Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2024 Supreme(SC) 1074

SUPREME COURT OF INDIA
DIPANKAR DATTA, SANJAY KAROL, JJ.
R. Kandasamy (Since Dead) & Ors – Appellants
Versus
T.R.K. Sarawathy & Anr. - Respondents
Civil Appeal No. 3015 OF 2013
With
M/S. ABT Limited – Appellant
Versus
T.R.K. Sarawathy & Ors. – Respondents
Civil Appeal No. 3016 of 2013
Decided On : 21-11-2024

Advocates appeared:
For the Appellant(s) : Mr. Rana Mukerjee, Sr. Adv. Mr. B Ragunath, Adv. Mrs. N.C. Kavitha, Adv. Mr. Vijay Kumar, AOR Mrs. V. Mohana, Sr. Adv. Mr. N Sridhar, Adv. Mrs. Bhavya Pandey, Adv. Mr. Gokul Athiya, Adv. Mr. Sriram P., AOR
For the Respondent(s): Mr. E.R. Kumar, Adv. Ms. Swati Bhardwaj, Adv. Ms. Pratyusha Priyadarshini, Adv. Ms. Aadya Malik, Adv. M/S. Parekh & Co., AOR Ms. Movita, AOR Mr. B Ragunath, Adv. Mrs. Nc Kavitha, Adv. Mr. Vijay Kumar, AOR

IMPORTANT POINTS
(1) Agreement to Sell – Suit for Specific Performance cannot be decreed where conduct of buyer does not inspire confidence in granting her discretionary relief of specific performance.
(2) An agreement which has been cancelled, would be rendered non-existent in eyes of law and such a non-existent agreement could not possibly be enforced before a court of law.
(3) Maintainability of suit – Unless an issue as to maintainability is framed by Trial Court, suit cannot be held to be not maintainable at appellate stage only because appropriate declaratory relief has not been prayed.
(4) Any failure or omission on part of trial court to frame issue on maintainability of suit touching jurisdictional fact by itself cannot trim powers of higher court to examine whether jurisdictional fact did exist for grant of relief as claimed.
(5) Agreement to Sell – Two or more clauses in a contract could, in some measure, be inconsistent with each other.

Headnote:
(A) Specific Relief Act, 1963 – Section 16(c) – Agreement to Sell – Suit for Specific Performance – It is not an infrequent happening that two or more clauses in a contract could, in some measure, be inconsistent with each other – In present case, conduct of buyer does not inspire confidence – It is common knowledge that none interested in buying an expensive property would agree to terms leaving himself/herself at a potential risk of facing litigation in future – Conduct of buyer in not doing needful, especially even after property became free of tenants, demonstrates her reluctance and diffidence to perform contract – Admission of not having enough fund in either of her bank accounts to pay balance sale price – This is sufficient proof of her financial incapacity to perform her part of contract – Conduct of buyer does not inspire confidence in granting her discretionary relief of specific performance – An agreement which has been cancelled, would be rendered non-existent in eyes of law and such a non-existent agreement could not possibly be enforced before a court of law – Judgment and decree of High Court set aside and suit instituted by buyer dismissed. (Paras 26, 34, 35, 36, 38, 41 and 48)
(B) Civil Procedure Code, 1908 – Section 9 read with Order VII Rule 1 – Maintainability of suit – Unless an issue as to maintainability is framed by Trial Court, suit cannot be held to be not maintainable at appellate stage only because appropriate declaratory relief has not been prayed – issue of maintainability of a suit strikes at root of proceedings initiated by filing of plaint as per requirements of Order VII Rule 1, CPC – If suit is barred by law, trial court has absolutely no jurisdiction to entertain and try it – However, even though a given case might not attract bar envisaged by Section 9, CPC, it is obligatory for trial court seized of suit to enquire and ascertain whether jurisdictional fact does exist to enable it to proceed to trial and consider granting relief to plaintiff as claimed – Assumption of jurisdiction/refusal to assume jurisdiction would depend on existence of jurisdictional fact – Irrespective of whether parties have raised contention, it is for trial court to satisfy itself that adequate evidence has been led and all facts including jurisdictional fact stand proved for relief to be granted and suit to succeed – However, any failure or omission on part of trial court to frame issue on maintainability of suit touching jurisdictional fact by itself cannot trim powers of higher court to examine whether jurisdictional fact did exist for grant of relief as claimed, provided no new facts were required to be pleaded and no new evidence led. (Paras 25, 44 and 47)
Facts of the case:
Appellants in Civil Appeal No.3015 / 2013 were the defendants in a suit for specific performance of an agreement for sale instituted by first respondent as the plaintiff, in respect of land together with a tenanted building. Suit was dismissed by the Trial Court vide judgment and decree dated 17th December, 2007. Upon a first appeal being carried under section 96 of the Code of Civil Procedure, 1908 by buyer before the High Court of Judicature at Madras, same succeeded vide judgment and decree dated 21st October, 2011. High Court reversed the judgment and decree of dismissal of the suit and granted decree for specific performance.
Findings of Court:
Buyer shall be entitled to return of the advance sum of Rs.25 lakh by sellers. If not already returned, sellers shall take steps in this behalf within a month from date. If buyer has made any deposit pursuant to any order of court, same shall also be returned to her with accrued interest.
Result : Appeals allowed.

JUDGMENT :

DIPANKAR DATTA, J.

THE APPEALS

1. The appellants¹[sellers, hereafter] in Civil Appeal No.3015/2013 were the defendants in a suit²[O.S. 420 of 2006] for specific performance of an agreement for sale³[Agreement, hereafter] instituted by the first respondent as the plaintiff⁴[buyer, hereafter], in respect of land together with a tenanted building⁵[property, hereafter]. The suit was dismissed by the Trial Court vide judgment and decree dated 17th December, 2007. Upon a first appeal⁶[A.S.811 of 2008] being carried under section 96 of the Code of Civil Procedure, 1908⁷[CPC, hereafter] by the buyer before the High Court of Judicature at Madras⁸[High Court, hereafter], the same succeeded vide judgment and decree dated 21st October, 2011⁹[impugned judgment, hereafter]. The High Court reversed the judgment and decree of dismissal of the suit and granted decree for specific performance. The sellers have taken exception to the first appellate judgment and decree in this appeal by special leave, granted on 5th April, 2013.

2. Civil Appeal No.3016/2013 is also an appeal against the impugned judgment, special leave wherefor was also granted on 5th April, 2013. It is at the instance of a company¹⁰[subsequent purchaser, hereafter] who had purchased the property, forming the subject of the Agreement, from the sellers when the first appeal was pending before the High Court without any order restraining the sellers to alienate the same. Upon such purchase, the subsequent purchaser derived knowledge of pendency of the first appeal; thus, it applied for and was impleaded as the eight respondent therein.

RESUME OF FACTS

3. Although the facts leading to institution of the suit by the buyer and the defence raised by the sellers are captured in the decisions of the Trial Court as well as the High Court, for the sake of completeness, we consider it appropriate to briefly refer to the same hereunder:

i. A sum of Rs. 10 lakh was paid by the buyer as an advance.

ii. The buyer had to pay the balance sale consideration within four months from the date of the Agreement (the period ending on 19th May, 2005).

iii. On the date of the Agreement, the property was occupied by tenants and the sellers agreed that they will have the tenants vacate the property and deliver vacant possession thereof to the buyer at the time of sale.

iv. Time shall be of the essence.

b. The buyer started effecting payments in instalments. She paid Rs. 5 lakh, Rs. 4 lakh, Rs. 1 lakh and Rs. 5 lakh on 2nd February, 24th February, 5th June, and 24th July, 2005, respectively, totalling to Rs. 15 lakh. Taking into consideration Rs.10 lakh paid in advance, the buyer paid in all Rs. 19 lakh prior to 19th May, 2005 and Rs. 6 lakh beyond that date.

c. The sellers vide letter dated 23rd February, 2006 cancelled the Agreement and returned the sum of Rs. 25 lakh claiming that the said period of 4 (four) months had expired and that the buyer had not shown interest to complete the deal. However, the buyer vide reply letter dated 24th February, 2006 refuted the contents of the letter and emphasized that the sellers were bound to have the property vacated and the sale deed had to be executed only after all the tenants had vacated the property. It is noted that the last of the tenants vacated the property on 2nd February, 2006.

d. The sellers vide letter dated 2nd March, 2006 asserted that the buyer has no right to claim purchase of the property as the Agreement had already been cancelled. The sellers reiterated that time is not the essence of the contract; the said period of 4 (four) months had expired; the fact of vacation of property by tenants was duly conveyed to the buyer multiple times; and despite multiple requests, the buyer did not come forward to execute the s