suit without a declaratory relief that cancellation of the agreement is bad in law is not maintainable. On facts and evidence this contention is untenable and consequently the decision cited by the appellants in I.S.Sikandars case (7 supra) can be distinguished on facts. In that case the defendant sent legal notice on 28.03.1985 to the plaintiff extending time to the plaintiff to pay sale consideration on or before 10.04.1985 with a warning that his failure to comply with the same, sale agreement dated 25.12.1983 would be terminated. The plaintiff did not perform his part of the contract within the extended period of legal notice. In those circumstances, the Apex Court treated the contract was not existing by the date of filing the suit for specific performance and held suit is not maintainable without a prayer for declaratory relief. In the instant case, facts were quite different.-The defendants did not issue any notice to the plaintiff cancelling the suit agreement for its alleged breach. They kept silent and issued Ex.A5reply notice wherein they claimed as if they orally informed the plaintiff that suit agreement cancelled. There is no basis for such claim. Hence, the said plea cannot be accepted. Further, the defendants did not take any plea in the written statement regarding non-maintainability of the suit for want of declaratory relief. Hence, they cannot raise this question now.-The defendants are directed to execute a regular registered sale deed in favour of plaintiff within two (2) months from the date of this judgment, failing which the plaintiff will be at liberty to get the sale deed executed and registered through process of Court.

THE HONBLE SRI JUSTICE U. DURGA PRASAD RAO          

C.C.C.A. No.323 of 2007

16-02-2016

Mohammed Abdul Azeem and another.. Appellants    

M/s. South India Prime Tannery Pvt. Ltd., Rep. by its Managing Director,
H.Abdul Lateef.. Respondent

Counsel for Appellants  : Sri P. Shiv Kumar

Counsel for Respondent  : Sri M.S.K. Prasad Sr. Counsel
                          for Sri E.V.V.S.Ravi Kumar
                               
<Gist:

>Head Note:

? Cases referred:
1)      AIR 1993 SC 1742 = (1993) 1 SCC 519  
2)      (1997) 3 SCC 1
3)      (2011) 12 SCC 18
4)      (2009) 17 SCC 27
5)      AIR 2008 SC 143
6)      (2011) 11 SCC 524
7)      (2013) 15 SCC 27
8)      (1996) 5 SCC 589
9)      AIR (1957) AP 307
10)     AIR 1967 SC 868 (1)
11)     AIR 1977 SC 1005
12)     (2004) 8 SCC 689
13)     AIR 2001 SC 2920  =  (2001) 1 SCC 134



THE HONBLE SRI JUSTICE U. DURGA PRASAD RAO          

C.C.C.A. No.323 of 2007


JUDGMENT:  
     Aggrieved by the Judgment and Decree dated 01.10.2007 in
O.S.No.104 of 2003 passed by the learned XII Additional Chief Judge
(FTC), City Civil Court, at Hyderabad, granting specific performance
decree in favour plaintiff in respect of suit schedule property i.e,
undivided half share in premises bearing Municipal No.1-5-6/A (new),
1-5-6(old) admeasuring 516 sq.yards out of 1032 sq.yards situated at
Bakaram, Musheerabad, Hyderabad, the defendants preferred the instant
appeal.
2)      The first defendant is the father and 2nd defendant is the son of 1st
defendant. The Plaintiffs case in brief is that the defendants 1 and 2
along with other sharersSri Mohd. Abdul Mannan and his sonSri  
Mohd. Meraj had entered into an agreement of sale of the premises
bearing Municipal No.1-5-6/A(new), 1-5-6(old) admeasuring 1032
sq.yards situated at Bakaram, Musheerabad, Hyderabad, with the
plaintiff on 25.02.2000 for Rs.49,53,600/- at the rate of Rs.4800/- per
sq.yard and on the same day, the plaintiff paid Rs.5,00,000/- i.e,
Rs.2,50,000/- to defendants 1 and 2 and Rs.2,50,000/- to Sri
M.A.Mannan and to his sonSri Mohd. Meraj. Plaintiff was always
ready and willing to perform his part of contract. It was settled mutually
at the time of agreement that defendants and other sharers would get the
tenant evicted and would deliver vacant possession.  Since the amount
was more than Rs.20,00,000/-, as per the provisions of Income Tax Act,
the defendants have to get clearance from I.T Department and
defendants undertook to obtain the clearance certificate and intimate the
same to plaintiff to get the sale deed registered. Plaintiff has been
reminding and defendants and other sharers to receive the balance sale
amount and to execute the sale deed.  The other sharers Sri M.A.Mannan
and Sri M.Meraj have executed sale deed by receiving their share
amount on 29.11.2001 vide document No.3469/2001. Thereafter,
plaintiff again reminded defendants to execute the sale deed and also got
issued legal notice on 01.02.2003 etc. Hence, the suit for specific
performance of contract of agreement.
3)      The defendants filed common written statement admitting that
they are the lawful owners and half shares and entered into an agreement
of sale and also received an amount of Rs.2,50,000/-. They contended
that plaintiffs company agreed to pay balance sale consideration within
two months but it was never ready with it. There is no mention in the
agreement about the eviction of the tenant.  Plaintiff never reminded the
defendants. Plaintiff did not come forward within the stipulated time.
The defendants informed to plaintiff that sale agreement was cancelled
and the same was accepted by plaintiff. Defendants had no knowledge
about the sale deed dt.21.11.2001 executed by other shareholders. The
suit is filed at the end of three years period hence barred by limitation.
Suit is not maintainable and there is no cause of action.
4)      Basing on the above pleadings, the trial Court framed following
issues:
1)      Whether the suit is barred by limitation?
2)      Whether the plaintiff is entitled for specific performance
of the contract as prayed for?
3)      To what relief?
The following additional issues were framed:
1)      Whether there is delay in filing the suit, if so whether
plaintiff is entitled for relief of specific performance?
2)      Whether Ex.A.1 is admissible in evidence as per the
Stamp Act and Registration Act?
3)      Whether time is essence of contract?
5)      During trial, PW.1 was examined and Exs.A.1 to A.9 were marked
on behalf of plaintiff. DW.1 was examined and Exs.B.1 to B.4 were
marked on behalf of defendants.
6)      The trial Court after appreciation of oral and documentary
evidence, decreed the suit with costs for relief of specific performance of
suit agreement of sale subject to the condition that plaintiff shall deposit
the balance of sale consideration into court within two months from the
date of judgment and thereafter, defendants shall execute regular sale
deed within two months, failing which plaintiff is at liberty to get the
sale deed registered through process of Court.
        Hence, the present appeal by the defendants.
7)      The parties in the appeal are referred as they were arrayed in
O.S.No.104 of 2003 before the trial Court.
8)      Heard the arguments of Sri P.Shiv Kumar, learned counsel for
appellants/defendants and Sri M.S.K.Prasad, learned senior counsel
appearing for Sri E.V.V.S.Ravi Kumar, learned counsel for
respondent/plaintiff. Both the parties have filed their written arguments.
9 a)    Impugning the judgment, the first contention of the
appellants/defendants is that in this case time is the essence of the
contract inasmuch as it is stipulated in Ex.A1agreement that vendors
due to various reasons were in need of money and entered into sale
agreement and hence it was stipulated that time for registration of sale
deed and for payment of balance sale consideration is two months from
the date of agreement but the plaintiff miserably failed to honour the
essential condition of the contract by paying the amount in spite of
repeated reminders of the defendants and thereby, the defendants were
constrained to cancel the agreement. Learned counsel argued that there is
no doubt there is stipulation in Ex.A1 that the vendors/defendants had to
effect the physical measurements of the suit property within the
aforesaid stipulated time of two months and the defendant No.1 (DW1)
in his cross-examination has clearly stated that the measurements were
taken place within 10 or 15 days after the agreement and after arriving at
the correct measurements, he informed to the plaintiff orally through
telephone. Learned counsel vehemently argued that the evidence of
DW1 would manifestly show that defendants performed their part of the
obligation. The aforesaid evidence of DW1 was not disputed by the
plaintiff and hence it must be accepted as proved. Having failed to pay
the amount within two months, the plaintiff filed the suit at the fag end
of three years with false and untenable allegations as if the defendants
having agreed to evict the tenants from the suit premises and obtain
Income Tax Clearance Certificate under Section 230A of Income Tax
Act, failed to fulfil the conditions and hence the plaintiff could not seek
for registration of property in time. He argued that the aforesaid alleged
conditions were not at all stipulated in Ex.A1 and the allegations were
levelled by the plaintiff only to cover up his laches. He concluded that
time is essence of the contract in this case and since the plaintiff failed to
perform its part within time, it does not deserve the equitable relief of
specific performance. In this context he relied upon the following
decisions:
1)      Smt. Chand Rani (dead) by LRs vs. Smt. Kamal Rani (dead) by LRs
2)       K.S.Vidyanadam and others vs. Vairavan
3)      Saradamani Kandappan vs. S. Raja Lakshmi and others  

b)      Secondly, learned counsel argued that plaintiff failed to prove its
ready and willingness to pay the balance sale consideration within the
stipulated time and it belatedly filed Exs.A8 and A9. The amounts
covered by Exs.A8 and A9 were issued by the bank towards working
capital of the plaintiffCompany and those amounts cannot be used to
purchase the suit property and therefore, the plaintiffCompany had no
capacity at the relevant time to purchase the suit property and it was not
ready and willing to perform its part and hence disentitled to the relief.
He placed reliance on the decisions reported in Azhar Sultana v.
B.Rajamani  and Sita Ram v. Radhey Shyam .  
c)      Thirdly, he argued that the plaintiff is not authorized to file the
suit as he is not the Managing Director of the Company and the Board of
Directors have not passed any resolution authorizing him to file the suit.
He relied upon the decision of the Apex Court reported in State Bank of
Travancore vs. Kingston Computers India Private Limited .
d)      Fourthly, it is contended that since the defendants cancelled the
suit agreement, the plaintiff under law has to seek for declaration that
such cancellation is bad in law apart from seeking specific performance
of contract. As the plaintiff has not sought for such declaratory relief, the
suit is not maintainable. He relied upon the decision of the Apex Court
reported in I.S.Sikandar (dead) by LRs vs. K.Subramani and others .
e)      Finally, he argued that the plaintiff has not come to the Court with
clean hands and therefore, it does not deserve equitable relief of specific
performance. In this context, he placed reliance on the decision of the
Apex Court in Lourdu Mari David and others vs. Louis Chinnaya
Arogiaswamy and others .  He thus prayed to allow the appeal and set
aside the decree.
10a)    Per contra, while supporting the judgment, learned senior counsel
Sri M.S.K.Prasad firstly argued that time is not the essence of the
contract in respect of immovable properties and so also in the present
case. Giving reasons, he submitted that two months time is prescribed
only for registration but not for payment of balance of sale consideration
because sale consideration has to be ascertained after arriving at the
extent of the land on physical measurements and defendants failed to get
measure the suit property before filing suit. Therefore, time cannot be
treated as essence of the contract. He further argued that even assuming
though not admitting that the stipulation of two months is also meant for
payment of balance amount, still the time stipulation cannot be treated as
essence of the contract because the parties by their conduct have not
treated the said period as essence of the contract. DW1 (defendant No.1)
admitted in his cross-examination that he did not give any notice to the
plaintiff informing about the physical measurements and eviction of
tenant and requested the plaintiff to pay the balance amount to execute
the sale deed. Therefore, time cannot be treated as essence of the
contract. In this context, he relied upon the following decisions:
1)      Nannapaneni Subayya Chowdary and another vs. Garikapati  
Veeraya and another
2)      Gomathinayagam Pillai and others vs. Palaniswami Nadar
3)      Govind Prasad Chaturvedi vs. Hari Dutt Shastri and another
4)      Smt.Chand Rani (Dead) by L.Rs vs. Smt.Kamal Rani (Dead) by L.Rs  
(1 supra)
5)      Swarnam Ramachandran (Smt) and another vs. Aravacode  
Chakungal Jayapalan
b)      Secondly, with regard to ready and willingness of the plaintiff,
learned counsel argued that plaintiff took a categorical plea that it was
always ready and willing to pay the amount and in proof thereof it
produced Exs.A8 and A9 showing sufficient balance in its account
during the relevant time. Further, in November, 2001 plaintiff paid the
balance sale consideration to the other half sharers and promptly
obtained Ex.A7registered sale deed from them. The plaintiff also
deposited the balance amount to the credit of the suit in terms of the
judgment within two months in November, 2007. Therefore, all these, he
argued, would amply show the ready and willingness of the plaintiff.
c)      Thirdly, he argued that the contention of the defendants that suit is
not maintainable without a declaratory relief is far-fetching for the
reason such a plea was not taken in their written statement. In fact, the
defendants did not issue any notice cancelling the suit agreement and
hence the plaintiff need not obtain such a declaratory relief and the cited
decision has no relevancy.
d)      Fourthly, he contended that PW1 is the Managing Director of the
plaintiffCompany and he produced copy of Memorandum and Articles  
of Association and therefore, he is authorized to file the suit. He thus
prayed to dismiss the appeal.
11)     In the light of above rival arguments, the points for determination
in this appeal are:

1)      Whether time is essence of the contract in this case?
2)      If Point No.1 is held in negative, whether the plaintiff
was ready and willing to obtain registered sale deed
within reasonable time?
3)      Whether the suit is not maintainable without a prayer for
declaratory relief?
4)      To what relief?

12)     POINT No.1: It is imperative to study the law on the subject
time is essence of the contract. For our study, contracts can be divided
into two categories:
1)      Contracts which do not stipulate any time for performance of
the terms.
2)      The contracts which stipulate such time.
a)      The first category of contracts are covered by Sec.46 of Indian
Contract Act, 1872, which reads thus:
 Section 46 - Time for performance of promise, where no
application is to be made and no time is specified
      Where, by the contract, a promisor is to perform his
promise without application by the promisee, and no time for
performance is specified, the engagement must be performed
within a reasonable time.
Explanation.The question "what is a reasonable time" is, in each
particular case, a question of fact.
b)      In Veerayee Ammal v. Seemi Ammal  the Apex Court tried to
explain the word reasonable than giving its definition. It observed
thus:
Para 14: 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 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 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."
        So, Section 46 of Indian Contract Act envisages that where no
time is stipulated for performance of a promise, the promisor has to
perform the engagement (i.e., promise) within a reasonable time and
what is a reasonable time in an each particular case, is a question of fact
to be determined with reference to the facts and circumstances of that
case.
c)      The Second category of contracts are covered by Section 55 of
Indian Contract Act, 1872, which reads thus:
Section 55 - Effect of failure to perform at fixed time, in
contract in which time is essential:
      When a party to a contract promises to do a certain thing
at or before a specified time, or certain things at or before
specified times, and fails to do such thing at or before the
specified time, the contract, or so much of it as has not been
performed, becomes voidable at the option of the promisee, if
the intention of the parties was that time should be of the
essence of the contract.
Effect of such failure when time is not essentialIf it was not
the intention of the parties that time should be of the essence of
the contract, the contract does not become voidable by the
failure to do such thing at or before the specified time; but the
promisee is entitled to compensation from the promisor for any
loss occasioned to him by such failure.
Effect of acceptance of performance at time other than that
agreed uponIf, in case of a contract voidable on account of
the promisor's failure to perform his promise at the time agreed,
the promisee accepts performance of such promise at any time
other than agreed, the promisee cannot claim compensation for
any loss occasioned by the non-performance of the promise at
the time agreed, unless, at the time of such acceptance, he gives
notice to the promisor of his intention to do so.
     From the above, it is clear that where a party promises to do
certain thing at a specified time and fails to perform the promise before
that time, the contract becomes voidable at the option of the promisee, if
the intention of the parties was that time should be the essence of the
contract. But if, it is not the intention of the parties that time should be
the essence of the contract, the contract does not become voidable by
such failure but the promisee is entitled to damages for loss caused to
him by such failure.  Section 55 delineates that mere non-performance of
the promise by the promisor within the stipulated time will not
automatically empower the promisee to avoid the contract unless it is
established that by making such time stipulation, the parties indeed
intended that the time was the essence of the contract. The intention of
the parties can be determined by the express condition mentioned in the
contract itself or by necessary implication through the facts and evidence
in a given case. It should be noted that Section 55 has not made any
distinction between immovable and movable properties for the purpose
of holding time as either essence or not essence of the contract.
However in India, basing on the British equity principles, it has been
held that so far as immovable property is concerned, there is no
presumption that time is essence of the contract.
13)     Let us peruse the important case law in this regard including the
judgments cited by both parties.
i)      In Nannapaneni Subayya Chowdarys case (9 supra) it was
observed thus:
Para 97:  xx xx xx xx
The effect of the passages quoted above is that in a contract of sale of
immovable property time will not be regarded as of the essence unless
it is shown that the parties intended that their right should depend
upon the observance of time as the essence of the contract.
ii)     In Gomathinayagam Pillais case (10 supra) a Full Bench of
Apex Court observed that fixation of the period within which the
contract is to be performed does not make the stipulation as to the time is
the essence of the contract nor default clause in contract by itself
evidences the intention to make the time as essence.  Time is of essence
if the parties intend to be so and such intention may be evidenced either
by express stipulation or by circumstances which are sufficiently strong
to disbelieve ordinary presumption that in contract for sale of land,
stipulation as to time is not of essence. It was further observed that if
time is not of essence originally, it can be made of essence even
subsequently by serving notice on other party.
iii)    In Govind Prasad Chaturvedis case (11 supra), relying upon the
Gomathinayagam Pillais case (10 supra), the Apex Court observed
thus:
It is settled law that the 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.  When a contract relates to sale
of immovable property it will normally be presumed that the
time is not the essence of the contract. The intention to treat time
as the essence of the contract may be evidenced by
circumstances which should be sufficiently strong to displace the
normal presumption that in a contract of sale of land stipulation
as to time is not the essence of the contract.
iv)     In Smt.Chand Ranis case (1 supra), Constitutional Bench of
Apex Court after referring several decisions, held thus:

 Para 25: From an analysis of the above case law it is clear
that in the case of sale of immovable property there is no
presumption as to time being the essence of the contract. Even if
it is not of the essence of the contract the Court may infer that it
is to be performed in a reasonable time if the conditions are:
1.      from the express terms of the contract;
2.      from the nature of the property; and
3.      from the surrounding circumstances, for example: the
object of making the contract.
v)      In Swarnam Ramachandrans case (12 supra), the Supreme  
Court observed thus:
Para 10: The key issue which is to be decided in this civil
appeal is: whether time was the essence for payment of
Rs.75,000/- on or before 30.9.1981 and whether the said term
was breached. This question does not depend only upon express
stipulation made by the parties, but it also depends upon the
intention of the parties. Notwithstanding that a specific date was
mentioned in the agreement, one has not only to look at the
letter but also at the substance of the contract. Whether time is
of essence is a question of fact and the real test is intention of
the parties. It depends upon facts and circumstances of each
case.
Para 11:  According to Pollock & Mulla's Indian Contract &
Specific Relief Acts - [(2001) 12th Edition page 1086], the
intention can be ascertained from:
i)      the express words used in the contract;
ii)     the nature of the property which forms the subject matter
of the contract;
iii)    the nature of the contract; and
iv)     the surrounding circumstances.
      Having observed above, the Apex Court held that the onus to plead and
prove time is essence of the contract would be on the person alleging so.
vi)     In K.S.Vidyanadams case (2 supra), the observations of Apex
Court can be summed up as follows:
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. 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 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 purchasers in special cases, 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.
14)     So an analysis would show that in the above cases it was
consistently held that in contracts relating to immovable properties, there
was no presumption that time is essence of the contract. A mere
stipulation of a specific time for performing a particular term with penal
provision will not make the time as essence of the contract unless it is
established by the party who pleads time is essence. The intention of the
parties to make the time is essence can be gathered by an express
stipulation in the contract or from the facts and surrounding
circumstances.
a)      Be that it may, we need to peruse another important decision of
Apex Court cited by the appellant reported in Saradamani Kandappans
case (3 supra). In this decision, the general principle that the time is not
the essence of the contract in respect of immovable properties is not
disturbed, but it was observed that the said principle needs to be
revisited. It was observed thus:
Para 42: Therefore there is an urgent need to revisit the
principle that time is not of the essence in contracts relating to
immovable properties and also explain the current position of
law with regard to contracts relating to immovable property
made after 1975, in view of the changed circumstances arising
from inflation and steep increase in prices. We do not propose to
undertake that exercise in this case, nor referring the matter to
larger Bench as we have held on facts in this case that time is
the essence of the contract, even with reference to the principles
in Chand Rani and other cases.
15)     With the law on hand as above, we have to scrutinize whether in
the instant case the parties intended to treat the time as essence of the
contract or not. The controversial condition employed in Ex.A.1
agreement runs as follows:
And the balance amount of sale consideration shall be paid by
the Vendee to the Vendors after physical measurements at the
rate of Rs.4,800/- per Square Yard at the time of registration of
Sale Deed and the time for registration of Sale Deed is 2 months
from the date of this Agreement of Sale
a)      From the above term and also the earlier mentioning and whereas
the vendors due to various reasons and being in need of money have
offered to sell the said house, the defendants would contend that they
were in dire need of money and therefore only they entered into sale
agreement and fixed the stipulation of 2 months for payment of balance
amount and hence, the said time stipulation shall be construed as the
essence of the contract.  On the other hand, the contention of the plaintiff
is that the 2 months time stipulation is only for effecting registration and
not for payment of the balance amount as it depends upon the
measurement of the suit property and upon such measurement and  
arrival of the exact extent, the plaintiff was to pay @ Rs.4800/- per
sq.yard and since the defendants did not get the suit property measured
within the stipulated time or thereafter, the time cannot be treated as
essence of the contract. As a reply, the plea of defendants is that they got
measured the suit property within 10 days after Ex.A.1 and informed to
plaintiff also.  In this back drop, the point is whether time can be held as
essence of the contract.
b)      From the above term what could be understood is that at first the
defendants have to get the physical measurements of the suit property
and inform its correct extent and thereafter the plaintiff has to pay @
Rs.4800/- per sq.yard and the said amount has to be paid at the time of
registration of sale deed and registration has to take place within 2
months from the date of agreement.  In other words, the balance amount
shall be payable within 2 months at the time of registration. So before
making the claim that the time is the essence of the contract, the
defendants must establish that they got the physical measurements of the
suit property within the 2 months period. In the cross-examination,
DW.1 (D.1) claimed that the physical measurements took place 10 or 15
days after Ex.A.1agreement and after arriving the correct
measurements, he has not informed the plaintiff about it by a notice but
he orally informed through telephone. This fact was not challenged by
plaintiff through a rebuttal suggestion. Further, in Ex.A.2 and in the
plaint it has not made any averment that it could not get ready for
registration because of the failure of the defendants to effect the physical
measurements of the suit property.  He made different allegations against
defendants which will be considered later. So at the outset, the
defendants claim that they got physical measurements of the suit
property has to be accepted. Then, it is for plaintiff to pay the balance
amount and obtain registered sale deed within 2 months but it did not do
so. The contention of the plaintiff was that it was always ready with the
money and willing to obtain sale deed but the defendants did not evict
the tenant and obtain the Income Tax Clearance Certificate. On the other
hand, the defendants would contend that those pleas are untenable
because they were not stipulated in Ex.A1 and it was only a ruse to cover
the laches of the plaintiff. Before deciding the veracity of the respective
contentions, first of all it must be scrutinized whether the two months
time stipulation is the essence of the contract and failure of which
disentitles the plaintiff to obtain sale deed.  After a thorough scrutiny of
the facts and evidence, I am of the considered view that time is not the
essence of contract in the instant case.  The reasons are as follows:
i)      The law is that a mere stipulation that the promisor shall
perform a particular term of the contract within a particular
time per se will not make the time as essence of the
contract unless the intention of the parties was to make the
time as essence of the contract. In this case there is no
express stipulation in Ex.A.1 to the effect that time is
essence of the contract.
ii)     In Ex.A.1 it is no doubt mentioned that the vendors due to
various reasons were in need of money and hence they
have offered to sell the suit property. However, in the
absence of the pleading and evidence of the defendants as
to what were the pressing needs and how they were put in
hardship due to the failure of the plaintiff, the aforesaid
mentioning would not serve a better purpose than an empty
rhetoric. In Saradamani Kandappans case (3 supra), the
Apex court in Para-28 observed that the time stipulation
will be considered to be essence of the contract whether
such intention is evident from the express terms or the
circumstances necessitating the sale, set out in the
agreement.  If the vendor discloses in the agreement
reasons for entering into contract for exampleneed to
repay a particular loan before a particular date, or to meet
the urgent time bound need like medical, educational
expenses of the family member or the like, then time will
be held to be the essence of the contract. Needless to say,
the defendants did not adduce any evidence about the
pressing needs which goaded them to enter into the
contract. Even in the contract except mentioning that they
were in need of money, they did not specifically mention
that they were in urgent need of money.
iii)    If the defendants were in pressing need for money and
plaintiff failed to pay the balance amount within the
stipulated time, their natural tendency would be to give
notice to the plaintiff either calling him to pay the amount
and obtain sale deed or cancelling the agreement. They did
not do so but leisurely gave reply to the plaintiffs notice
long after. This conduct of the defendants manifests that
they were not serious about the terms of the contract.
iv)     The other co-sharers have obtained their share of amount
long after the stipulated period of 2 months and executed
Ex.A7sale deed.  It implies they too did not consider the
time as essence of the contract.  Though defendants
pleaded ignorance of the said sale deed, the same cannot be
believed in view of the close relationship between the
parties. Even after Ex.A.7, the defendants did not issue any
notice to plaintiff, cancelling the agreement.  It also infers
that parties have not treated the 2 months stipulation of
time as essence of the contract.
So, time cannot be considered as essence of the contract in this case as
contended by the appellants/defendants. This point is answered
accordingly.
16)  POINT No.2:   As the point No.1 is held negative, it has now to be
seen whether the plaintiff was ready and willing to obtain registered sale
deed within reasonable time or it was guilty of negligence and total
inaction disentitling for specific performance.
a)      The submission of learned counsel for respondent/plaintiff is that
plaintiff was ready and willing to perform its part and in fact plaintiff
Company was having sufficient amount in its account vide Exs.A8 and
A9 and it promptly obtained Ex.A7sale deed from the other
co-sharers and the delay was only on the part of defendants as they have
not evicted the tenant and obtained Income Tax Clearance Certificate.
It was contended that the suit was filed within time and even if the suit
was filed at the fag end of the limitation, the said delay cannot be a
ground to reject the specific performance as obviously the delay was on
account of defendants and they were not in any way prejudiced by the
act of the plaintiff.
b)      In oppugnation, the contention of defendants is that except paying
the advance amount at the time of Ex.A1, the plaintiff did not show its
ready and willingness thereafter and it only issued notice at the fag end
of three years and the conditions of vacating tenant and obtaining
Income Tax Clearance Certificate were not stipulated in Ex.A1 and
hence cannot be raised to justify the wanton delay on the part of
plaintiff.
17)     When time is held not essence of the contract as in the present
case, it must be performed within a reasonable time which is the law.
What is reasonable time has been explained in Veerayee Ammals case  
(13 supra) as per which, reasonable time includes such length of time as
may fairly and promptly and reasonably be allowed or required having
regard to the nature of the act and attending circumstances. It should be
noted at this juncture that in K.S.Vidyanadams case (2 supra) it was
observed that even in the cases of time is not essence of the contract and
suit can be filed within three years as provided in Article 54 of
Limitation Act, still it should be performed within reasonable time
having regard to the terms of the contract and nature of the property.
Further, in the two decisionsAzhar Sultana (4 supra) and Sita Ram
(5 supra) cited by appellants/defendants, the Apex Court held that under
Section 16 (c) of Specific Relief Act, 1963 the burden will be on the
plaintiff to show his continuous readiness and willingness to be entitled
for specific performance and he must also show his blemishless conduct
in this regard.
        In the light of above law, the respective contentions of the parties
have to be scrutinized.
18 a)   Ex.A1agreement was entered on 25.02.2000; Ex.A2notice    
was issued on 01.02.2003 and suit was filed on 24.02.2003. This
chronology of facts will apparently show as if delay was on the part of
plaintiff and it did not act within the reasonable time. However, if the
relevant facts and circumstances are scrutinized, the mist of delay will
be cleared.
b)      After obtaining agreement the plaintiff did not keep silent but
promptly obtained sale deed vide Ex.A7 from the other co-sharers on
29.11.2001, in respect of their 50% share. It shows the plaintiff was
ready and willing to perform its part of contract. Further, Ex.A8 shows
that the State Bank of India renewed the working capital facility to the
plaintiff basing on its net worth. It should be noted that working capital
will be calculated basing on Companys current assets minus its current
liabilities. Ex.A9statement of bank account of the plaintiff shows a
balance of Rs.2,05,54,451.33 ps. as on 12.04.2000. Added to it, the
plaintiffs submission is that it deposited the balance sale amount to the
credit of the suit within two months after decree in November, 2007
which is not disputed. From all these, the ready and willingness of the
plaintiff can be inferred.
c)      Delay is concerned, plaintiffs claim is that the defendants did not
evict the tenants and they did not obtain Income Tax Clearance
Certificate. It is true that these aspects are not specifically stipulated in
Ex.A1. However, their importance cannot be ignored in view of
condition Nos.2 and 4 in Ex.A1. As per condition No.2, the vendors
agreed to sell the property free from all encumbrances, charges, prior
sale, gift, will, mortgage, lien, litigations and court attachments etc.
In that view of the matter, it appears the plaintiff sought for Income Tax
Clearance Certificate from the defendants. Under Section 230A of
Income Tax Act where conveyance of a property worth more than Rs.5
lakhs is effected, the registering officer shall not register the document
unless the Assessing Officer certifies that the vendor paid the required
taxes including the income tax. This section says that registration of the
document does not affects recovery of any existing liability under any of
the tax recovery Acts. So, the importance of this certificate cannot be
ignored because even if the property was registered by chance without
production of said certificate, the tax collecting authorities will have
right to recover taxes by exercising lien over the said property. So, to
avoid any future encumbrance over the property in terms of condition
No.2, the plaintiff must have demanded the certificate. Of course,
Section 230A which was in vogue by the date of agreement, was omitted
by Finance Act 2001 with effect from 01.06.2001. So till 01.06.200l the
plaintiff could demand defendants to produce Income Tax Clearance
Certificate. Then, as per condition No.4, the vendors agreed to deliver
peaceful physical and vacant possession of suit property at the time of
registration of sale deed. In that context, the eviction of the tenant from
the suit house is also a relevant fact. In the cross-examination, DW1
claimed as if the tenant was vacated after Ex.A1 but he admitted that he
did not give any notice to the plaintiff stating the said fact. This claim
appears to be false because in Ex.A7sale deed, the plaintiff obtained
only symbolic possession of the property from the other co-sharers and
the tenant was attorned. So, at the outset, the causes attributed by the
plaintiff for delay in obtaining sale deed cannot be said to be totally out
of context in view of aforesaid stipulations in Ex.A1. So when the entire
facts and conduct of the parties is taken into consideration the plaintiff
cannot be blamed for delay. On the other hand, plaintiff was ready and
willing to obtain sale deed within the reasonable time.
d)      Defendants also contended that suit is not maintainable at the
instance of plaintiff as it did not obtain any authorization from the Board
of Directors of the Company. This contention cannot be countenanced
for the reason that the plaintiff entered into Ex.A1 transaction as
Managing Director of the plaintiffs Company and it also filed the suit in
the same capacity which is not disputed. Further, the judgment shows
that before trial Court it produced copy of Memorandum and Articles of
Association of plaintiffs Company. This point is answered accordingly.
19)  POINT No.3:  The contention of defendants is that suit without a
declaratory relief that cancellation of the agreement is bad in law is not
maintainable. On facts and evidence this contention is untenable and
consequently the decision cited by the appellants in I.S.Sikandars case
(7 supra) can be distinguished on facts. In that case the defendant sent
legal notice on 28.03.1985 to the plaintiff extending time to the plaintiff
to pay sale consideration on or before 10.04.1985 with a warning that his
failure to comply with the same, sale agreement dated 25.12.1983 would
be terminated. The plaintiff did not perform his part of the contract
within the extended period of legal notice. In those circumstances, the
Apex Court treated the contract was not existing by the date of filing the
suit for specific performance and held suit is not maintainable without a
prayer for declaratory relief. In the instant case, facts were quite
different. The defendants did not issue any notice to the plaintiff
cancelling the suit agreement for its alleged breach. They kept silent and
issued Ex.A5reply notice wherein they claimed as if they orally
informed the plaintiff that suit agreement cancelled. There is no basis for
such claim. Hence, the said plea cannot be accepted. Further, the
defendants did not take any plea in the written statement regarding
non-maintainability of the suit for want of declaratory relief. Hence, they
cannot raise this question now. This point is answered accordingly.
20)     POINT No.4: In the result, in view of the above findings, this
appeal filed by the appellants/defendants is dismissed by confirming the
decree and judgment of the trial Court in O.S.No.104 of 2003.
The defendants are directed to execute a regular registered sale deed in
favour of plaintiff within two (2) months from the date of this judgment,
failing which the plaintiff will be at liberty to get the sale deed executed
and registered through process of Court. No costs in the appeal.
        As a sequel, miscellaneous applications pending, if any, shall
stand closed.
_________________________  
U.DURGA PRASAD RAO, J    
Date: 16.02.2016

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Or.18, rule 17 and sec.151 C.P.C - petition filed for reopen and examination of the executant of Ex.A1 the sale deed to fill up the lacuna in evidence pointed out at the time of arguments not maintainable = Shaik Gousiya Begum. ..Petitioner Shaik Hussan and others.... Respondents = Published in http://judis.nic.in/judis_andhra/qrydisp.aspx?filename=10515

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