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Madras High Court
ABDUL HADI,A. R. LAKSHMANAN
Vairavan - Appellant
Versus
K.S.Vidyanandam - Respondent
Decided On : 02/21/1995
SPECIFIC PERFORMANCE - SALE AGREEMENT - TIME OF ESSENCE - READINESS AND WILLINGNESS - ABANDONMENT - ADVANCE - EARNEST MONEY - LIS PENDENS - Held, time was not of the essence of the contract. The plaintiff was ready and willing to perform his part of the contract and had not abandoned it. The sum of Rs. 5,000/- paid on the date of the sale agreement was only advance, and not earnest money. The subsequent purchaser was affected by lis pendens, even though the sale to him was after the dismissal of the present suit.
Fact of the Case:
The plaintiff agreed to purchase a house from the defendants for Rs. 60,000/- and paid Rs. 5000/- as advance. The sale agreement stipulated that if the plaintiff failed to obtain the sale deed within six months, he would not be entitled to the advance. The plaintiff failed to obtain the sale deed within the stipulated time, and the defendants refused to sell the house to him. The plaintiff filed a suit for specific performance of the sale agreement.
Finding of the Court:
The Court held that time was not of the essence of the contract. The plaintiff was ready and willing to perform his part of the contract and had not abandoned it. The sum of Rs. 5,000/- paid on the date of the sale agreement was only advance, and not earnest money. The subsequent purchaser was affected by lis pendens, even though the sale to him was after the dismissal of the present suit.
Issues: 1. Whether time was of the essence of the contract? 2. Whether the plaintiff was ready and willing to perform his part of the contract? 3. Whether the plaintiff had abandoned the contract? 4. Whether the advance of Rs. 5000/- paid by the plaintiff pursuant to the contract had been forfeited? 5. Whether the plaintiff could claim the suit amount with interest? 6. To what relief is the plaintiff entitled?
Ratio Decidendi: 1. Time is not of the essence of a contract for the sale of immovable property unless it is expressly stipulated in the contract or can be inferred from the nature of the property, the conduct of the parties, and the surrounding circumstances. 2. The plaintiff was ready and willing to perform his part of the contract, as evidenced by his financial resources and his willingness to accept the property even with the tenant in possession. 3. The plaintiff did not abandon the contract, as evidenced by his continued efforts to obtain the sale deed and his willingness to pay the balance of the purchase price. 4. The sum of Rs. 5,000/- paid by the plaintiff was only advance, and not earnest money, and therefore the plaintiff was entitled to its return.
Final Decision: The judgment and decree of the trial Court are set aside, the suit is decreed for specific performance as prayed for and the appeal is allowed with costs throughout. Time for payment of balance of sale consideration is, one month. Time for executing the sale deed is, one month thereafter.
ABDUL HADI, J.:- The plaintiff is the appellant in this first appeal against the judgment and decree in O.S. No. 466 of 1981 on the file of the Subordinate Judge, Madurai. The said suit is for specific performance of Ex. A.l, sale agreement dated 15-12-1978 filed by the appellant against the defendants. The Court below has negatived the relief of specific performance, but has granted the return of advance amount paid, of Rs. 5,000/ -with interest paid, under the said agreement; (total sale consideration there on was Rs. 7,60,000/ -and the property agreed to sold was a house in Madurai). Since the specific performance relief has been negatived by the Court below, this appeal has been filed by the plaintiff, claiming the said relief.
2. The plaint allegations are briefly as follows:- The defendants who owned the above said suit property agreed to sell it for Rs. 60,000/- to the plaintiff and accordingly executed the sale agreement dated 15-12- 1978. As per the sale agreement, the defendants agreed to sell the same within six months free of all encumbrances and hand over vacant possession of the property at the time of the sale. The defendants also received a sum of Rs. 5000/ -on the same day as advance from the plaintiff. The plaintiff has been always ready to perform his part of the contract althrough. The plaintiff is sufficiently rich and has been always ready and willing to pay the balance of Rs. 55,000/- and to purchase the stamp papers and meet out the registration expenses. The plaintiff has got command to pay the sale price at any time. Though the abovesaid six months' time was fixed, it was never agreed that time was of essence of the contract. The property agreed to be sold is in fact in occupation of a tenant. Whenever the plaintiff approached the defendants, the plaintiff expressed his willingness and asked the defendants to receive the balance and execute the sale deed. But, the defendants had been stating that the tenant had not vacated and had been asking for time and that as soon as the tenant vacated, they would execute the sale deed. Though as per the terms of the sale agreement, the defendants had agreed to hand over vacant possession, the plaintiff is prepared to accept attornment from the tenant and is prepared to take eviction proceedings against him if necessary after the sale is completed. The plaintiff has sent registered notice to the defendants on 11-7-1981, calling upon them to execute the sale deed, but, though they have received the notice on 13-7-1981, had sent a reply dated 27-7-1981, containing false allegations. The allegations in the said reply notice that time was agreed to be of essence of the contract, that the defendants were ready and willing to perform their part of the contract and that the plaintiff wanted time, are all falsehood. The further contentions in the reply notice that the plaintiff could not arrange for the sale deed in time, that the plaintiff stated that he would give up his claim for the refund of advance and that the plaintiff agreed to give up his claim for specific performance are all false. Similarly, the contention therein that the tenant is relative of the defendants and was prepared to vacate at any time is also false. Even now the suit building is in the occupation of the tenant.
3. The allegations in the written statement are briefly as follows :- The sale agreement stipulated that if the plaintiff failed to obtain the sale deed duly executed within the abovesaid period of six months, he should not demand back the deposit of Rs. 5,000/-and that if the defendants failed to execute the sale deed, they should repay the deposit of Rs. 5,000/- and another sum of Rs.5,000/- The building is in the occupation of the tenant by name P.R. Subramanian, who is a close relation of the defendants and he is always prepared to vacate at any moment. However, as the plaintiff required six months' time of arranging the sale price and as the defendants wanted to sell the suit
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