2016(5) Law Herald (P&H) 4101 : 2016 LawHerald.Org 2519

IN THE HIGH COURTOF PUNJAB AND HARYANA

Before

The Hon’ble Mrs. Justice Rekha Mittal

RSA No. 4080 of 2013 (O&M)

Dr.AmitArya

v.

Smt. Kamlesh Kumar;

Decided on 08/02/2016

For the Appellant:             Mr. Anurag Jain, Advocate.

For the Respondent:       Mr. Vivek Suri, Advocate.

Agreement to SellSpecific PerformanceMere fact that agreement to sell contained a stipulation that in case the proposed vendor failed to execute sale deed by date fixed, he would be liable to pay double the amount of earnest money cannot be used to gain advantage by the guilty party.

  • Specific Relief Act, 1963, S.20–Agreement to SellSpecific Performance-Mere
    fact that agreement to sell contained a stipulation that in case the proposed
    vendor failed to execute sale deed by date fixed, he would be liable to pay
    double the amount of earnest money cannot be used to gain advantage by
    the guilty party.
    (Para 20)
  • Specific Relief Act, 1963, S.20–Agreement to Sell-Specific Performance-Belated
    legal noticeHeld, there is no requirement in law for the proposed vendee to
    serve a legal notice upon the proposed vendor either within a particular period of
    time or even before filing of suit for specific performance. (Para 21)
  • Specific Relief Act, 1963, S.20-Agreement to Sell-Specific Performance-Time as
    essence of the contractIn contract for sale of immovable property, ordinarily the
    time is not essence of contract unless so intended by the parties either expressly
    or by way of necessary; (Para 21)
  •  Civil Procedure Code, 1908, 6.14 R.2Framing of IssuesAppellate Court
    cannot reverse the findings merely because a specific issue has not been
    framed by trial CourtAppellate Court is empowered to frame an additional
    issue and if need be, seek a report from the trial Court on the said issue and
    then decide the appeal.
                                                                            (Para 24)
  •  Civil Procedure Code, 1908, O.14 R.2–Agreement to Sell-Specific Performance-
    Framing of Issues-Plea of hardship not taken in trial
    Cannot be considered in
    appeal-Specific Relief Act, 1963, S.20.                                                               (Para 30)

CASES CITED:

  1. S. Sikandar (d) v. K. Subramani, 2014(1) Law Herald (SC) 688. (Para 16)
  2. Man Kaur (dead) v. Hartar Singh Sangha, 2011(3) Law Herald (SC) 2417 : 2011(3) Law Herald (P&H)
    (SC) 2108 :2011(2) Land.L.R. 84 (SC). (Para 14)
  3. O. Souza v. Shondrilo Naidu, (2004) 6 SCC 649. (Para 15)
  4. Saradamani Kandappan v. S. Rajalakshmi, 2011(5) Law Herald (SC) 3548 :2012(1) Land L.R. 187 (SC). (Para 17)

JUDGMENT

Mrs. Rekha Mittal, J. – The present regular second appeal has been directed against the judgment and decree dated 22.04.2013 passed by the Additional District Judge, Panchkula whereby an appeal preferred by the respondent against the judgment and decree dated 14.05.2011 passed by the Additional Civil Judge (Senior Division), Panchkula has been partly allowed and as a result, the suit of the appellant for specific performance of agreement to sell has been dismissed and he has been granted alternative relief for recovery of earnest money along with interest.

  1. Facts relevant for disposal of the present appeal are that the respondent entered into an agreement to sell dated 11.12.2004 for sale of property measuring 2biswas 10biswasi situated in Hadbast No. 393 Khata No. 68/119, Khasra No. 223/6 to the extent of width of total 1 kanal 10 marlas situated in Kalka, Tehsil Kalka District Panchkula. Out of total sale consideration of Rs.9,05,000.00, an amount of Rs. 1,00,000.00 was paid as an earnest money at the time of execution of the agreement. The last date for execution of sale deed was fixed as 10.03.2005. It was agreed that in case the respondent failed to get the sale deed executed/registered, the appellant was entitled to recover Rs.2,00,000.00, double of the earnest money. It is averred that the appellant was always ready and willing to perform his part of the contract. On 10.03.2005, he remained present along with sale consideration and other expenses for registration of sale deed in the office of Sub Registrar, Kalka but the respondent failed to turn up for execution of sale deed. He got his presence marked by getting an affidavit attested. He also prepared a challan for purchase of stamp papers valuing Rs.72,400/-, got it passed from the concerned Treasury Officer. The appellant served a legal notice dated 29.11.2005, calling upon the respondent to execute the sale deed on/or before 06.12.2005 but the respondent sent reply to the legal notice wherein execution of the agreement and date fixed for registration of sale deed were admitted but it was wrongly claimed that the earnest money stood forfeited.
  1. The respondent filed the written statement, inter alia, challenging maintainability of the suit.
    She admitted that the agreement to sell dated 11.12.2004 was signed by her but pleaded that
    at that time, the agreement was blank and was filled later. The appellant failed to turn up
    before Sub Registrar, Kalka on 10.03.2005, whereas the answering respondent remained
    present in the office of Sub Registrar, Kalka throughout the day and got her presence marked
    by way of affidavit. The appellant failed to perform his part of the contract and earnest money
    stood forfeited as mentioned in the reply to the notice.
  2. The controversy between the parties led to framing of following issues:-

 

  1. Whether the defendant entered into an agreement to sell dated 11.12.2004 with the plaintiff of the
    suit property, as detailed in the head note of the plaint, situated in Kalka, Tehsil Kalka, District
    Panchkula, as alleged?OPP
  2. Whether the plaintiff is entitled for the relief of possession, as prayed for?OPP
  3. Whether the plaintiff is entitled for the relief of permanent injunction, as prayed for? OPD
  4. Whether the plaintiff is entitled for the alternative relief for the recovery of Rs.2,46,000.00 along with
    interest @ 18% per annum from the date of agreement to sell dated 11.12.2004, till the date of its
    actual realization, as prayed for? OPP
  5. Whether the plaintiff has no cause of action to file the present suit?OPD
  6. Whether the suitor” the plaintiff is not maintainable in the present form?OPD
  7. Whether the plaintiff has not come to the Court with clean hands?OPD
  8. Whether the plaintiff is estopped from filing the present suit by his own act and conduct? OPD
  9. Relief

 

  1. The trial Court permitted the parties to adduce evidence in support of their respective claims.
  2. The appellant appeared in the witness box as PW1, examined Jatinder Pal (PW2) and
    tendered into evidence documents Ex.P1 to 9.
  3. To rebut evidence of the appellant, the respondent examined herself as DW1, Surjit Singh
    (DW2), Chander Singh (DW3), Mahavir (DW4) and tendered into evidence document, Ex. D1.
  4. After having heard counsel for the parties in the light of issues framed for determination and
    evidence adduced on record, the learned trial Court answered issues No. 1 to 3 in favour of the
    appellant and as a result, the suit filed by the appellant was decreed for possession by way of

specific performance of the agreement and the respondent was directed to execute sale deed in favour of the appellant on receipt of balance sale consideration of Rs.8,05,000.00 within two months, failing which the appellant was left at liberty to get the sale deed executed through process of the Court.

  1. Feeling aggrieved against the judgment and decree passed by the trial Court, the
    respondent preferred an appeal which was partly allowed in favour of the respondent and as
    a result, the judgment and decree passed by the trial Court allowing specific performance of
    the agreement has been set aside and, the appellant has been held entitled to recover a sum
    of Rs.2,00,000.00, double of the amount of earnest money, with interest @ 9% per annum
    from the date of agreement till realisation of the amount.
  2. Feeling aggrieved by the judgment and decree passed by the appellate Court, the present
    appeal has been preferred by the appellant/plaintiff.
  3. A perusal of the record would make it evident that there is no dispute between the parties that
    agreement to sell dated 11.12.2004 was executed by the respondent in favour of the appellant
    and an amount of Rs. 1,00,000.00 out of total sale consideration of 19,05,000.00 was paid as
    earnest money at the time of execution of the agreement. The Courts below have recorded
    consistent findings in regard to claim of the appellant that the respondent executed the
    agreement in question on receipt of Rs.1,00,000.00 towards earnest money. Counsel for the
    parties have fairly conceded that they have nothing to submit to challenge the findings of the
    Courts below in this regard.
  4. The sole question that survives for consideration is “whether the appellant is entitled to
    specific performance of the agreement to sell or the appellate Court has rightly allowed
    alternative relief of recovery in the facts and circumstances of the present case?”
  5. Before adverting to the rival submissions made by counsel for the parties which would be
    dealt with in the later part of the judgment, it is appropriate to take note of the reasons which
    weighed in the mind of the Court in appeal to negate plea of the appellant for specific
    performance of the agreement. The appellate Court in Para 14 of the judgment has given four
    reasons and precisely, the same reads as under:-

 

  • No document of ownership of the suit land was produced and proved in evidence by the plaintiff/
  • The agreement to sell contains clause of payment of double of the earnest money in case the
    purchaser fails to get the sale deed executed till 10.03.2005.
  • The legal notice Ex.P4 was issued by the respondent after about more than 8 months from the
    date fixed for execution of the sale deed and the same raises a doubt if the appellant was ready and
    willing to perform his part of the contract. In addition, it is mentioned that the respondent has also
    produced her affidavit Ex.D1 got attested by her to mark her presence in the Tehsil on 10.03.2005 but
    the said affidavit was not discussed in the judgment by the trial Court.
  • No specific issue was framed as to whether the respondent was entitled for specific performance
    of the agreement to sell Ex.P1
  1. Counsel for the appellant would contend that the reasoning adopted by the Court in appeal
    to reverse the findings of the trial Court is not only erroneous but is the result of complete non-
    application of mind as well as against the settled principles in law that specific performance of
    an agreement is the rule in case proposed vendee is able to establish his claim with regard to
    execution of the agreement and his readiness and willingness to perform his part of the
    agreement. It is further argued that Hon’ble the Supreme Court of India has allowed specificperformance of the agreement even in a case where the agreement of sale only provided for damages in the event of breach by other party, in other words, the agreement did not provide for specific performance in the event of breach by the vendor. For this purpose, he has cited Man Kauf (dead) by LRs v. Hartar Singh Sangha, [2011(3) Law Herald (SC) 2417: 2011(3) Law Herald (P&H) (SC) 2108: 2011(2) Land.L.R. 84 (SC)]: (2010) 10 SCC 512.
  2. The next submission made by counsel is that the mere fact that the agreement contained
    a recital for payment of liquidated damages would not enure to benefit of the respondent by
    denying the relief of specific performance in favour of the appellant. For this purpose, he
    has relied upon judgment of Hon’ble the Supreme Court D. Souza v. Shondrilo Naidu,
    (2004) 6 SCO 649.
  3. Counsel for the respondent, on the other hand, has supported the judgment passed by the
    Court in appeal with the submissions that relief of specific performance is discretionary in
    nature and the appellate Court for well founded reasons has denied the said relief to the
    It is further argued that the respondent was very well present in the Tehsil office,

. Kaika on 10.03.2005 for executing the sale deed in favour of the appellant, but it was the appellant, who committed breach of the agreement. Silence on the part of the appellant for a period of more than 8 months from 10.03.2005 till issuance of notice dated 29.11.2005 speaks volume that he was not ready and willing to perform his part of the agreement. The respondent sent reply to the notice and raised a categoric plea that the amount of earnest money stands forfeited as the appellant failed to get the sale deed executed on the stipulated date i.e. 10.03.2005. It is argued with vehemence that the appellant has not challenged cancellation of the agreement, therefore, he has otherwise dis entitled himself to the relief of specific performance. For this purpose, he has relied upon judgment of Hon’ble the Supreme Court I.S. Sikandar (d) by LRs v. K. Subramani and others, [2014(1) Law Herald (SC) 688]: 2014(1) RCR (Civil) 236.

  1. Another submission made by counsel is that as time is essence of contract for transfer of
    immovable property and failure of the appellant to get the sale deed executed on 10.03.2005
    would entail his disentitlement to seek specific performance of the agreement and thus, the
    Court has rightly granted him alternative relief of damages. For this purpose, he has referred
    to judgment of Hon’ble the Supreme Court Saradamani Kandappan v. S. Rajalakshmi and
    others, [Saradamani Kandappan v. S. Rajalakshmi, 2011(5) Law Herald (SC) 3548:
    2012(1) LandL.R. 187 (SC)]
    : 2011 (4) RCR (Civil) 130.

18. I have heard counsel for the parties and perused the records.

  1. The substantial question of law that arises for consideration is ‘whether the reasons which
    weighed in the mind of the appellate Court for disallowing specific performance of agreement
    to sell, Ex.P1 are valid and can stand the test of judicial scrutiny?

As has been noticed hereinbefore, the appellate Court has recorded four reasons for differing with the trial Court and rejecting claim of the appellant for specific performance of the agreement to sell. As the respondent never raised any issue that she is not owner of the suit land and has rather admitted execution of the agreement, where was the reason for the appellant to adduce any evidence to prove ownership of the respondent.

  1. The mere fact that agreement to sell contained a stipulation that in case the proposed
    vendor failed to execute sale deed till 10.03.2005, she would be liable to pay double the
    amount of earnest money cannot be used to gain advantage by the guilty party. Hon’ble the
    Supreme Court in P.D. Souza’s case (supra), by referring to clause (7) of the agreement therein providing for payment of liquidated damages and after taking into consideration provisions of Section 23 of the Specific Relief Act 1963 has held that clause (7) of the agreement of sale would be attracted only in a case where the vendor is in breach of the term. It was for the plaintiff to file a suit for specific performance of contract despite having an option to invoke the said provision. It would not be correct to contend that only because such a clause exists, a suit for specific performance of contract would not be maintainable. The findings recorded by the appellate Court in sub Para 2 of Para 14 are in complete violation of what has been held by the Supreme Court in P.O. Souza’s case (supra).
  1. The learned appellate Court has recorded two reasons to negate plea of the appellant for
    his readiness and willingness to perform his part of the agreement. The first reason is that
    legal notice, Ex.P4 was issued after about more than 8 months from the date fixed for
    execution of sale deed. The second is that the respondent in her evidence has produced her
    affidavit Ex.D1, in token of her presence in the Tehsil office on 10.03.2005 but said affidavit
    was not discussed in the judgment by the trial Court. Firstly, there is no requirement in law for
    the proposed vendee to serve a legal notice upon the proposed vendor either within a
    particular period of time or even before filing of the suit for specific performance. Secondly, the
    notice was issued after about 8 months from the date fixed for execution of sale deed and the
    suit was instituted in January 2006 within a period of 10 months from the said date though
    admittedly, period of limitation is three years. In contract for sale of immovable property,
    ordinarily the time is not essence of the contract unless so intended by the parties either
    expressly or by way of necessary implication. It is none of the plea of the respondent that in the
    circumstances of the present case, time was essence of the contract. Even otherwise, if the
    respondent herself is guilty of not executing the sale deed on the stipulated date, she cannot
    be allowed to take advantage of her own wrong to deny the relief of specific performance by
    raising any such plea that time was essence of the contract.
  2. To be fair to the respondent, counsel has raised a submission that time is essence of
    contract in sale of immovable property. The judgment relied upon by counsel for the
    respondent in this regard has got no bearing. In Saradamani Kandappan’s case (supra), the
    Hon’ble Supreme Court has left the issue, if time is essence of contract in sale of immovable
    property as there is galloping increase in the prices of immovable property and market values
    of property are no longer stable or steady, to be considered in an appropriate case. I would
    hasten to add that there is nothing on record to suggest that in the year 2005 either there were
    any such market trends showing market value of property being no longer stable or steady
    when otherwise no such finding has been recorded by the appellate Court of which the
    respondent can derive advantage, in the circumstances of the present case.
  3. So far as failure of the trial Court to consider affidavit Ex.D1, the same cannot be a reason
    to hold against the appellant. The appellate Court is empowered to re-appreciate the entire
    evidence while examining correctness and legality of the findings recorded by the trial
    In this view of the matter, the reasoning adopted by the appellate Court in Para 14 is
    the result of non-application of mind and demonstrates that the presiding Officer did not
    bother to look into the various precedents available and relevant in the context, for the
    reasons best known.
  4. The appellate Court in Para 14 has further stated that no specific issue was framed as to
    whether the appellant was entitled for specific performance of the agreement to sell. It is not
    only surprising but shocking that the Court in appeal can reverse the findings merely because
    a specific issue has not been framed by the trial Court. The appellate Court is empowered to
    frame an additional issue and if need be, seek a report from the trial Court on the said issue and then decide the appeal. Even otherwise, as the trial Court framed issue No. 2 in respect of entitlement of the appellant for relief of possession, the parties adduced evidence knowing fully well their contesting claims, it otherwise cannot be held that either the trial Court did not frame any issue in regard to entitlement of the appellant to seek specific performance of the agreement or any prejudice ha’s been caused to the respondent for failure of the trial Court to do so. In view of the cumulative effect of the facts and circumstances discussed hereinbefore, it can be safely held that the appellate Court without legal and valid reason reversed the judgment of the trial Court for reasons which are whimsical, arbitrary and against the settled principles in law.