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HIGH COURT OF MADRAS
Honourable Mr Justice R. SUBRAMANIAN, R. Sakthivel, J
A.L.Deivanathan – Appellant
Versus
R.Saravanan – Respondent
A.S.NO.272 OF 2017 AND CMP NO.10461 OF 2017
Specific Performance - Sale Agreement - Stamp Duty - Registration - Limitation - Order II Rule 2 CPC
Fact of the Case:
The plaintiffs entered into a sale agreement with the defendants to purchase a property. The plaintiffs paid a substantial amount as advance, but the defendants refused to execute the sale deed. The plaintiffs filed a suit for specific performance of the agreement and alternatively for refund of the advance amount. The trial court dismissed the suit, and the plaintiffs appealed.
Finding of the Court:
The High Court held that the sale agreement was duly stamped and did not require registration for the purpose of the specific performance suit. However, the plaintiffs failed to prove the payment of an additional advance of ₹1 lakh. The court also held that time was the essence of the contract and the plaintiffs were not ready and willing to perform their part of the agreement within the stipulated time. The suit for specific performance was therefore barred by limitation and also under Order II Rule 2 of the CPC. However, the plaintiffs were entitled to the refund of the advance amount of ₹15 lakhs paid, along with interest.
Issues: ['Whether the sale agreement is valid, admissible, and enforceable?', 'Whether the plaintiffs proved the receipt for the payment of ₹1 lakh?', 'Whether time was the essence of the sale agreement?', 'Whether the plaintiffs are entitled to the relief of specific performance?', 'Whether the suit is barred by limitation?', 'Whether the suit is barred under Order II Rule 2 of the CPC?', 'Whether the plaintiffs are entitled to the alternate relief of refund of advance money with interest?']
Ratio Decidendi: The High Court held that the sale agreement was duly stamped and did not require registration for the purpose of the specific performance suit. However, the plaintiffs failed to prove the payment of an additional advance of ₹1 lakh. The court also held that time was the essence of the contract and the plaintiffs were not ready and willing to perform their part of the agreement within the stipulated time. The suit for specific performance was therefore barred by limitation and also under Order II Rule 2 of the CPC. However, the plaintiffs were entitled to the refund of the advance amount of ₹15 lakhs paid, along with interest.
Final Decision: The appeal was partly allowed. The plaintiffs were not entitled to the relief of specific performance, but they were entitled to the refund of the advance amount of ₹15 lakhs paid, along with interest.
JUDGEMENT
1. The appellants herein are the plaintiffs in O.S.No.190 of 2011 on the file of 'III Additional District Judge, Salem' (henceforth 'Trial Court' for the sake of brevity).
2.For the sake of convenience, henceforth, the parties will be referred to as per their array in the suit i.e., the appellants herein and the respondents herein will be referred to as plaintiffs and defendants respectively.
3.Feeling aggrieved with the judgment and decree dated January 18, 2017, passed by the Trial Court in O.S.No.190 of 2011, the plaintiffs have preferred this Appeal under Section 96 read with Order XLI Rule 1 of ‘Code of Civil Procedure, 1908’ (henceforth ‘CPC’), praying to set aside the aforementioned judgment and decree.
Plaintiffs’ case
4.The case of the plaintiffs is that, the 1st defendant is the father of the 2nd and 3rd defendants. Defendants acquired the Suit Propriety measuring an extent of 46 Cents under a registered Partition Deed dated June 13, 1985.
4.1.On April 24, 2008, the defendants entered into an agreement of sale with the plaintiffs to sell the Suit Property. As per the agreement, the sale price was fixed at Rs.230/- per Sq.ft., which totally comes to the tune of Rs.46,12,880/- (Rupees Forty Six Lakh Twelve Thousand Eight Hundred and Eighty only), and the sale shall be completed on or before September 30, 2008. While executing the sale agreement on April 24, 2008, the plaintiffs paid a sum of Rs.2,00,000/- (Rupees Two Lakh only) as advance and subsequently on May 28, 2008, another sum of Rs.13,00,000/- (Rupees Thirteen Lakh only) was paid as advance. Subsequently, on October 7, 2008, a sum of Rs.1,00,000/- (Rupees One Lakh only) was paid. Thus, in total, a sum of Rs.16,00,000/- (Rupees Sixteen Lakh Only) had been paid to the defendants by the plaintiffs towards purchase of the Suit Property. The defendants duly acknowledged the receipt of the said total sum in the presence of one Thiru.V.Pal Arumugam and Thiru.M.Mohan. Further, the defendants had received the sale consideration even after the deadline for performance of the contract i.e., September 30, 2008, which reflects unequivocally that time is not the essence of the contract.
4.2.After receipt of the huge amount as advance, the defendants handed over possession of the property to the plaintiffs for its development. The plaintiffs spent nearly Rs.10,00,000/- (Rupees Ten Lakh only) towards development of the Suit Property. The plaintiffs also purchased right on a pathway as additional approach road to the Suit Property from third party by paying consideration. All these things were done with the knowledge of the defendants. Major part of the sale consideration has been paid to the vendors and possession has been delivered in part performance.
4.3.The plaintiffs are always ready and willing to perform their part of the agreement. The Sale Agreement dated April 24, 2008 requires that the vendors should satisfy the purchaser on title of vendors and clear encumbrances, if any. It is a condition precedent for payment of the balance sale consideration to the vendors. Contrary to the same, when the plaintiffs asked for production of the original Partition Deed and execution of the sale deed after receiving the balance sale consideration, the defendants did not come forward and began evading execution of the sale deed under one pretext or other.
4.4.Therefore, the plaintiffs issued a legal notice to the defendants on February 14, 2010 calling upon them to execute sale deed by enforcing the agreement of sale dated April 24, 2008 after showing the original Partition Deed dated June 13, 1985. On March 9, 2010, the defendants gave a reply stating that no such sale agreement was entered into with the plaintiffs, and they denied the very receipt of Rs.16,00,000/- as advance. The defendants colluded together and played fraud on the plaintiffs. The plaintiffs came to know that the defendants were negotiating with a real estate baron to sell the Suit Property at a higher rate when
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