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PUNJAB & HARYANA HIGH COURT
G.L.Chopra and K.L.Gosain JJ.
Sat Parkash L., Tara Chand
Versus
Dr.Bodh Raj L., Bhagwan Das Khatri
First Appeal No. 145 of 1949,
Decided On : SEPTEMBER 19, 1957
CONTRACT - SALE OF PROPERTY - UNREASONABLE DELAY - ESSENCE OF CONTRACT - NOTICE - REASONABLE TIME - INTERPRETATION OF AGREEMENT - DETERIORATION OF PROPERTY VALUE - INTEREST ON EARNEST MONEY - SPECIFIC PERFORMANCE - CROSS-OBJECTIONS - FUTURE INTEREST.
Fact of the Case:
Plaintiff and defendants entered into an agreement for the sale of a house, with a condition that the defendants would obtain the sanction of the High Court for the sale on behalf of a minor. The defendants failed to obtain the sanction within a reasonable time, despite repeated requests from the plaintiff. The plaintiff served notices on the defendants, urging them to complete the sale and return the earnest money if they were unable to do so. The defendants did not comply with the notices, and the plaintiff filed a suit for the refund of the earnest money with interest.
Finding of the Court:
The court found that the defendants were guilty of unreasonable delay in obtaining the sanction of the High Court, which was a condition precedent to the sale. The court held that time was of the essence of the contract, either by express provision or by implication of law, and that the defendants' failure to complete the sale within a reasonable time amounted to a breach of contract. The court also found that the agreement of sale was provisional, depending on the defendants' ability to obtain the sanction of the High Court, and that the plaintiff was entitled to repudiate the contract and claim the refund of the earnest money.
Issues: 1. Whether the defendants were guilty of unreasonable delay in obtaining the sanction of the High Court for the sale of the property. 2. Whether time was of the essence of the contract. 3. Whether the plaintiff was entitled to repudiate the contract and claim the refund of the earnest money. 4. Whether the defendants were liable to pay interest on the earnest money.
Ratio Decidendi: 1. The court held that the defendants were guilty of unreasonable delay in obtaining the sanction of the High Court, considering the fact that they had taken more than a year and a half to make an application and had not taken any serious steps to pursue the matter thereafter. 2. The court held that time was of the essence of the contract, either by express provision or by implication of law. The court reasoned that where a contract does not specify a time for performance, the law implies a reasonable time, and that if the contract is not performed within that reasonable time, the defaulting party will be deemed to have breached the contract. 3. The court held that the plaintiff was entitled to repudiate the contract and claim the refund of the earnest money, as the defendants' unreasonable delay amounted to a breach of contract. The court also considered the fact that the value of the property had deteriorated since the agreement was entered into, which further justified the plaintiff's decision to repudiate the contract. 4. The court held that the defendants were liable to pay interest on the earnest money, as they had wrongfully withheld the money from the plaintiff for a considerable time.
Final Decision: The court dismissed the defendants' appeal and allowed the plaintiff's cross-objections, granting the plaintiff interest on the earnest money from the date of the suit till realization of the amount.
Gosain, J.
1. This is a first appeal against the preliminary decree of Shri Chaman Lal Puri, Subordinate Judge, First Class, Amritsar, dated 24th of May, 1949, for the recovery of Rs. 5,675/- with costs in favour of the plaintiff and against defendants Nos. 1 and 3 and dismissing the suit against defendant No. 2.
2. The facts giving rise to this appeal are as under. House No. 626/11, situate in Kucha Kadan, Amritsar, was the property of Sat Prakash major and Bhupindar Parkash minor, sons of Shri Tara Chand Khatri. Some time before partition of the country an application tor the appointment of a guardian for the person and property of Bhupindar Parkash minor was made to the High Court at Lahore and the High Court appointed Sat Parkash, brother of the minor, and Smt. Gita Wanti, mother of the minor, as joint guardians.
On 15th of May, 1946, Sat Parkash and Smt. Gita Wanti executed an agreement for sale of the said house in favour of Dr. Bodh Raj plaintiff for a sum of Rs. 27,500/-. At the time of the execution of the agreement, Bat Parkash and Smt. Gita Wanti received Rs. 5,000/- from the plaintiff by means of a cheque, dated 15th of May, 1946, drawn on the Prabhat Bank, Limited, Amritsar. The terms of the agreement of sale were that the price of the property agreed to be sold was to be Rs. 27,500/-, that Rs. 5,000/- paid by means of a cheque was to serve as earnest money, that defendants Nos. 1 and 3, Sat Parkash and Smt. Gita Wanti, were to obtain sanction of the High Court at Lahore for sale of the house on behalf of the minor, and that the sale deed was to be executed as soon as the said sanction was obtained.
Sat Parkash had executed the agreement both in his personal capacity and as a guardian of the minor jointly acting with Smt. Gita Wanti who signed the agreement merely in her capacity as a joint guardian. The plaintiff alleged that, though repeatedly asked, defendants Nos. 1 and 3 did not obtain the sanction of the High Court at Lahore and that the contract of sale could not, therefore, be completed. He sued for the refund of Rs. 5,000/- paid by him as earnest money together with Rs. 675/- as interest on the same calculated at 6 per cent, per annum from the date of payment till the date of suit and further prayed that this amount may be held to be a charge on the property in question. The plaintiff also claimed future interest at the same rate from the date of the suit till realisation of the amount. The defendants resisted the suit on the preliminary grounds that the Court at Amritsar had no jurisdic tion to try it and that the plaint was not in the prescribed form and was thus liable to be rejected. Three preliminary issues about these objections were framed by the learned trial Court on 20th of November, 1948, and were decided against the defendants on 22nd of December, 1948.
There is now no dispute with regard to the points covered by the order referred to above and it is not necessary, therefore, to go into details either of the objections or of the order disposing of the same. On merits, the defendants pleaded that defendants Nos. 1 and 8 did make an application to the Lahore High Court for getting permission to sell the property as guardians for the minor, defendant No. 2 that the said application was dismissed in default on 5th of March, 1947, that another application was thereafter made to the High Court at Lahore and that the proceedings were still pending in the High Court, and hence the plaintiff was not entitled to sue for the return of the earnest money. Five issues were framed by the learned trial Court on merits and they are as under: 1. Were the defendants ready and willing to perform their part of the contract as contained in Exhibit P-2?
2. To what interest, if any, is the plaintiff entitled by way of damages?
3. If issue No. 1 be not proved, then was not the plaintiff entitled to get back Rs. 5,000/-paid by him as earnest money?
4. Is not defendant No. 2 personally liable to refund the earne
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