Contract – Specific performance of – Parties entered into an agreement to sell a suit property for Rs. 3.65 lakhs – Plaintiff paid Rs.5000/- on the date of signing the agreement – Thereafter, he further made the payment of Rs.60,000/- – Clause 3 of the agreement required that balance sale consideration to be paid within 3 months from the date of the agreement – Clause 5 of the agreement also required seller to obtain the original title documents of the suit property from the mortgagee after clearing mortgage – Plaintiff alleged that defendant was attempting to wriggle out of the agreement and he had sent three notices (two letters and a legal notice) to the defendant to comply with the terms of the agreement – Trial Court ordered specific performance – First appeal was dismissed – In second appeal, High Court reversed the concurrent judgments of the Courts below and held that time was the essence of the contract and letters sent by the plaintiffs were not proved – On appeal, held: High Court went wrong on number of counts – First, to hold that time was essence in the agreement was wholly incorrect – Clause 3 of the agreement to sell has to be read along with clauses 5 and 8, which clearly show that in the nature of reciprocal promises, the promise made by the seller in clause 5 has to be performed first, viz., that the title documents have to be obtained from the mortgagee after the mortgage is cleared – Secondly, both letters were addressed to the defendant on the address on which he later received/acknowledged the legal notice – Further, High Court erred in holding plaintiff was not ready and willing to perform the agreement – Therefore, judgment of the High Court set aside and that of the Courts below restored.
Allowing the appeal, the Court
Held: 1. The High Court has, in the second appeal, gone wrong on a number of counts. First, to hold that time was of essence in the agreement, is wholly incorrect. Clause 3 of the agreement to sell has to be read along with clauses 5 and 8, which clearly show that in the nature of reciprocal promises, the promise made by the seller in clause 5 has to be performed first, viz., that the title documents have to be obtained from the mortgagee after the mortgage is cleared. It is only then that the consideration above Rs.70,000/-, being the balance consideration for the sale, has to be paid. Secondly, the High court is wholly incorrect in stating that the two letters of 18.12.2002 and 19.12.2002 cannot be said to have been proved.
Both the letters were registered
A.D. letters sent to the very address of the defendant, which the defendant states is the address on which it received the legal notice dated 07.07.2003. Further, the moment the registered letter once sent is returned with the remarks stating that the addressee did not receive the same, it shall be deemed to have been served on the defendant on the address so stated, unless the contrary is proved. The defendant did not come forward with anything to show that this was not the proper address. In fact, that this is the proper address is shown by the fact that he acknowledged the receipt of the legal notice dated 07.07.2003 on this very address. [Para 9] [1014-D-H]
2. The High Court order is not correct in stating that readiness and willingness cannot be inferred because the letters dated 18.12.2002 and 19.12.2002 had not been sent to the defendant. The High Court also erred in holding that despite having the necessary funds, the plaintiff could not be said to be ready and willing. In the aforesaid circumstances, the High Court was also incorrect in putting a short delay in filing the Suit against the plaintiff to state that he was not ready and willing. Para 10] [1014-H; 1015-A]
3. The High Court also went into error in stating that the value of the property was Rs.10 lakhs at the time of the sale agreement. PW-1 in his cross examination admitted that it was Rs.10 lakhs on the date when PW-1 was cross-examined. The value of the property on the date of the sale agreement was only Rs.6 lakhs, and it was open for the parties to negotiate the said price upwards or downwards, which was what the parties did in the facts of the present case. Nothing can, therefore, be derived from the erroneous assumption that a valuable property had been sold at a throwaway price. [Para 11] [1015-E-G]
Mademsetty Satyanarayana v. G. Yelloji Rao and Others AIR 1965 SC 1405 : [1965] 2 SCR 221
– referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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