1. Plaintiff is the appellant in this Second Appeal. The suit is for specific performance of a contract of sale of a building. The building belongs to defendant 1. On 8-7-1118 he agreed to sell it to the plaintiff for Rs. 500/- and received from the plaintiff on that date Rs. 100 as advance purchase-money. Subsequently, defendant 1 refused to execute the sale deed. The plaintiff filed this suit on 7-7-1121 for specific performance of the contract depositing in Court the balance purchase-money of Rs. 400. Defendant 2 is a tenant of the building under defendant 1. Defendants 3 to 8 are persons who reside in the building along with defendant 2. Defendants 1 and 2 contested the suit. Defendant 1 admitted the contract of sale, but contended that the plaintiff subsequently cancelled the contract. Defendant 2 contended that he was living in the house with his family under a coolicharth executed by him to defendant 1 and that he was not liable to be evicted from the house. The trial Court found that the plaintiff had not cancelled the agreement and gave a decree for specific performance. The relief against defendant 2 was disallowed. It was held that defendant 2 could be evicted from the house only in a fresh suit instituted by the plaintiff after he acquired ownership of the same.

2. In appeal filed by defendant 1 the District Court held that the delay in filing the suit raised a presumption that the plaintiff canceled the agreement, and on the basis of this presumption and acting on the evidence of defendant 1 that Court held that the plaintiff was not entitled to a decree for specific performance. The suit was, therefore, dismissed with, costs. The question for consideration in this Second Appeal is whether the plaintiff has cancelled the contract of sale of the house as contended by the defendant and whether the plaintiff is not entitled to a decree for specific performance by reason of the delay in filing the suit. The plaintiff's excuse for the delay in filing the suit is that defendant 1 was promising to execute the sale deed, that he said that the title deed relating to the house was in Tellicherry, and that he promised to execute the sale deed after getting the document. Defendant 1 had purchased this house as per document No. 360/1108. He was required by the plaintiff to produce this document in Court. In the statement filed by defendant 1 on 1-1-1122 it was stated that the document was missing. (Text in the local language about two lines omitted.—Ed.). In the light of this statement it may be taken that there is some basis for the contention of the plaintiff that defendant 1 was putting off the execution of the sale deed on the ground that the title deed relating to the house was not available. The house is situated in Mattancherry and in the year 1118 there was a scare that Cochin might be bombed by the Japanese and consequently a good number of people evacuated from the place. Defendant 1 went and resided at Edappilly and it is alleged that all his valuable documents were taken to Tellicherry.

3. With regard to the alleged cancellation of the contract by the plaintiff what defendant 1 swears as D.W 4 is that the plaintiff sent word to him through D.W 3 that he cancelled the sale as he had no money with him for taking the sale deed. But what D.W 3 says is that the plaintiff told him that he did not want the house as it was not worth Rs. 500. D.W 3 is the brother-in-law of defendant 1. What defendant 2 swears as D.W 1 is that the plaintiff told him that he did not want the house since defendant 2 was not prepared to vacate the same. Thus it will be seen that the defence evidence relating to the reason for the failure on the part of the plaintiff to take the sale deed is not consistent.

4. The lower appellate Court has relied on the evidence of P.W 2 to show that the plaintiff cancelled the contract. P.W 2 swears that in Chingam 1120 he acted as a mediator on behalf of the plaintiff and asked defendant 1 to execute the sale deed, that the latter then demanded Rs. 1500 as consideration, that he asked the plaintiff whether he would agree to pay Rs. 1000 and that the plaintiff did not agree to that. From this evidence the learned District Judge infers that defendant 1's case relating to the cancellation of, the original contract must be true. I do not think that this inference can be drawn from the evidence of P.W 2. His evidence only shows that the plaintiff was trying to avoid a litigation. It may be that for that purpose he was prepared to pay something more than what he had originally agreed to pay. That would not in any way amount to a cancellation of the contract.

5. It was argued on behalf of defendant 1 that the plaintiff was not at all keen on purchasing the house, that it was only for the purpose of avoiding the trouble of filing a suit for evicting defendant 1 that the plaintiff at first agreed to pay Rs. 500, that he subsequently thought it unnecessary to pay that amount and that it was only when the price of the building rose in 1121 that he thought of enforcing the contract. But the evidence in the case does not support this contention. The paramba in which the house is situate belonged to defendant 1's brother-in-law, D.W 3. The evidence is to the effect that when D.W 3 requested the plaintiff to purchase the paramba the latter insisted on his getting possession of the house also. D.W 3 thereupon prevailed upon defendant 1 to agree to sell the house to the plaintiff. Defendant 1 agreed to this in order to oblige his brother-in-law and sent the letter Ex. A to the plaintiff through D.W 3 agreeing to sell the house for Rs. 500 and requesting the plaintiff to pay Rs. 100 as advance purchase-money. Plaintiff paid this Rs. 100 through D.W 3 himself; who made an endorsement to that effect on Ex. A. If the plaintiff was not keen on purchasing the house there is no reason why he should part with Rs. 100. On the other hand, there is every reason to believe that defendant 1 was not keen on selling the house. Admittedly, he is a rich man and there was no necessity for him to dispose of the house. That this is so will be clear from his written statement itself. What is stated in para 3 of the written statement is this: (Text about ten lines given in the local language is-omitted.— Ed.). The sale deed for the paramba was executed on 24-7-1118. Normally we could expect the sale deed relating to the house also to be executed on the same day. It cannot be that the plaintiff changed his mind within that time. He had already paid Rs. 100 out of the total consideration of Rs. 500/-. It must have been because defendant 1 was not prepared to execute the sale deed that the document was not executed on that day. After the sale deed in respect of the paramba was executed there was no further incentive for defendant 1 to execute the sale deed relating to the house. On the other hand, the plaintiff must have been anxious to get possession of the house also after having purchased the paramba. He swears that he demanded defendant 1 on numerous occasions to execute the sale deed and that the latter was putting off the matter. If as a matter of fact the plaintiff cancelled the agreement giving up the Rs. 100 paid by him there is no reason why defendant 1 should not have insisted on getting back Ex. A.D.W 3 says that the plaintiff assured him that he had destroyed it. There is no reason why the plaintiff should make such a false statement if he had really cancelled the contract. Defendant 1 has not issued any notice for the return of Ex. A. Before filing the suit the plaintiff sent a notice, Ex. I, on 25-6-1121 through his advocate. Defendant 1 received it on 26-6-1121. The reply notice, Ex. IV, though dated 3-7-1121 was registered only on 5-7-1121 and the plaintiff's advocate received it only on 7-7-1121, apparently after the suit was filed. In the plaint it is stated that no reply was received to the notice issued to defendant 1. Along with the plaint the plaintiff deposited the balance sale consideration of Rs. 400. In the circumstances there is no reason for holding that the plaintiff has cancelled the agreement or that he was not prepared to purchase the building. With regard to the alleged cancellation of the contract there is only the oral evidence of defendant 1, his brother-in-law, D.W 3, and his tenant, defendant 2. In the circumstances of this case, I do not think that any reliance can be placed on their evidence. As stated above, they give different versions-with regard to the reason given by the plaintiff for cancelling the contract.

6. According to the learned District Judge the delay in filing the suit raises a presumption, of abandonment by the plaintiff of his right to enforce the contract. The suit was filed within three years from the date of Ex. A. No time is fixed in Ex. A for the performance of the contract. The plaintiff's cause of action for specific performance will arise only when he has notice that performance is refused by the defendant. According to the plaintiff it was only in 1120 that defendant 1 refused to execute the sale deed. The suit was filed in 1121. In the circumstances it cannot be said that there was inordinate delay on the part of, the plaintiff in filing the suit. It cannot also be assumed from the mere delay in filing the suit that the plaintiff had abandoned his rights under the contract.

7. With regard to the contention that it was because there was a rise in the price of the building in 1121 that the plaintiff chose to file the suit there is no evidence in the case as to when the price of properties in the locality began to rise. Moreover, that by itself is no I reason why specific performance should not be granted. In this case no third party has; acquired any interest in the suit building after the date of Ex. A and before the filing of the suit. Therefore, the granting of specific performance in this case will not prejudice any third party.

8. The jurisdiction to decree specific performance of a contract of sale is discretionary with the Court as provided in Section 22 of the Specific Relief Act. That Section is thus:

“The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of, correction by a Court of Appeal.”

9. The section also makes special mention of two cases in which specific performance may not be decreed and one case in which it may be decreed. Mere delay in filing the suit is not mentioned as a ground for not decreeing specific performance. The question as to when and under what circumstances delay in filing the suit will be a ground for refusing specific performance has been discussed by their Lordships of the Judicial Committee in — ‘Lindsay Petroleum Co. v. Hurd’, (1874) LR 5 PC 221 (A). Sir Barnes Peacock laid down the law thus in that case:

“Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fully be regarded as equivalent to a waiver of it, or, where by his conduct, and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances always important in such cases are the length of the delay and the nature of the acts done during the interval, which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.”

10. In — ‘Dalton v. Angus’, (1887) 6 AC 740 (B) Lord Penzance observed thus:

“In all the cases in which lapse of time is held to stand in the way of the assertion of rights attaching to the ownership of property, it is not the lapse of time itself which so operates but the inferences which are reasonably drawn from the continuous existence, of a given state of things during that period of time. These inferences are inferences of acquiescence or consent.”

11. This question was considered by Sadasiva Aiyar and Seshagiri Aiyar, JJ. in — ‘Suryaprakasarayadu v. Lakshminarasimhacharyulu’, AIR 1914 Mad 462 (C). Sadasiva Aiyar, J. observed thus in that case:

“I think it is an error of law to hold that mere delay amounts to a waiver or abandonment apart from other facts or circumstances or conduct of the plaintiff indicating that the delay was due to the waiver or abandonment of the contract on the plaintiff's part.” Seshagiri Aiyar, J. made the following observations:

“Ever since the decision of — ‘Lindsay Petroleum Co. v. Hurd’, (A) it has been settled law that mere laches on the part of the person in bringing a suit for specific performance will be no defence in law, and that has been followed in this Presidency in — ‘Athikarath Nanu Menon v. Erathanikath Komu Nayar’, 21 Mad 42 (D). ‘Kissen Gopal v. Kally Prosonno’, 33 Cal 633 (E) accepts that principle. The same has been affirmed in — Peer Mohamed v. Mohomed’, 29 Bom 234 (F). There is nothing in the Specific Relief Act which says that laches in bringing a suit will by itself be a ground for refusing specific performance. The only section dealing with the discretion of the Court is S. 22 and under that section the discretion must be judicially exercised. A few illustrations are given which are intended to guide the Courts in either granting or refusing relief. Laches is not one of the grounds mentioned as dis entitling a party to a contract to specific performance. Having regard to the fact that a special period of limitation has been fixed for bringing a suit for specific performance. I think the legislature has not intended that mere laches should be one of the grounds for refusing specific performance.”

12. To the same effect is the decision in — ‘Ramalinga v. Jagadammal’, AIR 1951 Mad 612 (G). In that case Viswanatha Sastri, J. observed:

“In England the tendency of modern decisions has been towards the grant of relief by specific performance, and if there is a valid contract for the sale of land specific performance has been the general rule. Under Section 12(c) of the Specific Relief Act, read with the Explanation to that section, the presumption of law is that a breach of contract to transfer immovable property cannot be adequately relieved by compensation in money. The intention of the legislature is that a party entering into a contract for sale of immovable property should not be allowed to avoid its performance to suit his own convenience by offering to pay damages and pleading that the disappointed party might well be compensated thereby.”

13. The same view was held by the Madras High Court in — ‘Sankaralinga v. Ratnaswami’, AIR 1952 Mad 389 (H). Venkatarama Iyer, J. cited with approval the following observation in — ‘Arjun Mudaliar v. Lakshmi Ammal’, AIR 1949 Mad 265 (I):

“It is now well established that mere delay does not by itself preclude the plaintiff from obtaining specific performance if his suit is otherwise in time. The delay must be such that it may be properly inferred, that the plaintiff has abandoned his right or on account of delay there must have been such a change of circumstances that the grant of specific performance would prejudice the defendant.”

14. After quoting the observation of Sir Barnes Peacock in —‘Lindsay Petroleum Co. v. Hurd’, (A) the learned Judge further observed:

“It is well settled that waiver is not to be inferred merely from delay in the institution of the suit.”

15. The following observation in — ‘Arjun Mudaliar v. Lakshmi Ammal’ (I), was also quoted with approval by the learned Judge:

“With great respect to the learned Judge we must say that we have not been referred to any authority in which it has been held that from long delay alone without anything further, an abandonment of rights could be inferred.”

16. The Travancore High Court also took the same view in — ‘Krishnan v. Kali Appi’, 35 Trav LR 194 (J). Rama Menon, C.J, observed thus in that case:

“The settled law seems to be that delay which is short of the period prescribed by the Limitation Act and which is not of such a character as to give rise to an inference of abandonment of right, is no bar to a suit for specific performance.”

17. The question was discussed at length by the erstwhile Cochin Chief Court in — ‘Veena Bai v. Kesur Bavu’, 6 Cochin 402 (K). Anantharama Iyer, J. dealt with the question in the following manner:

“We do not dispute the correctness of the proposition that long delay or laches may be a circumstance taken into account by courts in granting relief for specific performance, but the rule is subject to certain qualifications recognised at least by the Indian High Courts. Delay which is short of the period prescribed by the Indian Limitation Act and which is not of such a character as to give rise to an inference of waiver or abandonment of right is no bar to a suit for specific performance unless it is shown to have prejudiced the defendant: See — ‘33 Cal 633’ (E), — ‘Kedar Nath v. Manu Bibi’, 13 Ind Cas 879 (Cal) (L) and where the agreement does not fix any date for the performance, limitation commences to run from the date when performance was demanded or refused and delay to institute a suit for specific performance under such circumstances is not fatal to the suit unless the delay has in any way prejudiced the defendant: — ‘Abdul Khadir v. Nagasarupu’, 1912 Mad WN 1104 (M). Laches or delay in order to bar a suit must amount “to a neglect to do something which by law a man is bound to do” (Per Lord Ellenborough, C.J in — ‘Sebag v. Abitbol’, (1816) 6 M & S. 462 (N) cited in — ‘29 Bom 234 at p. 244’ (F).) Laches to bar the plaintiff's right must amount to waiver, abandonment or acquiescence and to raise the presumption of anyone of these the evidence of conduct must be plain and unambiguous. See — ‘29 Bom 234’ (F) and also — ‘Kazi Mahamed v. Narotam’, 9 BomLR 1117 (O). In the recent case decided by the Madras High Court two of the learned Judges have held that mere laches or delay short of the period of limitation is not always evidence of waiver or abandonment of a claim and even where it is up to the hilt cf, the limitation period it will be no ground for refusing specific performance. See — ‘AIR 1914 Mad 462 (C)’. Hence mere delay itself will be no valid defence to a suit for specific performance unless it is followed by certain legal effects and the right to sue is barred by the statute of limitation.”

18. In the light of these rulings it will not be proper to presume from the mere delay in filing the suit that there has been a waiver or abandonment of right by the plaintiff.

19. With regard to the contention that the price of the building has risen after the date of the contract and that the plaintiff will be getting an unfair advantage if specific performance is granted I do not think that this is a consideration that should weigh with the Court in deciding whether specific performance should be granted or not. The question was considered in — ‘AIR 1951 Mad 612’ (G) referred to above. Viswanatha Sastri, J. observed thus on the point:

“The question of the hardship of a contract or its reasonableness has generally to be judged of at the time it is entered into. If it was then fair and proper and not oppressive it is immaterial that by force of subsequent circumstances or events, as for instance by a rise in the price of landed property due to war conditions, the contract has become more beneficial to the purchaser……… In — ‘G.W Dayis v. Maung Shwe Co.’, 38 Cal 805 (P) the Judicial Committee held that in the absence of any evidence of fraud or misrepresentation on the part of the plaintiff which induced the defendant to enter into a contract of sale or that the plaintiff under the circumstances took an improper advantage of his position or the difficulties of the defendant, specific performance was rightly decreed, though the contract was onerous but not unconscionable.”

20. This question was considered in — ‘AIR 1952 Mad 389’ (H) also. Venkitarama Iyer, J. discussed the point in the following manner:

“Here is a transaction which was for proper consideration when it was entered into. At the time of the suit the value of the properties had considerably risen. Could specific performance be refused on this ground? The validity of a transaction should, on principle, be judged as on the date of the transaction…… With reference to S. 22(2) it is well settled that the question of hardship must be judged as on the date of the transaction and not in the light of subsequent events and that further the hardship should be one collateral to the contract and not in relation to a term of the contract such as the quantum of consideration. Fry in his book on Specific Performance states the law in the following terms (p. 199, S. 418): “The question of hardship of contract is generally to be judged of at the time at which it is entered into; if it be then fair and just and not productive of hardship, it will be immaterial that it may, by the force of subsequent circumstances or change of events, have become less beneficial to one party, except where these subsequent events have been in some way due to the party who seeks the performance of the contract………” It has been determined that the reasonableness of a contract is to be judged of at the time it is entered into and not by the light of subsequent events and we have already seen that the same principle applies in considering the fairness of a contract and again the question of the inadequacy of the consideration must of course be decided at the time of the contract and not by the light of subsequent events.”

21. In — ‘6 Cochin 402’ (K) also this question was discussed in paragraphs 21 and 22 in the following manner:

“21. Mr. Krishna Menon also adverted to hardship as a ground which would have been available to his clients as a plea of defence if a suit for specific performance had been brought by Korji or his heirs after such a long delay. He also invited our attention to Pomeroy's Equity Jurisprudence, Vol. II, page 1313, Ss. 791 and 798, Halsbury's Laws of England, Vol. 27, P. 60, for the position that before decreeing specific performance the hardship, if any, resulting from such a decree should be taken into consideration by the Courts. If subsequent events would show that greater hardship will result to one of the parties by granting a decree for specific performance, a Court of Equity will refuse to grant the relief (Pomeroy, Vol. 2, S. 788). Such, no doubt, appears to be the American Law. There is however, some difference between the English and American Law on this question as was pointed out by Mr. Fry in his work on Specific Performance (pp. 194 and 446). A question of hardshio must be determined according to circumstances as they stood at the time of agreement & this seems also to be the view adopted by Dr. Banerji in his monumental work on Specific Relief in India (see p. 393) and by the Indian High Courts. The Allahabad High Court has fully endorsed the views expressed by Fry, J. as will be seen from the case of —‘Shiblal v. Collector of Bareilly’, 16 All 423, at p. 436 (Q).

“22. The same view was adopted by Chandavarkar, J., in the case of —‘Peer Mahamed v. Mahomed’ where the learned Judge has held that the hardship contemplated is one which existed at the time of the contract though there may be exceptions to the general rule in cases where the hardship is the result of the conduct of the party seeking for specific performance (see 6 Bom LR 1013 at page 1022 (R).)”

22. Learned Counsel for the respondent relied on the ruling in — ‘Maharaj Bahadur v. Suresh’, AIR 1921 Cal 179 (S); — ‘Jadu Nath v. Chandra Bhusan’, AIR 1932 Cal 493 (T); — ‘Ma Shwe Mya v. Maung Mo Hnaung’, AIR 1922 PC 249 (U); — ‘Shanker Sakharam v. Ratanji Premji’, AIR 1923 Bom 441 (V) and — ‘Subbarayadu v. Tatayya’, (1937) Mad WN 1158 (W).

23. In the first case, namely, — ‘AIR 1921 Cal 179’ (S) the Court found that the conduct of the plaintiff in that case amounted to an abandonment of the right under the contract. This decision cannot apply to the facts of the present case. In — ‘AIR 1932 Cal 493’ (T) Suhrawardy, J. observed thus:

“The English doctrine of delay and laches showing negligence in seeking relief in a Court of Equity cannot be imported into the Indian law in view of Article 113, Limitation Act which fixes a period of three years within which a suit for specific performance should be brought. Except in mercantile and business contracts time is not of the essence of the contract. But it may be material for the purpose of considering whether in the circumstances of a particular case specific performance should be granted. Though time may not be essential, delay even within the time prescribed by law will affect the remedy. Absence of proof of plaintiff's readiness and earnestness to perform his portion of the contract will entitle the Court to exercise its discretion under Section 22 of the Specific Relief Act, and refuse relief to the plaintiff which otherwise he would be entitled to secure: — ‘Mohendranath v. Kali Proshad’, 30 Cal 265 at pp. 276 to 278 (X). Here delay is not a ground for refusing relief to the plaintiff if there has been no change in the status quo since the contract, but where the conduct of the plaintiff is such that though it does not amount to abandonment but shows waiver or acquiescence especially when inaction on his part induces the defendant to change his position, the plaintiff ought not to be allowed any relief: — ‘33 Cal 633’ (E). The law upon this point has been authoritatively laid down by Sir Barnes Peacock in —‘(1874) LR 5 PC 221 (A)’………Every case in which the discretion given by the law is to be exercised must be tested on its particular facts and surrounding circumstances, such as the relation between the parties, the nature of the subject-matter of the contract, the conduct of the parties and other material circumstances existing at the time.”

24. In that case the Court found that “the conduct of the plaintiff was very damaging to his case” and that “at every stage he defaulted to carry out his part of the contract”. I do not think that such misconduct can be attributed to the plaintiff in this case.

25. In — ‘AIR 1922 PC 249’ (U) their Lordships of the Privy Council observed thus:

“The rights of equity which prevail in British Burma are rights which are given to people who are vigilant and not to those who sleep, and, unless there can be clearly established some reason which threw upon the defendant the entire blame for the delay that had occurred or unless indeed it can be shown that the real right of action had only accrued a short time before the proceedings were instituted such a lapse of time would be fatal to any action for specific performance of a contract.”

26. In that case the suit was instituted nine years after the date of the contract and the plaintiff refused to go into the witness box to explain the cause of the delay in filing the suit.

27. ‘AIR 1923 Bom 441’ (V) was not a case of specific performance of contract for sale of land. In — ‘1937 Mad WN 1158’ (W) third parties acquired rights in the subject-matter of the contract after the date of the contract and before the date of the suit. Leach, C.J made the following observation in that case:

“Mere delay may not be sufficient in some cases to deprive a plaintiff of relief, but in this case the appellant took no steps to prevent respondent 1 conveying the property to respondent 4 and he sat by while respondent 4 spent money on improving the property.”

28. I do not think that this decision also applies to the facts of this case. The evidence in the case does not show, as I have already stated, that the plaintiff cancelled the contract. I do not also think that the delay in filing the suit leads to the inference that the plaintiff abandoned his rights under the contract. Neither does the fact that the value of the building has risen after the date of the contract stand in the way of specific performance being granted in this case. The learned Munsiff exercised his discretion properly in decreeing specific performance. I, therefore, set aside the judgment and decree of the lower appellate Court and restore those of the trial Court.

29. The Second Appeal is allowed with costs.

B/V.S.B

30. Appeal allowed.