SUPREME COURT HOLDS RESPONDENT ENTITLED TO SPECIFIC PERFORMANCE OF CONTRACT, AS SHE WAS ALWAYS WILLING TO PAY SALE CONSIDERATION TO APPELLANTS

A two Judge Bench of the Supreme Court presided by Justice Krishna Murari and Justice Sanjay Karol passed a Judgment dated 18.04.2023 in Gaddipati Divija & Anr. Versus Pathuri Samrajyam & Ors., Civil Appeal No. 4206 – 4207 of 2011 and observed that the Respondent No. 1 was entitled to specific performance of contract, as she was always ready and willing to pay the sale consideration to the Appellants.

Facts:

1) In the present case, Gaddipati Divija and Gaddipati Sai (Appellants), both minors, represented by their maternal grandmother, Smt. Inturi Chenchamma, are the children of one, Shri. G. V. Gopala Rao, who died on 13.05.2003, leaving behind his wife and the Appellants.

2) During his lifetime, Shri. G. V. Gopala Rao purchased a property measuring Ac. 0.90 cents (‘Suit Property’) from one, Smt. B. Alivelu Mangamma.

3) Subsequently, Shri. G. V. Gopala Rao executed an Agreement to Sell dated 14.08.2002 with one, Smt. Pathuri Samrajyam (Respondent No. 1), whereby he agreed to sell the Suit Property to the Respondent No. 1 for a sale consideration of Rs. 11,88,000/- out of which the Respondent No. 1 paid an amount of Rs. 4,00,000/- as advance.

4) Under the said Agreement, Shri. G. V. Gopala Rao agreed to execute the Sale Deed in favour of the Respondent No. 1, after demarcating the Suit Property and receiving the balance sale consideration within three months.

5) Upon expiry of the said three months, Shri. G. V. Gopala Rao issued a Notice dated 02.01.2003 to the Respondent No. 1 demanding the balance consideration of Rs. 7,88,000/-.

6) The Respondent No. 1 sent a Reply dated 10.01.2003 to the aforesaid Notice, thereby, denying the allegations of non-payment of balance amount despite repeated demands. By way of the said Reply, the Respondent No. 1 sought to get the Suit Property measured, get its attachments removed, after which the Respondent No. 1 would pay the balance sale consideration and get the Suit Property registered in her name. Further, the Respondent No. 1 stated in the Reply that Shri. G. V. Gopala Rao has borrowed money from one, Ch. Subbayamma who had filed S. No. 188 of 2002 before the Ld. Senior Civil Judge, Ongole (Trial Court) for recovery of amount and that the Suit Property had been attached in the said case.

7) Furthermore, Shri. G. V. Gopala Rao had also borrowed amounts of Rs. 2,40,000/- and Rs. 2,00,000/- (Debt) from one, Shri. Kalluri Kondaiah (Respondent No. 2) and Shri. M. Koteswara Rao (husband of Respondent No. 3 herein) respectively.

8) Thereafter, upon Shri. G. V. Gopala Rao’s death on 13.05.2003, Shri. Kalluri Kondaiah and Shri. M. Koteswara Rao filed S. No. 233 of 2004 and O.S. No. 235 of 2004 respectively, before the Ld. Trial Court for recovery of the said amounts. Both the Suits were decreed.

9) The Appellants – Legal Representatives (R.s) of Shri. G. V. Gopala Rao were called upon to clear the attachment over the Suit Property and discharge the Debt due in O.S. No. 188 of 2002 and execute the Sale Deed in favour of the Respondent No. 1.

10) Upon failure of the Appellants to do the aforesaid, the Respondent No. 1 filed S. No. 142 of 2004 before the Trial Court, seeking specific performance of the Agreement to Sell dated 14.08.2002 and directions to the Appellants to execute a sale deed in the Respondent’s favour.

11) The Ld. Trial Court passed a Judgment and Order dated 22.08.2007 in S. No. 142 of 2004 and partly dismissed the Suit to the extent that the Respondent No. 1 was held not entitled to specific performance of the Agreement to Sell and partly decreed the Suit to the extent that the Respondent No.1 was held entitled for recovery of the advance amount of Rs. 4,00,000/- paid to the Deceased-Shri. G. V. Gopala Rao with interest.

12) Aggrieved by the Ld. Trial Court Judgment and Order dated 22.08.2007, the Respondent No. 1 filed Appeal Suit No. 45 of 2008 before the High Court Andhra Pradesh at Hyderabad. The High Court vide Order dated 05.10.2010 allowed the said Appeal and directed the Appellants to execute the Sale Deed in favour of the Respondent No. 1, after receiving balance sale consideration from the latter.

13) Subsequently, ASMP No. 2292 of 2010 was filed before the High Court on behalf of the minor Appellants by their Maternal Grandmother, seeking recall of the High Court Judgment dated 05.10.2010 on the ground that the Appellants were not heard. The said Petition was dismissed by the High Court, vide Order dated 10.12.2010.

14) Aggrieved by the aforementioned Judgments of the High Court dated 05.10.2010 and 10.12.2010, the Appellants preferred Civil Appeal No. 4206 – 4207 of 2011 before the Supreme Court of India.

Issue:

Whether the High Court was justified in allowing the Respondent No. 1’s Appeal and decreeing the Suit for Specific Performance, by holding that the Deceased- Shri. G. V. Gopala Rao and his legal heirs (including the Appellants) failed to perform their obligation with regard to getting the Suit Property measured and demarcated and by holding that the Respondent No. 1 was always ready and willing to perform her part of contract by paying the balance sale consideration.

Supreme Court Observations:

The Apex Court passed a Judgment dated 18.04.2023 and observed as follows:

(1) That Section 16 (c) of the Specific Relief Act, 1963 (Personal bars to relief) is the relevant provision of law applicable in the present case and the 2018 Amendment thereof made certain amendments to Section 16. The amended Section 16 (c) is reproduced below for easy reference:

Personal bars to relief- Specific performance of a contract cannot be enforced in favour of a person-

(c) who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.

Explanation.—For the purposes of clause (c),—

(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;

(ii) the plaintiff must prove performance of, or readiness and willingness to perform, the contract according to its true construction.

(2) That on a bare perusal of the aforementioned Section, it is clear that prior to the 2018 Amendment, clause (c) of Section 16 laid down that the plaintiff is entitled to specific performance of contract if he avers and proves that he has performed or has always been ready and willing to perform his obligation under the contract. The Explanation attached to clause (c) further clarified that in a contract involving the payment of money, the plaintiff need not actually deposit the money to the defendant, and that he must aver that he has performed, or is ready and willing to perform the contract according to its true construction.

(3) That in the present case, the High Court rightly held that the Deceased- Shri. G. V. Gopala Rao or his legal heirs (including the Appellants) failed to perform their obligation with regard to the demarcation of the Suit Property, while the Respondent No.1 had established that she was always ready and willing to perform her part of the Agreement to Sell by paying the balance sale consideration which is the primary requirement as per Section 16 (c) of Act.

(4) In the case of Aniglase Yohannan vs Ramlatha & Ors, (2005) 7 SCC 534, it was held that the primary requirement to seek relief under Section 16 (c) of the Act is that the Plaintiff was ever ready and willing to perform his part of the contract.

(5) That applying the aforesaid principles of law, it is clear from the facts of the case, that (i) the Respondent No. 1 was ever ready and willing to pay the balance sale consideration. (ii) It appears that, at first, the Deceased- Shri. G. V. Gopala Rao failed to measure and demarcate the Suit Property. (iii) On the other hand, the Respondent No. 1 has been clear in her conduct. She had paid the advance sale consideration of Rs. 4,00,000/-. (iv) Further, as the Deceased- Shri. G. V. Gopala Rao failed to measure and demarcate the Suit Property, the question of the Respondent No. 1 paying the balance sale consideration would not arise. (v) However, even then the averments of the Respondent No. 1, her conduct and the testimony of her husband show that the Respondent No. 1, since the date of signing of the Agreement to Sell, was ever ready and willing to pay the balance consideration.

(6) That at this juncture, the High Court took note of a very crucial fact that the aforementioned part of the evidence (with regard to the Respondent No.1’s readiness and willingness) was not challenged by the Counsel appearing for Appellants in the Trial Court, and when a fact has been stated by a witness and the same has not been challenged, it can be said that such a fact is admitted. These aspects were not considered by the Trial Court and there was no appreciation of evidence with reference to Section 16 (c) of the Act.

(7) Thus, the High Court rightly stated that it is fairly well settled that mere stipulation of time would not make time the essence of the contract and in case of sale of immovable property, normally the time may not be essence of the contract. As such, when specific performance of the terms of the contract has not been done, the question of time being the essence does not arise. Therefore, the Appellants cannot claim that time was of the essence of the Contract / Agreement to Sell.

Conclusion

Thus, based on the aforesaid observations, the Hon’ble Supreme Court upheld the High Court Judgment dated 05.10.2010 and Order dated 10.12.2010 that allowed decreeing of the Suit for Specific Performance filed by Respondent No. 1-Buyer. Accordingly, both the Appeals were dismissed by the Apex Court.

Roopal Bardia

Associate

The Indian Lawyer