COROMANDEL INDAG PRODUCTS (P) LTD.versusGARUDA CHIT & TRADING CO. P. LTD. & ANR.

                      [2011] 12 S.C.R. 115


        COROMANDEL INDAG PRODUCTS (P) LTD.                            A
                                 v.
      GARUDA CHIT & TRADING CO. P. LTD. & ANR.
            (Civil Appeal No. 7021 of 2003)
                       AUGUST 16, 2011
                                                                      B
        [P. SATHASIVAM AND H.L. GOKHALE, JJ.]

        SPECIFIC RELIEF ACT, 1963: s.16(c) - Specific
  performance - Respondent-vendor agreed to sell its property
  to the appellant - In terms of agreement of sale, an advance        C
  of Rs.2 lacs was paid and the balance was payable in three
  short intervals - Respondent was required to furnish the
  documents of title and income tax clearance certificate -
  Appellant requested the respondent to furnish solvency
  certificate and exemption certificate from urban land ceiling       D
  authorities which were not furnished by respondent - Suit for
  specific performance by appellant - Held: It is incumbent on
  the party, who wants to enforce the specific performance of a
  contract, to aver and prove that he has performed or has
  a/ways been ready and willing to perform the essential terms        E
  of the contract - Respondent explained the urgency and the
  need to sell the property and dire need of money for their
  commercial transactions - An advance of Rs. 2 lakhs was
· made and further sums were paid in short intervals and time
  for completion of transaction was extended - The payment            F
  of money in short intervals and also the extension of time for
  completion of the transaction within the prescribed period
  clearly showed that both the parties wanted to complete the
  transaction as early as possible without further extension and
  the parties intended to treat the time as essence of the contract   G
 - The matter got delayed only due to the non-production of
  exemption certificate from urban land ceiling authorities - In
  the Agreement there was no specific reference to the
 production of an order from the competent authority under the
                              . 115                                   H
    116      SUPREME COURT REPORTS              [2011] 12 S.C.R.


A Urban Land Ceiling Act with regard to exemption - The
   lawyers of the appellant had perused all the relevant
   documents and on their advise, draft sale deed was prepared
   and that too after proper inspection of the site and building -
 · The information sought for by the appellant was only to delay
B the transaction - Appellant failed to prove that it was always
   ready and willing to perform in terms of s.16(c) of the Act -
   Suit for specific performance liable to be dismissed.

        The appellant-company required property for
    establishing Research and Development Centre.
C   Respondent-company desired to sell its property
    measuring 12 grounds 33 sq. feet with buildings. The
    appellant offered a price of Rs.82 lacs which was
    accepted by the respondent for sale of its property. The
    agreement of sale was executed between them on
D   28.8.1981 and an advance of Rs.2 lacs was paid. The
    appellant called upon the respondents to furnish the
    documents of title, the details of the encumbrances on
    the property, if any and also Income Tax Clearance
    Certificate as provided in the agreement of sale. The
E   respondents furnished the Income Tax Clearance
    Certificate and promised to furnish the other required
    documents very soon. They further demanded a further
    payment of Rs.10 lacs to which the appellant did not
    agree. As the respondents did not furnish the required
F   documents, the appellant again called upon the
    respondents to furnish the required documents. Instead
    of furnishing the documents, the respondents called
    upon the appellant to expedite the sale. Thereafter, the
    appellant requested the respondents to furnish the
G   solvency certificate and exemption certificate from urban
    land ceiling authorities. The respondents did not furnish
    the documents till the end of 1981 and the appellant filed
    a suit for specific performance before the High Court.

          The Single Judge of the High Court decreed the suit
H
   COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA              117
           CHIT & TRADING CO. P. LTD.
  and directed the respondents to execute the sale deed             A
. in favour of the appellant and granted three months time
  to the .appellant to pay, the balance of the sale
  consideration. The Division Bench of the High Court
  allowed the appeal. The instant appeal was filed
  challenging the order of the High Court.                          B

      Dismissing the appeal, the Court

        HE"'....D: 1. In the Agreement for Sale dated 28.08.1981,
  in the beginning, the Vendor-Respondents specifically
  asserted that they were the sole and absolute owner and           C
  in exclusive possession and enjoyment of all the land
  mentioned in the Schedule together with a multi-storey
  building, sheds, garages, outhouses, fixtures and fittings.
  The Agreement clearly stipulated that the Vendor required
  substantial cash for meeting its business purposes and,           D
  therefore, decided to sell the said property. It is apparent
  from the various clauses of the Agreement for Sale that
  the Vendor-Respc>ndent Company was in need of money
  for meeting its business purposes. Clau~es 3 and 4 of
  the Agreement mandated the Vendor to produce all the              E
  documents of title in their possession and hanq over the
  same to the Purchaser for investigation· by the
· Purchaser. It also made it clear that all those documents
  would be placed before the advocate of the Purchaser for
  scrutiny and approval and, thereafter, the Vendor at its          F
  own costs and expenses would clear all defects in title
  and encumbrances and claims on or to the said pr.operty.
  It is clear from Clause 6 that the sale shall be completed
  on or before 05.09.1981 or within a period of one week
  from the date of furnishing a Certificate under Section           G
  230-A of the Income-tax Act, 1981 by the vendor and on
  the date of the Registration of the Sale Deed, t~e
  Purchaser would pay Rs. 48 lakhs out of the amount of
  Rs. 82 lakhs. The balance of Rs. 10 lakhs was payable
  on or before 07.10.1981, Rs. 11 lakhs on or before                H
    118     SUPREME COURT REPORTS              [2011) 12 S.C.R.

A 07.11.1981, Rs. 11 lakhs on or before 07.12.1981 and the
  · balance of Rs. 32 lakhs payable in 3 instalments would
    not carry any interest. When there was a specific
    understanding between the parties within which period
    the sale was to be completed, it has to be construed that
B the intenti<>n of the parties was to treat the time as
    essence of the contract. Though the respondents had
    agreed to receive the balance of Rs. 32 lakhs in
    instalments for a period of 3 months after the registration
    of the sale deed which also made it clear that both
c parties had agreed to complete the entire transaction as
    early as possible which proved that time is essence of
    the contract. Though the appellant-Company relying on
    Clauses 3 and 4 of the Agreement contended that the
    respondents failed to produce all the required documents
0
    including the documents pertaining to title and
    encumbrances and claims on or to the property, there
    was no basis for such a claim. [Paras 5, 7, 8] [126-D-F;
    129-A-C; 129-D-H; 130-A-C]

         2. In terms of Section 16(c) of the Specific Relief Act,
E   1963, it is incumbent on the party, who wants to enforce
    the specific performance of a contract, to aver and prove
    that he has performed or has always been ready and
    willing to perform the essential terms of the contract.
    Explanation appended to this sub-section (c) makes it
F   clear that if a contract involves the payment of money, it
    is not essential for the plaintiff to actually tender to the
    defendant or to deposit in Court any money except when
    so directed by the Court. However, the plaintiff must aver
    performance of, or readiness and willingness to perform,
G   the contract according to its true construction. It is seen
    from the pleadings that necessary averments have been
    made in terms of sub-section (c) of Section 16. PW-1
    explained the urgency and the need to sell the property.
    He also explained that the company had a cash crunch
H   problem and was in dire need of money for thei~
   COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA            119
           CHIT & TRADING CO. P. LTD.
  commercial transactions and decided to sell the property        A
  in question, particularly, to meet the immediate need of
  their creditors. A payment of Rs. 2 lakhs was made as
  advance on the date of execution of the agreement dated
  28.08.1981. On 21.09.1981, a further sum of Rs. 5 lakhs
  was paid and by mutual consent, the time was extended           B
  to 30.09.1981. On 06.10.1981, another sum of Rs. 5 lakhs
  was advanced by the appellant-Company and the time for
  completion of the Sale Agreement was extended up to
  14.10.1981. Again, for the third time, that is on 19.12.1981,
  time was extended for the completion of the transaction         c
  up to 31.12.1981 on payment of Rs.1,10,000/-. The
  payment of money in short intervals and also the
· extension of time for completion of the transaction within
  the prescribed period clearly showed that both the parties
  wanted to complete the transaction as early as possible         0
  without further extension. Inasmuch as the Vendor was
  in dire need of money at every occasion and the need for
  such short term extension clearly showed that the parties
- intended to treat the time as essence· of the contract. In
  terms of Clause 7 of the Agreement at any time of               E
  registration of the sale deed, the appellant was required
  to pay a sum of Rs.50 lakhs, after deducting the advance
  amounts already paid and the balance of Rs.32 lakhs was
  payable after registration of the sale deed in three
  installments. This would also reveal the intention of the
  parties to treat the time as essence of the contract. The       F
  various clauses in the Agreement for Sale, pleadings,
  evidence and the conduct of the parties showed that
  parties have agreed that the time was essence of the
  contract and the same was to be adhered to strictly. [Para
  9] [130-D~G; 131-A-H]                                           G

    . 3. It Is true that in the Agreement, it was stated that
 Vendor was required to produce all the documents of title
 in their possession relating to the property to the
 Purchaser for investigation relating to title. In Clause 10,     H
    120      SUPREME COURT REPORTS              [2011] 12 S.C.R.


A there was a specific reference to the production of
  clearance certificate under Section 230-A of the Income-
  tax Act and obtain permission or sanction from any
  authorities that may be necessary for the purpose of sale
  of the property. When the appellant-Company being a
B Purchaser was investing a huge sum of Rs. 82 lakhs, they
  were entitled to clear all their doubts in respect of the title.
  In terms of Clause 6 of the Agreement, sale was to be
  completed on or before 05.09.1981 or within one week
  from the date of furnishing the certificate under Section
c 230-A of the Income-tax Act whichever was later and
  upon payment of Rs. 48 lakhs out of the agreed amount
  of Rs. 82 lakhs to the Vendor. Admittedly, the
  respondents produced Income-tax Clearance Certificate
  even on 09.09.1981. Only after production of l.T.
  Clearance, the appellant-Company sought further
0
  particulars relating to mortgage on the Bank of India,
  arrears of urban land tax, property tax, exemption
  certificate from the urban land ceiling authorities,
  encumbrance certificate, latest audited balance-sheet, list
E of creditors, solvency certificate, details of attachment
  and particulars about winding up proceedings alleging
  that they have not received the same to be forwarded to
  their advocates. The respondents sent a reply
  specifically stating that after being fully satisfied about the
  title, the appellant-Company prepared the draft sale deed
F and after a combined discussion at their office on
  07 .09.1981, the same was approved and thereafter, the
  respondents obtained necessary certificate under
  Section 23()..A of the IJ1.come-tax Act and the same was
  also intimated to them. In the same letter, it was pointed
G out that as per the Agreement of Sale and consensus
  arrived at between the parties, the appellant-Company
  was required to complete the sale within one week from
  09.09.1981. It was also pointed out that in spite of several
  promises and assurances, the appellant-Company could
H not fulfill their promise and also that because of this
  COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA              121
          CHIT & TRADING CO. P. LTD.
delay, they were suffering heavy loss and the very object          A
of sale was being defeated. It was also pointed out that
so far they had spent heavy sums and satisfied all their
requirements and finally requested to do the needful
immediately for completion of the sale transaction. [Para
10] [130-B-H; 132-A-D]                                             8

     4. It is not in dispute, more particularly, from the
evidence of PW-1 that the legal advisor of the appellant-
Company scrutinized the title deeds before entering into
Agreement. They also visited the site along with their
lawyers and finally after satisfying all the materials, their      C
lawyers gave opinion with regard to the clear title of the
property and only after getting their clearance, draft sale
deed was prepared to enable the respondents to get
certificate under Section 230-A of the Income-tax Act.
Curiously, in his evidence, P.W.1 has stated that the              D
matter got delayed only due to the non-production of
exemption certificate from urban land ceiling authorities.
It is true tha.t as per Clause 3 of the Agreement,
respondents have to produce all the documents
pertaining to the title of the suit property. It is further seen   E
that after payment of Rs. 2 lakhs as advance on the date
of execution of the Agreement, monies to the extent of
Rs. 11, 10,000/- were paid on various dates in order to
satisfy and comply with all statutory requirements. In the
Agreement that there was no specific reference to the              F
production of an order from the competent authority
under the Urban Land Ceiling Act with regard to
exemption. From the materials placed, the appellant-
Company was not justified in calling for several
documents when admittedly, their lawyers perused all the           G
relevant documents and on their advise, draft sale deed
was prepared and that too after proper inspection of the
site and building. In other words, production of clearance
certificate from the competent authority under the Urban
Land Ceiling Act was not specifically intended at any              H
    122     SUPREME COURT REPORTS             [2011] 12 S.C.R.


A point of time. The information sought for by the appellant-
    Company was only to delay the transaction and it was
    not always ready and willing to perform in terms of
    Section 16(c) of the Specific Relief Act, 1963. [Paras 11,
    12] [133-E-H; 133-A-D]
B
       5. The proviso to Section 3(2) of the Urban Land
  (Ceiling and Regulation) Ordinance, 1976 defining "land
  appurtenant" states that in the case of multi-storeyed
  building, the extent of land contiguous to the land
C occupied by such multi-storeyed building permitted
  according to the plan approved by the appropriate
  authority shall be deemed to be the land appurtenant. In
  view of the same, the entirety of the land in and around
  the five-storeyed building would come outside the vacant
  land under Section 3 (p) of the Act. It is clear that in the
D case of multi-storeyed building which was under
  construction at the date of commencement of the Act
  with building plans duly approved, no part of the land
  attached to the building would come within the scope of
  the Act. By refusing to pay the balance consideration to
E purchase the property by getting the sale deed
  registered, the appellant-Company has not only
  committed a breach of the Agreement but also showed
  that it was nc>t ready and willing to complete the
  Agreement. In those circumstances, the argument
F assailing the judgment of the Division Bench of the High
  Court is liable to be rejected. [Para 14] [135-E-F; 136-B-
    C]                                .            .

      CIVIL APPELLATE JURISDICTION : Civil Appeal No.
G 7021 of 2003.

        From the Judgment & Order dated 17 .02.2003 of the High
    Court of Judicature at Madras in O.S.A. No. 163 of 1994.
      KV. Viswanathan. V. Mohana, Abhishek K.. Sakati for the
H Appellant.
  COROMANDEL INDAG PRODUCTS (P) LTD. v: GARUDA            123
          CHIT & TRADING CO. P. LTD.
    K.K. Venogopal, V. Giri, K.V. Mohan, T.N. Unmi Nambiar,      A
Md. Sadique, K.V. Balakrishnan for the Respondents.

     The Judgment of the Court was delivered by

      ?.SATHASIVAM,J. 1. This appeal is directed against the
final judgment and decree dated 17.02.2003 passed by the         B
Division Bench of the High Court of Judicature at Madras in
O.S.A. No. 163 of 1994 whereby the appeal filed by the
respondents herein was allowed.

     2. Brief facts:                                             c
       (a) The appellant is a Private Limited Company
 (hereinafter referred to as "the appellant-Company) registered
 under the Companies Act, 1956 and is carrying on the business
of manufacturing, selling, exporting, trading in and distribution D
of Pesticides, Chemicals and Agro Chemicals. Respondent
 No. 1 is also a Private Limited Company (hereinafter referred
to as "the respondent-Company") registered under the
Companies Act, 1956 in which Mr. T.P. Narayanan -
respondent No.2 is the Chairman and Director and appeal
against him stood dismissed vide this Court's order dated E
19.07.2004. Mr. T.K. Gopinath (since died) was the Managing
Director - respondent No.3 and his legal representatives are
on record. In the year 1981, the appellant-Company required
a property around Mount Road Area near Mylapore, Madras
for establishing a Research and Development Centre. F
Respondent-Company, on coming to know about the said
requirement, offered its property measuring 12 grounds 33 sq.
ft. with buildings at Door No. 46, Cathedral Road, Madras. The
officials of the appellant-Company inspected the property and
after getting it evaluated by an AuthorizedValuer offered a price G
of Rs.82 lakhs for the entire property and the Respondent Nos.
2 & 3 herein accepted the same. Thereafter, an Agreement
for Sale was executed between the parties on 28.08.1981 and
a sum of Rs. 2 lakhs was paid by way of cheque as advance.
                                                                  H
    124      SUPREME COURT REPORTS                  [2011] 12 S.C.R.


A        (b) Pending investigation of title of the respondent-
    Company to the suit property, the appellant-Company entered
    into the said agreement since the respondents desired a firm
    commitment to be made. Clauses 3 and 4 of the said
    Agreement put the vendor under an obligation to produce all
B   documents of title in its possession or control relating to the suit
    property for the investigation and approval of the appellant-
    Company. Besides, getting other necessary clearances, the
    respondents were also required to get the Income Tax
    Clearance Certificate as specified under Section 230-A of the
c   Income Tax Act, 1961.

       (c) In accordance with the above, the appellant-Company
  called upon the respondents to furnish the documents of title,
  the details of the encumbrances on the property, if any, and also
  Income Tax Clearance Certificate and other necessary
D clearances to complete the sale. On 09.09.1981, the
  respondents furnished the Income Tc:x Clearance Certificate ,
  dated 07.09.198'1 and promised to furnish the other required
  documents very soon. They also demanded a further payment
  of Rs. 10 lakhs as advance pending finalization of the sale to
E which the appellant-Company did not agree.

       (d) As the respondents did not furnish the required
  documents, the appellant-Company issued a letter dated
  14.09.1981 calling upon them to furnish the required documents.
F Instead of furnishing all the required documents, as sought for,
  the respondents, vide letter dated 15.09.1981, called upon the
  appellant-Company to expedite the sale. Thereafter, on
  19.09.1981, the appellant-Company again requested the
  respondents to furnish the solvency certificate. In response to
G the above-said letters, the respondents orally apologized for the
  delay and promised to furnish the required details at the earliest
  and respondent No.2 also requested for a further payment of
  Rs.1 O lakhs as advance to enable them to discharge the
  mortgage subsisting in favour of Bank of India. The appellant-
  Company paid Rs. 5 lakhs to respondent No.2 on 21.09.1981
H
  COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA - i i5
    CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]

on the undertaking that the documents called for would be sent       A
by 30.09.1981. Again on the request of respondent No.2, the
appellant-Company paid a further sum of Rs. 5 lakhs to meet
the Urban Land Ceiling Clearance. A total sum of Rs. 12 lakhs
was paid to the respondents. On 19.10.1981, respondent No.2
again requested a sum of Rs. 2 lakhs to meet certain statutory       B
compliance which was a charge on the property. Taking full
details of such liabilities, the appellant-Company paid a sum
of Rs.1, 10,000/-. As the respondents did not furnish the
required documents till the end of 1981, the appellant-Company
sent a not~e dated 19.01.1982 calling upon them to perform           c
their obligation under the agreement dated 28.08.1981 as also
to fulfil their personal undertakings. Notice was served only on
respondent No.2 but the notice on respondent Nos. 1 and 3
were returned back with the remarks "unserved". In reply to the
said notice, respondent No.2 said that he is not personally liable   D
for the payment made by the appellant-Company.
     (e) In the said circumstances, the appellant-Company was
compelled to file a suit for specific performance on 10.05.1982
in the High Court of Judicature at Madras and the same was
numbered as C.S. No. 287of1982. The learned single Judge             E
of the High court by judgment dated 01.06.1993 decreed the
suit and directed the respondents herein to execute the sale
deed in favour of the appellant-Company and granted three
months' time to the appellant-Company to pay the balance of
the sale consideration.                                              F

     (f) Challenging the judgment of the learned single Judge,
the respondents preferred O.S.A. No. 163 of 1994 before the
High Court. By impugned judgment dated 17 .02.2003, the
Division Bench of the High Court allowed the appeal.                 G
Aggrieved by the said judgment of the Division Bench, the
appellant-Company preferred this appeal by way of special
leave petition before this Court.
     3. Heard Mr. K.V. Viswanathan, learned senior counsel for
the appellant-Company and Mr. K.K. Venugopal, learned senior         H
    126     SUPREME COURT REPORTS               [2011] 12 S.C.R.


A counsel for respondent No.1 and Mr. V. Giri, learned senior
  counsel for LRs of respondent No.3.

    Points for consideration:
        4. The only question for consideration is whether the
B decree granted by the learned single Judge of the High Court
  for specific performance based on the Agreement for Sale
  dated 28.08.1981 is sustainable, or the Division Bench is
  justified in concluding that the appellant-plaintiff has not made
  out a case for a decree of specific performance in allowing the
C appeal and setting aside the decree passed by the trial Court
  by dismissing the suit.

    Discussion as to Agreement for Sale
         5. In order to consider the rival claims, it is desirable to
D   verify the relevant clauses from the Agreement for Sale dated
    28.08.1981. In the beginning, the Ve11dor-Respondents herein,
    specifically asserted that they are the sole and absolute owner
    and in exclusive possession and enjoyment of all the land
    mentioned in the Schedule together with a multi-storey building,
E   sheds, garages, outhouses, fixtures and fittings thereon situated
    at Cathedral Road, Teynarnpet, Madras bearing present Door
    No. 46, Old No. 31, T.S. No. 1238/1A, R.S. No. 1233/1 and
    1233/5 measuring 12 grounds 33 sq. ft. The Agreement clearly
    stipulates that the VEmdor requires substantial cash for meeting
F   its business purposes and, therefore, decided to sell the said
    property. It makes it clear that by resolution dated 16.07.1981,
    the Board of Directors of the Vendor have authorized Shri K.S.
    Hari, General Manager, to negotiate and sell the said property
    and to execute the sale deed. It also makes it clear that the
G   Vendor has agreed to sell and the purchaser has ·agreed to
    purchase the said property at a price consideration of Rs. 82
    lakhs free from all encumbrances and claims whatsoever on the .
    terms and conditions set out in the agreement.

H
. COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA              127
    CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]
     6. Among the various clauses, we are concerned with the       A
following clauses in the Agreement for Sale. They are:

    "3. The Vendors shall produce or cause to be produced
    to the purchaser all the documents of title in their
    possession or control or relating to the said property for     8
    the investigation of the Vendor's title thereto.

    4. The sale shall be subject to the approval of the title of
    the vendor to the said property agreed to be sold herein
    by the advocate for the Purchaser and the Vendor shall at
    its own costs and expenses get in all outstanding estates      C
    and clear all defects in title and encumbrance and claims
    on or to the said property.

    6. The sale shall be completed on or before 05.09.1981
    or within one week from date of furnishing a Certificate       o
    under section 230-A of the Income Tax Act of 1981 by the
    Vendor whichever is later, upon the payment of Rs. 48
    lakhs out of the said purchase money by the purchaser to
    the Vendor, the balance being payable as hereinafter
    provided, the vendor and all other necessary parties if any    E
    shall execute a proper.conveyance of the said property in
    one piece of in several portions in favour of the purchaser
    or such other person or persons the Purchaser shall
    nominate.

    7. The Purchaser shall pay at any time of the Registration     F
    of the sale deed a sum of Rs. 48 Lakhs out of the said
    price and the balance in the following manner:-

    1. ·   Rs. 10 lakhs on or before 07.10.1981
                                                                   G
    2.     Rs. 11 lakhs on or before 07.11.1981

    3;     Rs. 11 lakhs on or before 07 .12.1981

    The said balance of Rs. 32 lakhs payable in three
    installments as aforementioned shall not carry any interest.   H
    128       SUPREME COURT REPORTS               [2011] 12 S.C.R.


A         If the purchaser fails to pay the amounts as stipulated
          above, the balance amount shall carry interest at 18% per
          annum till date payment.

          10. The Vendor shall at its cost obtain the required
          clearance certificate under Section 230-A of the Income
8
          Tax Act and obtain requisite permission or sanctions from
          any authorities as may be necessary for the purpose of
          effectual competition of the sale of the property."

    The above Agreement to Sell entered into on 28.08.1981 has
C   certain important provisions which provide a clear
    understanding of motivation of both the parties. Clause 3
    extracted above provides that the Vendor/respondents shall
    produce or cause to be produced all the documents relating to
    title of the property to the purchaser. Clause 4 provides that
D   the sale shall be subject to the approval of the purchaser's
    advocate. Clause 6 makes the completion of sale incumbent
    on the date of furnishing the Income-tax Certificate by the
    Vendorand payment of Rs. 48 lakhs by the purchaser. Clause
    10 makes it cle~ar that it is the responsibility of the Vendor to
E   obtain the required clearance certificate under Section 230-A
    of the Income-tax Act and also obtain requisite permission or
    sanction from other authorities, as may be necessary, for the
    purpose of completion of the sale of the property. Clause 13
    provides that if the title of the Vendor is not approved by the
F   Purchaser's advocate, the Purchaser would be entitled to
    cancel the Agreement. Clause 14 entitles the Purchaser for a
    suit for specific: performance in the event of breach of any of
    the terms of the Agreement by the Vendor or the return of the
    amount taken as advance by the Vendor together with a sum
G   of Rs. 1 lakh as liquidated damages. Clause 15 ensures that
    the Agreement shall come to an end if there is a breach by the
    Purchaser. With these clauses and understanding by both the
    parties, we have to analyze their claim and decide the case one
    way or the other.

H
   COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA              129
     CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]

Whether time is essence of the contract:                            A

      7. If we verify the various clauses from the Agreement for
Sale, it is clear that the Vendor-Respondent Company herein
was in need of money for meeting its business purposes. The
appellant-Company has very much relied on Clauses 3 and 4           8
of the Agreement which we have already extracted .. Those
clauses mandate the Vendor to produce all the documents of
title in their possession and hand over the same to the
Purchaser for investigation by the Purchaser. It also makes it
clear that all those documents be placed before the advocate
of the Purchaser for scrutiny and approval and, thereafter, the     C
Vendor at its own costs and expenses clear all defects in title
and encumbrances and claims on or to the said property.

      8. In order to strengthen their claim that time is essence
 of the contract, the respondents have heavily relied on Clauses    D
 6 and 7 which are extracted in the paragraphs supra. It is clear
 from Clause 6 that the sale shall be completed on or before
 _05.09.1981 or within a period of one week from the date of
·furnishing a Certificate under Section 230-A of the Income-tax
 Act, 1981 by the Vendor. It is clear from Clause 7 that on the     E
 date of the Registration of the Sale Deed, the Purchaser has
 to pay Rs. 48 lakhs out of the amount of Rs. 82 la!<hs.
 According to the vendor. the balance being payable in the
 following manner:
                     0
                                                                    F
           1. Rs. 10 lakhs on or before 07.10.1981

           2. Rs. 11 lakhs on or before 07.11.1981

           3. Rs. 11 lakhs on or before 07.12.1981

It is also clear from Clause 7 that the balance of Rs. 32 lakhs     G
payable in 3 instalments shall not carry any interest. However,
if the Purchaser fails to pay the amounts as stipulated above,
the balance amount shall carry interest @ 18% p.a. till date of
payment. It is clear that when there was a specific
                                                                    H
     130      SUPREME COURT REPORTS                   [2011] 12 S.C.R.


 A understanding between the parties as reflected in the above-
   mentioned clauses in the Agreement within which period the
   sale was to be completed, it has to be construed that the
   intention of the parties was to treat the time as essence of the
   contract. Though the respondents had agreed to receive the
 B balance of Rs. 32 lakhs in instalments for a period of 3 months
   after the registration of the sale deed which also makes it clear
   that both parties have agreed to complete the entire transaction
   as early as possible which prove that time is essence of the
   contract. Though the appellant-Company relying on Clauses 3
 c and 4 of the Agreement contended that the respondents failed
   to produce all the required documents including the documents
   pertaining to title and encumbrances and claims on or to the
   property, there is no basis for such a claim.

            9. It is also relevant to point out the stand of the parties as
  D reflected in their pleadings and evidence. In terms of Section
      16(c) of the Specific Relief Act, 1963, it is incumbent on the
      party, who wants to enforce the specific performance of a
      contract, to aver and prove that he has performed or has
      always been ready and willing to perform the essential terms
  E of the contract. Explanation appended to this sub-section (c)
      makes it clear that if a contract involves the payment of money,
      it is not essential for the plaintiff to actually tender to the
      defendant or to deposit in Court any money except when so
      directed by the Court. However, tile plaintiff must aver
  F performance of, or readiness and willingness to perform, the
      contract according to its true construction. It is seen from the
      pleadings that necessary averments have been made in terms
      of sub-section (c) of Section 16. On the side of the plaintiff,
      James Fadric was examined as PW-1. He explained the
· G · urgency and the need to sell the property. He also explained
    .that the company had a cash crunch problem. No doubt, he
      also referred that the company was facing liquidity proceedings
      before the High Court of Bombay and necessary application
      had been filed before the Company Court at Bombay for
  H settlement of the scheme to avoid liquidation which we are not
   COROMANDEL INDAG PRODUCTS (P) LTD.. v. GARUDA              131
     CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]
concerned. The fact remains that at the relevant time, Vendor/       A
 Respondent-Company was in dire need of money for their
commercial transactions and decided to sell the property in
question, particularly, to meet the immediate need of their
creditors. We have already adverted to the payment of Rs. 2
lakhs as advance on the date of execution of the agreement           B
dated 28.08.1981. On 21.09.1981, a further sum of Rs. 5 lakhs
was paid and by mutual consent, the time was extended to
30.09.1981. On 06.10.1981, another sum of Rs. 5 lakhs was
advanced by the appellant-Company and the time for
completion of the Sale Agreement was extended up to                  c
14.10.1981. Again, for the third time, that is on 19.12.1981,
time was extended for the completion of the transaction up to
31, 12.1981 on payment of Rs.1, 10,000/-. As rightly pointed out
by Shri K.K. Venugopal and Shri V. Giri, learned senior counsel
appearing for the respondents, the payment of money in short
                                                                     0
intervals and also the extension of time for completion of the
transaction within the prescribed period clearly show that both
the partiS!S wanted to complete the transaction as early as
possiblewithouHurther extension. Inasmuch as the Vendorwas
in dire need of money at every occasion and the need for such
short term extension clearly shows that the parties intended to      E
treat the time as essence of the contract. It is also relevant to
point out that Clause 7 of the Agreement, which we have
already extracted, makes it clear that at any time of registration
of the sale deed, the appellant shall pay a sum of Rs. 50 lakhs,
after deducting the advance amounts already paid and the             F
balance of Rs. 32 lakhs is to be paid after registration of the
sale deed in three installments as mentioned above. This
would also reveal the intention of the parties to treat the time
as essence of the contract. From the various clauses in the
Agreement for Sale which we have referred to, pleadings,             G
evidence and the conduct of the parties, we hold that parties
have agreed that the time is essence of the contract and the
same has to be adhered to strictly.

                                                                     H
    132      SUPREME COURT REPORTS                 [2011] 12 S.C.R.


A Readiness and willingness:
        10. Learned counsel for the respondents urged that several
  requests by the appellant-Company for various documents
  which are not provided in the terms of the Agreement show their
B intention that they wanted to delay the proceedings. On the
  other hand, learned counsel appearing for the appellant-
  Company submitted that they were justified in asking for those
  documents in order to satisfy the title of the property. It is true
  that in the Agreement, it is stated that Vendor has to produce
  all the documents of title in their possession relating to the
C property to the Purchaser for investigation relating to title. In
  Clause 10, there is a specific reference to the production of
  clearance certificate under Section 230-A of the Income-tax Act
  and obtain permission or sanction from any authorities that may
  be necessary for the purpose of sale of the property. It is true
D that when the appellant-Company being a Purchaser investing
  a huge sum of Rs. 82 lakhs, they are entitled to clear all their
  doubts in respect of the title. In terms of Clause 6 of the
  Agreement, sale has to be completed on or before 05.09.1981
  or within one week from the date uf furnishing the certificate
E under Section 230-A of the Income-tax Act whichever is tater
  and upon payment of Rs. 48 takhs out of the agreed amount of
  Rs. 82 lakhs to the Vendor. Admittedly, the respondents
  produced Income-tax Clearance Certificate even on
  09.09.1981. It is to be noted that only after production of l.T.
F Clearance, the appellant-Company, vide letter dated
  14.09.1981, addressed to Mr. K. S. Hari, General Manager of
  the Respondent-Company sought further particulars relating to
  mortgage on the Bank of India, arrears of urban land tax,
  property tax, exemption certificate from the urban land ceiling
G authorities, encumbrance certificate, latest audited balance-
  sheet, list of creditors, solvency certificate, details of attachment
  and particulars about winding up proceedings alleging that they
  have not receivE!d the same to be forwarded to their advocates.
  The said letter is available as Annexure-P2. In pursuance of
H the said letter, the respondents sent a reply on 15.09.1981 "by
COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA CHIT133
      & TRADING CO. P LTD. [P SATHASIVAM, J.]

hand delivery" to the appellant-Company specifically stating            A
that after being fully satisfied about the title, the appellant-
Company prepared the draft sale deed and after a combined
discussion at their office on 07.09.1981, the same was
approved and thereafter, the respondents obtained necessary
certificate dated 09.09.1981 under Section 230-A of the                 B
Income-tax Act and the same was also intimated to them. In
the same letter, it was pointed out that as per the Agreement
of Sale and consensus arrived at between the parties, the
appellant-Company has to complete the sale within one week
from 09.09.1981. It was also pointed out that in spite of several       c
promises and assurances, the appellant-Company could not
fulfill their promise and also that because of this delay, they are
suffering heavy loss and the very object of sale is being
defeated. It was also pointed out that so far they have spent
heavy sums and satisfied all their requirements and finally             0
requested to do the needful immediately for completion of the
sale transaction. The said letter is marked as Annexure-P3.

      11. It is not in dispute, more _particularly, from the evidence
of PW-1 that the legal advisor of the appellant-Company
scrutinized the title deeds before entering into Agreement. They        E
also visited the site along with their lawyers and finally after
satisfying all the materials, their lawyers gave opinion with
regard to the clear title of the property. As stated earlier, only
after getting their clearance, draft sale deed was prepared to
enable the respondents to get certificate under Section 230-A           F
of the Income-tax Act. Curiously, in his evidence, P.W.1 has
stated that the matter got delayed only due to the non-
production of exemption certificate from urban land ceiling
authorities. It is true that as per Clause 3 of the Agreement,
respondents have to produce all the documents pertaining to             G
the title of the suit property. We have already extracted Clause
4 of the Agreement which speaks about the approval of title
by the appellant's advocate.

     12. It is further seen that after payment of Rs. 2 lakhs as        H
    134      SUPREME COURT REPORTS                [2011] 12 S.C.R.


A advance on thE~ date of execution of the Agreement, monies to
  the extent of Rs. 11, 10,000/- were paid on various dates in
  order to satisfy and comply with all statutory requirements. It
  is relevant to point out in the Agreement that there is no specific
  reference to the production of an order from the competent
B authority under the Urban Land Ceiling Act with regard to
  exemption. From the materials placed, we are satisfied that
  the appellant-Company was not justified in calling for several
  documents when admittedly, their lawyers perused all the
  relevant documents and on their advise, draft safe deed was
c prepared and that too after proper inspection of the site and
  building. In other words, production of clearance certificate
  from the competent authority under the Urban Land Ceiling Act
  was not specifically intended at any point of time. We are
  satisfied that as rightly argued by learned senior counsel for the
  respondents that the information sought for by the appellant-
0
  Company was only to delay the transaction and it was not
  always ready and willing to perform in terms of Section 16(c)
  of the Specific Relief Act, 1963.

    Conduct of the parties:
E
        13. We have already stated that the Agreement for Sale
  includes land and building. The building stands on more than
  500 sq. mts. of land in addition to the plinth area. The building
  is a five-storeyed one for which building permission had been
F obtained as per the provisions of Town Planning Authority and
  as per the orders of the Corporation of Madras. It is also seen
  that the building was under construction at the time the Urban
  Land (Ceiling and Regulation) Ordinance, 1976 was passed.
  Section 3(h) of the Act defines "land appurtenant" which reads
G thus:
          "(h) "land appurtenant", in relation to any building means
          an extent of five hundred square metres contiguous to the
          land occupied by such building and includes,-

H         (i) in the case of any building constructed before or under
   COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA.                135
     CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]

     construction on. the commencement of this Act with a              A
     dwelling unit therein, or

     (ii) in the case of any building proposed to be constructed
     with a dwelling unit therein and in respect of which the plan
     for such building has been approved by the appropriate            8
     authority before the commencement of this Act,

     an additional extent not exceeding five hundred square
     metres of land, if any, contiguous to the said extent of five
     hundred square metres of land:
                                                                       c
             Pr~vided that in relation to a multi-storeyed building,
     the extent of land contiguous to the land occupied by such
     multi-storeyed building permitted according to the plan
     approved by the appropriate authority shall be deemed to
     be the land appurtenant;"                                         D
It is not in dispute that the plan had been approved by the
Competent Authority.

      14. As rightly pointed out by learned senior counsel for the
 respondents, the proviso to the definition states that in the case    E
 of multi-storeyed building, the extent of land contiguous to the
 land occupied by such multi-storeyed building permitted
 according to the plan approved by the appropriate authority
 shall be deemed to be the land appurtenant. In view of the
.same, the entirety of the land in and around the five-storeyed        F
 building would come outside the vacant land under Section 3
 (p) of the Act which reads as under:

     "(p) "Vacant land" means land, not being land mainly used
     for the purpose of agriculture, in an urban agglomeration         G
     but does not include-

     (i) .....
     (ii) in an area where there are building regulations-
                                                                       H
     136          SUPREME COURT REPORTS               (2011] 12 S.C.R.


A          (a) the land occupied by any building constructed before,
           or under construction on the commencement of this Act with
           the approval of the appropriate authority and the land
           appurtenant to such building .......... "

  It is clear that in the case of multi-storeyed buildi~g which was
8
  under construction at the date of commencement of the Act with
  building plans duly approved, no part of the land attached to
  the building would come within the scope of the Act. By refusing
  to pay the balance consideration to purchase the property by
C getting the sale deed registered, the appellant-Company has
  not only committed a breach of the Agreement but also showed
  that it was not ready and willing to complete the Agreement.
  In those circumstances, the argument assailing the judgment
  of the Division Bench of the High Court is liable to be rejected.

D About title inspection by the lawyers:
         15. It is relevant to narrate the actual question and answers
     by P.W.1 during cross-examination which reads as under:

            "Q:    Did you inspect the title deeds through your lawyer?
E·
            A:     Yes.

            Q:     Did you examine the title deeds before entering into
                   the agreement?

F          A:      We did get the title deeds examined by the lawyer.

            Q:     I asked you did you get any legal opinion from your
                   lawyer prior to entering into the agreement.
           A:      Yes.
G
           Q:      HavE1 you got the legal opinion?
           A:      Not in writing asked him to examine the title deed
                   and let us know whether the title deed is in order.
H
COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA                  137
  CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]

  Q:    What did he say?                                             A

  A:     He said, the title deed normally could be in order,
         but he had asked for certain other information such
       · as encumbrance certificates, Urban Land Ceiling
         Clearance from the Government of India and                  B
         Government of Tamil Nadu, etc.

  Q:    Your office prepared any report on title.

  A:    My legal department always traces title, it is good
        and competent to peruse the title deeds.                     c
  Q:    Your legal department is your staff?

  A:    Yes.

  Q:    Was any report on title obtained from the lawyer?            D
  A:    Yes.
  Q:    When was that obtained?

  A:    Somewhere between 20th to 28.8.1981                          E
  Q:    Have you produced the legal opinion before this
        Court?

  A:    No, it is internal affair and we felt it is not necessary.
                                                                     F
  Q:    Have ·you got the opinion?

  A:    I am not sure, I am able to find out.

  Q:    Did they produce all documents of title for approval?
                                                                     G
  A:    Yes. They fulfilled clause No.3

  Q:    Clause No.4 that also the defendant did not?

  A:    No.
                                                                     H
    138        SUPREME COURT REPORTS              [2011] 12 S.C.R.


A .       Q:    What do you mean by saying no?

          A:    Because they have not provided encumbrance to
                the title deeds, which is;part of the title deed, they
                had applied for Urban Land Ceiling exemption,
                which they have not disclosed.
B
          Q:    Is there any mention about Urban Land Ceiling
                Clearance?

          A:    It is not mentioned in the agreement, but I would like
c               to and it is obligatory on the part of the defendant
                to go through the implications of Section 6 of the
                Urban Land Ceiling Act.

          Q:    According to you, unless they do not furnish details
                of obtaining Urban Land Ceiling clearance, you are
D
                not prepared to purchase?

          A:    No. This is the condition of the negotiation. The
                vendor has always been acknowledging to produce
                the documents required by us before we put through
E               the sale. This is also seen in all stamped receipts
                for which monies were paid even after 230-A
                clearance obtained."

        16. It is also brought to our notice that the State
F Government in 1995 nearly 10 years after the filing of the suit,
  claimed 872 sq.mts. as being the excess land above the ceiling
  limit for which the appellant-Company had filed a writ petition
  being No. 6312 of 2000 before the High Court. Though the
  filing of the said writ petition and the ultimate order on
G 04.08.2005 were not brought to our notice by filing appropriate
  petition inasmuch as the said fact was not in dispute, we
  referred to the said decision of the High Court rendered in Writ
  Petition No. 6312 of 2000. That writ petition came to be filed
  by the respondent Company for issuance of a writ of
  mandamus to forebear the State and the competent authority
H
   COROMANDEL INDAG PRODUCTS (P) LTD. v. GARUDA             139
     CHIT & TRADING CO. P. LTD. [P. SATHASIVAM, J.]
  under the Urban Land Ceiling from enforcing the provisions of    A
  the Act which has been repealed by Tamil Nadu Act No. 20 of
  1999 w.e.f. 16.06.1999 insofar as the land of the petitioner
  therein (respondents herein at Door No. 46, Cathedral Road,
· Chennai in R.S. No. 1238/9 Mylapore, Village) is concerned.
                                                                   B
      17. It is true that despite the fact that there was no
 provision in the Act laying down the process for seeking an
 exemption from its operation, the respondent-Company wrote
 to the Deputy Secretary, Revenue Department, Government of
 Tamil Nadu on 26.12.1979 seeking such exemption. As there
 was no response, as rightly pointed out, it was understood that C
 as the proviso to Section 3 applies to the land and no further
 exemption was needed. It is relevant to point out that the
 appellant-Company made further applications on behalf of the
 respondents but to no avail. The entire land is in the enjoyment
 and possession of the respondent-Company and no part of the D
 land has been taken over by the Government.
      18. In the light of the above discussion, we are unable to
 agree with the claim of the appellant-Company, on the other
 hand we are in entire agreement with the conclusion arrived at    E
 by the Division Bench of the High Court. Consequently, the
 appeal fails and the same is dismissed. However, parties are
 directed to bear their own costs.

 D.G.                                       Appeal dismissed.