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KARNATAKA HIGH COURT
Anant Ramanath Hegde, J.
Mohammed Farughuddin – Appellant
versus
Ramachandra Balu Shinde and Ors. – Respondents
Regular First Appeal No. 100196 of 2014 (SP)
Decided on 27.2.2024
(A) Specific Relief Act, 1963 – Section 16(c) – Agreement to sell – Suit for Specific Performance – Plaintiff has filed appeal and claiming decree for specific performance – Defendant has not filed appeal – Defendant has accepted decree for refund of earnest amount – Decree for refund of money is based on finding that execution of agreement for sale is proved – Nothing is placed on record to hold that parties agreed to relax condition relating to time stipulated in agreement for sale – Though, principle that time is not essence of contract in a suit for specific performance of immovable property deserves its consideration in appropriate cases, said principle cannot be applied as if it is a Statute – If terms of contract stipulate time frame for payment of consideration amount by purchaser and nothing was required to be done by vendor except executing sale deed on receipt of entire consideration amount and when there is an admission in cross-examination which would point to fact that time was essence of contract, principle that time is not essence of contract cannot be applied to dilute rigour of agreement – Though respondent has failed to prove revocation of agreement, plaintiff must prove his readiness and willingness to perform his part of contract before expiry of time fixed. (Paras 14, 28, 31 and 39)
(B) Specific Relief Act, 1963 – Section 22 – Agreement to sell – Suit for Specific Performance – Alternative relief – Plaintiff/appellant is questioning decree rejecting specific performance and there is no challenge to part of decree rejecting alternative prayer for awarding compensation – Relief of specific performance of contract is a larger relief and a prayer for refund of earnest amount and damages is a lesser relief – Alternative prayer in plaint can be read in appeal – Court fee paid on main prayer and alternative prayer is same – Plaintiff/appellant is entitled to refund of earnest amount and compensation along with 7% interest. (Paras 53, 53, 54 and 59)
Result: Appeal allowed in part.
JUDGMENT
The Plaintiff filed a suit for the specific performance of a contract to enforce the agreement for sale dated 20.07.2006. In the alternative, Rs.11,51,000/- with interest @ 15% per annum is claimed towards refund of earnest amount and damages.
2. The plaintiff claims Rs.5 lakhs is paid as advance consideration amount, on 20.07.2006 by PW-1, the power of attorney holder of the plaintiff, and the balance Rs.6,51,000/- was to be paid at the time of registration of the sale deed. The agreement stipulated six months to complete the sale transaction.
3. The plaintiff pleaded that he was always ready and willing to perform his part of the contract and the defendant did not come forward to execute the sale deed.
4. The defendant resisted the suit. The defendant admitted execution of the agreement. However, took a plea that the time was the essence of the contract. The defendant further contends that the plaintiff did not pay the balance consideration amount within six months as stipulated. The defendant claimed that he orally revoked the agreement for sale dated 20.07.2006 as the transaction is not completed within six months.
5. The trial Court has concluded that the agreement for sale dated 20.07.2006 is proved. However, the decree for specific performance is declined holding that the plaintiff failed to prove his readiness and willingness to perform his part of the contract. The trial Court passed a decree for refund of the earnest amount of Rs.5,00,000/- along with interest at the rate of 6% per annum as against the claim of 15% per annum. The decree for compensation is also declined.
6. The trial Court held that the defendant has orally revoked the agreement for sale. The defendant had also taken a contention (by way of an amendment of written statement) that power of attorney produced by PW1 marked at Ex.P.10 is concocted and there was no power of attorney in favour of PW1 when the agreement was entered on 20.07.2006. The finding on this issue is against the defendant.
7. Aggrieved by the decree refusing specific performance of the contract, the plaintiff is in appeal.
8. The defendant has accepted the decree for refund of the earnest amount.
9. Learned counsel Sri.K.L.Patil, appearing for the appellant raised the following contentions:
(i) The suit for specific performance is decreed for refund of the earnest amount overruling defendant’s contentions. The agreement is held to be proved and the defendant did not challenge the decree for refund of the earnest money. Thus, he cannot dispute the execution of the agreement for sale.
(ii) Time is not the essence of the contract when it comes to the sale of immovable property and this well-established principle is not considered by the trial Court in proper perspective. The trial court erred in holding that the time was the essence of the contract dated 20.07.2006.
(iii) As per the terms of the agreement if balance consideration amount is not paid within 6 months, then the defendant must seek cancellation of the agreement by repaying earnest sale consideration amount. The defendant did not get the agreement cancelled and did not refund the advance consideration amount. Thus, the finding that the defendant has cancelled the agreement is erroneous.
(iv) The defendant has admitted in the cross-examination that the plaintiff is a man of sufficient means. It established plaintiff’s readiness and willingness to perform the contract.
(v) Soon after noticing the public notice inviting objections to the proposed sale of the properties by the defendant, to a third party, the plaintiff filed the suit for the specific performance of the contract. The trial Court erred in holding that the plaintiff was not ready and willing to perform his part of the contract.
(vi) In the alternative, if specific performance is not possible for any valid reason, there should have been a decree for compensation in addition to the decree for refund of the amount with 15% interest on the amount c
(1) Though, principle that time is not essence of contract in a suit for specific performance of immovable property deserves its consideration in appropriate cases, said principle cannot be applied a....
The court affirmed that time is the essence of a contract for the sale of immovable property, requiring the plaintiff to prove readiness and willingness to perform, which he failed to do.
Time is of the essence in contracts for sale of immovable property; failure to act within stipulated time undermines claims for specific performance.
Specific performance requires continuous proof of readiness and willingness, which was found lacking in this case, leading to a dismissal of the claim.
Continuous readiness and willingness to perform the contract is a condition precedent for obtaining the relief of specific performance under Section 16(c) of the Specific Relief Act.
Time is of the essence in specific performance agreements; the plaintiff must prove readiness and willingness to execute the contract, which was not established in this case.
(1) Specific performance of agreement of sale –Alternative plea of refund of earnest amount and damage could not be bar to claiming decree for specific Performance of contract.(2) Specific performanc....
Specific performance of a contract is a discretionary remedy that requires the plaintiff to prove readiness and willingness to perform their obligations within the stipulated time.
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