Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(Mad) 2503

IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.S. SUNDAR, C. KUMARAPPAN, JJ.
M/s Pan Resorts Ltd, rep by its Director Sarath Kakumanu, Chennai & Another – Appellants
Versus
H.H. Karthika Thirunal Lakshmi Bayi & Others – Respondents
O.S.A. No. 277 of 2013 & C.M.P. Nos. 8323 & 8324 of 2023
Decided On : 02-08-2023

Advocates appeared:
For the Appellants:Om Prakash, Senior Counsel for M/s Abitha Banu, Advocate. For the Respondents:T.V. Ramanujam, Senior Counsel, R1 & R3, R7 & R11, S. Prabakar, R6, S. Rajendrakumar, R9, Rajendran Raghavan, Advocates. Ajmal Khan, Senior Counsel, R10, M/s Ajmal Associates, R5, No appearance, R8-Died, R12, Batta due.

Time is of the essence of the contract and the plaintiff was not ready and willing to perform its part of the contract in terms of the agreement.

Headnote:
The Court held that time was the essence of the contract and the plaintiff was not ready and willing to perform its part of the contract in terms of the agreement. The Court also held that the plaintiff had committed breach of the contract and the defendants were entitled to rescind the contract or put an end to the contract. The Court further held that the plaintiff was not entitled to the equitable relief of specific performance, particularly having regard to the conduct of plaintiff all along and the change of events and circumstances after the filing of suit. The Court also held that the appellant can be permitted to file additional documents and raise additional grounds by allowing the interlocutory applications as mentioned above.
Fact of the Case:

The plaintiff entered into an agreement for sale with the defendants for the purchase of a property. The agreement specified that time was of the essence of the contract and that the sale deed was to be executed on or before a certain date. The plaintiff failed to pay the balance of the purchase price and to execute the sale deed within the stipulated time. The defendants rescinded the contract and sold the property to a third party.
Finding of the Court:

The Court held that the plaintiff was not entitled to the equitable relief of specific performance because: (i) time was of the essence of the contract and the plaintiff had failed to perform its part of the contract within the stipulated time; (ii) the plaintiff had committed breach of the contract by failing to pay the balance of the purchase price and to execute the sale deed within the stipulated time; (iii) the defendants were entitled to rescind the contract and sell the property to a third party; and (iv) the plaintiff had not acted in a fair and equitable manner.
Issues: ['Whether time is the essence of the contract having regard to the terms of the agreement dated 3.8.94?', 'Whether the plaintiff was ready and willing to perform its part of the contract in terms of the suit agreement?', 'Whether the plaintiff has committed breach of contract as contended by the defendants and therefore, the defendants are entitled to rescind the contract or put an end to the contract?', 'Whether the plaintiff is entitled to the equitable relief of specific performance, particularly having regard to the conduct of plaintiff all along and the change of events and circumstances after the filing of suit?', 'Whether the appellant can be permitted to file additional documents and raise additional grounds by allowing the interlocutory applications as mentioned above?']
Ratio Decidendi: The Court held that time was of the essence of the contract and the plaintiff was not ready and willing to perform its part of the contract in terms of the agreement. The Court also held that the plaintiff had committed breach of the contract and the defendants were entitled to rescind the contract or put an end to the contract. The Court further held that the plaintiff was not entitled to the equitable relief of specific performance, particularly having regard to the conduct of plaintiff all along and the change of events and circumstances after the filing of suit.
Final Decision: The Court dismissed the plaintiff's suit for specific performance and allowed the plaintiff's alternative prayer for refund of the advance paid under the agreement, with interest at the rate of 12% per annum from the date of the agreement till the date of payment.

JUDGMENT

(Prayer: Memorandum of Grounds of Original Side Appeal under Order XXXVI, Rule 1 of the Madras High Court Original Side Rules read with Clause 15 of the Letters Patent, against the judgment and decree dated 01.10.2012 made in C.S.No.632 of 1997 on the file of this Court.)

1. The above original side appeal has been filed by the plaintiff as against the judgment and decree of the learned single Judge dated 01.10.2012 made in C.S.No.632 of 1997 on the file of this Court.

2. The appellant herein has originally filed the suit in C.S.No.632 of 1997 for the relief of specific performance directing the defendants 1 to 9 to execute the sale deed in favour of the plaintiff after receiving the balance of sale consideration payable to the defendants in proportion to their respective shares in terms of the agreement of sale dated 3.8.94 and for consequential relief including the relief of directing the defendants to put the plaintiff in full possession of the suit property.

3. The case of the appellant in the plaint can be summarized as follows:-

(a) Defendants 1 to 9 are the joint owners of the suit property called Travancore House/Adyar House situated at L.B.Road, Padmanabha Nagar, Adyar, Chennai measuring about an extent of 20 grounds. Defendants 1 to 8 are entitled to 11.25% of shares and the ninth defendant is entitled to 10% share in the suit property. Earlier, defendants 1 to 9 entered into an agreement of sale dated 10.3.93 with one Shankar Khandadi and one Usman Fayaz along with Indian Bank represented by its Chief Manager, Adyar Branch. Since the said agreement with third parties did not come through, the plaintiff entered into an agreement for sale by executing a memorandum of agreement with the defendants 1 to 9 on 3.8.94. As per the said agreement, a sum of Rs.325 lakhs was fixed as sale consideration and a sum of Rs.50 lakhs was paid as advance. A sum of Rs.50 lakhs paid under the previous agreement dated 10.3.93 is also adjusted towards part of sale consideration and therefore the balance of sale consideration payable by the plaintiff to the defendants was Rs.225 lakhs.

(b) In terms of clause 4 of the agreement, the plaintiff agreed to pay a sum of Rs.50 lakhs to the defendants 1 to 9 on production of urban land ceiling clearance if produced before the NOC from the authorities of Income Tax Department or on production of NOC under Chapter XX-C of the Income Tax Act.

(c) In terms of clause 5 of the agreement, the plaintiff was to pay the balance of sale consideration without waiting for clearance under the Urban Land Ceiling Act and complete the transaction and get the sale deed executed within four months from the last date from which the defendants 1 to 9 obtain and produce (a) no objection certificate under Chapter XX-C of the Income Tax Act and (b) income tax clearance in respect of each of the defendants 1 to 9 under Section 230-A of the Income Tax Act.

(d) In terms of clause 8 of the agreement, defendants 1 to 9 had agreed to register the sale deed at the cost of plaintiff on or before 31.3.95 after obtaining all the necessary clearances and certificates. Though the plaintiff was to be put in possession only on the registration of the sale deed as per the agreement dated 3.8.94, as per clause 15 of the agreement, the plaintiff was in fact put in possession and it had undertaken not to demolish the existing palace over the suit property for a period of two years from 3.8.94 or till the receipt of any statutory notice for demolition, whichever is earlier. Therefore, there was already part performance of the agreement as evident from the conduct of parties, from the terms of agreement dated 3.8.94 and from the subsequent correspondences.

(e) In terms of the agreement, defendants 1 to 9 made an application seeking no objection from the income tax authorities under Chapter XX-C of the Income Tax Act on 4.8.94 and proceeded to obtain urban la