N.B Namazi v. Central Chinmaya Mission Trust, By Its Trustee, Mrs. Leela Nambiar

JUDGMENT

Mohan, J.:—This appeal arises out of the judgment and decree of our learned brother, Singaravelu, J. rendered in C.S No. 187 of 1981. Aggrieved by the same, the defendant has preferred this appeal,

2. The facts of the case are briefly as follows:— The suit property is No. 49, Harrington Road, Chetput, Madras 31. It is of an extent of 12 grounds and 974 sq.ft It belongs to the defendant. The plaintiff herein is the Charitable Trust known as Central Chinmaya Mission Trust, which runs a school with about 1050 students on rolls.

3. Originally, the plaintiff had taken the property from the defendant on lease from 1-5-1973, on payment of Rs. 750 per flat per month and later on an enhanced rent of Rs. 1,500 per month for the entire property. Therefore, on and from that date the plaintiff was inducted into possession. While the matter stood thus, under Ex. P1, dated 1st June, 1974, the agreement of sale was entered into between the parties. The term of the agreement inter alia provided that the defendant should sell the property to the plaintiff trust for a consideration of Rs. 3,20,000, free from all encumbrances. Advance of Rs. 50,000 was paid on the date of the agreement and the balance of sale consideration of Rs. 2,70,000 was agreed to be paid at the time of completion of sale deed.

4. The parties agreed that the sale shall be completed within a period of three months. Further it was, however, agreed to between the parties, that there could be extension of that period from 1st April, 1975 on condition that till date of completion of the sale the monthly rent payable shall be Rs. 1,800.

5. On 19th April, 1974, Ex. P2, was entered into between the parties under which the time for execution of the sale deed was extended till 30th June, 1976, or upto the time of the purchaser getting the orders of the Government for exemption of stamp duty and the permission from the competent authority for the sale and purchase of urban property if such permission is required under any law, in force at that time, whichever is later, The balance of said consideration of Rs. 1,70,000, was agreed to be paid.

6. On 24th November, 1976, Ex. P3 was entered into between the parties under which the period of agreement was further extended upto the time the orders of the Government for exemption of stamp duty was obtained whichever is later. Therefore, in effect and substance the earlier agreement was confirmed. At the same time, the plaintiff paid further sum of Rs. 80,000 to the defendant and the rent for the building was reduced to Rs. 50 per month, in as much as the vendor, viz., the defendant, bad received a sum of Rs. 2,30,000 as against the agreed sale consideration of Rs. 3,20,000.

7. On 9th March, 1976, the plaintiff applied for exemption from stamp duty as well as exemption from urban land ceiling. To this, the Government of Tamil Nadu sent a reply to the plaintiff on 18th March, 1977, informing that the owner of the premises shall tfile a statement under the Urban Land Ceiling Act and also for selling the property to the trust. In accordance with this the defendant applied to the Government for the grant of exemption. However, that was negatived on the ground that the request for transfer could not be considered till the Urban Land Ceiling authority clears same. This required the defendant to write to the Urban Land Ceiling authorities under Ex. 7, dated 13th July. 1978. In as much as the defendant was anxious to have the sale completed without any further delay issued Ex. P10 notice, dated 16th June, 1978 in which it was stated by him that already 15 months had elapsed and since the date of the agreement the prices of the properties were got escalated. Therefore, at least the plaintiff trust could enhance the rent substantially till the completion of the sale. To this the plaintiff replied under Ex. P11, dt. 25th June, 1978, affirming that the plaintiff had always been ready and willing to perform the contract and if at all there is any delay it was only due to obtaining the clearance from the competent authority by the defendant.

8. The plaintiff trust made a further payment of Rs. 10,000 under the letter Ex. P 13, dated 22nd September, 1978, informing the defendant that the plaintiff had been pursuing the matter with the Government for the exemption of stamp duty. It is very important to note at this stage that the defendant accepted this Rs. 10,000 and stated that the amount was received in confirmation of the agreement of sale referred to and reiteration of the terms of the agreement. On 28th February, 1978 the defendant under Ex. P14 wrote to the plaintiff to obtain the necessary exemption from the Government as the matter was getting delayed. He called upon the plaintiff to finalise the transaction by 15th March, 1979, as otherwise, the plaintiff trust alone will have to pay the municipal tax and other taxes due on the property. It was also stated by that letter that he will be obliged to charge interest at the rate of 15 per cent for the balance of the sale price. To this a reply emanated from the plaintiff under Ex. P 15, dated 29th March, 1979, stating that they were making a further payment of R3. 10,000, and the sale deed could be registered only after the exemption was granted. After a lapse of few months under Ex. P16, dated 31st December, 1979, the defendant wrote to the plaintiff being aggrieved by the fact that the Collector had not so far given exemption while the defendant had been compelled to pay the urban land tax for the property and the plaintiff must see that something was done about this delayed transaction. The defendant also stated that a fair rent application should be filed before the Rent Controller for fixation of fair rent as the rent that was paid was very nominal. It was replied by the plaintiff under Ex. P17, that every endeavour was taken to get exemption and the delay was only on the part of the Government. The Government sent a reply to the plaintiff on 22nd April, 1980, that the request for exemption from stamp duty was under consideration, While the matter stood thus, the defendant issued a lawyer's notice under Ex. P18, on 29th April, 1980 stating that the price of immovable property had gone up and that he had sufficiently waited for the completion of the sale. It was also stated that on account of the long delay the plaintiff has lost its right to purchase the property and therefore the contract of sale had been terminated. It was also stated that the entire amount of Rs. 2,70,000, which he had received would be refunded to the plaintiff. Under Ex. P19, the plaintiff replied to the defendant that the plaintiff was ready and willing to perform its part of the contract, and that the delay in getting exemption was beyond the control of the plaintiff. Under Ex P20, the defendant again complained about the inflation in price. It is at that stage the Government by its communication dated 3rd September, 1980 informed the plaintiff that the request for exemption could not be complied with. Thereupon under Ex. P4, dated 10th September, 1980, the plaintiff wrote to the defendant saying that in view of the order of rejection of exemption by the Government the plaintiff would be willing to pay the stamp duty and register the sale deed and that a draft sale deed would be prepared and sent to the defendant for approval. A reply notice under Ex.P21 was issued by the defendant on 7-10-1980, saying that the agreement of sale had already been cancelled.

9. Notwithstanding the rejection of the request of the plaintiff for grant of exemption from stamp duty the matter was still pursued by the plaintiff and ultimately the exemption from payment of stamp duty was granted under Ex.P9, dated 22-12-1981. In the meanwhile, rinding that the defendant was not willing to complete the sale and willing to resile from the terms of the contract the suit came to be filed on 23.3.1981, even before the exemption was obtained.

10. On these facts, the following issues came to be settled down for trial—

1. Whether the plaintiff or the defendant, who committed breach of contract?

2. Whether the plaintiff is not entitled to specific performance for the reasons stated by the defendant?

3. Whether the suit as framed is maintainable?

4. Whether the defendant is not liable to perform the contract for the reasons stated in the written statement?

5. To what relief, if any, are the parties entitled?

11. The learned trial Judge on a consideration of the oral and documentary evidence came to the conclusion on issue No. 1, that the defendant had committed breach of contract on account of the spurt in rise of price. Issue No. 2 was decided in favour of the plaintiff. Under issue No. 3 it was held that the suit as framed is clearly maintainable. On these findings, he came to the conclusion that the plaintiff was entitled to a decree for specific performance of the contract of sale and the defendant will execute the sale deed of the property after receiving the balance of sale consideration which had to be deposited by the plaintiff within four weeks from the date of the judgment. It is under these circumstances, the present appeal is come to be preferred.

12. Mr. Habibullah Badsha, learned counsel for the appellant would urge the following points for consideration; Firstly, he urged that this is a case in which the price as stipulated between the parties is grossly inadequate. It is open to this Court to take judicial notice of the fact that a contract which was entered into as early as on 1st June, 1974, is sought to be enforced in the year 1981. In between this period the value of the property had gone up considerably. Certainly, the defendant cannot be compelled to execute the sale deed because that will be unfair as far as the defendant-appellant is concerned. Therefore, by reason of the delay, the position of the parties is substantially altered and in such a case the discretionary relief of specific performance should be refused on equitable grounds.

Secondly, it is urged that this is a case of contingent contract falling under S.30 of the Indian Contract Act, because it was subject to obtaining exemption from stamp duty. When the plaintiff had been clearly informed that the exemption had been denied to him on 3.9.1980, he cannot go on try and expect the defendant to complete the sale transaction. Therefore, the judgment and decree cannot be supported.

The next submission of the learned counsel is that in a case of specific performance it is essential that the plaintiff must always be ready and willing to perform the contract. Though the plaintiff-respondent agreed to send a draft sale deed within 15 days from the date of Ex.P4 he never did so. Nor did he take any further step to complete the sale transaction but only he was taking umbrage under the fact that he applied for exemption from stamp duty. In this case, as the evidence disclosed escalation of prices have not been denied, and in none of the letters the plaintiff had denied the escalation of the prices when it was pointed out. Under S.20, Sub-S.(2)(c) of the Specific Relief Act, a decree for specific performance need not be granted when the court finds it to be inequitable. In the case reported in Satyanarayana, v. Yellogi Rao it has been held that mere delay is not sufficient to refuse the relief of specific performance. In this case, it must be deemed that the plaintiff by his own conduct had lost his right to specific performance. Again it has been held in Sundhya Rani v. Sudharani . A.I.R 1978 S.C 537., that the readiness and willingness had to be established from the beginning to the end.

13. In a series of cases inadequacy of consideration, if it is grossly low, had been held to be a good ground to deny the equitable relief of specific performance (vide—Rangaswami Gounder v. Periasami Gounder . 1977-1-M.L.J 231Gandhisan v. Ayyasami . 92 L.W 146=1979-1 M.L.J 270. and Dodlarami Reddi v. Devireddi Pattabhirami Reddi . 44 L. W. 749=A.I.R 1937 Mad. 124=71 M.L.J 599.. For all these reasons it is contended that the judgment and decree of the learned Judge has to be set aside.

14. Learned counsel for the respondent would urge first and foremost that this is a case in which the agreement Ex.P1 when it was entered into on 1.6.1974, as admitted by the defendant as D.W.1, the Act in relation to Urban Land Ceiling was prevailing. It is also candidly stated by him hat there were no buyers for this property. Therefore, by no stretch of imagination it can be contended that it was an unconscionable bargain, nor can it be contended that the price was grossly inadequate. On the contrary it is clearly established that the price as stipulated on the date was the proper price. In this case, the fact that Rs. 2,70,000 had been paid by the plaintiff itself would prove positively of its readiness and willingness at all material times to complete the sale transaction. All that stood in the way was the grant of exemption. Even when the defendant was called upon to send the documents of title, after the rejection of the request for exemption from stamp duty, nothing was done by the defendant-appellant. That was under Ex.P15 Even as late as 28.2.1979 all that the defendant wanted was that the plaintiff should pay the municipal tax. As a matter of fact, he received Rs. 2.000 in confirmation of the terms of the contract. Therefore this is a clear case in which owing to the escalation in prices the defendant tries to resile from the contract and tries to put the blame on the plaintiff. Merely because specific performance is a discretionary relief, though it may have its origin in the law of equity in England, in so far as that right is conferred under a statute, it is the limits of that statute which have to be looked into. The Explanation to S.20 of the Specific Relief Act bars any such discretion on the ground of inadequacy of price. In other words, that discretion cannot be exercised in an arbitrary fashion or in a capricious manner. The learned counsel relies, in this connection on a passage in Specific. Performance, by Gareth Jones & William Goodhart, (Chapter I 1986, Edn.). Learned counsel also relies upon a passage in paragraph 401 in Halsbury's Laws of England, page 275, 4th Edn., Volume 44.

15. Having regard to the above, only the following three questions arise for consideration :—

(1) Whether by reason of the delay the plaintiff could be denied the right of specific performance?

(2) Whether this is a contingent contract and if so, merely because the exemption sought for was denied to the plaintiff in the first instance could the contract be said to have fallen to ground?

(3) Whether the plaintiff had been ready and willing to perform at all material times its part of the contract?

16. We have already set out the facts in some detail. The first of the agreements is Ex. P1 dated 1st June, 1974. It is only under Ex. P2, a clause was stipulated to the following effect:—

“1. The period of the earlier agreement of sale dated 28th March, 1974, shall stand extended to 30-6-1978, or upto the time of the purchaser getting the order of the Government for exemption of stamp duty and the permission from the competent authority for the sale and purchase of urban property if such permission is required under any law in force at that time, whichever is later, on payment of the further advance of Rs. 1,00,000 (Rs. one lakh only,) on exeeution of this agreement. The balance of consideration, viz., Rs. 1,70,000, shall be paid on or at the time mentioned supra and the sale will be completed by execution of the necessary sale deed.”

It is important to note that the parties were fully aware of the implication of the contract entered into. The clause ‘whichever is later’ in effect means that time had never been intended to be the essence of the contract as far is the parties are concerned. It is one of the fundamental principles of contract that when solemn contracts are entered into between the parties, they are meant to be honoured. The same clause is reiterated as seen in Ex. P3 in the following terms :—

“1. The period of the earlier agreement of sale, dated 28th March 1974, as extended by agreement dated 9-4-1976 shall stand further extended upto the time the orders of the Government for exemption of stamp duty or the permission from the competent authority for the sale and purchase of the demised property, namely. 49, Harrington Road, Madras, are obtained, whichever time is later.”

It requires also to be noted that at the time of entering into Ex. P1 Rs. 50,000 was paid towards part of the sale consideration and thereafter, Rs. 1,00,000 was paid under Ex. P2 and another Rs. 80,009 was paid under Ex. P3. The plaintiff did not remain idle. The plaintiff has been exercising every diligence on his part and was writing to the Governmeat repeatedly. It is true under Ex. P8, dated 3rd September, 1980, the request for exemption from stamp duty was rejected. Soon after in Ex. P4, dated 10th September, 1980 the defendant was informed that the sale will be completed in as much as the trust had decided to pay the stamp duty and the sale deed could be registered. At every material point of time, the defendant not only agreed for the time being extended till the plaintiff obtained the necessary exemption, but also received substantial sum, as the learned Judge correctly pointed out, towards sale consideration. Under Ex. P14, dated 28th February, 1979, the defendant himself gave a farther time to the plaintiff for finalising the transaction. As a matter of fact he received a sum of Rs. 10,000 under Ex. P14, and he stated in Ex. P4, as follows :—

“Please note that if this transaction is not finalised by the 15th March, 1979, you will have to pay the municipal taxes and other taxes due on this property, and I am also putting you on notice that interest at 15 per cent will have to be paid by you for the late payments. I hope you will co-operate and finalise the transaction before 15th March, 1979. Thanking you for your kind co-operation early.

Yours faithfully

N.B Namazi,

copy to 1. Mrs. Nambiar; 2. Mr. Ramaswami; 3. Mr. Ramiah

The said sum of Rs. 10,000 is received in further confirmation of the agreement of sale referred to and in reiteration of the terms of agreement.”

This has been the attitude of the defendant and only later he chose to resile from the contract. Therefore, not only the parties did not consider the time as the essence of the contract, because of the wording under Ex. P1 and P3 but the vendor had received substantial sums and thereafter stood by the contract. In this case, the evidence discloses that exemption from stamp duty was obtained only in 1931 and it is only thereafter the contract could be completed. But, by then, the defendant-appellant has changed his attitude. It is in this background, we will have to consider S 20 of the Specific Relief Act 1963. What is relied on by Mr. Habibullah Badsha is S. 20(2)(c) of the Act which reads as follows;—

“20(2)(c)-Where the defendant entered into the contract under circumstances, which, though not rendering the contract voidable, makes it inequitable to enforce specific performance.”

But at the same time, we are of the view that regard should be had to the succeeding Explanation. Due to some supervening circumstances, namely, the grant of exemption from the provisions of the Urban Land Ceiling Act and the payment of stamp duty, there has been a delay and during this period, undoubtedly, there was an escalation in prices. The question is whether, by reason of that escalation this price could be held to be inadequate. We do not think so. The evidence in this case clearly discloses, as admitted by P.W 1 that at the time when the contract was entered into the present Act relating to the Urban Land ceiling was in force. There were no buyers for this property. Hence the price as paid on that date was adequate. Therefore, the inadequacy of the price cannot be pressed into service. This is beside the scope of Explanation 1 to S. 29 of the Specfic Relief Act, where it is stated that inadequacy of consideration shall not constitute an unfair advantage. Mr. C. Ramakrishnan, is, therefore, right in his submission that on the date of the contract, the sale consideration of Rs. 3,20,000 as stipulated was the proper price. As a matter of fact, it is nobody's case, as the learned trial Judge himself has found, that the price is inadequate.

17. On this aspect, Mr. Habibulla Badsha relies on the rulings in Ramakrishna v. Palaniappa, Rumireddi v. Pattabhiramareddi, Rawswarup Singh v. Mahabir, and Jadunath v. Chandra Bhushan. It requires to be noted that all these cases were under S. 22 of the Specific Relief Act, 1877. There was no Explanation to that section corresponding to Exp. (1) and (2) to Ss.20(2)(a) and (b) of the present Act. That makes a vital distinction. As a matter of fact, in Sankaralinga v. Ratnasami. it was held that the hardship must be judged with reference to the date of the transaction and not with reference to subsequent events. Therefore, we discountenance the argument of the learned counsel for the appellant that, since the the original rent of Rs. 1,500 came to be reduced from time to time and a huge building cannot ultimately fetch only a rent of Rs. 50, it resulted in extreme hardship. In Ex.P3 in no uncertain terms it was stipulated as follows—

“In view of the fact that the vendor has received a total of Rs. 2,30,000 till date, the purchaser has agreed to pay a rent of Rs. 50 (fifty only) per month from the day of execution of this agreement.”

The parties with open eyes entered into such transaction.

18. As to what exactly is the remedy of specific relief, we would only refer to the passage in Specific Performance by Gareth Jones & Williams Goodhart, Chapter 1, 1986 Edn., which is as follows—

“Specific performance is a decree of the court which compels the defendant personally to do what he promised to do. if the defendant disobeys, the Court had adequate remedies to compel compliance; for example, it has the power to nominate a person to execute an instrument; if the defendant refuses to do so and, in the last resort, he may be punished by being, committed for contempt. The remedy of specific performance is an equitable remedy which the Court will grant if the plaintiff requests it and if it is just to do so. No plaintiff is, therefore, entitled to specific performance as of right. The Court gives a spscific performance instead of damages ‘only when it can by that means do more perfect and complete justice. But the discretion to grant or refuse specific performance is not exercised capriciously but with regard to principles established by previous authorities,”

Again, in Halsbury's Law of England, in paragraph 401—page 275, 4th Edn, Volume 44, it is stated as follows—

“The remedy by specific performance is a equitable relief, given by the court to enforce against a defendant the duty of doing what he agreed by contract to do; a plaintiff may, therefore, obtain judgment for specific performance even though there has not in the strict sense, been any default by the defendant before the issue of the writ.”

19. On a consideration of all the above we hold that the delay in this case cannot be put against the plaintiff-respondent so as to deny it the right of specific performance merely on the ground that such a relief is discretionary.

20. Question No. 2. As to what is a contingent contract, we will refer to S.31 of the Indian Contract Act which reads as follows—

“A ‘contingent contract’ is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.”

21. In Satyanarayana v. Yelloji Rao, it has been categorically stated that mere delay is not sufficient to deny specific performance unless there is a waiver or abandonment. But in this case, there was no waiver at all at any point of time: nor had the plaintiff-respondent abandoned its right. On the contrary, it is the other way about. If there was nothing to suggest in the conduct of the plaintiff-respondent implying an abandonment, the contract will have to be enforced. Therefore, we are unable to agree with the contention of Mr. Habibullah Badsha that because of the failure to obtain exemption in the first instance, the contract had fallen to the ground. The plaintiff-respondent has been trying its level best to obtain the exemption from payment of stamp duty notwithstanding its failure to obtain it in the first instance which was because of the language of Ex.P1 and P3, to which we have already made a eference.

22. Question No. 3: Coming to the question of readiness and willingness, in answer to the letter of the appellant-defendant, dated 16th June, 1978, on 25th June. 1978 under ExP11, the plaintiff-respondent states as follows—

“We are always ready and willing to perform our part of the contract to conclude the sale. But it is unfortunate that the delay has been caused on your pact to get a clearance from the competent authority which has actually delayed the conclusion of the deed. Incidentally we may point out that we have applied for stamp duty exemption long ago and the authorities have directed us to produce a clearance certificate from the competent authority to enable them to pass necessary orders granting the exemption. In this connection we may point out that we have brought to your notice the letter received from the Government, dated 18-3-1977 calling upon the permission of the competent authority as a condition for granting exemption of stamp duty. A copy of the letter is enclosed for your reference.”

On 14th July, 1978, in Ex. P7 an endorsement made by the Assistant Commissioner of Urban Land Tax, is to the effect that there is no vacant land in excess of the ceiling limit as per the new Act. This is the communication addressed to the appellant-defendant. On 17th August, 1978 under Ex. P12, the appellant-defendant wrote to the respondent-plaintiff that he had requested the Corporation to collect the taxes. On 22nd September, 1978 under Ex. P13 the plaintiff-respondent wrote to the defendant-appellant stating that, in as much as only about a fortnight ago clearance certificate was given by him, steps were being taken to have stamp duty exemption. Under Ex. P15, dated 29th March, 1979, the respondent-plaintiff wrote an important letter which presumably was in confirmation of the discussion the parties had. That is made clear in the first paragraph of Ex. P 15 which reads as follows :—

“Subsequent to the receipt of your letter, dated 28-2-1979 and 6-3-1979, you were kind enough to participate in the discussion with school committee on 26-3-1979. In confirmation of the discussion and also in reply to your letter, dated 28th… … … …1979 wish to write as follows.

We have decided to accede to your request of paying a further sum of Rs. 10,000. The sale deed could be registered only after the exemption is granted and the finalisation can be done within the time mentioned in the agreement dated 24th November, 1974, Therefore your saying that time is extended upto November, 1978 or 15th March, 1979 is not correct in view of the agreement between us. However, in the meantime, that is, before the receipt of the exemption order from the Government, please direct your advocate to hand over all the original title deeds relating to the property to our advocate Mr. Vallinayagam, 12, Thambu Chetti St., Madras so that the sale deed could be finalised and agreement be made for finalising the registration of sale. Please also make it definite the final balance payment under the terms of the agseement will be only at the time of registration of the sale deed.”

On 8th February, 1980, the plaintiff respondent writes to the appellant defendant saying that the Government machinery was not acting quickly as in regard to the grant of exemption from payment of stamp duty and that it appreciated the difficulty of the appellant and that it would consider as to how best it could help the appellant. An assurance was given in that letter that the transaction would be finalised as early as possible. It is thereafter notices between the advocates passed.

24. On 10th September, 1980, under Ex. P4, the advocate for the plaintiff-respondent wrote to the defendant-appellant stating that the Government had since passed orders on 8th September, 1980 rejecting the request of the plaintiff-respondent for the grant of exemption and in view of that final order, the plaintiff-respondent had decided to pay the stamp duty and register the sale deed. In unequivocal terms it is stated therein as follows :—

“My client hereby expresses his readiness and willingness to complete the sale transaction by paying you balance of sale consideration and registering the sale deed.”

24. Though a copy of the draft sale deed was agreed to be sent, nothing was done in pursuance of the same. However, ultimately, the exemption was obtained in 1981, but, by then, as we observed above the defendant-appellant taking advantage of the increase in prices wanted to resile from the contract. Therefore, it became necessary on the part of the plaintiff respondent to file the suit. This shows the readiness and willingness of the plaintiff to complete the sale transaction. It is worthwhile to remember that out of the sale consideration of Rs. 3,20,000, if the respondent-plaintiff had paid Rs. 2,70,000, it cannot ever be contended that there was any lack of readiness or willingness on the part of the respondent plaintiff. Therefore, we should hold that the respondent-plaintiff was always ready and willing to complete the sale transaction.

25. For all these reasons, we find no difficulty in upholding the judgment and decree of the learned trial Judge and dismissing this appeal. Accordingly the appeal is dismissed.

In the circumstances, we make no order as to costs.

VCS.