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The Kancheepuram Kam... v. Yamuna Bai And Ors.
Summary of Legal Opinion
Factual and Procedural Background
The plaintiff, a co-operative society, filed a suit for specific performance of an agreement dated 26.10.1976 (Ex.A-1) entered into with Radhakrishnan. The agreed sale price was Rs. 1,04,000, with an advance of Rs. 5,000, and completion was to occur within three months (before 25.1.1977). On 16.11.1976 Radhakrishnan wrote (Ex.B-1) that he had signed without knowing the contents, stating he was not of steady mind and asking for cancellation. The society's Board on 20.11.1976 passed resolutions to apply to the Director of Handlooms and Textiles for sanction and to apply for a loan from the Provident Fund held at the Central Co-operative Bank, Kancheepuram. Radhakrishnan reiterated his position in a further letter on 7.12.1976 (Ex.B-2). The society, through a lawyer, on 17.1.1977 stated it was ready and willing to complete the sale and asked Radhakrishnan to fix a date for execution. On 28.1.1977 Radhakrishnan replied (Ex.A-4) that he would not execute a sale deed, repeating that the agreement was executed when he was not sober.
Radhakrishnan died on 23.7.1977. The society sent notices to his legal representatives on 13.8.1977 (Ex.A-5, Ex.A-6) calling on them to execute the sale deed; the representatives replied on 22.8.1977 (Ex.A-7) refusing. Nearly a year elapsed before the society issued another notice on 28.6.1978 (Ex.A-8), to which the defendants replied on 9.7.1978 (Ex.A-9) again refusing. The society again remained silent until 5.6.1979 when a registered notice (Ex.A-10) was issued and the suit for specific performance was filed on 18.6.1979.
In the plaint the society averred readiness and willingness to deposit Rs. 99,000 under court directions (to cover the balance and amounts for Income Tax Clearance under Section 230-A of the Income Tax Act). The trial court framed nine issues, disbelieved the defence that Radhakrishnan was intoxicated at signing, found the society had sufficient funds but held the society was not ready and willing to perform, had not obtained required sanction from the Director of Handlooms, and was guilty of laches and abandonment; consequently the trial court dismissed the suit. Defendants 4 and 5 were found to be necessary parties and were tenants; the appellant later did not press the appeal as against respondents 4 and 5 and the appeal was dismissed as to them. The society appealed; the appeal has now been dismissed.
Legal Issues Presented
- Whether the agreement of 26.10.1976 was vitiated by lack of voluntariness or by Radhakrishnan's alleged intoxication or want of mind at the time of signing.
- Whether the plaintiff society was ready and willing to perform its obligations under the agreement (including whether it had obtained the statutory sanction required and available funds or had taken steps to obtain funds).
- Whether the plaintiff's unexplained delay and periods of inaction amounted to laches or abandonment of the contract, thereby disentitling it to specific performance.
- Whether, in the exercise of judicial discretion, specific performance should be granted despite any delay or doubts concerning readiness and willingness.
Arguments of the Parties
Appellant (Plaintiff) — Contentions
- The documents produced and the plaintiff's oral evidence proved beyond doubt that it was always ready and willing to perform its part of the contract.
- Once it is found that the contract is not vitiated by fraud, coercion or undue influence, the court is bound to grant specific performance, particularly where the society had sufficient funds to perform.
Defendants — Contentions
- The agreement was not entered into voluntarily by Radhakrishnan; at the time he was under the influence of alcohol and not of sound mind.
- Radhakrishnan was heavily indebted, and under pressure, and the society's office-bearers compelled him to execute the agreement.
- The consideration was grossly inadequate; the property was worth much more than the stated price.
- The plaintiff was not ready and willing to perform its part of the contract and had abandoned the contract.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kantilal Sahah v. A.C. Devarajulu Reddiar (1977) 2 M.L.J. 484 (D.B.) | Support for the proposition that unexplained delay and silence can lead to an inference of waiver or abandonment precluding specific performance. | The court relied on this authority to justify inferring abandonment and laches from the society's inordinate delays in pressing for performance and in issuing notices only after long intervals. |
| Easwari Amma v. M.K. Korah (1972) 1 M.L.J. 218 | Holds that mere delay does not automatically preclude specific performance if the suit is otherwise in time; the delay must be such as to warrant inference of abandonment or result in prejudice to the defendant. | The court cited this decision to explain the governing principle but distinguished the present case on the ground that delay here was unexplained and, together with other factors (false or unreliable plaintiff evidence and failure to show readiness), justified refusal of specific performance. |
| Satyanarayana v. Vellohi Rao (Supreme Court) — (citation as referred) | Principle that grant of specific performance is discretionary (not arbitrary) and should be guided by judicial principles. | The court referred to the Supreme Court's statement to underscore that its denial of specific performance was a discretionary exercise guided by established principles, not an arbitrary refusal. |
| Subbarayalu v. Tatayya (1937 M.W.N. 1158) | Previous decision where specific performance was refused on grounds of false testimony and that granting performance would do injustice to the respondent. | The court relied on this authority to support refusal of specific performance where plaintiffs' witnesses gave false or unreliable evidence and where granting relief would be unjust to defendants. |
| Alagammal v. Rajagapala Servai (1976) 2 M.L.J. 397 | Held that actual tender or deposit of money is not necessary unless the court directs; an averment of readiness and willingness can suffice. | The court noted this authority but held it had no bearing on the present case because the plaintiff's averments of readiness and willingness were contradicted by the evidence on record. |
Court's Reasoning and Analysis
The court proceeded through a sequence of factual findings and legal considerations drawn from the record:
- Credibility regarding intoxication: The trial court rejected the defence that Radhakrishnan signed while intoxicated. On appeal, the court examined the evidence, accepted the testimony of D.W.I (the wife) as natural and credible — including that he was often under the influence of drink and that the property was worth more than Rs. 2,00,000 — but found that such evidence alone was insufficient to establish that Radhakrishnan was intoxicated at the exact time of signing. The court noted the absence of any witness present at the signing or corroborative third-party evidence of consistent intoxication or the debts said to have pressured him.
- Readiness and willingness to perform: The court focused on statutory and procedural impediments and internal inconsistencies in the society's evidence. It was undisputed that the society required sanction from the Director of Handlooms and Textiles before purchasing immovable property. Although the Board passed a resolution on 20.11.1976 to apply for such sanction and to apply for a loan from the provident fund, the society did not make the applications. Auditor's reports (Ex.A-2) showed substantial building funds (Rs. 1,82,395 on 30.6.1976 and Rs. 2,12,531 on 30.6.1977), yet the resolutions indicated a plan to borrow from the provident fund; the society offered no explanation for this discrepancy. Witness P.W.2, a director, denied that a resolution to borrow was passed, yet the minutes contained entries to the contrary. P.W.1 conceded the need for sanction and asserted it was usual to complete the transaction and later seek ratification, but there was no documentary support. Given the absence of the director's sanction and contradictions on funding sources, the court concluded the society had not established that it was legally able and in fact prepared to perform its contractual obligations.
- Delay, laches and abandonment: The court closely examined the society's sequence of notices. After the defendants' representatives refused to execute the sale deed in August 1977, the society waited nearly a year before issuing another notice in June 1978, then another year before the registered notice in June 1979 and filing suit. The society offered no explanation for these intervals. The court held that such inordinate and unexplained delays supported an inference of waiver or abandonment. The court relied on authority (Kantilal Sahah) for the proposition that unexplained silence and delay can disentitle a plaintiff to specific performance.
- Plausibility and veracity of plaintiff witnesses: The court found material discrepancies in the evidence of P.W.s 1 and 2, concluding they were not willing to speak the truth and were concealing facts. The court treated such false or unreliable testimony as a factor weighing against granting specific performance, citing Subbarayalu v. Tatayya.
- Discretionary refusal of relief: Balancing the factors — insufficient proof that the contract was vitiated at signing but also insufficient proof of readiness and willingness, failure to obtain required sanction, internal inconsistencies about funds, prolonged unexplained delay, and unreliable plaintiff witnesses — the court exercised its discretion against granting specific performance. The court noted precedents (including Easwari Amma and the Supreme Court's decision in Satyanarayana v. Vellohi Rao) to frame the discretionary nature of specific performance and to explain that mere delay alone does not always bar relief; however, on the facts of this case, the cumulative defects justified refusal.
Holding and Implications
Holding: The court dismissed the appeal and refused to grant specific performance. The core ruling is emphasized as follows:
APPEAL DISMISSED — Specific performance refused.
Implications:
- Direct effect: The plaintiff society's suit for specific performance was not granted; the society is held guilty of laches and abandonment of the contract and has failed to prove readiness and willingness to perform. The appeal fails and is dismissed.
- Costs: As the respondents did not enter appearance in the appeal, the court made no order as to costs.
- Precedential effect: The court applied established principles on readiness and willingness, laches, the discretionary nature of specific performance, and the probative value of witness testimony. The opinion does not purport to establish a new legal principle; it applies existing authorities to the particular facts and record before the court.
1. The plaintiff, which is a co-operative society has filed this appeal. The suit is one for specific performance of an agreement dated 26.10.1976 under Ex.A-1 entered with the plaintiff by one Radhakrishnan. Under the terms of the agreement, the consideration was fixed as Rs. 1,04,000 and an advance of Rs. 5,000 is said to have been paid. The time for completion of the transaction was agreed to be three months. In other words, it was to be completed before 25.1.1977. On 16.11.1976, the said Radhakrishnan gave a letter to the plaintiff stating that he signed the agreement without knowing the contents when the members of the society compelled him to sign the same. According to him, he was not having a steady mind at that time and after he returned to his house, the members of his family expressed the dissent to the transaction. He prayed for cancellation of the agreement.
2. On 20.11.1976, the Board of Directors passed two resolutions, one deciding to apply for sanction to purchase the property to the concerned authority viz., The Director of Handlooms and Textiles and the other to apply for loan from the Provident Fund kept in deposit with the Central Co-operative Bank, Kancheepuram. Radhakrishnan wrote another letter on 7.12.1976 marked as Ex.B-2 on the same lines as Ex.B-1. There was a reply by the Society to Radhakrishnan on 17.1.1977 through its lawyer. It was stated in the reply that the Society was ready and willing to have the sale deed completed and pay the balance of the sale price. He was called upon to fix and intimate a date to the society for the execution and registration of the sale deed. Radhakrishnan sent a reply in Ex. A-4 on 28.1.1977 stating that the agreement was executed when he was not sober. He stated that the agreement could not be completed and he would not execute a sale deed. The society kept quiet after receiving the said reply.
3. Radhakrishnan died on 23.7.1977. The society sent notices to the legal representatives on 13.8.1977 under Ex.A-5 and Ex.A-6 calling upon them to execute a sale deed as per the agreement referred to earlier. A reply was sent by the legal representatives who are the defendants herein on 22.8.1977 under Ex.A-7 in which they stated categorically that the sale deed would not be executed and the society was not entitled to call upon them to specifically perform the agreement. Nearly a year lapsed before the society issued another notice under Ex.A-7 dated 28.6.1978 again calling upon the defendants to execute the sale deed. There is no explanation in the notice as to why the society kept quiet after receiving the earlier reply notice dated 22.8.1977. There was a reply by the defendants on 9.7.1978 under Ex. A-9 once again reiterating their stand. Again, the society kept quiet till 5.6.1979, when a registered notice was issued by the society's lawyer under Ex.A-10. Then the suit was filed on 18.6.1979 by the society for specific performance. It is averred in the plaint that the society is ready and willing to deposit the sum of Rs. 99,000 under directions of the Court out of which amount the amount necessary to obtain Income Tax Clearance Certificate under Section 230-A of the Income Tax Act may be directed to be paid to the authorities by the court and the same adjusted against the price of the suit property. There is no explanation in the plaint as to why the Society kept quiet for nearly three years after the date of the agreement inspite of being aware of the stand taken by Radhakrishnan and his legal representatives. There is also no explanation as to why the society waited for more than a year after issuing the so-called final notice under Ex.A-6 to the defendants.
4. The defendants raised several contentions. The main contention was that the agreement was not entered into voluntarily by Radhakrishnan and at the time of agreement, he was under the influence of alcohol and his senses were not in his control. It was also alleged that he was steeped in debts and owing to pressure of debts and unhappiness, he became an addict to drinks. It was further alleged that the office-bearers of the society compelled him to execute the agreement and the property was worth much more than the consideration stated in the agreement. The entitlement of the plaintiff to the relief of specific performance was also challenged on the ground that the plaintiff was not ready and willing to perform its part of the contract and had abandoned the contract.
5. The trial court framed nine issues. The trial court found against the plea of the defendants that the agreement was executed by Radhakrishnan at the time when he was not fully conscious or when he was under the influence of drinks. It also found that the plaintiff society had sufficient money to be drawn for the purpose of paying the balance of consideration. However, the trial court found that the plaintiff was not ready or willing to perform the contract and it had not even obtained the sanction from the Director of Handlooms as required by law. It was also found that the plaintiff was guilty of laches and abandonment of the contract. Consequently, the suit was dismissed by the trial court. Incidentally, it should be mentioned that defendants 4 and 5 who were impleaded in the suit were tenants in the property and it was found by the trial court that they were necessary parties. But, when the appeal was pending in this Court, an endorsement was made by the appellant's counsel that the appeal was not pressed as against defendants 4 and 5. Consequently, the appeal was dismissed against respondents 4 and 5.
6. Learned Counsel for the plaintiff/appellant contends that the documents produced by the plaintiff and the oral evidence, adduced on the said of the plaintiff proved beyond doubt that it was always ready and willing to perform its part. According to learned Counsel, once it is found that the contract is not vitiated by fraud, coercion or undue influence, the court is bound to grant specific performance, particularly when it is found that the society had sufficient funds to perform its part of the contract.
7. The evidence adduced by the plaintiff is discrepant. It is not necessary for us to consider all the questions raised in the court below. Suffice it to point out that the finding of the court below that the plaintiff was not ready and willing to perform its part of the contract is acceptable and cannot be interfered with. No doubt, the correctness of the finding of the court below on the question as to whether Radhakrishnan executed the contract when he was sober and steady is open to doubt, There are reasons to hold otherwise, but we do not propose to do so as the evidence is not sufficient therefor. The learned trial Judge has chosen to disbelieve the version of D.W.I, the wife of Radhakrishnan on the ground it is unnatural. According to him, she has repeated what is contained in Exs.B-1 and B-2 the letters written by Radhakrishnan to the Society. That is hardly a ground for rejecting the evidence of D.W.I. A perusal of her evidence shows that it is natural and she has only spoken what happened in the house when Radhakrishnan informed the family of his signature having been taken on some papers by the society. She has given evidence that Radhakrishnan was always under the influence of drinks on account of pressure and tension. She has also stated that the property was worth more than Rs. 2,00,000 at the time of the agreement. There is no necessity to reject her evidence. We accept her evidence. But, that is not sufficient for us to give a finding that the agreement was executed by Radhakrishnan at a time when he was under the influence of drinks. None who was present at the time of agreement has been examined. The first defendant has not examined any other third party to prove that Radhakrishnan was always under the influence of drinks. She has not also proved the existence of debts which pressurised Radhakrishnan. She has not let in evidence to prove the value of the property at the time of agreement. Hence, we are not in a position to accept the defence fully though we find no reason to reject her evidence as , such which in our opinion is not sufficient to give* a finding in her favour.
8. As regards the readiness and willingness of the plaintiff society, it is not in dispute that the society has to obtain sanction of the Director for purchasing immovable property. The resolution was passed only on that basis on 20-11-1976 by the Board of Directors. It was decided that an application should be made to the Director of Handlooms and Textiles for sanction of the purchase for a consideration of Rs. 1,04,000. In the same meeting, another resolution was also passed that loan would be obtained from out of the Provident Fund on an application made to the Bank. Having passed such resolutions, the society has admittedly failed to make application either to the Director of Hand-looms or to the Bank. It is sought to be projected in the evidence that a sum of Rs. 2,00,000 was available in the building fund of the society in 1976-77 and there is no necessity to borrow money. Ex. A-2, a report of the Auditor of the society has been filed. It is seen from an entry in Ex.A-2 that a sum of 2,12,531 was available as on 30.6.1977 under the building fund and earlier a sum of Rs. 1,82,395 was available on 30.6.1976 under the same fund. But, the resolution passed is to the effect that they should borrow from the provident fund. If really a sum of Rs. 2,00,000 and odd was available at the time of the agreement, it is not known why the resolution was passed to borrow from the provident fund. There is no explanation therefor. P.W. 2 one of the Directors, who took part in the meeting and a signatory to the resolution denies passing of such a resolution. According to his evidence, it was not decided to borrow loan from the provident fund. He has also stated that the resolution was erroneous and there was no application at all for loan. If his version in the box is correct, there is no explanation as to how the minutes book contains such entries evidencing resolutions having been passed. P.W. 2 has also admitted that there was no sanction from the Director of Textiles for the purchase of the property. He has admitted that it is open to the Director to either reject or accept their application. P.W. I also admits that it is necessary to obtain sanction of the Director. But, P.W. 1 adds that it is usual to complete the transaction and later apply for ratification. But, that is not evident from any of the documents. That also runs counter to the resolutions passed as well as the evidence of P.W. 2 The evidence of P.Ws. 1 and 2 shows that it was necessary to obtain sanction before making the purchase. Admittedly such sanction has not been obtained. Hence, it cannot be said that the plaintiff was always ready to perform its part of the contract. When in the eye of law, the plaintiff could not have performed its part of the contract, it cannot claim that it was ready to perform the same. The willingness cannot also be said to have been established when there is material discrepancy in the matter of drawing of funds. It may be that the society had more than Rs. 2,00,000 in the building fund. But, the resolution passed by the Board of Directors is not to draw from the building fund. It is only to apply for a loan from the bank and admittedly no such application was made. Hence, it cannot be contended that the society has proved its willingness to perform its part of the contract.
9. We have already referred to the notices issued by the society once a year. There is no explanation as to why the society waited for nearly a year after issuing every notice. Once it was made clear to the society that the defendants would not execute a sale deed as claimed by them, they should have proceeded to enforce specific performance. But, they did not do so. They issued a notice again after a year and filed a suit after expiry of a further year. In the absence of any explanation for this inordinate delay in approaching the court, it can be inferred that the society has waived the performance of contract and abandoned the same. This is a case of unexplained silence and wanton delay and the society cannot escape the consequence of the same by saying that mere delay in seeking specific performance would not disentitle them to get the relief. See: Kantilal Sahah v. A.C. Devarajulu Reddiar (1977)2 M.L.J. 484 (D.B.). .
10. Reliance is placed on the judgment in Easwari Amma v. M.K. Korah (1972)1 M.L.J. 218. A Division Bench of this Court has held that mere delay will not preclude the plaintiff for obtaining specific performance if the suit is otherwise in time. It has also been pointed out by the Bench that the delay must not be such from which it may be properly inferred that the plaintiff has abandoned his right or on account of the delay there must have been such a change of circumstances that the grant of specific performance would prejudice the defendant. The Bench has referred to a judgment of the Supreme Court in Satyanarayana v. Vellohi Rao . The Apex Court has pointed out that the grant of relief of specific performance is discretionary though not arbitrary and it should be guided by judicial Principles. Reference has also been made to an earlier judgment of another Bench in Subbarayalu v. Tatayya 1937 M.W.N. 1158. In the earlier case, the Division Bench of this Court refused specific performance on two grounds, (1) the plaintiff had given false testimony in the witness box and (2) granting specific performance would be doing injustice to the respondent. In the present case, it is clear from a reading of the evidence of P. Ws. 1 and 2 that they are not willing to speak the truth before the court. It is obvious that they are concealing the facts from the court and their evidence is false. Even that is sufficient to refuse the relief to the plaintiff. In addition to it, the delay on the part of the plaintiff is not explained at all.
11. Learned Counsel referred to a judgment of V. Sethuraman, J. in Alagammal v. Rajagapala Servai (1976)2 M.L.J. 397. The learned Judge held in that case that it was not necessary for the plaintiff to actually tender the money or deposit the same in court except when the court directed the same. According to that judgment, it is sufficient if the plaintiff avers readiness and willingness to perform the contract according to its true construction. That ruling will have no bearing on the present case. No doubt, there is an averment in the plaint that the plaintiff is ready and willing to perform its part. We have already referred to the evidence on record which disproves the averments is of the plaintiff. The plaintiff has miserably failed to prove in this case readiness and willingness to perform the contract.
12. In the circumstances, we are entirely in agreement with the findings of the lower court that the plaintiff is guilty of laches and abandonment of the contract. In any event, we refuse to exercise our discretion in favour of the plaintiff and grant specific performance as prayed for. Hence, the appeal fails and it is dismissed. As the respondents have not entered appearance in this appeal, we make no order as to costs.
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