M/S P.R. DEB AND ASSOCIATESversusSUNANDA ROY

J
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                       MIS P.R. DEB AND ASSOCIATES                                   A
                                     v.
                                 SUNANDA ROY

                                 MARCH 1, 1996

             [FAIZAN UDDIN AND SUJATA V. MANOHAR, JJ.]                               B

           Specific Relief Act, 1963-Section J(}-Specific Perfonnance-Suit
    fo,-P/aintiff must be ready and willing to carry out his part of the agreement
    at all material times-Otherwise suit cannot be decreed for specific perfor-
    mance.
                                                                                     c
          The appellant, owner of certain immovable property, agreed to sell
    to the respondent that property for a sum of Rs. 9 lakhs. Under the terms
    of this agreement a sum of Rs. 25,000 was to be paid at the time of
    execution of the agreement and a further sum of Rs. 4 lakhs within five
    months from the date of the agreement and the balance amount at the time D
    of conclusion of the purchase, time-being of the essence of the contract;
    that the appellant was required to hand over vacant possession of the
    property on completion of sale except for possession of four shop rooms
    in the front portion as the payment of Rs. 4 lakhs was required under the
    terms of the agreement to enahl.e the appellant to acquire a suitable E
    residence by utilising this sum. As the respondent failed and neglected to
    pay this amount within the prescribed period, the appellant called upon
    the respondent to pay the amount within seven days but despite this notice,
    the respondent failed and neglected to pay the sum of Rs. 4 lakhs.

           The respondent filed a suit for specific performance against the F
    ap;:>ellant which was dismissed by the trial court holding that the respon-
    dent-plaintiff was not ready and willing to perform his part of the contract.
    In appeal, the High Court granted specific performance of the contract
    and directed the appellant to execute the deed of conveyance, on the
    respondent paying the amounts set out therein within a period of three G
    months from the date of the judgment. The respondent did not make
    payment within specified period. He made an application for extension of
    time for making payment under the decree but the High Court declined to
    grant any extension of time holding that in the facts and circumstances of
    the case it would cause hardship, serious prejudice and injury to the
    opposite party. It resulted in the respondent's suit for specific perfor- H
                                         163
    164                   SUPREME COURT REPORTS                    [19%] 3 S.C.R.

A mance being dismissed. Two appeals were filed, one by the appellant-defen-
    dant and another by the respondent-plaintiff against the decision of the
    High Court.

          The respondent contended that under the agreement, the appellant
    was required to enter into a further agreement with the promoter of a
B   proposed housing society being formed by the respondent but the appel-
    lant did not enter into any agreement with the proposed society, so the
    respondent could not raise the Sum of Rs. 4 lakhs.

          Disposing of the matter, this Court
c        HELD : Payment of Rs. 4 Iakhs within a reasonable time was an
  essential term of the contract becaus• late payment of this amount may
  affect the appellant's right to obtain suitable alternative residential ac-
  comodation. The respondent-plaintiff was not in a position to pay the sum
  of Rs. 4 lakhs either within the time specified in the agreement of sale or
D within a reasonable time. He has insisted on the appellant first entering
  into an agreement with a proposed housing society which never came into
    existence. There was nothing in the agreement of sale which required the
    appellant to enter into an agreement with a proposed co-operative housing
    society as a condition precedent to receiving part payment of the sum of Rs.
E   4 lakhs. The proposed co-operative housing society was never registered
    and there was nothing to show that there were any members of his proposed
    society. The respondent plaintiff was not in a position to carry out the terms
    of agreement of sale. The plaintiff, in a suit for specific performance, must
    be ready and willing to carry out his part of the agreement at all material
    times. Such was not the case here. In fact, even after the decree of specific
F   performance the respondent was not able to deposit the amounts specified
    by the High Court within the time prescribed. As the respondent did not
    comply and was unwilling and/or unable to comply with the term of the
    agreement, he could not be considered as ready and willing to perform his
    part of the contract. [169-D-G; 170-B, D, E; 171-F)
G         Chand Rani (Smt.) (Dead) by Lrs. v. Kamal Rani (Smt.) (Dead) by
    Lrs., [1993) 1 SCC 519 and Parakunnan Veeti// Joseph's Son Mathew v.
    Nedumbara Kuruvi/a's Son & Ors., [1987) Supp SCC 340, relied on.

          1.2. In the present case, the right of the appellant to purchase
H suitable residental accomodation was seriously affected by non-payment of
J
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           P.R DEBANDASSOCIATEv. SUNANDAROY[MRS. SUJATA V.MANOHARJ.]          165

     Rs. 4 lakhs within a reasonable time. The respondent had failed to comply A
     with the term of the agreement relating to payment of this amount. In these
     circumstances, in any case, a decree for specific performance cannot be
     granted as it would be nnfair and unreasonable to do so. [171-H; 172-A]

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4631 of
     1993 Etc.                                                   B

          From the Judgment and order dated 26.5.93 of the Calcutta High
     Court in F.A.No. 127 of 1989.

           C.S. Vaidyanathan for L.P. Agrawala & Co. for the Appellants.
                                                                                     c
           Asim Mehrotra for Khaitan & Co. for the Respondent.

           The Judgment of the Court was delivered by

            MRS. SUJATA V. MANOHAR, J. Civil Appeal No. 4631A of 1993                D
      is by original defendant to the suit challenging the decree of specific
      performance which has been passed in appeal by the High Court of
      Calcutta against the appellant. The judgment and decree of the High Court
      in appeal is dated 28th of August, 1991. By this judgment and decree, the
      judgment and order of the trial court dismissing the respondent's suit for
      specific performance was set aside. The High Court granted to the respon-      E
      dent a decree for specific performance of the· contract in question and
      directed the appellant to execute the deed of conveyance as set out therein
      on the respondent paying to the appellant the amounts set out therein. The
      decree provided that the respondent shall make these payments with
      interest as specified therein within a period of three months from the date    F
      of the judgment; and the appellant was directed to execute the documents
    . within three months thereafter. The respondent, however, did not make
      payment within specified period which expired on 27th of November, 1991.
      The respondent, however, ultimately made an application dated 3rd of
      February, 1992 before the High Court for extension of time for making
      payment under the decree by a further period of three months. The              G
      appellant opposed this application. The High Court by its order dated 26th
      of May, 1993 has declined to grant any extension of time for payment of
      the said amounts holding, inter alia, that in the facts and circumstances of
      the case it would cause hardship, serious prejudice and injury to the
      opposite party if any further extension of time is given thereby reopening     H
    166                  SUPREME COURT REPORTS                  [1996] 3 S.C.R ..

A the decree. The application of the respondent for extension of time has
    been dismissed by the High Court thus resulting in the respondent's suit
    for specific performance standing dismissed.

           Civil Appeal No. 4631 of 1993 is filed by the respondent from the
    judgment and order of the High Court dated 26th of May, 1993. For the
B   sake of convenience the appellant in Civil Appeal No. 4631A of 1993, that
    is to say the original defendant, is referred to as the appellant while the
    respondent in Civil Appeal No. 4631A of 1993, that is to say the original
    plaintiff, is referred to as the respondent.

C         The appellant is the owner of certain immovable property bearing
    No. 30, Gariahata Road, South Calcutta. By the agreement dated 24th of
    October, 1977 the appellant agreed to sell to the respondent the said
    property for a sum of Rs. 9 lakhs on the terms and conditions set out in
    the agreement of sale dated 24th of October, 1977. Under the terms of this
D   agreement a sum of Rs. 25,000 was to be paid at the time of execution of
    the agreement. A further sum of Rs. 4 lakhs was to be paid within five
    months from the date of the agreement and the balance amount was to be
    paid at the time of conclusion of the purchase, time-being of the essence
    of the contract. Under clause 4 of the agreement, after the title of the
    appellant was accepted by the respondent, the respondent was required to
E   send to the appellant's advocate a draft of the proposed conveyance in
    order to enable the appellant to apply for and obtain the income tax
    clearance certificate under Section 230A of the Income Tax Act and for
    permission of the compentent authority under the Urban Land (Ceiling
    and Regulation) Act, 1976. Under clause 6 of the agreement the appellant
F   was required to hand over vacant possession of the said property on
    completion of sale except for possession of four shop rooms in the front
    portion. Clauses 11, 13 and 14 of the agreement are as follows :

            "11. And it is further agreed that if ultimately the Conveyance is
            to be executed in favour of a Co-operative Housing Society to be
G           initiated by the said P.R. Deb & Associates as nominee of the said
            Purchaser herein and a further Agreement may be entered into
            between the Promoter of that Housing Society and the Vendor
            and the said Agreement be registered at the Office of the District
            Registrar at Alipore, 24-Parganas and the Vendor shall have to
H           give necessary consent letter to the Co-operative Housing Society
     P.R DEB AND ASSOCIATE'. SUNANDA ROY[MRS. SUJATA V. MANOHAR,J.]    167

        lo the effect that she has agreed to sell the land and the buildings A
        thereon to the co-operative Housing Society.

        13. On the Vendor's making out a marketable title to the said
        property free from all encumbrances whatsoever and on her com-
        plying with the obligations under this Agreement, if the Purchaser B
        fails to complete the purchase within the time and in the manner
        hereinbefore mentioned, the Vendor thereupon shall have the full
        power of rescinding this Agreement by giving notice in writing to
        the Purchaser or its said Advocate and the said earnest money of
        Rs. 25,000 shall in that even stand absolutely forfeited by the
        Vendor as and by way of liquidated damages and the Vendor shall C
        have further rights to sue the purchaser for specific performance
        of this Agreement and for other reliefs.

        14. It is clearly understood and agreed that further payment of Rs.
        4,00,000 will not be treated as earnest money for the operation of    D
        this clause. In case the transaction falls through 1he said sum of
        Rs. 4,00,000 has to be refunded forthwith."

       Under the terms of the said agreement the respondent was required
to pay Rs. 4 lakhs within five months, that is to say, on or before 23rd of
March, 1978. As the respondent failed and neglected to pay this amount E
within the prescribed period, the appellant addressed to the respondent
her solicitor's letter dated 12.4.1978. In this letter, the appellant pointed
out that the part payment of Rs. 4 lakhs had not been made by the
respondent to the appellant within the prescribed period under the agree-
ment. It was further pointed out that the respondent was aware that the F
appellant was residing in the said property. The appellant had agreed to
give vacant possession of this property on completion of sale. The payment
of Rs. 4 lakhs was required under the terms of the agreement to enable
the appellant to acquire a suitable residence by utilising this sum. The letter
also records that in fact the appellant had inspected a number of properties
and approved two of them for purchase: but owing to the default on the G
part of the respondent in paying the sum of Rs. 4 lakhs the appellant was
not able to proceed any further. On account of the default committed by
the respondent, the appellant had the option to terminate the agreement.
However, without prejudice to her rights she called upon the respondent
to pay the said sum of Rs. 4 lakhs within the seven days failing which the H
    168                  SUPREMECOURTREPORTS                   [1996) 3 S.C.R.

A appellant would be compelled to take further steps against the respondent
    as she may be advised. Despite this notice, the respondent failed and
    neglected to pay the sum of Rs. 4 lakhs.

          The respondent contends that under clause 11 of the said agreement,
B the appellant was required to enter into a further agreement with the
  promoter of a proposed housing society being formed by the respondent
  and was required to give a consent letter to the co-operative housing
  society as set out in clause 11. The respondent contends that although
  meetings were held between the solicitors of the appellant and the respon-
  dent, the appellant did not give such consent or enter into an agreement        ,
C with the proposed co-operative housing society which was then being set
  up by the respondent. It is the respondent's case that he could not raise
  the sum of Rs. 4 lakhs since the appellant did not consent to and/or execute
  an agreement in favour of the proposed housing society in supersession of
  the agreement of 24th of October, 1977. In this connection, the
D respondent's solicitors have addressed two letters to the appellant's
  solicitors. One is a letter dated 5th of June, 1978, written long after the
  expiry of the date for payment of Rs. 4 lakhs, in which the respondent has
  called upon the appellant to approve the draft agreement for sale between
  one M/s. Anirban Co-operative Housing Society Ltd. which was not then
  registered and the appellant in supersession of the existing agreement
E along with a cheque for Rs. 25,000 drawn in favour of the appellant by the
  said proposed society. This cheque has not been encashed. The second
  letter from the respondent to the appellant's solicitors is dated 25th Sep-
  tember, 1980 in which it is, inter alia, recorded that unless the agreement
  was executed between the proposed co-operative society and the appellant,
F it would not be possible for the respondent to raise money and make
  payment of Rs. 4 lakhs. The letter also records that the appellant had,
  during the negotiations, taken the stand that unless the sum of Rs. 4 lakhs
  was paid the appellant would not execute the fresh agreement for sale. This
  letter also records that after the agreement between the proposed co-
  operative society and the appellant is completed, the respondent will,
G within a month thereafter, make payment of Rs. 4 lakhs. But unless the
  agreement is completed it is impossible to collect the money from the
  members of the proposed co-operative society.

          On 10.11.1980, the respondent filed a suit for specific performance
H   against the appellant· praying for specific performance of the agreement of
      P.R DEB AND ASSOCIATE,. SUNANDA ROY [MRS. SUJATA V. MANO HAR, J.J      169

24th of October, 1977. The trial court by its judgmen~and order dated A
24.12.1985 dismissed the suit holding that the respondent was not ready
and willing to perform his part of the contract. In appeal, however, the
High Court has granted specific performance as prayed for on terms and
conditions which are set out in its judgment and decree dated 28.8.1991.
Hence the present appeal has been filed by the appellant.
                                                                                    B
       Under the agreement of sale dated 24.10.1977, the respondent was
required to make part payment of Rs. 4 lakhs within five months of the
agreement of sale. The agreement has clearly provided that this payment
is not by way of earnest but it is part payment of the purchase price. The
purpose of this payment is clearly set out in the appellant's solicitor's letter    C
dated 12.4.1978 addressed to the respondent's solicitors. Early payment of
the amount of Rs. 4 lakhs was required as the appellant had to purchase
alternative residential accomodation for herself in order to carry out her
obligation under the agreement of sale to deliver vacant possession of the
property to the respondent except for the four shops set out in the said            D
agreement. By her solicitor's letter of 12th April, 1978, the appellant had
also make it clear that she requires payment of Rs. 4 lakhs for this purpose
and gave notice to the respondent to pay this amount within a week of the
said letter since the time for payment had already expired. Clearly, pay-
ment of Rs. 4 lakhs within a reasonable time was an essential term of the
contract. Because a late payment of this amount may affect the appellant's          E
right to obtain suitable alternative residential accomcidation; property
prices may increase, thus affecting the appellant's right to purchase a
suitable residential accommodation. From the reply which has been sent
by the respondent's solicitors, especially the reply dated 25.9.1980, it is
quite clear that the respondent was not in a position to pay the sum of Rs.         F
4 lakhs either within the time specified in the agreement of sale or within
a reasonable time. In fact, he has clearly set out in the said letter that unless
he is able to enter into a suitable arrangement with a co-operative housing
society, he will not be able to pay Rs. 4 lakhs to the appellant. He has
insisted, therefore, on the appellant first entering into an agreement with
a proposed housing society which admittedly, never came into existence.             G
There is nothing in clause 11 of the agreement of sale which requires the
appellant to enter into an agreement with a propsed co-operative housing
society as a condition precedent to receiving part payment of the sum of
Rs. 4 lakhs. Clause 11 is independent of the right of the appellant to receive
a sum of Rs. 4 lakhs. The agreement specifies the time within whieh the             H
    170                   SUPREME COURT REPORTS                  [1996] 3 S.C.R.

A sum of Rs. 4 lakh& was to be paid and the correspondence makes it quite
  clear that the respondent was not in position to pay this amount within the
  agreed period or within any reasonable time thereafter because he had, in
  turn, to collect this amount from the expected members of the proposed
  co-operative housing society. There is no evidence in this case to show
B whether there were any members of this proposed co-operative housing
  society and whether the respondent was in a position to collect this amount
  of Rs. 4 lakhs. In fact, the evidence is to the contrary. The proposed
  co-operative housing society was never registered and there is nothing to
  show that there were any members of this proposed co-operative housing
  society. Although the respondent and his solicitor have given evidence in
C the case, they have not stated that the respondent had the sum of Rs. 4
  lakhs at the material time or that the respondent was in a position to pay
  this amount within a reasonable time. There is nothing in the agreement
  requiring the appellant to enter into an agreement with the proposed co'
  operative housing society before the sum of Rs. 4 lakhs is released to her.
D The trial court, therefore, had rightly come to the conclusion that the
  respondent-plaintiff was not in a position to carry out the terms of agree-
  ment of sale. The plaintiff, in a suit for specific performance, must be ready
  and willing to carry out his part of the agreement at all material times. Such
  is not the case here. In fact, even after the decree of specific performance,
  the respondent was not able to deposit the amounts specified by the High
E Court within the time prescribed. Ultimately he applied for extension of
  time for deposit of amount which application was rejected.

          In the case of Chand Rani (Smt.) (Dead) by Lrs. v. Kamal Rani (Smt.)
    (Dead) by Lrs., [1993] 1 SCC 519, a Bench of Five Judges of this Court
F   considered a similar situation, where the contract stipulated that a sum of
    Rs. 98,000 would be paid by the purchaser to the vendor within a period
    of ten days only. Despite notices of the vendor, the vendce was not willing
    to pay the said amount unless vacant possession of a part of the property
    was given by the vendor to the vendee. The Court said that in view of the
    express terms of the contract coupled with the conduct of the vendee, it
G   was clear that the time was of the essence of the contract and the vendee
    was not ready and willing to perform the contract. In these circumstances,
    this Court upheld the refusal of the High Court to grant specific perfor-
    mance. This Court has observed that although in the case of a sale of
    immovable property time is not of the essence of the contract, it has to be
H   ascertained whether under the terms of the contract, when the parties
                  P.R. DEBANDASSOCIATEv. SUNANDAROY[MRS.SUJATA V. MANOHAR,J.]         171


'+·        . named a specific time within with completion was to take place, really and A
             in su.bstance it was intended that it should be completed within a
             reasonable time. It observed that the specific performance of a contract
             will ordinarily be granted, notwithstanding default in carrying out the
             contract within the specified period, if having regard to the express stipula-
             tions of the parties, nature of the property and the surrounding circumstan-
             ces, it is not inequitable to grant the relief. If the contract relates to sale
                                                                                             B
             of immovable property, it would normally be presumed that the time was
             not of the essensce of the contract. But even if it is not of the essence of
,.           the contract, the Court may infer that it is to be performed in a reasonable
             time if the conditions of the contract so warrant. These can be inferred,
             (1) from the express terms of the contract; (2) from the nature of the         c
             property and; (3) from the surrounding circumstnaces. For example, the
             object of making the contract may make it clear that the agreement
             requires to be performed within a reasonable time. The Court said that the
             stipulation in the contract regarding payment of Rs. 98,000 within a period
             of ten days only showed that the failure to pay the amount within the
                                                                                             D
             stipulated period would constitute a breach of contract.
 "
                  The present case is similar. The clause relating to payment of various
            amounts under the contract including the sum of Rs. 4 lakhs states that the
            time is of the essence. Moreover, by his letter of 12th April, 1978, also the
            appellant has made payment of Rs. 4 lakhs within a period of seven days         E
            from the date of notice, of the essence of the contract pointing out the
       -    circumstances which require payment of Rs. 4 lakhs within a reasonable
            time. As the respondent drd not comply and was unwilling and/or unable
.,.         to comply with this terms of the agreement, he cannot be considered as
            ready and. willing t'f perform his part of the contract.      ·
                                                                                            F
                 In the case of Parakunnan Veetil/ Joseph's Son Mathew v. Nedumbara
            Kurnvila's Son & Ors., [1987] (Supp) SCC 340, this Court has observed that
            the court should meticulously consider all facts and circumstances before
            granting specific performance. The court should take care to see that it is
,...        not used as an instrument of oppression to have an unfair advantage.            G

                  In the present case, the right of the appellant to purchase suitable
            residential accommodation is seriously affected by non-payment of Rs. 4
            lakhs within a reasonable time. The respondent had failed to comply with
            the term of the agreement relating to payment of this amount. In these H
    172                   SUPREME COURT REPORTS                  (1996) 3 S.C.R.

A circumstances, in any case, a decree for specific performance cannot be
    granted as it would be unfair and unreasonable to do so. The High Court,
    therefore, was not right in setting aside the judgment and order of the trial
    court.

           We, therefore, allow Civil Appeal No. 4631A of 1993 and restore the
B judgment and order of the trial court while setting aside the judgment and
    decree of the High Court.

           In view of Civil Appeal No. 4631A of 1993 being allowed, as above,
    nothing now survives in Civil Appeal No. 4631 of 1993 which is against the
    refusal of the High Court to extend time for making payment of the
C   amounts under the decree of the High Court which has now been set aside.
    The High Court passed a conditional decree whereby the High Court has
    ordered, inter a/ia, that in the event of the respondent herein committing
    default in making the payment to the appellant within the time as specified
    in the decree, the suit for specific performance of the contract 'shall and
D   do stand dismissed'. The respondent contends that the High Court has the
    power to extend time for making payment despite this provision in the
    decree. While the appellant contends that the court having become functus
    officio on passing of the above conditional decree, it cannot further extend
    time. The High Court has declined to extend time in the facts and cir-
E   cumstances of the case. We need not, however, examine the detailed
    contentions raised by both the parties in this connection since this dispute
    has now become redundant, the decree for specific performance having
    been set aside. Civil Appeal No. 4631 of 1993 is, therefore, dismissed. The
    respondent shall pay to the appellant costs of the appeals.

F        The respondent will be at liberty to withdraw the amount deposited
    pursuant to the orders of the Court with accrued intere9st, if any.

    R.A.                                                     Matter disposed of.