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A B c D F -G 573 R. C. CHANDIOK & ANR. v. CHUNI LAi SABHARWAL & ORS. October 12, 1970 [J, C. SHAH AND A. N. GROVER, JJ.) Specific Performance-Suit for by vendee-Vendors'stitle not perfect ondate of contractand priorsanctionof Governmentnecessary.for sale Whether v•ndor could claim that vendee has not performed hir part with· outperfectinghis title and obtainingsanction-Decree of trial court only directjng return of the part of purchasemoney paid by vendee-Vendor depositingmoney in court-If vendee precludedfrom filing an appeal for specificperformance. The respondents, who had beenallotteda plotby .the Rehabilitation'. Ministryagreed to sell it totheappellantsandreceived a partof the pur chase money. ·On thedateof thecontractthe respondents'title was not perfect as theleasedeed in theirfavourhad not been executed l:IY the Governtnent nor did the respondentsobtain ·the sanction of theMinistry which was necessary for transferringthe elot. Therefore, the periodfor execu.tion of thesale-deed was extendedttll afterreceiptof thesanction. Butthe sanction was ·applied formorethan a yearlater.Meanwhile,the respondentswrote to theappellants . stating thU it was uncertain as ID when the sanctionwould be-granted, that thereforetho agreementhad become void on accountof uncertainty,butthat they. were willing· to have the sale,deed registeredon payment by theappellantsof thebalance with· outwaitingfor the sanction. Appreoonding thatthe respondentswere tryingto disR.._ose of too plot to someone else theappellants informedpros: pective buyers about the agreement in theirfavour.They also wrote.to therespondentsdeclaring their readiness and willingness to pay .the balance of thepurchaseprice on the respondentsprocuring the sanction, Thereafter,the sanction was granted,but the respondentsnever in'formod the appellants;but comingto know about it the appellants filed a cuit claimingspecific performanceof thecontract. Thetrialcourtheld that therespondents, by theirlettersmade time the essence ofthecontractand refused to decreespecificperformance, butgranteda decreefor refundof the amountpaid. Therea'fter, too appellantsapplied to thetrialcourt for an injunctionrestraining.the res pondents from disposingof the11,rcperty, but the injunction was not grant· ~ and t~e plot was sol~ to a thrrdparty,The .appellants filed an appeal in the HighCourt against the decreeof the tnal. courtrefusingspecific performance,and during the pendency rlf the appeal,the amotmtdecreed by the trialcourt was· depositedby therespondents,but the ·appellants· did n'?I withdrawthe amount.The High Court confirmed the· decreeof the trial courtand also held thatoncethe appellants obtainod satisfactionof thedecreefor the amountpaid by them, they becamedisentitledto a decreefor specificperformance. Inappealto thisCourt, HELD: (I) There 'kas no questionof time having been made the ~sence ,of the contract by the letterssent by the respondents;nor could 1t be s~td th.at. theappellants had 'fail-.d to performtheir part of the agreementwtthtn a reasonable time. [579 E] 574 SUPREME COURT REPORTS (1971] 2 S.C.R. As long as the title of the respondentswas incompleteanJ sanction for sale wasnot obtainedthere ·was no question of completingthe sale. Also,after the sanctionwas given,the reSpondent3 did notinformthe appellantsso as to enablethem 'to p~rform their part of the agreement. [578 E-F; ,579D-E] (2) Therewas nothingto indicatethat the appellantswere not ready and willingto performtheir part of thecontraet.Readiness and willing nessmust _be determined !from the entirety of thefacts and circumstances relatingto theintention.and conduct of the partyconcerned.In the pre sentcase,the factsthat the appellar.tsinformed prospectivebuyers about the existenceof theagreement in' their fa,·our, that theywrote to the respondentsdeclaring their readinessand willingness to paythe balance as soonas thesanctionwas obtained,and thattheypromptlyfiled the suit, showedtheir .keennessand readiness.The appellantswere carrying on businessand werein a positionto arrange for th.e balanceof the p1•rchase money. It was neithernecessary nor incumbenton them to senu any draft conveyanceafter the respondentshad cancelledthe agroemcnt. L579 H; 580 B-C] (3) In the. presentcase, the rule thatthe appellantscould not accept satisfaction of the decreeof thetrialcourtand yet preferan appealagainst thatdecreecannotapply, because.the appellantshad by ccnsistentand unequivocalconduct by applyingfor inunctionand pro.1ecuting the appeal intheHighCourtmade it clearthat theywerenot 'l'illing to acceptthe judgment· of the trial, court as correct.The grant of reliefof specific performance is discretionarybut the discretion must be exercisedin accordancewith judicialprinciplesand not arbitrarily. It couldnot he heldtliat the conduct of the appellantswas suchthat it precludedthem fromobtaininga decreefor specificperformance. [581 F-H; -581 A-Bl Ot was directedthat the subsequenttransferee should join in the con veyanceso )IS to pass on thetitlewhichresides in him to theappellants.] [582B-C] LalDurga Prasad v. LalaDeepChand, ,[,1954] S.C.R. 360. referred to. CIVIL APPELLATE JURISDICTION :CivilAppealNo. 1776 a.f 1966. A B c D E Appealby specialleave from the judgmentand decrcz dated F December22, 1964of the Punjab HighCourt,CircuitBench at R.F.A.No. 37-Dof 1959. Bishan Narain and B. P. Maheshwari, fortheappellant. N. N. Keswani, for respondentNo. 2. C. B. Agarwala and Urmi/a Kapoor, for respondentNo. 3. The Judgment of· the Colll't was deliveredby Grover, J, This is an appealby specialleave from a decree of the Punjab HighCourt(CircuitBench, Delhi). On July 18, 1955,the appellantsentered into an agreement withthe. respondent&.,for the purchaseof plotNo. 8 measuring 1500 Sq. Yds inJangpuraB,New Delhi for Rs. 22,500/-. The contractwas evidencedby receiptExhibit P-6 which was in the followingterms : G H A B c D E F G H R. c. CHAND!OK v. CHUN! LAL (Grover, J.) 575 "Received with thanksfrom Messrs.RameshChander Chandiokand Kai!ashChandraChandiokthe sumof Rs. 7,500/- (RupeesSeven thousandand five hundred only) as earnestmoney of thepurchasemoney of Rs. 22,500/- (RupeesTwenty two thousandand five hundred) forthe sale of Plot No. 8 measuring 1500 sq. yds in JangpuraB., purchasedfrom the Rehabilitation Ministryand owned by us. Thebalanceof Rs. I 5,000 (RupeesFifteen Thousandonly) shall be paidto us by them withinone month of the executionof thisreceipt ontheexecutionof thesaledeedby us in their favour." It is commonground 11).at the aforesaidplot had been allott~d by theRehabilitationMinistry to therespondentsand thatits possession was tobedeliveredafter paymentof rentof lease moneyup-to-dateand afterexecutionof theleasedeed.The leasedeed was actuallyexecuted in favour of therespondentson April 21, 1956. Meanwhileon August11, 1955 foe respon~ dents wrotea letterto theappellants as follows: "With referenceto the receipt dated 18-7-55 executed by us in yourfavour,acknowledgingreceipt of Rs. 7,500/- as earnest money forthesale of PlotNo. 8measuring I 500 sq. yds inJungpura B. ownedby us. and agreedto besoldto youby us,sinceit willtake abouta monthmore to obtainsanctionof the Rehabili tationMinistry,the ex.ecutionof the sale deedby us cannot be completewithout the saidsanction,it is hereby mutuallyagreed between us or orallythat the periodfor executionof t11e sale deedshall remain ex tendedtill thetimeof thereceiptof thesaidsanction and we herebyconfirmthe saidoralagreement. We will informyou as soon as the saidsanction is received andwithina weekthereof, we will executethe neces sary sale-deed in yourfavourand get thesame regis teredagainstpayment of the balancemoney.Please signthe duplicateof thisletterin confirmationof the saidoral arrangement." A noticedated June 15, 1956 was served by counselforthe res pondentson theappellantssaying that the balanceof considera-· lion accordin~ to thetermsof theagreementdated July 18, 1955 was to be paid bytheappellantsand the sale deed was to begot registeredwithin one monthof July 18, 1955. It wasfurther statedthat extensionhad beengiven as desiredby theappellants butthe balanceamount had not beenpaid. In para 3 itwas stated "my clientsare notpreparedto waitindefinitelyand there fore cancelyour agreement for want of certa¥1ty and hereby give youan offer,withoutprejudiceto theirlegalrights,to receive- 576 SUPREME COURT REPORTS [1971] 2 &C.R. .baek the sumof Rs. 7,500/- paidby you as earnestmoney les5 the amountof losssufferedby themon account· of leaseand in terestetc. withinone ·week of thereceipt of thisletter,failing whichmy clientswould be entitledto forfeitthe earnestmoney .andtreatthe agreement cancelled." A replydatedJune 22, •1956 was sent by counselfor the .appellantsin whichreference was madeto theletterdated August11, 1955and it was pointedout that no informationhad beensent by therespondentsabout the sanctionhaving been -obtainedfrom the RehabilitationMinistry. The respondents w.ere calledupon to obtainthe requisitesanctionand to execute ·the sale de~d against receipt of balanceof purchasemoney. On July 4, 1956counselfor the respondentssent a replysayingthat sanctionhad not beengrantedtill thenand inquiriesmade by respondentsrevealed that it mightnot be forthcoming for an indefiniteperiod and thatit was absolutelyuncertain as to when it wouldbe granted.It was claimed that theagreementhad becomevoid on accountof uncertainty and withoutprejudice to their legal rights the respond~nts were prepared "ex gratia" to havethe saledeedregisteredon payment of thebalancewithin a week of thereceiptof theletterwithoutawaitingsanction of the RehabilitationMinistry. On November 11, 1956the respon dents' are stated to haveappliedfor sanctionfor transfer of the plotand it was grantedon November 20, 1956.The appellants bad themselvesmade inquiriesfrom the Housingand Rent Officer ·-On August9, 1956to ascertainwhether sanctionhad been grantedand howmuchtime it wouldtake to accordthe sanction. Bya letterdated27 /29th November1956 the aforesaidofficer informedthe appellantsthat permission to transfer had been givenon November 20, 1956.The appellantshad alsotaken ~teps to informother prospectivebuyers about.the existence of the agreement as theyapprehendedthat thci respondentsintended transferringthe same to some other party. On July29, 1956 an advertisement was publishedbythem in the'Timesof India'. ·declaring the ex·isience of theagreemententered into betweenthe appellantsand th~ respondent.swith regardto thesaleof the afore saidplot. On December4. 1956the suitout of which thepre sentappealhas. arisenwas filed by theappellantsclaiming specific performanceof tbecontractdated July 18, 1955and in the alternativefor refundof Rs.7 ,500/- beingthe amountof earnest money andRs. 15,000/- as damagestogether with inierest. Apartfrom taking all the necessi:ry pleasit was averredin the plaint that the plaintiffs-appellantshad alwaysbeen readyand "Willing to performtheir part of the contract.The suit wascon- A B c D E F G H R. c. CHANDIOK v. CHUN! LAL (Grover, I.) fi77 A tested by the defendants-respondentsand amongthe mat~rial issues whichwere framedby thetrialcourtwere. the followmg_: B c D E F G H " ( 5) Whetherthe specificperfonnance of the (b) agreement· in suit shouldbe refused u/ s 21or 22 9f theSpecificRelief Act ? Whetherthe plaintiffswere readyand willingto perfonntheir part of thecon- tract?" Theadmittedcase of the partieswas thataccordingto the condiC tionsof theleasegrantedto therespondents,which had, however, notbeenproducedthe transferof thelease-holdrights could be effeciedonly with the sanctionof theRehabilitationMinistry. Thetrialcourtwas of theopinionthat in spiteof thiscondition therespondentshad a subsistingthough defeasibleinterest in the lease-holdrights which could very well be thesubjectmatter of sale. lt washeldthat the appellantsdid notperformthe contract forabout1 t years even though the respondentshad repudiated itmuchearlier.Any partyto thecontractcould subsequently maketime the essenceof thecontractby a reasonablenotice and thishadbeendone by the respondentsby Exhibits P-8 and P-12, namelythe lettersdated June 15, 1955and August24, 1956. IssueNo. 5 wasthusdecidedagainst the appellants. On issue No.6 thetrialcourtfoundthat ihe appellantswere noi ready and willingto paythe balanceof considerationin accordancewith theoriginalagreement as they insistedon sanctionof the Rehabi litationMinistrybeing obtainedbefore the completionof sale thoughno suchconditionexisted in the.originalcontraci. How ever, a decreewas grantedto theappellantsin thesum of Rs. 7 ,500 I -on thegroundthat the sameconstituted part paymeint of considerationand wasnot liableto beforfeited. On March. 31,1959the appellanisfiled an applicationbefore the trial court statingthat theyintendedto preferan app.eal againstthe dismissal of thesuitfor specificperformancebut as therespondents were !~ing !o dispose o~ theplot theyshouldbe ~U:ained by an m1unc!Jon from domgso. It appearsthat no m1unctionwas granted by the court. An appeal was filedto theHighCourt and duringthe pendency of theappeal,the amountof Rs. 7,500/ wasdepositedby therespondentsin satisfactionof the decree· passedby thetrialcourt.According to the respondents th• appellantshad takenout executionof thedecreeand it was for that rea~on thaithe saidamountwas deposited. It wasnot, how ever, withdrawn by theappellantsduring the pend.encyof the appeal. TheHighCourtfoundthat boththe respondentswere bound bytheletterExhibitP-7 datedAugust11, 1955to whichreference 578 SUPREME COURT REPORTS [1971] 2 S.C.R. .has alreadybeen made.It was noticedthat sanctionof the .RehabilitationMinistry was required before the salecouldbe completedbut it was heldthat there was nothingto indicatethat theabsenceof sucha sanctioninvalidatedthe transfer ab initio .or renderedit void.In agreementwith the trialcourtthe High Courtheld that evena d.efeasible interest cou1d be the subject .matterof sale; in otherwordsthe salecould be effectedwithout the sanction· havingbeen previouslyobtained.The view of the HighCourt was that ExhibitP-7 did notcontainany suchlan guagewhichwould justifythe importingof a conditionthat until therespondentsobtained sanction for the transferof the property theappellantswere not bound to get thesalecompleted. It was alsodecidedthat the appellantshad not satisfactorilyshown that theyhad sufficientfunds to paythe · balanceamountof Rs. 15,000/- fromwhichit could be concludedthat they were not readyand willingto performtheir part of thecontract.Yet anotherpoint was decided against the appellantson thebasis o{ certainexecutionproceedingsstated at theBar to havebeen taken duringthe pendencyof theappeal.According to the HighCourt oncethe appellantshad obtainedsatisfactionof thedecreefor Rs. 7,500/- theybecamedisentitledto a decreefor specificper formance. We areunableto concurwith the reasoningor theconclu sionsof theHighCourton theabovemaih points.It is signi ficantthat the leasedeed was not executedin favourof the res pondents by theGovernmentuntil April21, 1956. So long as theirown title was incompletethere was no questionof thesale beingcompleted. It is- also undisputedthat according to the conditionsof theleasethe respondentswere bound to obtainthe sanctionof theRehabilitationMinistry transferringthe plotto anyone else. Therespondentswere fully awareand conscious ·of this situationmuch earlierand that is the reasQn why ·on August11, 1955it was agreedwhile extendingthe periodfor executionof thesale.deedthat the sameshall be got executed afterreceiptof thesanction.The sa!ementcontainedin Exhibit P-7that the executionof thesaledeed "by us cannotbe complete withoutthe said sanction" was unqualifiedand unequi vocal.The respondentsfurther undertookto informthe appel lants as soon as sanction was receivedand thereafterthe sale 1deed had to beexecuted withiJl; a weekand got re~istered on pay mentof thebalanceamount of consideration. We arewholly unable to understand how inthepresence of Exhibit P-7 it was possibleto holdthat the appellantswere boundto getthesale completedeven beforeany information was receivedfrom the respondentsabout the sanctionhaving been obtained. It is quite obviousfrom the letter Exhibit P-8 datedJune 15, 1956that the Tespondentswere havingsecondthoughtsand wantedto wriggle A II c D E F G H B c D E ]1 H R. c. CHANDIOK v. CHUN! LAL (Grover, J.) 579 out of theagreementbecause presumablythey wantedto transfer itforbetterconsideration to some one elseor to transferit in favourof theirown relation as is statedto havebeen donelater. Therespondentsnever appliea·for any sanction aft11r August11, 1955and took up the positionthat they wiife not,JJrepared to waitindefinitelyin thematterand weretherefore oi.acelling the agreement "for wantof certainty". We are completely at a loss to understandthis attitude Jk!r has anylightbeenthrownon the uncertaintycontemplated fir the aforesaidletter. It · does not appearthat therewouldhave beenany difficultyin obtainingthe sanctionif therespondentshad madeany attempt lo obtainit. This is obviousfrom the factthatwhenthey actuailyapplied for sanction ein November11, 1956it was grantedafter a week. The statementcontainedin Exhibit P-10 dated July 4, 1956that the sanction was notforthcominghas notbeen subs tantiatedby anycogentevidence as no documentwas placedon therecordto show that any attempt was madeto obtainsanction priorto November11, 1956. Be that as it maythe respondents couldnot calluponthe appellants to completethe saleand pay the balancemoney until the undertaking . givenin Exhibit. p, 7 datedAugust11, 1955had be.en fulfilledby them.The sanction was givenin November,1956 and eventhen the respondentsdid notinformthe appellantsabout it so as to enablethem to per form their part of theagreement of sale.There was no question oftimehavingever beenmadethe essenceof thecontractby the letters sent by therespondentsnor couldit besaidthat the appel lantshad failedto performtheir part of theagreementwithin a reasonabletime. On behalf of the respondentsit hasbeenurgedthat in spite ofthelettersof therespondentby whichthe agreementhad been cancelledthe appellantsdid nottreatthe agreementof sale as havingcome to anendand keptit alive.They were therefore bound to senda draft of theconveyanceand cailuponthe respon dentsto execute the saledeedand get it registeredon paymentof thebalanceof thesaleprice as soon as they c.ame t6 know directly fromthe Housingand Rent Officer thatsanctionhad been granted. Thisthey failed to do and it must be inferredthat theywerenot readyand willing to performtheir part of the agreement. Our attentionhas beeninvited to a statementin Halsbury's Laws of England,Vol. 34, ThirdEdn. at page 338 thatin the absenee of agreement to thecontraryit is the purchaserwho has to prepare thedraftconveyanceand submitit tothevendorfor approval. No suchpoint was raisedat anypriorstageand in any case we donot considerthat afterthe cancellationof theagreement by the respon dentsit was necessaryor incumbenton theappellantsto !lend any ,draft conveyance.The veryfact thatthey prompdy ~ die suit 580 SUPREME COURT REPORTS [1971]2 S.C.R. shows their keennessand readinessin thematterof acquiringthe plot by purchase. It must be rememberedthat the appellantshad notonlyput in an ndvertisement innewspapers ~bout theexistence oftheagreementbut had also senta letterExhibit P-13 on Sep tember12, J 956 declaringtheir readinessand willingness to pay the balanceof the purchaseprice on therespondentsprocuring the sanction.The appellantsfurther made enquiriesdirectly from the authoritiesconcerned about the sanction.Readiness and willing ness· cannot be treat.ed as a straightjacket formula.These have to be determinedfrom the entirety of factsand circumstancesrelevant to 1;1e intention and conductof thepartyconcerned.In ourjudg mentthere was nothing to indicatethat the appeilantsat any stage werenot readyand willing to performtheir part of the contract. The HighCourthad takenanotheraspect of readinessand willing ness intoconsideration,namely, the possessionof sufficientfunds by the appellantsat thematerialtime for paymentof thebalanceof thesaleprice.RameshChand P.W.6 had statedthat his fatherwas aHeadMastersince.1922in <1 High Schooland he was also doing importbusiness. He gave Gp service in 1934.The son joinedthe fatherin hisbusinessin theyear1928and his otherbrotherappel lantNo. 2 also join.ed thatbusinesssome years ago. The bank accountwas producedwhich showedthat betweenJuly 18, 1955 andDecember31, 1955the appellants'father had in his account acreditof overRs. 15,000/- but thereafterbetween January,1956 andMarch,1956 an amountof Rs. 15,000/- odd had beenwith drawn.According to the High Courtafter thesedatesthere was nothingto showthat the appellantshad any funds. The evidence ofRomeshChand P .W. 6 thatthe familyhad ;tn amount Gf Rs. 40,000/- lying at theirhousewas not believed.Now in the firstplacethe relevantperiod for determiningwhether the appel lantswere in a positionto paythe balanceof thesaleprice was afterNovember,1956 when sanctionhad obtainedby the respondentsfor transferof theplotfromthe RehabilitationMinis try.The appellantshad admittedlypaid withoutany difficult Rs.7 ,500 I -as earnestmoney and the bank accountof thefather showedvarious credit and debitentriesfrom time to time. On March5, 1956an amountof Rs. 12,720/- had beenwithdrawn by a chequein favourof RomeshChand P.W. 6. Accordingto his statementthis amount was withdrawnbecause his fatherwas very ill and it was decidedto withdrawthe amountat thattime. It wasdepositedwith his motherand remainedwith her throughout.There is no materialor evidenceto showthat this amounthad beenexpendedor spentand thatthe statementof RomeshChand was false on 1hepoint.Even if theversion .that Rs. 40,000/- in cashwerelyingat thehouseof theappellant is discardedat leastan amountof Rs.12,720/- must havebeen availableat the material and relevanttime. The appellantswere A. B c Do E F G H j. ' ' ' .. ,. } • ~"""' A 8 D R. c. CHANDIOK v. CHUN! LAL (Grover, !.) 581 carrying on businessand there is nothingto indicatethat they Vere not in a position to arrange forthe remainingsum te make up the totalof Rs. 15,000/-. We are,therefore,unable to acceptthat theappellants, who hadall alongbeen tryingtheir utmost to pur chasethe plot,did not havethe necessaryfunds or couldnot arrangefor themwhenthe saleaeedhad to be executedand regis tered after the sanctionhad beenobtained. Comingto thelastpoint,the HighCourthas heldthat the appellantswere disentitled to a decreefor specificperformance because a statement was made· attheBarthatduringthe pendency of the appealthey had executedthe decreeof thetrialcourtand anamountof Rs. 7,500/- hadbeendeposited by the respondents pursuant to theexecutionproceedings. It is true that the appel lantcouldnot acceptsatisfactionof thedecreeof thetrialcourt andyet prefer an appealagainstthat decree.That may well haYe broughtthem withinthe principlethat when the plaintiff has elected to proceedin someother mannerthan for specificperform- ancehe cannotask for the latterrelief.This is what Scrutton L. J. said in Dexters,Limited v. Hill Crest Oil Company BradfoJ"d Ltd.(') at page358 : "So, in my opinion, you cannottake the benefitof a judgment as being good and thenappealagainstit as being bad." £ It was further observed: F G H "It startles me to hearit arguedthat a personcan saythe judgment is wrongand at thesametime accept paymentunder the judgment as being right." Thisillustratesthe rulethat a partycannotapprobate and· repro bateat thesametime.These propositionsare so well known thatno possibleexceptioncan be taken to them. In thepresent case,however,the aboverule cannotapply becausethe appellants had,by consistentand unequivocalconduct, made it clearthat theywerenot willingto acceptthe judgmentof thetrialcourt as correct. It has alreadybeen mentioned at a previousstage that afterthe decisionof the trial court the appellantshad evenapplied O'l March31, 1958for an injunctionrestrainingtherespondents fromsellingor otijerwise disposingof theplot as it was apprehend e~ thattheyweretryingto do so. It was stated in thisapplica tion thatthe plaintiffswould be preferringan appealbut it would take time to securecertified copies. An appeal was in fact preferredand seriouslypressed before the HighCourton therelief relatingto specificperformance. ff· ;t926] I K.B. 348, 358. JO-L436Slp.Cli71 582 SUPREME COURT REPORTS [1971I2 S.C.R. This relief is discretionarybut notarbitraryand discretion must be exercised ·in accordancewith the soundand reasonable judicialprinciples.We are unableto holdthat the conductof theappellants,which is always an importantelement for considera tion, was suchthat it p1 -eluded themfrom obtaininga decree forspecificperformance. • It is commonground that the plotin disputehas been trans ferred bytherespondents r ·,d thereforethe properform of the decree would be the sa·m..: ;, , indicatedat page369 in Lala Durga Prasad & Another v. Lala Deep Chand & Others(') viz.,"to direct specific performanceof thecontractbetweenthe vendorand the plaintiff anddirectthe s' |
