Court Must Consider Time Limit In Agreement In Suit For Specific Performance, Need Not Decide Suit Merely Because It Was Filed Within Limitation Period: Karnataka HC

The Karnataka High Court has held that while exercising discretion in a suit for specific performance, the court need not decree the suit merely because it is filed within the period of limitation, by ignoring time limits stipulated in the agreement.

A division bench of Justice Krishna S Dixit and Justice Ramchandra D Huddar allowed the appeal filed by the Lakkamma @Lakshmamma and others and set aside the trial court order dated 20th October 2012, decreeing the suit of the plaintiff Jayamma against the appellants for the relief of specific performance of the suit agreement dated 02.08.2007.

The court said “Here in this case, because of financial difficulties, defendants wanted to sell the property. Inspite of their persistent demand to pay the balance consideration amount, as per the evidence brought on record, the plaintiff has expressed her financial difficulties. Therefore, it cannot be stated that plaintiff was ever ready and willing to perform her part of contract. The fact that limitation is for three years to file such suits does not mean that a purchaser can wait for one or two years or to wait after completion of time stipulated and file a suit and obtain a decree for specific performance.”

The plaintiff (Jayamma) before the trial court contended that by receiving advance consideration amount of Rs.50,000, in part performance of the contract executed an agreement of sale. The defendants agreed to execute the registered sale in favour of the plaintiff within six months after getting the Khatha and other documents changed in their name and also on receipt of the balance consideration of Rs.16,50,000.

During the month of September 2007, the defendants approached the plaintiff and requested to pay Rs.50,000 and accordingly, the plaintiff paid the same. To that effect, the defendants acknowledged and an undertaking was given as per the aforesaid agreement of sale.

However, the defendants did not come forward to execute the registered sale deed in favour of the plaintiff. Even when the plaintiff was and is always ever ready and willing to perform her part of the contract. Following this, a legal notice was issued and then a suit came to be filed. The trial court decreed the suit in favour of the plaintiff. The order came to be challenged in appeal.

The appellants argued that the learned trial Court assuming that there were admissions regarding the payment of the money in time, had wrongly decreed the suit. Though all the documents were very much available to execute the sale deed, but, the plaintiff went on postponing to complete the transaction on one or the other pretext expressing her financial difficulties. Therefore, the conclusions arrived at by the trial Court in decreeing the suit are based on assumptions and wrong presumptions.

Further, the plaintiff was never ever ready and willing to perform her part of the contract and thereby, the suit of the plaintiff is bad for want of compliance of provisions of Section 16(c) of the Specific Relief Act, 1963.

Moreover, the scheduled property is the only property available to the defendants/appellants and if now the judgment and decree are confirmed, these appellants/defendants would be put to greater hardship and loss and they would be deprived of their property and would be on the street itself. The agreement of sale is dated 02.08.2007 and almost more than 16 years, 10 months have lapsed. He further submits that because of the passing of more than one-half of a decade, the prices of the immovable properties have considerably increased.

The respondent contended that when the agreement of sale is admitted, so also the payment of Rs.50,000/- on the date of agreement of sale and subsequent payment of Rs.50,000/- as demanded by the defendants is admitted, then, it was the conduct of the defendants who had not performed their part of the contract by receiving the balance consideration amount. It is his submission that the plaintiff was ever ready and willing to perform her part of the contract. But, it was the defendants who did not get their names changed in the revenue records and because of that, at their instance, a delay was caused.

Findings:

The bench noted that in a suit for specific performance of an agreement of sale, it is for the plaintiff to prove his or her readiness and willingness to perform his/her obligations under the agreement. Where a certain amount has been paid in advance and the balance is required to be paid within a stipulated time, it is for the plaintiff to show that he was in a position to pay the balance money. The plaintiff has to prove that he has the money or has alternatively, made necessary arrangements to get the money.

Referring to Section 16 (c) of the Act, it said “It may not be essential for the plaintiff to actually tender money to the defendant or to deposit money in Court except when so directed by the Court to prove readiness and willingness to perform the essential terms of a contract, which involves payment of money. However, explanation (ii) says the plaintiff must aver performance or readiness and willingness to perform the contract according to its true construction.”

Further, “If the plaintiff does not have sufficient funds with her to discharge her obligations in terms of a contract which requires payment of money, the plaintiff would have to specifically plead how the funds would be available to her.”

Then it observed that the assumption of the respondent (Jayamma) that readiness and willingness on the part of the plaintiff is something which need not be proved if the plaintiff is able to establish that the defendant refused to execute the sale deed and thereby committed breach is not correct.

Referring to the evidence of the power of attorney appointed by the respondent (Jayamma) the court said that throughout the examination-in-chief there is no evidence spoken to by him that what was the arrangement made by the plaintiff to pay the balance consideration amount.

Noting that it has come in the evidence of PW.1 that there was a persistent demand made by the plaintiff to execute the sale deed, the Court said that there is no evidence that the plaintiff was possessing the balance consideration amount.

Then referring to the evidence of DW-1 (Appellant no 1) the court said “It is her evidence that when defendants demanded to pay the balance consideration amount and get the sale deed executed, it was plaintiff who went on postponing the payment of balance consideration amount expressing her financial difficulties. This evidence is not properly denied by the plaintiff throughout the cross-examination.”

The court further said that throughout the affidavit, there is no recital or mention that the amount so deposited being the sale proceeds of the site by the plaintiff with State Bank of India, Channarayaptna Branch was withdrawn and the said amount is sought to be deposited was stated by the plaintiff.

It is just stated that the plaintiff has all along shown that she has been ready to pay the balance sale consideration of Rs.16 lakhs. The said deposit was made only after the arguments of the plaintiff were canvassed when the Court pointed out about the deposit or payment of the balance sale consideration, the bench added.

Following which it held “Therefore, as could be seen from the conduct of the plaintiff, a doubt arises about plaintiff's readiness and willingness to perform her part of the contract.”

Allowing the appeal the court held “We are of the view that, respondent-plaintiff has failed to discharge her duty to prove her readiness as well as willingness to perform her part of the contract by adducing cogent evidence. Acceptable evidence has not been placed on record to prove her readiness and willingness. By depositing the amount after advancing the argument without producing any document about availability of the funds itself makes it clear that the plaintiff did not have sufficient funds to discharge her part of the contract.”

It thus directed that the plaintiff was entitled to the refund of Earnest Money of Rs.50,000, paid on 2.8.2007 and subsequent payment of Rs.50,000 on 10.09.2007 with interest on both the sums at the rate of 12% p.a. from the date of payment till realisation.

The Respondent-plaintiff is at liberty to withdraw Rs.16,00,000, with accrued interest if any thereon and the balance interest out of the said amount is to be made good by the defendants, it was concluded.

Appearance: Advocate C Shankar Reddy for Appellants.

Advocate S V Prakash for Respondent

Citation No: 2024 LiveLaw (Kar) 271

Case Title: Lakkamma & Others AND Jayamma

Case No: REGULAR FIRST APPEAL NO. 6 OF 2013

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