PRABHAKARLAL KALWAR v. SHRI GAJANAN

It is the case of the plaintiffs, as pleaded in the plaint, that the defendants are the owners of the suit schedule property and that the plaintiff/Gajanan was a tenant in respect of the said property. Defendant No.1 namely, Prabhakarlal was working in a cement factory at Shahabad in Kalaburagi District. Thereafter, he inducted the plaintiff/Gajanan as a tenant. It was the intention of the defendants to settle in Shahabad town and therefore, he offered the suit schedule property for sale and executed an agreement of sale dated 16.07.1976 for a total sale - 5 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR consideration of Rs.20,000/-. On the said date, an advance amount of Rs.5,000/- was paid by the plaintiff to the defendant.

#6. One of the conditions of the agreement was that the defendants shall execute a registered sale deed within two months from the date of obtaining permission to sell the land from the Deputy Commissioner, Belagavi, under the Urban Land (Ceiling and Regulation) Act, 1976. The defendant obtained the order of permission to sell the land on 31.03.1981. Thereafter, the defendant on one pretext or the other avoided execution of the sale deed. Consequently, on 22.06.1981 a legal notice was issued by the plaintiff to the defendant and thereafter the suit was filed on 22.07.1981. Hence, it is contended that the suit has been filed within the period of limitation. Accordingly, the suit is filed for specific performance.

#7. The defendants appeared through their Advocate and filed their written statement denying the execution of the agreement of sale as well as the receipt of advance amount of Rs.5,000/-. It is further contended that the suit schedule property is joint family property and that the defendant is not the exclusive owner of the said property. It is also pleaded that - 6 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR legal action was taken by the defendants to evict the plaintiffs from the premises, as the plaintiff/Gajanan was a tenant. The defendants further submit that the suit is barred by limitation and plead that time was the essence of the contract, which the plaintiff failed to adhere to the time stipulation. Therefore, on these grounds and averments made in the written statement, the defendants pray for dismissal of the suit.

#8. Both the Trial Court and the First Appellate Court have concurrently held that the plaintiff has proved execution of agreement of sale - Ex.P.1 by defendant and also the defendant received advance consideration amount of Rs.5,000/-, therefore, decreed the suit. Both the Trial Court and the First Appellate Court on the fact that since agreement of sale is proved and plaintiff is in continuous possession, held that the plaintiff is ever ready and willing to perform his part of contract, therefore, opined that all the legal requirements are proved for grant of a decree for specific performance and accordingly granted.

#9. The First Appellate Court concurred with the Trial Court that the plaintiff is entitled for the relief of decree for specific performance, but has directed the plaintiff to pay additional sum - 7 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR of Rs.4,00,000/- to defendant over and above Rs.15,000/-. Therefore, directed the defendant to receive an amount of Rs.4,00,000/- + Rs.15,000/- and directed the defendant to execute the registered sale deed.

#10. Being aggrieved by decreeing the suit in full in favour of plaintiff, the defendant owner has preferred the instant Regular Second Appeal by raising various grounds and raising substantial questions of law.

#11. Upon considering the appeal, following substantial questions of law would arise for consideration in this appeal. i) Whether, under the facts and circumstances involved in the case, both the Trial Court and the First Appellate Court are justified granting decree of specific performance in favour of plaintiff without considering the parameters enumerated in Section 20 of the Specific Relief Act like arbitrariness, hardship and unfair advantage over the defendant by the plaintiff? ii) Whether, under the facts and circumstances involved in the case, time is essence of contract in the present case and the plaintiff is - 8 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR adhered to the time stipulated in the contract for exercising his right of seeking relief of specific performance?

#12. Learned counsel for appellant/defendant submitted that grant of decree for specific performance by both the Trial Court and the First Appellate Court is completely arbitrary and causing hardship to the defendant and also creating unfair advantage over the defendant by the plaintiff. He argued that the agreement of sale is dated 16.07.1976 and total sale consideration is Rs.20,000/- and in case of plaintiff that he has paid Rs.5,000/- to the defendant, therefore the Trial Court delivering the judgment after 20 years directing the defendant to execute the registered sale deed for the meagre amount of Rs.20,000/- is nothing but arbitrary.

#13. Further submitted that though the First Appellate Court has directed the plaintiff to pay additional sum of Rs.4,00,000/- that also would not solace the defendant. Therefore submitted, the grant of decree for specific performance is causing hardship to the defendant rather than the plaintiff and is also creating an unfair advantage over the defendant by the plaintiff. Thus, submitted that both the Trial Court and the First - 9 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR Appellate Court have not appreciated correctly the mandate of law that the Court shall have to exercise the discretion judiciously. Therefore, submitted that the plaintiff on the basis of decree of specific performance is getting unfair enrichment at the cost of defendant owner. Therefore, submitted that both the Trial Court and the First Appellate Court have not exercised the discretionary power judiciously and correctly.

#14. Further submitted that, as against the sale, time is the essence of contract and according to terms of contract, performance ought to have been performed within two months and necessity of obtaining permission to sell the property, by the competent authority, lies on the defendant and the defendant has obtained permission from the ULC authorities on 31.03.1981. The plaintiff was well represented by advocate before ULC authorities and the plaintiff came to know regarding grant of permission to sell the property on 31.03.1981 itself and as per stipulation in the agreement that within one month from grant of permission, the plaintiff ought to have taken recourse requesting the defendant to execute such sale deed, but not done so. Therefore, the suit is barred by limitation. But this aspect is not - 10 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR considered by both the Trial Court and the First Appellate Court. Hence, both the Trial Court and the First Appellate Court have not exercised the discretion correctly and judiciously. Therefore, prays to make interference with the order passed by both the Trial Court and the First Appellate Court.

#15. Further submitted that, the defendant has faced much hardship at the hands of plaintiff. Since the defendant underwent legal proceedings up to the Hon’ble Supreme Court, for taking back his property and the suit schedule property is the only source of income for the family of defendant, therefore, if the plaintiff gets a decree of specific performance, that causes unjust enrichment to the plaintiff whereas the defendant will be put into greater hardship, but these factors are not considered by both the Trial Court and the First Appellate Court. Therefore, submitted that both the Trial Court and the First Appellate Court have not exercised the power correctly. Hence, prays to interfere with the judgment and decree of both the Trial Court and the First Appellate Court by allowing this appeal.

#16. On the other hand, learned counsel respondents/plaintiffs submitted that from the evidence adduced - 11 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR by DW.1 it is admitted and proved that the defendants executed the agreement of sale (Ex.P1). It was further contended that the suit is filed well within the period of limitation. Placing reliance on the admission made by DW.1 during cross-examination, the learned counsel submitted that once the execution of agreement of sale is proved the plaintiff is entitled to the relief of specific performance, which has been rightly granted by both the Trial Court and the First Appellate Court. Therefore, prays to dismiss the appeal, as it does not involve any substantial question of law.

#17. It is further submitted that though there has been escalation in the price of the property, the First Appellate Court in exercise of its discretion has directed the plaintiffs to pay an additional sum of Rs.4,00,000/- to the defendants. Thus, any hardship that might have been caused to the defendants stands mitigated by the said direction. It was contended that there would be no hardship to the defendants, if the suit schedule property is sold to the plaintiffs. Therefore, when the agreement of sale is proved and the defendants have received an advance amount of Rs.5,000/-, there remains no ground to deny the decree. Accordingly, it was submitted that both the Trial Court - 12 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR and the First Appellate Court have rightly granted the decree of specific performance, which needs no interference. Therefore, prays to dismiss the appeal.

#18. Upon consideration of the pleadings and the rival contentions placed by the learned counsel for both parties, it is proved that the defendants are the owners of the suit schedule property and that the plaintiffs are the tenants under the defendants. From the cross-examination of DW.1 it is evident that he has admitted the execution of the agreement of sale dated 16.07.1976 and also received an advance amount of Rs.5,000/-.

#19. It is pertinent to note that the suit property is situated on Kirloskar Road, Belagavi. As submitted by both learned counsel the property is located in a prime area of the Belagavi city.

#20. The Trial Court after a trial of 20 years, has decreed the suit in favour of the plaintiffs directing the defendants to receive Rs.15,000/- and execute the registered sale deed. However, the Trial Court failed to consider the escalation in the market value of the property during this long period. Granting a - 13 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR decree for specific performance at the original consideration fixed 20 years earlier, is arbitrary and causes serious hardship to the defendants resulting in an unfair advantage to the plaintiffs.

#21. The First Appellate Court concurred with the findings of the Trial Court and upheld the decree for specific performance with a modification directing the plaintiffs to pay an additional sum of Rs.4,00,000/- over and above Rs.15,000/-. However, both the Trial Court and the First Appellate Court failed to properly exercise their discretionary power in deciding whether the decree for specific performance could have been granted considering the factual background of the case.

#22. The agreement of sale is dated 16.07.1976 stipulated a total sale consideration of Rs.20,000/, out of which Rs.5,000/- was paid as advance. As per the terms of the agreement the plaintiffs were required to perform their part of contract within two months. It was also stipulated that the defendants were required to obtain necessary permission from the competent Urban Land Authorities and upon obtaining such permission, the plaintiffs were required to exercise their rights of specific performance within one month. - 14 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR

#23. Based on the evidence is proved that on

31.03.1981, the defendants obtained permission from the Competent Authorities to sell the land. Proceedings before the Competent Authorities show that both the defendants and plaintiffs were represented by their respective Advocates. Therefore, the plaintiffs were fully aware of the grant of permission on 31.03.1981. As per the conditions stipulated in Ex.P1 - agreement of sale, the plaintiffs were required to perform their part of contract within one month from the date of permission by establishing their readiness and willingness to get the sale deed executed.

#24. However, the plaintiffs issued a legal notice at Ex.P7 on 22.06.1981 and thereafter filed the suit on 22.07.1981. Thus, the suit filed by the plaintiffs is barred by limitation. When the agreement specifically stipulates the time within which the sale deed is to be executed, time becomes the essence of the contract and both parties are bound to such stipulation. The plaintiffs failed to adhere to the agreed time frame and is not supposed to act at his own convenience to seek execution of registered sale deed. - 15 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR

#25. The Hon’ble Supreme Court in DESH RAJ AND OTHERS vs. ROHTASH SINGH3, has laid down the principles relating to whether time is the essence of the contract in paragraph Nos.21, 22, 23 and 24, which reads as under: “21. Before venturing into the aforementioned issue, we must highlight that throughout the entire dispute, the appellants have taken a consistent stand of time-bound performance being an essence of the contract. They have maintained that sale deed was needed to be executed necessarily on the date of execution as agreed between the parties. It is unfortunate that all the courts below have failed to render a finding on this aspect despite the fact that this was one of the key defences taken by the appellants in respect of the prayer seeking specific performance.

#22. In this respect, we must now take note of Section 55 of the Contract Act which stipulates the aftermath in case of failure to perform contractual obligations at fixed time. The provision states –

#55. Effect of failure to perform at fixed time, in contract in which time is essential.-- When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential.–If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is 3 (2023) 3 Supreme Court Cases 714 - 16 - NC: 2026:KHC-D:1638 RSA No. 100234 of 2017 HC-KAR entitled to compensation from the promisor for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than that agreed upon.–If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so.

#23. The sale agreements in the present case clearly indicate the intention of the parties to treat time- bound performance as an essential condition. They stipulate that in case the sale deed was not executed on the date of execution, the sale agreements were liable to be treated as cancelled, and the earnest money was to be forfeited. Even in the legal notices dated 18.08.2004, through which respondent to execute the sale deed, the factum of time for performance was being an essential condition reiterated. On the other hand, no evidence or communication has been brought on record by the respondent to contradict the defence of time-bound performance taken by the appellants. last opportunity was extended

#24. Private Estates At this juncture, we must note the decision of this Court in Citadel Fine Pharmaceuticals v. Ramaniyam Real and Saradamani Kandappan v. S. Rajalakshmi5 wherein it was held that defence under Section 55 of the Contract Act is valid against anyone who is seeking the relief of specific performance. The facts of the instant case make the observations in Saradamani Kandappan5.” Ltd4.

#26. Therefore, when the contract contains a clear time stipulation the plaintiffs are required to strictly adhere to it. In ORDER a) The appeal is allowed. b) The judgment and decree dated 18.11.2016 passed in R.A.No.592/2009 on the file of I Additional District Judge, Belagavi, and the judgment and decree dated 01.04.2002 passed in O.S.No.351/1989 on the file of Principal Civil Judge JR.DN, Belagavi, are hereby set aside. c) The suit of the plaintiffs is dismissed. d) No order as to costs. Sd/- (HANCHATE SANJEEVKUMAR) JUDGE ASN-para Nos.1 to 7. MRK-para 8 to 15. PMP-para 16 to end. CT-CNB List No.: 1 Sl No.: 3