1998 Supreme(Mad) 1129

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K.P. SIVASUBRAMANIAM
N. Saraswathi Ammal
Versus
Jayaram Rao and others
S.A.No.1758 of 1985
Decided On : 25-08-1998

The mere stipulation of a date or time limit alone is not decisive to hold that in such cases, only the first limb of Article 54 of the Limitation Act would be automatically attracted. On the other hand, if the intention and conduct of the parties point out otherwise, it is only the second limb of the said article which would apply.

Headnote:

SPECIFIC PERFORMANCE - SALE OF IMMOVABLE PROPERTY - LIMITATION - WHETHER TIME WAS OF THE ESSENCE OF THE CONTRACT - INTERPRETATION OF THE AGREEMENT - INTENTION OF THE PARTIES - CONDUCT OF THE PARTIES - SURROUNDING CIRCUMSTANCES - APPLICATION OF ARTICLE 54 OF THE LIMITATION ACT.

Fact of the Case:

The plaintiff filed a suit for specific performance to direct the defendants to execute a sale deed in favour of the plaintiff in respect of the plaint schedule mentioned property after the receipt of balance of sale consideration of Rs .4,000 and in default by the defendantson their behalf, a deed of conveyance may be executed by the court, in favour of the plaintiff. The defendants contended that the property originally belonged to one Hemaji Rao, maternal grandfather of defendants 2 and 3 and father-in-law of the first defendant, and after the death of Hemaji Rao the property came to his only daughter, namely the mother of defendants 2 and 3. After her death, defendants 2 and 3 alone have become the absolute owners and in the said circumstances, the claims of the plaintiff were false and it was also false to state that all the defendants have entered into an agreement on 27. 73. The defendant would submit that the second defendant was very much at Madras and he has never given any power of attorney to enter into any agreement. The third defendant, younger brother of the second defendant, was instructed by the first defendant to sign a document which was now put forwardas an agreement for the sale of the property and that neither the second defendant nor the third defendant had any intention to sell the property much less, for Rs. 18,000 to the plaintiff. Assuming that such an agreement had been executed by the third defendant, it had become unenforceable in view of Clause 2 of the agreement that the sale should be completed within three months from the date of the agreement and the time was the essence of the contract.

Finding of the Court:

The court held that the mere stipulation of a date or time limit alone is not decisive to hold that in such cases, only the first limb of Article 54 would be automatically attracted. On the other hand, if the intention and conduct of the parties point out otherwise, it is only the second limb of the said article which would apply. In the present case, the following circumstances would clearly establish that notwithstanding the stipulation of the time limit, the parties did not intend so.

Issues: 1. Whether time was of the essence of the contract for sale of immovable property? 2. Whether the plaintiff was entitled to specific performance of the contract?

Ratio Decidendi: 1. The court held that the mere stipulation of a date or time limit alone is not decisive to hold that in such cases, only the first limb of Article 54 would be automatically attracted. On the other hand, if the intention and conduct of the parties point out otherwise, it is only the second limb of the said article which would apply. 2. The court held that in the present case, the following circumstances would clearly establish that notwithstanding the stipulation of the time limit, the parties did not intend so: (i) The time limit was extended not once, but four times, out of which three times extension was made after a long lapse of time limit provided under the earlier extension. (ii) Even though there is no stipulation in the agreement that the purchaser should give any amount for discharging the mortgage debt, on 111. 1973 after a lapse of the time provided under agreement (210. 1973) the vendor accepted payment of Rs.5000 on 111. 1973 towards the mortgage debt and cleared the mortgage debt. (iii) The following extract of Clause 6 in the agreement is also relevant: “It is hereby agreed that as the Vendors are not in a position to give vacant possession of the scheduled mentioned property, the purchaser is hereby authorised to take such necessary action against the tenant and in the event of his getting vacant possession before registration of the Sale Deed the purchaser can take possession and occupy the same. But however as per agreement the Sale Deed shall be completed within 3 months as mentioned in Clause 3.” (iv) No prudent vendor would agree to part with possession of a property, if the idea of time limit of three months was seriouslymeant and would also be clothe the purchaser with the statutory protection under Section 53-A of the Transfer of Property Act. (v) Ex.A.2, a stamped letter executed by the tenant Govindan, has been filed by the plaintiff to prove that he had vacated the premises on receipt of Rs.4,500 from the plaintiff on 9. 1973 (within thestipulated time). (vi) The defendants did not do anything even after the lapse of a very long time after the expiry of the extended time limitup to 21. 1976. (vii) If the vendors had considered the agreement had fallen through and not enforceable they ought to have returned the amount due to the plaintiff which was not at all done.

Final Decision: The court allowed the Second Appeal and decreed the suit subject to the condition that the plaintiff shall pay the balance amount of Rs.4,000 with interest at the rate of 24 twenty four per cent per annum from 21. 1976 being the extended date of payment till the date of payment till the date of payment.