1. CCCA No.36 of 1998 has been preferred against the judgment and decree dated 11-3-1997 passed by the learned 111 Additional Chief Judge, City Civil Court, Hyderabad, in OS No.311 of 1980 by the unsuccessful defendants 2 and 5 while arraying the other defendants in the suit as respondents 2 to 7.
2. CCCA No.58 of 1998 has been preferred by the remaining defendants 1, 3, 4 and 6 to 8 against the same judgment and decree in OS No.311 of 1980 while arraying the defendants, 1, 2 and 5 as respondents 2 to 4. The plaintiff in the suit is the first respondent in both the appeals.
3. Initially an ex parts decree was passed on 24-12-1981 when all the defendants remained ex parte in the suit; Later the said decree was set aside pursuant to the orders passed in IA No.392 and 393 of 1983 qua the defendants 2 and 5 alone on 20-3-1989. The petition filed by the 7th defendant in IA No.436 of 1983 was dismissed. The petitions filed by the remaining defendants seeking to set aside the exparte decree also resulted in dismissal. 8th defendant, however, carried the matter to the Apex Court eventually and he was permitted to submit written arguments in the suit without allowing him to participate in the trial. The ex parts decree that had been passed earlier became final against all other defendants except defendants 2 and 5. The unsuccessful defendants 2 and 5 filed the former appeal and the other defendants filed the later appeal against that ex parte decree. The defendant No.8 although was permitted to submit written arguments in the suit and in fact filed the written submissions did not join the defendants 2 and 5 in the former appeal. But preferred to join the other defendants in the later appeal.
4. Both the appeals therefore can be disposed of together inasmuch as they arise out of the same judgment and decree in OS No.311 of 1980. It is expedient to refer the parties as they are originally arrayed in the suit so as to avoid any confusion.
5. Briefly stated the facts are thus:
The Life Insurance Corporation Employees Co-operative House Building Society (for short 'the plaintiff society') represented by its Vice-President laid the suit for specific performance of suit agreement of sale dated 28-3-1974. The vacant land measuring 16000 sq. yards more fully described in the schedule appended to the plaint (for short the 'suit land') was originally belonged to the father of the8th defendant, the grandfather of the defendants 1 to 7 and one M.A. Quadeer. The said Quadeer since died unmarried, the father of the 8th defendant and the grandfather of the defendants 1 to 7 became the absolute owners. After their death and the death of the father of the defendants 1 to 7, defendants 1 to 8 became the absolute owners thereof. The plaintiff society through its Joint Secretary negotiated with the defendants 1 to 7 and their late mother Basheerunnisa Begum for purchasing the suit land. Defendants 1 and 2 under a registered general power of attorney represented the 8th defendant. The bargain was settled and the society agreed to purchase the suit land at the rate of Rs.17/-per sq. yard and eventually the suit agreement of sale dated 28-3-1974 came to be executed by the defendants 1 to 7 and their late mother Smt. Basheerwmisa Begum who died subsequently on 27-11-1975. The terms agreed upon between the parties were set-forth in the agreement and the sale consideration was worked out at Rs.2,43,525/-. On the date of agreement an amount of Rs.20,000/- was paid by the plaintiff-society under a cheque drawn in favour of the first defendant. Later the plaintiff-society paid an amount of Rs.20,000/- on 7-8-1975 and Rs.15.000/- on 11-11-1975 by means of cheques drawn in favour of the first defendant who endorsed the receipt duly on the agreement itself in token thereof. The balance amount of Rs. 1,58,555/- was agreed to be paid at the time of registration of the sale deed. The plaintiff-society took possession of the suit land in the month of April 1974 for the purpose of getting it measured and the necessary lay out plan prepared. The first defendant produced a certificate issued by the Tahsildar dated 3-7-1974 to the effect that there was no Survey No.20 existing in the protected tenancy register and the plaintiff society was given thereby an impression that there were no protected tenants on the suit land. But otie Kommu Jangaiah and others and one G. Muthyal Reddy and others claimed to be the protected tenants over the suit land. The plaintiff-society under a compromise paid an amount of Rs.20,000/-to Kommit Jangaiah and others who pursuant to the compromise surrendered their rights, Similarly, it paid an amount of Rs.35,000/-to the said G. Muthyal Reddy and others and pursuant to the compromise inter se between them they too surrendered their rights in favour of the plaintiff society accordingly. Thus, the plaintiff paid an amount of Rs.55,000/- in addition to the consideration payable as agreed upon.
6. The Tahsildar, Hyderabad Urban Taluk issued necessary proceedings to the effect that the protected tenants surrendered protected tenancy rights under the proceedings No.C3/14842/73 and A3/3500/ 78 dated 9-6-1978 respectively. The defendants agreed to obtain necessary permission from the Government under the Andhra Pradesh Vacant Land in Urban Area (Prohibition of Alienation) Act, 1972 (for short the 'Act 12 of 1972'). Permission was granted under G.O. Rt. No.2071 dated 23-7-1975. The first defendant then called upon the plaintiff society by his letter dated' 14-2-1976 to get ready for registration of the sale deed on or before 18-2-1976 informing inter alia that the necessary income tax clearance certificate and other documents were ready. In the meanwhile the Urban Land (Ceiling and Regulation) Act, 1976 (for short the 'Act 33 of 1976') came to be passed. Therefore, the plaintiff society along with the defendants submitted applications in the month of August, 1976 seeking necessary permission for the sale of the suit land in accordance with the provisions of the said Act. After conducting necessary enquiry permission was granted on 31-7-1979 by the Government of Andhra Pradesh. However, as the second defendant was abroad the sale deed could not be executed and registered. The plaintiff society was always ready to perform its part of the contract. The defendants however were not evincing enthusiasm to receive the balance sale consideration and to execute the sale deed. Therefore, the plaintiff got issued a registered notice on 28-6-1979, but all the defendants refused to receive the said notice. Hence the suit.
7. Both the defendants 2 and 5 filed separate written statements resisting the claim of the plaintiff society. Their plea infer alia in the written statements was denial of the execution of the suit agreement, passing of consideration and other material averments made in the plaint. It was further pleaded that as the second defendant was abroad, he did not know about the proceedings of the Government and that the plaintiff society was not in position to pay the balance sale consideration and was never ready and willing to perform its part of contract within the meaning of Section 16(c) of the Specific Relief Act and that the plaint was not in conformity with the Forms 47, 48 of Appendix. B of the Civil Procedure Code and therefore, the suit was not maintainable and therefore the plaintiff was not entitled to the relief of specific performance. It was further pleaded that the suit was barred by limitation under Article 54 of the Limitation Act. An additional written statement was filed by defendants 2 and 5 taking the plea that defendants 6 to 8 being foreign nationals, in view of the Foreign Exchange Act their property cannot be sold without permission from the concerned authority and therefore, the suit agreement of sale cannot be enforced and therefore, it is hit by the doctrine of frustration.
8. On the above pleadings, the following issues were framed at the time of settlement of issues.
(1) Whether the plaintiff society is validly registered under the A.P. Cooperative Societies Act entitled to enter into the suit agreement and entitled to maintain the suit.
(2) Whether the suit is validly instituted by the plaintiff?
(3) Whether the agreement of sale dated 28-3-1974 is true, valid, binding and enforceable against defendants 2 to 5.
(4) Whether the payments alleged to have been made by the plaintiff under the agreement of sale are true and binding on the defendants 2 and 5?
(5) Whether the suit is not barred by limitation?
(6) Whether the plaintiff has always been ready and willing to perform its part of contract up to the date of the suit?
(7) Whether the plaintiff is entitled to the specific performance prayed for?
(8) To what relief?
9. At the trial two witnesses were examined and the documents Exs.A1 to A51 were got marked on the side of the plaintiff and two witnesses were examined and the documents Exs.B1 and B2 were got marked on the side of the defendants. Exs.C1 and C2 contradictions were marked from the statement of the first defendant made in IA No.392 of 1983. Upon considering the evidence on record, both oral and documentary, and upon hearing the arguments and also the written submissions made on behalf of the 8th defendant as permitted by the Apex Court in SLP Nos.10273 and 11343 of 1996 dated 26-8-1996, the Court below decreed the suit with costs as prayed for directing the defendants to execute a registered sale deed within one month from the date of judgment while permitting them to withdraw the balance sale consideration lying in Court deposit, having been deposited by the plaintiff society pursuant to the direction in ex parte decree passed initially in the suit. While decreeing the suit, the Court below I found on issue No.3 that Ex.A1 suit agreement of sale was true, valid, binding and enforceable against the defendants. On issue No.4 it was found that the plaintiff society paid an amount of Rs.85,000/-towards part payment of sale consideration. On issue No.5 it was found that the suit was filed within time and therefore, it was not barred by limitation. On issue No.6 it was found that the plaintiff was always ready and willing to perform its part of the contract.
10. Having been aggrieved by the said judgment and decree as aforesaid defendants 2 and 5 filed the present appeal.
11. Now in this appeal, the learned Counsel appearing for the appellants raised the following points, (1) Sri P. V. Subbaiah who signed the plaint is only the Joint Secretary, whereas the description of the plaintiff shows that lie is Vice-President and therefore, the verification of the plaint is defective. (2) The said Subbaiah was not examined in the suit and therefore, the plaintiff is to be non-suited. (3) Rule 42 of the Rules framed under Co-operative Societies Act requires prior permission of the Registrar, which is based on a public policy, and no such permission having been obtained the suit is hit under Section 23 of the Contract Act. (4) The suit is barred by limitation in view of Article 54 of the Limitation Act. (5) The plaintiff society has never been ready and willing to perform its part of the contract. (6) The society has no necessary funds to pay the balance sale consideration and it has therefore, approached with false plea in regard thereto and hence it is not entitled to the equitable relief of specific performance. (7) Due to appreciation of the value of the urban land the cost of the suit land escalated manifold than the sale price and therefore, on that ground the plaintiff is not entitled to the specific performance.
12. The learned Counsel for the first respondent while answering the points raised contends that ultimately there is nothing to interfere with the judgment and decree of the trial Court. In view of the contentions raised on either side, the following points arise for my determination in this appeal.
(1) Whether the plaint is defective and therefore, is liable to be rejected?
(2) Whether non-examination of P.V. Subbaiah is fatal to the case of the plaintiff?
(3) Whether the suit agreement of sale is opposed to public policy and therefore the contract is void under Section 23 of the Contract Act?
(4) Whether the suit is barred by limitation in view of Article 54 of the Limitation Act?
(5) Whether the plaintiff society has always been ready and willing to perform its part of the contract?
(6) Whether the plaintiff society approached the Court with unclean hands and is, therefore, disentitled to the equitable relief of specific performance?
(7) In view of the appreciation of the value of the urban land, whether the plaintiff is entitled to the relief of specific performance of the contract of sale?
13. The contract of sale dated 28-3-1974 upon which the entire edifice of the case of the plaintiff lies is Ex.A1. The execution thereof although has been denied, in the written statements later seems to have not been seriously disputed during the course of trial. When PWs.1 and 2 have categorically deposed on oath in regard thereto, no suggestion even has been put denying the execution thereof in the entire cross-examination of these two witnesses. Consequently, the testimony of PWs.l and 2 remained uncontroverted. Defendants 5 and 2 in the suit who have been examined as DWs.1 and 2 respectively except stating that they have not entered into an agreement with the plaintiff society in respect of the suit land and that they have not received any consideration, there has been no specific denial of the execution of Ex.Al. Having been confronted with the document DW1 alluded to give a specific answer on the premise that she developed cataract in the eyes and therefore she could not read or identify the writing or signature. DW2 has figured earlier as a witness before the same Court in the same proceeding in connection with an enquiry in the petition filed by him under Order 9, Rule 13 of Civil Procedure Code seeking to set aside the exports decree. The witness is said to have admitted his signature on Ex.A1. However, when confronted with his deposition in regard thereto he contradicted the same and the relevant portions have been eventually marked as Exs.C1 and C2. A witness who has given two diametrically opposite versions at two stages in the same proceeding cannot ordinarily be believed in the absence of any plausible explanation. But no such explanation is forthcoming. With this type of oral evidence of DWs.1 and 2, I do not think there is any difficulty to this Court or as a matter of that to any other Court to accept the testimony of PWs.l and 2. Further, the plaintiff society got a Public Notice published in 'Siasat' daily English about the suit contract of sale. The same has been admitted by the defendants as can be seen from the suggestions put to PW1. Their conduct in not denying the same is material and is suggestive of valid execution.
14. There has been overwhelming documentary evidence adduced on the point to buttress the plea of valid execution of Ex.A1. The notables among the various documents filed in tin's regard are Exs.A3, 7, 10, 12 and 37 to 45, 48 and 49, Ex.A3 compromise was signed by the defendants 1, 4 and late Basheerunnisa Begum and the protected tenants Kommu Jangaiah and others. There has been a reference to the contract of sale between the plaintiff society and the defendants in the said compromise. The requisite exemption as envisaged by the provisions of Act 12 of 1972 has been granted in this case under Ex.A7 proceedings dated 23-7-1975 permitting the defendants to alienate the suit land in favour of the plaintiff society. Similarly the necessary exemption as envisaged under the provisions of the Act 33 of 1976 has been granted in this case by the Government of Andhra Pradesh under Ex.A12 permitting the defendants to alienate the suit land to the plaintiff society. Under the provisions of the said Act the defendants filed declarations under Exs.A37 to A44. In connection with the enquiry in regard thereto the first defendant on his behalf and on behalf of the other defendants has deposed before the authority competent to conduct an enquiry. The certified copy of the said statement of the first defendant has been marked in this case as Ex.A45. A mention has been made about the execution of Ex.A1 contract of sale in all the declarations as can be seen from Exs.A37 to A44. The first defendant has categorically stated before the authority about the execution of Ex.A1 in respect of the suit land. Receipt of part of sale consideration given time to time in all a sum of Rs.85,000/-has also been admitted therein. The first defendant in this case is a practising advocate. Despite the fact that he has remained ex parte in the suit, he has been actively participating in the proceedings by being present during the course of trial of the suit and by giving necessary instructions to the Counsel appearing for the contesting defendants 2 and 5 at the time of cross-examination of the witnesses. The said fact has been recorded by the Court in the depositions of witnesses. All the other defendants have adopted the statement of the first defendant given before the authority under the Act 33 of 1976. Ex.A49 is the certified copy of the compromise memo filed jointly by the protected tenants K. Jangaiah and others and defendants 1, 4 and late Basheerunnisa Begum, where under the protected tenants K. Jangaiah and others have given up their tenancy rights in favour of the defendants. It has been mentioned in the said compromise memo that the defendants herein have entered into an agreement with the plaintiff society and that therefore, the protected tenants have filed the suit OS No.1249 of 1974 before the 111 Additional Judge, City Civil Court, Hyderabad, for a perpetual injunction restraining the defendants herein from alienating the same in favour of the plaintiff society. This circumstance amply proves the valid execution of Ex.A1 by the defendants in view of their admission in regard thereto made therein. The proceedings of the competent authorities under the two enactments refetred to above are the quasi-judicial proceedings, having been given after conducting due enquiry pursuant to which the Government issued Exs.A7 and A12 orders. Reliance can therefore be placed upon these two proceedings without any hesitation. The declarations filed in Exs.A37 to 45 coupled with the statement in Ex.A45 will further reinforce the proceedings under Ex.A12 given by the competent authority viz., Special Tahasildar under the Act 33 of 1976. Under Ex.AlO the first defendant sent a letter on 14-2-1976 representing himself and other defendants calling upon the plaintiff to get the sale deed registered on or before 18-2-1976, while informing one Lokanadha Rao, the Secretary of the plaintiff society that the requisite income tax clearance certificate and all the necessary documents have been made ready for the purpose of registration. A comment has been made in this regard that Ex.A10 will not bind the other defendants since they have not signed. From the evidence on record it is obvious that the first defendant has been leading the other defendants in this case, and it is he and the second defendant have been receiving considerations paid in piecemeal time to time. It is he who has represented the other defendants before the authority under the Act 33 of 1976. Under the circumstances, the said contention of the learned Counsel is factually unpalatable and legally unacceptable. One of the circumstances being very much relied upon by the defendants while negating the plea of execution of Ex.A1 as can be seen from para 11 of the written statement filed by D1 has been that late Smt. Basheerannisa Begum was an illiterate marks woman, and the agreement therefore which purported to have been signed by her is not true. Ex.A49 is the certified copy of the compromise memo filed, in File No.C3/l 3842/73 and Ex.A3 being the Xerox copy thereof are one and the same and are appropriate here to be referred. A perusal of this document shows that Komntu Jangaiah and others claiming themselves to be the protected tenants over the suit land laid a suit for perpetual injunction against the defendants restraining them from alienating the suit land in favour of the plaintiff society. As aforesaid, the tenants ultimately surrendered their tenancy rights pursuant to the written compromise entered into between the parties. Both parties set their hands at the end on the compromise memo before the Notary. The certificate appended thereon by the Notary duly certifying that the parties have affixed their signatures in the presence of the Notary appointed by the Government of Andhra Pradesh negates the plea of the defendants that late Basheerunnisa Begum was an illiterate marks woman. Given the overwhelming evidence direct and circumstantial on the point it is loo late for the defendants to have denied the execution of Ex.Al. For the foregoing reasons, the execution of the suit document Ex.A1 is beyond doubt and has been amply proved in this case.
15. Passing of consideration in part paid time to time in an aggregate of Rs.85,000/-cannot also be doubted. It goes without saying when the execution of Ex.A1 contract of sale has been established. Indeed it has not been raised as an issue before me by the learned Counsel for the appellants. As can be seen from the tenor in the various picas raised in the written statements, there has been no specific denial except general denial putting the plaintiff in proof of all the averments made in the plaint in regard to either execution of the suit contract of sale or passing of consideration in part as detailed in the plaint. As can be seen from the averments made in the written statements much controversy is centered round, the identity of the suit land in view of the discrepancy about the description of the suit land in Ex.A1 contract of sale. The said controversy has been set at naught subsequently in the evidence of PWs.1 and 2 who have sought to explain the same with reference to Ex.A1 (a), the plan annexed to Ex.Al. 1, therefore, see no dispute in regard to passing of consideration in part there under. Perhaps, that is the reason why the document is sought to be assailed collaterally on different considerations on the premises that the plaintiff society has not been properly represented and the requisite pennission from the Registrar of Co-operative Societies having not been obtained, the execution of the document is opposed to public policy and therefore, void in view of Section 23 of the Contract Act. These contentions would be adverted to a little later at the appropriate stage of the case.
16. I shall now proceed to answer the points framed by me supra for determination. Ex.Al has been signed by one P. V. Subbaiah representing the plaintiff society in the capacity of Joint Secretary thereof. The said Subbaiah signed the plaint on each page, but in the cause-title the description of the plaintiff has been mentioned as the society being represented by its vice-president. PW1 categorically deposed that lie was the Joint Secretary of the plaintiff society during the years 1978-79. He admitted in the cross-examination that one R Lokmohan Rao was the Joint Secretary of the plaintiff society in the year 1974 and Mr. P. V. Subbaiah was the vice-president of the society by then. It is the contention of the learned Counsel for the appellants that the plaintiff society has not been properly represented. Ex.A48 is the copy of the resolution passed by the plaintiff society in the meeting held on 25-6-1979. One Sri DVK Sharma or Sri P.V. Subbaiah, the Joint Secretary and Vice-President respectively of the society has been authorised to represent the society in the legal proceedings instituted by it against the defendants. P.V. Subbaiah was the vice-president of the society at the relevant time. The fact that the said Subbaiah signed on Ex.A1 in the capacity of Joint Secretary is not of much significance. The evidence of PW1 is supported by the document Ex.A48. It is no doubt true the original resolution has not been marked in this case. PW1 categorically deposed that Ex.A48 is the certified copy of the resolution by the President of the society and the society has filed the original minutes book of the society. This statement of fact given on oath in the chief examination has not been controverted in the cross-examination. The document Ex.A48 has been allowed to be marked without any demur. It is, therefore, not permissible for the appellants at this stage to have contended that Ex.A48 has not been proved. The plaintiff society is a body corporate and is therefore to be represented by one or other of its members. Changes in the office bearers of the society are bound to occur. A person who might be the Joint Secretary at one point of time might be representing the society in a different capacity at another point of time. Whatever may be the designation P. V. Subbaiah was holding at the relevant time the fact remains that he has been representing the society, and that cannot in my considered view militate against the case of the plaintiff since it is a mere irregularity not affecting the merits of the case. On that ground the decree cannot be reversed or modified in view of Section 99 of the Civil Procedure Code. Ex.A48 clearly proves that the said Subbaiah has been authorised. I, therefore, see no infraction of the provisions of Rules 14 and 16 of Order VI of the Code and the plaint cannot be rejected on that ground. Much emphasis has been laid on the point of non-examination of P.V. Subbaiah by the learned Counsel for the appellants. PW1 has been representing the society in various capacities as can be seen from his evidence. He categorically deposed on oath that he associated himself in the matter of purchase of the suit land and that he was present at the time of the execution of Ex.A1, and as a matter of that he was conversant with the entire affairs touching the execution of Ex.A1 and filing of the suit. This statement of PW1 made on oath in the chief-examination had not been controverted in the cross-examination; his authority to represent the society, his acquaintance with the material facts touching the execution and filing of the suit are therefore beyond doubt. I, therefore, see no force in the contention of the learned Counsel for the appellants that non-examination of P.V. Subbaiah is fatal to the case of the plaintiff. The learned Counsel for the respondents on the other hand has contended that the first defendant in the suit has been looking after the entire litigation and has been leading in fact the other defendants in the suit. His active participation by giving necessary instructions to the Counsel has been recorded as a fact in the depositions of the witnesses in this case. It is he who received the payments made by the plaintiff society towards part of the consideration under various cheques. Therefore, it is the contention of the learned Counsel that the first defendant should have come into witness box and deposed as he has been conversant with the material facts in this case and his non-examination is fatal. Reliance has been placed in this regard to buttress the said contention upon the observations made by the Privy Council in Sardar Gurubakhash Singh v. Gurdial Singh, AIR 1927 PC 230, at Page 230 the Privy Council held as follows:
'If her story were, notwithstanding all this, a true story, it was her bounden duty to give evidence in the suit, telling the whole facts in support of her and her alleged son's case; but she did not. If under advice she did not do so, that advice was of the worst description, and worthy of the animadversion above made. But in any view her non-appearance as a witness, she being present in Court, would be the strongest possible circumstance going to discredit the truth of her case.'
17. In another judgment the Privy Council in Musammat Lal Kunwar v. Chiranji Lal, 37 Indian Appeals 9PCO 1, has deprecated the practice of the advocates omitting to call their own clients as witnesses in the hope of forcing their opponents to do so. I see considerable force in the said contention of the learned Counsel.
18. The legal plea raised about the maintainability of the suit is relevant to be adverted to. The learned Counsel for the appellants placed much reliance upon Rule 42 of the Rules framed under the A.P. Co-operative Societies Act and contended that permission of the Registrar of Co-operative Societies having not been obtained as mandated by Rule 42 which symbolises the public policy, and therefore, the infraction thereof attracted the mischief of Section 23 of the Contract Act. The said legal plea raised on the side of the appellants loses all its significance in view of the fact that the Hyderabad Co-operative Societies Act is the relevant Act which governs the parties and transaction as the said Act was in vogue at the time when Ex.A1 came to be executed. There is no dispute that there has been no such provision in the rules framed under the said Act akin to Rule 42 of the Rules framed under the present Act. Even otherwise, the fact that the Act has not envisaged any penal consequences for the violation of any Rules framed thereunder is an indicia that no such public policy can validly be culled out as contended by the learned Counsel for the appellants. Neither the Act nor the Rules framed thereunder in any way declared, as can be seen there from, that the transaction entered into between the parties in violation thereof is void or illegal or opposed to public policy. In other words, there has been no express prohibition. The learned Counsel appearing for the respondents contended that the requisite permission under Rule 42 of the Registrar of the Co-operative Societies is meant for the administrative convenience, therefore, no public interest is involved. To drive home the point reliance has been placed by the learned Counsel upon a passage in the commentary under Section 23 of the Contract Act from the Indian Contract and Specific Relief Acts by Pollock and Mulla, eleventh edition, Volume I at Pages 308, 309 and 311. Defore extracting the relevant passages it is apt here to consider Section 23 in the first instance. Section 23 of the Indian Contract Act reads thus:
'23. The consideration or object of an agreement is lawful, unless--
it is forbidden by law; or
is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
19. In each of these cases, the consideration or object of an agreement said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
20. A perusal of the said section shows that it speaks of two requirements, viz., (1) consideration and (2) object of the agreement. Either one of them is lawful unless law forbids it or the Court regards it as immoral or opposed to public policy, in which case either the consideration or the object is said to be unlawful. The section declares in itself that every agreement of which the object or consideration are unlawful is void. It may be mentioned here that we are not concerned in this case with the consideration. There remains the other requirement of the Section viz., the object of the agreement. To attract the mischief under Section 23 the object must either be immoral or opposed to public policy. Under no stretch of imagination it can be said that the object under Ex.A1 is immoral. Boiled down there remains the public policy being opposed, this then takes us to consider as to when the object is said to be opposed to the public policy so as to make the agreement ultimately unlawful. Words 'forbidden by law' and 'public policy' have not been defined under the Indian Contract Act. Since the criminal law is Codified there is no difficulty in understanding the words 'forbidden by law' inasmuch as the Act has not envisaged any penal consequences in the event of infraction of any of the provisions thereof. In the absence of any such express prohibition entiling punitive action it cannot be said that law forbids it. The relevant passage at Pages 308 and 309 of the Contract Act may be extracted hereunder thus:
'Broadly speaking, that which has been forbidden in the public interest cannot be made lawful by paying the penalty for it; but an act, which is in itself harmless, does not become unlawful merely because some collateral requirement imposed for reasons of administrative convenience has been omitted.'
At Page 311 it is mentioned thus--
'When conditions are prescribed by statute for the conduct of any particular business or profession, and such conditions are not observed, agreements made in the course of such business or profession are void if it appears by the context that the object of the Legislature in imposing the condition was the maintenance of public order or safety or the protection of the persons dealing with those on whom the condition is imposed; (but they) are valid if no specific penalty is attached to the specific transaction, and if it appears that the condition was imposed for merely administrative purposes, e.g., the convenient collection of the revenue.'
'In our opinion this case falls within the latter class, because the Statute itself does not forbid or attach a penalty to the transaction of subletting, but merely gives power to impose a condition under which it can be forbidden should the Collector see fit to do so for what can be only purely administration purposes. The Act imposing tolls is an Act passed for the benefit of the revenue and not an Act for the protection of public morals.'
'As a general rule, the law does not forbid things in express terms, but imposes penalties for doing them, and the imposition of such penalties implies prohibition, and an agreement to do a thing so prohibited is unlawful under Section 23 of the Contract Act. As no penalties are prescribed under the (Tolls) Act, the agreement does not prima facie fall under the 1st clause of Section 23.'
21. A perusal of the above excerpts shows that a provision of an Act, the infraction of which does not entitle any penal consequences or punitive action, is meant purely for administrative purposes and therefore cannot be said to be forbidden by law. Public Policy is based upon the principle ex dolo malo non oritur actio. The principle underlying the maxim is that no man can lawfully do that which has a tendency to be injurious to the public welfare. The Apex Court in Central Inland Water Transport Corporation Ltd v. Brojo Nath Ganguly, : (1986)IILLJ171SC , at Page 1612 in Para 93 held thus:
'The Contract Act does not define the expression 'public policy' or 'opposed to public policy'. From the very nature of things, the expressions 'public policy', 'opposed to public policy', or 'contrary to public policy' are incapable of precise definition. Public policy, however, is not the policy of a particular Government. It connotes some matter, which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time.'
22. No Court will lend its helping hand to a person who founds his cause of action upon an immoral or an illegal act, is based upon the principle ex turpi causa non oritur actio. This is also based on public policy. To invoke this principle the party must be guilty of illegal or immoral conduct or on an overall consideration of the circumstances it should be an affront to the public conscience.
23. The learned Counsel for the respondents relied upon a judgment in Bhikanbhai v. Hiralal Ramdinshet Marwadi, ILR 24, Bom. 624. That was a case where the plaintiff sublet the tolls to the defendants without the requisite permission of the Collector, and sued to recover a certain amount which the defendants promised to pay for the sublease. Under Section 10 of the Tolls Act Government leased to plaintiff to levy of tolls on certain conditions and one of the conditions was that plaintiff should not sublet the tolls without the permission of the Collector previously obtained. One of the clauses of the lease provided that for a breach of any of the conditions of the lease entitles imposition of fine of Rs.200/- by the Collector, When the plaintiff filed the suit for recovery of the sublease amount from the defendants, the defendants resisted that suit on the premise that the contract was void under Section 23 of the Contract Act as the sublease was illegal and opposed to the public policy. It was held that the contract was not opposed to public policy as the Tolls Act did not expressly prohibit it nor a penally was provided for under that Act for the infraction of any of the provisions. The passage from the Pollock on Contract, 6th Edition, and Page 28! was extracted in the judgment thus:
'When conditions are prescribed by Statute for the conduct of any particular business or profession, and such conditions are not observed, agreements made in course of such business or profession are void, if it appears by the context that the object of the Legislature in imposing the condition was the maintenance of public order or safety or the protection of the persons dealing with those on whom the condition is imposed; are valid if no specific penalty is attached to the specific transaction, and if it appears that the condition was imposed for merely administrative purposes, e.g., the convenient collection of the revenue.'
24. It is appropriate here to consider Rule 42 of the Rules framed under the Co-operative Societies Act and the said Rule reads thus:
'42. Transaction with non-members:--No society shall enter into any transaction with a person other than a member unless:
(a) the Bye-laws of the society permit it to enter into such transaction, and
(b) the previous sanction of the Registrar has been obtained by the society for entering into such transaction.'
As afore discussed neither the Act nor the Rules framed thereunder did provide any clause forbidding the contract between the society and a third party envisaging clearly the penal consequences in the event of any infraction thereof. What Rule 42 extracted above shows is that a prior permission of the Registrar should be obtained. In the absence of any such policy prohibiting such contracts without the previous permission of the Registrar it is hardly sufficient to hold that there is underlying public policy. I see considerable force in the contention of the learned Counsel for the respondents that the Rule symbolises the administrative convenience. For the foregoing reasons, I am of the considered view that Ex.A1 agreement is not opposed to public policy merely because the permission requisite from the Registrar of Co-operative Societies has not been obtained previous to the contract.
25. On the point of limitation the suit agreement of sale was executed on 28-3-1974. According to the condition No.4 stipulated inter alia in the said agreement, the vendors shall forthwith apply to the Government and obtain a permission under the Act 12 of 1972 at their own expense and notify the same in writing to the purchasers. Within a period of 15 days from the receipt of such notice, the purchaser shall pay to the vendors a further sum making up 1/4th of the total consideration after giving credit to the payment made already. As per Condition No.5 within a period of another six weeksfrom the payment aforementioned in clause 4 the purchaser shall pay their balance of the sale consideration and get the sale deed registered in its favour. From a glance at these two conditions, it is obvious that the defendants were obliged to apply to the Government for the requisite permission under Act 12 of 1972. The defendants were further obliged to notify the plaintiff after obtaining necessary permission. From the date of receipt of such notice from the defendants and within a period of 15 days therefrom the plaintiff should pay a further sum making up l/4th of the total consideration after giving credit to the advance amount of Rs.20,000/- that had already paid and within a period of another six weeks from the said payment the plaintiff should pay the balance sale consideration and get the sale deed registered. Thus, the date was set for performance of the contract as can be seen from clauses 4 and 5 of Ex.Al at two months period after defendants notifying the plaintiff about the receipt of the requisite permission under Act 12 of 1972. From that date as per Article 54 of the Indian Limitation Act the suit shall be laid within a period of three years. Under Ex.A7 G.O. Rt. No.2071, dated 23-7-1975 the necessary permission was granted by the Government under Act 12 of 1972 for alienation of the suit land. Even before granting permission under Ex.A7, according to the plaintiff it paid a sum of Rs.20,000/-under a cheque dated 4-8-1975, a sum of Rs.30,000/- under a cheque dated 7-8-1975 and a further sum of Rs. 15,000/- under a cheque dated 11-11-1975. The amounts thus paid from time to time would ultimately made out the 1/4th of the total consideration is an undisputed fact. Although Ex.A7 G.O. was dated 23-7-1975 it is not known as to when the same was communicated to the parties. But under Ex.A10 letter dated 14-2-1976 the first defendant informed the Secretary of the plaintiff society that the income tax clearance certificate and other necessary documents were ready for the purpose of registering the sale deed. Therefore, Ex.A10 shall have to be taken into consideration as the necessary notification as enjoined under clause 4 of Ex.A1 agreement. From 14-2-1976 the plaintiff society was given time in all two months for paying the balance consideration and for getting the sale deed executed and registered. Therefore, this 14-4-1976 should be the day from which the period of limitation is to be reckoned in usual course. In the meanwhile, the Act 33 of 1976 came into force with effect from 17-2-1976. Unless the suit land is exempted from the application of the provisions of Chapter III of the said Act, no alienation could be effected validly. The provisions of Act 33 of 1976 thus constitute a legal bar for the transaction under Ex.AI to be pushed through. This was an unforeseen event and the parties could not have visualised the said contingency at the time of Ex.AI agreement. Although the necessary covenant in regard thereto has not been incorporated in Ex.AI, it is an insurmountable condition without which the execution and registration of the sale deed cannot validly be proceeded with. Even if the sale deed is executed it will not be registered by the Sub-Registrar, sans the requisite permission from the Government under the provisions of Act 33 of 1976. It is now the contention of the learned Counsel for the appellants that the requirement of the necessary permission/ exemption under the provisions of Act 33 of 1976 will not and cannot detain the parties from proceeded further with the transaction and even for filing the suit and the Court can direct in the decree to the parties to obtain such permission. Reliance has been placed in support of the said contention by the learned Counsel for the appellant upon the judgment of the Apex Court in Mrs. Chandnee Widya Vati Madden v. Dr. C.L. Katial, : [1964]2SCR495 . The Supreme Court held as follows:
'In this view of the matter, the High Court was entirely correct in decreeing the suit for specific performance of the contract. The High Court should have further directed the defendant to make the necessary application for permission to the Chief Commissioner, which was implied in the contract between the parties. As the defendant-vendor, without any sufficient reasons, withdrew the application already made to the Chief Commissioner, the decree to be prepared by this Court will add the clause that the defendant, within one month from today, shall make the necessary application to the Chief Commissioner or to such other competent authority as may have been empowered to grant the necessary sanction to transfers like the one in question, and further that within one month of the receipt of that sanction she shall convey to the plaintiffs the property in suit. In the event of the sanction being refused, the plaintiffs shall be entitled to the damages us decreed by the High Court.'
That was a case where the plaintiff entered into contract of sale of a house belonging to the defendant constructed on the plot granted by the Government. As per one of the terms of the contract, the vendor should obtain the necessary permission of the Government for the sale within two months of the agreement and if the permission was not forthcoming within that time it was open to the vendors to extend the date or to treat the agreement as cancelled. Indeed, the defendant made an application for permission, but for the reasons of her own withdrew the same. In the suit for specific performance filed by the plaintiff therein, the point that arose for consideration was as to whether the suit contract of a sale was a contingent contract, and the point of limitation did not arise for consideration. The High Court while repelling the contention that the contract between the parties was a contingent contract granted decree for specific performance, the Apex Court while confirming the same directed to add another condition in the decree as extracted above. One thing is obvious from the said judgment that the date of specific performance of the contract could be extended by the parties when the requisite permission from the Government could not be obtained within the time. It was also open to them to cancel the contract when obtaining permission was impossibility. Here in the instant case, under Ex.A9 an endorsement was made on Ex.A1 agreement of sale whereby the parties mutually extended the time for performance up to 31-1-1976. This Ex.Al endorsement was sought to be assailed by the learned Counsel for the appellants that all the defendants did not sign the endorsement, and therefore, it would not bind the others. This was signed by D1 and D2. The denial of his signature by D2 is of no consequence in view of my discussion above in the judgment in regard to the execution of Ex.A1. As can be seen from Ex.A9 (a) - extension letter the parties mutually agreed for extension of time up to 31-1-1976. D1, D2, D3, D4 and the mother of Dl to D7 and on the side of the plaintiff society by one Loknatharao, the Secretary, signed this. This extension of the date up to 31-1-1976 is in accordance with Ex.A9 endorsement. As things stand, even otherwise, the starting point of the limitation would be 1-2-1976. That the parties could mutually extend the time for performance is now beyond doubt and controversy. It is now the contention of the learned Counsel for the respondents that a covenant on the part of the vendor to do all things necessary to give effect to the agreement including obtaining of permission for the transfer of the property under Act 33 of 1976 is implied and shall have to be read into Ex.A1 contract of sale. Reliance has been placed in support of the said contention upon the judgment of the Apex Court in Rojasara Rumjibhai Dahyabhai v. Jani Narotlamdas Lallubhai, AIR 1986 SC 1912, the Apex Court in Para 12 of the judgment at Page 1916 held as follows:
'There is always in such contracts an implied covenant on the part of the vendor to do all things necessary to give effect to the agreement, including the obtaining of the permission for the transfer of the property. The principles on which a term of this nature may be implied in contracts are well settled.'
In support of the said observation the Apex Court relied upon a passage from Halsbury's Laws of England, Vol.8, 3rd Edition, P.121, which may be profitably extracted hereunder:
'In construing a contract, a term or condition not expressly stated may, under certain circumstances be implied by the Court, if it is clear from the nature of the transaction or from something actually found in the document that the contracting parties must have intended such a term or condition to be part of the agreement between them. Such an implication must in all cases be founded on the presumed intention of the parties and upon reason, and will only be made when it is necessary in order to give the transaction that efficacy that both the parties must have intended it to have, and to prevent such a failure of consideration as could not have been within the contemplation of the parties.'
26. The Supreme Court also relied upon the judgment of the Privy Council in Motilal v. Nanhelal Ghasiram, AIR 1930 PC 287. The earlier judgment of the Apex Court in Mrs. Chandnee Widya Vati Madden's case (supra), has also been referred to in the said judgment. It is now well settled that an implied covenant can be read into a contract of sale in the contingencies that obtain given the facts of a particular case. In this case on account of the advent of the Act 33 of 1976 perforce the requisite exemption from the Government shall have to be obtained. The contract of sale will not become a contingent contract on account of such requirement or as a matter of that requirement under the Act 12 of 1972. Given the necessary sanction under Exs.A7 and A12 that contingency would not arise in this case. For the above reasons now there is an implied covenant under Ex.A 1 that the defendant should obtain the necessary exemption from the authority under the Act 33 of 1976. As discussed by me (supra), clause (4) of Ex.A1 requires a permission to be obtained by the defendants under the provisions of the Act 12 of 1972 and after receipt of such permission should notify the plaintiff society. Under this implied covenant the defendants are further required to obtain the necessary exemption under the Act 33 of 1976 also albeit, there is no such explicit term in the agreement. The starting point of limitation shall be from the date of the receipt of the necessary exemption under the Act 33 of 1976. It is appropriate here to refer Article 54 of the Limitation Act, which provides for the period of limitation in regard to the suits for specific performance. Article 54 reads as under:
54.For specific performance of contract.
Three yearsThe date fixed for theperformance or, if no such dale is fixed, when the plaintiff has notice that performance is refused.
The period of limitation is to be reckoned from the date fixed for the performance of the contract or when no such date is fixed from the date of knowledge of the refusal of the performance by the opposite party. Article 54 therefore, take care of two contingencies. In respect of the matters, which have not come within the purview of the two contingencies viz., (1) where the date of performance is fixed, and (2) where no such date is fixed. Taking a hypothetical situation where, even though the date is fixed for performance, but the contract cannot be performed on account of any legal impediment, which cannot frustrate the contract, like the one in the instant case, the period of limitation cannot be reckoned from the date as fixed in the contract. In respect of the matters which have not been covered by either of these two contingencies as envisaged by Article.
54, the residuary Article 113 would apply. Article 113 reads as under:
Suits for which there is no prescribed period
Suits for which there is no prescribed period.
Description of suitPeriod of limitationTime from which period begins to run
113.Any suit for which no period of limitation is provided elsewhere in this schedule.Three yearsWhen the right to sue accrues.
From this Article the starting point of limitation is the date on which the right to sue accrues. In fact the Apex Court relied upon Article 113 in a suit for specific performance in Rojasara Ramjibhai Dahyabhai's case (supra). That was a case where the appellant entered into an agreement of sale to purchase Girasdari agricultural land of which he was a tenant. The agreement stipulated that the respondent was to apply for permission from the Collector to convert the agricultural land for non-agricultural use and the sale deed was to be executed after obtaining such permission. The contract of sale was entered into on October 19, 1949. In the year 1951 The Saurashtra Land Reforms Act, 1951 came into force w.e.f., September 1, 1951. Under the provisions of that Act, the right of the respondent therein was extinguished and the appellant was recognised to be an occupant. On August 26, 1958 the Revenue authorities granted permission in respect of a part of the land and on September 10, 1959 in respect of the remaining part of the land. When the respondent refused to execute the sale deed, the appellant filed the suit for specific performance on September 6, 1960. On the above facts, the Apex Court in Para 15 of the judgment held as follows:
'75. The next and the last contention that the suit brought by the appellant was barred by limitation is wholly devoid of substance. Under Article 113 of the Limitation Act, 1963, the limitation prescribed for a suit for specific performance is a period of three years, which runs from the date when the cause of action accrues. In the facts and circumstances of the case the respondents were required to have a conveyance executed immediately upon the conferral of occupancy rights on the abolition and the permission granted by the Revenue authorities to him to convert the suit land into village site. As already stated, the permission to convert the disputed land into village site having been obtained on August 26, 1958 insofar as a part of the land admeasuring 1,000 square yards and on September 10, 1959 as regards the remaining portion, it could not be said that the respondent's suit filed on September 6, 1960 was barred by limitation.'
27. Obviously, therefore, in respect of the matters which are not covered squarely by Article 54, Article 113 can be invoked. The fact that the Act 33 of 1976 has come into force far subsequent to the execution ofEx.Al is of no consequence. Act 33 of 1976 creates an embargo for the transaction to be pushed through is clear from the provisions of the said Act. No sale deed could have validly been executed and registered without the necessary exemption under the said Act. In such contingencies going by the stipulation 4 (four) of Ex.A1 for reckoning the period of limitation is not the proper course. An implied covenant for obtaining the necessary exemption by the defendants shall have to be read into the contract of sale under Ex.A1. Since the contingency obtaining from the peculiar facts of this case is not covered by Article 54 of the Limitation Act the other Article that applies is obviously Article 113. The right to sue accrued to the plaintiff only after obtaining necessary exemption under Ex.A12 from the Government. Ex.A12 exemption was granted under G.O. Ms. No.179, dated 27-1-1979. The right to sue to the plaintiff accrued on and after 27-1-1979 only. The contentions of the learned Counsel for the appellants that inasmuch as the date for performance has been fixed under clause (4) of Ex.A1 agreement, Article 113 has no application, merits no consideration in view of the settled position of the law that an implied covenant is to be read into the agreement. Consequently the condition stipulated under clause (4) of Ex.A1 loses significance in view of the advent of Act 33 of 1976 which perforce requires an implied covenant to be read into the agreement; because of that implied covenant a permission is got to be taken from the authorities under Act 33 of 1976. Therefore, there remains no fixed date for performance of the contract nor it can be a case where no date is said to have been fixed. Article 54 therefore, has no application to the peculiar facts of this case. In my considered view Article 113 clearly govern the situation obtaining, given the peculiar facts, in this case. Though the position has not been dealt so clearly, the Court below is of the view that the suit filed on 2-7-1977 was well within three years from the date of exemption granted under Ex.A12 under Act 33 of 1976.
28. Whether the plaintiff society is always ready and willing to perform its part of the contract is the next moot question. A perusal of Ex.A9 endorsement and Ex.A9(a) extension letter shows that the request for extension of time for performance of the contract seems to have emanated from the plaintiff society. Similarly, a perusal of Ex.A12 shows that the registration of the sale deed could not be completed, as the society could not get loan from the Life Insurance Corporation till 16-1-1976. Ex.A8 letter dated 13-1-1976 shows that the plaintiff society applied for loan on 9-8-1975 of Rs.12,43,100/- against the security of the suit land and the Life Insurance Corporation expressed its readiness to advance the loan for the purpose of purchase of land, its development and construction of 32 houses thereon and the plaintiff was called upon there under to express its willingness by 6th February, 1976. Ex.A36 is another letter addressed by Life Insurance Corporation of India to the Secretary of the plaintiff society calling upon the society to inform the reasons for the delay in availing of the first loan instalment and commencement of construction work of houses. Relying upon the above documents, the learned Counsel for the appellants contends that the plaintiff society was not ready to perform its part of the contract. The learned Counsel further contends that even under Ex.A9(a) the time was extended till 31-1-1976 by which time Act 33 of 1976 was not in vogue and nothing prevented the plaintiff from surging forward with necessary readiness to get the sale deed executed and registered. It is therefore, the contention of the learned Counsel that on the facts of this case it is obvious that the plaintiff society was not ready and willing to perform its part of the contract. Reliance has also been placed by the learned Counsel upon the admission made by PW1 in the cross-examination to the following effect:
'As far as 4th venture is concerned, the plaintiff society has no money. The plaintiff society did not apply for any loan in March or April, 1974.'
Sequestered bit from the deposition of PW1 cannot be taken into consideration. Admission is not a conclusive proof, it only constitutes as an estoppel. The admission to be relied upon shall be unequivocal and unqualified. Down below the said admission in the deposition of PW1 he slated that the society had sufficient money to pay as advance under Ex.A1 when it purchased the suit land. To the specific question put to him, he stated that the society had sufficient money to pay advance to the vendors under Ex.A1 although it was not having the requisite Rs.2.5 lakhs in lump sum on the date of Ex.A1. He volunteered to say that Ex.A2 passbook shows that the society had sufficient money then. The deposition of the witness as a whole is to be considered, but not the isolated excerpt from the deposition. The learned Counsel for the appellants has contended that as per clause (5) of Ex.A1 the balance consideration should be paid within six weeks from the date of the first payment making l/4th of the sale consideration and that it is his further contention that within that period of six months the protected tenants have been cleared and therefore it shows that the plaintiff society has not been ready to pay the balance and to perform its part of the contract. Ex.A10 letter is a complete answer to this contention. Under this letter the defendants have fixed the date for registration of the sale deed as 18-2-1976 informing inter alia that they have obtained income tax clearance certificate and other certificates.
29. It can be culled out from the oral evidence of PW1 and some of the documents filed in the suit that the plaintiff society has been undertaking various ventures to construct houses for the benefit of its members. The suit land is sought to be purchased for the construction of 35 houses as a fourth venture. It indicates that all three ventures have been completed. It is also obvious from the evidence more particularly from Ex.A2 that the advance amount of Rs.85,000/- paid to the defendants under Ex.A1 agreement has been only from the individual contributions made by the members of the plaintiff society. The members of the plaintiff society are obviously employees of the Life Insurance Corporation. That fact negates the view that the society has no necessary wherewithal for purchasing the suit land. Even if the sanctioning of loan by the Corporation is delayed, the balance of the sale consideration being only Rs.1,58,525/-can be raised by the individual members of the society as they have been doing earlier as is evident from Ex.A2 passbook. Ex-A10 letter addressed by the first defendant refers to two other letters dated 6-2-1976 and 7-2-1976 received by the first defendant from the Secretary of the society and further reads that in those tetters inter alia the Secretary has expressed his readiness for execution and registration of the sale deed. In fact, the office copy of one of those letters has been marked in this case as Ex.A29. Even earlier thereto under Ex.A21 letter the plaintiff society expressed its readiness to get the sale deed registered before 31-1-1976 while requesting the defendants to obtain certain documents mentioned inter alia therein. That letter has also been referred to in Ex.A29. It is too much to contend that without the necessary preparedness the plaintiff society has been mentioning in all these letters that on their part they have been ready to get the sale deed registered. It suggests in a way that they have the necessary wherewithal to pay the balance of consideration in the event of defendants expressing willingness to perfonn their part of the contract. It is true under Ex.A11 letter addressed in reply to Ex.A10 it has been mentioned that the parties can fix up a mutually agreed date for registration that is on account of the fact that the protected tenants obtaining the necessary certificates from the Tahasildar and they have got to be evicted. In fact, under Ex.A3 and A49 one set of protected tenants surrendered their rights and the plaintiff society paid an amount of Rs.20,000/- to them and that the defendants on their part paid their share of Rs.20,000/-. Similarly, for the second set of protected tenants, the plaintiff society paid an amount of Rs.35,000/- under the compromise, where under the protected tenants surrendered their tenancy rights, as can be seen from Exs.A5 and A6. There has been no dispute about these transactions and payment of money by the plaintiff society to the two sets of protected tenants. The plaintiff society did not claim any credit for this amount of Rs.55,000/- paid to the protected tenants. Unless the plaintiff is interested in the transaction it would not have incurred the extra expenditure of Rs.55,000/-, that shows the bona fides on the part ofthe society and its anxiety to get through the transaction. Above all in Exs.A37 to A44 declarations filed by the defendants individually as against column No.7 it has been uniformly mentioned as follows:
'No.1 have entered into an agreement along with the other co-owners of the land with LIC Employees Co-operative House Building Society Ltd. TANo.203 on 28-3-1974 for sale of the vacant land admeasuring 13665.17 sq.meters. Because of certain genuine hardships registration of land could not be completed before the Act came into force. The Society has already got the lay out approved by MCH which referred in clause (6) of Part B.'
It has been clearly mentioned in the above excerpt that on account of certain genuine hardships the registration of the land could not be completed before the advent of Act 33 of 1976. These declarations bear the signatures of the defendants and it is they who have furnished them before the authorities in accordance with the provisions of Act 33 of 1976. It does not lie therefore, in the mouths of the defendants to contend that the plaintiff society is not ready and willing to perform its part of the contract and they have no money for payment of the balance of sale consideration.
Let us now turn to the relevant provisions under the Specific Relief Act so as to reach a definite conclusion on this contentious issue. Sections 16 and 20 of the said Act are germane for consideration in this context. Section 16 of the Specific Relief Act is apposite here to be considered and reads thus:
'16. Specific performance of a contract cannot be enforced in -favour of a person--
(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
(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 arc 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)--
(1) where a contract involved 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 aver performance of, or readiness and willingness to perform, the contract according to its true construction.'
The cognate Section 20 reads thus:
'20. (1) The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal.
(2) The following are the cases in which the Court may properly exercise discretion not to decree specific performance--
(1) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(2) where the performance of the contract would involve some hardship on the defendant, which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff.
(3) where the defendant entered into the contract under circumstances, which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1: Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).
Explanation 2: The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(1) The Court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(2) The Court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party.
30. Clause (c) of Section 16 of the Act ordains that the plaintiff who seeks the relief of specific perfonnance should aver and prove that he has either performed or has always been ready and willing to perform the essential terms of the contract other than terms performance of which has been prevented or waived by the adversary. He need not therefore prove those terms the performance of which has been prevented or waived by the defendant. The explanation appended to clause (c) elucidates the words 'ready and willing'. The plaintiff need not tender the amount to the defendant nor there is any need for him to deposit the same in the Court so as to demonstrate that he is ready and willing to perform the essential terms of the contract.
31. The learned Counsel for the plaintiffs in this regard relies upon a judgment of the Privy Council in The Bank of India Ltd v. J.A.H. Chinoy, AIR (37) 1950 PC 90. At Page 96 in para 21 it has been held as follows:
'But in order to prove himself ready and willing a purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction. The question is one of fact.....'
The learned Counsel for the plaintiffs has also relied upon a passage from the Pollock and Mulla of India Contract and Specific Relief Acts, 11th Edition, Volume II, Page No.1287 which may be extracted hereunder thus:
'Readiness and willingness of a person seeking performance in a case where time is provided for performance means that the person claiming perfonnance has kept the contract subsisting with preparedness to fulfil his obligations and accept perfonnance when the time for performance arrives. But it does not mean that he had command of the necessary money throughout the existence of the contract. But to prove readiness and willingness a purchaser has not necessarily to produce the money or vouch a concluded scheme for financing the transaction. Failure to find money or prove possession of money before time for performance cannot entitle the vendor to refuse performance.
The plaintiff does not have to go about jingling money to demonstrate his capacity to pay the purchase price. Thus, even where the plaintiff had stated that she did not have the means to pay the Court-fees but did in fact pay the full Court-fees before the time for claiming specific performance expired, the Court held that it could not be said that she was not ready and willing to perform her obligation. Clause (1) of Explanation of Section 16(c) clearly enacts that money need be produced only when directed by the Court.'
32. Learned Counsel for the defendants on the other hand relied upon a judgment of the Apex Court in N.P. Thimgnanam v.R. Jagan Mohan Rao, : AIR1996SC116 , in support of his contention. The Apex Court in the said judgment has held as follows:
'The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract.'
33. That was a case where on facts the trial Court Judge directed the plaintiff on an application filed by the defendant in regard thereto to deposit an amount of Rs.20,000/- or furnish bank guarantee giving time up to March, 1991. But the plaintiff neither deposited the amount nor did he furnish the bank guarantee. It was found on facts further that the plaintiff was dabbling in real estate business and he was not able to pay the loans. Under the circumstances, the Apex Court repelled the contention of the plaintiff that it was not necessary for the plaintiff that he should keep the money on hand and what is relevant and material is that he should have the necessary capacity to raise the funds and was ready and willing to perform his part of the contract. As a principle the Supreme Court did not lay down that the plaintiff should demonstrate by keeping the money ready right from the date of agreement till the date of decree so as to show that he is ready and willing to perform his part of the contract. For the above reasons the judgment of the Apex Court in N.P. Thirugnanam's case (supra), has no application to the facts of the case. Ultimately whether the plaintiff was ready and willing to perform the essential terms of the contract is only a question of fact, even as per judgment of the Apex Court referred to above. It is therefore got to be decided with reference to the facts and circumstances, which are peculiar to the given case. In the instant case, as discussed by me supra, the credit-worthiness of the plaintiff society cannot be doubted. Ex.A2 passbook shows that the members have been contributing and from out of the accumulated amounts the society has been paying the amounts to the defendants. For the above reasons readiness of the plaintiff cannot be doubted. It is incumbent upon the plaintiff to affirmatively establish that all throughout the plaintiff was willing to perform its part of the contract. Failure on the part of the plaintiff to perform its part of the contract or willingness to perform its part of the contract will disentitle it to the relief. The question whether the relief of specific performance should be granted or not always depends upon the facts and circumstances of each case vide Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi, : [1978]2SCR839 . The criterion to show willingness as laid down by the Supreme Court in the above case is inordinate delay on the part of the plaintiff, which disentitled the plaintiff to the relief. The plaintiff in that case had been put in possession of a substantial portion of the property and had not paid major part of his consideration. Procrastination on the part of the plaintiff put the defendant in a disadvantageous position and forced him to sell the existing property to raise enough money to pay off dues. Under the circumstances, in that case, the Apex Court refused the relief of specific performance. In N.P. Thirugnanam's case (supra), the Apex Court has held as follows:
'..... The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the Court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the Court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available.'
The Apex Court further held that:
'The Court may infer from the facts and circumstances whether the plaintiff was ready and always ready and willing to perform his part of contract.'
34. What is noteworthy from the above is the conduct of the party prior and subsequent to the filing of the suit along with other attending circumstances. Relying upon the said judgment of the Apex Court cited above a learned single Judge of this Court in Vwwnalanetii Basavayya v. Myneni Venkayya, 1997 (5) ALD 782, with reference to the facts in that case held that the plaintiff failed to prove that he had with him the balance amount of the consideration with agreed interest right from 3-3-1978 to the date of the institution of the suit and further he was unwilling to pay the agreed amount of interest at the rate of 18% on the balance amount of consideration and therefore only conclusion that would be drawn was that he was not really willing to perform his part of the contract and at no time he was ready either with money or with resources to perform his part of the contract and therefore the fact of depositing the balance amount of consideration with interest in pursuance of the decree passed by the trial Court would be of little interest to the plaintiff. The facts in that case are clear unlike in the instant case. There has been a stipulation for payment of interest on the balance sate consideration which has not been complied with by the plainliff therein. The conduct of the party has also been taken into consideration in the said judgment as the plaintiff was found to be guilty of material alterations by incorporating a clause in the agreement to the effect that the vendor had no objection for the vendee entering into the land to raise the level of land and put his hayrick. Reliance has also been placed by the learned Counsel for the defendant upon a decision of the Division Bench of this Court in C. Panduranga Rao v. V. Shyamala Rao, : 1999(4)ALT270 (DB), to which 1 am a party. It was held that in a suit for specific performance the plaintiff should plead and prove that he was always ready and willing to perform his part of contract at all material times, i.e., from the date of contract till the date of the suit and the party is not entitled to the relief of specific performance as a matter of course even though the execution of the suit agreement of sale is either admitted or proved, and the plaintiff must show equity in himself before seeking the equitable relief of specific performance. On facts in that case where the plaintiff approached the Court with the plea that he paid an amount of Rs.43,000/- and at another breadth Rs.52,000/- was found to have approached the Court with unclean hands. Therefore, the relief for specific performance was not granted to him.
35. In a recent judgment in Syed Dastagiri v. T.R. Gopal Krishna Setly, : AIR1999SC3029 , the Supreme Court held that the language in Section 16(c) of the Specific Relief Act 1963 docs not require any specific phraseology but only that the plaintiff must aver that he has performed or has always been and is willing to perform his part of the contract and to insist for a mechanical production of the exact words of a statute is to insist for the form rather than essence. The pith and substance in the plea should be taken into consideration. By relying upon the earlier judgment of the Apex Court in R.C. Chandiok and Anr. v. Chuni Lal Sabharwal and Ors., : [1971]2SCR573 , wherein it enunciated a principle that readiness and willingness cannot be treated as a strait-jacket formula and that has to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the party concerned. The Supreme Court furtherheld while construing explanation (i) of Section 16(c) that the plaintiff need not tender to the defendant or deposit in Court any money but he must as per explanation (ii) at least aver his performance or readiness or willingness to perform his part of the contract. If the plaintiff tenders the money that exhibils the willingness of the plaintiff to perform his part of the obligation.
36. What emerges from a conspectus of provisions of law and the various judgments referred to above is thus:
(1) Equitable relief of specific performance is discretionary and the Court is not bound to grant such a relief at the mere asking because it is lawful to do so.
(2) A person who is seeking equitable relief must show the equity in himself and approach the Court with clean hands.
(3) He must aver and prove that he has always been ready and willing to perform the essential terms of the contract, other than the terms the performance of which has been prevented or waived by the defendant. In other words he must show his readiness to perform the essential terms of the contract. The difference between the 'readiness' and 'willingness' cannot be lost sight of. The former refers to the financial capacity and the later on the conduct of the plaintiff wanting specific performance. Readiness and willingness cannot be treated as a strait-jacket formula. That has to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the parly concerned.
(4) The plaintiff to prove his readiness should show that the amount ofconsideration is available. But that does not mean that he should demonstrate by showing the availability of the money from the beginning till the date of the decree. Suffice if it is proved that he is ready to go through with the contract.
The following are the instances where the performance of the contract cannot be enforced.
(1) Inordinate delay on the part of the plaintiff to perform his part of the contract.
(2) The conduct of the plaintiff prior and subsequent to the filing of the suit and the other attending circumstances, which disentitle him from the relief.
(3) If any unfair advantage plaintiff derives over the defendant at the time of entering into the contract.
(4) Where the plaintiff has no equity in himself or approaches the Court with unclean hands.
(5) Where the contract makes it inequitable to enforce the specific performance.
(6) Where the performance of the contract results in disadvantageous position or hardship to the defendant and the non-performance thereof would not result any such hardship to the plaintiff. Again whether it would result in disadvantageous position or hardship to the defendant or give unfair advantage to the plaintiff or would not result in any such hardship to the plaintiff shall have to determined with reference to the facts and circumstances of the each case since it is a pure question of fact.
The above indicia only are illustrative but not exhaustive and they shall be consideredwith reference to the facts and circumstances of the each case.
37. The learned Counsel for the appellants contend that on account of the appreciation in the value of the Urban Lands the value of the suit lands has been increased and therefore the relief of specific performance is granted, it would cause any amount of hardship to the defendant. Reliance has been placed in support of the said contention by the learned Counsel upon the judgment of the Apex Court in K. Nurendra v. Riviera Apartments (P) Ltd., 1999 (5) ALD 14 (SC), one of the circumstances enumerated by the Supreme Court is subsequent escalation of prices. Ultimately the Supreme Court considered the totality of the circumstances emanating from the record therein, viz., the builder who agreed to purchase the plot for developing the same by constructing a multi-storeyed building thereon, failed to construct the building even after seven years from the date of agreement, failed to obtain the necessary sanction and a clearance from the authorities concerned, part of the land covered by the agreement was found to be in excess by the authority under the Act 33 of 1976 and, the other part has been acquired by the State; the builder was not in a position to construct and deliver the plots as agreed to the vendor and there has been an astronomical rising of prices in the meanwhile. All these circumstances, the cumulative effect of which has been considered by the Apex Court. The plaintiff society has done substantial acts towards the performance of the contract and also incurred loss at least to the extent of Rs.55,000 paid to the protected tenants, which is not covered by the terms of Ex.A1. The defendants cannot claim any disadvantage or hardship on account of the escalation of prices, more particularly the appreciation of value of the urban land. In the absence of any blame on the part of the plaintiff society, the delay cannot squarely be attributed to the plaintiff society. The initial version of the defendantsat the time of the execution of agreement of sale was that the land was not in existence in the records of protected tenants, was proved to be false. Two sets of protected tenants claimed tenancy rights over the suit land and ultimately on account of the compromise with them they surrendered their rights in favour of the plaintiff society. The plaintiff had to incur an additional amount of Rs.55,000/- in that regard, which he is not claiming by way of any deduction from out of the balance of sale consideration. The advent of Act 33 of 1976 was quite unforeseen by either of the parties and the blame cannot be thrown upon the plaintiff for that. The anxiety of the plaintiff to get the sale deed executed can be seen the way in which he paid the money to the protected tenants under a compromise. The delay was occasioned also as some of the defendants had to come from abroad for the execution of the sale deed. Having due regard to the facts and circumstances of the case, no part of the delay could be attributed to the plaintiff. The transaction cannot be said to be unfair and disadvantageous to the defendants. The defendants who have been evincing interest initially for the clearance of the hurdles at a later stage, after the necessary permission was given by the Government under Act 33 of 1976 stopped evincing interest in the transaction perhaps for the reason that as per the prevailing rates, the market price of the suit land has been increased many fold. On that ground it cannot be said that the transaction between the parties inter se under Ex.A 1 is unfair or it causes hardship. Causing hardship is a relative term and it has to be considered having due regard to the positions of both the parties. If the relief of specific performance is not granted the plaintiff society cannot acquire a suitable site for constructing houses for its members having already parted with the money.
38. At this juncture the learned Counsel for the appellants contends that the plaintiffsociety approached the Court with unclean hands by making a false averment in the plaint that the possession of the suit land was delivered to the plaintiff but in fact it was agreed to be delivered at the time of the registration of the sale deed. A careful reading of the averments made in the plaint would reveal that the possession was said to be delivered for a limited purpose of taking measurements and for preparing the necessary lay out. In fact, a petition to amend the plaint has been filed before this Court seeking the relief of possession, as it was not initially prayed for. It is further contended that the plaintiff society, which in fact was not ready with the necessary money for paying the balance sale consideration, had falsely averred in the plaint that it was ready and willing to perform its part of the contract. Payment of an additional amount of Rs.55,000/- to the tenants which was unexpected by both the parties itself is an indicia of the preparedness on the part of the plaintiff society to perform or willing to perform its part of the contract. The defendants themselves admitted in Exs.A37 to A44 that on account of the genuine hardships the sale deed could not be registered. I, therefore, see no merit in the contention of the defendants that the plaintiff society is guilty of falsity of the claim and approaching the Court with unclean hands. For the foregoing reasons it is obvious that the plaintiff society from the date of the suit agreement has always been ready and performed the essential terms of the contract and is willing to perform its part of the contract. It is only the subsequent events, which would not be foreseen, that prevented the plaintiff society from proceeding further and there are no laches on its part. None ofthe above indicia is attracted in this case so as to disentitle the plaintiff society the relief of specific performance and therefore there is nothing to interfere with the judgment and decree ofthe Court below.
39. In the result both the appeals fail and the appeals are hereby dismissed. In the circumstances there shall be no order as to costs.
This case having been set down for 'for being mentioned' on this 30th day of December, 1999, upon perusing the judgment dated 24-11-1999 in the appeals, upon hearing the arguments of Mr. T. Veerabhadrayya, Advocate for the appellants and of Mr. D.S.V.G. Nagaraju, Advocate for the respondents in CCCA No.36 of 1998 and of Mr. S. Niranjan Reddy, Advocate for the Appellants and of Mr. D.S. KG. Nagaraju, Advocate for the Respondents in CCCA No.58 of 1998, the Court made the following order :
ORDER
40. On being mentioned by the learned Counsel for the contesting respondents and after having heard both the Counsel, it is felt expedient to elucidate further on the point of possession of the disputed property.
41. CMP No.20514 of 1999 has been filed seeking leave to amend the plaint by incorporating the relief of recovery of possession. After having heard both sides, given the provisions of Section 22 of the Specific Relief Act and to avoid multiplicity of proceedings the said petition has been allowed. The amendment has also been carried out in the plaint. Unless the judgment and decree contained the said direction the whole effort would become otiose. The decree of the trial Court obviously does not contain any direction about the relief of possession. The decree of the trial Court would merge into the appellate Court decree. Therefore, the decree of the appellate Court should contain the necessary direction in regard to possession, as the amendment in regard thereto in the plaint has been made to the plaint in accordance with the order of this Court in CMP No.205I4 of 1999. Further more, when the plaintiff is entitled to the relief of specific performance it is equally entitled to the relief of recovery ofpossession. But then there has been no appeal or cross-objections on the part of the plaintiffs in regard thereto. The present appeal has been filed by the defendants in the suit. Notwithstanding the same, given the provisions of Rule 33 of Order 41 CPC, this Court can consider the request of the contesting respondents by suitably modifying the decree by adding the relief of possession so as to ultimately give effect to the order passed by this Court in CMP No.20514 of 1999 in the interest of justice. The judgment and decree are therefore to be suitably modified by directing that the plaintiff be entitled to recover the possession of the disputed property.