Civil Appeal Nos. 7254-7256 of 2002, Contempt Petition (C) No. 28-29 of 2009 and Civil Appeal Nos. 4641-42/2002. Case: 1. Mrs. Saradamani Kandappan, 2. Mrs. S. Rajalakshmi and Ors. Vs 1. Mrs. S. Rajalakshmi and Ors., 2. Mrs. Saradamani Kandappan and Anr.. Supreme Court (India)

Case NumberCivil Appeal Nos. 7254-7256 of 2002, Contempt Petition (C) No. 28-29 of 2009 and Civil Appeal Nos. 4641-42/2002
JudgesR.V. Raveendran and K.S. Radhakrishnan, JJ.
IssueContract Act, 1872 - Sections 51, 52, 53, 54 and 55; Transfer of Property Act, 1882 - Sections 34, 55, 55(1) and 55(5); Specific Relief Act, 1963; Rent Control Act; Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 - Sections 5(10)(B), 7 and 9(2); Civil Procedure Code (CPC) - Order 41, Rule 27; Constitution of India - Articles 14...
Judgement DateJuly 04, 2011
CourtSupreme Court (India)

Judgment:

R.V. Raveendran, J.

  1. These appeals by special leave (CA Nos. 7254 to 7256 of 2002) are directed against the common judgment and decree dated 19.6.2002 passed by the Madras High Court in O.S.A. Nos. 12 of 1992, 32 of 1995 and 148 of 1999 filed by the Appellant herein against the common judgment dated 29.11.1991 passed by a learned Single Judge of that court in Civil Suit Nos. 95/1984, 302/1989 and 170/1984 and filed by the Respondents herein. The Appellants and Respondents herein who were the Plaintiffs and Defendants respectively in the three suits, will be referred, for the purpose of convenience, by their ranks in the suit also.

  2. Respondent Nos. 2, 3 and 4 are respectively the son, daughter and husband of first Respondent. The first Respondent is the owner of Survey Nos. 13, 14 and 15, the second Respondent is the owner of lands bearing Survey Nos. 16 and 18 and the third Respondent is the owner of Survey Nos. 19 and 20, all situated in Chettiaragaram Village, Saidapet Taluk, Chingleput District in all measuring 24 acres 95 cents. The said lands along with the trees, wells, pump-houses, farm go downs, perimeter fence and some furniture, are together referred to as the 'schedule properties'. Respondents 1 to 4 entered into agreement of sale dated 17.1.1981 with the Appellant herein for sale of the schedule properties, at a price of Rs. 15,000 per acre (in all Rs. 3,74,250 rounded off to Rs. 3,75,000). On the date of the agreement, Rs. 1,00,000 was paid as advance to Respondents, which was duly acknowledged in the agreement. Clauses 3, 4, 5, 6, 7, 12 and 15 of the agreement which are relevant for our purposes are extracted below:

  3. The execution of the sale deeds shall depend upon the party of the second part getting satisfied regarding the title to the land, so also the nil encumbrance.

  4. The mode of payment of the balance of Rs. 2,75,000/- (Rupees Two lakhs and seventy five thousand only) shall be as under:

    (a) Rs. 1,00,000/- (one lakh) on or before 28.2.1981

    (b) Rs. 1,00,000/- (one lakh) on or before 6.4.1981

    (c) Rs. 75,000/- (seventy five thousand) on or before 30.5.1981

  5. If however any of the above mentioned dates are subsequently declared as holidays then the next immediate working day shall be the day of the payment.

  6. The payments on due dates is the essence of this contract and in case of failure on the part of the party of the second part, the party of the first part shall cancel this agreement.

  7. The sale deed shall be executed at the convenience of the party of the second part as and when she wants them to be executed either in her name or in the name of her nominee or nominees.

  8. If the party of the second part finds the titles of the properties herein above mentioned to be unsatisfactory or unacceptable, the party of the first part shall be put on notice revealing her intention not to conclude the sale and in such event if the party of the first part, fails to satisfy the party of the second part regarding the title the party of the first part shall pay to the party of the second part within three months the date there of all the monies advanced by the party of the second part till then.

  9. The party of the first part has a caretaker at present. From the day of this agreement the party of the second part shall act as a caretaker for the entire properties and be in trust of all the properties till the party of the first part given the possession of the entire properties to the party of the second part on payment of the sale amount i.e. after the entire sale amount is paid.

    (Emphasis supplied)

  10. On the same day (17.1.1981) the fourth Respondent, in a letter addressed to the Appellant, acknowledged the receipt of Rs. 1,25,000 paid on various dates as commission for the said transaction relating to sale of the said 24.95 acres of land. By the said letter, he agreed that in case the transaction of sale remained unconcluded or got cancelled because of the default on the part of the sellers or buyers under the agreement dated 17.1.1981 or because of defective title, the entire amount of Rs. 1,25,000 received by him as commission would be refunded within three months thereof.

  11. In pursuance of the said agreement the Appellant paid further advances of Rs. 1,00,000 on 28.2.1981 and of Rs. 25,000 on 2.4.1981. The balance of 75,000 in regard to the instalment payable on 6.4.1981 and the last instalment of Rs. 75,000 payable on or before 30.5.1981 was not paid by the Appellant.

  12. Respondents 1 to 3 caused a notice dated 2.8.1981 to be issued through their counsel to Appellant, cancelling the agreement dated 17.1.1981, on the ground of default in paying the balance of the sale consideration, in exercise of their right to cancel the agreement on such default, under Clause 6 of the agreement. The relevant portion of the cancellation notice is extracted below:

    My clients state that even at the time of entering into the said agreement of sale, you looked into the documents of title and satisfied yourself about the title of my clients to the said property. My clients were always ready and wiling to conclude the sale and expected you to pay the balance of sale consideration of Rs. 2,75,000/- in accordance with Clause 4 of the said agreement. Now that you have committed defaults in the payment of the balance of consideration. Not withstanding the fact that you have not even sent any communication whatsoever to my clients as to whether you were ready and willing to pay the balance of consideration under the said agreement, my clients waited for a long time and in the circumstances my clients have no other alternative except to invoke Clause 6 of the said agreement. Accordingly, my clients hereby cancel the said agreement dated 17th January 1981 entered into between yourself and my clients in view of your failure to have paid the balance of sale consideration according to Clause 4 of the said agreement, as the payment of the instalment on due dates was agreed to be the essence of the contract.

    Please take notice that the said agreement dated 17.1.1981 has been cancelled and my clients will be refunding the sum of Rs. 2,25,000/- only so far received by them as aforesaid on their concluding the sale with any third party and ascertaining the deficit, if any, in the sale price for deducting the same from the amounts refundable to you in receipt of which you may expect a communication from my clients on their concluding the sale with third party.

  13. The Appellant sent a reply dated 7.8.1981 through counsel contending that time was never intended to be the essence of the agreement though it was formally mentioned in the agreement that time was of the essence; that Respondents had failed to produce the original documents of title in spite of repeated demands and therefore it was agreed between the Appellant's husband and the fourth Respondent during discussions held in March 1981 in the presence of witnesses, that the original documents would be made available as soon as possible and the Appellant should pay the balance only thereafter, and that sale should be completed within a reasonable time of handing over the documents; and that as a token of such understanding, a further advance of Rs. 25,000 was received on 2.4.1981. The Appellant also denied the claim of the Respondents that the Appellant had got examined the documents of title and satisfied herself about that title at the time of entering into the agreement of sale. The Appellant asserted that there was no default on her part and contended as follows:

    The allegation that your client was always ready and willing to conclude the sale and expected my client to pay the balance of the sale consideration of Rs. 2.75 lakhs in accordance with Clause 4 of the said agreement etc. is not correct. The very attitude your client is not giving the documents of title for scrutiny from January 1981 for the past 6 months will prove the hollowness of the claim. The further allegation that my client has committed default in payment etc. is also not true, because my client has already paid Rs. 2,25,000/- and on 2.4.1981 when the sum of Rs. 25,000/- was paid it was specifically understood that the balance of money will be paid and the sale will be completed within a reasonable time as soon as the documents of title were handed over to her. Therefore, the question of default in payment of the instalment does not arise. Moreover, it is very unreasonable on the part of your client to allege that default has been committed when the truth is otherwise.

    My client is ready and willing to pay the balance of sale consideration and have the sale completed provided the documents are handed over to her immediately for scrutiny and approval. Once again in the circumstances set out above, there is no default on the part of my client and she is always ready and willing to perform her part of the agreement provided your client hands over the documents for scrutiny and the title is found good to the satisfaction of my client's legal advisers.

    My client therefore stated that the purported cancellation of the agreement by the said notice is not legal and valid and your client is called upon to perform her part of the obligation, viz., the handing over of the original documents forthwith and without any undue delay, so that the transaction may be completed. I hope that your client will see the reasonableness in the offer and will not precipitate the matter any further. My client expects an early reply in this regard.

  14. This brought forth a rejoinder dated 26.8.1981 from Respondents 1 to 3 through their counsel. They denied the claim of the Appellant that there was a variation in the term regarding payment of balance consideration in specified instalments. They also denied that such a variation was agreed at a meeting held in March 1981. They reiterated that the time was the essence of the contract and that the agreement was executed only after the Appellant had satisfied...

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