SATYA JAIN (D) THR. LRS & Ors. v. ANIS AHMED RUSHDIE (D) TR.LRS & Ors.

sent a legal notice stating that he had written a letter to A the plaintiff No.1 on 9.9.1971 calling upon him to pay a sum of Rs. 1 lakh to the defendant. Plaintiff No.1 denied the receipt of letter dated 9.9.1971. He also reiterated his readiness to tender any payment as might be due under clause 7 of the agreement. Plaintiff No.1 received a notice from the defendant terminating the tenancy. The plaintiff filed the suit seeking a decree for specific performance of the agreement dated 22.12.1970. The defendant in his written statement contended, inter alia, that the suit was barred by limitation; that the plaintiffs were not entitled c to a decree for specific performance as plaintiff No.1 had breached the conditions of the agreement, particularly, clause 7 thereof. The trial court decreed the suit and directed execution of the sale deed. High Court, in appeal, reversed the decree. B D Allowing the appeals, the Court HELD: 1. On due application of the provisions of Section 15(5) of the Limitation Act, 1963, the suit filed by the plaintiff was well within time as the period of the absence of the defendant from India has to be excluded while computing the limitation for filing of the suit. [Para 15] [337-B-C] P C K Muthia Chettiar and Ors v. V E S Shanmugham Chettair (D) and Anr. AIR 1969 SC 552: 1969 SCR 444 - relied on. Atul Kristo Bose v. Lyon and Co. ILR 14 Cal 457; Muthukanni Muda/iar v. Andappa Pillai AIR 1955 Mad 96 - referred to.

2.1 Under clause 7 of the agreement, the obligation of plaintiff No.1 was to pay to the Income Tax Department. Neither clause 7 nor any other Clause of the E F G H 322 SUPREME COURT REPORTS I [2013] 3 S.C.R. A agreement had cast upon plaintiff No.1 a duty to tender any further payment to the defendant or to credit the bank account of the defendant with any further advance amount. Plaintiff No.1 had repeatedly asserted i,n his correspondence that he was always ready and willing to B pay any amount (within the balance consideration payable) to the Income Tax department so that the necessary tax clearance certificate could be issued. Nothing has been brought on record by the defendant to show that any demand or request had been made by him c to plaintiff No.1 for payment of any amount to the Income . Tax Department. [Para 20] [340-D-F]

2.2 The High Court, notwithstanding the clear language of clause 7 of the agreement, had invoked the principle of "business efficacy" to hold that a slight D deviation from the plain meaning of the language of clause 7 would be justified so as to read an obligation on the part of the plaintiff to pay the further amount of Rs. one lakh as demanded by the defendant instead of insisting on making such further payment(s) only to the Income Tax Authorities. [Para 21] [340-G] E

2.3 The principle of business efficacy is normally invoked to read a term in an agreement or contract so as to achieve the result or the consequence intended by the F parties acting as prudent businessmen. Business efficacy means the power to produce intended results. The test of business efficacy requires that a term can only be implied if it is necessary to give business efficacy to the contract to avoid such a failure of consideration that the G parties cannot as reasonable businessmen have intended. But only the most limited term should then be implied • the bare minimum to achieve this goal. If the contract makes business sense without the term, the courts will not imply the same. [Para 22] [340-H; 341-A·C] H SATYA JAIN (D) THR. LRS. v. ANIS AHMED RUSHDIE 323 (D) TR.LRS. United India Insurance Company Limited vs. Manubhai A Dharamasinhbhai Gajera and Ors. (2008) 10 SCC 404: 2008 (9) SCR 778 - relied on. The Moorcock by Lord Justice Bowen - referred to. 2.4 The business efficacy test, therefore, should be 8 applied only in cases where the term that is sought to be read as implied is such which could have been clearly intended by the parties at the time of making of the agreement. In the instant case not only the language of clause (7) of agreement dated 22.12.1970 is clear and · C unambiguous there is no other clause in the agreement which had obliged plaintiff No.1 to make any further payment after the initial part payment of Rs.50,000/-. The obligation of plaintiff No.1 was to pay any further amount(s) to the Income-Tax authorities, at the request D of the defendant, in order to facilitate the issuance of the Tax Clearance Certificate. No payment to the defendant initial amount of Rs.50,000/- was beyond contemplated. The intent of the parties, acting as prudent businessmen, appears to be clear. An obvious intent to E exclude any obligation of the plaintiff to pay any further amount (beyond Rs.50,000/-) to the defendant is clearly discernible. Consequently, resort to the principle of business efficacy by the High Court to read such an implied term in the agreement dated 22.12.1970 was not F warranted in the facts and circumstances of the case. [Para 24] [342-G-H; 343-A-D]

#3. No straitjacket formula can be laid down on the basis of which the readiness and willingness of the plaintiff in a suit for specific performance is to be judged. G The test of readiness and willingness of the plaintiff would depend on his overall conduct i.e. prior and subsequent to the filing of the suit which has also to be viewed in the light of the conduct of the defendant. In H 324 SUPREME COURT REPORTS [2013] 3 S.C.R. A the instant case, plaintiff No.1 was, at all times, ready and willing to perform his part of the contract. On the contrary, it is the defendant who had defaulted in the execution of the sale document. The insistence of the defendant on further payments by the plaintiff directly to B him and not to the Income Tax authorities as agreed upon was not at all justified and no blame can be attributed to the plaintiff for not complying with the said demand(s) of the defendant. [Para 25] [343-F-G; 344-A-B] C J.P. Builders and Anr. v. A. Ramdas Rao and Anr. (2011) 1 sec 429: 2010 (15) SCR 538 - relied on.