A.R.Madana Gopal Etc.Etc. vs M/S Ramnath Publications P.Ltd.. … on 9 April, 2021


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Supreme Court of India

A.R.Madana Gopal Etc.Etc. vs M/S Ramnath Publications P.Ltd.. … on 9 April, 2021

Author: L. Nageswara Rao

Bench: [ R Bhat], [ N Rao]

                                                        Non-Reportable

              IN THE SUPREME COURT OF INDIA

                CIVIL APPELLATE JURISDICTION

             Civil Appeal Nos.3523-3526 of 2010

A.R. MADANA GOPAL ETC.ETC.
                                                 .... Appellant(s)
                                 Versus

M/S RAMNATH PUBLICATIONS PVT. LTD. AND ANR.
                                    …. Respondent (s)

                           JUDGMENT

L. NAGESWARA RAO, J.

1. These Appeals are filed against the judgment of the Division

Bench of the Madras High Court by which a decree for specific

performance passed by the learned Single Judge was reversed.

2. The Appellants filed four suits for specific performance of

the agreements of sale dated 20.03.1991 and Memoranda of

Understanding (MOU) dated 24.01.1994. In addition, the

Appellants prayed for a direction to the Respondents to deliver

vacant possession of the schedule property, a decree of

permanent injunction restraining the Respondents from alienating

or encumbering the suit property and a decree of mandatory

injunction to deposit the title deeds with the Court. It was alleged

in the plaints that the Respondent entered into separate

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agreements with the Appellants who belong to the same family for

sale of property situated at Door No.325, Arcot Road, Vadapalani,

Chennai on 20.03.1991. As per the terms of the agreement, the

sale was to be concluded within a period of four months. The

Respondents would produce the encumbrance certificate much

before the execution and registration of the sale deeds. The

Respondents should also obtain the income tax clearance

certificate under Section 230-A of the Income Tax Act, 1961. To

comply with the obligation stipulated in the agreement, the first

Respondent applied to the Income Tax authorities for permission

to alienate the property. The Income Tax authorities passed an

order for compulsory acquisition of property on 25.06.1991.

3. The Writ Petition filed by the Respondents challenging the

order of the Income Tax authority was allowed by the Madras High

Court by its judgment dated 21.12.1992. The authorities were

directed to reconsider the matter afresh. The Income Tax

authorities passed another order on 22.02.1993 directing

purchase of the property. The said order was challenged in the

High Court and an interim order of injunction was passed on

10.03.1993. The parties were directed to maintain status quo and

not to change the nature of the property. In view of the

developments after the agreements relating to the orders passed

by the Income Tax authorities and the pendency of the Writ

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Petitions challenging those orders, the Appellants and the

Respondents entered into four separate MOUs on 24.01.1994.

The recitals of the MOUs would show that they were in addition

and not in substitution of the agreements dated 20.03.1991. It

was agreed that the Respondents shall continue to keep the

original title deeds until completion of the sale by registration of

the sale deeds. The original title deeds would be handed over to

the Appellants at the time of registration. It was also recorded in

the Memorandum that certain amounts were paid by the

Appellants and the balance of the sale price shall be paid to the

Respondents at the time of registration of the sale deeds

immediately after the disposal of the Writ Petitions in their favour.

4. The Writ Petitions filed against the compulsory acquisition

by the Income Tax authorities were disposed of on 11.09.1998.

The judgment of the learned Single Judge of the High Court

allowing the Writ Petitions was challenged by the Income Tax

department by way of filing of an appeal. When the Appellants

made a demand for execution of sale deeds, the Respondents

informed them that it can be done only after disposal of the Writ

Appeal. Indian Bank filed a suit for recovery of its dues from the

Respondents. As the Respondents were not executing the sale

deeds in spite of repeated requests, the Appellants filed separate

suits for specific performance.

3 | Page

5. In the written statement filed by the Respondents, it was

submitted that the MOU dated 22.01.1994 substituted the suit

agreements dated 20.03.1991. It was contended on behalf of the

Respondents that the suit was time barred. Time was the

essence of the agreement dated 20.03.1991 as it was agreed

between the parties that the sale should be concluded within a

period of four months. Though, the Writ Petition filed against the

order of the Income Tax Department was allowed in the year 1998,

the Appellants maintained silence for more than two years before

filing the suits in 2000 which clearly shows that they were neither

ready nor willing to perform their part of the agreement.

6. All the four suits were tried together and a learned Single

Judge of the High Court decreed the suits on 17.07.2003. The

Appellants were directed to deposit the balance sale consideration

along with interest at the rate of 12 per cent within eight weeks

from the date of decree and upon such deposit, the Respondents

were directed to execute the sale deeds in favour of the

Appellants. Thereafter, the Respondents were directed to deliver

possession of the property to the Appellants. The Appellants

deposited the balance consideration on 01.08.2003. The

Respondents filed original suit appeals against the judgment of

the learned Single Judge which were allowed by a Division Bench

of the High Court on 25.07.2008. The judgment of the Division

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Bench setting aside the decrees passed in favour of the Appellants

is the subject matter in the present Appeals.

7. While decreeing the suit filed by the Appellants, the learned

Single Judge of the High Court expressed his opinion that it cannot

be said that the Appellants did not evince any interest in

performing their part of the agreement nor can it be said that they

did not have sufficient funds. It was further held that the

Appellants were always ready and willing to perform their part of

the contract by depositing the balance sale consideration. He

further observed that the major portion of the sale consideration

was already paid. According to the learned Single Judge, the suit

was filed within a period of three years from the date of the

disposal of the Writ Petitions and therefore, cannot be said to be

barred by limitation. The MOUs dated 24.01.1994 were held to be

in addition to the agreements dated 20.03.1991. On the above

findings, the learned Single Judge decreed the suit. The relief

claimed by the Appellants for award of damages was, however,

not granted. The learned Single Judge awarded interest on the

balance sale consideration at the rate of 12 per cent.

8. A Division Bench of the High Court set aside the judgment

and decree of the learned Single Judge by holding that the

Appellants failed to deposit the balance consideration immediately

after the disposal of the Writ Petition. Though, the Writ Petition

5 | Page
was disposed of on 11.09.1998, the suits were filed between

October to December, 2000. No notices were issued by the

Appellants seeking execution of sale deeds nor did they purchase

the stamp papers. According to the Division Bench the above

factors would indicate that the Appellants were not ready and

willing to perform their part of the agreement along with the fact

that they kept quiet for two years and three months after the

disposal of the Writ Petitions. That apart, conduct of the

Appellants was commented upon by the Division Bench of the

High Court to conclude that they are not entitled to the relief of

specific performance. The Division Bench found fault with the

Appellants for not pleading and proving how they got the

possession of a part of the property. The claim of the Appellants

for vacant possession of the property was found to be frivolous as

the Appellants continued to be in possession of a part of the

property. The attempt made by the Appellants to trespass into

the ground floor of the property where the Indian Bank was having

its office disentitled them from seeking the equitable relief of

specific performance.

9. We have heard Mr. Raghavendra S. Srivatsa, Advocate for

the Appellants and Mr. P.S. Narasimha, learned Senior Counsel for

the Respondents. The contention of the Appellants is that the

agreements and the MOUs have to be read together. It was

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argued on behalf of the Appellants that the sale consideration of

all the four agreements for purchase of the property is Rs. 37/-

lakhs out of which Rs. 34/- lakhs was paid by August, 1994. Mr.

Srivatsa, submitted that the demand made by the Appellants for

execution of the sale deeds was rejected by the Respondents on

the ground that the Writ Appeal filed by the Income Tax

Department against the judgment of the High Court dated

11.09.1998 was pending. It was only on receipt of information by

the Appellants that the property was already encumbered, that

the Appellants filed suits for specific performance. According to

the Appellants, it cannot be said that there was any delay in filing

the suits. The Appellants were always ready and willing to

perform their part of the agreement. The Appellants asserted that

the interpretation of the MOU is contrary to well settled law of this

Court. The Division Bench of the High Court placed undue

emphasis on the word “immediately” to conclude that the

Appellants failed to pay the balance consideration immediately

after the disposal of the Writ Petition. By placing reliance on the

judgments of this Court in State of Bihar v. Tata Iron1, Anglo

American Metallurgical Coal Pty Ltd. v. MMTC Ltd.2 and

Khardah Company Ltd. v. Raymon & Co. (India) Private

Limited3, Mr. Srivatsa submitted that the intention of the parties

1 (2019) 7 SCC 99
2 2020 SCC OnLine SC 1030
3 (1963) 3 SCR 183

7 | Page
must be ascertained from the language used in the agreement by

reading it as a whole and in the light of the surrounding

circumstances. He submitted that the relevant clause in the

agreement obligates the Appellants to pay the balance sale

consideration at the time of registration of sale deeds,

immediately after the disposal of the Writ Petition. According to

Mr. Srivatsa, the High Court ignored the crucial words “at the time

of registration of the sale deeds” and committed an error in

relying upon the word “immediately” to find that the Appellants

were in default. The pendency of the Writ Appeal filed by the

Income Tax Department was the reason for the Appellants not

taking any steps to file the suits immediately after the disposal of

the Writ Petitions. Seeking support from the judgments of this

Court in K.S.Vidyanadam and Others v. Vairavan4 and

Saradamani Kandappan v. S. Rajalakshmi5, Mr. Srivatsa

contended that the Appellants are entitled for the relief of specific

performance as they have paid a major portion of the

consideration, possession in part was handed over to them and

the suit was filed within the period of limitation. It was further

submitted on behalf of the Appellants that specific performance is

no longer a discretionary relief in view of the insertion of Section

10-A in the Specific Relief Act, 1963. It was argued that the

4 (1997) 3 SCC 1
5 (2011) 12 SCC 18

8 | Page
amendment should be made applicable to all pending proceedings

including appeals.

10. Mr. Narasimha, learned Senior Counsel for the Respondents

contended that time is the essence of the agreements dated

20.03.1991 and the MOUs dated 24.01.1994. Though, the Writ

Petitions were disposed of on 11.09.1998, the Appellants filed the

suit only between October and December, 2000. The Appellants

had not issued any notices to the Respondents to execute sale

deeds after the disposal of the Writ Petitions. The Appellants also

did not discharge their obligation of paying balance sale

consideration. The delay of two years and three months after the

disposal of the Writ Petition is fatal and the Appellants are not

entitled for the relief claimed for. It was argued on behalf of the

Respondents that the escalation in prices of properties in Chennai

is a relevant factor. Mr. Narasimha, supported the judgment of

the Division Bench of the High Court by arguing that the

Appellants were not put in possession of the property at the time

of the agreement. There is no covenant in the MOU that the

possession shall be given to the Appellants. The Appellants have

not explained as to how they got possession of the first floor. The

Appellants highhandedly made attempts to disturb the possession

of the Indian Bank from a portion of the building. As the First

Appellate Court is the last Court on findings of fact, this Court

9 | Page
should refrain from interfering with the judgment of the Division

Bench of the High Court.

11. There is no dispute about the agreements dated 20.03.1991

and the MOUs between the parties. It is also a fact that Income

Tax Department wanted to compulsorily acquire the property, due

to which Writ Petitions were filed which were disposed of on

11.09.1998. Writ Appeals filed by the Department were pending

on the date of filing of the suit. The relevant clause in the MOU is

that the Appellants shall pay the balance sale consideration at the

time of registration of sale deeds immediately after the disposal of

the Writ Petition. The Division Bench of the High Court in the

impugned judgment held that the Appellants were not ready and

willing to perform their part of the agreement by not depositing

the balance sale consideration immediately after the disposal of

the Writ Petition. The High Court lost sight of the words “at the

time of registration of sale” in clause 3 of MOUs. A plain reading

of clause 3 in the MOU’s would show that the Appellants were

required to pay the balance sale consideration at the time of the

registration of the sale deeds immediately when the Writ Petition

is disposed of upholding the sale agreement. The High Court

further found fault with the Appellants in waiting for 2 years and 3

months after the disposal of the Writ Petition for filing the suits.

The High Court refused to grant relief of specific performance to

10 | P a g e
the Appellants on the ground that there was total inaction on the

part of the Appellants for more than two years after the parties

entered into the MOU. Though, it was pleaded by the Appellants

in the suits that they were always ready and willing to perform

their part of the agreement, the High Court was of the opinion that

they did not prove the same as they did not pay the balance sale

consideration immediately after the disposal of the Writ petition.

We find force in the submission made on behalf of the Appellants

that payment of balance consideration has to be done only at the

time of the registration of the sale deeds. Admittedly, no steps

were taken for the registration of the sale deeds. The finding of

the Division Bench of the High Court that the Appellants were not

ready and willing to perform their part of the contract by not

paying the balance consideration immediately after disposal of the

Writ Petition is erroneous.

12. The Division Bench of the High Court agreed with the

contention of the Appellants that mere fixation of time within

which the contract was to be performed does not make the

stipulation as to time being of the essence of the contract.

However, the Appellants were found guilty of total inaction on

their part. The sole ground for denial of relief to the Appellants is

non payment of balance consideration immediately after disposal

11 | P a g e
of the Writ Petition. The said conclusion is the result of a faulty

interpretation of clause 3 of the MOUs as stated earlier.

13. The High Court highlighted the conduct of the Appellants to

deny relief. The failure of the Appellants in not pleading and

proving how they were put in possession of a part of the property,

the frivolous complaint about vacant possession not being given

by the Respondents and the attempt made by the Appellants to

take forcible possession of a part of the property were commented

upon to hold that the Appellants were disentitled to equitable

relief. There is not dispute that the Appellants were in possession

of the first floor of the property. Details about the manner in

which possession was given to the Appellants not being pleaded

cannot be a ground to deny relief. The contention of the

Appellants before the High Court was that the Respondents should

demolish the super structure and hand over vacant possession of

the land. The High Court observed that the Appellants who were in

possession of a part of the property cannot make such an inane

plea. According to the terms of the agreement, the Respondents

had to hand over vacant possession of the land. The Appellants

submitted that no steps were taken to demolish the structure to

highlight the inaction on the part of the Respondents. By no

stretch of imagination, can it be said that the Appellants can be

denied relief on this account. Yet another reason given by the

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Division Bench of the High Court is that the Appellants made an

attempt to trespass into the ground floor where the Indian Bank

was a tenant. The contention of the Appellants is that the Indian

Bank was not a tenant in the ground floor but only a creditor of

the Respondents. Admittedly, the Indian Bank sued the

Respondents for recovery of the loan by the sale of the

hypothecated goods stored in the ground floor. It was also

contended on behalf of the Appellants that a police complaint was

preferred by them against the Respondents for causing

disturbance to their possession. The Appellants cannot be said to

be disentitled for a relief of specific performance on the ground

that their conduct on this count is blameworthy.

14. A suit for specific performance cannot be dismissed on the

sole ground of delay or laches. However, an exception to this rule

is where an immovable property is to be sold within a certain

period, time being of the essence, and it is not found that owing to

some default on the part of the plaintiff, the sale could not take

place within the stipulated time. Once a suit for specific

performance has been filed, any delay as a result of the Court

process cannot be put against the plaintiff as a matter of law in

decreeing specific performance. However, it is within the

discretion of the Court, regard being had to the facts of each case,

as to whether some additional amount ought or ought not to be

13 | P a g e
paid by the plaintiff once a decree of specific performance is

passed in its favour even at the appellate stage 6. We are in

agreement with the Appellants that they did not file the civil suits

immediately after the disposal of the Writ Petition in 1998 due to

the pendency of Writ Appeals. Escalation of prices cannot be the

sole ground to deny specific performance 7. We are of the

considered view that the Respondents are not entitled for any

additional amount as 90 per cent of the sale consideration was

paid by the Appellants before 1994. It is not necessary for us to

deal with the submission of the Appellants regarding the

applicability of the amendment to the Specific Relief Act, 1963, in

view of the conclusion that we have reached in favour of the

Appellants.

15. For the aforementioned reasons, the judgment of the

Division Bench of the High Court is set aside and the judgment

and decree passed by the learned Single Judge is restored. The

Appeals are allowed, accordingly.

…………………………..J.

[L. NAGESWARA RAO]

………………………….J.

[S. RAVINDRA BHAT]

New Delhi,
April 09, 2021

6 Ferrodous Estates (Pvt) Ltd. v. P. Gopirathnam (Dead) and Others, 2020 SCC OnLine
SC 825
7 Nirmala Anand v. Advent Corpn. (P) Ltd ., (2002) 8 SCC 146

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