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Judicial Opinion Summary — C.M. Lodha, J.

Factual and Procedural Background

The defendant-respondent Nawab Mohammed Mukarram Ali Khan owned a Haveli known as Nawab Sahib Ki Haveli in Tripolia Bazar, Jaipur. By an agreement dated 24 August 1955 (marked Ex. 1) the defendant agreed to sell a portion of the Haveli to the plaintiffs Ram Kishore and others for Rs. 49,999. The plaintiffs paid Rs. 10,000 at the time of the agreement. The agreement provided that the plaintiffs would get the sale deed prepared at their expense; thereafter the defendant would present the deed for registration, register it on payment of Rs. 39,999 and transfer possession. The contract provided for damages equal to 25% of the sale price if a party committed breach.

Disputes arose: the plaintiffs alleged they purchased stamps worth Rs. 1,000 for executing the sale deed, attempted to have a draftsman take measurements but were prevented by the defendant, and that the defendant initiated proceedings at the Tehsil which resulted in a notice (Ex. 3) restraining the purchase. The plaintiffs also alleged wrongful repudiation by a notice dated 9 September 1955 (Ex. 2), by which the defendant purported to forfeit the Rs. 10,000 and threatened suit for Rs. 12,500 as damages. The plaintiffs responded by a notice dated 10 October 1955 (Ex. 4) reiterating willingness to perform. When the sale-deed was not executed, the plaintiffs by a notice dated 22 March 1956 purported to put an end to the contract and called for return of Rs. 10,000 plus Rs. 12,500 damages, and filed suit on 5 April 1956 claiming Rs. 22,500.

In the written statement the defendant admitted the agreement and the Rs. 10,000 payment but alleged that the plaintiffs breached and were not ready and willing to perform. At trial the plaintiffs called three witnesses (P.W.1 Ram Kishore, P.W.2 Ram Prasad and P.W.3 Suwalal); the defendant cross-examined two witnesses but was absent thereafter and led no evidence.

The Senior Civil Judge by judgment dated 25 August 1959 decreed refund of Rs. 10,000 to the plaintiffs but dismissed their claim for damages. The plaintiffs appealed seeking a decree for Rs. 12,500 damages; the defendant did not appeal the refund portion. The sole question before this Court is whether the plaintiffs are entitled to damages.

Legal Issues Presented

  1. Whether the plaintiffs are entitled to damages for breach of contract by the defendant.
  2. Whether, having treated the defendant's repudiatory notice as not terminating the contract (by giving notice on 10 October 1955 that they remained willing), the plaintiffs proved that they were ready and willing to perform their reciprocal obligations so as to claim damages.
  3. Whether the defendant's notice of repudiation dated 9 September 1955 was justified under the terms of the agreement (in particular whether time was the essence of the contract).

Arguments of the Parties

Appellants' Arguments (Mr. Tikku)

  • The defendant committed breach by preventing measurement-taking of the property, thereby hindering preparation of the sale-deed.
  • The defendant repudiated the contract by the notice dated 9 September 1955 (Ex. 2), and therefore the plaintiffs were not required thereafter to demonstrate readiness and willingness to perform.
  • Reliance was placed on Section 39 of the Indian Contract Act, 1872 and on cases including Najan Ahmed v. Salemahomed and Union of India v. Bungo Steel Furniture (P.) Ltd. to support the contention on repudiation and available remedies.

Respondent's Arguments (Mr. Kasliwal)

  • The plaintiffs failed to allege and prove they were ready and willing to perform their obligations — they did not produce a draft sale-deed, did not show arrangements for payment of Rs. 39,999, nor prove the purchase of stamps.
  • The defendant was justified in repudiating the contract by the notice dated 9 September 1955.
  • Reliance was placed on Section 51 of the Contract Act and on authorities including Mathra Das v. Secretary of State and Imamali v. Rani Priyawati Devi.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Najan Ahmed v. Salemahomed Explains the consequences of a seller's repudiation: the buyer may either treat repudiation as inoperative and keep the contract alive (awaiting performance) or treat it as wrongful and sue immediately for breach; if the buyer keeps the contract alive he remains subject to obligations and may be required to mitigate damages. The Court relied on and quoted this authority to set out the two courses available to the plaintiffs after the defendant's repudiation, and used it to explain why plaintiffs, having elected to keep the contract alive, had to prove readiness and willingness to perform to claim damages.
Nannier v. Rayulu Iyer & Co. Cited as approving the observations in Najan Ahmed regarding consequences of repudiation. The Court noted that Najan Ahmed's observations were cited with approval in this case, thereby reinforcing the principle applied to the present facts.
Union of India v. Bungo Steel Furniture (P.) Ltd. Relied upon by appellants' counsel (specific rule not elaborated in the opinion). The opinion records that the appellants relied on this case, but does not state any substantive application or further analysis based on it.
Mathra Das v. Secretary of State Relied upon by respondent's counsel (specific rule not elaborated in the opinion). The opinion records reliance but does not detail how this authority was applied in the Court's reasoning.
Imamali v. Rani Priyawati Devi Relied upon by respondent's counsel (specific rule not elaborated in the opinion). The opinion notes reliance but does not record any explicit application of this decision to the present facts.

Court's Reasoning and Analysis

The Court proceeded in a step-by-step analysis grounded in the agreement's terms, the parties' post-contract conduct, statutory provisions cited, and the trial evidence.

1. Examination of the agreement (Ex. 1): The Court found no clause making it obligatory on the plaintiffs to get the sale-deed prepared within a week; the agreement stipulated that the defendant would present the sale-deed for registration within a week of its preparation. Thus, there was no express time-limit imposed on the plaintiffs to prepare the draft, and the parties did not appear to have made time the essence of the contract. The Court observed that for immovable property transactions, time is ordinarily not of the essence unless clearly shown.

2. Legal position on repudiation: The Court invoked Section 39 of the Indian Contract Act (as cited) and the ratio in Najan Ahmed v. Salemahomed to explain the two alternatives available to a promisee when the promisor repudiates — (a) treat the repudiation as wrongful and sue immediately for breach (thereby putting an end to the contract), or (b) treat the repudiation as inoperative, keep the contract alive, and require that to obtain damages later the promisee must prove readiness and willingness to perform.

3. Plaintiffs' election: The Court found from the plaint and the plaintiffs' notice dated 10 October 1955 (Ex. 4) that the plaintiffs chose the latter course — they treated the contract as subsisting and gave the defendant time to execute the sale-deed. Because of this election, the plaintiffs were required, to recover damages, to prove that they were ready and willing to perform their reciprocal obligations.

4. Evaluation of evidence on readiness and willingness: The Court reviewed the trial evidence. The plaintiffs conceded they produced no draft sale-deed and did not show arrangements for payment of the balance (Rs. 39,999). The plaintiffs' testimony that they sent persons to take measurements was undermined by admissions (Ram Kishore admitted he did not thereafter send anyone); accordingly the Court concluded the defendant did not, in fact, prevent measurements in a way that excused further plaintiff inaction. The plaintiffs' claim of purchase (and later refund) of stamps was supported only by Ram Kishore's uncorroborated oral assertion; no documentary evidence or corroborative testimony or records from the Stamps Department were produced. There was "absolutely no evidence" of arrangements to pay the balance.

5. Conclusion from evidence: Given these evidentiary deficiencies, the Court agreed with the trial court's finding that the plaintiffs had failed to prove they were ready and willing to perform their reciprocal obligations. Because the plaintiffs had retained the contract and thus bore the burden of proving readiness, their failure meant they could not successfully claim damages for the defendant's non-performance.

6. Relief and costs: On this basis the Court dismissed the appeal. The Court upheld the trial court's order for refund of Rs. 10,000 (not appealed by defendant) and, in respect of the appeal on damages, left the parties to bear their own costs.

Holding and Implications

Holding: The Court concluded that the plaintiffs are not entitled to damages for breach of contract. The appeal is dismissed.

Implications:

  • Direct effect on the parties: The trial court's decree requiring refund of Rs. 10,000 to the plaintiffs remains effective (the defendant did not appeal that part). The plaintiffs' claim for Rs. 12,500 damages is dismissed and they recover no damages. The parties were directed to bear their own costs of this appeal.
  • Legal consequence: The decision applies established principles (as in Najan Ahmed) concerning a promisee's election on repudiation: by electing to keep the contract alive the plaintiffs assumed the burden of proving readiness and willingness to perform, which they failed to discharge. The opinion states no novel precedent; it applies existing principles to the factual record.

Note: This summary includes only information expressly contained in the provided opinion. Sections omitted or summarized reflect absence of additional material in the source text.

    Mst. Suraj Bai v. Nawab Mohammed

    C.M Lodha, J.:— The defendant respondent in this case is Nawab Mohammed Mukarram Ali Khan who owned a Haveli populardy known as Nawab Sahib Ki Haveli situated in Tripolia Bazar, Jaipur. He agreed to sell a portion of it for a sum of Rs. 49,999/- to the plaintiffs Ram Kishore and others by an agreement dated 24th August, 1955, which has been placed on the record and marked Ex. 1. It may be stated here that the plaintiffs Ram Kishore, Ganeshlal and Damodar Dass died during the pendency of this appeal and are now represented by their heirs. A part of the sale price, that is Rs. 10,000/- was paid at the time of the execution of the agreement and it was stipulated that the plaintiffs purchasers would get the sale deed prepared at their expense and thereafter the defendant would present the same for registration and get the sale-deed registered on payment of Rs. 39,999/- and also transfer the possession of the property in question to the vendees. It has also been provided in the agreement that the party committing breach of the contract would be liable to pay damages to the other party to the extent of 25% of the sale price. The plaintiffs' case is that they had purchased stamps worth Rs. 1000/- for execution of the sale deed and also asked the defendant to execute the sale-deed on the stamps. It was also alleged by them that they sent a draftsman to take measurements of the property agreed to be sold to them but the defendant prevented him from taking the measurements. The plaintiffs have charged the defendant with a fraudulent intention of illegally putting an end to the contract by having got initiated a complaint in respect of the proposed sale in the Tehsil Jaipur as a result of which the plaintiffs received a notice dated 13th September, 1955, from the Tehsil whereby they were restrained from purchasing this property. Copy of this notice is marked Ex. 3. It was also alleged in the plaint that the defendant gave a notice to the plaintiffs dated 9th September, 1955, by which he wrongly repudiated the contract on the false ground that the plaintiffs had not purchased the stamps for drawing out the sale deed thereon within the stipulated period of seven days. A copy of this notice dated 9th September, 1955, has also been placed on the record and is marked Ex. 2. It was stated in the notice that the defendant had forfeited Rs/10,000/- paid to him by the plaintiffs as part of the purchase price and would bring a suit against the vendees for Rs. 12500/- as damages. The plaintiffs have further averred that in spite of the defendant's notice dated 9th September, 1955, wrongly repudiating the contract, they called upon the defendant by their notice dated 10th October, 1955, that they were still prepared to purchase the property in question and if within a month, the defendant failed to execute the sale-deed, the plaintiffs would be forced to bring a suit for enforcement of their right. A copy of the notice dated 10th October, 1955, has also been placed on the record and is marked Ex. 4. The plaintiffs' case is that in spite of their notice dated 10th Oct., 1955, the defendant did not execute a sale-deed in their favour. They therefore put an end to the contract by their notice dated 22nd March, 1956, and called upon the defendant to return ten thousand rupees paid to him as part of the purchase price together with a sum of Rs. 12,500/- as damages as provided in the contract. Ultimately, the plaintiffs filed the present suit in the court of the Senior Civil Judge, Jaipur, on the 5th April, 1956, and claimed a decree of Rs. 22,500/- on account of the alleged breach of contract on the part of the defendant.

    2. In the written statement filed by the defendant, he admitted the fact of entering into the contract in question and also payment to him a sum of Rs. 10000/- as part of the purchase price at the time of the agreement to sell. But he pleaded that the plaintiffs had committed breach of contract and were not prepared at any time to perform their part of the contract. The defendant, therefore, contested the plaintiffs' right to cover any amount from him either by refund of the part of the purchase price or by way of damages. After framing the necessary issues on the pleadings of the parties, the learned trial court recorded the evidence of P.W 1 Ram Kishore, one of the plaintiffs, and P.W 2 Ram Prasad on 6th March, 1957. The defendant cross-examined these witnesses but thereafter remained absent with the result that the evidence of the third witness produced by the plaintiffs P.W 3 Sualal, was not subjected to any cross-examination nor did the defendant produce any evidence in the case.

    3. The learned Senior Civil Judge by his judgment dated 25th August, 1959, decreed the plaintiff's suit for refund of paid by the plaintiffs to the defendant as part of the purchase price at the time of the execution of the agreement but dismissed the plaintiffs' claim for damages. The plaintiffs have, therefore, filed an appeal to this Court with a prayer that the judgment of the trial court may be modified and they may be awarded a decree for damages also to the tune of Rs. 12,500/-. The defendant has not preferred any appeal from that part of the judgment and decree by which they have been directed to refund Rs. 10,000/- as part of the purchase price paid to them. The only question we are, therefore, called upon to determine in this appeal is whether the plaintiffs appellants are entitled to get any damages.

    4. In this connection, the learned Senior Civil Judge has held that the plaintiffs have failed to establish that they had purchased steps for the sale-deed and further that they have failed to prove that they had got any draft of the sale-deed prepared or had made any arrangement for payment of the balance of the sale-price. In short, the finding of the learned Senior Civil Judge is that the plaintiffs have failed to show that they were ready and willing to perform their part of the contract and consequently they were not entitled to get any damages.

    5. Mr. Tikku, learned counsel for the appellants, has urged that the defendant had committed breach of the contract inasmuch as in the first instance he had not permitted the plaintiffs to take the measurements of that portion of the Haveli which was agreed to be sold with the result that without measurements the sale-deed could not be drafted. In the second place, it is urged that the defendant had himself repudiated the contract though wrongly by his notice dated the 9th September, 1955, Ex. 2, and, consequently, it was no more necessary thereafter for the plaintiffs to have shown that they were ready and willing to perform their part of the contract. In support of his contention, he has referred us to Sec. 39 of the Indian Contract Act, 1872, and also placed reliance on Najan Ahmed v. Salemahomed (1) and Union of India v. Bungo Steel Furniture (Pr.) Ltd. (2). On the other hand, Mr. Kasliwal, learned counsel for the defendant respondent, has submitted that the plaintiffs have failed to allege and prove that they were ready and willing to perform their part of the contract. It is urged that the plaintiffs have led no evidence to show that they had prepared a draft of the sale-deed and had made arrangements for payment of Rs. 39,999/- the balance of the purchase money or that they had actually purchased stamps for execution of the sale-deed. He has also argued that the defendant was justified in repudiating the contract by the notice dated the 9th September, 1956. In support of his arguments he has referred to Section 51 of the Contract Act and has also relied upon Mathra Das v. Secretary of State (3) and Imamali v. Rani Priyawati Devi (4).

    6. We may state at once that the notice Ex. 2 dated the 9th September, 1955, by the defendant to the plaintiffs repudiating the contract on the ground that the plaintiffs had failed to purchase the stamps for drawing out the sale-deed within a week of the execution of the agreement does not seem to be justified. We have examined the terms of the agreement Ex. 1, and it is not provided therein that plaintiffs would get the sale-deed prepared within a week from the date of the agreement. What is mentioned there, in this connection is that the defendant vendor would present the sale-deed for registration within a week of the date of its preparation. No time limit has been fixed by which it was made obligatory on the part of the plaintiffs to get the sale-deed prepared and it does not appear to us that the parties ever intended to make time, an essence of the contract. Moreover, in transactions of immovable property time is not generally the essence of the contract unless there is clear evidence to the effect that the parties intended to make it so. On receipt of this notice from the defendant, it was no doubt open to the plaintiffs to put an end to the contract and sue the defendant for damages. It was also open to the plaintiffs to keep the contract alive and give an opportunity to the defendant to perform the contract, and in case the defendant failed to do so, to sue for specific performance of the same, or, in the alternative, for damages. Sec. 39 of the Contract Act itself lays down that when a party to a contract has refused to perform or disabled himself from performing his promise in its entirety, the promisee may put an end to the contract, unless he has signified by words or conduct his acquiescence in its continuance. It was observed in Najan Ahmed v. Salemahomed (supra) that:

    “In such a case when the seller clearly shows his intention not to be bound by and to repudiate the contract, the buyer, if he pleases, may treat the notice of intention as inoperative, and await the time when the contract is to be executed and then hold the seller responsible for all consequences of non-performance, but in that case he keeps the contract alive for the benefit of the seller as well as his own; but buyer remains subject to all his obligations and liabilities under it, and enables the seller not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstances which would justify him in declining, to complete it. On the other hand, the buyer may, if he thinks proper, treat the repudiation of the seller as wrongful putting an end to the contract, and may at once bring his action as on a breach of it, and in such action he will be entitled to such damages as would have arisen from non-performance of the contract at the appointed time, subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his damage.”

    7. These observations were cited with approval in Nannier v. Rayulu Iyer & Co. (5).

    8. Thus, two courses were open to the plaintiffs in the present case when the defendant repudiated the contract by his notice dated 9th September, 1955. They could either treat the repudiation by the defendant as wrongfully putting an end to the contract and may have at once brought an action as on a breach of it, or they may have treated the notice as inoperative and showed their willingness to perform the contract subject to all their obligations and liabilities under it. The plaintiffs, however, chose the latter course as is clear from the averment made be them in para No. 6 of the plaint as well as their notice dated the 10th October, 1955. It is stated in para No. 6 of the plaint that the plaintiffs gave a reply to the defendants wholly unfounded notice dated the 9th September, 1955, that they were prepared to purchase the property according to the agreement and they gave one month's time to the defendant to execute the sale-deed. So also in the notice dated the 10th October, 1955, (Ex. 4) the plaintiffs have said that they were even then reaidy and willing to perform their part of the contract. Thus on reading the plaint as well as the plaintiffs' notice dated the 10th October, 1955, it becomes clear that the plaintiffs did not put an end to the contract but treated it as still subsisting. In these circumstances, in order to get damages, it was necessary for the plaintiffs to prove that they were ready and willing to perform their reciprocal promise.

    9. This brings us to the question whether the finding of the lower court that the plaintiffs had failed to establish that they were ready and willing to perform their part of the contract is correct? It is conceded by the learned counsel for the appellants that the plaintiffs have led no evidence to show that any draft of the sale-deed had been got prepared by them. He has also frankly conceded, and rightly so, that the plaintiffs have made no endeavour to prove that the proceedings in the Tehsil prohibiting the proposed sale of the property in question had been got instituted at the instance or with the connivance of the defendant. He has, however, contended that the plaintiffs had sent an Overseer for taking measurements of the property, but the defendant did not allow him to do so.

    10. We have gone through the statements of the plaintiffs' witnesses P.W 1 Ram Kishore, P.W 2 Ram Prasad and P.W 3 Suwalal in this connection. It has been stated by Ram Kishore, one of the plaintiffs, that he had sent draftsman Ramn Prasad with Suwalal to the defendant's house on the 26th August, 1955, but both Ramprasad and Suwalal came back without taking measurements as the defendant's Kamdar had not allowed them to take measurements. He further states that he had met the defendant the next day and the defendant told him that he would ask his Kamdar to allow the plaintiffs to take the measurements of the apartments agreed to be sold to the plaintiffs. It is, however, admitted by the plaintiffs Ram Kishore that thereafter he did not send any body on his behalf to take the measurements. In these circumstances it cannot be said that the defendant had prevented the plaintiffs from taking measurements of the property.

    11. As regards the plaintiff's evidence that they had purchased the stamps for drawing out the sale-deed thereon, we may state, that it is highly unsatisfactory. The plaintiff Ram Kishore has not been able to say when the stamps were purchased 1. He has not produced any documentary evidence either from his possession or from the Stamps Department in support of this allegation. He also states that he had returned the stamps after some time and obtained refund; but he has not produced any other oral or documentary evidence in support of this assertion except his own bald statement which does not appear to us to be convincing. We are, therefore, in agreement with the learned Senior Civil Judge that the plaintiffs had failed to prove that they had purchased any stamps as a step towards the execution of the contract on their part. There is absolutely no evidence on the record that the plaintiffs had made arrangements for payment of Rs. 39,999/- the balance of the sale-price. In these circumstances, on just exception can be taken to the finding of the learned Senior Civil Judge that the plaintiffs had failed to prove that they were ready and willing to perform their part of the contract and it cannot be said that the defendant had committed breach of the contract. All that the defendant was required to do under the terms of the agreement was to present the sale-deed for registration and accept the balance of the sale-price and deliver possession of the property to the vendees. But this part of the contract by the defendant could be performed only when the plaintiffs had prepared a draft of the sale-deed, got it written on a stamp-paper and handed it over to the defendant for signature and presentation to the Registration Department and had also made arrangements for payment of the balance of the sale-price. However since plaintiffs have failed to prove that they had done all these necessary acts, they cannot make the defendant liable for non-performance of his part of the contract. Consequently the plaintiffs are not entitled to get any damages from the defendant and their claim for damages has rightly been dismissed by the trial court.

    12. We, therefore, dismiss the appeal, but in the circumstances of the case, we leave the parties to bear their own costs of this appeal.

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    Mst. Suraj Bai v. Nawab Mohammed
    (Apr 13, 1969)