. 12 to 15. Out of the sale

consideration of Rs. 80,000/- a sum of Rs. 10,000/- is paid as

advance amount, a further sum of Rs. 30,000/- is paid at the

time of execution of the sale deed, remaining Rs. 40,000/- is

retained to be paid in favour of defendant Nos. 1 to 11, free

of interest, within one month from the date of disposal of

I.A. No. 208 of 1990 in A.S. No. 95 of 1990 pending on the

file of District Court Nagarcoil. The appeal was filed

challenging the decree for partition in O.S. No. 11 of 1978.

5. The plaintiff got issued the legal notice (Exhibit A-3)

on 29.04.1993 to defendant Nos. 1 to 15 demanding execution of

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the sale deed as per the agreement (Exhibit A-1). Defendant

Nos. 12 to 15 replied vide Exhibit B-7. The other defendants

did not reply to the demand made by the plaintiff, therefore,

he was constrained to institute original suit on 14.06.1993

before the Sub Court Kuzhithurai. The written statements were

filed by all the defendants denying the claim of the plaintiff

inter alia contending that the time is the essence of the

contract as per unregistered agreement of sale (Exhibit A-1).

As the plaintiff had agreed to pay remaining sale

consideration of Rs. 63,000/- within nine months from the date

of agreement, the same has not been paid. Since there is

breach of contract on the part of the plaintiff and,

therefore, he is not entitled for decree of specific

performance in respect of the suit schedule property. Further,

it is pleaded that the plaintiff has not shown his readyness

and willingness to perform his part of the contract, as

required under Section 16(c) of the Specific Relief Act,

therefore, defendant Nos. 1 to 11 contended that the plaintiff

is not entitled for a decree of specific performance of the

suit schedule property. Defendant Nos. 12 to 15 denied the

plaint averments, however, specifically pleaded that they are

the bona fide purchasers of the part of the suit schedule

property and they are protected under Section 19(b) of the

Specific Relief Act. On the basis of the said pleadings the

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case went for trial. Before the trial court the plaintiff and

defendants were examined in support of their respective claim

and counter claim. The trial court on the basis of the

pleadings and evidence adduced on record has formulated the

following four issues:

(i) Whether specific performance of the

contract as sought by plaintiff is

allowable?

(ii)Is sale deed dated 19.04.1993 valid?

(iii)Have D12 to D15 purchased the suit

property in good faith?

(iv)What are the reliefs plaintiff is

entitled?

6. The trial court on the basis of pleadings and the

evidence produced on record has appreciated and answered the

Issue Nos. 1 and 2 in favour of the plaintiff. Issue No. 3 was

answered against defendant Nos. 12 to 15 and, accordingly,

answered Issue No. 4 and passed the decree of specific

performance in favour of the plaintiff in respect of the suit

schedule property with certain directions to him.

7. Aggrieved of the said judgment and decree of the

learned trial judge, defendant Nos. 12 to 15 preferred an

appeal before the High Court raising certain grounds inter

alia urging that findings and reasons recorded on the

contentious issue Nos. 1 to 3 are erroneous in law and are

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liable to be set aside and prayed to set aside the judgment

and decree of the trial court and disposal of the appeal suit

instituted by them. On the basis of the rival legal

contentions, the High Court has formulated certain points and

the same have been answered in favour of the plaintiff by

assigning reasons, rejecting the legal contentions urged in

the Appeal Suit on behalf of defendant Nos. 1 to 15. The

concurrent finding recorded in the impugned judgment of the

High Court is under challenge in this appeal urging certain

grounds and prayed to set aside the impugned judgment and

decree.

8. Mr. Thomas P. Joseph, learned counsel for defendant

Nos. 12 to 15 (appellants herein) questioned the correctness

of the concurrent finding of fact recorded on the contentious

issues raised by the defendants, which the High Court has

answered in favour of the plaintiff, contending that as per

the unregistered agreement there is a clause stipulating the

time of nine months for payment of balance consideration of

Rs. 63,000/- to defendant Nos. 1 to 11 out of the total sale

consideration of Rs. 65,000/-, which has not been complied

with by the plaintiff. Under Section 55 of the Indian Contract

Act, 1872 once the time is specified in the agreement, time is

the essence of the contract and the parties shall adhere to

the same. Non-adherence of the said contract rendered the

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contract repudiated, therefore, the plaintiff is not entitled

for a decree of specific performance.

9. Learned counsel for defendant Nos. 12 to 15 relied upon

the judgments of this Court in the cases of Gomathinayagam

Pillai & Ors. vs. Palaniswami Nadar, AIR (1967) SC 868 para

4, Harold Wood Brick Company Ltd. vs. Ferris, (1935) King's

Bench Division 198, Saradamani Kandappan vs. S. Rajalakshmi

& Ors., AIR (2011) SC 3234 para 25.

10. Another ground urged by learned counsel for defendant

Nos. 12 to 15 is that the pleadings on behalf of the plaintiff

must be strictly in conformity with Order 6 Rule 3 of the Code

of Civil Procedure (“CPC” for short) which provides Form of

pleadings and placed strong reliance upon Clause 3 of Form No.

47 in Appendix 'A' which reads thus:

“The plaintiff has been and still is ready

and willing specifically to perform the

agreement on his part of which the

defendant has had notice”.

He further places reliance upon the plaint averments at para

6, which is quoted hereinafter, submitted that the said

averments are not strictly in conformity with Order 6 Rule 3

CPC of Form 47 of the aforesaid clause, therefore, the

plaintiff has not shown readyness and willingness which is the

condition precedent as required under Section 16(c) of the

Specific Relief Act, that has been ignored by both the Courts

below, therefore, the concurrent finding recorded by the High

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Court in the absence of this important aspect of the case has

not only rendered the finding erroneous in law but the same

are contrary to the judgments of this Court. Learned counsel

placed strong reliance upon the following judgments in the

cases of Jugraj Singh & Anr. vs. Labh Singh & Ors., (1995) 2

SCC 31 at para 6, Ram Awadh vs. Achhaibar Dubey, (2000) 2

SCC 428, Ouseph Varghese vs. Joseph Aley & Ors., (1969) 2

SCC 539, Abdul Khader Rowther vs. P.K. Sara Bai & Ors.,

(1989) 4 SCC 313, Pushparani S. Sundaram & Ors. vs. Pauline

Manomani James (D) & Ors., (2002) 9 SCC 582, Manju Nath

Anandappa Urf Shivappa Hansai vs. Tammanasa & Ors.,(2003) 10

SCC 390 paras 15, 17 and 18.

11. The last legal contention urged by learned counsel for

defendant Nos. 12 to 15 (appellants herein) is that the courts

below have erred in law in not noticing the right conferred

upon defendant Nos. 12 to 15 under Section 19(b) of the

Specific Relief Act as they are bona fide purchasers since

they, after proper verification and obtaining the

clarification of the property in question, have paid full

consideration to defendant Nos. 1 to 11 towards the property

in question, therefore, the concurrent finding of the High

Court not noticing this important aspect of the matter while

affirming the judgment and decree passed by the trial court

rendered the finding erroneous in law and, therefore, the same

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are liable to be set aside.

12. Learned counsel appearing on behalf of the plaintiff

(Respondent No. 1 herein) sought to justify the impugned

judgment and decree of the High Court contending that the High

Court in exercise of its appellate jurisdiction examined the

correctness of the finding rendered by the trial court on the

contentious issues on proper appreciation of the pleadings and

evidence on record and the same has been reaffirmed by the

High Court by assigning valid and cogent reasons, hence, there

is no ground for this Court to interfere with the same in

exercise of its appellate jurisdiction as there is either

miscarriage of justice or error in the judgment and decree

and, therefore, he prayed to dismiss the appeal.

13. Learned counsel for the plaintiff placing strong

reliance upon paragraphs of the plaint in support of the

contention that the plaintiff has averred relevant pleadings

with regard to the non compliance of the condition enumerated

in the agreement of sale by defendant Nos. 1 to 11 in

non-measuring the suit schedule property before calling upon

the plaintiff to pay the balance sale consideration amounts

to breach on the part of the defendants. This plea has not

been specifically denied by them in their written statement as

required under Order 8 Rule 5 CPC, therefore, he submitted

that both the courts below have rightly examined the case on

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proper evaluation of the pleadings and evidence on record and

rightly granted the decree in favour of the plaintiff and the

same need not be interfered with by this Court in exercise of

this Court's jurisdiction.

14. With reference to the aforesaid rival legal

contentions, we are required to examine the correctness of the

concurrent finding recorded on the question of stipulation of

period to perform the contract by the plaintiff to pay the

balance consideration of Rs. 63,000/- on the basis of which he

was awarded the decree of specific performance. We have

carefully examined this aspect in the backdrop of the

recitals contained in the unregistered agreement to sell the

suit schedule property to the plaintiff. As could be seen from

the said agreement the plaintiff has agreed for payment of the

balance sale consideration amount within nine months from the

date of execution of the agreement to sell. The relevant

recitals of Exhibit A1 are extracted hereunder for better

appreciation of the contentions urged in this regard by the

learned counsel on behalf of defendant Nos. 12 to 15:

“You are willing to purchase this schedule of

property for Rs. 65,000/-. As we were fully

aware that there was no possibility to

purchase this property for a higher price by

anybody else, we also were willing to sell

for the same amount and hence we received an

advance of Rs. 2,000/- from the total price.

This amount of Rs. 2,000/- is received to

relieve us a little from our debt trap. You

should pay the balance of consideration

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Rs. 63,000/- within 9 months .”

(emphasis supplied)

15. The above clause in the agreement to sell clearly

indicates that the plaintiff has agreed to perform his part

of the contract by paying balance consideration amount of Rs.

63,000/- within nine months. This clause falls within the

first part of Article 54 of the Limitation Act, 1963. In

support of this contention learned counsel for defendant Nos.

12 to 15 has placed strong reliance upon the judgments of this

Court. It would be suffice to refer to the case of

Gomathinayagam Pillai and Ors. vs. Palaniswami Nadar, AIR

1967 SC 868. Para 9 of the said judgment reads as under:

“9. The Trial Judge apparently confused two

independent issues one of default in

performance of the contract by the respondent

and the other of readiness and willingness of

the respondent to carry out his part of the

contract. As observed earlier, if time is not

of the essence of the contract, default

occurs when a party serves a notice making

time of the essence and requires the other

party within a reasonable time fixed by the

notice to carry out the terms of the

contract, and the party served with the

notice fails to comply with the requisition.

In this case no such notice was served, and

from the mere delay in calling upon

appellants 1 & 2 to complete the contract,

default on the part of the respondent cannot

be inferred. But the Trial Court also came to

the conclusion that the conduct of the

respondent as evidenced by his statement and

his witnesses proved that he was not ready

and willing to perform his part of the

contract. This the Court inferred from the

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delay of three months after April 30, 1959

and the evidence given by the respondent to

explain that delay and other circumstances.”

The other judgments relied upon by the learned counsel

reiterate the same proposition. It would be worthwhile to

extract paragraph No. 22 of the judgment in the case of Chand

Rani (D) by Lrs. vs. Kamal Rani (D) by Lrs., (1993) 1 SCC

519, which reads as follows:

“22. In Hind Construction Contractors case

(1979) 2 SCC 70) quoting Halsbury's Laws of

England, this Court observed at pages 1154-55

as under:

"In the latest 4th edn. of Halsbury's

Laws of England in regard to building

and engineering contracts the statement

of law is to be found in Vol. 4, Para

1179, which runs thus:

'1179. Where times is of the essence of

the contract. - The expression time is

of the essence means that a breach of

the condition as to the time for

performance will entitle the innocent

party to consider the breach as a

repudiation of the contract.

Exceptionally, the completion of the

work by a specified date may be a

condition precedent to the contractor's

right to claim payment. The parties may

expressly provide that time is of the

essence of the contract and where there

is power to determine the contract on a

failure to complete by the specified

date, the stipulation as to time will be

fundamental. Other provisions of the

contract may, on the construction of the

contract, exclude an inference that the

completion of the works by a particular

date is fundamental; time is not of the

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essence where sum is payable for each

week that the work remains incomplete

after the date fixed, nor where the

parties contemplate a postponement of

completion.

Where time has not been made of the

essence of the contract or, by reason of

waiver, the time fixed has ceased to be

applicable, the employer may by notice

fix a reasonable time for the completion

of the work and dismiss the contractor

on a failure to complete by the date so

fixed.' (emphasis supplied)

It will be clear from the aforesaid

statement of law that even where the parties

have expressly provided that time of the

essence of the contract such a stipulation

will have to be read along with other

provisions of the contract and such other

provisions may, on construction of the

contract, exclude the inference that the

completion of the work by a particular date

was intended to be fundamental; for instance,

if the contract were to include clauses

providing for extension of time in certain

contingencies or for payment of fine or

penalty for every day or week the work

undertaken remains unfinished on the expiry

of the time provided in the contract such

clauses would be construed as rendering

ineffective the express provision relating to

the time being of the essence of contract.

The emphasis portion of the aforesaid

statement of law is based on Lamprell v.

Billericay Union [(1849) 3 Exch 283, 308];

Webb v. Hughes [(1870) LR 10 Eq 281] and

Charles Rickards Ltd. v. Oppenheim.[ [1950] 1

K.B. 616]."

16. The said legal contention urged on behalf of defendant

Nos. 12 to 15 has been strongly rebutted by learned counsel on

behalf of the plaintiff contending that the question of

payment of balance consideration amount of Rs. 63,000/- within

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nine months would have arisen after the terms and conditions

of the contract agreed upon by defendant Nos. 1 to 11 if they

had measured the suit schedule property. They have not

discharged their part of the contract stipulated in the

agreement to sell, therefore, it is urged by him that time was

not the essence of the contract as defendant Nos. 1 to 11

themselves have failed to perform their part of the agreement.

17. The said contention urged on behalf of the plaintiff is

unacceptable to us that the question of taking measurement

would not arise before the plaintiff perform his part of the

contract regarding the balance consideration within the period

stipulated in the agreement. Undisputedly, that had not been

done by the plaintiff in the instant case within the

stipulated time and the notice was issued by the plaintiff

only after one year, therefore, the plaintiff has not adhered

to the time which is stipulated to pay the balance

consideration amount to defendant Nos. 1 to 11 which is very

important legal aspect which was required to be considered by

the Courts below at the time of determining rights of the

parties and pass the impugned judgment. The Courts below have

ignored this important aspect of the matter while answering

the contentious Issue Nos. 1 and 2 in favour of the plaintiff

and granted decree of specific performance in respect of the

suit schedule property. The said finding of fact is contrary

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to the terms and conditions of the agreement, pleadings and

the evidence on record. Accordingly, we answer the said issues

in favour of defendant Nos. 12 to 15 after setting aside the

concurrent finding of fact recorded by the High Court.

18. The second important legal contention raised by

defendant Nos. 12 to 15 is that the pleadings of the plaintiff

is not in conformity with Order 6 Rule 3 CPC, clause 3 of Form

No. 47 in Appendix 'A', extracted hereinabove. By a careful

reading of paragraph 6 of the plaint makes it very clear that

the averment as provided under clause 3 is not in stricto

sensu complied with by the plaintiff. The same is evidenced

from the averments made at paragraph 6 of the plaint which

reads thus:

“6. The plaintiff is ready and willing to

perform his part of the contract by paying

the balance of sale consideration of

Rs. 63,000/- and take the sale deed in

accordance with the provisions of the

agreement deed dated 19.04.1992.”

19. Upon a careful reading of the abovesaid paragraph we

have to hold that the plaintiff has not complied with the

legal requirement which is mandatory as provided under Section

16 (c) of the Specific Relief Act. Section 16(c) fell for

consideration and has been interpreted by this Court in a

number of cases, referred to supra, upon which reliance has

rightly been placed and the said decisions are applicable to

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the fact situation in support of defendant Nos. 12 to 15 and,

therefore, we have to hold that the concurrent finding of fact

recorded by the High Court on Issue No. 1 is erroneous in law

and is liable to be set aside.

20. The last contention urged is whether defendant Nos. 12

to 15 (the appellants herein) are protected under Section

19(b) of the Specific Relief Act as they being the bona fide

purchasers. Learned counsel for defendant Nos. 12 to 15 has

rightly invited our attention that the non-compliance of the

contract regarding payment of balance consideration to

defendant Nos. 1 to 11 on the part of the plaintiff within

nine months is an undisputed fact and further the agreement of

sale is not registered, as is evidenced from the encumbrance

certificate obtained by defendant Nos. 12 to 15 before they

entered into an agreement (Exhibit B-1). Both the Courts below

have erroneously recorded an erroneous finding on the non

existent fact holding that the agreement of sale in favour of

the plaintiff is a registered document which, in fact, is not

true. The same is evidenced from the encumbrance certificate.

More so, defendant Nos. 12 to 15 before entering into the

agreement with defendant Nos. 1 to 11 have made proper

verification from the competent authority to purchase the part

of the suit schedule property and got the agreement of sale

(Exhibit B-1) executed in their favour, from defendant Nos. 1

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to 11 and thereafter, they got the sale deed registered by

paying sale consideration amount. As could be seen from the

agreement of sale and registered sale deed, which is marked as

Exhibit B-3, it is very clear that defendant Nos. 12 to 15

have paid the sale consideration amount of the property,

therefore, the reliance placed upon Section 19(b) of the

Specific Relief Act as they being the bona fide purchasers,

the specific performance of contract cannot be enforced

against the transferees. Defendant Nos. 12 to 15 being the

transferee as they have purchased the suit schedule property

for value and have paid the money in good faith and without

notice of the original contract.

21. In view of the aforesaid facts, the purchase of the

suit schedule property by defendant Nos. 12 to 15 for a

valuable consideration is established by the above defendants

by adducing evidence on their behalf before the trial court.

Both the Courts below have omitted to consider this important

piece of pleadings as also the material evidence on record

thereby the concurrent finding recorded on the contentious

issues has been rendered erroneous in law and is liable to be

set aside. Accordingly, we answer the said issues in favour of

defendant Nos. 12 to 15.

22. For the reasons stated supra, defendant Nos. 12 to 15

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(appellants herein) must succeed. Accordingly the appeal is

allowed, the impugned judgments and decrees of the High Court

and the trial court are hereby set aside and the suit is

dismissed. There shall be no order as to costs.

...........................J.

(V. GOPALA GOWDA)

..........................J.

(C. NAGAPPAN)

NEW DELHI,

APRIL 7, 2015