Judgment:
A. Gopal Reddy, J.
1. Defendant in the suit filed this appeal against the judgment and decree dated 27-9-2002 in O.S No. 12/95 of the Senior Civil Judge, Vizianagaram, granting specific performance of an agreement of sale dated 31-7-1991 in favour of the plaintiff.
2. The parties herein will be referred to as arrayed in the suit.
3. The undisputed facts briefly stated as under : The defendant who is the absolute owner of the plaint schedule land, ad-measuring Ac.4-00 in S. No. 141, Patta No. 450 situate in Ardhannapalem in Kothavalasa Panchayat Area, Vizianagaram District offered to sell the same to the plaintiff, who agreed to purchase on the terms and conditions as reduced into writing under an agreement of sale dated 31-7-1991 Ex.A-1, for a consideration of Rs. 9,75,000/-, on the premise that the extent being Ac.4-00 and paid a sum of Rs. 2,45,000/- as advance on the date of execution of the agreement, and agreed to pay the balance of sale consideration within a period of four months. If the payment is not made within the said period of four months, the plaintiff would pay interest at the rate of 21% per annum. Whereas the defendant agreed to execute the sale deed in favour of the plaintiff or his nominee either by way of one sale deed or sale deeds as desired by the plaintiff. The plaintiff stated that the defendant agreed to get the land measured in the meanwhile through the Government Surveyor. On such survey, if the total extent is found short of Ac.0.05 cents out of Ac.4-00 then the plaintiff would pay entire sale consideration to the defendant. If the shortage is more than Ac.0,05 cents then sale consideration should be reduced proportionately. Though it was agreed that the defendant would deliver possession of the property on registration of the sale deed, the defendant put the plaintiff in possession of the property immediately to enable him to get the land surveyed. Accordingly, the plaintiff got the land surveyed, levelled the same and got planted stones demarcating the plots. In the said process, it was noticed that the total land is ad-measuring Ac.3-78 cents. The plaintiff invested huge amount for the purpose of levelling and plotting, expecting that the defendant would honour the agreement and execute the sale deed within the period of four months. While so, the plaintiff received a caveat petition filed by one Gorapalli Satyam Naidu claiming title over an extent of Ac. 1-60 cents of the plaint schedule land. On receipt of the same, the plaintiff contacted the defendant by phone who in turn assured him that he would speak to Sathyam Naidu and settle the issue. The plaintiff also got verified the village records and other revenue records. The plaintiff came to know that on contacting Sathyam Naidu by the defendant, he (Satyam Naidu) objected for sale of the extent over which he claimed a right. As the defendant failed to establish his title to the entire plaint schedule land to the satisfaction of the plaintiff, he made further investigation into the claim of Sathyam Naidu and obtained all documents and after satisfying himself about the title of the defendant to the plaint schedule land, it was agreed that defendant would execute the sale deed for the exact extent found on survey on payment of balance of sale consideration. However, when the plaintiff offered to pay the balance of sale consideration the defendant demanded interest thereon at 21% from the date of the agreement. When the plaintiff declined to pay the same on the ground that delay in taking the sale deed was due to his (defendant) fault, as he has not settled, and agreed to pay the balance of sale consideration and take sale deed as per the terms of the agreement. In spite of convincing the defendant, he was reluctant to execute the sale deed. Therefore, the plaintiff having been left with no other option/alternative got issued a legal notice dated 6-11-1994 demanding the defendant to receive balance of sale consideration and execute the sale deed. The same was replied by the defendant on 17-11-1994 refusing to comply with the demand made by the plaintiff making a reference of notices dated 6-8-1992 and 15-9-1992 got issued by him. The plaintiff despite diligent searches could not produce said notices. Therefore, he could not advert to the contents of the said notices and he would controvert the same at an appropriate time and the plaintiff filed the above suit for specific performance seeking a direction to the defendant to execute the sale deed by receiving the proportionate sale consideration of Rs. 8,97,750/- being the value of the land Ac.3-78 cents or in the alternative to refund Rs. 2,45,000/- paid as an advance along with interest thereon at 18% per annum from 31-7-1991 till the date of suit and for future interest on Rs. 2,45,000/- at 18% per annum from the date of suit till the date of realization.
4. The defendant filed a written statement while resisting the claim of the plaintiff contended that plaint averments in para III (a) are substantially correct and para III (b) are not substantially correct. He further stated that defendant is the absolute owner of Ac.4-00 with specific boundaries as mentioned in the agreement. He denied that he owns Ac.3-78 cents. He never offered to sell the plaint schedule land to the defendant but plaintiff himself approached him for sale of the plaint schedule land and negotiated for the same and accordingly agreement of sale was executed by him on 31-7-1991 for a total consideration of Rs. 9,75,000-00 and received Rs. 2,45,000-00 as advance and balance of sale consideration is payable within four months and sale deed is to be obtained by the plaintiff or his nominee. Time was mentioned as essence of contract but if the balance of sale consideration is not paid within four months the same will carry interest at 21% per annum. The defendant was certain about extent and is well defined by the boundaries. At the plaintiffs instance, it was agreed that land will be get measured by the Surveyor. He denied about the possession of the original agreement of sale but only a xerox copy was given to the plaintiff. He further stated that the original agreement might have been mis-placed by the plaintiff as was done in the case of notices issued by the defendant or might have been suppressed by creating story that the original is with the defendant. The defendant denied about delivery of possession to the plaintiff and subsequently false to allege that the defendant failed to survey the land, and he himself got surveyed and fixed the boundaries by levelling the land and making it into plots. Investment of huge amount is also denied. The plaintiff was given all documents of title, partnership deed, dissolution deed, sale deed of defendant's vendor and also the revenue accounts at the time of entering into the agreement and the plaintiff having satisfied with the same entered into an agreement with the defendant. Therefore, he could not say Sathyam Naidu put up a claim over Ac. 1-60 cents out of the plaint schedule land by filing a caveat. The defendant issued a notice dated 15-5-1992 informing the plaintiff that time of four months has already been elapsed and grace period was also given to get the registered sale deed executed in favour of the plaintiff and requested him to obtain a registered sale deed by paying balance of sale consideration with interest at 21% per annum within a week from the date of receipt of the notice, failing which sale agreement would be cancelled and defendant will sell the land to whomsoever he intends. On 13-6-1992 the plaintiff sent a reply letter to the defendant informing and asking him to get the sale deed attested by Sathyam Naidu, for which the defendant did not agree. The defendant got issued a lawyer's notice on 7-8-1992 informing the plaintiff that he is not obliging the condition put forward by the plaintiff in his notice dated 13-6-1992, to which the plaintiff replied on 18-6-1992, with full of defamatory statements, for which defendant's advocate sent a reply on 1-9-1992 informing that agreement has already been cancelled and plaintiff has no right to enforce the same. Thereafter, the plaintiff got issued a lawyer's notice dated 6-11-1994 which was suitably replied stating that the plaintiff himself committed breach of contract and is not ready to willing to take the sale deed within the stipulated time, and lost all his rights under the sale agreement including right to ask for refund of advance amount paid and plaintiff is not entitled to any relief as no cause of action arises to file the suit.
5. On these pleadings, the lower Court framed as many as six issues, which read as under :
1. Whether the plaintiff is entitled for specific performance of the contract or in the alternative refund of the amount with interest as claimed ?
2. Whether the time is essence of the contract ?
3. Who committed the breach of contract ?
4. Whether the plaintiff was delivered possession of the land ?
5. Whether the extent as claimed by the plaintiff is correct ?
6. To what relief ?
6. In order to prove the claim of the plaintiff, he himself examined as P.W.I and attestor of the agreement of sale Ex.A-1 has been examined as P.W.I and got marked Exs.A-1 o A-5. Whereas defendant himself examined as D.W.I and got marked Exs.B-1 to B-15.
7. Learned Senior Civil Judge on appreciation of the oral and documentary evidence substantially answered all issues in favour of the plaintiff and against the defendant except Issue No. 4 holding that defendant never delivered possession of the plaint schedule land covered under agreement of sale to the plaintiff and accordingly decreed the suit.
8. Sri N.V. Ranganadham, learned Senior Counsel appearing for the petitioner/ defendant, apart from filing written arguments, made the following submissions :
9. The property which is agreed to be sold was originally owned by Balaji Jute and Twine Mill, of which the defendant is a partner under a partnership agreement dated 15-7-1980. A compound wall was constructed enclosing Ac.4-00 of land. On dissolving the partnership firm in the year 1988, the property in question fell to the share of the defendant as he accepted the liability to pay the amount due to the Andhra Bank. The description of the property was shown in all the documents with specific boundaries. Once P.W.I admitted that the defendant is having title and possession over the plaint schedule land and entered into an agreement to purchase the same after going through the title deeds, mere receiving of caveat from Sathyam Naidu cannot be a ground for non-payment of balance of sale consideration with interest as agreed by the plaintiff. When the plaintiff admitted that he entered into an agreement to make profit for selling the land by developing it into plots, refusing to pay interest in spite of demand amounts to repudiation of contract, therefore he is not entitled to any discretionary relief. Learned Senior Counsel gone to the extent of arguing that a reading of reply under Ex.B-2 would show that the plaintiff is not prepared to pay the balance of sale consideration as per the terms of the agreement by attributing delay and got filed caveat, but caveator has not filed any suit, which is only a ruse to show semblance of claim by a fictitious person. Admittedly, Sathyam Naidu is not in possession of the suit schedule land within the compound wall, hence he could not lay any claim of the property within the compound wall. Under Ex.B-10 when one week time is granted to the plaintiff for payment of balance of sale consideration with interest and called upon the plaintiff to obtain a regular sale deed, the plaintiff replied under Ex.B-2 dated 13-6-1992 with frivolous pleas. On receipt of the said reply the defendant issued notice Ex.B-11 dated 7-8-1992 followed by another notice dated 15-9-1992 (Ex.B-3), but suit was filed nearly 2'/2 years of said notices which clearly demonstrates that the plaintiff was ever ready to obtain sale deed, and filed the suit only on appreciation of the value of the property. When the plaintiff insisted that caveator Sathyam Naidu should join in execution of the sale deed, which is not agreed between the parties under the agreement of sale, it will amount to incorporating a new clause unilaterally and it can be presumed that the plaintiff is not willing and ready to take the sale deed as per the terms and conditions of the agreement, therefore, he is not entitled to any discretionary relief.
10. Sri K. Subramanya Reddy, learned Senior Counsel appearing for the respondent-plaintiff with his usual tenacity while sustaining the judgment under appeal contended that it is obligatory on the part of the vendor i.e., defendant to clear the doubts expressed by third party, adjacent land owner, over the suit schedule land, who filed caveat on entering into the agreement by the plaintiff with the defendant. If the vendor failed to clear the doubts expressed by the vendee, he is at fault and placed strong reliance on the following judgments :
1. Subbayya v. Garikapati AIR 1957 AP 30/
2. Madurai Chetty v. Babu Saheb AIR 1920 Mad. 859
3. Lallubhai v. Mohanlal AIR 1935 Bom. 16
4. Seetharamamma v. Patta Reddi AIR 1940 Mad. 739
He further submits that as per the terms concluded, consideration depends on actual measurements and once the defendant has not complied with the terms till date by getting the land measured and in the absence of any terms with regard to cancellation of the agreement, it is not open for the vendor to cancel the same for the reason that the terms of the contract binding on the parties. Once there is an interest clause for nonpayment of balance of sale consideration within the stipulated period, time is not the essence of the contract. When the defendant has not complied with the very essential condition, the lower Court exercised the discretion and granted a decree for specific performance, which do not require any interference and place strong reliance on Nallam Seeta Mahalakshmi and others v. Talari Vijayalakshmi : 2005(4)ALD130 . The plaintiff is agreeable to deposit Rs. 7,30,000/- being the balance of sale consideration.
11. On these submissions, the following points that arise for consideration in this appeal are :
1. Whether the plaintiff was always ready and willing to perform the terms of agreement of sale and entitled to enforce the contract ?
2. Whether the defendant failed to comply the essential conditions of the contract as pleaded ?
3. Whether it is open for the defendant to cancel the agreement of sale unilaterally ?
4. Whether the time is essence of the contract ?
12. I shall now consider the first point in the light of the pleadings and evidence adduced by the parties.
13. It is well settled that in order to obtain specific performance of a contract, the plaintiff must establish his readiness and willingness to perform his part of contract. Section 16(c) of the Specific Relief Act, 1963 lays down as under :
16. Personal bars to relief,- Specific performance of a contract cannot be enforced in favour of a person
(a) xxx;
(b) xxx;
(c) who fails to aver and 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 purpose of clause (c)-
(i) xxxx;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.
A perusal of the above section would reveal that not only should there be said averments in the plaint but surrounding circumstances, the steps taken by the plaintiff in that regard must also indicate the plaintiffs readiness and willingness continues from the date of contract till the hearing of the suit,
14. In the case of Subbayya (supra), (The principles laid down in the above case were uniformally approved by all the Courts including the Supreme Court) this Court after examining the various authorities held that in a suit for specific performance of a contract of sale of land, all that is necessary for the purchaser to show that he was ready and willing to perform the terms of the agreement; that he had not abandoned the contract; and that he had kept the contract subsisting.
15. The first point has to be considered in the light of the above principles.
16. The readiness and willingness as pleaded by the plaintiff is in Para 2 of the plaint, as referred to earlier in the judgment, m order to substantiate the said plea, the plaintiff who examined as P.W.I testified that the defendant agreed to get the land measured by the Surveyor and on such survey if the extent of the land is found short of Ac.0-05 cents by this side or that side, plaintiff should pay the agreed sale consideration and if there is any short fall of more than Ac.0-05 cents sale consideration has to be paid proportionately. Further though it was agreed to deliver possession of the land at the time of registration of the sale deed, the same was delivered to the plaintiff and he took possession of the land from the defendant and spent considerable amount for its development by demolishing the old walls available in the land by making the same into plots. On measuring the land, it was found only Ac.3-78 cents. In the meanwhile, he received a copy of caveat petition from one Sathyam Naidu claiming title over Ac. 1-60 cents out of the entire plaint schedule land, which fact has been informed to the defendant. When the defendant has not shown much interest, he had a talk with Sathyam Naidu, who showed him the original documents. Then the plaintiff immediately applied and obtained a certified copy of the said original document from the Registrar's Office. After obtaining the same, when he tried to contact the defendant, he did not care him. So he addressed a letter to the defendant. The defendant got issued a lawyer's notice, for which he sent a reply. In order to prove his readiness and willingness, P.W.I marked Ex.A-5 dated 4-11-1991. It is curious to note that there is no reference of the said document in the pleadings but first time it was introduced during the course of evidence. It was further stated by the plaintiff that he contacted the vendor of the defendant, who informed him that the caveator Sathyam Naidu is not having any right and defendant is due a sum of Rs. 10,000/- to his vendor, who asked the plaintiff to pay the said amount. Nearly after three years of the agreement of sale he came to know that defendant is the absolute owner of the plaint schedule land but he did not co-operate with him in execution of the document in his favour. Then he demanded for execution of the sale deed but the defendant demanded him to pay interest at 21%, for which the plaintiff replied that he need not to pay the interest since he was ready from the beginning to pay the balance of sale consideration. He further admitted that originally there were old sheds without roofs and there is a compound wall around the suit schedule land, which is on the way to his factory. He verified the documents pertaining to the suit schedule land before execution of the agreement of sale, Ex.A-1. He further admitted that he was shown the original partnership deed, dissolution deed, certificate of discharge got from Andhra Bank, apart from the sale deed executed by Sattoor of Kothavalsa and he had no doubt about the genuineness of the same. The reason for non-payment of the balance of sale consideration said to be is caveat petition received from Sathyam Naidu and he has not shown the same to his advocate nor enquired in Mandal Revenue Office about the possession and title of the plaint schedule property of the defendant including the claim made by Sathyam Naidu. He further stated that the defendant was carrying undoubted possession over the plaint schedule land and he got the land measured in the first or second week of August, 1991. The land of Sathyam Naidu immediately about the compound wall of the plaint schedule land, old compound wall around it is in a dilapidated condition. As per the terms and conditions of Ex.A-1 sale agreement, plaintiff being the purchaser of the land shall get the land measured through the Government Surveyor. He admitted about the receipt of the notice and replies sent by him. He demanded the defendant to get the sale deed attested by Sathyam Naidu through Ex.B-1 as well as Ex.B-2. Under Ex.B-3 dated 15-9-1992 the defendant made it clear that the agreement was not subsisting and it was cancelled. Therefore, suit notice Ex.A-2 was issued on 6-11-1994. He admitted of his not filing any document showing steps taken by him between 1992 and 1994.
17. P.W.2 who is having a factory by the side of the plaint schedule land and who is the attestor of Ex.A-1 speaks about his receiving of caveat petition from Sathyam Naidu. On receipt of the same, himself and the plaintiff went to Sathyam Naidu and enquired about issuance of caveat, who informed that he is the owner of the land covered under Ex.A-1 and showed his title deed. After l'/2 month himself and the plaintiff met the defendant and brought the caveat petition to his notice. In the cross-examination, he admitted that the suit schedule land and his factory are situated on either side of the road.
18. The defendant examined himself as D.W.I while traversing the pleadings and evidence stated that the plaintiff had gone through the documents and title deeds and other certificates before purchasing the suit schedule land from him. All the details of the documents, certificates are mentioned in Ex.A-1. He admitted about the plaintiff contacting him through phone and met him at Visakhapatnam on receipt of caveat by the plaintiff, and he informed the plaintiff that the Caveator has no right over the suit schedule land and asked him to enquire it from the MRO Office. He admitted that he was ready to execute the sale deed in favour of the plaintiff but he did not come forward to get the sale deed executed. Ex.B-9 is the Encumbrance Certificate issued by the Sub-Registrar, S. Kota to show that there are no encumbrances over the suit schedule land from 1-1-1958 to 22-12-1980. When his oral attempts failed, the defendant got issued Ex.B-10 dated 15-5-1992 to the plaintiff after completion of stipulated period of four months, giving a final opportunity to the plaintiff to pay the balance of sale consideration with interest. Under reply Ex.B-2 dated 13-6-1992 to the said notice, the plaintiff stated that he won't receive the sale deed without the signature of Sathyam Naidu. In view of the same, notice Ex.A-11 dated 7-8-1992 was issued to the plaintiff informing him that the matter was closed, agreement was cancelled and advance amount paid was forfeited. He further stated that he being an income-tax Assessee paid income tax on the accrued interest as stipulated in Ex.A-1. In spite of his resistance, the authorities of Income Tax Department collected tax over the interest amount under Exs.B-13 to B-15. On plaintiff contacting the defendant after receipt of the caveat petition, he informed him that there is no need for him to give any reply to Sathyam Naidu for the caveat received by the plaintiff and he never promised to clear the dispute with the Sathyam Naidu. In the cross-examination, he admitted that the plaintiff addressed a letter informing that he is ready with the balance amount for getting the registered sale deed if it is executed by the defendant and Sathyam Naidu.
19. It is specifically agreed by the parties to the agreement of sale, Ex.A-1 dated 31-7-1991, that the balance of sale consideration of Rs. 7,30,000/- is to be payable within four months from the date of agreement and the time is essence of contract. If the full amount is not paid within four months, for the remaining amount interest will be paid with 21% per annum till the full payment is made. It was also agreed between the parties that the purchaser to measure the land by Government Surveyor and draw a plan to the scale. If the extent of land by virtue of measurement is Ac.0.05 cents less than Ac.4-00 the purchaser agreed to pay the full consideration. If the measurement is below Ac.3-95 cents, the vendor agreed to take actual sale consideration as per the measurement rate agreed to. In the schedule of the property on the South it is mentioned as Zeroyithi dry land belonging to the caveator, Sathyam Naidu,
20. The defendant under Ex.B-10 notice informed the plaintiff that balance of sale consideration is payable within four months and if the plaintiff fails to pay the full amount within four months, the remaining amount will carry interest at 21% per annum. Defendant further informed that he agreed to execute the registered sale deed after receipt of the entire sale consideration with interest. He further informed that even after five months has elapsed and in spite of repeated reminders for payment of balance of sale consideration plaintiff did not pay the same, a final opportunity was given to him for payment of balance of sale consideration with interest at 21% within one week and to obtain registered sale deed, failing which he will be compelled to cancel the agreement. In reply to the said notice under Ex.B-2 dated 13-6-1992, it is stated by the plaintiff that Sathyam Naidu shown his documents that he is having right over a part of the suit schedule land, so it is necessary that the sale deed should be signed by the defendant as well as Sathyam Naidu to solve the dispute. Thereafter the defendant got issued a legal notice under Ex.B-11 denying all allegations levelled in Ex.B-2, Having failed to avail the opportunity given by the defendant under Ex.B-10 for payment of the balance of sale consideration, he had no option but to forfeit the advance amount paid. He further alleged that the plaintiff in collusion with Sathyam Naidu tried to create litigation to postpone the execution. In reply to the same under Ex.B-1 dated 18-8-1992, the plaintiff denied about his collusion with Sathyam Naidu and insisted the defendant that Sathyam Naidu should join the defendant in execution of the sale deed to nullify the claim made by Sathyam Naidu. On receipt of the same, the defendant under Ex.B-3 dated 15-9-1992 asserted that he is in possession of the suit schedule land and if plaintiff trespasses into his land, he will prosecute him. Nearly after 2 years 3 months, the suit notice was got issued by the plaintiff under Ex.B4 and filed the suit.
21. Sri N.V. Ranaganadham, learned Counsel for the appellant contended that the plaintiff who has approached the Court with unclean hands is not entitled to discretionary relief by placing reliance on the following judgments :
1. Lourdu Mari David v. Louis Chinnayaarogiaswamy AIR 1995 SC 2814
2. A.C. Arulappan v. Ahalya Naik 2001 (5) ALD 90 (SC)
3. K.S. Vidyanadam v. Vairavan : AIR1997SC1751
22. In view of the above evidence and submissions as referred to above, two subsidiary questions that arise for answering the main point are :
1. Whether the plaintiff is justified in entertaining a doubt about the title of the defendant's vendor over the property and can demand to clear the doubt or it is only a ruse in order to enable him to gain time to make up the balance of sale consideration ?
2. Whether the plaintiff approached the Court with unclean hands, is not entitled to discretionary relief of specific performance ?
27. It will be convenient to consider the submission with regard to the plaintiff entertaining a doubt about the title of the defendant in the light of Section 55 of the Transfer of Property Act, which prescribes rights and liabilities of the buyer and seller in the following terms :
55. Rights and liabilities of buyer and seller.-In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following, or such of them as are applicable to the property sold :
(1) (a) to (g) x x x x;
(2) The seller shall be deemed to contract with the buyer that the interest which the seller professes to transfer to the buyer subsists and that he has power to transfer the same :
Provided that, where the sale is made by a person in a fiduciary character, he shall be deemed to contract with the buyer that the seller has done no act whereby the property is encumbered or whereby he is hindered from transferring it.
The benefit of contract mentioned in this rule shall be annexed to, and shall go with, the contract for their failure to do so and on the other hand purchasers were entitled to sue for specific performance and an inquiry into title.
24. In the case of Subbayya (supra) this Court after taking note of the facts in Srinivasadas Bavri v. Meher Bai AIR 1916 PC 5, that the purchaser repudiated the agreement and asked for refund of the advance paid by him on the ground that the vendor had not made out a title and the finding of the Privy Council in the said case that the purchaser had a right to call upon the vendor to deduce marketable title free from all reasonable doubts, and also taking note of the definite stand that was taken that there were no enforceable mortgages subsisting on the suit property and what was contacted under the agreement was only the right possessed by the vendor as per the terms of the sale certificate without any personal liability and without warranty of title, held that in order to make out a good title to the property the vendors must show that the property is free from all encumbrances and the vendee could not be expected to take a title with a cloud thereon or compelled either to accept a doubtful title without investigation or rescind the contract.
25. The Madras High Court in Madurai Chetty's (supra), held that a purchaser is entitled to good and a marketable title. If the title is found to be doubtful so as to require investigation he cannot be compelled either to rescind the contract or to accept without investigation the doubtful title. In the circumstances that since the property was mortgaged by the vendor's grandson and one of the vendors had created evidence that it had been purchased in her name benami for her daughter the mother of the mortgager, the Division Bench held that the vendors were not entitled to call upon the purchasers to complete the contract within a stated time without further investigation and to rescind
26. Justice Varadachariar speaking for the Bench in the case of Seetharamma (supra) held that when a vendor's title depends not upon a question of law but upon proof of a disputed fact, that fact must be proved and if he vendor does not prove it, he cannot be held to have made out a good title. While holding the same, he incorporated the rule stated in Williams on Vendor and Purchaser at page 1011 of the 1906 edition. Under the heading 'questioning of fact' the author, concludes the discussion as follows :
It appears that where there is a real ground of suspicion of some matter which would cause a defect in the legal title to the property sold, the Court may, unless the suspicion be removed by sufficient evidence, pronounce the title to be too doubtful to be forced on the purchaser, or may at least do so if its acceptance would leave him exposed to the reasonable probability of adverse litigation.
27. In the case of Lallubhai (supra), a Division Bench of Bombay High Court held that the meaning of a title free from reasonable doubt was explained in 10 Hare 1(7) as a marketable title which can at all times be forced upon an unwilling purchaser, and it was further held that specific performance should not be allowed even though the Court takes a favourable view of the title if it appears that its opinion may fairly and reasonably be questioned by other competent persons.
28. In J.N. Duggan v. KM. Talyarkhan AIR 1938 Bom. 77, Justice Kania held that unless a marketable title is proved or where the rectitude of the title depends upon facts, capable of being disputed, specific performance of contract of sale cannot be granted the interest of the transferee as such, and may be enforced by every person in whom that interest is for the whole or any part thereof from time to time vested.
29. Sir Edward Fry in his Treatise on the Specific Performance of Contracts, 6th Edition at Para 1414, stated the principles with regard to interest payable in case of delay in payment of the amount as under :
In case of delay of interest from the day appointed for completion, from whatever cause the delay might have arisen, did not apply to a case of the vendor's own default, but that in that case interest ran only from the time when a good title was shown...that is, that the party never did mean to contract that he would pay interest, although he might be prevented from having the benefit of is purchaser by the default of the vendor...is that the vendors being in default, the delay having been occasioned by their not performing their part of the contract, are not to exact from the purchaser the payment of interest until the time they showed a good title on their abstract...had not commenced to run, it did run when they showed a good title, and not before.
30. Pollock and Mulla in Indian Contract and Specific Relief Acts, 12th Edition-Volume-II at page 2541 observed as under :
A purchaser in such a suit of specific performance filed by the vendor, can call for an enquiry and reference with regard to title before he accepts the title. Where the vendor seeks specific performance, the mere fact of knowledge on the purchaser's part of the earlier transactions of the vendor does not preclude the purchaser from seeking proof of the vendor's title, unless the parties have agreed to limit the nature of the enquiry into title, or the purchaser had agreed to accept the title of the vendor as it was.
31. The majority decision in the case of Subbayya (supra), is as follows :
What emerges from these authorities is that it is open to the purchaser to contract himself out of the statutory rights conferred on him by Section 55(2) of the Transfer of Property Act; but this should be expressed in clear and definite terms in the document itself and it is not permissible to let in oral evidence to show that there was an agreement excluding covenants for title, and that the mere knowledge on the part of the vendee of a defect in title to the property to be sold would not by itself defeat the purchaser's title based on the statutory covenant. (Para 75)
32. I shall now consider the question whether there is evidence to prove that vendor had defective title to the property. In answering the same, it is necessary to consider the terms of Ex. A-1. The title and possession of the vendor has been traced out from Paras 1 to 7 of Ex.A-1. In Para 3, plaintiff admitted about the ownership of the defendant and his possession over the suit schedule land, for which he entered into an agreement of sale. He further admitted that he took possession of the property for developmental purpose, by making it into plots. On receipt of the caveat petition, when the defendant failed to establish his title to the satisfaction of the plaintiff, he got investigated into the title of the plaintiff and satisfied about his title to the suit schedule land. But curiously pleadings as well the oral evidence of plaintiff conspicuously absent when he investigated into the title of the defendant over the suit schedule land and satisfied with the title of the defendant. In his evidence, he categorically admitted that the property was covered with compound wall around and the plaintiff verified the documents pertaining to the plaint schedule land before execution of the agreement of sale and he was shown all the title deeds as mentioned in the agreement of sale Ex.A-1 and he cannot doubt the documents and the defendant was carrying undoubted possession over the suit schedule property on the date when he entered into an agreement. But curiously, he has not filed caveat petition, he received, to substantiate his plea that about his entertaining a genuine doubt. In spite of the defendant issuing a legal notice calling upon the plaintiff to perform his part of contract, namely, payment of balance of sale consideration along with interest as agreed, the plaintiff except agreeing to obtain registered sale deed on paying balance of sale consideration asserted that he is not liable to pay interest since he was always ready and willing to perform his part of contract provided sale deed is executed by the defendant and Sathyam Naidu, caveator. As the defendant is not willing to join Sathyam Naidu as one of the executants, plaintiff declined to pay interest. Insistence of Sathyam Naidu to join in execution of the sale deed has not been agreed to by the parties. In the evidence, the defendant admitted that between 1992 to 1994 there was no transaction between himself and the plaintiff and there was no further discussion with regard to the plaint schedule property except issuing suit notice on 6-11-1994 Ex.A-2. While traversing the allegations made by the plaintiff, the defendant in his written statement categorically asserted that since time of four months stipulated for payment of balance of sale consideration with interest has elapsed, the defendant cancelled the agreement and informed of the same to the plaintiff under Ex.B-11. The plaintiff satisfied with the documents of title by verifying the revenue records and Encumbrance Certificate Ex.B-9. Sathyam Naidu except filing a caveat has not filed any suit nor claimed any interest over the suit schedule land and he has got land as per the schedule on the southern side. The plaintiff having admitted that he satisfied that Sathyam Naidu has no title or interest over the suit schedule land cannot postpone to perform his part of contract.
33. When the plaintiff was clearly informed under Ex.B-11 about cancellation of agreement and forfeiture of advance amount paid on 31-7-1991 and was threatened if he trespasses into the land under Ex.B-3 dated 15-9-1992 he will be prosecuted, the plaintiff has not moved a little finger in this regard till lapse of 2 years 3 months i.e., issuance of suit notice Ex.A-2 dated 6-11-1994 for specific performance. The allegation levelled in the plaint that the defendant undertook to survey the land and he failed to perform his part of contract is contrary to the terms of the agreement of sale, wherein the plaintiff himself undertaken the responsibility to get the land surveyed through a Government Surveyor. His evidence i.e., plaintiff also discloses that he has not intimated about survey he made, which clearly discloses that the plaintiff was not ready al-through to perform his part of contract to obtain the sale deed from the defendant, but he insisted that Sathyam Naidu should join in execution of the sale deed and not agreeable to pay interest on the balance of sale consideration. The assertion of the plaintiff that he is in possession of the suit schedule land as defendant delivered possession to him is negatived on Issue No. 4 whereunder the trial Court held that defendant never delivered possession of the suit schedule land to the plaintiff as alleged by him falsify his plea of possession and development made, if any.
The Supreme Court in the case of Arulappan (supra), on which much reliance was placed by the learned Counsel for the appellant, after taking into consideration its earlier judgment in Lourdu Mari David v. Louis Chinmaya Arogiaswamy (supra), wherein it was held that the party who seeks to avail of the jurisdiction of a Court and specific performance being equitable relief, must come to the Court with clean hands, in other words, the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief, allowed the defendant's appeal holding that the plaintiff-respondent who has not approached the Court with clean hands is not entitled to a decree of specific performance of the contract.
34. Though the validity of filing caveat petition is only for a period of three months and Sathyam Naidu has not filed any suit claiming suit schedule land, insisting the defendant to execute registered sale deed along with Sathyam Naidu and receive balance of sale consideration without interest, clearly disclose that he was not ready and willing to perform his part of the contract all along.
35. This Court in P. Lazarus v. Johnson Edward AIR 1976 AP 243, categorically held that even wrongful repudiation of contract by the vendor did not absolve the purchaser from his duty of performing his part of contract in order to prove his readiness and willingness.
36. The Supreme Court in K.S. Vidyanadam v. Vairavan (1997) 3 SCC 1, after taking into consideration the suit notice issued after 21/2 years from the date of agreement of sale observed as under :.Indeed, we are inclined to think that the rigor of the rule evolved by Courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown -requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so.... The said time-limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time-limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no significance or meaning or that they are as good as non-existent All this only means that while exercising its discretion, the Court should also bear in mind that when the parties prescribe certain time-limit(s) for taking steps by one or the other party, it must have some significance and that the said time-limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract (relating to immovable properties).
37. The correspondence after issuance of Ex.B-10 clearly discloses that the plaintiff is not agreeable to pay interest on the pretext of the caveat, which is nothing but a ruse to avoid contractual obligation undertaken by him. Therefore, he is not entitled to a specific performance of the agreement. Point No. 1 is accordingly answered.
38. Point No. 2 :-As discussed above, except caveat petition there is no other genuine claim made by the plaintiff to show that the defendant is under an obligation to clear doubt entertained by the plaintiff. When it is categorically asserted by the defendant in his written statement as well as legal notice Ex.B-11 that the plaintiff colluded with Sathyam Naidu for creating litigation and postponing payment of balance of sale consideration, the plaintiff though denied under Ex.B-1 has not explained either in his evidence or in the pleadings. When the plaintiff did not specifically state on what date when he contacted Sathyam Naidu after receipt of the caveat; when he obtained certified copy of the original document from the Sub-Registrar's Office on which Sathyam Naidu claimed a right over the property; when he contacted the vendor of the defendant who clarified that Sathyam Naidu has no right over the suit schedule property and when he satisfied with the defendant's title over the schedule property, plaintiff cannot take the aid of Section 55(2) of the Transfer of Property Act, namely, time spent by him to clear the doubt created by lodging caveat by Sathyam Naidu, When it was admitted that entire area was covered by the compound wall and defendant was in possession of the property; and when the plaintiff got measured the land in the month of August and land of Sathyam Naidu immediately about the compound wall of the plaint schedule land, there is every possibility of caveat being lodged by Sathyam Naidu manufactured by the plaintiff to help him in postponing the matter. Defendant clearly pleaded that Sathyam Naidu's claim is untenable and on receipt of the caveat by the plaintiff, he informed him that caveator has no right over the suit schedule land and he can enquire the said fact in MRO's Office with title deeds. The said fact has not been controverted. In fact the plaintiff admitted in his examination that from 1992 to 1994, he did not initiate any legal proceedings nor filed any documents showing the steps taken by him, which clearly discloses that he obtained sale deed of Sathyam Naidu prior to 1992 itself and satisfied about the title of the defendant over the suit schedule land. As the defendant categorically stated that Sathyam Naidu has no right to claim and the same can be verified by the plaintiff, it is for the plaintiff to verify the same and defendant has not failed to comply with any of the essential conditions of the contract, since all the title deeds were shown to the plaintiff prior to the agreement of sale. In view of the same, it is the plaintiff who failed to comply with the essential conditions of the agreement of sale but not by the defendant. The point is accordingly answered.
39. Point Nos. 3 and 4 :-It was nextly argued that defendant cannot cancel the sale agreement unilaterally since time is not the essence of the contract.
40. In the case of Subbayya (supra) Justice Umamaheswaram after considering the decision of the House of Lords in 1915 AC 386 (A) held that the vendor who waited for several months entitled to give notice that purchaser should complete the contract within a definite time and notice issued by the vendor fixing one week time for completion of transaction is reasonable on the surrounding circumstances and vendor was entitled to treat the contract as rescind when the amount was not paid within the period fixed thereunder. Justice Chandra Reddy, on difference of opinion, agreed with Justice Umamaheswaran in Para 98 and held that it is open to one of the parties to make time of the essence of the contract by calling upon the other party who has been guilty of unreasonable delay to perform the contract within a stated time by giving him reasonable notice.
41. Even the evidence adduced by the parties discloses that the plaintiff who intended to purchase the suit schedule land is to make profit by selling the same after developing it into house plots. That is the reason, it was agreed that necessary sale deed has to be obtained within a period of four months by paying balance of sale consideration and if the purchaser failed to pay the full amount within four months, he should pay interest at 21% per annum till full payment is made. In view of the same, time is not the essence of the contract. Surrounding circumstances and the intention of the parties as gathered from the evidence and agreement clearly disclose that plaintiff wanted to make profit by selling the land by converting it into house plots. Therefore, the defendant is justified in issuing notice calling upon the plaintiff for payment of balance of sale consideration, after expiry of four months period as stipulated in the agreement, within one week under Ex.B-10, and unequivocally making it clear that failure to pay the balance of sale consideration, he is compelled to cancel the agreement of sale and sell the land to any other person. On receipt of the reply from the plaintiff under Ex.B-2, the defendant cancelled the agreement under on failure to pay the amount as demanded under Ex.B-10. After 2 years and 3 months, the suit notice was issued. In view of the same, I see no force in the submission that the defendant cannot cancel the agreement of sale in the absence of any clause in the contract and can make the time as the essence of contract. Points 3 and 4 are accordingly answered against the plaintiff and in favour of the defendant.
42. For the aforementioned discussion, I hold that the plaintiff is not entitled to a decree of specific performance of the contract and the judgment and decree, under appeal, passed by the trial Court, is liable to be set aside, and is accordingly set-aside.
43. The next question remains for consideration is whether the plaintiff is entitled to alternative relief of refund of the amount as claimed by him i.e., advance amount and interest thereon.
44. The defendant in his evidence categorically asserted that he being an income tax assessee paid income tax on the accrued interest as stipulated in Ex.A-1; that in spite of his resistance the authorities of Income Tax Department collected the tax over the interest amount as per the assessment orders under Exs.B-13 to B-15; and that he nearly paid a sum of Rs. 2,50,000/- towards income tax on the accrued interest as per the slab rate applicable to him. In the cross-examination, he admitted that against assessment orders Exs.B-13 to B-15, appeal have been filed and are still pending; he paid half of the amount mentioned therein and he did not file those receipts into Court as the same were filed before Income Tax Appellate Authority along with the appeals. In the circumstances, the defendant was subjected to payment of income tax, filing of appeals and contesting the same. In view of the same, the plaintiff is entitled to refund of advance amount paid together with interest at 6% per annum thereon from the date of suit till the date of payment. Three months time is granted from to-day for payment of the same. In default, the advance amount will carry interest at 12% per annum on expiry of three months period.
45. The appeal suit is accordingly allowed with costs throughout as indicated above.