1988 PLP 76 (CLC)

7. The main facts of the case are not disputed. The main questions that require consideration by the Court are, whether the time was essence of contract and whether the time for performance of contract was extended. To appreciate the question involved, it will be helpful to peruse the relevant terms of the agreement of sale admittedly executed by the defendant No.l. This agreement has been produced as Ex.6 by the plaintiff Vali Mohammad, who has been examined as P.W.l. Paras. 4 and 6 of the agreement which are relevant for the decision of the question involved, are reproduced as under:‑ "

4. That the vendee shall get the said loan amount transferred to his name on or before the completion of the sale at the cost and expense of the vendee. The vendee further agrees to take liability for the payment of said loan to the House Building Finance Corporation from this date, the 16th July, 1962. (5) ........................ (6) That the vendor shall obtain income‑tax clearance certificate, permission from the P.E.C.H.S. and Ministry of Works, obtain completion certificate from the K. D. A. execute and register the sale‑deed in favour of the vendee within three months of the execution of this agreement and if the vendor fails to obtain the necessary documents required for registration purposes this time shall be extended further, when the balance of the sale price will be paid by the vendee to the vendor."

8. It will be seen that under para. 4 of the agreement certain obligation is cast upon the plaintiff to get the loan of the House Building Finance Corporation (hereinafter called 'H. B. F. C.') transferred in his name, and he also undertook the liability of payment of loan to the H . B . F. C. It will be further noticed that no time was fixed in this para for the performance by the plaintiff of his part of agreement. The fact that he was to get the loan transferred in his name implied that the loan was to be repaid in instalments. Otherwise, if it was to be paid in lump sum, there was no need to get the loan transferred in the name of the vendee.

9. It is further contended by the learned counsel for the plaintiff that the loan being in the name of defendant No.1, it could not be transferred without his initiation and in fact it was defendant No.l, who had to get the loan transferred in the name of plaintiff, of course, at the cost and expenses of the plaintiff. In support of this contention reliance is placed on the admission of defendant No. 1 in the notice given by him to the plaintiff which is Ex.12. In para. 3 of this notice it is stated, that defendant No: 1 had undertaken to transfer the outstanding loan of H.B.F.C. In the cross‑examination he has also admitted about this admission in the notice.

10. Defendant No.l has examined D.W: No. 2 Noor Mohammad, who is Assistant Manager in H.B.F.C. He has stated that on 9‑11‑1962 defendant No.l had written a letter to the H.B.F.C. for the transfer of the loan to the plaintiff, but he was asked to produce the sale‑deed. As he did not comply with the requirement of transfer, the loan was not transferred. In cross‑examination he has also admitted that the plaintiff had also written for the transfer of the loan. However, the fact remains that this loan was not transferred in the name of the plaintiff.

11. Next we come to the obligations placed on the defendant No.l under para. 6 of the agreement. It enjoins upon defendant No.l to obtain certain documents mentioned therein to execute the registered deed in favour of the vendee within three months of the agreement. However, if he failed to obtain for registration purpose the necessary documents the time shall be extended further. It is contended by the learned counsel for the defendant No. 1 that under this para. time was the essence of the contract and failure of the plaintiff to get the sale‑deed registered within three months amounted to breach of the contract entitling defendant No.l to avoid the agreement.

12. It is, however, contended by the learned counsel for the defendants Nos. 2 to 4 that bare reading of this para would show that the time is not essence of the contract. Under this para. would show that the time is not essence of the contract. Under this para. time is prescribed for defendant No.l to perform his part of contract, but no time was so fixed for performance of his part of contract by the plaintiff. It is further contended that no time has been fixed after further extension of the time. Reliance is placed on the case of Govind Prasad Chaturvedi v. Hari Dutt Shastri and another reported in A I R 1977 SC 1005. It was held therein as under:‑ "The fixation of the period within which the contract has to be performed does not make the stipulation as to time the essence of the contract. When. a contract relates to sale of immovable property it will normally be presumed that the time is not the essence of the contract. The intention to treat time as the essence of the contract may be evidenced by circumstances which should be sufficiently strong to displace the normal presumption that in a contract of sale of land stipulation as to time is not the essence of the contract." It is contended by the learned counsel for the defendant that even if it is held that under the agreement the time was not essence of the contract, still it can be made essence subsequently by serving such notice upon other party. Reliance is placed on the case of Gomathinayagam Pillai and others v. Palaniswami Nadar A I R 1967 SC

185. It is observed therein that 'time is of essence if parties intend it to be so. Intention may be evidenced either by express stipulations or by circumstances which are sufficiently strong to displace ordinary presumption that in contract for sale of land stipulation as to time is not of essence. If time is not of essence originally, it can be made of essence even subsequently by serving notice on other party."

13. It is contended that defendant No.1 by letter Exh.7, dated 13‑3‑1963 he served notice upon the plaintiff to arrange the registration of sale‑deed within one week, failing which the entire responsibility would be of his.

14. It is alleged by the plaintiff that he did not receive this letter, but it is argued on behalf of the defendant No.1 that this letter was sent by registered post A. D. on the same address on which the letter Exh.12, dated 23‑11‑1965 was sent and which was admittedly received by the plaintiff. The acknowledgement receipt Exh.7 shows that it was received by somebody on behalf of the plaintiff. It is further submitted that even in this letter Exh.7, no consequence is provided in case of non‑compliance ty the plaintiffs within the time fixed in the letter and, therefore, this cannot be considered as a notice fixing the time as essence of contract.

15. The main argument of the learned counsel for the defendant No.l is that even if the time is not considered to be the essence of contract, the suit for specific performance of the contract had to be filed under Article 113 of the Limitation Act within three years from the date, the refusal of the performance was corveyed to the plaintiff vide letter Exh.12, dated 23‑I1‑1965.

16. Article 113 of the Limitation Act provides a period of limitation of three years for suit for specific performance of the contract. This limitation is to run from the date fixed for the performance, or if no such date is fixed when the plaintiff has noticed that performance is refused. It is settled law that refusal should be absolute. To assess whether the refusal was absolute and unconditional, it is necessary to refer to the evidence produced by the parties and also to see the circumstances of the case.

17. Admittedly out of sale price of Rs.59,00C, Rs.16,500 were to be paid by the plaintiff to the H.B.F.C. in instalments. Out of the remaining amount of Rs.42,500, Rs.37,500 were paid by the plaintiff immediately to the defendant No.l at the time of the sale‑agreement and he subsequently paid Rs.4,000 to the defendant No.1, leaving a balance of Rs.1,000 only. The plaintiff was also put in possession of the bungalow in question. In his examination‑in‑chief, the plaintiff has stated that the execution of the sale‑deed was put off because some of the documents relating to the property were lying with the H.B.F.C. and they could be released only after the liability of the Corporation (H.B.F.C.) was discharged and the defendant had promised to execute the sale‑deed with the Sub‑Registrar, Karachi after he was able to collect the documents. The defendant No.l in his cross‑examination has admitted that the sale‑deed was to be executed after the instalments due had been paid by the plaintiff. These instalments were admittedly finally paid on 5th May, 1975.

18. Para. 6 of the agreement also provides that if the vendor fails to obtain the necessary documents required for registration purposes, the time shall be extended further. Keeping in view the statement of the plaintiff, the admission of the defendant No. 1 and the abovementioned provisions in pare. 6, it will be clear that the parties had agreed that the registration of the sale‑deed would take place after all the documents including the documents lying with the H.B.F.C. were available and collected by the vendor. I have already pointed, that the dues of the H . B . F. C . were to be paid in instalments which were to be completed in 1974. Therefore, it is contended by the learned counsel for the plaintiff. that the plaintiffs could enforce specific performance of the contract only after 1974.

19. However, the fact remains that by Ex.12, dated 23‑11‑1965 the defendant No. 1 did communicate to the plaintiffs his refusal to perform the contract and it is contended by the learned counsel for the defendant that time under Article 113 of the Limitation Act will run from this date. The plaintiff, in his deposition, has admitted the receipt of this letter, but has stated that the defendant No.l had assured him that he will execute the sale‑deed in his favor are that he need not worry as he was in possession and that the defendant No.l had received practically all the consideration. The plaintiff has also led the evidence of P.W. No.2 Gul Mohammed, who states to have accompanied the plaintiff to the defendant No.l on two occasions, once in May, 1966 and other time in March, 1967. He has stated that on both these occasions the plaintiff asked the defendant to get the sale‑deed executed, but the defendant No.1 told the plaintiff to go on paying the instalments and he would execute the sale‑deed when the instalments are completed.

20. Defendant No.2 Habibur Rehman has examined himself. He states, that in 1973 vide agreement Ex.13/1, he purchased the house in question from the plaintiff, who put him in possession of the house. He further states that he had met the defendant No.1 three or four times and during these meetings the defendant No.l had told him, that if they would pay the balance of remaining unpaid instalments to the H.B.F.C., he would have no objection to the purchase of property by them. He has further stated, that he had constructed the second storey on this bungalow with approved plan of the K . D.A., which was approved at the request of defendant No.l. The defendant No.l has denied any knowledge of this transaction. He admits, that the upper storey has been raised on this bungalow, but denies that it was raised with his consent.

21. Learned counsel for the plaintiff and defendants Nos. 2 to 4 have argued, that the conduct of the defendant No.l described under, confirms the contention of the plaintiff, that even after notice Ex.12 annulling the agreement, the defendant No.l had orally agreed to execute the sale‑deed on the completion of instalments of the H . B . F. C . Though notice annulling the agreement was sent in 1965 in which ‑a demand was made of payment of rent @ Rs.600 per month from the plaintiff, still even until now no steps have been taken by the defendant No.1 either to recover the possession of the house in dispute or to recover rent /compensation from the plaintiff or even from the subsequent purchaser/occupants viz defendants Nos. 2 to 4.

22. Upper storey on this house was raised by the defendants Nos. 2 to 4, but even uptil now no objection has been raised by the defendant No.l against this construction. There is nothing on the record to show that he protested against the raising of construction or even gave notice to the defendants Nos. 2 to 4 to demolish this construction. Admittedly the property tax is being paid by the plaintiff and the subsequent purchaser and the evidence on record shows that only in 1984‑85 the defendant No.l moved the Taxation Authorities for removing the name of Vali Mohammed from the taxation register. In other words, he allowed the plaintiff and subsequent occupants to pay property tax in his capacity as owner of the property. It is also admitted that no dues were paid to the H.B.F.C. by the defendant No.l except Rs.1,700 which were paid by him in 1975. Admittedly there were Rs.16,500 remaining to be paid to the H.B.F.C. and this amount and the interest was allowed by the defendant No.l to be paid by the plaintiff and subsequent purchaser to H.B.F.C. without any protest or objection from defendant No.l. It is also admitted fact that on 29‑6‑1973 the defendant No.1 moved an application Ex.19/1 to the H.B.F.C.. for loan for the construction of house on Plot No. F/59 Block 'F', North .Nazimabad. Admittedly in this application, he has shown, that he had sold the house in suit. It is contended that there is nothing on the record to show that the defendant No.l had sold'this house to any body else except to the plaintiff and, therefore, the only reasonable conclusion ttat can be drawn is, that even uptil 29‑6‑1973, the defendant No. 1 considered this house to have been sold to the plaintiff.

23. It is further submitted that even according to the defendant No.l, the sale‑deed was to be executed after instalments had been completed. It is further admitted, that it was only after the last payment of Rs.1,700 made by him vide Receipt Ex.29, which is dated 5‑5‑1975, that defendant No.l was able to get the documents relating to the property from the H . B . F. C . Therefore, the cause of action for enforcement of specific performance of the contract accrued to the plaintiff only on 5‑5‑1975. Reliance is placed on the case of Lakshminarayana Reddiar v. Singaravelu Naicker and another A I R 1963 Mad.

24. It is observed therein 'that cause of action arises for a party under contract only when, as contemplated by the parties, the obligor is in a position to perform his promise effectively. Till such date no cause of action arises for the other party to compel him to file a suit for specific performance of the contract'. It is further held, 'the words of the third column in Art. 113 of the Limitation Act should not be literally construed but liberally construed having regards to the facts of each individual case. 'The date fixed for the performance', which is a phrase occurring in the third column of Art.113, must be not only a date which can be identified without any doubt as a particular point of time, but it should also be a date which the parties intended should be the date when the contract could be performed'.

24. It may be pointed that the defendant No.l is not an ordinary layman, but is an Advocate, who knows his legal rights and liabilities. His omission to take any steps to recover the possession of the house, after the alleged cancellation of agreement in 1965, can be said to have led the plaintiff to believe that the sale‑agreement continued to be in force and, therefore, he continued to pay the dues of the H.B.F.C. and the property tax to the Excise Department without any objection from the defendant No.l. This impression can also be said to have led him to enter into sale‑agreement with defendants Nos. 2 to 4 and to deliver the possession of the same to defendants Nos. 2 to

4. Again the omission of the defendant No.l to take any steps to recover the possession from defendants Nos. 2 to 4 or to intimate them about the cancellation of sale‑agreement can be said to have led the defendants Nos. 2 to 4 to believe that they have validly entered into agreement of purchase and consequently they raised construction on the upper storey again without any objection from the defendant No.l. It is contended by the learned counsel for the plaintiff that under the circumstances the principle of estoppel can be invoked against the defendant No.l.

25. If the suit is held to be time‑barred and the decree for specific performance is refused to the plaintiff, a situation would be created which would result in stalemate. Neither the plaintiff can perfect his title by getting sale‑deed registered and consequently the defendants Nos. 2 to 4 also cannot get the sale‑deed registered in their favour, nor can defendant No. 1 be benefited there from. He cannot recover possession of the house in view of section 53(A) of the Transfer of Property Act. Besides there is nothing on the record to show that he has filed any suit for the recovery of possession from the plaintiff or defendants Nos. 2 to 4 whose possession after 1965 after the alleged cancellation of the sale‑agreement can be deemed to be unauthorised. If the defendant No.l files a suit fur possession after 22 years of such alleged unauthorised possession, the plaintiff even defendants Nos. 2 to 4, who came in possession in 1973, can raise the plea of adverse possession. The principles of justice and equity require the Court not to give a decision, which can create such situation.

26. Even on merits, there appears to be great force in the contention of the learned counsel for the plaintiff that the conduct of the defendant No.l, as described above, lends support to the evidence of the plaintiff and defendant No.2, that even after the alleged cancellation of the sale‑agreement, the defendant No.l continued to promise to execute the sale‑deed after the instalments of H.B.F.C were paid. This conclusion gets further support even from the statement of defendant No.l in his application Ex.19/1 made in 1973, wherein he has shown the house in question to have been sold.

27. On reading para. 6 of the agreement, it will be seen that the date of registration which was three months would be automatically' extended further, in case the vendor viz. defendant No.l failed to obtain the necessary documents required for registration. This date would be deemed to have been extended till the defendant No.l was able to obtain the necessary documents required for registration.

28. As laid down in the Madras case and under the circumstances of the present case it is imperative that the liberal construction should be put upon Art.113. Therefore, under para. 6 of the agreement the date fixed for registration after extension of time would be the date on which all the relevant documents necessary for registration were obtained by the defendent No.l. Admittedly some of the necessary documents required for registration were lying with H.B.F.C., with whom the plot/house was mortgaged and which documents admittedly the defendant No. l obtained after payment of the last dues on 5‑5‑1975. This is also the date on which the defendant No.l was in a position to perform the contract viz. execute the registered sale‑deed and it is also the date when the plaintiff could have enforced specific performance. of the said contract. The refusal of the. defendant No. l to perform the contract at the time when he was not in a position to perform it will have no value in the eyes of law. It will only be an~ academic refusal, but not an effective one. Therefore, the period of limitation under Article 113 in the instant case would run from 5‑5‑1975 and there can be no dispute that the suit has been filed within three years of this date.

29. In view of the above discussion my finding on issue No.l is in affirmative, on issue No.2 is in negative and on issue No.3 it is in affirmative. The suit of the plaintiff for specific performance is decreed against defendant No‑.1 subject to condition that the balance' of the consideration as well as Rs.1,700 or any other amount paid by the defendant No.1 to the H. B. F.C. is paid by the plaintiff to defendant No.l or is deposited in the Court.. Under the circumstances of the case the parties are directed to bear their own costs. The judgment was announced by a short order, dated 17‑9‑1987 Above are the reasons in support of the said order. A.A./V‑6/K Suit decreed