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HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU
Reserved on: 05.10.2023 Pronounced on:07.11.2023
CFA No. 1/2005
Pran Nath aged 66 years 2.
(a) Smt. Sudesh Kumari W/o. Late. Sudagar Shah
(b) Rajesh Kumar Gupta S/o. Late Sudagar Shah
(c) Vikram Kumar Gupta S/o. Late Sudagar Shah
(d) Raman Kr. Gupta, S/o. Late Sudagar Shah 3. Smt. Raj Kumari aged 57 W/o. Shri Pran Nath 4. Smt. Sudesh Kumari aged 60 years, W/o. Shri Sudagar Shah 5. Dr. Sandeep Kumar aged 34 years 6. Er. Randeep Kumar aged 32 years, Sons of Sh. Pran Nath 7. Smt. Chander Kanta aged 46 years, wife of Sh. Vinod Kumar Appellants Nos. 2 to 7 th. Shri Pran Nath, appellant No. 1 All residents of 116-A, Bakshi Nagar, Jammu
…..Appellant(s)/Petitioner(s)
Through: Mr. Z. A. Shah, Sr. Adv. with Mr. Jagpaul Singh, Adv. Q
Shri Raghubir Khajuria, Son of Shri Hari Chand Khajuria, R/o. H. No. 41- A, Patoli Magotrian, Jammu .…. Respondent(s)
Through: Mr. P. N. Raina, Sr. Adv. with Mr. J. A. Hamal, Adv.
CFA No. 2/2005
1 (a) Smt. Sudesh Kumari W/o. Late. Sudagar Shah (b) Rajesh Kumar Gupta S/o.
…..Appellant(s)/Petitioner(s)
CFA Nos. 1/2005 & 2/2005
Late Sudagar Shah (c) Vikram Kumar Gupta S/o. Late Sudagar Shah (d) Raman Kr. Gupta, S/o. Late Sudagar Shah 2 Pran Nath aged 66 years S/o. of Sh. Amar Nath 3 Smt. Raj Kumari aged 57 W/o. Shri Pran Nath 4 Smt. Sudesh Kumari aged 60 years, W/o. Shri Sudagar Shah 5 Dr. Sandeep Kumar aged 34 years 6 Er. Randeep Kumar aged 32 years, Sons of Sh. Pran Nath 7 Smt. Chander Kanta aged 46 years, wife of Sh. Vinod Kumar All residents of 116-A, Bakshi Nagar, Jammu Appellants Nos. 1 and 3 to 7 th. their power of attorney, Shri Pran Nath, appellant No. 2
Through: Mr. Z. A. Shah, Sr. Adv. with Mr. Jagpaul Singh, Adv. Q
Shri Raghubir Khajuria, Son of Shri Hari Chand Khajuria, R/o. H. No. 41- A, Patoli Magotrian, Jammu .…. Respondent(s)
Through: Mr. P. N. Raina, Sr. Adv. with Mr. J. A. Hamal, Adv.
CORAM: HON’BLE MR. JUSTICE SANJAY DHAR, JUDGE
JUDGMENT
By this common judgment, two appeals, one bearing CFA No. 2/2005 which is directed against judgment dated 16.12.2004 passed by the learned 1st Additional District Judge, Jammu (hereinafter to be referred as the trial court) in a suit for Specific Performance of agreement to sell filed by the respondent
CFA Nos. 1/2005 & 2/2005
herein against the appellants and the other appeal bearing CFA No.1/2005 which is directed against judgment dated 16.12.2004 passed by the trial court in a suit for possession filed by the appellants against the respondent, are proposed to be disposed of. It is pertinent to mention here that the subject matter of both the suits is the same. 2. It appears that respondent-Raghubir Khajuria filed a suit against the appellants seeking specific performance of agreement to sell dated 15.11.1996. It was pleaded by the plaintiff in the said suit that the defendants who happen to be the appellants herein, had entered into an agreement to sell with the plaintiff in respect of the land measuring 15 kanals and 15 marlas in survey No. 727 min situated at Lohan, Paloura for a sale consideration of Rs. 12,37,500/-. According to the plaintiff of the said suit, an amount of Rs. 5000/- was paid to the defendants on 24.10.1996, whereafter, the agreement to sell dated 15.11.1996 was executed and at that time a further sum of Rs. 1.00 lac was received by the defendants. It was agreed by the parties that the plaintiff would make payment of Rs. 1.5 lacs by the end of December, 1996 and rest of the sale consideration was agreed to be paid by the plaintiff by 10.05.1997. According to the plaintiff in the said suit, the possession of the land in question was handed over to him and he was authorized to clear and level the land and convert the same into plots. 3. It was the case of the plaintiff before the trial court that he approached the defendants through their attorney to receive Rs. 1.50 lacs prior to end of December, 1996 but despite being approached several times, they avoided to receive the amount. On 01.01.1997, a notice was issued by the plaintiff to the defendants asking them to receive the payment and execute the sale deed,
CFA Nos. 1/2005 & 2/2005
however, the defendants through their attorney served notice dated 14.01.1997 upon the plaintiff informing him that because he had failed to pay the amount of Rs. 1.50 lacs within the stipulated time, as such, the agreement stands cancelled and the advance paid by the respondent stands forfeited. Vide notice dated 27.1.1997, the plaintiff responded to this notice and annexed a cheque for an amount of Rs. 1.5 lacs along with his response but attorney of the defendants returned the said cheque along with his reply dated 14.02.1997. It was pleaded by the plaintiff that he was always ready and willing to perform his part of the contract, but the defendants were avoiding the execution of the sale deed. It was also pleaded that the plaintiff has spent an amount of Rs. 4.5 lacs on levelling and development of the land and he has also raised construction of a room on the said land. On these grounds, the plaintiff sought specific performance of contract dated 15.11.1996. 4. The defendants, who happen to be the appellants herein, contested the suit by filing their written statement. In their written statement, the defendants admitted the execution of the agreement to sell. However, they denied having handed over possession of the suit land to the plaintiff-respondent herein. According to the defendants, the plaintiff was only permitted to level the suit land and convert it into plots. It was also contended that the plaintiff failed to make the payment of Rs. 1.5 lacs up to 31.12.1996 and because the time was essence of the contract, as such, the agreement to sell became voidable at their option. The defendants took a stand that they have rescinded the contract so there is no question of specific performance of the same. It was also pleaded that the plaintiff had taken over the forcible possession of the suit land and he
CFA Nos. 1/2005 & 2/2005
is liable to pay compensation for its use and occupation, besides being liable to eviction. 5. It is pertinent to mention here that during pendency of the suit, the defendants filed an application for amendment of the written statement by seeking incorporation of plea that there are certain interpolations and insertions in clause (6) of the agreement to sell, which have been added after the execution of the said deed without the knowledge of the defendants and as such, the same are not binding upon them. This application was allowed by the trial court vide its order dated 16.03.2002. Vide the same order, the application of the defendants seeking production of photocopy of the agreement to sell, which according to the defendants, is the actual agreement to sell, was dismissed. However, vide judgment dated 16.12.2002 passed by this Court in a civil revision petition challenging the aforesaid order of the trial court (CR No.46/2002), the defendants were permitted to place on record the photocopy of the agreement to sell with a rider that inference in this regard shall be drawn by the trial court at the time of final disposal of the suit and it was also provided that effect of modified written statement and the plea taken by the defendants in the said written statement shall be taken up for consideration by the trial court at the time of final disposal of the suit. Accordingly the defendants filed the amended written statement and also placed on record photocopy of the agreement to sell, which according to them, was the actual agreement to sell without alleged interpolations. 6. On the basis of the pleadings, the learned trial court framed the following issues:
CFA Nos. 1/2005 & 2/2005
Whether the defendant has refused to accept Rs. 05 lakh which was offered by the plaintiff to him which the plaintiff as per agreement to sell was required to pay up to 31.12.1996? OPP 2. In case issue No. 2 is not proved whether failure to comply with the said clause rendered the agreement to sell voidable as the payment was the essence of the contract? OPD 3 Whether the plaintiff has failed to perform his part of the agreement and the defendants have right to avoid the contract? OPD 4. Whether the plaintiff is left with only remedy of recovering double the amount of earnest money? OPD 5. Whether the agreement never permitted the plaintiff to take possession which he has taken forcibly only in order to complete transaction and raised one room? OPP 6. Whether the plaintiff has made the plots on spot by levelling and developing the land and has spent Rs. 4.5 lakhs? OPP 7. To what relief the plaintiff is entitled?” 7. During pendency of the aforesaid suit, the appellants herein also filed a suit against the respondent before the trial court seeking possession of the land which is subject matter of agreement to sell dated 15.11.1996. The factual narration leading to filing of the said suit as contained in the plaint is exactly the same as is the factual narration contained in written statement filed by the appellants in the suit for specific performance of the agreement to sell filed by the respondent. Therefore, there is no need to reiterate those facts herein. The respondent, who happens to be the defendant in the aforesaid suit for possession filed by the appellants, filed his written statement and in his written statement whatever was stated by him in the plaint of the suit for specific performance of agreement to sell has been stated in the written statement. These facts are also not required to be reiterated. 8. Vide order dated 16.12.2002 passed in Civil Revision No. 46/2002, a direction was issued by this Court that with a view to avoid conflicting judgments in the two suits, the same would be tried by one and the same court
CFA Nos. 1/2005 & 2/2005
and the judgments in both the suits would be passed on a single date. Accordingly, both the suits were assigned to the court of 1st Additional District Judge, Jammu. The trial court framed the following issues in the suit for possession. “1. Whether the present suit can proceed as for the same land earlier suit between the parties regarding specific performance of the contract is pending in this Hon’ble Court? OPP 2. Whether the present suit is liable to be stayed under sec. 10 CPC because of the fact that the earlier suit for specific performance of the contract filed by the defendant against the plaintiff is pending in the court regarding the same land? OPD 3. Whether this suit has been properly valued for court fee and jurisdiction when admittedly the agreement to sell was executed for Rs. 12,37,500/- OPP 4. Whether the plaintiffs are entitled to compensation for use and occupation of the land from the defendant at the rate of Rs. 5000/- from 01.05.1995 to ending Aug. 1998? OPP 5. Whether the plaintiff can claim the possession of the land when as per the agreement to sell executed between the parties regarding the same land, the possession was given to the defendant for levelling etc? OPP 6. Whether the defendant has spent Rs. 4.50 lac on levelling and making improvements and construction of a room over the said land? OPP 7. Whether the suit for possession of the land is maintainable when a room already stands constructed on the said land and the land has been converted into plots by levelling the same? OPP 8. Relief.” 9. The appellants examined witnesses, namely, Pran Nath, Amarjeet Singh, Rajiv Gupta, Shanker Singh and Boki Ram in the two suits, whereas respondent besides examining himself as a witness, examined Chaman Lal Khajuria, Joginder Singh Manhas, Mahesh Khajuria and Kuldeep Samotra as witnesses in support of his case in the two suits. 10. The learned trial court after hearing the parties and after appreciating the evidence and the documents on record, came to the conclusion that the respondent had failed to prove that attorney of the appellants had refused to
CFA Nos. 1/2005 & 2/2005
accept Rs. 1.50 lacs which he had offered to him and which he was required to pay up to 31.12.1996. However, the learned trial court came to the conclusion that time was not the essence of the contract as the contract was to be completed by 10.05.1997 and even prior to that the appellants had called off the contract. Thus, according to the learned trial court, the respondent could not be termed as defaulter and he is not guilty of breach of terms of the contract. The learned trial court also came to the conclusion that because the respondent herein was permitted to take possession of the land in question and to develop the same into plots, as such, it is not a case of forcible occupation of the suit land. On the basis of these findings, the learned trial court decreed the suit for specific performance of agreement to sell in favour of the respondent and dismissed the suit for possession filed by the appellants. 11. The appellants have challenged the impugned judgments passed by the learned trial court on the grounds that time was essence of the contract so far as it is related to payment of amount of Rs. 1.50 lacs and this aspect of the matter has not been taken note of by the learned trial court. It has been further contended that once the trial court came to the conclusion that there was breach of terms of contract on the part of the respondent, the decree of specific performance could not have been passed in his favour. It is also contended that relief of specific performance of an agreement is discretionary in nature and once it was proved that there were interpolations and forgery in clause (6) of the agreement to sell, discretionary relief of specific performance of agreement to sell could not have been granted in favour of the respondents. It is further contended that there was a specific covenant in the agreement to sell which provided that possession of the land would be given to the respondent
CFA Nos. 1/2005 & 2/2005
after the full payment is made but still then the learned trial has, on the basis of erroneous appreciation of evidence on record, concluded that the possession of the land in question was handed over by the appellants to the respondent. It has been contended that the trial court failed to appreciate that the respondent was only permitted to level the suit land and convert it into plots. 12. I have heard learned counsel appearing on behalf of the parties and perused the grounds of appeal, impugned judgments and the record of the trial court. 13. Learned Senior Counsel appearing for the appellants has vehemently argued that the covenant with regard to the payment of Rs. 1.50 lacs by 31.12.1996 as contained in the agreement to sell was essence of the contract, though the execution of the sale deed may not have been essence of the contract. Therefore, once the respondent defaulted in payment of said amount by 31st December ,1996, the agreement became voidable at the option of the appellants. On the other hand, learned Senior Counsel appearing for the respondent has contended that it is a settled law that time is not the essence of the contract relating to immovable property unless it is specifically provided and the circumstances clearly indicate it. The learned Senior Counsel has contended that the learned trial court has rightly interpreted the covenants of the agreement to sell and concluded that the time was not the essence of the contract in view of the fact that date of completion of the sale was fixed as 10.05.1997. Thus, the first point for determination is whether time was essence of the contract with reference to payment of Rs.1.50 lacs by ending December, 1996, and if so, what is its effect.
CFA Nos. 1/2005 & 2/2005
Before determining the merits of the rival contentions raised by the learned Senior Counsel appearing for the parties, it would be necessary to discuss the legal position on this aspect of the matter. The legal position as regards the nature of a contract relating to the sale of immovable property has been discussed by a Constitution Bench of the Supreme Court in the case of Chand Rani v. Kamal Rani, (1993) 1 SCC 5191. The Supreme Court has outlined the principles in the following manner: “…It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It has to be ascertained whether under the terms of the contract the parties named a specific time within which completion was to take place, really and in substance it was intended that it should be completed within a reasonable time. An intention to make time the essence of the contract must be expressed in unequivocal language.” Relying upon the earlier decisions of this court in Gomathinayagam Pillai case [ 1967 (1) SCR 227 and Govind Prasad Chaturvedi v. Hari Dutt Shasrti, 1977(2) SCC 539, this Court further held that fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. Where the contract relates to sale of immovable property, it will normally be presumed that the time is not the essence of the contract. Thereafter this court held that even if time is not the essence of the contract, the Court may infer that it is to be performed in a reasonable time : (i) from the express terms of the contract; (ii) from the nature of the property and (iii) from the surrounding circumstances as for example, the object of making the contract. The intention to treat time as the essence of the contract may however be evidenced by circumstances which are sufficiently strong to displace the normal presumption that time is not the essence in contract for sale of land. In Chand Rani, clause (1) of the agreement of sale required the balance consideration to be paid as under: "Rs.98,000/- will be paid by the second party to the first party within a period of ten days only and the balance Rs.50,000 at the time of registration of the sale deed....". This court held that time regarding payment of Rs.98,000 was the essence, on the following reasoning: "The analysis of evidence would also point out that the plaintiff was not willing to pay this amount unless vacant delivery of possession of one room on the ground floor was given. In cross-examination it was deposed
CFA Nos. 1/2005 & 2/2005
that since income-tax clearance certificate had not been obtained the sum of Rs. 98,000 was not paid. Unless the property was redeemed the payment would not be made. If this was the attitude it is clear that the plaintiff was insisting upon delivery of possession as a condition precedent for making this payment. The income-tax certificate was necessary only for completion of sale. We are unable to see how these obligations on the part of the defendant could be insisted upon for payment of Rs. 98,000. Therefore, we conclude that though as a general proposition of law time is not the essence of the contract in the case of a sale of immovable property yet the parties intended to make time as the essence under Clause (1) of the suit agreement." 15. It is manifest from the ratio laid in the aforesaid judgment that unless there is intention to make time the essence of the contract, in an agreement relating to sale of immovable property, time cannot be regarded as the essence of the contract. The aforesaid ratio has been consistently followed by the Supreme Court and various High Courts of the country till date. However, question arises as to what would be the significance of the timelines for performance of various obligations by the parties in an agreement to sell. If it is presumed that in an agreement to sell relating to immovable property, time is not the essence of the contract, then can it be said that there is no significance of the timelines given in the said agreement as regards the performance of obligations by the parties to the agreement. The answer to the said question has to be in negative. Otherwise, the covenants of the agreement, which lay down timelines for performance of obligations by the parties to the agreement, would be rendered redundant. This cannot be the intention of the parties, while framing an agreement. While interpreting the covenants of an agreement, it needs to be understood as to whether timely performance of the obligations arising under the agreement is the essence of the contract. 16. In the above context, we need to understand the legal position in light of the provisions contained in Sections 51 to 55 of the Contract Act. Section 51 of the Contract Act provides that when a contract consists of reciprocal promises
CFA Nos. 1/2005 & 2/2005
to be simultaneously performed, no promisor needs to perform his promise unless the promisee is ready and willing to perform his reciprocal promise. Section 52 of the Contract Act provides that where the order in which reciprocal promises are to be performed is expressly fixed by the contract, they shall be performed in that order. Section 53 of the Contract Act provides that when a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented. Section 54 of the Contract Act provides that when a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise, last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise. Section 55 of the Contract Act deals with effect of failure to perform at a fixed time a contract in which time is essential. It provides that if time is not essence of the contract, the contract would not become voidable by the failure to do such thing at or before the specified time but the promisee would be entitled to compensation from the promisor for any loss occasioned to him by such failure. 17. In the light of the aforesaid legal position, let us now advert to the facts of the present case. It would be essential to notice the covenants of the agreement to sell which is subject matter of these appeals for determining the issue whether payment of amount of Rs. 1.50 lacs was an essential term, the breach whereof would make the agreement voidable. The agreement dated 15.11.1996 contains as many as six clauses, the translated version whereof reads as under:
CFA Nos. 1/2005 & 2/2005
(1) Rs. 1.00 lac has been paid by the proposed vendee to the proposed vendors on the day of execution of the agreement and that payment of further sum of Rs. 1.50 lacs by the end of December, 1996 to proposed venders shall be the obligation of the proposed vendee. (2) The date of completion of the contract has been fixed as 10.05.1997. (3) If up to the aforesaid date of completion of the transaction, balance amount is not paid by the proposed vendee in that case the advance amount received by the proposed vendors shall stand forfeited and they would be entitled to cancel the agreement and if proposed vendors upon receipt of full amount of sale consideration, avoid to complete the contract, they shall be liable to pay double the amount of advance received by them to the proposed vendees in one go. (4) The proposed vendors have agreed to sell whole of the land which is subject matter of the agreement and in case there is any deficiency in the land on spot, they shall not be held responsible for the same. (5) On the date when the proposed vendors receive the whole of the sale consideration, they would be bound to hand over the possession of the land in question to the proposed vendee and if the proposed vendee desires, he can get a general power of attorney executed in his favour. (6) (Unaltered) The proposed vendee can clear and level the land at his cost and he would convert it into plots but he would not be competent to sell or execute a sale deed in respect of these plots
CFA Nos. 1/2005 & 2/2005
and that the proposed vendors shall be competent to transfer these plots. After whole of the sale consideration is received by the proposed vendors, the proposed vendee would be competent to sell these plots and the proposed vendors shall have no objection to the same. (7) (Altered) The proposed vendee can clear and level the land at his cost and he would also convert the same into plots but he would not be competent to sell or execute the sale deed in respect of these plots. However, in respect of the plots, which the proposed vendee would sell up to 10.05.1997, the proposed vendors would be competent and bound by such transfer. After whole of the sale consideration is received by proposed vendors, the proposed vendees would be competent to sell these plots and the proposed vendors will have no objection to the same. (Emphasis supplied on altered portion) 18. For determining the issue raised by the learned Senior Counsel appearing for the appellants, the purport of clauses No. 1, 2 and 3 of the agreement as quoted above, needs to be understood and analysed. As per clauses (1) and (2), the respondent was to pay an amount of Rs.1.5 lacs up to end of December, 1996 and the date of completion of the transaction was fixed as 10.05.1997. Clause No. 3 of the agreement further clarifies that if by 10.05.1997, whole of the sale consideration is not paid by the proposed vendee, it would entail cancellation of the agreement and forfeiture of advance amount paid by the proposed vendee. Thus, in terms of the agreement, the time fixed for completion of the transaction was 10.05.1997 and consequences of failure to adhere to the obligations under the agreement
CFA Nos. 1/2005 & 2/2005
would come into play only after 10.05.1997 and not prior to that. The agreement nowhere provides that if amount of Rs. 1.5 lacs is not paid by the proposed vendors by ending December, 1996, it would entitle the proposed vendors to call off the contract or to take any other action against the proposed vendee. Therefore, in terms of Section 55 of the Contract Act failure to perform the obligation regarding the payment of Rs. 1.5 lacs by the respondent by ending December, 1996, does not make the contract voidable at the option of the proposed vendors. This is so because no consequences are provided in the agreement to sell for failure to pay Rs. 1.50 lacs to the appellants. The time for completion of the transaction has been fixed as 10.05.1997. The consequences of default, as per the terms of the agreement, take effect only after 10.05.1997 19. The learned trial court has rightly held that failure to stick to the timelines provided in the agreement for payment of Rs. 1.50 lacs would not make the agreement to sell redundant. In view of the nature of covenants of the agreement to sell (ExPW-RK), it can be stated with certainty that time was essence of the contract, but that time was to expire on 10.05.1997 and not on 31.12.1996. Thus, it can also be safely stated that time was not essence of the contract with reference to the covenant regarding payment of 1.50 lacs by the respondent to the appellants before ending December, 1996. The contention of the learned Senior Counsel appearing for the appellants, therefore, is without any merit. 20. The second issue that arises for determination in this case is as to whether in the facts and circumstances of the case, the trial court was justified in granting the discretionary relief of specific performance of agreement to sell in favour
CFA Nos. 1/2005 & 2/2005
of the respondent. The first contention in this regard that has been raised by the learned Senior Counsel appearing for the appellants is that total sale consideration fixed in terms of the agreement to sell is 12,37,500/- whereas in terms of the agreement, only Rs. 1.00 lac was received as advance by the appellants which constitutes less than 10% of the total value of the property. The learned Senior Counsel has submitted that discretionary relief of specific performance in favour of the respondent upon payment of a paltry sum of amount as advances should not have been granted by the trial court. 21. Section 22 of the J&K Specific Relief Act, which is applicable to the instant case, provides that jurisdiction to grant a decree of specific performance is discretionary in nature and that the court is not bound to grant such relief merely because it is lawful to do so. The provision further provides that the discretion is to be exercised upon sound and reasonable grounds guided by judicial principles. It is also provided that in a case where circumstances under which the contract is made are such as to give plaintiff an unfair advantage over the defendant or in a case where performance of the contract would involve some hardship on the defendant which he did not foresee, the courts may not exercise the discretion to grant a decree of specific performance. Grant of decree of specific performance is an exception to Section 73 of the Contract Act which provides for relief of damages in case of breach of a contract. However, the Court has to exercise the power to grant a decree for specific performance of a contract only in appropriate cases and not in every case where a plaintiff proves breach of contract on the part of the defendant. 22. The Supreme Court in the case of Sardamani Kandappan v S. Rajalakshmi and others, (2011) 12 SCC 18, had an occasion to consider the aspect
CFA Nos. 1/2005 & 2/2005
relating to grant of discretionary relief of specific performance. In the context of the instant case, it would be apt to refer to paras 37 and 43 of the judgment, which read as under: "37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non-performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and "non-readiness". The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and received rupees ten thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining rupees ninety thousand, when the property value has risen to a crore of rupees. xxxxxx xxxxxxx xxxxxxx 43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanandam. (i) The courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored. (ii) The courts will apply greater scrutiny and strictness when considering whether the purchaser was "ready and willing" to perform his part of the contract. (iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time- limits stipulated in the agreement. The courts will also "frown" upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean that a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three-year period is intended to assist the purchasers in special cases,
CFA Nos. 1/2005 & 2/2005
as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part- performance, where equity shifts in favour of the purchaser."
After taking note of the aforesaid observations of the Supreme Court, the Delhi High Court in the case of A. K. Narula vs Iqbal Ahmed, 2013 (1) ILR (Delhi) 315, observed as under: “16. A reading of the aforesaid paras shows that Courts have a bounden duty to take notice of galloping prices. Surely it cannot be disputed that the balance of convenience i.e. equity in the present case is more in favour of the defendants who have only received 10% of the consideration. If the hammer has to fall in the facts of the present case, in my opinion, it should fall more on the plaintiff than on the defendants inasmuch as today the defendants cannot on receiving of the balance consideration of `44,00,000/-, and even if exorbitant rate of interest is received thereon, purchase any equivalent property for this amount. Correspondingly, the plaintiff has had benefit of 90% of sale consideration remaining with him (assuming he has any) and which he could have utilized for purchase of assets including an immovable property. In specific performance suits a buyer need not have ready cash all the time and his financial capacity has to be seen and thus plaintiff can be said to have taken benefit of the 90% balance with him. It is well to be remembered at this stage that in a way that part of Specific Relief Act dealing with specific performance is in the nature of exception to Section 73 of the Contract Act, 1872 i.e. the normal rule with respect to the breach of a contract under Section 73 of the Contract Act, 1872 is of damages, and, the Specific Relief Act, 1963 only provides the alternative discretionary remedy that instead of damages, the contract in fact should be specifically enforced. Thus for breach of contract the remedy of damages is always there and it is not that the buyer is remediless. However, for getting specific relief, the Specific Relief Act, 1963 while providing for provisions of specific performance of the agreement (i.e. performance instead of damages) for breach, requires discretion to be exercised by the Court as to whether specific performance should or should not be granted in the facts of each case or that the plaintiff should be held entitled to the ordinary relief of damages or compensation.” 24. From the foregoing analysis of the legal position, it is clear that when a proposed vendee has paid only a small portion of the sale consideration then such a vendee would not ordinarily be entitled to the discretionary relief of specific performance, particularly when the matter relating to grant of specific
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performance is being decided after a lapse of decades. If the proposed vendee is asked to pay the balance sale consideration after a lapse of a considerable period of time, it would work very harshly against the proposed vendor as he would not be able to purchase even a fraction of the property from the balance sale consideration which he would receive at the time of grant of decree for specific performance. 25. Coming to the facts of the instant case, the amount of sale consideration, as already indicated, is Rs. 12,37,500/- and the advance received by the appellants is only Rs. 1.00 lac, which is less than 10% of the total sale consideration. The agreement has been executed way back in the year, 1996. 27 years have elapsed since then. In case, the appellants are asked to receive the balance amount of sale consideration, i.e. Rs. 11,37,500/- at this juncture and to part with 15 kanals and 15 marlas of land located in Jammu City, it would be very harsh upon them. The prices of the property in Jammu City have gone through the roof in the last three decades on account of the fact that most of the Kashmir Valley and even certain Districts of Jammu Province have remained disturbed and the people from these disturbed areas have migrated to Jammu City. Not only this, Jammu City is the only peaceful place in the Union Territory of J&K where decent medical and educational facilities are available which attracts the people from all over the Union Territory to construct their houses over here. This has resulted in tremendous increase and escalation of property prices in Jammu. It is a fact of common knowledge that even when prices of real estate in rest of the country had stabilized and depreciated, Jammu City has not witnessed either depreciation of value of property or even stabilization of property prices during the last three decades.
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In these circumstances, grant of decree of specific performance in favour of the respondent when he has paid only a paltry sum of Rs.100 lacs to the appellants and has defaulted in payment of Rs.1.50 lacs within the time stipulated in the agreement, would not be a proper exercise of discretion. The respondent is not shown to have taken substantial steps towards the fulfilment of his obligation under the terms of agreement, as such, he has rendered himself disentitled to grant of discretionary relief of decree for specific performance. 27. Apart from the above, there are a number of other reasons for which the respondent is not entitled to discretionary relief of specific performance. One of the prime reasons for this is that he has not come to the court with clean hands. The appellants have specifically pleaded in their written submission before the trial court that the respondent/plaintiff had made insertions in the agreement to sell (ExPW RK) without the consent of the appellants, thereby changing the nature of the agreement. In this regard, one of the marginal witnesses to the agreement to sell dated 15.11.1996, Sh. Rajiv Gupta has deposed that at the time when the agreement was executed by the parties in his presence, the inserted portion of the clause (6) of the agreement was not there. The appellant, Madan Lal, who is executant of the said agreement was also stated so in his deposition. There is nothing in the cross examination of the appellant or in the cross examination of Sh. Rajiv Gupta that would discredit their statements in this regard. 28. Learned Senior Counsel appearing for the respondents has contended that the certified true copy of the agreement to sell (ExPW RK) shows that the inserted lines were there in the certified true copy also. He has further
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contended that in the initial written statement filed by the respondent, he had admitted all the contents of the agreement to sell, therefore, he cannot withdraw his admission and resile from inserted portion of clause (6) of the agreement. 29. If we have a look at the agreement to sell (ExPW RK), there is a clear insertion in the said agreement in its clause (6) and it has not been attested by the executants. The unaltered and altered clause (6) has already been quoted in preceding paras of this judgment. As per unaltered clause (6), the respondent was authorized to clear and level the land and thereafter convert it into plots. The clause further provides that the respondent was not authorized to sell or execute the sale deed in respect of any plot and that the appellants would be authorized to sell these plots. The alteration made in the said clause changes it altogether by providing that those plots regarding which the respondent has made any transaction prior to 10.05.1997, the same would be binding upon the appellants. A plain reading of altered clause (6) of the agreement to sell (ExPW RK) would unequivocally lead us to the conclusion that the said clause has been tampered with to the advantage of the respondent. 30. If we read the altered clause (6) in conjunction with other clauses of the contract, it leads to absurd and contrary conclusions. The covenant that respondent would not be authorized to sell and execute sale deed in respect of these plots runs contrary to the altered portion of the same covenant according to which those transactions which the respondent has made up to 10.05.1997 would be binding upon the appellants. To make the things more clear, the subsequent sentence in the same clause, provides that when whole of the
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amount is received by the appellants, the respondent would be authorized to sell the plots. This runs contrary to the inserted covenant, which provides that transactions made by the respondent till 10.05.1997, would be binding upon the appellants. Thus, the interpolation in the agreement to sell does not fit in at all in the context of the agreement leaving alone the manner in which it is written. This clearly suggests that the interpolation has been made subsequently after the execution of the agreement. The insertion makes the whole agreement ambiguous and incapable of being construed in a harmonious manner. 31. These circumstances indicate that the agreement to sell (ExPW RK) has been tampered with at the instance of the respondent, who has tried to gain advantage over the appellants by arrogating to himself the power to transfer the plots without even paying the sale consideration to the appellants. This could not have been the intention of the parties as is clear from the subsequent sentences of the clause (6) of the agreement. The manner in which the insertion in clause (6) of the agreement has been made leaves no manner of doubt in holding that the same has been done after the execution of agreement. These circumstances lend credence to the statements of Sh. Rajiv Gupta and appellant Madan Lal that the insertion was not there at the time of execution of the agreement. The mere fact that the certified copy of the agreement also contains the insertion does not make any difference because the certified copy which has been produced is only an extract of the register maintained by the concerned petition writer, who has not even been examined as a witness. Thus, it can be safely stated that clause (6) of the agreement to sell has been tampered by the respondent to his advantage without the consent
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of the appellants. This is further strengthened from the fact that the photocopy of the agreement (Mark-A) placed on record by the appellants during trial of the case does not contain the insertions in clause (6). 32. The next question that arises for determination is as to whether the insertion made in the agreement to sell (ExPW-RK) is material in nature so as to make the agreement voidable at the option of the appellants. What is meant by material alteration has been explained in paragraph 1378 of Volume 12 of the Halsburys Laws of England (Fourth Edition) in the following manner “If an alteration (by erasure, interlineation, or otherwise) is made in a material part of a deed, after its execution, by or with the consent of any party to or person entitled under it, but without the consent of the party or parties liable under it, the deed is rendered void from the time of the alteration so as to prevent the person who has made or authorised the alteration, and those claiming under him, from putting the deed in suit to enforce against any party bound by it, who did not consent to the alteration, any obligation, covenant, or promise thereby undertaken or made. The Supreme Court in the case of Seth Loonkaran Sethiya and others vs. Mr. Ivan E. John and others, (1977) 1 SCC 379, while explaining the aforequoted paragraph, observed that a material alteration is one which varies the rights, liabilities or legal position of the parties as ascertained by the deed in its original state or otherwise varies the legal effect of the instrument as originally expressed, or reduces to certainty some provision which was originally unascertained and as such void, or which may otherwise prejudice the party bound by the deed as originally executed. It has been further held that the effect of making such an alteration without the consent of the party bound is exactly the same as that of cancelling the deed. 33. In view of the foregoing legal position, it is clear that once any interpolation or insertion is made in a deed without the consent of a party to the deed, the same
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becomes voidable at the option of the said party. In the instant case as already stated, interpolation has been made in clause (6) of the agreement to sell (ExPW RK) so as to authorise the respondent to sell the plots of land and make the appellants bound by the said transactions, even though as per the unaltered clause (6) as also from the reading of the agreement as a whole, the power to transfer plots of land vests with the appellants till such time whole of the sale consideration is paid by the respondent. This is a material alteration giving advantage to the respondent over the appellants. Once it has been established that covenants of the agreement to sell (ExPW RK) have been changed without consent of the appellants to their disadvantage, the agreement itself becomes unenforceable at the option of the respondent. 34. Apart from the above, a party who comes to the court basing his claim on a forged and interpolated document, is disentitled from claiming discretionary relief of specific performance. A Division Bench of Madras High Court in the case of S. K. Panchaksharam Mudaliar and others vs. T. V. Kanniah Naidu and others, 98 L.W. 674, has held that when there is a material alteration in an agreement to sell property, the plaintiff cannot enforce such an agreement. The High Court of Madras after examining the evidence on record in that case dealt with the issue regarding effect of material alteration in an agreement to sell in the following manner: “For these reasons. we hold that the contention advanced on behalf of the appellant that this is not a material alteration has to be rejected. The fact that there was no plea in the written statement that there was an interpolation would not matter at all because even a casual look at the document is clearly suggestive of the material alteration. What D.W. 1 in evidence says is that the understanding between the parties was that after the completion of sale the first defendant was willing to obtain possession from the fourth
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defendant. But this cannot be construed as meaning that the first defendant would evict the 4th defendant after which event alone the sale can be concluded. For all these reasons we have not the slightest hesitation in holding that the interpolation is a material alteration acting to the prejudice of the first defendant and therefore the plaintiff cannot enforce his right on the suit agreement Ex A. 1.” 35. From the foregoing analysis of the law on the subject, it is clear that once it is established that the agreement to sell has been materially altered after its execution, the same cannot be enforced. This aspect of the matter has not been dealt with by the learned trial court at all while decreeing the suit. It was an important aspect of the matter having a material bearing upon the decision as to whether or not discretion for grant of relief of specific performance was to be exercised in the instant case. This vital aspect of the matter has escaped the notice of the learned trial court, while passing the impugned judgment and decree. The fact that the learned trial court omitted to consider this aspect of the matter, renders the impugned judgment/decree unsustainable in law. 36. Another aspect which needs to be taken note of is that the plea of the respondent that he had approached the appellants with an amount of Rs. 1.50 lacs before 31.12.1996 has been found false by the learned trial court. It has been found after the trial of the case that the respondent did not approach the appellants with an amount of Rs. 1.50 lacs as such, he was in breach of one of the conditions of the agreement to sell. This finding has not been challenged by the respondent. In spite of falsity in the claim of the respondent, the learned trial court has granted the discretionary relief of decree of specific performance in his favour. The Supreme Court in the case of Lourdu Mari David and others v Louis Chinnaya Arogiaswamy and others, 1996(5) SCC 589 has held that a party who seeks to avail the equitable jurisdiction of a court and
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specific performance being equitable relief, must come to the court with clean hands. It has been held that a party who makes false allegation does not come with clean hands and is not entitled to equitable relief. Applying the said ratio to the instant case, the respondent becomes disentitled to the grant of decree of specific performance. 37. There is yet another aspect of the matter which has not been considered by the learned trial court. It is an admitted position that the appellants had cancelled the contract by serving notice dated 14.01.1997 which has been duly received by the respondent. The respondent did not challenge this cancellation of agreement in the suit for specific performance, which he filed before the trial court. It was incumbent upon the respondent to seek a declaration with regard to the termination of the agreement to sell effected by the appellants. Without declaring the action of termination of the agreement to sell as illegal, the decree of specific performance in favour of the respondent could not have been granted. The Supreme Court in the case of I. S. Sikander(D) by LRs and others vs. K. Subramani and others, (2013) 15 SCC 27, has held that in the absence of declaration to declare the termination of agreement to sell by defendants as bad in law, grant of specific performance on the basis of agreement to sell and grant of relief of permanent injunction is not maintainable in law. 38. That takes us to the impugned judgment passed by the learned trial court, whereby suit for possession filed by the appellants has been dismissed. Once it has been held that decree of specific performance of agreement to sell (ExPW RK) is not legally sustainable, the occupation of respondent over the
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suit property becomes unauthorized. Even otherwise, if we have a look at the covenants of agreement to sell (ExPW RK), the respondent has been permitted to clear and level the suit land and to convert it into plots. The agreement further provides that when the proposed vendors receive whole of the sale consideration, the proposed vendors shall be obliged to put the proposed vendee into the possession of the land in question. When the covenants of the agreement to sell are harmoniously construed, it means that possession of the land in question was to be delivered to the respondent only upon payment of full consideration, which he never did. As per the covenants of the agreement, he was only permitted to clear and level the land and to convert it into plots. This does not mean that the possession of the property in question was delivered to the respondent. 39. The finding of the learned trial court that the appellants had delivered the possession of the suit property out of their own will and volition is contrary to the covenants of the agreement to sell (ExPW RK). Section 92 of the Evidence Act excludes evidence of oral agreement, when the terms of any contract have been reduced into writing in a form of a document. Thus, once it was clearly laid down in the agreement to sell (ExPW RK) that the possession was to be delivered to the respondent only upon payment of full sale consideration and that the respondent was permitted only to clear and level the land, no oral evidence to the contrary could have been admitted by the trial court. So it is not a case where the respondent has come in possession of the property in question on the basis of permission of the appellants but it is a case where the respondent has encroached upon the land in question without the consent of the appellants. Therefore, his possession over the suit
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land is that of an unauthorized occupant and, as such, he is liable to be evicted from the suit property. 40. For all what has been discussed hereinabove, both the appeals are allowed and the impugned judgments passed by the learned trial court are set aside. The suit filed by the respondent for specific performance of the contract is dismissed whereas, the suit filed by the appellants for possession of the land in question is decreed in their favour as against the respondent with costs throughout. Accordingly, the respondent is directed to hand over possession of the suit land to the appellants forthwith. 41. Record of the trial court along with a copy of this judgment be sent back.
(SANJAY DHAR)
JUDGE
Jammu 07.11.2023 Rakesh PS
Whether the order is speaking: Yes/No Whether the order is reportable: Yes/No