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High Court Of Madhya Pradesh
GULAB C. GUPTA
SURAJ SINGH - Appellant
Versus
NATHI BAI - Respondents
First Appeal 169 Of 1989
Decided On : 08/26/1989
SPECIFIC PERFORMANCE - AGREEMENT FOR SALE OF IMMOVABLE PROPERTY - TIME OF ESSENCE - READINESS AND WILLINGNESS TO PERFORM - REFUND OF EARNEST MONEY - SECTION 55 OF THE CONTRACT ACT, 1872 - SECTION 16 (C) OF THE SPECIFIC RELIEF ACT, 1963 - SECTION 22 OF THE SPECIFIC RELIEF ACT, 1963 - SUMMARY: The court held that time was of the essence of the contract for sale of immovable property, and the appellant was not ready and willing to perform his part of the contract. The court also held that the appellant was entitled to refund of earnest money paid by him, but the court could not grant a decree for refund in the absence of any prayer in that behalf in the plaint.
Fact of the Case:
The appellant entered into an agreement with the respondent No. 1 to purchase a house for a sum of Rs. 21,000/-. The appellant paid Rs. 2,000/- as advance and the balance was to be paid by 5-3-1983. The respondent No. 1 agreed to execute the sale deed on receipt of the balance consideration. However, the appellant did not pay the balance consideration and the respondent No. 1 sold the house to respondents Nos. 2 to 4 for a sum of Rs. 22,000/-. The appellant filed a suit for specific performance of the agreement.
Finding of the Court:
The court held that time was of the essence of the contract and the appellant was not ready and willing to perform his part of the contract. The court also held that the appellant was entitled to refund of earnest money paid by him, but the court could not grant a decree for refund in the absence of any prayer in that behalf in the plaint.
Issues: 1. Whether time was of the essence of the contract for sale of immovable property? 2. Whether the appellant was ready and willing to perform his part of the contract? 3. Whether the appellant was entitled to refund of earnest money paid by him?
Ratio Decidendi: 1. The court held that time was of the essence of the contract based on the language used in the agreement, the nature of the property, and the surrounding circumstances. 2. The court held that the appellant was not ready and willing to perform his part of the contract based on the evidence of the parties that they treated 5-3-1983 to be the outer limit during which the appellant was entitled to obtain the sale deed. 3. The court held that the appellant was entitled to refund of earnest money paid by him based on the admission of the respondent No. 1 that she was willing to refund the amount but could not do so as she had no money with her.
Final Decision: The appeal was dismissed. However, in view of the peculiar facts and circumstances of the case, the parties were directed to bear their own costs of this appeal.
( 1 ) THIS is plaintiff's first appeal under Sec. 96 of the Code of Civil Procedure against the judgment and decree dated 29-7-1985 passed by Shri K. C. Agarwal, First Additional Judge to the Court of District Judge, Sagar in Civil Suit No. 8-A of 1983, dismissing the appellant's suit for specific performance.
( 2 ) ADMITTEDLY the respondent No. 1 is the owner of a house and plot situate at Ravishanker Ward, Sagar and demarcated in the map annexed to the plaint. It is admitted by the parties that respondent No. 1 agreed to sell the said house to the appellant for a sum of Rs. 21,000/- only and executed an agreement on 3-1-1983 (Ex. P/1 ). There is also no dispute that respondent No. 1 received a sum of Rs. 2,000/- from the appellant as advance. The appellant and the respondent No. 1 agreed that sale deed may be got executed by the appellant by paying balance of Rupees 17,000/-, before the Registrar by 5-3-1983. The agreement further provides that in case, the respondent No. 1 did not execute the sale deed, as aforesaid, the appellant would be entitled to get the same executed through the Court of law. The document is witnessed by ashok Kumar Choubey (D. W. 1) and Nathu Singh (PM. 3), The case of the appellant, as stated in the plaint, is that he had been ready and willing to obtain the sale deed and had even approached the respondent No. 1 for that purpose but the respondent No. 1 somehow avoided the execution thereof: There appears to be no dispute now that the respondent No. 1 sold the very same house to the respondents Nos. 2 to 4 for a valuable consideration of Rs. 22,000/- and executed sale deed on 7-3-1983 (Ex. P/4 ). The appellant claims that the subsequent sale in favour of respondents Nos. 2 to 4 was without any legal effect. He, therefore, prayed for a declaration that the sale deed dated 7-3-1984 (Ex. P/4) was illegal and inoperative and that the respondent No. 1 be directed to execute the sale deed in his favour in specific performance of agreement (Ex. P/1), The respondent No. 1 admitted execution of the agreement (Ex. P/1) but submitted that she had been ready and willing to execute the sale deed as per the same. She alleged that she had herself approached the appellant for the purpose several times before 5-3-1983 but the appellant did not have the ready money to buy the house and, therefore, did not obtain the sale deed. She admitted having sold the same house to respondents Nos. 2 to 4 which according to her, was legal and valid. Respondents Nos. 2 to 4 filed their separate written statement and submitted that they had no knowledge of the agreement dated 3-1-1983 (Ex. P/1) or else they would not have purchased the said house. They, therefore, claim that they were bona fide purchasers for value and, without notice of prior agreement and, therefore, the sale in their favour could not be invalidated. They further allege that the appellant was guilty of breach of condition of agreement and, therefore, his suit must fail. The learned trial Judge, on examination of evidence adduced by the parties, held that the appellant did not have the ready money to buy the suit house and, therefore, it cannot be inferred that he was ready and willing to perform his part of the agreement. The suit was accordingly dismissed and hence this appeal.
( 3 ) A perusal of the agreement dated 3-1-1983 (Ex. P/1) indicates that the parties had fixed time limit for execution of the same i. e. 5-3-1983 and had provided that the respondent No. 1 would execute the sale deed in favour of the appellant on his paying balance consideration of Rs. 19,000/ -. A plain reading of this document would, therefore, indicate that the appellant was required to pay Rs. 19,000/- and got the sale deed executed at his cost latest by 5-3-1983. The date 5-3-1985, therefore, was the outer limit for getting the sale deed executed in terms of this agreement. This interpretation of the agreement would give rise to two legal questions, namely, (i) whe
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