KOLLI SATYANARAYANA (DEAD) BY LRS.versusVALURIPALLI KESAVA RAO CHOWDARY (DEAD) THR. LRS. AND OTHERS

330                      [2022]REPORTS
               SUPREME COURT    7 S.C.R. 330               [2022] 7 S.C.R.


A               KOLLI SATYANARAYANA (DEAD) BY LRS.
                                        v.
            VALURIPALLI KESAVA RAO CHOWDARY (DEAD)
                      THR. LRS. AND OTHERS
B                        (Civil Appeal No. 1013 of 2014)
                             SEPTEMBER 27, 2022
                [B. R. GAVAI AND C. T. RAVIKUMAR, JJ]
            Specific performance: Sale agreement – Decree for specific
      performance – Time limit specified in the agreement – Significance
C
      of – Held: When the parties prescribe certain time limit for taking
      steps by one or the other party, the said time limit cannot be ignored
      altogether on the ground that time is not the essence of the contract.
            Allowing the appeal, the Court
D           HELD: 1.1 Taking into consideration the fact that the
      agreement of sale provided that in the event the permission from
      the Competent Authority under the Urban Land (Ceiling and
      Regulation) Act, 1976 to sell the suit property was not obtained
      within 75 days, the purchaser would be entitled to get back his
      advance money paid after 75 days but not later than 90 days under
E     any circumstances, the findings of the Single Judge of the High
      Court cannot be said to be erroneous. After the defendant
      terminated the agreement on 12th April 1982 stating therein that
      since the permission from the ULC Authorities could not be
      obtained, she had cancelled the agreement of sale, the plaintiff
F     did not take any step till 19th February 1984. Only after the ULC
      permission was granted on 7th February 1984, the plaintiff had
      issued a legal notice to the defendant on 19th February 1984.
      The Division Bench, after elaborately discussing the terms and
      conditions stipulated in the agreement of sale, also agreed with
      the view taken by the Single Judge. [Para 13, 14][335-D-F]
G
            1.2 Though, the Division Bench of the High Court denied
      the relief for specific performance to the plaintiff, it has directed
      the respondents-defendants to refund the advance amount of


H
                                       330
KOLLI SATYANARAYANA (DEAD) v. VALURIPALLI KESAVA                           331
             RAO CHOWDARY (DEAD)

Rs.15,000/- along with accrued interest or a sum of                        A
Rs.3,00,000/- in all. [Para 15][335-F-G]
      1.3 There is no reason to differ with the concurring
judgments passed by the Single Judge as well as the Division
Bench of the High Court denying a decree for specific
performance. However, taking into consideration the facts and              B
circumstances and that the defendant had, in fact, received an
amount of Rs.15,000/- as early as 1978, the respondents-
defendants are directed to pay an amount of Rs.15,00,000/- to
the appellants-plaintiffs, within the stipulated period. [Para
16][335-G-H; 336-A-B]
                                                                           C
      K. S. Vidyanadam and Others v. Vairavan (1997) 3 SCC
      1 : [1997] 1 SCR 993 – referred to.
                           Case Law Reference
[1997] 1 SCR 993                 referred to               Para 12
                                                                           D
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1013
of 2014.
      From the Judgment and Order dated 17.10.2008 of the High Court
of Andhra Pradesh at Hyderabad in Letter Patents Appeal No. 26 of
1999.
                                                                           E
      C. Nageswara Rao, Sr. Adv., Byrapaneni Suyodhan, Ms. Tatini
Basu, Advs. for the Appellants.
      Sridhar Potaraju, Ms. Shiwani Tushir, Rajat Srivastava, Advs. for
the Respondents.
      The Judgment of the Court was delivered by                           F

      B. R. GAVAI, J.
      1. This appeal challenges the judgment dated 17th October 2008
passed by the learned Division Bench of the High Court of Judicature,
Andhra Pradesh at Hyderabad in Letters Patent Appeal No. 26 of 1999,       G
thereby partly allowing the appeal filed by the present appellants.
      2. Facts in brief giving rise to the present appeal are as under:
      The defendant is the owner of the suit property. The defendant
executed an agreement of sale in favour of the plaintiff for sale of the
                                                                           H
332             SUPREME COURT REPORTS                            [2022] 7 S.C.R.


A     suit property. The total consideration was fixed at Rs.45,315/-. The plaintiff
      paid an amount of Rs.15,000/- by way of Demand Draft dated 7th July
      1978 as advance payment. The defendant addressed a letter to the plaintiff
      on 13th October 1978 stating therein that, she was ready to execute the
      sale deed and that she was coming to Hyderabad the week thereafter
      for the said purpose. The said communication was responded to by the
B
      plaintiff on 20th October 1978, requesting to confirm whether the
      necessary permission from the Competent Authority (hereinafter referred
      to as the “ULC Authorities”) under the Urban Land (Ceiling and
      Regulation) Act, 1976 (for short “ULC Act”) to sell the suit property
      had been obtained or not. Immediately thereafter, the plaintiff purchased
C     stamp papers on 23rd October 1978. On 8th December 1978, the defendant
      applied to the Secretary to Government of Andhra Pradesh, Revenue
      Department for granting exemption under Section 20 of the ULC Act
      for selling the suit property. Another communication was addressed by
      the plaintiff on 30th December 1978, requesting the defendant to inform
      him as soon as the requisite permission under the ULC Act has been
D
      obtained. On 3rd March 1980, the defendant addressed a communication
      to the plaintiff stating therein that the concerned official had promised
      her to do the needful.
             3. On 12th April 1982, the defendant addressed a communication
      to the plaintiff stating therein that the requisite permission from the ULC
E     Authorities could not be obtained and therefore, she had cancelled the
      agreement of sale dated 29th July 1978. The defendant had also enclosed
      a Demand Draft of Rs. 15,000/- for the purpose of refund of advance
      amount. The plaintiff replied to the defendant vide communication dated
      2nd May 1982 that, the contract was binding and returned the said Demand
F     Draft. He reiterated that he was always ready to make the payment and
      execute the sale deed. It was also contended by him that because of the
      spiralling price rise, the defendant was going back on the promise. The
      defendant, on 2nd June 1982 addressed a letter to the plaintiff, stating
      therein that, she was forfeiting the advance payment of Rs.15,000/- since
      the plaintiff had not claimed the refund within 90 days from the date of
G     the agreement of sale. Thereafter, there were certain other
      communications between the parties.
            4. The Government of Andhra Pradesh, vide G.O. Ms. No. 161
      dated 7th February 1984, granted exemption to the defendant under the
      provisions of Section 20 of the ULC Act. After coming to know about
H
KOLLI SATYANARAYANA (DEAD) v. VALURIPALLI KESAVA                              333
       RAO CHOWDARY (DEAD) [B. R. GAVAI, J.]

the same, on 19th February 1984, the plaintiff issued a legal notice to the   A
defendant for execution of the sale deed in pursuance of the agreement
of sale dated 27th July 1978. Since the defendant did not respond, the
plaintiff filed a suit bearing OS No. 139 of 1984 before the trial court
seeking specific performance of the agreement of sale dated 29th July
1978. The trial court, vide judgment and decree dated 29th April 1988,
                                                                              B
decreed the suit directing the defendant to execute the sale deed within
2 months from the date of the judgment and decree.
       5. Being aggrieved thereby, the defendant (since deceased) through
legal representatives filed an appeal being Appeal No. 1415 of 1998
before the High Court. The learned Single Judge of the High Court, vide
judgment dated 24th September 1998, allowed the appeal and dismissed          C
the suit of the plaintiff. Being aggrieved thereby, the plaintiff filed an
appeal being LPA No.26 of 1999 before the Division Bench of the High
Court. The learned Division Bench of the High Court, vide impugned
judgment dated 17th October 2008, denied the relief to the plaintiff for
specific performance. However, it held that the plaintiff was entitled to     D
get the refund for the advance payment of Rs.15,000/- along with the
accrued interest or a sum of Rs.3,00,000/- in all. Being aggrieved thereby,
the plaintiff has approached this Court.
      6. We have heard Shri C. Nageswara Rao, learned Senior Counsel
appearing on behalf of the appellants and Shri Sridhar Potaraju, learned      E
counsel appearing on behalf of the respondents.
        7. Shri Rao submitted that the learned Single Judge of the High
Court has erred in reversing the well-reasoned judgment and decree
passed by the trial court. He further submitted that the Division Bench
of the High Court also erred in upholding the judgment passed by the          F
learned Single Judge denying specific relief. The learned Senior Counsel
submitted that the findings of the learned Single Judge as well as the
Division Bench of the High Court are based upon misinterpretation of
evidence. He submitted that the learned Single Judge and the Division
Bench have, through their own interpretation, imported a condition which
is not in existence.                                                          G
       8. Shri Sridhar, on the contrary, submitted that the learned Single
Judge as well as the Division Bench of the High Court has concurrently
held that the conduct of the plaintiff was not such which entitled him for
specific relief. He further submitted that no interference is warranted in
the present appeal.                                                           H
334             SUPREME COURT REPORTS                           [2022] 7 S.C.R.


A           9. The learned Single Judge, while reversing the judgment and
      decree passed by the trial court, has relied on Clauses 3 and 5 of the
      agreement of sale dated 29th July 1978, which read thus:
            “3. The sale deed shall be executed within three months from the
            date of this agreement or within one month from the date of
B           receipt of intimation from ‘the vendor’ stating that the necessary
            permission from the concerned authority under Urban Land Celling
            Act is obtained or within such further period as mutually agreed
            upon on payment of the balance of consideration. If the balance
            of consideration is not paid within the stipulated period of agreed
            period rendering it difficult for ‘the vendor’ to execute the sale
C           deed, this agreement of sale shall stand cancelled.
            4. ….
            5. That ‘the vendor’ shall obtain permission for alienation under
            Urban Land Ceiling Act or any other Act as early as possible but
D           not later than 75 days from the date of this agreement and ‘the
            vendor’ shall be sole responsible for obtaining the above
            permission, ‘the purchaser’ shall be entitled to get back the advance
            paid after 75 days from the date of the agreement, but not later
            than 90 days under any circumstances.”

E             10. Upon interpretation of the aforesaid clauses, the learned Single
      Judge of the High Court came to a conclusion that a reading of the said
      clauses made it clear that the parties intended that that the permission
      should be obtained by the defendant within 75 days. It held that in the
      event the permission was not obtained by the defendant within the
      stipulated time, the plaintiff was entitled to get back his advance money.
F     It has found that under the agreement of sale, even for the said purpose,
      the limit of 90 days was fixed. After the said period of 90 days, the
      plaintiff was not even entitled to get back the advance money and the
      defendant was entitled to forfeit the same.
             11. The learned Single Judge further found that the conduct of the
G     parties to the contract was also significant. It found that both the parties
      tried to get the exemption from the Government of Andhra Pradesh
      under Section 20 of the ULC Act for about a year after the agreement
      of sale dated 29th July 1978. It is further to be noted that though the
      defendant had communicated to the plaintiff on 12th April 1982 that,
      since the requisite permission from the ULC Authorities could not be
H
KOLLI SATYANARAYANA (DEAD) v. VALURIPALLI KESAVA                               335
       RAO CHOWDARY (DEAD) [B. R. GAVAI, J.]

obtained and as such, she had cancelled the agreement, the plaintiff did       A
not file any proceeding against the defendant. It was only after a period
of almost 2 years when the defendant obtained the permission after
cancellation of the earlier agreement, the plaintiff chose to file the suit.
       12. In the case of K.S. Vidyanadam and Others v. Vairavan1,
this Court has held that the court should look at all the relevant             B
circumstances including the time limit(s) specified in the agreement and
determine whether its discretion to grant specific performance should
be exercised. It has been held that in case of urban properties, the prices
have been rising sharply. It has been held that while exercising its
discretion, the court should bear in mind that when the parties prescribe
certain time limit(s) for taking steps by one or the other party, it must      C
have some significance and that the said time limit(s) cannot be ignored
altogether on the ground that time is not the essence of the contract.
       13. Taking into consideration the fact that the agreement of sale
provided that in the event the permission was not obtained within 75
days, the purchaser shall be entitled to get back his advance money paid       D
after 75 days but not later than 90 days under any circumstances, the
findings of the learned Single Judge cannot be said to be erroneous.
After the defendant terminated the agreement on 12th April 1982 stating
therein that since the permission from the ULC Authorities could not be
obtained, she had cancelled the agreement of sale, the plaintiff did not       E
take any step till 19th February 1984. Only after the ULC permission
was granted on 7th February 1984, the plaintiff had issued a legal notice
to the defendant on 19th February 1984.
       14. The Division Bench of the High Court, after elaborately
discussing the terms and conditions stipulated in the agreement of sale,       F
also agreed with the view taken by the learned Single Judge.
       15. Though, the Division Bench of the High Court denied the relief
for specific performance to the plaintiff, it has directed the respondents-
defendants to refund the advance amount of Rs.15,000/- along with
accrued interest or a sum of Rs.3,00,000/- in all.                             G
     16. We do not find any reason to differ with the concurring
judgments passed by the learned Single Judge as well as the Division
Bench of the High Court denying a decree for specific performance.
However, taking into consideration the facts and circumstances and an
1
    (1997) 3 SCC 1                                                             H
336                SUPREME COURT REPORTS                       [2022] 7 S.C.R.


A     undisputed position that the defendant had, in fact, received an amount
      of Rs.15,000/- as early as 1978, we direct the respondents-defendants
      to pay an amount of Rs.15,00,000/- to the appellants-plaintiffs. The said
      amount shall be paid within a period of 3 months from the date of this
      judgment.
B           17. In the result, the appeal is allowed in the aforesaid terms.
      Pending application(s), if any, shall stand disposed of in the above terms.
      No order as to costs.


      Nidhi Jain                                                   Appeal allowed.
C




D




E




F




G




H