BOMBAY HIGH COURT
Anuja Prabhudessai, J.
Girish Vinodchandra Dhruva and Ors. – Appellants
versus
Neena Paresh Shah and Anr. – Respondents
FA No.1252 of 2013 with CA No.3479 of 2013 in FA No.1252 of 2013 with IANo.3007 of 2022 in FA No.1252 of 2013 with IA No.18033 of 2022 in
FA No.1252 of 2013
Decided on 12.6.2023

IMPORTANT POINTS
(1) Power of attorney – Power of attorney holder is not competent to depose or give evidence in place of principal for acts done by principal or transactions or dealings of principal, of which principal alone has personal knowledge unless he has personal knowledge of facts and of transaction or where all affairs of principal are completely managed, transacted and looked after by attorney, who may happen to be close family member.
(2) Contract – Time is essence of contract – Time does not cease to be essence of contract with mere extension of original time period – Mere incorporation of penalty clause does not by itself evidence intention to make time essence of contract.
(3) Specific performance of contract – Readiness and willingness – Section 16(c) of Specific Relief Act, as it stood prior to 2018, mandates readiness and willingness on part of Plaintiffs as condition precedent to seek specific performance.
(4) Specific performance of contract – Section 20 of Specific Relief Act , as it stood prior to 2018 amendment, stipulates that jurisdiction of Court to grant decree of specific performance is discretionary

Headnote:

(A) Power of attorney – Power to give evidence – Power of attorney holder is not competent to depose or give evidence in place of principal for acts done by principal or transactions or dealings of principal, of which principal alone has personal knowledge – This bar will not apply to case where power of attorney holder has personal knowledge of facts and of transaction or where all affairs of principal are completely managed, transacted and looked after by attorney, who may happen to be close family member –Both Plaintiffs are residents of United States – Pleadings as well as evidence on record clearly indicate that PW1, brother of Plaintiff No.1 was exclusively dealing with original Defendant on behalf of Plaintiffs – He had personal knowledge of transaction – PW1 was competent to depose or give evidence on behalf of Plaintiffs. [Paras 27, 28, 29]

(B) Contract Act, 1872 – Section 55 – Sale - Non-completion of sale transaction within stipulated time - Time essence of contract – Time does not cease to be essence of contract with mere extension of original time period – All that it suggests is that balance payment had to be made within extended time period – Agreement also reveals that there was consensus between parties that amount paid towards earnest money would stand forfeited in event purchasers/Plaintiffs defaulted in fulfilling terms of agreement within stipulated time – This clause clearly spells out urgency in completing sale transaction within stipulated time and discloses intention of parties to make time essence of contract – Mere incorporation of penalty clause does not by itself evidence intention to make time essence of contract – Suit flat was too small to accommodate large family of original Defendant – There was pressing need to acquire separate premises for her sons – This being the case, non-payment of balance sale consideration and non-completion of sale transaction within stipulated time would frustrate very purpose of sale – Plaintiffs have averred that they were ready and willing to perform contract within stipulated time – Pleadings indicate that Plaintiffs also considered time to be essence of contract – These facts and circumstances coupled with express and other implied stipulations in agreement disclose intention to make time essence of contract, which displaces general presumption in this regard. [Paras 41, 42, 43, 44]

(C) Specific Relief Act, 1963 – Section 16 (c) – Specific performance of contract – Readiness and willingness –Plaintiffs were required to plead and prove that they had performed or had always been ready and willing to perform essential terms of contract which were to be performed by him – Readiness and willingness are not one, but two separate elements – Readiness means capacity of Plaintiff to perform contract which would include financial position to pay purchase price – It is not condition that Plaintiffs should carry cash with them but it is sufficient to establish that they have capacity to pay – Whereas, willingness refers to intention of Plaintiff as purchaser to perform his part of contract – Willingness is inferred by scrutinizing conduct of Plaintiff/purchaser, including attending circumstances – Compliance of readiness and willingness has to be in spirit and substance and not in letter and form – Non-framing of issue has not led to miscarriage of justice and is not fatal to case – In absence of documentary evidence as regards financial position or capacity of Plaintiffs, mere uncontroverted oral statement made by Power of Attorney, cannot be considered to bea proof of financial capacity of Plaintiffs – Findings regarding readiness cannot be recorded in their favour –Plaintiffs have not established through reliable documentary evidence that they had financial capacity to pay balance sale consideration as well as registration charges – As regards the willingness, Plaintiffs had not purchased stamp paper, they had not prepared draft sale or sale deed and had not got stamp duty adjudicated –Plaintiffs have failed to prove that they were ready and willing to perform their part of contract – In terms of Section 16(c) of Specific Relief Act they are barred from claiming specific performance not withstanding alleged breach by Defendant vendor. [Paras 45, 46, 49, 51, 52, 58, 60, 62]

(D) Specific Relief Act, 1963 – Section 20 – Specific performance of contract –Appellate Court should not exercise its discretion against grant of specific performance on extraneous considerations or sympathetic consideration – Once agreement to sell is legal and validly proved and further requirements for getting such decree are established then Court has to exercise its discretion in favour of granting relief for specific performance – Plaintiffs have failed to prove requirements of getting decree of specific performance – Decree of specific performance would dislocate several members of Defendant’s family and this would cause undue hardship to Defendants as compared to hardship caused to Plaintiffs – It would not be fair and reasonable to grant specific performance in favour of Plaintiffs – Impugned judgment set aside – Defendants are directed to refund the earnest money of Rs.2,51,000/- with interest @ 6% per annum from date of the suit till final payment. [Paras 63, 64, 65, 66]

Result: Appeal allowed.