Gujarat High Court
Miskinbanu Jahidkhan Pathan vs Alisher Subhanali Ansari on 23 April, 2026
NEUTRAL CITATION
C/FA/2516/1999 CAV JUDGMENT DATED: 23/04/2026
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Reserved On :18/03/2026
Pronounced On : 23/04/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 2516 of 1999
With
R/FIRST APPEAL NO. 2776 of 1999
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J. C. DOSHI
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Approved for Reporting Yes No
Yes
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MISKINBANU JAHIDKHAN PATHAN & ORS.
Versus
ALISHER SUBHANALI ANSARI & ANR.
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Appearance:
JENIL M SHAH(7840) for the Appellant(s) No. 1.1,1.2,1.3,1.4,1.5
MR MEHUL S SHAH(772) for the Appellant(s) No. 1
MR AFTABHUSEN ANSARI(5320) for the Defendant(s) No. 1
MR. MAYUR V DHOTARE(7019) for the Defendant(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE J. C. DOSHI
CAV JUDGMENT
1. This common judgment governs the disposal of the
captioned appeals as they arise from the judgment and decree
dated 09.04.1999 passed by the learned City Civil Court,
Ahmedabad in Civil Suit No.4584 of 1986.
1.1 In Civil Suit No.4584 of 1986, the learned 16 th Judge,
City Civil Court, Ahmedabad vide judgment and decree dated
24.04.1999 decreed the suit in favour of the plaintiff directing
that defendant no.1 to executed the sale-deed in favour of the
plaintiff in respect of the suit property on the plaintiff making
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payment of remaining amount of sale consideration as per the
agreement dated 01.10.1985 with interest @ 9% per annum
from the date of agreement i.e. 01.10.1985 till the date of
payment and to handover vacant and peaceful possession of
the suit property to the plaintiff, after taking possession of the
suit property from the defendant no.2. Consequently, the sale-
deed (Exh.127) dated 23.12.1993 executed by the defendant
no.1 in favour of defendant no.2 during the pendency of
proceedings of the suit is declared illegal, null and void. The
defendant no.2 was directed to handover peaceful and vacant
possession of the suit property to defendant no.1, who in turn,
is directed to handover the peaceful and vacant possession fo
the suit property to the plaintiff.
1.2 The defendant no.1 is also held guilty for violation of
injunction order dated 11.11.1987 and he was directed to
undergo one day’s imprisonment.
1.3 Thereby, the judgment and decree whereby the
defendant no.1 was directed defendant no.1 to execute the
sale-deed in favour of plaintiff and handover peaceful and
vacant possession as well as cancellation of sale-deed
executed by defendant no.1 in favour of defendant no.2 are
challenged by way of captioned appeals by defendant no.1 and
defendant no.2 respectively, under the provisions of Section
96 of the Code of Civil Procedure, 1908 (‘the Code’, for short).
1.4 The judgment and order directing the defendant no.1 to
undergo one day’s imprisonment for disobedience of the
injunction order is accepted and whereof, defendant no.1 has
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undergone one day’s imprisonment.
2. These appeals are filed by the defendant nos.1 and 2
whereas the the respondent is plaintiff. For convenience and
brevity, they are referred to herein as per their original status
as that of before the learned trial Court.
3.1 Briefly states, the plaintiff instituted suit against the
defendant no.1 seeking prayer for specific performance of
agreement to sale dated 01.10.1985 (‘ATS’, for short) and
seeking execution of the sale deed. In the alternative, the
plaintiff prayed for damages. During the pendency of the suit
proceedings, the plaint was amended by joining defendant
no.2 as he is the purchaser of the suit property pending the
suit. The prayer was also amended for relief of setting aside
the registered sale-deed dated 23.12.1993 executed by the
defendant no.1 in favour of defendant no.2 in violation of
injunction order passed below Notice of Motion.
3.2 In the aforesaid factual background, the case of the
plaintiff is that the defendant no.1 is exclusive owner of
immovable property bearing Survey No.141-1 Part-191, M.C.
No.50981 situated at Parmanand Patel Chawl, Near Shah
Hamid Roza, Sherkotda Ward, Ahmedabad (‘the suit
property’, for short) for sale consideration of Rs.16,000/-. The
defendant no.1 agreed to sell the suit property to plaintiff
after accepting Rs.2,000/- as advance money being part of the
sale consideration. The ATS was registered with Sub-registrar
Office vide Entry No.11109 on 01.10.1985.
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3.3 The plaintiff further pleaded that on 14.10.1985, he paid
Rs.300/- on 17.10.1985 he paid Rs.100/- and on 12.10.1985,
he paid Rs.6,000/- to the defendant no.1 and during the
pendency of ATS, he pleaded that plaintiff was ever ready and
willing to get executed the sale-deed as a part of specific
performance of the ATS in his favour. Time and again he
approached the defendant no.1 to get execute the sale-deed
however, the defendant no.1 did not do so. The plaintiff,
therefore, filed the suit for relief of specific performance as
although he was ready and willing to perform his part of
agreement, defendant no.1 since was not reciprocating to
perform his part of the contract. The plaintiff also preferred
injunction application (Notice of Motion) under Order 39
Rules 1 and 2 read with Section 151 of ‘the Code’. The
injunction was granted in favour of the plaintiff which the
defendant no.1 did not challenge the said order passed below
Notice of Motion.
3.4 Pending the suit, the defendant no.1, in violation of
injunction order, executed the registered sale-deed in favour
of defendant no.2 on 23.12.1993 with respect to the suit
property. The plaintiff, therefore, filed an application for
amendment in the plaint to join defendant no.2 – the
subsequent purchaser and also to amend relief to cancel the
said sale-deed dated 23.12.1993 and to declare the same as
not binding to the plaint so also to quash and set aside the
said sale-deed dated 23.12.1993.
3.5 The plaintiff also moved an application Exh.34 seeking
action against the defendant no.1 for dis-obediance of
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injunction order under Order 39 Rule 2A of the Code. That
application was also heard along with the suit.
3.6 The summons was served upon defendant no.1. He filed
written statement vide Exh.16 denying the allegations made in
the plaint by the plaintiff and contending therein inter alia
that the ATS in question has been cancelled by the defendant
no.1 and hence the suit is not maintainable. The defendant
no.1 admitted execution of the ATS dated 01.10.1985. It was
further contended that the time was essence of the contract.
The sale-deed was to be executed within six months from the
date of agreement as per the terms and conditions of the ATS,
however, plaintiff did not perform his part of contract by
obtaining necessary permission to sell the property. According
to defendant no.1, since the plaintiff did not act as per the
terms and conditions of the ATS and did not adhere to time
limit specified in terms and conditions of the agreement, it
compelled the defendant no.1 to cancell the ATS by issuing
Notice dated 21.07.1986 and, therefore, plaintiff now is not
entitled to get any relief for specific performance.
3.7 The amended plaint was confronted by filing written
statement at Exh.71 whereby defendant no.1 contended that
he has not executed any sale-deed in favour of defendant no.2
and had never gone to the office of Sub Registrar to register
the sale deed, not had committed any disobedience of any
injunction order. Defendant no.2 being joined subsequently
filed written statement at Exh.73. As usual, defendant no.2
denied allegations and averments made in the amended plaint
and contended that therein inter alia that the suit property
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was in joint possession of defendant no.1 and his brother
Prabhudas and their father Kalaji. Some disputes had arisen
between defendant no.1 and his brother Prabhudas for which
some litigations were filed and thereafter some settlement
had taken place between two brothers whereby title of the
suit property was recognised in favour of defendant no.1 and
the possession was lying with his brother Prabhudas.
3.8 It is further contended by defendant no.2 that he is bona
fide purchaser and he was not put to notice as regards
pendency of any suit either by defendant no.1 or his brother
Prabhudas. They had not informed him about pendency of the
suit or injunction order. He has paid sale consideration of
Rs.80,000/- of which Rs.40,000/- each was paid to defendant
no.1 and his brother Prabhudas. Therefore, he is bona fide
purchaser and without notice of earlier pendency of the suit
or injunction order and thus it is contended that plaintiff
cannot claim any relief against defendant no.2.
3.9 The learned City Civil Court framed issues at Exh.26 and
permitted both the parties to lead the evidence. After
analysing the evidence on record, learned City Civil Court
decreed the suit in favour of plaintiff in aforesaid terms.
3.10 Being aggrieved by and dissatisfied with the impugned
judgment and decree, the defendant no.1 filed First Appeal
No.2776 of 1999 and defendant no.2 filed First Appeal
No.2516 of 1999. Upon request of learned advocates
appearing for respective parties, First Appeal No.2516 of
1999 has been treated as lead matter and, therefore, the facts
are taken from the said First Appeal No.2516 of 1999.
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4.1 Learned advocate Ms.Mayur Dhotare appearing for
defendant no.1 refers to registered agreement executed on
01.10.1985 (Exh.105) and mainly argued that admittedly as
per clause:6, the time period of ATS was six months which
expired on 31.03.1986. He would submit that during time
period of ATS, plaintiff did not remain ready and willing to
perform his part of contract. He would further submit that
consequently on 21.07.1986, the defendant no.1 cancelled the
ATS and forfeited earnest money paid by the plaintiff. He
would submit that since it is on record that ATS was cancelled
by the vendor – defendant no.1, the plaintiff was required to
file suit for declaratory relief seeking cancellation /
termination of the ATS as bad in law, without asking such
relief, the suit for specific performance is not maintainable. In
support of this submissions, learned advocate Mr.Dhotare
referred to judgment of Hon’ble Supreme Court in the case of
I.S.Sikandar vs. K. S. Subramaniam and others reported in
2013 (15) SCC 27 as well as in case of Sangita Sinha vs.
Bhavna Bhardwaj reported in AIR 2025 SC 1806 and
submitted that in absence of prayer for declaratory relief that
termination / cancellation of agreement is bad in law, suit for
specific performance is not maintainable.
4.2 Mr.Dhotare, learned advocate for the defendant no.1
further submits that issue of maintainability of suit can be
raised at any stage and even during the First Appeal as it has
been legal issue, he submits that though the specific
contention was not raised by defendant no.1 in written
statement about maintainability of the suit, it was openly
contended that defendant no.1 vendor has cancelled the ATS
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and forfeited earnest money and in presence of that pleading
it was mandatory upon the trial Court to frame the issue as
regard to maintainability of the suit, that whether in absence
of declaratory relief to declare the termination of ATS as bad
in law, the suit is maintainable. However, learned trial Court
did not frame this issue of maintainability of the suit and
thereby materially erred. He would further submit that the
defendant vendor is entitled to raise the issue in First Appeal
and can insist for framing of such issue and remand the
matter for fresh consideration. In support of this submission,
learned advocate Mr.Dhotre referred to judgment of the
Hon’ble Supreme Court in case of State of Rajasthan vs. Rav
Raja Kalyan Singh reported in 1972 (4) SCC 165 as well as
in case of Shivalaya Co. Operative Housing Society Ltd. vs.
Santaben T. Patel & Ors. reported in 2002 (1) GLR 426.
4.3 The next contention raised by learned advocate
Mr.Dhotare that the ordinarily time is not the essence of the
contract in Agreement to Sale for immovable property but in
the present case Clause:6 of ATS specifies the time of six
months and the agreement thus could be survived only for six
months, plaintiff who is expected to perform his part of
contract within six months did not come forward even did not
call the defendant no.1 – vendor to execute the sale deed
during the time period of ATS, which specifies that the
plaintiff was not ready and wiling to perform his part of the
contract.
4.4 Learned advocate Mr.Dhotare would also submit that, in
view of Section 16(c) of the Specific Relief Act, in the suit for
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specific performance plaintiff must allege and prove
continuous readiness and willingness to perform his part of
contract from the date of contract and must remain ready and
willing throughout the contract period. The readiness and
willingness of the plaintiff to perform his part of the contract
must be established right from the date of contract till the
date of the hearing of the suit. He would submit that in the
present case plaintiff, after executing the ATS on 01.10.1985,
did nothing within the time period of the contract which
establishes and proves that he was never ready and willing to
perform his part of the contract.
4.5 learned advocate Mr.Dhotare having referred to ATS at
Exh.105 submits that the sale consideration fixed for
Rs.60,000/- and the plaintiff paid barely Rs.2000/- and did not
pay the balance amount within the six months from the date of
execution of ATS which itself sufficiently displays that plaintiff
was never ready and willing to perform his part of contract.
Yet the learned trial Court overlooked this statutory
requirement to decree the suit. In support of his submissions,
he referred to and relied upon the judgment of the Hon’ble
Supreme Court in the case of Shenbagam and others vs. KK
Rathinavel reported in 2022 SCC Online 71 and the
judgment rendered in the case of Vijay Kumar & Ors. Vs. Om
Prakash reported in 2019 (17) SCC 429.
4.6 In regard to contention that ‘time is the essence of
contract’, more particularly when the time period is specified
in the ATS, learned advocate Mr.Dhotare submits that since
plaintiff failed to adhere to the time limit stated in the ATS,
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and did not perform his part of contract within six months
from the date of ATS it could be presumed that plaintiff being
a vendee was not ready and willing to perform his part of
contract and such conduct disentitles plaintiff from getting
relief of specific performance, yet learned trial Court granted
relief of specific performance ignoring the very conduct of the
plaintiff and thereby committed patent error. In support of
this submission, he referred to and relied upon the
Constitution Bench judgment in the case of Chand Rani (Smt.)
(Dead by Lrs.) vs. Kamal Rani (Smt.) (Dead) by Lrs. reported
in (1993) 1 SCC 519.
4.7 Upon aforesaid submissions and arguments, learned
advocate Mr.Dhotare submitted that since learned City Civil
Court committed manifest error in decreeing the suit ignoring
the settled principles of law and Section 16(c) of the Specific
Relief Act, as well as when the time became essence of the
contract and thirdly in absence of prayer seeking declaratory
relief that termination of agreement was bad in law the
impugned judgment and decree deserves to be quashed and
set aside by allowing these appeals.
5. Learned advocate Mr.Jenil Shah appearing for defendant
no.2 – subsequent purchaser, after adopting aforesaid
argument canvassed by learned advocate Mr.Dhotare, mainly
argued that defendant no.2 was not aware of pendency of the
suit or injunction order. The defendant no.2 did what he was
required to do before purchasing the immovable property. He
has paid full consideration and, therefore, defendant no.2 has
to be declared as bona fide purchaser with value, without
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notice of pendency of the suit. He would further submit that in
view of provisions of Section 19 of Specific Relief Act, the
defendant no.2 proved himself to be a bona fide purchaser. He
would further submit that defendant no.1, in his deposition,
admitted that he has not informed the defendant no.2 about
the pendency of the suit or existence of the injunction order
and, therefore, the judgment and decree passed against him
cancelling his sale-deed, and ignoring the aforesaid factual
aspects, is bad in law and requires to be quashed and set
aside and, therefore, he also submits to allow this appeal filed
by defendant no.2 and to quash and set aside impugned
judgment and decree passed by the learned trial Court.
6.1 Per contra, learned advocate Ms.Lakshya Bhavnani for
learned advocate Mr.Aftab Ansari, appearing for the plaintiff,
referred to the judgment of Hon’ble Supreme Court in the
case of K.S.Manjunath and Ors. vs. Moorasavirappa alias
Muttanna Chennappa Batil, since Deceased by His Lrs. and
others reported in 2025 SCC OnLine SC 2378 and
submitted that the arguments canvassed by learned advocate
for the defendants is squarely answered in the judgment of
Hon’ble Supreme Court. She firstly would submit that merely
some time period stated in the ATS, would not ipso facto
governs that the time is essence of the contract. She would
further submit that surrounding circumstances, conduct of the
party and the clauses in the ATS, in its entirety, has to be
considered while deciding the issue whether time is essence
of the contract or not. She would further submit that, in the
facts of the present case, learned trial Court believed the
entry in diary made by defendant no.1, while accepting
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Rs.6,000/- in furtherance of sale consideration (produced at
Exh.108) which is sufficient to say that plaintiff was ready and
willing to perform his part of contract and actually he has
performed his part of contract by paying further amount of
Rs.6,000/- towards sale consideration.
6.2 Learned advocate Ms.Bhavnani would further submit
that principle of ‘readiness and willingness’ has to be weighed
considering the conduct of the defendant who has been
though repeatedly urged to perform his part of contract and
to execute sale deed since denied and later on unilaterally
cancelled ATS. Thus this act can be treated that he is not
ready and willing to perform his part of contract which is
rightly being held by the learned City Civil Court. She would
further submit that the ATS executed between the parties did
not contain any clause about termination of ATS; does not
give defendant the right to terminate the contract unilaterally
and forfeit the earnest money. She would further submit that
in absence of any clause regarding terminability of contract
between the parties, such termination of contract by
defendant no.1 must be treated to be breach of contract and
thus for such unilateral termination of the contract, plaintiff is
not required to seek a declaratory relief that the termination
of agreement was bad in law as it covers under the issue that
whether plaintiff is entitled to specific performance of
contract or not. She would further submit that otherwise
every vendor, after executing ATS, would unilaterally
terminate the contract and get away from the performance of
the contract. As far as applicability of principle that whether
time is essence of contract or not, she would submit that
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conduct of the party did not specify that time was the essence
of the contract. She also referred to the notice exchanged
between the parties and submits that defendant no.1 came out
within seven months of execution of sale deed to cancel the
same unilaterally by issuing notice, in reply of such notice
(Exh.145), the plaintiff came out with specific case that
plaintiff begs to continue to execute sale-deed during the ATS.
In furtherance plaintiff pleaded his case that at different
intervals of time, plaintiff paid different amounts to the
defendant no.1 as he was required and in total of Rs.8400/-
was paid before filing of the suit in addition to earnest money
of Rs.2,000/-. Therefore, large amount of sale consideration
was already paid to the defendant before filing of the suit. She
would further submit that learned trial Court believed that
defendant no.1 obtained Rs.6000/- on 12.12.1985 from the
plaintiff, by making entry in the plaintiff’s diary on his own
handwriting (Exh.108).
6.3 In view of the above submissions, learned advocate
Ms.Bhavnani would submit that if the plaintiff was not ready
to perform his part of contract, he would not have paid such
big amount towards sale consideration without execution of
sale-deed. She would submit that in reply to the notice, it is
specifically contended by plaintiff that no clause of ATS
permits defendant no.1 to cancell the ATS or to forfeit earnest
money. She submits that reply to notice was immediately
given on receipt of notice. She would further submit that
defendant no.1 even replied notice given by the plaintiff and
immediately thereafter since the plaintiff found the intention
of defendant no.1 not to perform his part of ATS, filed the suit
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on 02.09.1986. Therefore, the conduct of plaintiff, in first
place, is that plaintiff was ever ready and willing to perform
his part of contract ane even during pendency of the suit till
hearing of the suit, plaintiff was ready and willing to perform
his part of contract. She would further submit that when
defendant himself turned away from performing his part of
contract and cancelled the ATS, without being permitted to do
so, in first seven months of the contract / ATS, cannot come
out and say that plaintiff since was not ready and willing to
perform his part of contract, specifies performance of contract
could not be attracted.
6.4 Learned advocate Ms. Lakshya Bhagnani would submit
that since defendant no.1 breached the injunction order and
sold the suit property to defendant no.2, defendant no.2, who
was in obligation to make necessary inquiry, as per Section 3
of the Transfer of Property Act, 1986, since had not done
needful, he cannot claim shelter of ‘bona fide purchaser’ by
invoking Section 41 of the Transfer of Property Act, 1986 or
Section 19 of the Specific Relief Act, 1963. In support of this
submission, she relies upon the judgment rendered by the
Hon’ble Supreme Court in the case of K.S.Manjunath and Ors.
vs. Moorasavirappa alias Muttanna Chennappa Batil, since
Deceased by His Lrs. And others (supra). In addition thereto,
she referes to judgment in the case of Annamalai vs. Vasanthi
and others reported in 2025 SCC OnLine SC 2300.
6.5 Making the above submissions, learned advocate
Ms.Lakshya Bhavnani submit to dismiss both the appeals and
to confirm the impugned judgment and decree.
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7. Heard learned advocate Mr.Dhotare for defendant no.1,
Mr.Jenil Shah, learned advocate for defendant no.2 and
Ms.Lakshya Bhavnani for Mr.Ansari, learned advocate for the
plaintiff and also gone through the records and proceedings
as well as the paper-book placed on record by the respective
parties.
7.1 Having heard learned advocates for both the sides, at
the outset, following questions arise for consideration in these
appeals.
(i) Whether suit for specific performance filed by the
plaintiff, in absence of declaratory relief for
termination or cancellation of agreement was bad in
law, is maintainable ?
(ii) Whether plaintiff proved that he was ready
and willing to perform his part of contract and proved
his readiness and willingness throughout the time
period of the contract as well as the suit ?
(iii) Whether in facts and circumstances of the
case, time was essence of the contract or not ?
(iv) Whether defendant no.2 proves that he is
bona fide purchaser and, therefore, not bound by the
decree ?
7.2 Certain facts which need to be noticed before arriving to
the conclusion that;
(i) the execution of the ATS between the plaintiff
and defendant no.1, dated 01.10.1985 is undisputed.
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Secondly, on the same day, plaintiff has paid
Rs.2,000/- towards earnest money is also undisputed.
(ii) Pending the suit proceedings, learned City
Civil Court has issued injunction below notice of
motion and restrained the defendant no.1 from
changing hands of the suit property. The order is not
carried to challenge but rather accepted by defendant
no.1 is also not disputed.
(iii) In violation of injunction order, the defendant
no.1 has sold the suit property to defendant no.2 and
thereby has committed violation of injunction order
under Section 39 Rule 2A of ‘the Code’ is also
undisputable as defendant no.1 has not challenged
the said order.
(iv) The defendant no.1, for violation of injunction
order, faced and undergone one day simple
imprisonment.
7.3 Learned City Civil Court framed issues at Exh.26 and
subsequent to amendment in the plaint added Issue Nos.7 and
8. The issues framed by the learned City Civil Court read as
under:
“1. Whether the plaintiff prove that he is entitled to
recover the amount claimed from the defendant?
2. Whether the plaintiff is entitled to interest? If yes,
at what rate of interest?
3. Whether the plaintiff is entitled to the damages
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sought?
4. What are orders and decrees?”
7.4 To prove his case, plaintiff produced the documents
Exh.138 which includes the original ATS (Exh.105), the entry
of the payment made by the defendant no.1 in the diary
belongs to plaintiff at Exh.108, a copy of the Index in receipt
of the sale of suit property by the defendant no.1 to defendant
no.2 at Exh.106. The defendant has produced documentary
evidence along with list Exh.114 and 143 which include the
certified copy of the plaint at Exh.144 and the notice given by
the defendant no.1 to plaintiff at Exh.113, reply of plaintiff at
Exh.117 and the reply at Exh.145. Defendant no.1 entered
witness box at Exh.116. Defendant no.2 produced
documentary evidence along with the list at Exh.52 and 124
including the copy of the sale-deed executed by defendant
no.1 in favour of defendant no.2 of 23.12.1993 at Exh.107 and
another document. The Power of Attorney Holder of defendant
no.2 entered into witness box at Exh.125.
7.5 After analysing the aforesaid oral and documentary
evidence, learned City Civil Court pleased to answer the issue
nos.1, 2 and 8 in affirmative, issue no.3 to 5 in negative and
issue no.6 held to be ‘does not survive’ and issue no.7 was
answered in affirmative pointing out that execution of sale
deed by defendant no.1 to defendant no.2 is not binding to the
plaintiff and Issue No.9 is answered in favour of plaintiff
decreeing the suit in aforesaid terms.
7.6 Having noticed aforesaid undisputed facts, let first refer
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the relevant terms of the Agreement to Sale (ATS) executed
between the parties. The relevant conditions of the ATS, in
translated version from Gujarat to English, are extracted
herein below.
“This Agreement for Sale is written on this date: 1-10-
1985 by me-the executant to you-the executee:
1. The property situated opposite to Parmanand
Patel’s Chawl bearing Survey No. 141-1 paiki 191 and
Muni. Sur. No: 509-81, situated opposite meter-gauge
Railway Station, near Shah Hameed Roza, in the Saher-
Kotda ward of Ahmedabad city; District-Sub-District
Ahmedabad, detailed description of which is annexed
herewith. The said property is of sole and Independent
ownership of myself-the executant, and hereinafter, the
said property shall be addressed as property in the
deed.
2. Land of the property of the said deed is held
on lease and there is an old and dilapidated structure
on the land. It has been decided by this agreement to
sell that property to you, the purchaser, by means of an
absolute sale.
3. The land of the property mentioned in this
document was originally in the full and independent
possession of Saiyed Mahemudmiya Badamiya,
Yasinmiya Badamiya, and Hamidmiya Badamiya. Of
this, the land of Survey No. 141 of this Chawl,
adadmeasuring 3 Acres and 20 Gunthas, was taken on
lease by Patel Govindbhai Panachand, Nagori Harilal
Mulchand, and Jagjivandas Shamjibhai. This lease
commenced and accrued from July 8, 1919, and was
fixed for a term ending on July 8, 2019, at an annual
rent of ₹900.00 (Rupees Nine Hundred Only), and the
Lease Deed of that time, to the extent of the rights of
Mahemudmiya and Yasinmiya, was registered in the
office of the Ld. Sub-Registrar of Ahmedabad on the
date 29-09-1919, which is recorded vide Serial Number
3536 in Book Number One; and the second Lease Deed,
to the extent of the rights of Saiyed Hamidmiya
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Badamiya, was registered in the office of the Sub-
Registrar, Ahmedabad on 07/10/1919, which is
recorded at Serial Number 3743. In this manner, by
way of these Lease Deeds, Govindlal, Harilal, and
Jagjivandas mutually agreed upon an oral partition and
each party has transferred the land falling to their
respective shares into their own names. By virtue of
that partition, the land of Survey Number 141-1
admeasuring 1 Acre and 08 Gunthas came into the
possession and occupancy of Jagjivandas Shamjibhai.
Thereafter, said Jagjivandas Shamjibhai built a Chawl,
and from then on, said property of Chawl remained in
the possession of Jagjivandas Shamjibhai. Upon his
death, it came into the possession and occupancy of his
son, Parmananddas Jagjivandas. After the death of
Parmananddas Jagjivandas, as heirs, Parsotamdas
Parmanand Patel himself, and as the guardian of the
minor Prakash Parsotamdas, and Godavari Bai, the
widow of Patel Parmananddas Jagjivandas, became the
owners and they all became the co-owners of said
property. It was in their possession and occupancy by
way of inheritance. Thereafter, Parsotamdas
Parmananddas Patel himself, and as the guardian and
administrator of his minor son Prakash Parsotamdas,
and Godavari Bai, the widow of Parmananddas
Jagjivandas, through her Power of Attorney holder, Mr.
Parsotamdas have sold the property of said document
and another property for ₹2900-00 on the date
16/07/1959 along with leasehold rights and the
superstructure to one Mr. Indrasinh Chhatrasinh Raol.
The said sale deed was registered at serial number-
4472 in the office of Sub-Registrar, Ahmedabad. It was
registered in book number one on the same day and
thereafter, the said Indrasinh Chatrasinh sold the said
registered property to me-the executant on 08/01/1985
and the said sale-deed has been registered in the office
of Sub-Registrar, Ahmedabad at serial number 351.
Since then, I-the executant became the sole
independent owner of the said registered property.
Before buying the said property, I-the executant was
living in the said property as tenant and was in
possession of it. But, after buying the said property, I-
the executant have become the sole independent owner
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of the said property and I-the executant have the
possession as a owner. In the said property, Prior to
this there was no tenancy right or any other right of any
kind of any person other than me-the executant, nor
was any such right ever created. I-the executant alone
used to enjoy the tenancy rights and have become an
owner after buying it and in sole independent
possession as an owner and I am competent to hand
over such a title clear possession.
4. I-the executant have agreed to convey the
property to you-the executee against consideration of
Rs. 16,000-00 (Rupees Sixteen thousand only) and I
have received in cash an earnest money of Rs. 2,000-00
(Rupees Two Thousand only) from you-the executee,
which I shall adjust in the sale consideration at the time
of executing the sale-deed in your favour.
5. The rights and title of the said property are
clear and marketable. Furthermore, no person other
than me, the executant, has any kind of right, interest,
share, claim, or attachment in the said property and I-
the executant has neither created any kind of mortgage,
charge, or encumbrance on the said property, nor I
have taken any loan against it. Also, there is no stay
order or prohibitory order of any court regarding the
said property. The property is in the sole, full, and
independent possession and occupancy of me-the
executant. Furthermore, I, the executant, give a firm
assurance to you, the executee, that I am fully
competent to sell the said property to you. The
possession of the said property is to be handed over to
you at the time of the execution of the sale deed.
6. The time limit of the said earnest money deed
is fixed at six months.
7. I, the executant, is to obtain all necessary
permissions regarding the said property from the
Urban Land Ceiling Act and other government offices
as required by law and in this regard, I, the executant,
shall provide signatures and acknowledgments to you,
the executeee, wherever and whenever necessary.
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8. If you, the executeee, are willing and ready to
take the property according to the terms of the said
agreement, but I, the executant, am not willing and
ready to give the sale of the said property, then you, the
executeee, are entitled to have the sale of the said
property executeed through the Court; and for that, you
are entitled to recover all expenses and losses incurred
by you from me, the executant.”
7.7 The first contention of learned advocate Mr.Dhotare that
in absence of declaration decree that termination of
cancelling the contract was bad in law for suit for specific
performance would not be maintainable which is an issue
touches maintainability of the suit and can be permitted at
any stage including First Appeal is concerned, having referred
to the aforesaid terms and condition of the agreement
executed between the parties none of the clause thereof
permits the defendant no.1 to terminate the contract
unilaterally and to forfeit earnest money. Rather the condition
no.8 specifies that even if the vendor is not ready and willing
to perform his part of contract, vendee would be entitled to
file a civil suit before the court for the specific performance of
the contract and to get sale deed registered. In absence of any
condition authorising or permitting the defendant no.1 –
vendor to terminate the contract, act of terminating the
contract itself if bad rather in breach of terms and condition
of the contract.
7.8 For the purpose of determinability of the contract, the
contract can be bifurcated in several categories. Firstly, the
contracts that are unilaterally and inherently revocable or
capable of being dissolved such as licenses and partnership at
will; secondly contracts that are terminable unilaterally on a
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“without cause” or “no fault” basis, thirdly – contracts that are
terminable forthwith for cause or that cease to subsist “for
cause”, without a provision for remedying the breach; fourthly
– the contracts which are terminable for cause subject to a
breach notice being issued and an opportunity to cure the
breach being given and fifthly, contracts without a
termination clause, which could be terminated for breach of a
condition but not a warranty, as per applicable common law
principles.
7.9 In case of A Murugan vs. Rainbow Foundation Ltd.
reported in 2019 SCC OnLine Mad 37961, the Madras High
Court, in para:17, held as under:
“17. On examining the judgments on Section 21(d) of SRA
1877 and section 14(c) of the Specific Relief Act, as
applicable to this Case, le. before Act 18 of 2018, Lam of
the view that Section 14(c) does not mandate that all
contracts that could be terminated are not specifically
unenforceable. If so, no commercial contract would be
specifically enforceable. Instead, Section 14(c) applies to
contracts that are by nature determinable and not to all
contracts that may be determined. If one were to classify
contracts by placing them in categories on the basis of
ease of determinability, about five broad categories can
be envisaged, which are not necessarily exhaustive. Out
of these, undoubtedly, two categories of contract would
be considered as determinable by nature and,
consequently, not specifically enforceable: (i) contracts
that are unilaterally and inherently revocable or capable
of being dissolved such as licences and partnerships at
will; and (ii) contracts that are terminable unilaterally on
“without cause” or “no fault” basis. Contracts that are
terminable forthwith for cause or that cease to subsist
“for cause” without provision for remedying the breach
would constitute a third category. In my view, although
the Indian Oil case referred to clause 27 thereof, which
provided for termination forthwith “for cause”, thePage 22 of 59
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decision turned on clause 28 thereof, which provided for
“no fault” termination, as discussed earlier. Thus, the
third category of contract is not determinable by nature,
nonetheless, the relative determinability may be a
relevant factor in deciding whether to grant ease of
specific performance as regards this category. The fourth
category would be of contracts that are terminable for
cause subject to a breach notice and an opportunity to
cure the breach and the fifth category would be contracts
without a termination clause, which could be terminated
for breach of a condition but not a warranty as per
applicable common law principles. The said fourth and
fifth categories of contract would, certainly, not be
determinable in nature although they could be terminated
under specific circumstances. Needless to say, the
rationale for Section 14(c) is that the grant of specific
performance of contracts that are by nature determinable
would be an empty formality and the effectiveness of the
order could be nullified by subsequent termination.
(Emphasis Supplied)”
7.10 The Bombay High Court in case of Narendra Hirawat &
Co. vs. Sholay Media Entertainment Pvt Ltd. reported in 2020
SCC OnLine Bom 391 observed that phrase ” a contract
which is in its nature determinable” would mean a contract
which is determinable at the sweet will of a party to it,
without reference to the other party or without reference to
any breach committed by the other party or without any
eventuality or circumstances. In other words, the phrase
would contemplate a unilateral right in a party to a contract to
determine the contract without assigning any reason. The
relevant observation is as under:-
“48. In Narendra Hirawat & Co. v. Sholay Media
Entertainment Pvt. d., 2020 SCC OnLine Bom 391, the
Bombay High Court observed that the phrase “a contract
which is in its nature determinable” would mean a
contract which is determinable at the sweet will of aPage 23 of 59
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party to it, without reference to the other party or
without reference to any breach committed by the other
party or without any eventuality or circumstance. In
other words, the phrase would contemplate a unilateral
right in a party to a contract to determine the contract
without assigning any reason. The relevant observation is
as under:-
“8. […] When the relevant provision [section 14(d)
of the Specific Relief Act] uses the words “a
contract which is in its nature determinable”, what
it means is that the contract is determinable at the
sweet will of a party to it, that is to say, without
reference tot he other party or without reference to
any breach committed by the other party or without
reference to any eventuality or circumstance. In
other words, it contemplates a unilateral right in a
party to a contract to determine the contract
without assigning any reason or, for that matter,
without having any reason. The contract in the
present case is not so determinable; it is
determinable only in the event of the other party to
the contract committing a breach of the agreement.
In other words, its determination depends on an
eventuality, which may or may not occur, and if
that is so, the contract clearly is not “in its nature
determinable”. (Emphasis Supplied).
7.11 Section 14 of the Specific Relief Act, 1963 set out
certain classes of contracts which are not specifically
enforceable. Section 14 (i)(d) specifies that contract which
needs continuous supervision of the Court for its performance
is not specifically enforceable. Aptly clause (d) of Section 21
of Specific Relief Act, 1877 expressly provided that the
contracts which are in their nature of revocable are not
enforceable. The said statute was repealed and replaced by
Specific Relief Act, 1963. Clause (c) of 14(i) of the Specific
Relief Act, 1963 which replace the Clauses (d) of Section 21 of
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Specific Relief Act, 1877 expressly provided that contracts,
which are in nature of determinable were not specifically
enforceable. The word “revocable” as used in clause (d) of
Section 21 of the Specific Relief Act, 1877 was replaced by
word “determinable” in the new Act. The reason for excluding
such contract from the category of being enforceable are that
the contract itself is in nature of being “determinable”. This
would be of little purpose in granting relief of specific
performance of contract which the parties were entitled to
terminate or otherwise determine. Apt to note that relief of
specific performance is equitable relief. It is founded on
principle that the parties to the contract must be entitled to
the benefit from the contract entitle to by them, however, if
the terms or nature of contract entitles the party to terminate
contract, there would be no purpose in directing specific
performance of that contract. In another words, no such relief
can be granted in equity. Viewed from this aspect, if it
establishes that the contract is in its nature determinable if
the same can be terminated or its specific performance can
not be awarded to the parties, thus the contract that can be
terminated by parties on will or in respect of relationship
which either party can terminate would be a contract that in
nature are determinable if a party can rescind the contract at
its own will, it is obvious that same cannot be enforceable for
the same party, but if party cannot terminate the contract as
long as the other party willing to perform its obligation the
contract cannot be considered as determinable and it would
be in equity that the contract to be enforced against the party
that fails to perform. There can hardly be any contract which
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cannot be terminated by the party if the other party fails to
perform its obligation. However, such contract cannot be said
to be determinable solely because it is or it can be terminated
by the party, the party to the contract who is not in default
would in equity be entitled to seek performance of that
contract. In such circumstances, it cannot be lying in the
mouth of the parties breached the contract that other party is
not entitled to specific performance of the contract.
Therefore, the unilateral termination of contract would not
disentitle the plaintiff from filing the suit for specific
performance even without asking for declaratory relief that
the termination of the ATS is bad in law, more particularly,
when no such determinable conditions are enclosed in the
ATS or no such determinable nature of the contract is
forceable.
7.12 In the case of K. S. Manjunath (supra), the
Supreme Court has examined the issue in detail. Paras:42, 43,
44 and 45 are relevant paras, which read thus:
“42. In addition to the views expressed by various High
courts, as discussed above, this Court, in the recent
decision of Annamalai v. Vasanthi, 2025 SCC OnLine SC
2300, wherein one of us, J.B. Pardiwala, J., was a member
of the Bench, had the occasion to consider whether a suit
for specific performance is maintainable without seeking
a declaration that the termination of the agreement was
invalid in law. This Court held that where a contract
confers upon a party the right to terminate it under
certain conditions, and if such right is exercised, then the
continued subsistence of the contract becomes doubtful.
In such cases, the plaintiff must first obtain a declaration
that the termination is invalid before seeking specific
performance. However, where no such contractual rightPage 26 of 59
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to terminate exists, or where the right has been waived,
and a party nevertheless proceeds to terminate the
contract unilaterally, such termination would amount to a
repudiatory breach, in which event the non-terminating
party can directly seek specific performance without first
seeking a declaration as aforesaid. The relevant
observation is as under:
“Issues for consideration
12. Upon consideration of the rival submissions and
having regard to the facts of the case, in our view,
following issues arise for our consideration:
A. Whether the High Court was justified in interfering
with the finding of the first appellate court qua
payment of additional amount of Rs. 1,95,000 by the
plaintiff-appellant? If receipt of additional payment by
D-1 and D-2 is proved, as found by the first appellate
court, whether it could be held that plaintiff was not
ready and willing to perform its part under the
contract?
B. Whether the suit for specific performance was
maintainable without seeking a declaration that
termination of the agreement was invalid in law?
C. Whether in the facts of the case the plaintiff was
entitled to the discretionary relief of specific
performance?
When a declaratory relief is essential
25. A declaratory relief seeks to clear what is doubtful,
and which is necessary to make it clear. If there is a
doubt on the right of a plaintiff, and without the doubt
being cleared no further relief can be granted, a
declaratory relief becomes essential because without
such a declaration the consequential relief may not be
available to the plaintiff. For example, a doubt as to
plaintiff’s title to a property may arise because of
existence of an instrument relating to that property. If
plaintiff is privy to that instrument, Section 31 of
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for cancellation of the instrument which may be void or
voidable qua him. If plaintiff is not privy to the
instrument, he may seek a declaration that the same is
void or does not affect his rights. When a document is
void ab initio, a decree for setting aside the same is not
necessary as the same is non est in the eye of law, being
a nullity. Therefore, in such a case, if plaintiff is in
possession of the property which is subject matter of
such a void instrument, he may seek a declaration that
the instrument is not binding on him. However, if he is
not in possession, he may sue for possession and the
limitation period applicable would be that as applicable
under Article 65 of the Limitation Act, 1963 on a suit for
possession. Rationale of the aforesaid principle is that a
void instrument/transaction can be ignored by a court
while granting the main relief based on a subsisting
right. But, where the plaintiff’s right falls under a cloud,
then a declaration affirming the right of the plaintiff may
be necessary for grant of a consequential relief.
However, whether such a declaration is required for the
consequential relief sought is to be assessed on a case-
to-case basis, dependent on its facts.
26. A breach of a contract may be by non-performance
or by repudiation, or by both. In Anson’s Law of Contract
(29 Oxford Edn.), under the heading “Forms of Breach
Which Justify Discharge”, it is stated thus:
“The right of a party to be treated as discharged from
further performance may arise in any one of three
ways: the other party to the contract (a) may
renounce its liabilities under it; (b) may by its own
conduct make it impossible to fulfill them, (c) may fall
to perform what it has promised. Of these forms of
breach, the first two may take place not only in the
course of performance but also while the contract is
still wholly executory Le., before either party is
entitled to demand a performance by the other party
of the other’s promise. In such a case the breach is
usually termed an anticipatory breach. The last can
only take place at or during the time for performance
of the contract.”
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27. Ordinarily, for a breach of contract, a party
aggrieved by the breach. i.e.. failure on the part of the
other party to perform its part under the contract can
claim compensation or damages by accepting the breach
as a termination of the contract, or/and, in certain cases.
obtain specific performance by not recognizing the
breach as termination of the contract. In a case where
the contract between the parties confers a right on a
party to the contract to unilaterally terminate the
contract in certain circumstances, and the contract is
terminated exercising that right, a mere suit for specific
performance without seeking a declaration that such
termination is invalid may not be maintainable. This is
so, because a doubt/cloud on subsistence of the contract
is created which needs to be cleared before grant of a
decree enforcing contractual obligations of the parties to
the contract.
28. Now we shall consider few decisions of this Court
where the question of grant of relief of specific
performance of a contract in teeth of termination of the
contract without seeking a declaration qua subsistence
of the contract was considered. In I.S. Sikandar v. K.
Subramani, the agreement for sale stipulated sale within
a stipulated time frame; on failure of the plaintiff to
respond to the notice seeking execution of sale, the
agreement was terminated. In that context, this Court
held:
“36. Since the plaintiff did not perform his part of
contract within the extended period in the legal notice
referred to supra, the agreement of sale was
terminated as per notice dated 28-3-1985 and thus,
there is termination of the agreement of sale between
the plaintiff and defendants 1-4 w.e.f. 10-4-1985
37. As could be seen from the prayers sought for in
the original suit, the plaintiff has not sought for
declaratory relief to declare the termination of
agreement of sale as bad in law. In the absence of
such prayer by the plaintiff the original suit filed by
him before the trial court for grant of decree for
specific performance in respect of the suit scheduledPage 29 of 59
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property on the basis of agreement of sale and
consequential relief of decree for permanent
injunction is not maintainable in law.
38. Therefore, we have to hold that the relief sought
for by the plaintiff for the grant of decree for specific
performance of execution of sale deed in respect of
the suit scheduled property in his favor on the basis of
non-existing agreement of sale is wholly
unsustainable in law.”
29. In A. Kanthamani (supra), the decision in 1.5.
Sikandar (supra) was considered, and it was held:
“30.3. Third, it is a well settled principle of law that
the plea regarding the maintainability of suit is
required to be raised in the first instance in the
pleading (written statement) then only such plea can
be adjudicated by the trial court on its merits as a
preliminary issue under Order 14 Rule 2 CPC. Once
the finding is rendered on the plea, the same can be
examined by the first or/and second appellate court. It
is only in appropriate cases, where the court prima
facie finds by mere perusal of plaint allegations that
the suit is barred by any express provision of law or is
not legally maintainable due to any legal provision; a
judicial notice can be taken to avoid abuse of judicial
process in prosecuting such suit. Such is, however,
not the case here.
30.4. Fourth, the decision relied on by the learned
counsel for the appellant in 1.5. Sikandar turns on the
facts involved therein and is thus distinguishable.”
30. In R. Kandasamy (since dead) v. T.R.K. Sarawathy,
this Court considered both I.S. Sikandar (supra) and A.
Kanthamani (supra), and clarified the law by observing
as under:
“47. However, we clarify that any failure or omission
on the part of the trial court to frame an issue on
maintainability of a suit touching jurisdictional fact by
itself cannot trim the powers of the higher court toPage 30 of 59
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examine whether the jurisdictional fact did exist for
grant of relief as claimed, provided no new facts were
required to be pleaded and no new evidence led.”
31. From the aforesaid decisions what is clear is that
though a plea regarding maintainability of the suit, even
if not raised in written statement, may be raised in
appeal, particularly when no new facts or evidence is
required to address the same, the issue whether a
declaratory relief is essential or not would have to be
addressed on the facts of each case.
32. In our view, a declaratory relief would be required
where a doubt or a cloud is there on the right of the
plaintiff and grant of relief to the plaintiff is dependent
on removal of that doubt or cloud. However, whether
there is a doubt or cloud on the right of the plaintiff to
seek consequential relief, the same is to be determined
on the facts of each case. For example, a contract may
give night to the parties, or any one of the parties, to
terminate the contract on existence of certain
conditions. In terms thereof, the contract is terminated,
a doubt over subsistence of the contract is created and,
therefore, without seeking a declaration that termination
is bad in law, a decree for specific performance may not
be available. However, where there is no such right
conferred on any party to terminate the contract, or the
right so conferred is waived, yet the contract is
terminated unilaterally, such termination may be taken
as a breach of contract by repudiation and the party
aggrieved may, by treating the contract as subsisting,
sue for specific performance without seeking a
declaratory relief qua validity of such termination.
(Emphasis Supplied)
43. Thus, in view of the above discussion, the following
principles of law are discernible:
(1). Unilateral termination of the agreement to sell by one
party is impermissible in law except in cases where the
agreement itself is determinable in nature in terms of
Section 14 of the Act of 1963;
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(ii). If such unilateral termination of a non-determinable
agreement to sell is permitted as a defence, then virtually
every suit for specific performance can be frustrated by
the defendant by placing an unfair burden on the plaintiff,
who despite performing his part of the obligations and
having showcased readiness and willingness, would
require to also seek a separate declaration that the
termination was bad in law. In such cases, the burden
cannot be casted upon the plaintiff to challenge the
alleged termination of agreement;
(iii). Where a party claims to have valid reasons to
terminate or rescind a non-determinable agreement to
sell, with a view to err on the side of caution, it should be
such terminating party, if at all, who ideally should
approach the court and obtain a declaration as to the
validity of such termination or rescission, and not the non-
terminating party. However, this must not mean that the
defendant (the terminating party) in such cases would
mandatorily be required to seek a declaration because
Sections 27 and 31 of the Act of 1963 respectively, while
using the phrase “may sue” merely give an option to any
person to have the contract rescinded or adjudged as void
or voidable;
(iv). Once the alleged termination of a non-determinable
agreement in question is found to be not for bona fide
reasons and being. done in a unilateral manner on part of
the defendant, it cannot be said that any declaration
challenging the alleged termination was required on part
of plaintiff;
(v). If a contract itself gives no right to unilaterally
terminate the contract, or such right has been waived, and
a party still terminates the contract unilaterally then that
termination would amount to a breach by repudiation, and
the non-terminating party can directly seek specific
performance without first seeking a declaration; and
(vi). In the event it is found that the termination of
agreement to sell by the defendant was not valid, then
such an agreement to sell will remain subsisting and
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executable.
44. Before applying the aforesaid principles of law to the
facts of the present case, and bearing in mind that
unilateral termination of an agreement to sell by one
party is impermissible in law except where the agreement
is by its very nature determinable, it is, as a necessary
corollary, essential to also determine whether the ATS
dated 28.04.2000 was determinable in nature or not.
(b) Whether the ATS dated 28.04.2000 determinable? was
in nature determinable ?
45 The Commentary on the Indian Contract Act and
Specific Relief et authored by Pollock & Mulla (17th
Edition) states that determinable contracts derive their
existence from the determination clause envisaged in the
contract and there are essentially three types of
determination clauses, viz. (i) termination for cause that
allows a party to terminate the contract if the other party
breaches a specific term or if a specified event occurs, (ii)
termination for convenience that allows a party to end the
contract without having to give a reason and (iii)
termination upon expiry of the term of the contract.”
7.13 In view of above and applying settled principles of law to
the facts of the present case, the first contention that raised
by learned advocate that the plaintiff’s suit for specific
performance is not maintainable without asking declaratory
relief that termination of the contract is bad in law, cannot be
accepted.
7.14 Whether the time is essence of the contract and whether
plaintiff was ready and willing throughout the contract till
hearing of suit are the issues intermingle with each other.
Section 16(c) of the Specific Relief Act, 1963 mandates that in
a suit for specific performance of plaintiff must allege and
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prove continuous readiness and willingness to perform his
contract on his part on the date of contract and the onus is
lying upon the plaintiff. The relief of specific performance
under Section 20 of Specific Relief Act, 1963 cannot be
granted unless and until plaintiff proves that he was ever
ready and willing to perform his part of contract. It is settled
principle of law that factum of readiness and willingness to
perform the part of contract is to be adjudged with reference
to the conduct of the party and attending and surrounding
circumstances. The Court may infer from the facts and
circumstances whether plaintiff was ready and always ready
and willing to perform his part of contract.
7.15 In JP Builders and others vs. Ramdas reported in 2011
(1) SCC 421, it has been held by Hon’ble Supreme Court as
under :
“27. It is settled law that even in the absence of specific
plea by the opposite party, it is the mandate of the statute
that the plaintiff has to comply with Section 164c) of the
Specific Relief Act and when there is non-compliance with
this statutory mandate, the count is not bound to grant
specific performance and is left with no other alternative
but to dismiss the suit. It is also clear that readiness to
perform must be established throughout the relevant
points of time. “Readiness and of the parties.” (emphasis
supplied) willingness” to perform the part of the contract
has to be determined/ascertained from the conduct of the
parties.” (emphasis supplied)”
7.16 In the case of C.S.Venkatesh vs A.S.C.Murthy (D)
By Lrs. reported in (2023) 3 SCC 280, Hon’ble the Supreme
Court has held as under:
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“16. The words “ready and willing” imply that the plaintiff
was prepared to carry out those parts of the contract to
their logical end so far as they depend upon his
performance. The continuous readiness and willingness
on the part of the plaintiff is a condition precedent to
grant the relief of performance. If the plaintiff fails to
either aver or prove the same, he must fail. To adjudge
whether the plaintiff is ready and willing to perform his
part of contract, the court must take into consideration
the conduct of the plaintiff prior, and subsequent to the
filing of the suit along with other attending
circumstances. The amount which he has to pay the
defendant must be of necessity to be proved to be
available. Right from the date of the execution of the
contract till the date of decree, he must prove that he is
ready and willing to perform his part of the contract. The
court may infer from the facts and circumstances whether
the plaintiff was ready and was always ready to perform
his contract.
7.17 Yet in another judgment in case of
N.P.Thirugnanam vs. R. Jagan Mohan Rao, reported in (1995)
5 SCC 115, it was held that continuous readiness and
willingness on the part of the plaintiff is a condition precedent
to grant of the relief of specific performance. This
circumstance is material and relevant and is required to be
considered by the court while granting or refusing to grant
the relief If the plaintiff fails to either aver or prove the same,
he must fail. To adjudge whether the plaintiff is ready and
willing to perform his part of the contract, the court must take
into consideration the conduct of the plaintiff prior to and
subsequent to the filing of the suit with other attending
circumstances. The amount of consideration which he has to
pay to the defendant must necessarily be proved to be
available.
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7.18 The readiness refers to the financial capacity and
willingness refers to conduct of the plaintiff pointing the
performance. In the evidence recorded before the learned
court below, it comes on record that the plaintiff had paid
Rs.2000/- towards the earnest money at the time of execution
of ATS. Although as per term of ATS, he was not required to
pay any other amount towards sale consideration till sale deed
is executed, has proved that he has paid Rs.6000/- more as he
has proved vide entry in defendant no.1’s handwriting in
Diary at Exh.108 which was not seriously disputed by other
side at the time when the said entry was exhibited.
7.19 The learned City Civil Court has discussed the
evidence in paras:15 to 17 of its judgment. The relevant
discussion of the learned trial Court on the issue of readiness
and willingness and time is essence of the contract are in
paras:15 to 17, which reads thus :
“15. It appears from the pleadinies, oral and documentary
evidence produced by the parties and from the respective
submissions made by the learned advocates for the parties
that the initial prayer of the plaintiff against the defendant
no. 1 for specific performance of the agreement dt.
1/10/83 was required to be amended and the defendant
no. 2 was required to be joined as party defendant as
during the pendency of the suit, the defendant no. had
sold out the suit property to the defendant no. 2 inspite of
the operation of the interim injunction restraining the
defendant no.1 from transferring or selling the suit
property. It appears that the agreement dt. 1/10/85
produced at exh. executed between the plaintiff and the
defendant no. under which it was agreed by the defendant
no. I to sell the suit property to the plaintiff for Rs.
16,000/- out which the plaintiff had paid Rs.2000/- by way
of earnest money to the defendant no. of 1. It has beenPage 36 of 59
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specifically mentioned in the said agreement that the
defendant no. 1 was the exclusive owner of the suit
property and had clear and marketable title in respect of
the suit property. It is true that as per the condition the
conditi 6 of the said agreement, the time limit was fixed to
no. be six months and as per condition no. 7, the
defendant no. 1 had agreed to co operate the plaintiff for
getting necessary permission from the Government offices
as and when found necessary. Now, Mr.Pathan relying
upon the said condition nпо. 6 of the agreement has
submitted that the time was the essence of the contract
and hence the plaintiff was not entitled to the specific
performance of the said agreement after the expiry of six
months from the date of agreement. I find no substance in
the said submission of Mr. Pathan inasmuch as mere
fixing the time limit in the agreement would not make the
time essence of the contract, all the other conditions of
the agreement also have to be taken into consideration for
deciding as to whether the parties had intended the time
to be made the essence of the contract or not. As such
there is no correspondence ensued between the parties
prior to the filing of the suit except that the defendant 1
had issued the notice on 21/7/86 produced at exh. 113
cancelling the said agreement dt. 1/10/85. Hence it is
difficult to gather the intention of the parties whether at
the time of execution of the said agreement dt. 1/10/85,
the time was made essence of the contract or not. At this
juncture, it is necessary to refer to the ratio of judgment
laid down by the Hon’ble Supreme court in A.1.R. 1977,
S.C. 1005 which reads as under:
“The fixation of contract has to be the period within
which the performed does not make the stipulation as
to time the essence of the contract. When a contract
relates to sale of immoveable 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.”
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16. In the instant case also Mr.Pathan for the defendant
no. 1 has failed to displace the normal presumption that
the time was not the essence of contract as the contract
related to sale of immoveable property. In that view of the
matter, I hold that the time was not made the essence of
contract at the time of execution of the agreement dt.
1/10/85, exhh, 105.
17. So far as readiness and willingness of the plaintiff
in performing his part of the contract is concerned, the
plaintiff’s deposition is required to be read in the light of
notice given by the defendant no. 1 at exh. 113 and also
the reply dt. 12/8/86 produced at mark 3/2 of the plaintiff.
It is pertinent to observe at this stage that the said reply
produced at mark 3/2 has not been exhibited during the
oral evidence of the plaintiff as the plaintiff had failed to
produce the original acknowledgment receipt showing the
receipt of the said reply by the defendant no.1. However.
subsequently, the defendant no.1 having produced his list
of documents in which he has also produced the reply Ut
3/9/86 at exh. 117 which is reply to the said notice dt.
12/8/96 of the plaintiff and hence the said reply produced
at mark 3/2 treated as proved and is now exhibited as exh.
145. It clearly transpires from the reply dt. 3/9/80 of the
defendant no. 1 produced at exh. 117 that the defendant
no. 1 had received the reply dt. 12/8/86 of the plaintiff
now exhibited as exh.145 in which the plaintiff had
categorically stated that he was ready and willing to get
the sale deed executed from the defendant no. 1 but the
defendant no. 1 was avoiding the execution by giving false
excuses. The plaintiff has also pleaded in his plaint and
stated i his oral evidence that he was ready and willing to
make payment of agreed sale consideration and to
perform his part of the contract. As against that, if the
deposition of defendant no. I is seen, it clearly transpires
that the defendant no. 1 has changed his version from
time to time to suit his own purpose. In the entire
deposition he has gone on making inçonsistent statements
and the statements contrary to his pleadings. Even the
court had to warn him orally number of time and had also
made a note to the effect that the witness is being warned
for giving correct deposition on oath in the court.
However, the defendant no. 1 has not chosen to put
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correct Jacks before the court It also appears that the
defendant no. I had also accepted Rs. 6000/- as per the
entry made in the diary of the plaintiff produced at exh.
108. of course Mr. Pathan has seriously disputed the
receipt of the said amount and has also given the
application exh. Thy for de exhibiting the said exh. 108
produced by the defendant no. 2 by the said application
exh. 112, Мг. Pathan has also requested the court to de
exhibit exh. 107 given to the copy of sale deed produced
by the defendant no. 2. Мг. Pathan has also relied upon
A.I.R. 1979 S.C. 14 and submitted that the court should ot
take upon itself the task of comparing the admitted
signatures with the disputed one! It is true that as held in
the said judgment ordinarily it is not proper for the court
to compare the admitted signature with the disputed one
to lind out whether the two agree with each other or not
and the prudent course is to obtain the opinion and
assistance of an expert. However, it has also been held”
since even where proof of handwriting which is in natural
comparison, exists, a duty is cast on the Court to use its
own eyes and mind to compare the admitted writing with
the disputed one too verify and reach its own conclusion it
will not be wrong to say that when a court seized of a
case, directs an accused person present before it to write
down a sample writing. such direction in the ultimate
analysis, is for the purpose for enabling the court to
compare” the writing so written with the writing alleged
to have been written by such person, within the
contemplation of Section 73 such, in the instant case there
is no question of the court comparing the disputed
signature with the admitted Signature of the defendant,
no. 1. The entry made in the diary of the plaintiff exh. 108
has been exhibited treating the same as proved on the
plaintiff stating in his oral evidence that the said entry
was made by the defendant no.1 on his making payment of
Rs. 6,000/- to him. It is true that normally, the receipt of
payment has to be on a piece of paper. However, thefe is
no bar in making entry in the diary of the person
acknowledging the receipt of payment as has been done in
the instant case. 1, therefore, find no force in the
argument of Mr. Pathan that the entry exh. 108 should be
de exhibited. There is also no force in the argument of Mr.
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been produced by the defendant no. 127 and the
document produced at exh. 107 is only the copy of the
said sale deed produced at exh. 127. that view of the
matter, the application given by Mr. Pathan at exh. 112
which was directed to be heard and decided alongwith the
final disposal of the suit is hereby dismissed. In that view
of the matter, I hold that the plaintiff has proved by
producing oral and documentary evidence that he was
ready and willing to perform his part of the contract as
per the terms and conditions of the sale agreement,
whereas the defendant has failed to prove that he was
ready and will execute the sale deed in favour of the
plaintiff prior to his notice dt. 21/2/86. As rightly
submitted by Mr. Ahmadi, there being no condition
contained in the said agreement dt. 1/10/85 entitling the
defendant to cancel the agreement if the plaintiff did not
perform his part of the contract within the time limit fixed
therein, the defendant no. 1 could not have cancelled the
said agreement and forfeited the amount paid by the
plaintiff towards the earnest money.”
7.20 Taking exception to the aforesaid findings, learned
advocate Mr.Dhotare submitted that learned trial COURT
ignored notices exchanged between the parties whereby the
defendant no.1 rescinded the contract and secondly plaintiff
did not perform his part of contract within stipulated time of
six months indicates that the plaintiff was not ready and
willing to perform his part of contract. The submission found
in contrast to the terms and conditions of the ATS as well as
evidence on record. Firstly the evidence of the defendant no.1
which comes out by way of cross-examination of the plaintiff
as well as he entered the witness box does not suggest,
specify or establishes that plaintiff was not ready and willing
to perform his part of contract. Apt to note that the terms and
condition of the contract does not specify plaintiff to pay
anything more than Rs.2,000/- during the execution of the
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ATS the plaintiff successfully proved that he has paid
Rs.6,000/- more to the defendant no.1 during the currency of
the contract. Plaintiff further pleaded that he was continously
bagging to the defendant to execute sale deed by accepting
remaining amount of sale consideration. Plaintiff’s such action
has been supported by the fact that within seven months of
execution of sale-deed, defendant unilaterally rescinded the
contract and forfeited earnest money although he had no such
right.
7.21 According to condition no.4 of the contract, plaintiff
was required to pay balanced amount of the sale
consideration at the time of execution of sale deed and not
prior to it. As observed herein-above, yet plaintiff paid
Rs.6000/- more on demand of defendant no.1. This act of the
plaintiff sufficiently establishes that plaintiff was ever ready
and willing to perform his part of the contract and he never
denied to perform his part of the contract. The conduct of the
defendant no.1 vis-a-vis shows that despite having no right or
authority to terminate the contract, he terminated the
contract (ATS) by issuing notice and further dared to forfeit
the earnest money and thereafter pending the suit sold suit
property to defendant no.2 in violation of prohibitory
injunction order. This conduct itself is sufficient to mark that
plaintiff is entitled to get specific performance of the ATS,
because the defendant was not complying with the terms and
conditions of the ATS rather has breached the same and was
not ready to perform his part of ATS.
7.22 Next argument was that ‘time was the essence of
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contract’ and non-adherence of it, makes plaintiff disentitled
to claim relief of specific performance. The submission that
the condition no.3 of the contract specifies the time period of
the contract was six months and thereby time is essence of
the contract. It is apt to note that merely stating some time
period to execute the contract, by itself would not be
condition to apply the doctrine of “time is essence of
contract”. There is no other condition which specifies that if
the contract has not been specifically performed within six
months, it shall be terminated or the defendant would be
entitled to rescind or get away from the contract. In other
words, absence of any condition in ATS, stating consequential
action or result of not adhereing time limit stated in contract,
would make clear that it was not intention of the party to
contract to make “time as essence of contract”. The condition
no.7 specifies that some permission from the Government
office in regard to Urban and Land Ceiling Act was required to
be taken. Condition No.8 states that even if defendant no.1
vendee is not ready and willing to perform his part of the
contract, plaintiff would be entitled to file suit for specific
performance to get registered sale deed. These three
conditions stated in the contract, in harmonious and entirety
perusal, infer or intend that putting up of time limit of six
months was not the intention of the party to contract to make
it rigid and inflexible, non-adherence of which ipso facto
rescind the contract, or contract becomes non existent. In
absence of aforesaid intention, in that circumstances of the
case, time cannot be considered to be ‘an essence of
contract’.
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7.23 Ordinarily time is not of the contract as far as it relates
to sell of the immovable property. The Constitution Bench of
the Supreme Court in the case of Chand Rani (Smt.) (Dead by
Lrs.) vs. Kamal Rani (Smt.) (Dead) by Lrs. (supra) discussed
the applicability of the principle after referring to Section 55
of the Contract Act. PARAS:19 to 23 and 25 read as under:
“19. It is a well-accepted principle that in the case of sale
of immovable property, time is never regarded as the
essence of the contract. In fact, there is a presumption
against time being the essence of the contract. This
principle is not in any way different from that obtainable
in England. Under the law of equity which governs the
rights of the parties in the case of specific performance of
contract to sell real estate, law looks not at the letter but
at the substance of the agreement. It has to be
ascertained whether under the terms of the contract the
parties named a specific time within which completion
was to take place, really and in substance it was intended
that it should be completed within a reasonable time. An
intention to make time the essence of the contract must
be expressed in unequivocal language.
20. We will now refer to the decisions of this Court. In
Gomathinayagam Pillai’s case it was held :
“Sec.55 of the Contract Act which deals with the
consequences of failure to perform an executory contract
at or before the stipulated time provides by the first
paragraph:
“When a party to a contract promises to do a
certain thing at or before a specified time, or
certain things at or before specified times, and fails
to do any such thing at or before the specified time,
the contract, or so much of it as has not been
performed, becomes voidable at the option of the
promisee if the intention of the parties was that
time should be of the essence of the contract.”
It is not merely because of specification of time at or
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before which the thing to be done under the contract is
promised to be done and default in compliance
therewith, that the other party may avoid the contract.
Such an option arises only if it is intended by the parties
that time is of the essence of the contract. Intention to
make time of the essence, if expressed in writing, must
be in language which is unmistakable : it may also be
inferred from the nature of the property agreed to be
sold, conduct of the parties and the surrounding
circumstances at or before the contract. 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 stipulations of the parties, nature of the property
and the surrounding circumstances, it is not inequitable
to grant the relief. If the contract relates to sale of
immovable property, it would normally be presumed that
time was not of the essence of the contract. Mere
incorporation in the written agreement of a clause
imposing penalty in case of default does not by itself
evidence an intention to make time of the essence. In
Jamshed Khodaram Irani V/s. Burjorji Dhunjibhai the
Judicial Committee of the Privy Council observed that
the principle underlying sec. 55 of the Contract Act did
not differ from those which obtained under the law of
England as regards contracts for sale of land. The
Judicial Committee observed:
“Under that law equity, which governs the rights
of the parties in cases of specific performance of
contracts to sell real estate, looks not at the letter
but at the substance of the agreement in order to
ascertain whether the parties, notwithstanding that
they named a specific time within which completion
was to take place, really and in substance intended
more than that it should take place within a
reasonable time …. Their Lordships are of opinion
that this is the doctrine which the section of Indian
Statute adopts and embodies in reference to sales
of land. It may be stated concisely in the language
used by Lord Cairns in Tilley V/s. Thomas :-
“The construction is, and must be, in equity the
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indeed relieve against, and enforce, specific
performance, notwithstanding a failure to keep
the dates assigned by the contract, either for
completion, or for the steps towards
completion, if it can do justice between the
parties, and if (as Lord Justice Turner said in
Roberts V/s. Berry, (1853) 3 De G.M. & G. 284),
there is nothing in the express stipulations
between the parties, the nature of the property,
or the surrounding circumstances, which would
make it inequitable to interfere with and modify
the legal right. This is what is meant, and all
that is meant, when it is said that in equity time
is not of the essence of the contract. Of the
three grounds mentioned by Lord Justice
Turner ‘express stipulations’ requires no
comment. The ‘nature of the property’ is
illustrated by the case of reversions, mines, or
trades. The ‘surrounding circumstances’ must
depend on the facts of each particular case.”
Their Lordships will add to the statement just quoted
these observations. The special jurisdiction of equity to
disregard the letter of the contract in ascertaining what
the parties to the contract are to be taken as having
really and in substance intended as regards the time of
its performance may be excluded by any plainly
expressed stipulation. But to have this effect the
language of the stipulation must show that the intention
was to make the rights of the parties depend on the
observance of the time limits prescribed in a fashion
which is unmistakable. The language will have this effect
if it plainly excludes the notion that these time limits
were of merely secondary importance in the bargain, and
that to disregard them would be to disregard nothing
that lay as its foundation. “Prima facie, equity treats the
importance of such time limits as being subordinate to
the main purpose notwithstanding that from the point of
view of a Court of Law the contract has not been literally
performed by the plaintiff as regards the time limit
specified.”
21. In Govind Prasad Chaturvedi V/s. Hari Dutt Shastri,
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following the above ruling it was held at pages 543-544:
(SCC para 5) :
“It is settled law that 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. It may also be mentioned that
the language used in the agreement is not such as to
indicate in unmistakable terms that the time is of the
essence of the contract. The intention to treat time as
the essence of the contract may be evidenced by
circumstances which are 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.”
(emphasis supplied)
22. In Hind Construction Contractors case, 1979 2 SCR
1147 quoting Halsbury’s Laws of England, this Court
observed : as under: (SCC pp.76-77, paras 7 & 8)
“In the latest 4th edn. of Halsbury’s Laws of England in
regard to building and engineering contracts the
statement of law is to be found in Vol. 4, Para 1179,
which runs thus:
“1179. Where time is of the essence of the contract.
The expression time is of the essence means that a
breach of the condition as to the time for
performance will entitle the innocent party to
consider the breach as a repudiation of the contract.
Exceptionally, the completion of the work by a
specified date may be a condition precedent to the
contractor’s right to claim payment. The parties may
expressly provide that time is of the essence of the
contract and where there is power to determine the
contract on a failure to complete by the specified
date, the stipulation as to time will be fundamental.
Other provisions of the contract may, on the
construction of the contract, exclude an inference
that the completion of the works by date is
fundamental, time is no the essence where a sum is
payable for each week that the work remainsPage 46 of 59
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incomplete after the date fixed, nor where the
parties contemplate a postponement of completion.
Where time has not been made of the essence of
the contract or, by reason of waiver, the time fixed
has ceased to be applicable, the employer notice fix
a may by reasonable time for the completion of the
work and dismiss the contractor on a failure to
complete by the date so fixed.” (Emphasis supplied)
It will be clear from the aforesaid statement of law that
even where the parties have expressly provided that
time is the essence of the contract such a stipulation will
have to be read along with other provisions of the
contract and such other provisions may, on construction
of the contract, exclude the inference that the
completion of the work by a particular date was intended
to be fundamental, for instance, if the contract were to
include causes providing for extension of time in certain
contingencies or for payment of fine or penalty for every
day or week the work undertaken remains unfinished on
the expiry of the time provided in the contract such
clauses would be construed as rendering ineffective the
express provision relating to the time being of the
essence of contract. The emphasis portion of the
aforesaid statement of law is based on Lamprell V/s.
Billericay Union, Webb V/s. Hughes and Charles
Rickards Ltd. V/s. Oppenheim. ”
23. In Smt. Indira Kaur V/s. Shri Sheo Lal Kapoor it was
held as under:
“The law is well-settled that in transactions of sale of
immovable properties, time is not the essence of the
Contract.”
24. … xxx
25. From an analysis of the above case-law it is clear
that in the case of sale of immovable property there is no
presumption as to time being the essence of the contract.
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
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the conditions are :
(1) from the express terms of the contract;
(2) from the nature of the property; and
(3) from the surrounding circumstances, for example :
the object of making the contract.”
7.24 Applying the aforesaid settled principles vis-a-vis
the terms and conditions of the contract (Exh.105), I find
argument time being essence of the contract, in this case, is
totally non-applicable.
7.25 As far as contention that the defendant no.2 is bona
fide purchaser and is not bound by the enforcement of the
specific performance against him as defendant no.2 has
purchased the suit property for a value and paid Rs.80,000/-,
whereof Rs.40,000/- each to defendant no.1 vendor and his
brother Prabhudas in good faith and without notice of original
contract as well as the pendency of the suit is concerned, let
me refer the judgment in the case of K.S.Manjunath (supra)
wherein Hon’ble the Supreme Court has held as under, in
paras:69 to 75, governs or clinches the issue, reads thus:
“69. Similarly, in Durg Singh v. Mahesh Singh, 2004 SCC
OnLine MP 9, tire Madhya Pradesh High Court had
observed that there are two farfors that are necessary for
the adjudication of suit for specific performance of the
contract where the subject matter property has been sold
to a subsequent purchaser: (1) that whether the plaintiff
remained always ready and willing to perform his part of
the contract to purchase the suit property and the
readiness and willingness should exist till the date of the
passing of the decree, and (ii) that whether subsequent
transferee was having prior knowledge of the earlier
agreement executed in favour plaintiff. Both these factors
need to have nexus with the facts of each case andPage 48 of 59
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conduct of parties. The relevant observation is as under:
“11. In a suit of specific performance of the contract
where the property in dispute has been sold to the
subsequent purchaser, twe things are necessary for
the adjudication, they are: (1) that whether the
plaintiff remained always ready and willing to perform
his part of the contract to purchase the suit property
and the readiness and willingness should exist till the
date of the passing of the decree and in whether the
subsequent transferee was having prior knowledge of
the earlier agreement.executed in favour of plaintiff in
other words, we may say that if plaintiff fails to plead
and prove by his conduct the readiness and
willingness to purchase the suit property and if the
subsequent purchaser was a bona fide purchaser
without prior notice of the original contract who had
paid the value of the suit property to the vendor, the
suit of specific performance cannot be decreed. Both
these essential ingredients are having nexus with the
facts of each case as well as the conduct of the parties
of that case. No straight-Jacket formula can be framed
in this regard and each case should be tested on the
touchstone of its own facts and circumstances coupled
with the evidence. Thus, I shall now examine the
present case in that regard.” (Emphasis Supplied)
70. The expression “wilful abstention from inquiry or
search” recalls the expression used by Sir James Wigram
VC in the case of Jones v. Smith, (1841) 1 Hare 43,
wherein the High Court of Chancery of England & Wales
had held that constructive notice is basically a
manifestation of equity which treats a man who ought to
have known a fact, as if he had actually known it. The
court noted that:
“It is, indeed, scarcely possible to declare a priori
what shall be deemed constructive notice, because,
unquestionably, that which would not affect one man
may be abundantly sufficient to affect another. But I
believe, I may, with sufficient accuracy for my present
purpose and without danger assert that the cases in
which constructive notice has been establishedPage 49 of 59
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resolve themselves in two classes:
First, cases in which the party charged has had
actual notice that the property in dispute was in
fact charged, encumbered or in some way affected,
and the court has thereupon bound him with
constructive notice of facts and instruments, to a
knowledge of which he would have been (sic) led
by an enquiry after the charge, encumbrance or
other circumstances affecting the property of
which he had actual notice; and secondly, cases in
which the court has been satisfied from the
evidence before it that the party charged had
designedly abstained from enquiry for the very
purpose of avoiding notice […]”(Emphasis
Supplied)
71. Similar to the importance of the term “notice” used in
Section 19 (b) of the Act of 1963, the term “good faith”
which is also used in Section 19(b) is equally important.
The term “good faith” is defined in Section 3(22) of the
General Clauses Act, 1897 (for short, “GC Act“) as well as
Section 2(11) of the Bhartiya Nyaya Sanhita, 2023 (for
short, “BNS”). Section 3(22) of GC Act defines “good
faith” is defined in the following terms:
“3(22). A thing shall be deemed to be done in good faith
where it is in fact done honestly whether it is done
negligently or not.”
72. Section 2(11) of the BNS defines “good faith” in the
following terms:
“2(11). “Good faith Nothing is said to be done or
believed in good faith” which is done or believed
without due care and attention”
73. Therefore, in order to come to a conclusion that an act
was done in good faith it must have been done with (i)
due care and attention, and (ii) there should not be any
dishonesty. This Court recently in case of Manjit Singh v.
Darshana Devi, 2024 SCC OnLine SC 3431, wherein one
of us, J.B. Pardiwala, J., forming a part of the Bench,
construed the usage of the term “good faith” under
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Section 19(b) of the Act of 1963 in the above sense and
held that each of the abovementioned aspects is a
complement to the other and not an exclusion of the
other. This Court observed that the definition of the BNS
emphasizes due care and attention whereas the definition
of the GC Act emphasizes honesty. The relevant
observation is as under:
“13. Section 3(2) of the General Clauses Act defines
‘good faith” as follows:-
3(22). A thing shall be deemed to be done in good
faith where it is in fact done honestly whether it is
done negligently or not.
14. Section 2(11) of the Bhartiya Nyaya Sanhita, 2023
defines “good faith”, as follows:-
2(11). “Good faith- Nothing is said to be done or
believed in “good faith” which is done or believed
without due care and attention;
15. The abovesaid definitions and the meaning of the
term ‘good faith” indicate that in order to come to a
conclusion that an act was done in good faith it must
have been done with due care and attention and there
should not be any negligence or dishonesty. Each
aspect is a complement to the other and not an
exclusion of the other. The definition of the Penal Code,
1860 emphasises due care and attention whereas
General Clauses Act emphasises honesty.
16. The effect of abstention on the part of a subsequent
purchaser, to make enquiries with regard to the
possession of a tenant, was considered in Ram Niwas v.
Bano, (2000) 6 SCC 685 […]
17. In the case reported in Kailas Sizing, Works v.
Municipality, B. & N., 1968 Bom LR 554, the Bombay
High Court observed as follows:
A person cannot be said to act honestly unless he
acts with fairness and uprightness. A person whoPage 51 of 59
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acts in a particular manner in the discharge of his
duties in spite of the knowledge and consciousness
that injury to someone or group of persons is likely
to result from his act or omission or acts with
wanton or wilful negligence in spite of such
knowledge or consciousness cannot be said to act
with fairness or uprightness and, therefore. he
cannot be said to act with honesty or in good faith.
Whether in a particular case a person acted with
honesty or not will depend on the facts of each case.
Good faith implies upright mental attitude and clear
conscience. It contemplates an honest effort to
ascertain the facts upon which the exercise of the
power must rest. It is an honest determination from
ascertained facts. Good faith precludes pretence,
deceit or lack of fairness and uprightness and also
precludes wanton or wilful negligence.” (Emphasis
Supplied)
74. This aspect also deserves a reference to the case of
Jammula Rama Rao v. Merla Krishnaveni, 2002 SCC
OnLine AP 646, wherein the Andhra Pradesh High Court
while holding that honesty is the essential condition in
‘good faith’ observed that when subsequent purchasers
were informed about the existence of the agreement in
favour of the prior vendee, then the subsequent
purchasers should have made enquiries from the prior
vendee to satisfy themselves whether the agreement in
favour of prior vendee is only a nominal one as alleged by
the vendors. The court held that the failure on the part of
the subsequent purchasers in not conducting such an
enquiry with the prior vendee would render them
susceptible to the complaint that subsequent purchasers
had not acted honestly and in good faith. The relevant
observation is as under:
“7. In view of the language employed in Sec. 19(b) of
Specific Relief Act, the subsequent purchaser has to
establish that he paid money in good faith, without
notice of the original contract. Since ‘good faith’ is not
defined in Specific Relief Act, its meaning has to be
understood from the definition of ‘good faith’ in General
Clauses Act, 1897, Sub-sec. 22 of Sec. 3 of GeneralPage 52 of 59
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Clauses Act, defined ‘good faith’ as “a thing shall be
deemed to be done in ‘good faith” if it is done honestly”.
So, honesty is the essential condition in ‘good faith,
When appellants, were informed about the existence of
the suit agreement in favour of the 1 respondent,
appellants should have made enquiries from the 1
respondent to satisfy themselves whether the
agreement in favour of 1″ respondent is only a nominal
one, as alleged by respondents 2 to 5. If they have not
done so, it cannot be said that they acted honestly, and
consequently it cannot be said that appellants acted in
good faith.” (Emphasis Supplied)
75. At the outset, it must be noted that the subsequent
purchasers have themselves admitted that prior to their
purchase they were Uranded over a copy of the notice of
termination dated 10.03.2003 by the original vendors and
were also specifically informed that the ATS stood
terminated by virtue of the said notice. This single fact is
of decisive importance. The said notice of termination in
the present case is not a peripheral document, rather, it is
a self-contained recital of the very material terms of the
contract. The said notice of termination makes a clear
reference to the fact of existing ATS dated 28.04.2004
and the material terms agreed therein including but not
limited to the description of subject land, area of the
subject land agreed to be sold, sale consideration,
payment of earnest money and payment stages thereafter,
and names and residential addresses of the original
vendees. Thus, by their own admission, the subsequent
purchasers were put in possession of all material
particulars of the ATS. Having been confronted with a
document of this character, no prudent purchaser acting
in good faith could have remained passive. The
subsequent purchasers had at their disposal clear and
concrete means to demand from the original vendors a
copy of the ATS itself or at the very least verify from the
original vendees the correctness of the assertions
contained in the notice of termination, however, the
subsequent purchasers chose not to pursue either
course.”
7.26 In the case of Chander Bhan (dead) through LRS
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Sher Singh Vs. Mukhtiar Singh & Ors. reported in 2024 INSC
377, Hon’ble the Supreme Court after referring to Sections
41 and 52 of the Transfer of Property Act and the settled
position that even if Transfer of Property Act, is not applicable
since the principle of lis pendence is based upon justice,
equity and good conscience, is applicable, to set aside
subsequent purchaser. Paras:15, 16, 18 and in para :22
(highlighted portion)
“15. In order to appreciate the rival contentions of the
parties, it will be appropriate to reproduce the relevant
provisions of the Transfer of Property Act, 1882, the
benefit of which is being claimed by both parties. Section
41 of the Act of 1882 which governs the principle of
bonafide purchaser for valuable consideration is
reproduced below:
“41. Transfer by ostensible owner.-Where,
with the consent, express or implied, of the
persons interested in immovable property, a
person is the ostensible owner of such
property and transfers the same for
consideration, the transfer shall not be
voidable on the ground that the transferor
was not authorised to make it:
Provided that the transferee, after taking
reasonable care to ascertain that the
transferor had power to make the transfer,
has acted in good faith.”
Similarly, Section 52 of the Act of 1882 governs the
principle of lis pendens and is reproduced below:
“52. Transfer of property pending suit
relating thereto. – During the [pendency) in
any Court having authority (within the limits
of India excluding the State of Jammu and
Kashmir) or established beyond such limits]
by [the Central Government, of (any) suit orPage 54 of 59
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proceeding (which is not collusive and in
which any right to immovable property is
directly and specifically in question, the
property cannot be transferred or otherwise
dealt with by any party to the suit or
proceeding so as to affect the rights of any
other party thereto under any decree or
order which may be made therein, except
under the authority of the Court and on such
terms as it may impose.
[Explanation- For the purpose of this section,
the pendency of a suit or proceeding shall be
deemed commence from the date of the
presentation of the plaint or the institution of
the proceeding in a court of competent
jurisdiction, and to continue until the suit or
proceeding has been disposed of by a final
decree or order, and complete satisfaction or
discharge of such decree or order has been
obtained, or has become unobtainable by
reason of the expiration of any period of
limitation prescribed for the execution
thereof by any law for the time being in
force.]”
16. The object underlying the doctrine of lis pendens is
for maintaining status quo that cannot be affected by an
act of any party in a pending litigation. The objective is
also to prevent multiple proceedings by parties in
different forums. The principle is based on equity and
good conscience. This Court has clarified this position in a
catena of cases. Reference may be made here of some,
such as: Rajendra Singh. Santa Singh, AIR 1973 SC
2537; Dev Raj Dogra . Gyan Chand Jain, (1981) 2
SCC 675, Sunita Jugalkishore Gilda Ramanlal Udhoji
Tanna, (2013) 10 SCC 258.
17. xxxx ….
18. Keeping this in mind, the explanation to Section 52
which was inserted by the Act No. XX of 1929, clarifies
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that pendency of a suit shall be deemed to have
commenced from the date on which the plaintiff presents
the suit. Further, that such pendency would extend till a
final decree is passed and such decree is realised.
19. xxxx…..
…. xxxx
22. …. We are going by the settled position that
subsequent purchasers will be bound by lis pendens and
cannot claim they are bonafide purchasers because they
were not aware of the injunction order, looking at the
peculiar facts of the present case.
7.27 In the present case, it is admitted fact that
defendant no.1 in violation of injunction sold suit property to
defendant no.2. The defendant no.2 claimed shelter of ‘bona
fide purchaser’ with value and paid without having notice of
previous contract fails to prove that his transaction was bona
fide and was in good faith and he has no notice. It was
expected from the defendant no.2 to inquire into such title of
the property. The defendant no.2 was knowing fully well that
there was dispute between defendant no.1 and his brother
and, therefore, he was expected to inquire in such title of
property.
7.28 This Court raised a question to learned advocate
Mr.Jenil Shah appearing for defendant no.2, while he was
arguing that the defendant no.2 was bona fide purchaser, that
whether defendant no.2 has published any public notice in any
news paper widely circulated in the area before purchasing
disputed property, and whether defendant no.2 has obtained
title clearance certificate from any solicitor or the advocate,
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he said “No”. The defendant no.2, who was required to take
constructive notice and to make necessary inquiry or such,
before purchasing the suit property, has failed to do so and,
therefore, his defense cannot be accepted.
7.29 It is important to note that the learned City Civil
Court, while recording the evidence, noted the demeanor of
defendant no.1, who changed his version like chameleon. At
first blush, in pleading as well as in deposition he denied
execution of such deed in favour of defendant no.2 but in
same breathe accepted the same. In first blush, he did not
recognize to defendant no.2 but in same breath he recognized
defendant no.2. Thus all these conduct and the evidence
clearly suggesting that it was defendant no.1 who was culprit
for non executing sale-deed and he executed sale-deed in
favour of defendant no.2 once prohibitory injunction was
issued by learned City Civil Court. The defense of defendant
no.2 that defendant no.1 did not inform him of earlier contract
or pendency of the suit would not survive as defendant no.2
was required to take constructive notice and was further
required to make necessary and detailed inquiry and search
about title of the immovable property before purchasing the
same.
7.30 In wake of above reasons, appellant failed to make
out case.
7.31 Before parting with the judgment, let me deal with
the judgments relied upon by the learned advocate
Mr.Dhotare. In case of Shena Begum (supra) and in case of
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Vijaykumar and others (supra), Hon’ble the Supreme Court
explained the principle of ‘readiness and willingness’ to
perform the part of the contract. On factual aspect, the
Hon’ble Supreme Court believed that the plaintiff was not
ready and willing to perform his part of contract. The
judgment in the case of Sangita Sinha (supra) would not be
applicable in the facts of the present case. It is also a case
where majority of earnest money was refunded much prior to
filing of the suit by cancelling ATS and the suit was filed after
delayed period. Insofar as the judgment in the case of
I.S.Sikandar (supra) is concerned, it is factually
distinguishable.
7.32 Thus, for the reasons stated hereinabove, both the
appeals are found meritless. As far as the judgment relied
upon in the case of Chanda Rani (supra) is concerned, is
referred herein-above and rather postulates law in favour of
plaintiff. In factual aspect of judgment referred in the said
case of Chanda Rani (supra), the Hon’ble Supreme Court
reached to the conclusion that plaintiff was failed to prove
readiness and willingness and thus, plaintiff’s suit stood
dismissed.
8. For the reasons stated herein above, captioned appeals
deserve no consideration and require to be dismissed and
accordingly they are dismissed. The judgment and decree
passed by the learned City Civil Court in Civil Suit No.4584 of
1986 is hereby confirmed and approved. Interim relief,
granted earlier, if any, shall stand vacated. Decree to be
drawn accordingly. Throughout cost is awarded in favour of
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the plaintiff. Records and Proceedings is ordered to be sent
back. Registry to maintain a copy of this judgment in each
appeal.
(J. C. DOSHI,J)
After pronouncement of judgment, learned advocates
Mr.Jenil Shah and learned advocate Mr.Dhotare, request for
staying the implementation and execution of this judgment for
a period of weeks, so as to enable them to appear before the
higher forum. However, learned advocate Mr.Bhavnani, for
the respondent has strongly object to grant of any such relief.
Having heard learned advocates and having gone through the
fact that the interim relief is operating in the matter since
long time, request of learned advocate for the appellants is
acceded to and operation, implementation and execution of
this judgment is stayed for a period two weeks.
(J. C. DOSHI,J)
MISHRA AMIT V.
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