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Petitioner: Smt. INDIRA KAUR And Others VS Respondent: Shri SHEO LAL KAPOOR
Court Name: Supreme Court of India Judge(s): N. D. Ojha, M. P. Thakkar Title: Smt. INDIRA KAUR And Others vs Shri SHEO LAL KAPOOR Case No.: Civil Appeal No.3131 of 1984 Date of Judgment:1988-03-28 Reported As: 1989 MLD 2420 Result: Appeal allowed
JUDGMENT
JUDGMENT M.P. THAKKAR, J.--The widow and legal heirs of the original plaintiff may be pardoned for their cynicism having lost the property as well as the bread winner who committed suicide on losing his meritorious matter at all levels. 2. A poor person (original plaintiff) owned a small house property in Bambagher, Ramnagar, district Nainital. His son was taken ill. He did not have sufficient liquid resources to enable him to incur the necessary expenditure for treating his ailing son. He thereupon entered into a transaction with the original defendant who was a resident of the same place on August 16, 1967. The essential features of the transaction were:- (1) Plaintiff executed a document pertaining to ostensible sale of the property in question for a consideration of Rs.7,000 favouring the defendant. (2)On the same day a contemporaneous document was executed by the defendant in favour of the plaintiff agreeing to sell the property in question for a sum of Rs.7,000 within 10 years of the date of the execution of the aforesaid document. (3)The possession of the property remained with the original plaintiff and he was to pay Rs.80 per month as rent. (4)The Municipal and other taxes in respect of the property were to be paid by the plaintiff. It appears that while the sum of Rs.7,000 so raised was expended in the treatment of his son by the plaintiff it was of no avail inasmuch as the son died of the ailment notwithstanding expensive treatment given to him. Nearly 10 years passed. The deadline for getting the sale-deed executed from the defendant on the expiry of 10 years in pursuance to the agreement of sale was approaching fast. According to the plaintiff he personally contacted the defendant and made a
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number of requests to the defendant to fulfill his obligation by executing the sale deed. But the defendant refused to honour his commitment. Five days before the deadline that is to say on 11-8- 1977 he sent to the defendant who was residing at Ramnagar itself a notice through his Advocate by Registered Post calling upon him to execute the sale deed in his favour as stipulated in the agreement of sale dated August 16, 1967. He had also sent a local telegram on 11-8-1977 calling upon the defendant to remain present at the Office of the Sub-Registrar on August 16, 1977 (deadline was 16-8-1977). The defendant did not reply to either of these notice. The defendant never conveyed in writing to the plaintiff that he was ready and willing to convey the property to the plaintiff to discharge the obligation undertaken by him by the agreement to sell either in response to the registered notice sent through the Advocate or the local telegraphic notice sent on 11-8-1977, five days before the deadline. He maintained complete silence. On the crucial date the plaintiff remained present at the Sub Registrar's office and made an application to the Sub- Registrar to make a record of the fact that he was so present. The defendant, such is the version of the plaintiff, did not care to attend the Sub-Registrar's office though the plaintiff was present throughout the day. On the next day, after the date of the deadline that is to say on 17-8-1977, the defendant sent a local telegram to the plaintiff to the effect that he had remained present at the office of the Sub Registrar, but that the plaintiff had remained absent. Some one year later the plaintiff instituted the suit culminating in the present appeal seeking specific performance of the agreement to sell the property in question for Rs.7,000. In the plaint the plaintiff set out the circumstances pertaining to the transaction and asserted that it was a transaction of mortgage. The real intention of the parties was to create a mortgage but an ostensible transaction of sale was entered into and a contemporaneous agreement for selling the property to the plaintiff was executed by the defendant. However the relief sought was for a decree for specific performance of the agreement of 1967 to sell for Rs.7,000. The plaintiff asserted that he had made oral requests, sent a registered notice, a telegraphic notice, and had remained present at the Sub---Registrar's office for the whole day. The defendant in his written statement did not specifically controvert these averments made in the plaint. He rest content by saying in regard to each of these averments that the same was `not admitted'. The most important feature of the written statement is that the defendant nowhere asserted that he had gone to the Sub-Registrar's office and had remained present there at on 16-8-1977. His main defence was to the effect that the plaintiff had no funds and he was not ready and willing to perform his obligation. 3. The trial Court came to the conclusion that the plaintiff did not have adequate funds to purchase the property. The trial Court did not record a specific finding on the question as to whether or not the defendant had remained present at the Sub-Registrar's office in pursuance to the requisition made by the plaintiff by the registered notice and by the local telegram five days in advance. The trial Court dismissed the plaintiff's suit holding that the plaintiff could not have been possessed of Rs.7,000 on the deadline stipulated for performance mainly on the ground that the was a poor person who could be earning Rs.200 or so per month and could not have made any saving and that he had not produced his passbook (which he was never called upon to produce by the other side or by the Court). The Lower Appellate Court and the High Court successively dismissed the appeal preferred by the unsuccessful plaintiff on the same pattern of reasoning. The plaintiff having committed suicide m the wake of the judgment of the High Court, his widow and legal representatives have approached this Court by the present appeal by special leave. 4.The questions debated by the parties in this appeal are:- (1)Whether the transaction was really one of mortgage though apparently of sale in form? (2)Whether time was of the essence of the contract? (3)Whether it was the plaintiff who had committed breach by not being ready and willing to perform his part of contract or whether it was the defendant who had committed a breach of
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contract by refusing to convey the property in question to the plaintiff in pursuance to the agreements to sell executed by him in favour of the plaintiff? Was it a transaction of mortgage or one of outright sale? 5. There is no manner of doubt that the transaction in question was one of mortgage in essence and substance though it was clothed in the garb of a transaction of ostensible sale. The factors adumbrated hereinunder leave no room for doubt on this score:-- (1)The sale-deed was for a sum of Rs.7,000. So also the agreement which could be enforced at any time within 10 years was also for an identical sum of Rs.7,000. If the defendant wanted to purchase an immovable property for the sake of investment would he have agreed to convey the very same property, for the same amount even after ten years. In the first place he would have lost the advantage of appreciation in value of the property resulting in 10 years let alone erosion of his investment on account of inflation. In the second plaice he would not have been able to sell, mortgage, gift or will away the property for 10 years as the obligation to convey it to the plaintiff within ten years for the very same amount was annexed to the property and he could have dealt with his property in any of the aforesaid modes only subject to this obligation. Why should he have locked up his funds in such a manner? (2)The stipulated period for conveying the property was a very long period of ten years. The very length of the period is suggestive of a transaction of mortgage and not a transaction of absolute sale with a stipulation to recovery the property is such peculiar circumstances, bearing on the relationship between the parties or some other relevant consideration. (3)If he wanted to purchase the property for his personal occupation, why should he have allowed the plaintiff to continue as a tenant on payment of Rs.80 p.m. Which worked out to 13-1/2% interest on the sum of Rs.7,000. (4)Admittedly the property was never mutated to the name of the plaintiff (defendant). If he had become an absolute owner, why should be not have got the property mutated to his own name? It is not even his case that he had ever applied for mutation.. The fact that he allowed the property to remain standing in the name of the vendor-plaintiff tells its own tale. (5)The obvious reason for entering into such a transaction of ostensible sale coupled with a contemporaneous agreement to sell within ten years was that if it was not garbed with this paraphernalia and was given the nomenclature of a mortgage the period of redemption would have been 30 years. This period could not have been curtailed without attracting the doctrine of clog on equity of redemption. This was obvious reason for resorting to this device. These factors clearly spell out the real intention of the parties that it was a transaction of mortgage to secure the sum of Rs.7,000 at approximately 13--1/2% interest. But then it is not necessary to examine this dimension of the matter inasmuch as the plaintiff has not prayed for redemption though in the plaint an averment has been made that the real intention of the parties was to create a mortgage. As the plaint stands, and as the plaintiff himself has preferred to enforce the agreement for specific performance, it is not necessary to examine the question as to whether or not the real nature of the transaction was mortgage though it was given an appearance of a transaction of a sale. For the same reason we need not examine the question as to whether or not section 58(c) of the Transfer of Property Act would have disabled the plaintiff from claiming the relief of redemption on the basis that the real intention of the parties was to create a mortgage and not an absolute sale coupled with an agreement for reconveyance. This question will have to be dealt with at an appropriate time having regard to the fact that there is an increasing tendency in recent years to I enter into such transactions in order to deprive the debtor of his right of redemption within the prescribed period of limitation. In fact very often the mortgagee in place of getting a mortgage deed executed in lieu of a loan obtains an agreement to sell in his favour from the mortgagor so as to bring pressure on the mortagor by seeking to enforce specific performance
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to enable the mortgagee to obtain possession of the property for an amount smaller than the real value of the property. We need not however probe the matter any further for the purpose of disposing of the present appeal for the reasons stated earlier. Was time of the essence of the contract? 6. It is remarkable that the defendants has not even made an assertion in the written statement or in his evidence to the effect that time was of the essence of the contract and yet the Courts below have so concluded. It is not the case of the defendant that time was made the essence of the contract by giving an intimation to this effect to the vendee. The law is well-settled that in transactions of sale of immovable properties, time is not the essence of the Contract. The Courts below have in holding so held exactly contrary to the law declared by this Court in unambiguous terms in the following passage in Govind Prasad Chaturvedi v. Hari Dutt Shastri (1977) 2 SCR 877: AIR 1977 SC 1005 the facts wherein were almost on all fours with the facts of the present case:-- "Apart from the normal presumption that in the case of an agreement of sale of immovable property time is not the essence of the contract and the fact that the terms of the agreement do not unmistakably state that the time was understood to be the essence of the contract neither in the pleadings nor during the trial the respondents contended that time was of the essence of the contract. In the plaint the allegation was that the appellant has always been ready and willing to perform his part of the contract and he did all that he was bound to do under the agreement while the respondents committed breach of the contract. The respondents did not set up the plea that the time was of the essence of the contract. In paragraph 32 of the Written Statement all that was stated was that the appellant did not perform his part of the contract within the stipulated time and that the contract thereafter did not subsist and the suit is consequently misconceived. The parties did not go to trial on the basis that time was of the essence of the contract for no issue was framed regarding time being the essence of the contract. Neither is there any discussion in the judgment of the trial Court regarding this point. The trial Court after considering the evidence came to the conclusion that appellant was always ready and willing to perform his part of the contract while the respondents were not. In the circumstances therefore the High Court was in error setting as one of the points for determination whether time was of the essence of the contract. The High Court after referring to the agreement was of the view that the agreement was entered into between the parties during the course of a litigation between the appellant and the respondents and in pursuance of the agreement the parties were directed to withdraw their cases and were directed further not to take fresh legal steps during the period of two months within which the sale- deed was to be executed. On taking into account the circumstances of the case and the conduct of the parties of serving on each other notices, counter-notices and telegrams the High Court inferred an intention on the part of the parties to treat the time as of essence to the contract. We will refer to the terms of the contract and the correspondence between the parties in due course but at this stage it is sufficient to state that neither the terms of the agreement nor the correspondence would indicate that the parties treated time as of essence of the contract. In fact according to the agreement the sale deed ought to have been executed by the 24th May but it is the admitted cases that both the parties consented to have the document registered on the 25th May. On the question whether the time is of the essence of the contract or not we are satisfied that the High Court was in "error in allowing the respondents to raise this question in the absence of specific pleadings or issues raised before the trial Court and when the case of time being the essence of the contract was not put forward by the respondents to the trial Court. Apart from the absence of pleadings we do not find any basis for the plea of the respondents that the time was of the essence of the contract." Whether or not time was of the essence of the contract would have also to be judged in the context and circumstances of the case. In a given case the vendor can go away from his usual place of
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residence or business or go abroad without leaving his address. If time were to be treated as the essence in such a contract the rightful claim of the vendee could always be defeated by going away at the material time so that the vendee could not enforce his claim. Reliance was placed by the learned counsel for the defendants on the majority view in Shanmugam Pillai v. Annalakshmi Animal AIR 1950 FC 38 and on two High Court judgments (i) AIR 1972 Raj 250, (ii) AIR 1974 Born. 136 wherein the principle laid down in the aforesaid decision has been followed. In Shanmugam Pillai's case (supra) the Federal Court has by majority judgment taken the view that the reciprocal promise was made by way of a 'concession and that the compliance with the reciprocal obligation could be secured strictly with the stipulated time frame. In the present case having regard to the facts and circumstances highlighted in the course of the discussion pertaining to the question as to whether or not the transaction was a transaction of mortgage having regard to the real intention of the parties it would be difficult to hold that the agreement to sell executed by the defendant in favour of the plaintiff was by way of a concession: It was a transaction entered into by the defendant who was a hard-headed businessman and the documents in question have been carefully framed in legal terminology taking into account the relevant provisions of law. The transaction also discloses the awareness of the defendant about section 58(c) of the Transfer of Property Act as is evident from the fact that the reconveyance clause is not embodied is the sale deed itself. In the agreement to sell, no reference has been made to the transaction of sale though it has been executed contemporaneously. The defendant who has permitted the plaintiff to continue in possession on payment of rent equivalent of about 13-1/2% interest and was evidently aware of all the dimensions of the matter would not have granted any concession or executed the agreement by way of a concession. The agreement was executed evidently because the plaintiff would not have executed the sale--deed unless an agreement to sell by a contemporaneous document was also executed to enable the plaintiff to enforce specific performance within ten years. It was therefore a transaction entered with open eyes by the defendant and there was no question of granting any concession. Even so it is not necessary to examine the matter in depth or at length for it is not considered necessary to rest our decision on this point. We have referred to the debate which has entered on this issue and made observations called for by the circumstances of the case, but we do not propose to rest our decision in this matter on this aspect. Hence it is unnecessary to examine the question any further. Whether it was the plaintiff who had committed breach by not being read and willing to perform his part of contract or whether it was the defendant who had committed a breach of contract by refusing to convey the property in question to the plaintiff in pursuance to the agreement to sell executed by him in favour of the plaintiff? 7. A last ditch effort has been made to press the argument to the utmost stretchable limit by contending that the question as to who was not prepared to perform his part of the contract, the plaintiff or the defendant, is essentially a question of fact and that having regard to the concurrent finding recorded by the High Court, the exercise to re-examine the issue on the basis of the evidence on record should not be undertaken at this level. Particularly in the context of the fact that this is an appeal by special leave under Article 136 of the Constitution o India. There are many answers to this argument. Article 136 of the Constitution of India does not forge any such fetters expressly. It does not oblige this Court to fold its hands and become a helpless spectator even when this Court perceives that a manifest injustice has been occasioned. If and when the Court is satisfied that great injustice has been done it is not only the `right' but also the `duty' o this Court to reverse the error and the injustice and to upset the finding notwithstanding the fact that it has been affirmed thrice. There is no warrant to import the concept of the conclusiveness of divorce on the utterance of `Talaq' thrice in interpreting the scope of the jurisdiction of this Court under Article 136. It is not the number of times that a finding has been reiterated that matters. What really
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matters is whether the finding is manifestly an unreasonable, and unjust one in the context of evidence on record. It is no doubt true that this Court will unlock the door opening into the area of facts only sparingly and only when injustice is perceived to have been perpetrated. But in any view of the matter there is no jurisdictional lock which cannot be opened in the face of grave injustice. This view has been taken in Variety Emporium v. Muhammad Ibrahim Naina, (1985) 1 SCC 251: A 1 R 1985 SC 207 to which one of us (Thakkar, J.) was a party. The relevant passage in the words of Chandrachud, C.J. May be quoted with advantage: "It cannot be overlooked that three Courts have held concurrently in this case that the respondent has proved that he requires the suit premises bona fide for his personal need. Such concurrence undoutedly, has relevance on the question whether this Court should exercise its jurisdiction under Article 136 of the Constitution to review a particular decision. That jurisdiction has to be exercised sparingly. But that cannot possibly mean that injustice must be perpetuated because it has been done three times in a case. The burden of showing that a concurrent decision of two or more courts or tribunals is manifestly unjust lies on the appellant. But once that burden is discharged, it is not only the right but the duty of this Court to remedy the injustice. Shri Tarkunde, who appears for the respondent, argued that this may lead and, in practice, does lead to different standards being applied by different Courts to find out whether a concurrent decision is patently illegal or unjust. That, in the present dispensation is inevitable. Quantitatively, the Supreme Court has a vast jurisdiction which extends over matters as far apart as Excise to Elections and Constitution to Crimes. The Court sits in Benches and not enhance, as the American Supreme Court does. Indeed, even if the entire Court were to sit to hear every one of the eighty thousand matters which have been filed this year, a certain amount of individuality in the response to injustice cannot be avoided. It is a well known fact of constitutional history, even in countries where the whole Court sits to hear every case, that the composition of majorities is not static. It changes from subject to subject though perhaps not from case to case. Personal responses to injustice are not esoteric, Indeed, they furnish refreshing assurance of close and careful attention which the judges give to the cases which come before them. We do not believe that the litigating a lie will refer a computerised system of administration of justice only that the Chancellor's foot must tread warily." (Emphasis added) 8. On carefully perusing the pleadings and the evidence and also the findings recorded by the Courts below, we are fully satisfied that the trial Court was entirely in error in recording a finding adverse to the appellant plaintiff on the ground that the plaintiff was not ready and willing to perform his part of the contract. The finding is contrary to the evidence and is palpably unreasonable. Two serious errors have been committed in reaching this conclusion. The first error which has been committed is that of drawing an adverse inference against the plaintiff as to whether plaintiff had the means to pay the amount of Rs.7,000 being the consideration stipulated in the agreement to sell. The plaintiff has stated that in January, 1977 he had collected the requisite amount. He had borrowed a sum of Rs.3,000 from his brother and a sum of Rs.2,000 from his brother-in-law and he had the rest in cash. He stated that he had deposited a sum Rs.8,000 in the Bank. The defendant did not enquire from the plaintiff either the name of the Bank in which he had deposited the amount or whether he had any passbook in respect of the said Bank Account. Nor was the plaintiff called upon to produce the passbook either by the defendant or by the Court, at the instance of the defendant or on its own. Even so the trial Court recorded a finding against the plaintiff on this point, as under:-- "Amar Dass P.W. 1 has though stated that he arranged a sum of Rs.3,000 from his brother Attar Chandra and Rs.2,000 from his brother-in-law Ishwar Das and he has saved a sum of Rs.4,000 thus he had arranged a sum Rs.8,000 for execution of the sale-deed and deposited the same in the Bank but he had not filed any passbook to show it satisfactorily that he had arranged a sum of
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Rs.8,000 before 16-8-197'7 and that the said money was in deposit in his account in the bank on 16- 8-1977 or before it..:" "Fourthly, it is urged that the respondents did not produce any accounts even though their case was that accounts were maintained and that Dasekhi Singh used to give maintenance allowance to the widows who were missing separately. It is urged that adverse inference should be drawn from the fact that accounts were not produced by the respondent and that if they had been produced that would have shown payment…
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