Professional Documents
Culture Documents
DATED: 13.11.2009
CORAM:
A.S. No.1157/1995
1.R.Rajaram
2.R.Rajagopal : Appellants
Vs.
T.R.Maheswaran : Respondent
Appeal filed against the Judgment and Decree dated 05.04.1995 made in
O.S.No.116/1991 on the file of the learned Subordinate Judge, Tindivanam.
J U D G M E N T
Introduction :
Whether a plaintiff who failed to deposit the balance sale consideration for a period of four years after
obtaining lodgment schedule from the trial Court to deposit the amount, which was a precondition for
instituting a suit for specific performance as per the Agreement entered into between the parties, and
made the trial Court to believe that such deposit was in fact made, can be said to be a person who was
always ready and willing to perform his part of the contract and entitled for an equitable remedy of
specific performance, is the core question to be decided in this first appeal.
2. Challenge in this first appeal is to the Judgment and Decree dated 05 April, 1995 in
O.S.No.116/1991 on the file of the learned Subordinate Judge, Tindivanam, whereby and whereunder a
Decree for specific performance was granted in favour of the respondent/ plaintiff.
3. The parties to this appeal are hereinafter referred to as plaintiff and Defendants as per their status
before the trial Court.
Background facts :
The Plaint :
4. The suit in O.S.No.116/1991 was instituted by the plaintiff against the Defendants praying for a
Decree of specific performance on the basis of the sale Agreement dated 29 June 1990 or in the
alternative, directing the Defendants to refund the advance consideration of Rs.1,60,000/ with interest
@ 18% termed as damages.
5. In the plaint in O.S.No.116/1991, plaintiff has interalia contended thus:
(a) The property described in the schedule to the plaint absolutely belongs to the defendants. They have
decided to sell the property to raise funds for their business. The plaintiff was ready and willing to
purchase the property and accordingly, after negotiation, defendants offered to sell the property for a
sum of Rs.1,75,000/. The said offer was accepted by the plaintiff and an agreement was entered into
on 29 June 1990. As per the said agreement, the plaintiff agreed to purchase the suit property for a total
consideration of Rs.1,75,000/ and a sum of Rs.1,50,000/ was paid as advance, the receipt of which
was duly acknowledged by the defendants. As per the terms and conditions of the agreement, the
balance amount of Rs.25,000/ has to be paid within one year and the plaintiff has to get the document
executed. It was further stipulated that in case the plaintiff fail to pay the balance sale consideration
and get the conveyance executed and registered within one year from the date of agreement, plaintiff
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would lose the advance and in case of failure on the part of the defendants to perform their part of the
contract, the plaintiff is at liberty to sue the defendants for specific performance of the agreement after
depositing the balance sale consideration and get the conveyance executed and recover possession of
the suit property through Court.
(b) Since the defendants were hard pressed for money, a further sum of Rs.10,000/ was paid on 15
July 1990 and in token of acceptance of the said amount, the defendants also issued a receipt cum
acknowledgment dated 15 July 1990. In the said receipt also, they have reiterated the terms and
conditions of sale. According to the plaintiff, he was ready and willing to perform his part of the
contract at all point of time. He was having sufficient funds to pay the balance sale consideration of
Rs.15,000/. Though repeated requests were made to the defendants to receive the balance
consideration and to execute the deed of conveyance, they were not prepared for the same. Therefore,
plaintiff was constrained to issue notice to the defendants through his lawyer on 05.04.1991. The said
notice was returned unserved which made the plaintiff to send a telegram on 26.04.1991 calling upon
the defendants to execute the sale deed after receiving the balance sale consideration. Though the
telegram was received by the defendants, there was no follow up action to register the sale deed. The
plaintiff was ready and willing to pay the balance consideration of Rs.15,000/ and to show the bona
fides, lodgment schedule was also filed along with the plaint for depositing the balance consideration
in Civil Court deposit. Accordingly, the suit was instituted for specific performance.
(c) Plaintiff has claimed an alternative relief of damages, as according to him, he would have earned at
least 18% from the date of payment, if he had invested the said amount in any approved financial
institution and in the event of the Court coming to a conclusion that he was not entitled to a decree of
specific performance, he should be given a decree to refund the advance consideration with interest at
the rate of 18% which was termed as damages.
The written statement :
6. Defendants on appearance before the trial Court filed their Written Statement. The material
contentions as found in the Written Statement would read thus :
a) It is true that an Agreement was entered into between the parties to sell the suit property for a sum of
Rs.1,75,000/. However, the plaintiff was not in a position to obtain the Sale Deed from the Defendants
by paying the balance sale consideration within the time stipulated in the Agreement. It was only on
account of the failure on the part of the plaintiff to pay the balance amount, the Sale Deed was not
executed. Since the default was on the part of the plaintiff, Defendants have not contributed for the
delay, and as such, plaintiff is not entitled for a Decree of Specific Performance. It was further
contended that they have not received the notice from the plaintiff. Since the plaintiff has committed
breach of contract, he is not entitled to get any kind of relief from the Court and accordingly, the
Defendants prayed for dismissal of the suit.
The Issues :
7. In accordance with the pleadings, the trial Court framed the following issues for consideration :
"1. Is it the plaintiff or the defendants who had violated the conditions in the sale agreement ?
2. Are the defendants liable to execute the sale deed after accepting the sale consideration ?
3. Are the defendants liable to repay Rs.1,60,000/ with interest at 12% to the plaintiff, as damages ?
4. To what relief, the plaintiff is entitled to ?"
Proceeding before Trial Court :
8. Before the trial Court, plaintiff was examined as PW1. Witness to the Agreement was examined as
PW2. Exs.A1 to A6 were marked on the side of the plaintiff. The first defendant was examined as
DW1 and they have also examined DW2 to prove the value of the suit property as on the date of the
Agreement as well as its present rate. However, no exhibits were marked on the side of the Defendants.
Judgment of the Judge :
9. Though specific performance is a discretionary remedy, and the plaintiff was bound to prove that he
was ready and willing to perform his part of the contract at all point of time, no specific issue to that
effect was framed by the trial Court.
10. The learned Trial Judge recorded the submissions made by the counsel for the plaintiff and the
Defendants. After recording the submissions advanced on the side of the plaintiff, the Court observed
that the submission of the counsel has to be accepted. However, there was no independent assessment
made by the learned Trial Judge with respect to the pleadings as well as evidence adduced on the side
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of the parties to come to a definite conclusion that the plaintiff was entitled to a Decree of Specific
Performance.
11. The learned Trial Judge by agreeing with the contentions raised on the side of the plaintiff,
observed that the Defendants could have given a reply to the telegram and the fact the Defendants have
not taken any steps to execute the documents proved that there was no merit in their contention that
non availability of the balance consideration with the plaintiff was the reason for the failure to execute
the document.
12. The counsel for the plaintiff also argued before the trial Court that as per the sale agreement
marked as Ex.A1, in case the Defendants failed to register the document, the plaintiff was permitted to
deposit the balance consideration before the trial Court and seek a Decree of Specific Performance.
According to the learned Counsel, the plaintiff has taken steps to deposit the amount before the trial
Court. The Trial Court accepted the said contention and indicated that deposit of the amount after
taking a challan from court shows the bonafides of the plaintiff. The learned Judge by accepting the
contention of the counsel for the plaintiff again made an observation that in view of Ex.A3 and A6
being notice and telegram respectively, it cannot be said that the plaintiff was not having the resources
to pay the balance consideration and accordingly, the contention raised by the counsel for the
Defendants to that effect was negatived. The Court ultimately observed that as per the evidence of PW
1 and PW2, and in the light of documents, Exs.A1 to A6, as well as the admission made by PW1
during his cross examination, it could be concluded that the plaintiff was entitled to a Decree for
Specific Performance. Accordingly, the suit was Decreed as prayed for and the Defendants were
directed to execute the Sale Deed after receiving the balance sale consideration. Since the main prayer
was granted, prayer for granting alternative relief was dismissed. The Trial Court also granted thirty
days time to the plaintiff to deposit the balance sale consideration. In short, the plaintiff was granted
the equitable remedy of Specific Performance. It is the said Judgment and Decree which is impugned
in the appeal at the instance of the Defendants.
Submissions :
13. The learned Counsel for the Defendants attacked the Judgment and Decree of the trial Court on the
following grounds :
"a) Plaintiff was not ready and willing to perform his part of the contract. This was proved by the
conduct of the plaintiff. There was no documents produced before the trial Court to substantiate the
contention that he was having sufficient funds to complete the transaction by tendering the balance
consideration.
b) The plaintiff has claimed damages in the plaint itself. Therefore, it was evident that he was more in
favour of getting an alternative remedy of damages than a decree for specific performance, and in such
circumstances, he is not entitled to the discretionary remedy of Specific Performance.
c) The Agreement was entered into in the year 1990. The property is situated in a prime locality at
Tindivanam and land value has gone up considerably during the interregnum and as such, specific
performance of the contract would give the plaintiff an unfair advantage over the defendants.
14. The learned Counsel for the plaintiff supported the Judgment and Decree of the trial Court. He also
contended that major portion of the consideration was already paid and as such, it cannot be said that
the plaintiff was not having sufficient money with him for payment of the balance consideration.
Similarly, the suit was also filed even before the expiry of the time granted in Ex.A1 and as such, it
cannot be said that there was undue delay in approaching the Court.
The core issues in this appeal :
15. The following points arise for consideration in the present appeal :
a) Whether the plaintiff was ready and willing to perform his part of the contract at all point of time?
b) Whether the plaintiff is entitled to the discretionary remedy of Specific Performance in the facts and
circumstances of this case ?
c) whether the plaintiff is entitled to the alternative remedy of refund of the advance consideration with
interest ?
Discussion :
16. The execution of the agreement dated 26.09.1990 as per Ex.A1 is not in dispute. Similarly, the
subsequent payment of Rs.10,000/ on 15.07.1990 and the execution of the document in Ex.A2 is also
admitted.
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17. The plaintiff has agreed to purchase the suit property on a total consideration of Rs.1,75,000/.
Terms and conditions of the agreement was reduced into writing. The said document was marked as
Ex.A1.
18. As per Ex.A1, plaintiff was bound to pay the balance consideration of Rs.25,000/ within one year
and to get the sale deed executed. It was also stipulated that in case plaintiff failed to pay the balance
consideration and get the sale deed executed in his favour, he would lose the advance consideration.
Similarly, in the event of the failure of defendants to execute the sale deed in spite of tendering the
balance consideration by the plaintiff, liberty was granted to the plaintiff to deposit the balance
consideration in Court and to file a suit for specific performance. Since the defendants were in dire
need of money, a further sum of Rs.10,000/ was paid by the plaintiff on 15.07.1990. Plaintiff has also
obtained a further agreement on 15.07.1990 as per Ex.A2 acknowledging the subsequent payment. In
Ex.A2, the terms and conditions of the sale was reiterated. It was also stated that plaintiff has to
produce the stamp papers and tender the balance sale consideration of Rs.15,000/ within the time
stipulated in Ex.A1 and in such an event, the document has to be registered by the defendants. There
was a further stipulation in Ex.A2 which was a reproduction of the conditions as found in Ex.A1. As
per the said condition, in case the defendants failed to register the document in spite of the readiness on
the part of the plaintiff to pay the balance sale consideration, plaintiff was given the right to deposit the
balance sale consideration before the Court and to file a suit for specific performance.
19. Though the balance sale consideration was only a sum of Rs.15,000/, and the defendants were in
dire need of money, which was indicated in Ex.A2 as well as in the plaint, no steps appears to have
been taken by the plaintiff to pay the balance sale consideration immediately and to get the sale deed
executed. It was only during the fag end of the time fixed for completion of the transaction, plaintiff
has sent the notice in Ex.A3 dated 05 April 1991 followed by telegram as per Ex.A6 dated 26 April
1991. According to the plaintiff, the telegram was received by the defendants, and even then, they have
not taken any action to conclude the sale. However, very strangely, the suit was filed two months after
the telegram and that too, just two days prior to the expiry of the time prescribed in Ex.A1 to conclude
the transaction.
20. Before the trial Court, plaintiff was examined as PW1 and during his evidence, he deposed that he
was a licensed pawn broker doing business at Tindivanam. He was also maintaining accounts of the
business transactions. It was the further evidence of PW1 that he was having documents to prove his
financial capacity to raise the sale consideration of Rs.1,75,000/ and as such, it cannot be said that he
was not having sufficient money for the purpose of payment of balance sale consideration.
21. The first defendant in his evidence as D.W.1 specifically stated that the plaintiff never approached
him or the second defendant to complete the transaction with the balance amount. D.W.1 maintained
that it was only the plaintiff who was at fault. D.W.1 expressly denied the contention raised on the side
of the plaintiff that he was doing finance business. According to D.W.1, plaintiff has no property much
less house property in Pondicherry or in Tindivanam. He was not doing finance business. In short, the
contention raised by the plaintiff with regard to his sound financial position was challenged by the
defendants.
22. Before the trial Court, it was the contention of the plaintiff that he was having sufficient funds with
him to pay the balance consideration and to get the sale deed executed. He also contended that in spite
of sending a notice as well as telegram to the defendants, they have not turned up to register the
document. The plaintiff attempted to project his bona fides by contending that the application for
lodgment schedule to deposit the balance sale consideration has already been filed in the Court which
shows that he has performed his part. The learned Trial Judge without making any attempt to find out
the bona fides in the contention, simply agreed with the views expressed by the learned counsel for the
plaintiff; and by way of a passing remark, observed that the learned counsel for the plaintiff was
perfectly correct in his submission that it was only the defendants who were not ready and willing to
perform their part of the contract, which was also substantiated by the fact that they have not taken any
steps to register the property even after receipt of notice as well as telegram.
23. Since the trial Court has not framed any issues with respect to the entitlement of the plaintiff to
obtain a decree of specific performance as well as his readiness and willingness at all point of time, the
said vital issue has to be considered in the first appeal.
24. The agreement in Ex.A1 was executed on 29.06.1990. Plaintiff paid a sum of Rs.1,50,000/ as
advance. The time limit for completion of the transaction was specifically mentioned in Ex.A1. The
defendants were in dire need of money and as such, a further sum of Rs.10,000/ was paid on
15.07.1990 and a receipt cum agreement was entered into on 15.07.1990, as per Ex.A2. In the said
document, there was a mention that the defendants were hard pressed for money. When the defendants
were eager to get the balance sale consideration, nothing prevented the plaintiff to pay the balance and
to get the sale deed executed immediately. Therefore, it is evident that the prescription of one year as
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the time for completion of the transaction was made only at the instance of the plaintiff. In case he was
having the entire sale consideration with him and as the defendants were in dire need of money, he
could have paid the balance sale consideration also and there was no need to wait for the stipulated
period of one year to complete the transaction. In Ex.A2 as well as in the plaint, there was a specific
statement about the financial difficulties faced by the defendants. Plaint also proceeds on the factual
basis that it was only to raise funds for the business, defendants have agreed to sell the property. When
it was their urgent necessity to raise funds for their business, the defendants would be eager to
complete the transaction at the earliest point of time. There was no necessity so far as the defendants
were concerned to fix such a longer time for completion of the transaction. It was also not the
contention of the plaintiff that the defendants were not having the title deeds with them for the purpose
of executing the sale deed and that was the reason for fixing a longer time for completion of the
transaction in spite of the fact that major portion of the sale amount has already been paid. Therefore,
the only possible conclusion that could be arrived at from the given facts is that the period of one year
was prescribed only at the instance of the plaintiff as he has to arrange the balance sale consideration.
25. The subsequent payment of Rs.10,000/ was made as early as on 15.07.1990 and that too within a
short time from the date of execution of Ex.A1. This shows the imminent need of the defendants for
money. Even after paying a sum of Rs.1,60,000/ plaintiff has waited till 05.04.1991 to send the notice
in Ex.A3 calling upon the defendants to receive the balance sale consideration and to execute the sale
deed. Even after issuing notice followed by telegram and knowing perfectly well that the defendants
were not coming forward to register the document, plaintiff has waited for about two months to file the
suit. In fact, the suit was filed just two days prior to the expiry of the time limit.
26. In Ex.A2, there was a specific recital that the plaintiff has to purchase stamp papers for the
purpose of executing the document. However, other than sending notice in Ex.A3 and telegram in
Ex.A6, there was nothing to show that the plaintiff has taken active steps for concluding the sale.
27. Plaintiff has stated in paragraph 5 of the plaint that he was always ready and willing to perform his
part of the contract. The fact that he has applied for issuance of challan along with the plaint was also
taken as a ground to prove his bona fides. However, even after obtaining a challan from the Court, he
has not deposited the money. In fact, deposit of the balance sale consideration in court was agreed to be
a precondition for instituting a suit for specific performance. The application for issuance of challan
was only to comply with the said mandatory condition. The non deposit of the amount even after the
order passed by the court shows the falsity of the case of readiness and willingness, as pleaded by the
plaintiff. Therefore, it is evident that he was not possessed of the balance consideration.
28. The defendants had in clear terms challenged the financial capacity of the plaintiff to pay the
balance sale consideration. According to them, plaintiff was not having the sufficient means, which
alone was the reason for delay. Though in his evidence PW1 stated that he was having substantial
property as well as money and that his accounts would show that substantial amount was with him, not
even a scrap of paper was produced before the Court to prove the contention. It cannot be said that the
plaintiff should be having cash with him at all point of time. However, when there was a serious
dispute raised by the defendants about the financial position of the plaintiff in the light of the period
prescribed in the agreement to complete the transaction, plaintiff should have produced sufficient
materials before the Court to substantiate his contention that he was always ready and willing to
perform his part of the contract.
29. Time agreed between the parties to perform the contract expired by 29.06.1991. The suit was
instituted on 27.06.1991 and on the very same day, plaintiff obtained a challan for deposit of a sum of
Rs.15,000/, being the balance sale consideration. However, no deposit was made. The amount was
deposited on 07.04.1995 by way of demand draft dated 06.04.1995. The deposit made on 07.04.1995
before the Court cannot be considered to be a valid deposit made during the currency of the agreement
and in pursuance of the agreement, and on the basis of the challan submitted on 27.06.1991. The
deposit made by way of demand draft dated 06.04.1995 was clearly out of time. The deposit made
subsequent to the decree does not satisfy the condition of predeposit of the balance amount before
filing the suit for specific performance.
30. Plaintiff who approached the Court with a pair of unclean hands was not entitled for an equitable
remedy. Plaintiff projected his case that he was always ready and willing to comply with the terms and
conditions of the sale agreement. He also contended that he has applied for challan to deposit the
balance sale consideration. During his evidence as PW1, it was further stated on oath that he has
applied for challan. The learned counsel for the plaintiff has also made his submission before the trial
Court that the plaintiff was ready and willing at all point of time, which was borne out by the fact that
he has obtained lodgment schedule to deposit the amount by way of challan. The trial Court also
proceeded on the basis that the plaintiff was always ready and willing, which was substantiated by the
fact that he has obtained a lodgment schedule. However, the fact remains that plaintiff has not
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deposited the amount though he has taken the challan. Therefore, there was a deliberate attempt on the
part of the plaintiff to mislead the Court.
Discretionary remedy of specific performance :
31. Remedy of specific performance is an equitable remedy. In Order to obtain such discretionary
relief, plaintiff has to come to the Court with clean hands. Entire facts of the case have to be pleaded.
There should be no attempt on the part of the plaintiff to conceal the facts. As a condition precedent for
obtaining a decree of specific performance, the plaintiff should comply with all the mandatory
conditions as incorporated in the sale agreement. When the sale agreement stipulates a precondition so
as to enable the plaintiff to obtain a decree of specific performance, the said condition has to be
complied with in its letter and spirit. There should be no attempt on the part of the plaintiff to mislead
the Court. Whether it be favourable or unfavourable, plaintiff was expected to disclose the entire
details of the transaction. The conduct of the plaintiff should be trustworthy. The course of conduct
adopted by the plaintiff should be fair and any suppression of material particulars would be treated as
unfair, which would disentitle him from obtaining the equitable remedy of specific performance.
32. Readiness and willingness on the part of the plaintiff to perform his part of the contract has to be
ascertained from the totality of circumstances. Mere reproduction of the wordings in Section 16(c) of
the Specific Relief Act is not enough. It is true that the plaintiff was not expected to maintain liquid
cash with him through out the agreement period to discharge the obligation cast on him as per the
agreement of sale. However, in cases wherein the very financial capacity of the plaintiff to pay the
balance sale consideration was under challenge, he was expected to produce some materials to show
his financial position and the availability of funds to honour the commitments made in the agreement
of sale.
33. Since the remedy of specific performance is a discretionary remedy on equitable grounds, plaintiff
has to produce materials with respect to his readiness and willingness at all point of time. The conduct
of the plaintiff assumes significance in a case like this. Court was expected to weigh the materials
produced by the plaintiff to come to a definite conclusion pertaining to the readiness and willingness to
perform the contractual obligation voluntarily undertaken by the plaintiff. Any action on the part of the
plaintiff to take undue advantage of the situation would give negative results and he would be denied
the equitable remedy. The conduct of the plaintiff throughout should be taken note of to decide the
issue regarding exercise of discretionary jurisdiction. In a matter relating to sale of property, Court was
not bound to grant specific performance for a mere asking.
34. When the agreement entered into between the parties contains a specified mechanism to redress
their grievances, and conditions to be complied with for exercising the said jurisdiction, it was
absolutely necessary to adhere to those conditions.
35. Agreement involved in this matter pertains to the sale of immovable property. The terms and
conditions were negotiated between the parties and an agreement was arrived at after consensus. As
per the agreed terms, plaintiff would forfeit the advance amount in case the balance amount was not
tendered and get the document registered after producing the necessary stamp papers. Similarly,
situation which would emerge on account of the failure of the vendor to register the document was also
foreseen by the parties. Accordingly, a condition regarding deposit of balance consideration and filing
a suit for specific performance was incorporated in the agreement.
36. It is true that in ordinary circumstances payment of the balance sale consideration was not a pre
condition for filing a suit for specific performance. However, in cases like the present one, when such a
condition was incorporated at the instance of both the parties, such conditions would be binding on the
parties. The Court is bound to examine such mandatory conditions when it has to decide as to whether
the purchaser should be given equitable relief of specific performance. The conditions regarding
payment of balance sale consideration for initiating action for specific performance was incorporated
only to ensure that the plaintiff was having the balance amount with him and it was not an offer in
paper to pay the balance sale consideration. In fact, the very cause of action for filing a suit for specific
performance would arise only on account of the failure of the vendor to register the document in spite
of tendering the balance amount and preparing the document in stamp papers. Therefore, the deposit of
balance sale consideration was an essential term of contract. The plaintiff was well aware of the
importance of the said condition and it was only on account of the said reason he has made an
averment in the plaint that he has applied for lodgment schedule to deposit the balance sale
consideration in Court. In fact, he has also applied for issuance of a lodgment schedule and the Court
was pleased to issue chalan on 27.06.1991 itself so as to enable the plaintiff to deposit the balance sale
consideration. However, there was no follow up action on the part of the plaintiff to deposit the
amount. The amount was deposited only on 07.04.1995 and that too in pursuance of the direction as
contained in the Judgment and Decree dated 05.04.1995. In fact, the factum of preferring an
application for issuance of lodgment schedule was taken as a pointer to show the bona fides of the
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plaintiff. Thrust of the argument of the learned counsel for the plaintiff before the trial Court was also
relating to the readiness and willingness on the basis of notice, telegram and the application for
lodgment schedule to deposit the amount. The learned Trial Judge without verifying as to whether the
amount was deposited in pursuance of such application for lodgment schedule was carried away by the
arguments of the learned counsel for the plaintiff and the factum of issuance of lodgment schedule was
also taken as a ground to come to a conclusion that the plaintiff was always ready and willing to
perform his part of the contract.
37. The conduct of the plaintiff would clearly show that he was making use of the lodgment schedule
as a piece of evidence to prove his continuous readiness and willingness. However, mere receipt of
lodgment schedule would not serve any purpose. If there was no condition to deposit the amount as per
the agreement entered into between the parties, there was no necessity to make deposit simultaneous
with institution of the suit for specific performance. Therefore, it was only in pursuance of the binding
contractual term as found in Ex.A1, plaintiff has applied for issuance of challan. However, the
plaintiff has conveniently omitted to note the fact that the mandatory provision as contained in Ex.A1
was for deposit of money before the trial Court simultaneous with the institution of suit for specific
performance and not making an application for issuance of challan without a follow up action to
deposit the balance consideration. The necessity to make the deposit before the Court along with the
suit assumes significance in the present case on account of the contention of the defendants that the
plaintiff was not having the balance sale consideration with him and that was the only reason for the
delay. There was no attempt made by the plaintiff to prove his financial capacity before the Court.
Plaintiff has not even produced his bank pass book or his account book to demonstrate his financial
position. He has not produced the license issued by the Government empowering him to do business as
a pawner. Therefore, other than the interested testimony of PW1, there was nothing before the Court to
come to a definite conclusion that the plaintiff was having necessary amount with him to perform his
part of the contract. The Demand Draft taken on 06.04.1995 and deposited before the Court on
07.04.1995 cannot be taken as proof to show that balance consideration was paid during the currency
of the agreement period as the time limit for payment of the balance sale consideration expired as early
as on 29.06.1991. Institution of civil suit would not operate as extension of time for payment of
balance sale consideration.
38. When the issue to be decided relates to the exercise of discretionary and equitable jurisdiction, the
terms of contract voluntarily agreed to between the parties had to be respected. The Court cannot
rewrite the terms of contract for the parties. Plaintiff was given liberty to file a suit for specific
performance subject to the condition of paying the balance sale consideration. Though the agreement
provides that deposit has to be made before instituting the suit for specific performance, the deposit
must at least be simultaneous with the institution of the suit. Non compliance of the mandatory
condition itself disentitles the plaintiff from obtaining an equitable remedy of specific performance.
39. The conduct of the plaintiff in this case was not above board. Plaintiff has not produced even a
scrap of paper to show his readiness to pay the balance amount at any point of time. He has not
purchased the stamp papers though it was a mandatory requirement as per Ex.A2. Probably, plaintiff
wanted to procure money from third parties. The fact that the amount was not deposited along with the
suit and ultimately it was deposited after the decree is a pointer towards that direction. In case he was
ready with the money, nothing prevented the plaintiff from making deposit after getting the challan
from the Court as early as on 27.06.1991.
40. It is true that as per the Lawyer's notice in Ex.A3 and the telegram in Ex.A6, plaintiff has shown
his desire to get the sale deed executed. However, the desire to get the document executed was not
followed by conduct. It was a mere desire on paper not accompanied by readiness and willingness to
tender the balance sale consideration and purchase of stamp papers for the purpose of concluding the
transaction. Mere desire to purchase the property was not sufficient. Plaintiff should be ready and
willing to perform his part of the contract. Desire should be translated into action. In fact, plaintiff was
having only the desire and not the money to conclude the contract.
41. The learned Trial Judge has adopted a very novel procedure. Failure on the part of the defendants
to register the sale deed in spite of Ex.A3 notice and Ex.A6 telegram were considered to be proof of
readiness and willingness on the part of the plaintiff. Remedy of specific performance being one in the
realm of equitable jurisdiction, the burden was clearly on the plaintiff to prove the positive facts of
readiness and willingness on his part. The defendants were not expected to prove the negative.
Therefore, failure on the part of the defendants to execute the sale deed in spite of notice and telegram
per se, was not sufficient to hold that the plaintiff was ready and willing to perform his part of the
contract.
42. The learned Trial Judge appears to have decreed the suit on the basis of the arguments advanced on
the side of the plaintiff with respect to the readiness and willingness as evident by Ex.A3 and Ex.A6
and the application for lodgment schedule to deposit the balance sale consideration. However, there
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was no attempt on the part of the trial Court to verify as to whether there was really any genuine
attempt made by the plaintiff to perform his part of the contract by tendering the balance sale
consideration and making everything possible to execute the document. The defendants were not in a
very good financial condition which was evident from the statement in Ex.A2. In fact, the plaintiff
was well aware of the poor financial condition of the defendants which made him to state expressly in
his plaint that the defendants were in dire need of money which made them to call upon him to pay a
further sum of Rs.10,000/ within one month from the date of execution of Ex.A1. Therefore, the
plaintiff was only making use of the pitiable condition of the defendants. The defendants were
consistent in their stand and there was no attempt on their part to avoid the contract. It is evident from
the agreement, pleadings and evidence tendered by PW1 and DW1 that the property was sold only for
the business purpose of the defendants and they were in urgent need of money. When the very property
was sold to meet out the financial crisis, it cannot be said that it was only the defendants who took one
year time to conclude the transaction. In case the plaintiff was having the balance consideration of
Rs.15,000/ with him, nothing prevented him from tendering the said amount on 15.07.1990 itself and
to get the document executed. Therefore, the only possible conclusion which could be drawn is that it
was only on account of the inability of the plaintiff to muster necessary funds, completion of the sale
was delayed. Contention of the plaintiff before the trial Court was to the effect that he has paid major
portion of the sale consideration and it was only a small portion which was kept as balance. The
contention of the learned counsel for the plaintiff before this Court was also the same. However, the
fact remains that it was only the plaintiff who was not having the balance sale consideration to
complete the sale. There is not even a whisper in the agreement or in the plaint as well as in the
evidence of PW1 to the effect that the condition relating to the period of one year was inserted only at
the instance of the defendants. Therefore, on a careful consideration of the entire factual matrix, I am
of the view that the plaintiff had miserably failed to prove that he was ready and willing to perform his
part of the contract.
43. In the first appeal, the Appellate Court is obliged to frame the points for consideration for deciding
the legality and correctness of the lower Court judgment. The Appellate Court is also bound to
consider the matter independently and to arrive at a conclusion. In the subject case, the learned Trial
Judge has not rendered any definite finding about the readiness and willingness on the part of the
plaintiff to perform his part of the contract. The learned Trial Judge has only recorded the submission
made by the learned counsel for the plaintiff pertaining to the readiness and willingness on the part of
the plaintiff on the basis of Ex.A3 and Ex.A6 and the lodgment schedule, and has given seal of
approval to the said argument by holding that the in action on the part of the defendants to execute the
sale deed after receiving the balance consideration was ample proof of the fact that the plaintiff was
ready and willing at all point of time. The said finding has no factual basis. In fact, the learned Trial
Judge attempted to decree the suit not on the basis of the positive case pleaded by the plaintiff but on
the basis of the alleged falsity of the case put forward by the defendants.
Legal principles on specific performance :
44. In N.P.Thirugnanam vs. R.Jagan Mohan Rao (Dr), (1995) 5 SCC 115, the legal position with
respect to the discretionary relief of specific performance was indicated by the Supreme Court thus :
"5.It is settled law that remedy for specific performance is an equitable remedy and is in the discretion
of the court, which discretion requires to be exercised according to settled principles of law and not
arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963 (for short the Act). Under
Section 20, the court is not bound to grant the relief just because there was a valid agreement of sale.
Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has
always been ready and willing to perform the essential terms of the contract which are to be performed
by him, other than those terms the performance of which has been prevented or waived by the
defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent
to grant 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 and
subsequent to the filing of the suit along with other attending circumstances. The amount of
consideration which he has to pay to the defendant must of necessity be proved to be available. Right
from the date of the execution till date of the decree he must prove that he is ready and has always been
willing to perform his part of the contract. As stated, the factum of his readiness and willingness to
perform his part of the contract is to be adjudged with reference to the conduct of the party and the
attending circumstances. The court may infer from the facts and circumstances whether the plaintiff
was ready and was always ready and willing to perform his part of the contract.
45. In Pukhraj D.Jain v. G.Gopalakrishna, (2004) 7 SCC 251, the Supreme Court held that not only
should there be an averment in the plaint that the plaintiff was ready and willing to perform his part of
the contract but surrounding circumstances must also indicate that the readiness and willingness
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continued from the date of contract till hearing the suit. The legal position was explained in the
following words :
"6.Section 16(c) of the Specific Relief Act lays down that specific performance of a contract cannot be
enforced in favour of a person who fails to aver and prove that he has performed or has always been
ready and willing to perform the essential terms of the contract which are to be performed by him,
other than terms the performance of which has been prevented or waived by the defendant.
Explanation (ii) to this subsection provides that the plaintiff must aver performance of, or readiness
and willingness to perform, the contract according to its true construction. The requirement of this
provision is that the plaintiff must aver that he has always been ready and willing to perform the
essential terms of the contract. Therefore, not only should there be such an averment in the plaint but
the surrounding circumstances must also indicate that the readiness and willingness continue from the
date of the contract till the hearing of the suit."
46. In Gobind Ram v. Gian Chand , (2000) 7 SCC 548, the discretionary jurisdiction of specific
performance was indicated by the Supreme Court thus :
"7.It is the settled position of law that grant of a decree for specific performance of contract is not
automatic and is one of the discretions of the court and the court has to consider whether it will be fair,
just and equitable. The court is guided by principle of justice, equity and good conscience. As stated in
P.V. Josephs Son Mathew the court should meticulously consider all facts and circumstances of the
case and motive behind the litigation should also be considered."
47. In K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1, petitioners before the Supreme Court entered
into an agreement with the respondent to sell their property. However, the sale was not concluded and
in the meantime, the property value in Madurai has increased tremendously. Trial Court had granted
the relief of specific performance and it was reversed by the High Court with an observation that the
plaintiff has been requesting for execution of the sale deed by the defendants. Before the Supreme
Court, the plaintiffs contended that time was not the essence of contract in the case of an immovable
property and as such, rise in price in the meantime cannot be a reason to reject the prayer for specific
performance. Supreme Court examined the entire issue in the light of the earlier decisions and
observed thus :
"11. ... May be, the parties knew of the said circumstance but they have also specified six months as the
period within which the transaction should be completed. The said timelimit may not amount to
making time the essence of the contract but it must yet have some meaning. Not for nothing could such
timelimit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where
time is not made the essence of the contract, all stipulations of time provided in the contract have no
significance or meaning or that they are as good as nonexistent? All this only means that while
exercising its discretion, the court should also bear in mind that when the parties prescribe certain time
limit(s) for taking steps by one or the other party, it must have some significance and that the said time
limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the
contract (relating to immovable properties).
48. In Sita Ram v. Radhey Shyam,(2007) 14 SCC 415 :: 2007 (11) Scale 626, the Supreme Court
indicated the necessity of examining the conduct of the person seeking the relief of specific
performance thus :
10.The basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking
benefit of the specific performance of contract must manifest that his conduct has been blemishless
throughout entitling him to the specific relief. The provision imposes a personal bar. The court is to
grant relief on the basis of the conduct of the person seeking relief. If the pleadings manifest that the
conduct of the plaintiff entitles him to get the relief on perusal of the plaint he should not be denied the
relief. (See Aniglase Yohannan v. Ramlatha and ors. [2005(7) SCC 534].
49. In Azhar Sultana vs. B.Rajamani and others, 2009(3) Scale 159, the salient features of Section
16(C) of the Specific Relief Act was considered by the Supreme Court and it was observed thus :
"17.Section 16(c) of the Specific Relief Act, 1963 postulates continuous readiness and willingness on
the part of the plaintiff. It is a condition precedent for obtaining a relief of grant of specific
performance of contract. The Court, keeping in view the fact that it exercises a discretionary
jurisdiction, would be entitled to take into consideration as to whether the suit had been filed within a
reasonable time. What would be a reasonable time would, however, depend upon the facts and
circumstances of each case. No hard and fast law can be laid down therefor.
The conduct of the parties in this behalf would also assume significance."
filed by the plaintiff was dismissed by the trial Court on the ground that the property was sold to a bona
fide purchaser for value without notice. The decree was confirmed in first appeal. In the further appeal
before the Division Bench, a finding was rendered to the effect that the plaintiff has not come to the
Court with clean hands. When the matter was taken up before the Supreme Court, it was found that
false contentions were raised by the plaintiff in the suit. The Supreme Court was of the view that
specific performance being an equitable relief, any party who comes to the Court with unclean hands
should be denied the remedy. The relevant paragraph would read thus:
"2.It is settled law that the party who seeks to avail of the equitable jurisdiction of a court and specific
performance being equitable relief, must come to the court with clean hands. In other words the party
who makes false allegations does not come with clean hands and is not entitled to the equitable relief."
51. In Umabai and another vs. Nilkanth Dhondiba Chavan (dead) by Lrs and another, 2005(6) SCC
243, necessity to produce some evidence to show that the plaintiff was in a position to arrange the
balance sale consideration was indicated by the Supreme Court thus :
"33. ... There must, thus, be some evidence to show that the plaintiff could arrange for the amount
stipulated for payment to the vendor as and when called upon to do so."
52. The necessity to approach the Court with clean hands in a suit for specific performance was
indicated by the Supreme Court again in Mohammadia Coop. Building Society Ltd. v. Lakshmi
Srinivasa Coop. Building Society Ltd.,(2008) 7 SCC 310 thus :
"71. Grant of a decree for specific performance of contract is a discretionary relief. There cannot be
any doubt whatsoever that the discretion has to be exercised judiciously and not arbitrarily. But for the
said purpose, the conduct of the plaintiff plays an important role. The courts ordinarily would not grant
any relief in favour of the person who approaches the court with a pair of dirty hands."
53. In Pushparani S. Sundaram v. Pauline Manomani James,(2002) 9 SCC 582, the readiness and
willingness within the meaning of Section 16(c) of Specific Relief Act, was considered by the Supreme
Court and it was observed thus:
"5. ... So far these being a plea that they were ready and willing to perform their part of the contract is
there in the pleading, we have no hesitation to conclude, that this by itself is not sufficient to hold that
the appellants were ready and willing in terms of Section 16(c) of the Specific Relief Act. This requires
not only such plea but also proof of the same. Now examining the first of the two circumstances, how
could mere filing of this suit, after exemption was granted be a circumstance about willingness or
readiness of the plaintiff. This at the most could be the desire of the plaintiff to have this property. It
may be for such a desire this suit was filed raising such a plea. But Section 16(c) of the said Act makes
it clear that mere plea is not sufficient, it has to be proved."
54. The Supreme Court in G.Jayashree v. Bhagwandas S. Patel,(2009) 3 SCC 141, indicated the
concept of discretionary jurisdiction thus :
"32. The civil courts, in the matter of enforcement of an agreement to sell, exercise a discretionary
jurisdiction. Discretionary jurisdiction albeit must be exercised judiciously and not arbitrarily or
capriciously. A plaintiff is expected to approach the court with clean hands. His conduct plays an
important role in the matter of exercise of discretionary jurisdiction by a court of law.
55. In a recent judgment reported in 2009(13) Scale 457 (A.K.Lakshmipathy (dead) and Ors. vs. Rai
Saheb Pannalal H.Lahoti Charitable Trust and Ors.), the Supreme Court indicated the basic
requirement for obtaining a decree of specific performance thus :
"Next is the question whether the appellants were ready and willing to complete their part of the
agreement. It is well settled that in a suit for specific performance of a contract for sale, it has to be
proved that the plaintiff who is seeking for a decree for specific performance of the contract for sale
must always be ready and willing to complete the terms of the agreement for sale and that he has not
abandoned the contract and his intention is to keep the contract subsisting till it is executed".
56. In M/s.Ramnath Publications Pvt. Ltd rep. By its Managing Director and another Vs. A.R.Madana
Gopal and others, a Division Bench of this Court referred to the judgments rendered by the Supreme
Court pertaining to Section 16(c) of Specific Relief Act and observed thus :
"36. From the above decisions, it would be quite clear that in order to satisfy the requirements of
Section 16(c) of the Specific Relief Act, mere plea though specifically made in the suit for specific
performance, that the plaintiffs were ready and willing would not be sufficient. But, that must be
proved by acceptable evidence. In the instant case, even the statement of PW1 in the box that the
plaintiffs were all along ready and willing to perform their part of the contract by paying the balance of
convenience would not be sufficient."
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57. In Lakshmipathy case cited supra, the Supreme Court observed that the best evidence for readiness
and willingness was the factum of payment of balance consideration before agitating the matter for
specific performance. It reads thus :
"In order to show that the appellants were all ready and willing to perform their part of their obligation
to complete the agreement was to bear the remaining amount of the contract and then agitate the matter
for specific performance before the Court. This was also the view expressed by this Court in Chand
Rani vs. Kamal Rani (Supra) wherein this Court held that if the final ultimatum by the seller has been
given for payment of balance amount then the best thing for the purchasers is to pay the amount and
then take appropriate steps". (emphasis supplied).
58. The learned counsel for the plaintiff placed reliance on the judgment of the Supreme Court in
Balasaheb Dayandeo Naik (Dead) through Lrs. And ors. vs. Appasaheb Dattatraya Pawar, 2008(1)
CTC 530 in support of his contention that the prayer for refund of earnest money as an alternative
claim would not disentitle the plaintiff from claiming a decree of specific performance.
59. There is no dispute with respect to the said legal position. The contention raised by the learned
counsel for the defendants that in view of quantification of damages by the plaintiff, he was disentitled
from seeking a relief of specific performance has no legal sanction. It is trite that the claim for
alternative relief of damages would not disentitle the plaintiff from seeking the relief of specific
performance.
Findings in a nutshell :
(a) On Readiness and willingness :
60. The following points would show that the plaintiff was not ready and willing to perform his part of
the contract :
(a) Recitals in Ex.A2 and the plaint averments proceeds on the footing that the defendants were hard
pressed for money. However, time limit for concluding the sale was stipulated as one year. There was
nothing to be done on the part of the defendants to complete the transaction except signing the sale
deed. There was no attempt at the instance of the plaintiff to pay the balance sale consideration,
purchase of stamp papers and preparation of sale deeds.
(b) Notice in Ex.A3 was issued on 05.04.1991 and it was followed by telegram in Ex.A6 dated
26.04.1991. Defendants have not come forward to register the document even after receiving the
telegram. Therefore, the plaintiff was sure that the defendants were not prepared to execute the sale
deed. However, the suit was filed after a period of two months and that too just two days prior to the
expiry of time prescribed for performing the contract.
(c) As per Ex.A1 and Ex.A2, while instituting the suit for specific performance, plaintiff has to
deposit the balance sale consideration in Court. However, no such deposit was made in spite of
obtaining a challan for making deposit.
(d) In Ex.A2, it was specifically stated that the plaintiff has to tender the balance sale consideration,
purchase the stamp papers and prepare the document and then call upon the vendor to execute the
document. However, the stamp papers were not purchased at any point of time.
(e) Though it was stated in Ex.A3 and Ex.A6 that the plaintiff was ready and willing to perform his
part of the contract, there was no follow up action to tender the balance sale consideration. The
remaining amount of sale consideration was deposited only after the decree.
(f) Though it was stated in the evidence of PW1 that he was having sufficient funds to pay the balance
sale consideration, not even a scrap of paper was produced to show his financial capacity.
(g) The application for issuance of lodgment schedule was made on the basis of a recital in Ex.A1 and
Ex.A2 which was an essential term of contract. However, even after obtaining the challan from the
Court on 27.06.1991, plaintiff failed to deposit the amount.
(b) On failure to approach with clean hands:
61. The following factors would indicate that the plaintiff has not come to the Court with clean hands
and as such, he was not entitled to the discretionary relief of specific performance :
(i) In the plaint, it was stated that the plaintiff approached the defendant on many occasions to conclude
the sale. It was further stated that even after the issuance of Ex.A3 notice and Ex.A6 telegram, the
plaintiff contacted the defendants and called upon them to conclude the sale. However, not even a
single date was mentioned as to the particular day on which the plaintiff approached the defendants
personally. The cause of action paragraph in the plaint also does not contain any averment with respect
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to the meeting between the plaintiff and the defendants for the purpose of concluding the agreement
both prior to Ex.A3 and Ex.A6 and subsequently. Therefore, it was a false representation made with
an intention to obtain the equitable relief.
(ii) In the plaint, it was stated that to prove the readiness and willingness, he has applied for lodgment
schedule to deposit the balance sale consideration in Court. Accordingly, challan was issued by the
Court on 27.06.1991. There was a direction to pay the amount in Court deposit as per the Order passed
by the trial Court. However, the amount was not deposited.
(iii) PW1 deposed before the trial Court that he was ready and willing at all point of time and the
factum of filing application for lodgment schedule was taken as an element of proof to substantiate his
contention. However, he has not disclosed before the Court that the amount was not deposited in spite
of the issuance of challan by the Court. The said fact was not within the knowledge of the defendants
and as such, undue advantage was taken by the plaintiff making use of the ignorance of the Court as
well as the defendants with respect to nondeposit.
(iv) In Ex.A1 and Ex.A2, there was a clear recital that before filing a suit for specific performance,
the plaintiff has to deposit the balance sale consideration. However, while drafting the plaint, the
essential term which was inserted as a condition precedent for obtaining the relief of specific
performance was deliberately omitted.
(v) The conduct of the plaintiff was not unblemished and his attempt was to obtain a decree by
suppression of material particulars.
(vi) The trial Court was made to believe that the balance sale consideration was deposited and
accordingly, the same was taken as a ground to prove the bonafides of the plaintiff.
Statutory bar under Section 16 of the Act :
62. Section 16 of the Specific Relief Act contains illustrations with respect to cases wherein specific
performance of contract cannot be enforced in favour of a person. As per Section 16(b), specific
performance of a contract cannot be enforced in favour of a person who has become incapable of
performing, or violates any essential term of the contract. Therefore, in case the plaintiff was guilty of
violation of a material term of contract, the said fact was a bar for granting the relief of specific
performance. In the case on hand, there was a specific recital in Ex.A1 and Ex.A2 to the effect that
for obtaining the relief of specific performance, the plaintiff has to deposit the balance sale
consideration before the trial Court along with the suit. The said condition was an essential term of
contract. The plaintiff was well aware of the said condition which made him to make a statement in the
plaint to the effect that he has applied for lodgment schedule to deposit the amount. The plaintiff has
also obtained a challan for depositing the amount as per the Order passed by the trial Court on
27.06.1991. However, the amount was not deposited for reasons best known to the plaintiff. Therefore,
he has violated the essential term of contract which would disentitle him from obtaining a decree of
specific performance. Therefore, the bar, as contained under Section 16 is attracted in the present case.
63. The factual matrix as explained above clearly shows that the plaintiff was guilty of suppression of
material facts and he has not come to the Court with clean hands. Plaintiff has also violated the
essential term of contract. While deciding the question as to whether the plaintiff was entitled to the
discretionary remedy of specific performance, trial Court was bound to consider the terms and
conditions of sale agreement and more particularly, the term which gives cause of action to file the suit
for specific performance. Therefore, the only possible conclusion is that the plaintiff was not ready and
willing to perform his part of the contract and that he has not come to the Court with clean hands and
therefore, he is disentitled from claiming a decree for specific performance. Accordingly, the point
Nos.1 and 2 are decided against the plaintiff and in favour of the defendants.
64. The third point relates to the alternative remedy of refund of the advance amount with interest.
Alternative prayer :
65. Though the primary relief claimed by the plaintiff was a decree of specific performance, he has
quantified damages and an alternative decree for refund with interest was claimed.
66. According to the plaintiff, he would have earned at least 18% p.a. from the date of agreement, if he
had invested the advance amount in any approved financial institution. Though the plaintiff is not
entitled for the equitable remedy of specific performance of agreement, the fact remains that he has
parted with a sum of Rs.1,50,000/ on 29.06.1990 and another sum of Rs.10,000/ on 15.07.1990.
Defendants have also confirmed the factum of such payment. Section 21 of the Specific Relief Act,
1963 provides for awarding compensation in certain cases. Therefore, the plaintiff is entitled to the
refund of the amount with appropriate interest. There was nothing indicated in the written statement
filed by the defendants as to whether interest claimed was excessive. Therefore, I am of the view that
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the plaintiff is entitled to a decree for refund of Rs.1,60,000/ with interest @ 18% from the date of
plaint till the date of realization.
Disposal :
67. In the result, the judgment and decree dated 05.04.1995 in O.S.No.116/1991 on the file of the
learned Subordinate Judge, Tindivanam is set aside. The prayer for granting a decree of specific
performance is rejected. The plaintiff is granted the alternative decree for refund of the advance
amount with simple interest @ 18% p.a. from the date of plaint till the date of realization.
68. The appeal is allowed as indicated above. No costs.
tar To
1. The Subordinate Judge, Tindivanam
2. The Section Officer, V.R. Section, High Court, Madras
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