Summary
The Supreme Court set aside a High Court decree for specific performance and restored the trial court's dismissal of the suit. Although time was not of the essence, because the clause requiring the sellers to evict the tenants qualified the four-month payment clause, the buyer was not ready and willing to perform. The Court also explained how I.S. Sikandar and A. Kanthamani bear on a suit with no prayer to declare the cancellation invalid, and held that appellate courts may examine a missing jurisdictional fact even where no issue was framed.
Issues
- Whether time was of the essence of the agreement for sale, given a four-month payment clause and a clause obliging the sellers to evict tenants and deliver vacant possession at the time of sale.
- Whether the buyer proved continuous readiness and willingness to perform her part of the agreement and was entitled to the discretionary relief of specific performance.
- Whether a suit for specific performance is maintainable without a prayer declaring the vendor's cancellation of the agreement bad, and whether a higher court may examine that point when the trial court framed no issue on it.
Provisions considered
- Section 16(c), Specific Relief Act, 1963Following N.P. Thirugnanam, C.S. Venkatesh and U.N. Krishnamurthy, the plaintiff must plead and prove continuous readiness and willingness, including availability of funds, from the agreement to the decree. The buyer was held to have failed this test. (¶¶ 16, 20, 21, 33, 35, 36)
- Section 20 (as it stood before the 2018 amendment), Specific Relief Act, 1963Specific performance was treated as a discretionary, equitable relief to be exercised on settled principles; considering the buyer's conduct cumulatively, the Court declined to grant it. (¶¶ 15, 16, 17, 18, 33, 38)
- Section 10, Specific Relief Act, 1963Named among the provisions to be borne in mind when deciding whether the buyer was ready and willing and entitled to specific performance. (¶ 33)
- Section 9 and Order VII Rule 11(d), Code of Civil Procedure, 1908Maintainability of a suit is examined through Section 9, on an issue or earlier under Order VII Rule 11(d). Apart from any such bar, the trial court must itself be satisfied that the jurisdictional fact needed to grant relief exists. (¶¶ 44, 45)
- Order XIV Rule 2, Code of Civil Procedure, 1908A. Kanthamani was noted as holding that a plea on maintainability must ordinarily be raised in the written statement and decided as a preliminary issue under this rule before appellate courts examine it. (¶¶ 24, 25, 41)
Held
- Where two clauses of a contract conflict, a later clause that destroys the earlier obligation is rejected, but one that only qualifies it must be read together with it to give effect to the parties' intention (Forbes v. Git, Radha Sundar Dutta, Bharat Sher Singh Kalsia). (¶¶ 26, 27, 28)
- The clause requiring the sellers to evict the tenants and give vacant possession at the time of sale qualified the four-month payment clause, which assumed the property would be free of tenants by then. As the last tenant left only in February 2006, the buyer had four months from then, and the courts below rightly held time was not of the essence despite the agreement saying it was. (¶¶ 30, 31)
- The buyer was not ready and willing. After learning the property had been vacated, she raised a demand for an encumbrance certificate that the agreement did not oblige the sellers to provide, and she did not act on the sellers' repeated deadlines to pay and take the sale deed. (¶¶ 34, 35)
- The buyer's admission in cross-examination that neither of her bank accounts held enough to pay the balance showed she lacked the financial capacity to perform; her husband's bank transactions did not show otherwise. Holding back the returned advance draft until the last day of its validity further showed she was not genuinely interested. (¶¶ 36, 37)
- Seen cumulatively, the buyer's conduct did not justify granting the discretionary, equitable relief of specific performance. (¶¶ 38, 39)
- Reading I.S. Sikandar and A. Kanthamani together: where the vendor unilaterally cancels the agreement, the vendee seeking specific performance ought to seek a declaration that the cancellation is bad, since a cancelled agreement is non-existent in law; Kanthamani adds that a suit is not to be dismissed as not maintainable unless an issue on it was framed. (¶¶ 40, 41, 42)
- Whether or not a party raises it, the trial court must be satisfied that the jurisdictional fact needed to grant relief exists, and wrongly assuming it makes the decree ultra vires. If the trial court framed no such issue, a higher court may still examine the jurisdictional fact, provided no new pleadings or evidence are needed. The Court found it unnecessary to apply this here given its finding on readiness and willingness. (¶¶ 43, 44, 45, 46, 47)
Result
Appeals allowed; the High Court's first appellate judgment and decree set aside and the trial court's dismissal of the suit restored; the sellers to return the advance of Rs. 25 lakh within a month if not already returned, and any deposit made by the buyer under court orders to be returned with accrued interest.