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2023 Supreme(Bom) 1692
IN THE HIGH COURT OF BOMBAY
M.S. Sonak, J.
Mathurabai - Appellant
Versus
Amresh - Respondent
Misc. Civil Application No. 2551 of 2021 (F)
Decided On : 20-04-2023
Ryan Menzes, Advocate, Jina Almeida, Advocate, Amresh Balachandra Anvekar, Advocate
IMPORTANT POINT
In contracts for the sale of immovable property, time is not typically of the essence unless explicitly stated, and specific performance can be granted despite delays if the party demonstrates readiness and willingness to perform.
Headnote:
KEYWORD - SUBJECT - ACT SECTION LIST - SUMMARY
Fact of the Case:
The appeal concerns the specific performance of an agreement for sale dated 10/12/2003, where the Plaintiff sought to enforce the contract after failing to pay the full consideration within the stipulated time. The Defendants argued that the agreement was terminated due to non-payment and sought to forfeit the earnest money.
Finding of the Court:
The court found that the Plaintiff had made substantial payments and demonstrated readiness and willingness to perform the contract. The courts below correctly held that time was not of the essence in the contract, and the Plaintiff's conduct supported his claim for specific performance.
Issues: 1. Whether time was of the essence in the agreement for sale. 2. Whether the courts erred in directing mutation of property rights. 3. Whether the interest on delayed payment should be at 6% or 12%.
Ratio Decidendi: The court reiterated that in contracts for the sale of immovable property, time is generally not considered of the essence unless explicitly stated. The agreement's clauses indicated that the Defendants were responsible for mutation, and the Plaintiff's readiness to pay the balance consideration was established.
Final Decision: The appeal was disposed of by upholding the decree for specific performance while modifying the interest rate on the delayed payment to 12% per annum and clarifying the timeline for mutation proceedings.
JUDGMENT/ORDER
1. This Appeal is directed against the concurrent Judgments and Decrees dated 1552013 and 17122014 passed by the Trial Court and the First Appellate Court, decreeing Special Civil Suit No. 312004A for specific performance of an Agreement for sale dated 10122003, instituted by Respondent No.1 (Plaintiff).
2. This Second Appeal was admitted by an order dtd. 25/3/2015 on the following substantial questions of law
(i) Whether the courts below failed to appreciate that Clause (1) of the Agreement dtd. 10/12/2003 of which the Plaintiff sought specific performance, itself provided in clear terms that the entire considerationsale price agreed to therein, was required to be paid within a period of 3 months thereof, or a further period of 1 month, along with 12 % interest thereon, the said agreement would stand terminated, as would Respondent No.1's entitlements thereunder, with forfeiture of an amount of ? 30, 000- to the Appellant No.1, and return of the balance any amounts paid by the Respondent No.1 to the Appellant No.1 free from interest, and as such time was indeed the essence of the contract
(ii) Whether the courts below erred in directing the Appellants to complete the mutation in respect of the record of rights of the property which is the subject matter of the said agreement, when no such relief was claimed by Respondent No.1, more so when the same would be the subject matter of a proceeding before a quasi-judicial authority, and the disposal thereof is not in the hands of the Appellants
3. Later, an order dtd. 9/4/2021 formulated the following additional substantial question of law. Whether, (assuming the Respondent was entitled to a decree directing the Appellants to execute a sale deed in his favour, as claimed by him), in view of the fact that in Clause (1) of the Agreement of Sale dated 10122003, provided for interest of 12% p.a. to be paid on any delayed payment of the consideration thereunder, the Trial Court erred in directing interest to be paid at 6% p.a., i.e. half the agreed contractual rate, and the Appellate Court erred in upholding the same
4. Mr Ryan Menezes, learned Counsel for the Appellants, referred to Clause (1) of the Agreement dated 10122003 to submit that payment of the balance consideration of 2, 80, 000- ? was of the essence of the contract. Since, admittedly, the entire balance amount of 2, 80, 000- was not paid within three months ? or even an additional one month from the date of execution, the agreement stood terminated for all legal effects by forfeiting an amount of 30, 000-. He submitted that Plaintiff paid only an ? amount of 2, 08, 000-, as against the required payment of ? ?3, 30, 000- within the period stipulated in the agreement.
5. Mr Menezes submits that given the precise terms of Clause (1) of the Agreement, the two Courts erred in decreeing the suit for specific performance despite breaches attributable to Plaintiff. Mr Menezes relied on A.K. Lakshmipathy (Dead) and Ors. v. Rai Saheb Pannalal H. Lahoti Charitale Trust and Ors., 2010 (1) SCC 287.
6. Mr Menezes submitted that there was no relief regarding mutation in the plaint. He offered that the mutation proceedings must be independently instituted before quasi-judicial Authorities under the Land Revenue Code. Therefore, he submits that the two Courts erred in directing mutation in the rights record. Based upon this, Mr Menezes urged that the second substantial question of law, as formulated, must be decided to favour the Appellants (original defendants).
7. Finally, Mr Menezes submitted that without prejudice to his contention that the suit should be dismissed, the two Courts erred in directing the Plaintiff to pay interest on the balance consideration amount at only 6% per annum. He submitted that in terms of the agreement between the parties, the interest was provided at 12% per annum. He presents that though this point may not have been urged before the two Courts, there was no serious dispute on this aspect, given the ter
