Narasimhan vs Balammal on 12/9/1988
ORDER
Srinivasan, J.
1. This revision petition is filed by the legal representative of the defendant in the suit O.S. No. 1798 of 1974 on the file of the Fifth Assistant
Judge, City Civil Court, Madras against an order dismissing an application under section 28 of the Specific Relief Act, to rescind the contract. The suit was
filed by the respondent. herein for specific performance of an agreement dated
29.11.1973. Under the agreement the consideration agreed was Rs. 12,300, out of
which a sum of Rs. 500 was paid in advance. It was agreed that the respondent
should discharge the mortgage over the property executed by the vendor, the
father of the present petitioner. It was further agreed that the transaction
should be completed within three months from the date of the agreement and that
after discharging the mortgage and paying certain taxes, the balance should be
paid before the Sub Registrar at the time of registration of the sale deed.
2. The respondent averred in the suit that in spite of her notice before the
suit, the defendant was not willing to perform his part of the contract and
consequently the filing of the suit was necessitated.
3. The trial Court held that the respondent was ready and willing to do her
part of the contract and, she was entitled to a decree for specific performance.
4. With regard to the payment of the balance of sale price, the trial Court
took note of the fact that under the agreement the plaintiff was to discharge
the mortgage debt and pay the arrears of tax and pay the balance only before the
Sub Registrar at the time of registration of the document. Hence, the trial
Court did not think it necessary or proper to give a direction to the plaintiff
to deposit the balance of sale price into Court. Consequently a decree was
passed by the trial Court, directing the defendant to execute a sale deed in
favour of the plaintiff as per the agreement dated 29-11-1973 for Rs. 12,300.
The decree contained a clause that if the defendant failed to execute the sale
deed, the plaintiff was at liberty to take out necessary steps to have the deed
executed by the Court.
5. The decree was passed on 8-3-1976. The plaintiff filed a petition for
execution of the decree on 29-1-1979. The defendant died on 28-2-1978 before
service of notice in the execution proceedings. The plaintiff filed a petition
to bring the legal representatives on record and the petitioner herein and his
sister, who died later, were brought on record as legal representatives. The
petitioner had filed a counter affidavit, contesting the execution proceedings.
On 28-11-1980 the executing Court passed an order in the following terms
Enquiry and deposit of amount by 20-12.
The matter was posted to 20-12-1980. It is not in dispute that the respondent
deposited a sum of Rs. 11,800 on 18-12-1980 into Court within the time
specified. The said amount was calculated by deducting the sum of Rs. 500 paid
by way of advance at the time of the agreement from the total consideration of
Rs. 12,300.
6. The execution petition was dismissed on 14-12-1981 on the ground that the
relief was sought in the execution proceedings against the dead person and,
therefore, it was not maintainable. The executing Court made an observation that
the decree holder had not deposited the sale price into Court or disclosed her
willingness. Obviously the deposit made on 18-12-1980 was not taken into account
by the executing Court. However, the respondent filed C.M.P.No. 3754 of 1981 in
this Court against the order dated 14-12-1981 and it was allowed on 25-8-1982.
The execution proceedings were remanded to the executing Court with a direction
to dispose of the same in accordance with law. That execution proceeding is
stated to be still pending.
7. The petitioner herein filed I.A.No. 15777 of 1986 in the trial Court under
Section 28 of the Specific Relief Act for rescinding the contract. That
application was dismissed by the trial Court. It is against the said order of
dismissal that the present revision petition is filed.
8. Learned Counsel for the petitioner contends that the deposit made by the
decree-holder on the direction given by the executing Court could not be treated
as a valid deposit, as the executing Court had no jurisdiction to extend the
time for making deposit. According to learned Counsel for the petitioner, though
the decree had not fixed any time for deposit of the consideration amount, the
decree-holder ought to have made the deposit within a reasonable time. Learned
Counsel points out that under the agreement of 1973 the parties had agreed to
complete the transaction within three months from the date of the agreement. It
is submitted that the decree-holder ought to have made the deposit within three
months from the date of the decree. It is urged that the decree-holder was bound
to discharge the mortgage before paying the balance of consideration and before
insisting upon the execution of a sale deed and the decree-holder has not so far
discharged the mortgage. It is not in dispute that the mortgagee has filed a
suit O.S.No. 609 of 1980 and obtained a decree against petitioner as well as the
respondent on foot of the mortgage. It is the contention of learned Counsel for
the petitioner that the respondent not having performed part of the contract and
there being no explanation for her inaction from 8-7-1976, the date of the
decree till 29-1-1979, on which the execution petition was filed, the trial
Court ought to have rescinded the contract.
9. Learned Counsel for the respondent contends that the decree had not fixed
any time for making any payment or deposit and the decree-holder was entitled to
make the payment within the period of limitation prescribed for executing the
decree and she had filed the execution petition in time. It is submitted by
learned Counsel for the respondent that on the direction given by the executing
Court, she had made the deposit on 18-12-1980 and the order of the executing
Court was not challenged by the petitioner herein by way of revision or appeal
and it is not now open to the petitioner to contend that the deposit should not
be considered to be a valid deposit. Learned Counsel on both sides invited my
attention to several decisions on the question of rescission of contract after
passing of the decree. I will refer to them later.
10. Section 28 of the Specific Relief Act, insofar as it is relevant herein
is in the following terms:
28. (1) Where in any suit a decree for specific performance of a contract
for the sale or lease of immovable property has been made and the purchaser or
lessee does not, within the period allowed by the decree or such further period
as the court may allow, pay the purchase money or other sum which the court has
ordered him to pay, the vendor or lesson may apply in the same suit in which the
decree is made, to have the contract rescinded and on such application the court
may, by order, rescind the contract either so far as regards the party in
default or altogether, as the justice of the case may require.
The section contemplates the failure on the part of the purchaser to pay the
purchase money or other sum which the Court has ordered him to pay within the
period allowed by the decree or such further period as the Court may grant. Even
though the section does not by its terms apply to a decree where no time limit
is fixed or no time is granted for payment of money, it is now well settled that
the principles of the section would apply even to cases in which the decree has
not fixed any time for payment of money.
11. The statement of the law relating to the decrees in suits for specific
performance is found in the decision of a Division Bench of this Court in Abdul
Shaker Sahib v. Abdul Rahman Sahib 44 M.L.J. 167 : 17 L.W. 216 : A.I.R. 1923
Mad. 284 : I.L.R. 46 Mad. 148, the Division Bench held that a decree in a suit
for specific performance is in the nature of a preliminary decree and the
Original Court keeps control over the action. The relevant passage in the
judgment is found at page 154 which reads thus:
In my judgment, this decree is in the nature of a preliminary decree, the
Original Court keeping control over the action and having full power to make any
just and necessary orders therein, including in appropriate cases the extension
of the time. If I am wrong in this and the proper interpretation of this decree
is as contended for by the appellant, then, in my judgment, this decree is wrong
and I should, if necessary, order that it be set right by eleminating the
condition which ought not to have been imposed upon the successful plaintiffs,
except at a much later date and upon definite refusal by him to complete. Even
in that case such condition could only be imposed at the request of the
defendant who, as I have pointed out, has other various, remedies.
This has been accepted to be the correct position in a number of subsequent
decisions.
12. In Anandilal v. Gunendra , the Calcutta High Court has referred to the
decision of the said Division Bench and followed the principle of law laid down
therein. Dealing with the question of rescission of contracts, the learned Judge
of the Calcutta High Court has stated thus:
The true character of a decree for specific performance has been discussed
in the decisions of A.I.R. 1923 Mad. 284 corresponding to I.L.R. 46 Mad. 148 and
A.I.R. 1933 Mad. 386 corresponding to I.L.R. 46 Mad. 796. Schwabe C.J. in Abdul
Shaker's case I.L.R. 46 Mad. 148 : A.I.R. 1923 Mad. 284 said that a decree for
specific performance was in the nature of a preliminary decree and the original
Court kept control over the action and had full power to make any just and
necessary orders therein, including the appropriate cases an extension of time.
An application in the suit in which the decree for specific performance was made
was held competent in that case, in Akkshalingam's case I.L.R. 56 Mad. 796 :
A.I.R. 1933 Mad. 386 it was held relying on the authority of the decision of the
Judicial Committee in Ardeshir H. Mama v. Flora Sassoon 55 M.L.J. 523 : 28 L.N.
527 : 55 Ind. App. 360 : A.I.R. 1928 P.C. 208, that the sections of the Specific
Relief Act both as to substantive law and practice should be interpreted in the
light of the principles recognised by the English Courts, and if there is any
express divergence, then the Act will be strictly adhered to whatever be the
English law. Secondly, it was said that a decree for specific performance
operates in favour of both parties. Thirdly, that the passing of the decree does
not terminate the suit.
13. The Supreme Court had occasion to deal with this aspect of the matter in
Hungerford Investment Ltd., v. Haridas Mundhra . The relevant observation is
found in paragraph 28 of the judgment, which reads thus:
The fact that the decree did not fix a time for completing the contract did
not prevent either party from demanding performance from other party within a
reasonable time and thus make time essential, as the parties had that liberty
before the decree was passed and the decree did not abrogate that liberty in any
way, and if the party from whom performance was demanded evinced by his conduct
that he was unwilling to perform his part, then it was open to the party
claiming performance to rescind the contract and obtain an order from the Court
adjudging rescission of the contract and the decree thereon. We do not think in
case the Court comes to the conclusion that the party moved against has by
conduct evinced an intention not to perform his part of the contract, the fact
that no time has been fixed in the decree would preclude it from adjudging the
contract as rescinded. The observation of Fry already quoted does not mean that
unless a time is specified in the decree there can be no default. It only means
that if the conduct of the party moved against is equivocal, an order for
rescission will be made only in default of completion within a specified time.
Nor can the observation quoted above from the Halsburys Laws of England bear any
other construction.
14. A Division Bench of the Madhya Pradesh High Court laid down a similar
proposition in Kannaiyalal v. Abdul Hussain A.I.R. 1986 M.P. 2. The Bench
observed in the following terms:
It is true that no time to pay or deposit was fixed in the decree for
specific performance of the contract but the question of fixing the time by the
High Court in the decree passed in First Appeal No. 13 of 1962 did not arise as
it was not an appeal against the decree for specific performance of the contract
but an appeal by the plaintiff only for enhancement of the compensation under
Section 19 of the Specific Relief Act. When no time for payment or deposit is
fixed in the decree for specific performance the law implies a reasonable time
within which the contract is to be performed. When the (sic) it should be
performed within reasonable time. The decree or contract is silent as to the
performance/reasonable time depends upon the facts and circumstances of each
case. In the present case, the contract as stated earlier was entered into on
25th May, 1958 and the sale-deed had to be obtained on payment of balance of
consideration within a month. The non-payment of balance of consideration till
1-10-1959 is understandable as the Madhya Bharat Tenancy and Land Revenue Act
was in force under which the permission of the Collector was to be obtained for
sale of land and as no permission was obtained the defendant could not be said
to be at fault. But on 2-10-1959 the above Madhya Bharat Tenancy and Land
Revenue Act was repealed and Madhya Pradesh Land Revenue Code, 1959 came into
force under which there was no provision by which the permission of the
Collector was necessary. As discussed above, the defendant had either any funds
nor any means to make the payment of consideration right from the year 1959 upto
the date of passing of the decree for specific performance. The defendant could
not pay even upto the date of decree rescinding the contract. Thus more than
sufficient time had elapsed within which the defendant could have made the
payment but he failed to do so. In these circumstances, it could not be said
that the contract was rescinded before the expiry of the reasonable time. See
Dinakaraj v. Sukhdayal A.I.R. 1947 Bom. 293.
In Abdul Shaker Sahib v. Abdul Rahman Sahib A.I.R. 1923 Mad. 234 a Division
Bench took the view that it is a well established principle that persons who
desire the assistances of the Court in obtaining equitable relief must come
quickly. In the present case not only the defendant failed to come quickly but
he absolutely failed to come forward with the amount at any stage of the
relevant proceedings.
15. Bearing in mind the above principles if the facts of the case are looked
into, it is seen that the respondent herein waited for nearly 3 years before
initiating the execution proceedings. There is no explanation on her part for
inaction for such a long period. No doubt, under the decree, she was not bound
to pay any amount before the registration of the document. She could have
insisted upon the registration of the document and paid the balance of money in
the presence of the Sub Registrar. Even for insisting on the registration of the
document, the respondent ought to have performed her part of the contract under
the agreement viz., the discharge of the mortgage which was outstanding. If she
had paid the mortgage amount and called upon the vendor to execute a sale deed
and if the vendor failed to do so, the respondent could have failed an execution
petition. But, the respondent did not care to discharge the mortgage and allowed
the mortgagee to file a suit and obtain a decree. In the absence of any
explanation whatever for the failure on the part of the respondent to perform
her part of the contract from 8-7-1976 to 29-1-1979, the date on which the
execution petition was filed, it cannot be said that the respondent had proved
her readiness and willingness to perform her part of the contract. As the decree
passed in the suit is only a preliminary decree and the Court has got control
over the action, it would be open to the trial Court to pass appropriate orders.
Learned Counsel for the respondent places strong reliance on the factum of
deposit of the money pursuant to the direction of the executing Court. The
deposit was actually made on 18-12-1980. Learned Counsel for the respondent
contends that the order, directing the respondent to deposit, could be taken as
an order fixing time for deposit or extending the time for deposit. That
contention cannot be accepted. The order directing the respondent to deposit the
amount could be made only by the trial Court and not by the executing Court. The
executing Court had no jurisdiction to direct the respondent to deposit the
money. As the respondent had not performed his part of the contract within the
reasonable time, the question of rescinding the contract has arisen.
16. Reliance is placed upon a decision in Vaiyapuri Reddi v. Sivalinga
Mudaliar (1970) 1 M.L.J. 92. In that case the decree holder did not deposit the
money within the time granted by the Court. An application was filed for
reminding the decree under Section 23 of the Specified Relief Act. While dealing
with that application the trial Court passed an order extending the period for
making the deposit. That order was challenged by Way of revision in this Court.
The learned Judge dismissed the revision petition, upholding the order of the
trial Court extending the period. Learned Counsel contends that if the Court had
the power to extend the time even on an application under Section 28 of the Act,
in the present case the deposit made by the respondent long before the filing of
the application under Section 23 of the Act should be treated as proper
compliance with the decree. The facts in the above case are entirely different
from the facts of the present case. In that case the application was made to the
trial Court which passed the decree. That Court had certainly jurisdiction
either to grant further time or to rescind the decree. On the facts of the case
the Court chose to grant further time to the decree-holder for making deposit.
That order was upheld by, this Court. The learned Judge held that on the facts
of the case there was no positive refusal by the decree-holder to perform his
part of the contract and in the absence of such positive refusal, the Court
could not rescind the contract. In support of the said conclusion, the learned
Judge relied on the following observation of Schewabe, C.J., in Abdul Shaker
Sahib v. Abdul Rahman Sahib I.L.R. 46 Mad. 148, at page 153.
... If the default is made by the purchaser in paying the purchase money,
there are several remedies open to the vendor. (1) He may on motion in the
action obtain an order fixing a definite time and place for payment and delivery
over of the conveyance and title-deeds and can, after the expiration of that
time, levy execution for the amount, if not paid. (2) He may apply by motion in
the action for an order rescinding, not the judgment but the contract, and in
order to succeed in such a motion he has to satisfy the Court that there has
been a positive refusal to complete which it may be observed in the present
case, the respondent has certainly not proved....
17. As regards the requirement of positive refusal by the decree-holder for
the purpose of rescinding the contract, a later Division Bench of this Court in
Saraswathi alias Kalpan v. P.S.S. Somasundaram Chettiar 80 L.W. 454, expressed
its dissent from the observations made in Abdul Shaker's case I.L.R. 46 Mad.
148. After referring to the earlier Bench judgment, the later Bench observed
thus:
Thus, the real point which the Bench considered was whether such a decree
should be treated to be a preliminary decree. The trial Court retaining full
control over the suit, or it should be treated as a final decree. Only because
the learned Judges took the view that such a decree must be treated as a
preliminary decree, they observed that if it was intended to be a final decree,
the learned Judge had no jurisdiction to pass such a final decree. Therefore,
the decision relied on by the learned Counsel for the appellant cannot be said
to have laid down any proposition that the trail Court which passes a decree for
specific performance has no jurisdiction at all to fix a time-limit for
depositing the money due by the decree-holder, provided the decree is treated as
a preliminary decree and the Court retains control over the entire action. If at
all, the only passage in the judgment of Wallace, J. with which We do not agree
is that which regards the decree itself as a contract. Equally, we do not agree
with the learned Chief Justice when he observed that the vendor can succeed in
his motion for rescission of the contract only when there has been a positive
refusal on the part of the vendor to complete and a default on his part to
comply with the direction of the Court is not sufficient.
18. In my view, the opinion of the Division Bench in the later case is more
correct and in accord with law than the opinion of the Division Bench in the
earlier case. I prefer to follow the Division Bench judgment in the later case.
It must also be pointed out that the judgment of the Division Bench in
Saraswathi alias Kalpana v. P.S. S. Somasundaram Chettiar 90 L.W. 454 has been
affirmed in so far as the principles of law are concerned by the Supreme Court
in K. Kalpana Saraswathi v. Somasundaram Chettiar . The principles of law laid
down were left undisturbed by the Supreme Court though the Supreme Court though
fit to grant some time to the decree-holder to deposit the balance of
consideration.
19. From the facts of the case it is seen that the proceedings before the
Division Bench arose out of a decree for specific performance. The plaintiff,
who obtained a decree for specific performance, filed an appeal as against the
directions contained in the decree, fixing a time-limit for depositing the
amount of consideration. It was contended that the Court had no jurisdiction to
fix a time-limit for depositing the consideration. That contention was rejected
by the Bench. The Bench, however, accepted the second contention that the Court
had no jurisdiction to include a default clause in the decree. There was an
application before the Bench for extension of time to pay the amount of
consideration. That application was dismissed by the Bench. The Supreme Court
accepted that application and granted further time to the decree-holder' for
deposit of amount of consideration. In other respects, the judgment of the Bench
was affirmed by the Supreme Court.
20. On the facts of this case, the respondent has not proved her readiness
and willingness to perform her part of the contract within a reasonable time
after the decree. Though the decree in the present case has not specified any
time to deposit the amount, it was duty of the respondent to have performed her
part within a reasonable time. The time taken viz. 3 years and odd cannot be
said to be reasonable by any standard. Hence, the contract has to be rescinded
as prayed for by the petitioner. The Court below is wrong in dismissing the
application filed by the petitioner. The application filed under Section 28 of
the Specific Relief Act will have to be allowed.
21. However, the amount having been deposited by the respondent in Court is
December, 1980, equity requires that she should be compensated for the loss of
interest which she has suffered. Section 30 of the Specific Relief Act empowers
the Court, which rescinds the contract, to provide for compensation to the
decree-holder. Hence, the petitioner is directed to pay interest on the sum of
Rs. 11,300 at the rate of 18% per annum from 18.12.1980 till the date of payment
to the respondent by way of compensation. The petitioner prays for time to pay
the amount. The petitioner shall pay the amount to the respondent on or before
31-1-1989 failing which it is open to the respondent to execute this order and
recover the amount from the petitioner. The respondent is entitled to withdraw
the amount of Rs. 11,800 already deposited by her in the executing Court,
22. The Civil Revision Petition is allowed in the above terms. The parties
will bear their respective costs in this revision petition.
