RAVI SETIA versus MADAN LAL AND OTHERS on 4 October 2019

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SUPREME COURT REPORTS

[2019] 13 S.C.R.

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RAVI SETIA

v.

MADAN LAL AND OTHERS

(Civil Appeal No(s). 2837 of 2011)

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OCTOBER 04, 2019

[NAVIN SINHA AND INDIRA BANERJEE, JJ.]

Specific Relief Act, 1963: s.16(1)(c) – Suit for specificperformance of contract – Readiness and willingness of plaintiffto perform his part of contract – Defendants 1 to 3 agreed to sellCland in question to plaintiff – The sale deed was to be executed on30.04.1990 – Case of plaintiff was that the defendant no.1 and 2did not appear before the Registrar for execution on 30.04.1990 –Trial Court and First Appellate Court arrived at the finding ofreadiness and willingness on part of the plaintiff solely on basis ofDa certificate produced by him from the Sub-Registrar confirminghis presence before him on 30.04.1990 for execution – Held: Apartfrom the said certificate, no further evidence was led by the plaintiffto demonstrate readiness and willingness including the continuouscapacity for discharge of the balance consideration – In thecircumstances the certificate from the office of Sub-Registrar cannotEbe construed as conclusive evidence to non-suit defendants 1 and2 – The findings to that effect therefore held to be unsustainable.

Specific Relief Act, 1963: s.16(1)(c) – Suit for specificperformance of contract – Readiness and willingness of plaintiffto perform his part of contract – Trial Court decreed the suit onF01.06.1994 and granted time to the plaintiff for deposit of thebalance consideration within two months – Plaintiff offered noexplanation whatsoever for the failure to comply the direction –After expiry of the time granted for deposit, plaintiff filed anapplication before the Trial Court that in view of the pendency ofGthe First Appeal preferred by defendants, the time for deposit maybe extended as otherwise the amount would lie in the bank withoutinterest – Time for deposit was extended till disposal of the FirstAppeal – Held: The failure of the plaintiff to offer any explanationwhy the balance consideration was not deposited within the time H

granted, the filing of the application for extension of time afterexpiry of the prescribed period coupled with the frivolousness ofthe grounds taken in the application for extension that the moneywould lie in the bank without earning interest, were all but evidenceof incapacity on part of the plaintiff to perform his obligations underthe agreement and reflective of lack of readiness and willingness –The grant of relief for specific performance under s.16(1)(c) of theAct is a discretionary and equitable relief – The plea that the amountwould lie in the bank without interest is unfounded and contrary tonormal banking practice – This is sufficient evidence of theincapacity or lack of readiness and willingness on part of theplaintiff to perform his obligations – Undoubtedly, the time fordeposit could be extended under s.28 of the Act – But the mereextension of time for deposit does not absolve the plaintiff of hisobligation to demonstrate readiness and willingness coupled withspecial circumstances beyond his control to seek such extension –The pendency of an appeal by the defendant did not preclude theplaintiff from depositing the amount in proof of his readiness andwillingness – High Court has rightly observed that there was nostay by the Appellate Court of the decree under appeal to justifynon-deposit during the pendency of the appeal – There was noinfirmity in the order of the High Court concluding that the plaintiffin the facts and circumstances was not ready and willing to performhis obligations.

Dismissing the appeal, the Court

Conclusion

Dismissing the appeal, the Court

HELD: 1. Defendant nos. 1 and 2 by registered noticesdated 28.05.1990 and 12.06.1990 required the plaintiff to get thesale deed executed by 25.06.1990. The plaintiff does not disputethat the communication was properly addressed and sent throughregistered acknowledgement due. If it was returned back withthe endorsement that the plaintiff was not available at his home,defendants 1 and 2 were not required to do anything further. Ifthe plaintiff was of the opinion that the endorsement was wrong,it was for him to have contended so and led necessary evidencein this regard. The Trial Court rightly did not disbelievedefendants 1 and 2, but without returning any finding in that regardpreferred to rely on the unsubstantiated claim of the plaintiff of AB

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Ahaving been present before the Sub-Registrar on 30.04.1990.The said finding is also held to be unsustainable. [Para 6][943-H;944-A-C]

2. The Trial Court decreed the suit on 01.06.1994 andgranted time to the plaintiff for deposit of the balanceBconsideration within two months from 01.06.1994, i.e. by31.07.1994. The plaintiff offered no explanation whatsoever forthe failure to comply the direction. After expiry of the time grantedfor deposit, on 02.08.1994 the plaintiff filed an application beforethe Trial Court that in view of the pendency of the First AppealCpreferred by defendants, the time for deposit may be extendedas otherwise the amount would lie in the bank without interest.On 02.08.1994 itself, the time for deposit was extended tilldisposal of the First Appeal. The defendants’ challenge to theex-parte order was unsuccessful on technical grounds. [Para8][944-F-G]D

3. The grant of relief for specific performance under Section16 (1)(c) of the Act is a discretionary and equitable relief. UnderSection 16 (1)(c), the plaintiff has to demonstrate readiness andwillingness throughout to perform his obligations under thecontract. The plea that the amount would lie in the bank withoutEinterest is unfounded and contrary to normal banking practice.This is sufficient evidence of the incapacity or lack of readinessand willingness on part of the plaintiff to perform his obligations.Undoubtedly, the time for deposit could be extended underSection 28 of the Act. But the mere extension of time for depositFdoes not absolve the plaintiff of his obligation to demonstratereadiness and willingness coupled with special circumstancesbeyond his control to seek such extension. The plaintiff did notaver in the application that he was ready and willing to performhis obligations and was prevented from any special circumstancesfrom doing so. The pendency of an appeal by the defendant didGnot preclude the plaintiff from depositing the amount in proof ofhis readiness and willingness. [Para 10][945-C-F]

4. According to normal human prudence, land priceescalates over time. Unless it be a situation of a distress sale, noland owner will sell his land for a lesser price than what may haveHbeen recorded in an agreement for sale. The fact that the A

defendants nos.1 and 2 subsequently sold the land on 16.01.1991to defendants nos.4 to 7 at a lesser price, due to personalnecessity, also mitigates against the plea of the plaintiff that hewas ready and willing to perform his part of the obligations underthe contract. [Para 14][947-B-C]

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5. The plaintiff failed to prove readiness and willingness toperform its obligations under the agreement for sale. However,in the peculiar facts and circumstances of the case, the respondentis not entitled to retain the earnest money and it shall be refundedto the appellant without interest within a period of one monthfailing which it shall carry interest at the rate of 7 per cent.[Para 16][947-H; 948-A-B]

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V. S. Palanichamy Chettiar Firm v. C. Alagappan, (1999)

4 SCC 702 : [1999] 1 SCR 349; Ramankutty Guptan v.Avara, (1994) 2 SCC 642 : [1994] 1 SCR 542; Umabai

and Another v. Nilkanth Dhondiba Chavan (Dead) byLrs. and Another, (2005) 6 SCC 243 : [2005] 3 SCR521; Dilbagrai Punjabi v. Sharad Chandra, 1988 Supp D

SCC 710 : [1988] Suppl. SCR 276 – relied on.

Case Law Reference

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CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2837of 2011.

From the Judgment and Order dated 13.01.2009 of the High Courtof Punjab and Haryana at Chandigarh in Civil Regular Second AppealNo. 2443 of 1999.

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Amit Anand Tiwari, Ms. Mary Mitzy, Ms. Harshal Gupta, Advs.for the Appellant.

Ranjit Thomas, Sr. Adv., Ms. Shashi Juneja, V. N. Raghupathy,Mohit Singh, Advs. for the Respondents.

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AThe Judgment of the Court was delivered by NAVIN SINHA, J.

1. The plaintiff assails correctness of the order allowing the secondappeal of the defendants. By the impugned order, the High Court setBaside the concurrent orders of the courts below decreeing the plaintiff’ssuit for specific performance.

2. The plaintiff filed a suit for specific performance of agreementfor sale dated 10.11.1989 with regard to 2/3[rd] of the lands owned bydefendants 1 and 2 as Defendant No. 3 declined to sign the agreement.CRs. 50,000/- was paid as earnest money and the balance considerationof Rs.3,10,490/- was to be paid at the time of execution. The agreementprovided for execution of the sale deed on or before 30.04.1990. TheTrial Court decreed the suit holding that the plaintiff had remained presentin the office of the Sub-Registrar for registration of the sale documentson 30.04.1990, but defendant nos. 1 and 2 did not appear for execution.DDuring the pendency of the proceedings, defendant nos. 1 and 2 sold thelands to defendant nos. 4 to 7 by three separate sale deeds dated16.01.1991. The first appeal by the defendants was dismissed holdingthat defendant nos. 4 to 7 were not bonafide purchasers. Thus, the presentappeal.

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3. Shri Amit Anand Tiwari, learned counsel for the appellant-plaintiff, submitted that the High Court in a second appeal ought not tohave interfered with a concurrent finding of fact that the plaintiff wasready and willing to perform his part of the obligations under theagreement. Defendant nos. 1 and 2 had failed to appear before the Sub-FRegistrar for execution on 30.04.1990. The plaintiff never received thepurported notices from defendant nos.1 and 2 dated 28.05.1990 and12.06.1990 requiring the plaintiff to execute the sale deed on 25.06.1990.The subsequent sale to defendants 4 to 7 has been held to be not bonafide,but a sham transaction. The plaintiff had been granted extension of timefor deposit of the balance consideration by the Trial Court till the disposalGof the first appeal. The balance consideration was deposited after decisionin the First Appeal. In the alternative, a submission was made that if theappeal is not to be allowed, defendants 1 and 2 may be directed to paythe sum of Rs.1,00,000/- to the plaintiff comprising the earnest moneyplus damages as claimed in the suit.H

4. Shri Ranjit Thomas, learned senior counsel appearing for thedefendants-respondents, submitted that the plaintiff had failed to provereadiness and willingness to perform its obligations under the agreement.The defendants were not put on notice for appearance before the Sub-Registrar on 30.04.1990. The notices dated 28.05.1990 and 12.06.1990were sent by defendants 1 and 2 through registered post at the correctresidential address of the plaintiff. The plaintiff did not respond to thesame because he did not have the capacity to perform his obligationsunder the agreement and failed to deposit the balance consideration withinthe two months’ time granted by the Trial Court on 01.06.1994. Theapplication for extension of time made after expiry of the time prescribedis sufficient evidence for the incapacity of the plaintiff to perform hisobligations demonstrating readiness and willingness. The High Court insecond appeal was empowered to set aside concurrent findings of factsif they were perverse.

5. We have considered the submissions on behalf of the partiesand have also been taken through the orders under appeal. Defendantsnos. 1 to 3 owned 61 karnals 17 marlas of lands in Village Gumjal, TehsilAbohar, District Ferozpur. Defendant no.3 having refused to sign theagreement for sale dated 10.11.1989, the plaintiff instituted a suit forenforcement of the agreement with regard to the 2/3[rd] share of defendants1 and 2. The sale deed was to be executed on or before 30.04.1990.The Trial Court and the First Appellate Court arrived at the finding ofreadiness and willingness on part of the plaintiff solely on basis of acertificate produced by them from the Sub-Registrar confirming theirpresence before him on 30.04.1990 for execution. Apart from the same,no further evidence was led by the plaintiff to demonstrate readinessand willingness including the continuous capacity for discharge of thebalance consideration. The plaintiff in its application before the Sub-Registrar stated that he had required defendants 1 and 2 to be presentfor registration on 25.06.1990. No evidence whatsoever has been led bythe plaintiff in support of the same. We are of the considered opinionthat in the circumstances the certificate from the office of the Sub-Registrar cannot be construed as conclusive evidence to non-suitdefendants 1 and 2. The findings to that effect are therefore held to beunsustainable.

6. Defendant nos. 1 and 2 by registered notices dated 28.05.1990and 12.06.1990 required the plaintiff to get the sale deed executed by A

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A25.06.1990. The plaintiff does not dispute that the communication wasproperly addressed and sent through registered acknowledgement due.If it was returned back with the endorsement that the plaintiff was notavailable at his home, defendants 1 and 2 were not required to do anythingfurther. If the plaintiff was of the opinion that the endorsement wasBwrong, it was for him to have contended so and led necessary evidencein this regard. The Trial Court rightly did not disbelieve defendants 1 and2, but without returning any finding in that regard preferred to rely on theunsubstantiated claim of the plaintiff of having been present before theSub-Registrar on 30.04.1990. The said finding is also held to beunsustainable.C

7. Under Section 16 of the Specific Relief Act, 1963 (for short“the Act”), there are certain grounds which bar the relief of specificperformance of the contract. This section, insofar it is relevant, is asunder:

D“16. Personal bars to relief.—Specific performance of a contractcannot be enforced in favour of a person—

(a) -(b)***

(c) who fails to aver and prove that he has performed orhas always been ready and willing to perform the essential termsEof the contract which are to be performed by him, other thanterms the performance of which has been prevented or waivedby the defendant.”

8. The Trial Court decreed the suit on 01.06.1994 and grantedtime to the plaintiff for deposit of the balance consideration within twoFmonths from 01.06.1994, i.e. by 31.07.1994. The plaintiff offered noexplanation whatsoever for the failure to comply the direction. Afterexpiry of the time granted for deposit, on 02.08.1994 the plaintiff filed anapplication before the Trial Court that in view of the pendency of theFirst Appeal preferred by defendants, the time for deposit may beGextended as otherwise the amount would lie in the bank without interest.On 02.08.1994 itself, the time for deposit was extended till disposal ofthe First Appeal. The defendants’ challenge to the ex-parte order wasunsuccessful on technical grounds.

9. There can be no straight jacket formula with regard to readinessHand willingness. It will have to be construed in the facts and circumstances of each case in the light of all attending facts and circumstances. Weare of the considered opinion, that in the facts and circumstances of thepresent case, the failure of the plaintiff to offer any explanation why thebalance consideration was not deposited within the time granted, thefiling of the application for extension of time after expiry of the prescribedperiod coupled with the frivolousness of the grounds taken in theapplication for extension that the money would lie in the bank withoutearning interest, are all but evidence of incapacity on part of the plaintiffto perform his obligations under the agreement and reflective of lack ofreadiness and willingness. He preferred to wait and abide by the gambleof a favourable decision in the first appeal.

10. The grant of relief for specific performance under Section 16(1)(c) of the Act is a discretionary and equitable relief. Under Section16 (1)(c), the plaintiff has to demonstrate readiness and willingnessthroughout to perform his obligations under the contract. The plea thatthe amount would liein the bank without interest is unfounded and contraryto normal banking practice. To our mind, this is sufficient evidence ofthe incapacity or lack of readiness and willingness on part of the plaintiffto perform his obligations. Undoubtedly, the time for deposit could beextended under Section 28 of the Act. But the mere extension of timefor deposit does not absolve the plaintiff of his obligation to demonstratereadiness and willingness coupled with special circumstances beyondhis control to seek such extension. The plaintiff did not aver in theapplication that he was ready and willing to perform his obligations andwas prevented from any special circumstances from doing so. Thependency of an appeal by the defendant did not preclude the plaintifffrom depositing the amount in proof of his readiness and willingness.Readiness has been interpreted as capacity for discharge of obligationswith regard to payment. The High Court has rightly observed that therewas no stay by the Appellate Court of the decree under appeal to justifynon-deposit during the pendency of the appeal. The grant of extensionof time cannot ipso facto be construed as otherwise demonstratingreadiness and willingness on part of the plaintiff. The plaintiff was requiredto plead sufficient, substantial and cogent grounds to seek extension oftime for deposit because otherwise it becomes a question of his conductalong with all other attendant surrounding circumstances in the facts ofthe case. We therefore find no infirmity in the order of the High Courtconcluding that the plaintiff in the facts and circumstances was not readyand willing to perform his obligations.

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11. In V.S. Palanichamy Chettiar Firm vs. C. Alagappan,(1999) 4 SCC 702, it was observed as follows :

“17. The agreement of sale was entered into as far back on16-2-1980, about 19 years ago. No explanation is forthcoming asto why the balance amount of consideration could not be depositedwithin the time granted by the Court……Merely because a suit isfiled within the prescribed period of limitation does not absolvethe vendee-plaintiff from showing as to whether he was readyand willing to perform his part of the agreement and if there wasnon-performance, was that on account of any obstacle put by thevendor or otherwise. Provisions to grant specific performance ofan agreement are quite stringent. Equitable considerations comeinto play. The court has to see all the attendant circumstancesincluding if the vendee has conducted himself in a reasonablemanner under the contract of sale….. It is not the case of therespondent decree-holders that on account of any fault on thepart of the vendor judgment-debtor, the amount could not bedeposited as per the decree……That apart, no explanationwhatsoever is coming from the respondent decree-holders as towhy they did not pay the balance amount of consideration…..Equity demands that discretion be not exercised in favour of therespondent decree-holders and no extension of time be granted to B

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Ethem to comply with the decree.”

12. In our opinion, had the plaintiff deposited the amount afterexpiry of the time but during the pendency of the appeal, as held inRamankutty Guptan vs. Avara, (1994) 2 SCC 642, entirely differentconsiderations may have arisen. The judgement in any event is based onFits own peculiar facts and circumstances.

13. In Umabai and Another vs. Nilkanth Dhondiba Chavan(Dead) by Lrs. and Another, (2005) 6 SCC 243, it has been observedas follows :

“30. It is now well settled that the conduct of the parties, with aview to arrive at a finding as to whether the plaintiff-defendantswere all along and still are ready and willing to perform their partof contract as is mandatorily required under Section 16(c) of theSpecific Relief Act must be determined having regard to the entireattending circumstances. A bare averment in the plaint or a G

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statement made in the examination-in-chief would not suffice.The conduct of the plaintiff-defendants must be judged havingregard to the entirety of the pleadings as also the evidence broughton records.”

14. According to normal human prudence, land price escalatesover time. Unless it be a situation of a distress sale, no land owner willsell his land for a lesser price than what may have been recorded in anagreement for sale. The fact that the defendants nos.1 and 2 subsequentlysold the land on 16.01.1991 to defendants nos.4 to 7 at a lesser price,due to personal necessity, also mitigates against the plea of the plaintiffthat he was ready and willing to perform his part of the obligations underthe contract.

15. There can be no quarrel with the well settled proposition oflaw that in a second appeal, the High Court ought not to enter intoreappreciation of evidence to arrive at new findings, except on purequestions of law. But if the findings are perverse, based on completemisappreciation or erroneous consideration of evidence, and the failureto consider relevant evidence, it becomes a question of law. In DilbagraiPunjabi vs. Sharad Chandra, 1988 Supp SCC 710,it was observed asfollows:

“5…..The High Court was right in pointing out that the courtsbelow had seriously erred in not considering the entire evidenceon the record including the aforesaid documents. It is true that theHigh Court while hearing the appeal under Section 100 of theCode of Civil Procedure has no jurisdiction to reappraise theevidence and reverse the conclusion reached by the first appellatecourt, but at the same time its power to interfere with the findingcannot be denied if when the lower appellate court decides anissue of fact a substantial question of law arises. The court isunder a duty to examine the entire relevant evidence on recordand if it refuses to consider important evidence having directbearing on the disputed issue and the error which arises is of amagnitude that it gives birth to a substantial question of law, theHigh Court is fully authorised to set aside the finding….”

16. In view of the discussion, we arrive at the conclusion that theplaintiff failed to prove readiness and willingness to perform its obligationsunder the agreement for sale. We are of the considered opinion that A

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Athere is no merit in the present appeal. However, in the peculiar factsand circumstances of the case, we are of the considered opinion that therespondent is not entitled to retain the earnest money and it shall berefunded to the appellant without interest within a period of one monthfailing which it shall carry interest at the rate of 7 per cent.

B17. The appeal is dismissed. There shall be no order as to costs.

Devika Gujral

Appeal dismissed.

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