N.P. Thirugnanam (D) by LRs. v. Dr. R. Jagan Mohan Rao

A buyer who agreed to buy a house in Madras sued for specific performance (a court order to carry out the contract). Two courts held that he was never ready and willing to perform his side. The Supreme Court dismissed his petition. It said readiness and willingness must continue from the agreement until the decree, and the court judges it from the buyer's conduct and the circumstances.

Quick Revision

Read the full judgment: Indian Kanoon (unofficial copy)

Parties

N.P. Thirugnanam (D) by LRs. — petitioners in the Supreme Court; the legal representatives of the dead plaintiff, who had agreed to buy the house.

Dr. R. Jagan Mohan Rao and others — respondents; the first respondent entered the agreement for himself and, as General Power of Attorney holder, for his mother, brothers and sisters.

Procedural History

1. The plaintiff filed a suit for specific performance of the agreement of sale. He said the respondents had evaded executing the sale deed.
2. After evidence, the single Judge of the High Court found that the plaintiff was not ready and willing to perform his part. He gave several reasons.
3. In OSA No. 195/83, the Division Bench dismissed the appeal by judgment dated 3 January 1985.
4. The plaintiff died on 26 December 1994. By then the arguments in the appeal were heard and judgment was reserved. His counsel filed a Memorandum under Order 22 Rule 11-A of the Code of Civil Procedure and asked for time to bring the legal representatives on record. The court declined.
5. The legal representatives filed a special leave petition. The Supreme Court dismissed it on 12 July 1995.

Facts

1. The plaintiff agreed to buy a house property in Madras city for Rs 2,30,000. He did so for himself and on behalf of his mother, brothers and sisters, as General Power of Attorney holder.
2. He paid Rs 10,000 as advance. Until the sale deed was executed, he took possession as a tenant at Rs 1,650 per month rent.
3. The agreement (Ex. P.1) was dated 9 April 1979.
4. He sued for specific performance, saying the respondents evaded executing the sale deed.
5. The respondents pleaded that they were ready and willing to perform their part. They said the plaintiff did not pay the further Rs 20,000 advance, by December 1979, to discharge the mortgage debt due to the Madras Corporation. That Rs 20,000 was adjusted towards rent by consent.
6. The trial Judge pointed out that on the defendants' application the plaintiff was directed by an order dated 11 February 1991 to deposit Rs 2,00,000 or furnish a bank guarantee by 11 March 1991. He did neither.
7. The plaintiff was dabbling in real estate business. He held a house on a hire purchase agreement with the T.N. Housing Board. He paid only Rs 7,750 up to 1980, and Rs 29,665 was still payable.
8. He had an agreement with one Annamma Philip for Rs 49,500 to sell that house after buying it from the Board. He got a sale deed in his favour and sold it to her on 7 February 1980.
9. He could not pay his loans. He adjusted Rs 20,000 towards arrears of rent. He paid only Rs 1,975 under Ex. P.30 towards the sale consideration of his house.
10. He was unable to pay the rent to the respondents. He deposited a huge amount towards arrears of rent under court orders.
11. PW-2 said he was willing to lend Rs 2,00,000 to the plaintiff on a promissory note. But he did not have cash. He admitted he would have to raise Rs 2,00,000 by pledging his property.
12. The plaintiff knew of the death of Dr. R. Surya Rao and that his interest passed to the first defendant, his mother, brothers and sisters. The Division Bench said the circumstances noticed by the single Judge show that the plaintiff made the agreement with the first defendant alone only to get into the property somehow. The stipulated rent was also not paid.

Issues Raised

1. Is the decree of dismissal against the dead plaintiff-appellant a nullity?
2. Was the plaintiff always ready and willing to perform his part of the contract, as Section 16(c) of the Specific Relief Act, 1963 requires?
3. Is the High Court's finding of fact open to interference by special leave?

Arguments Contended

For the petitioners (legal representatives of the plaintiff):

• The first ground in the SLP is that the decree of dismissal against the dead plaintiff-appellant is a nullity.
• The plaintiff was always ready and willing to perform his part of the contract. Counsel relied strongly on the evidence of PW-2, who testified he was willing and prepared to lend Rs 2,00,000 to the plaintiff on a promissory note.
• The plaintiff need not keep the money ready in hand. What matters is that he had the capacity to raise the funds. PW-2's evidence showed this.

For the respondents: the order does not record separate arguments by the respondents in the Supreme Court. It records their pleadings in the suit: they were ready and willing, and the plaintiff did not pay the further advance of Rs 20,000.

Court's Reasoning

The judgment is a short order with no numbered paragraphs. K. Ramaswamy, J. delivered it for the Bench of two Judges (Ramaswamy and Hansaria, JJ.). Steps follow the order of the judgment. Each ends with the judge's name.

K. Ramaswamy, J. (order of the Bench)

1. Noted: The petitioners are the legal representatives of the plaintiff. He agreed to buy the Madras house for Rs 2,30,000, paid Rs 10,000 and took possession as a tenant at Rs 1,650 per month. The respondents pleaded that they were ready and willing and that the plaintiff did not pay the further Rs 20,000 by December 1979 (Ramaswamy, J.).
2. Noted: The single Judge found the plaintiff not ready and willing, for several reasons. The Division Bench dismissed the appeal in OSA No. 195/83 on 3 January 1985 in a well considered judgment (Ramaswamy, J.).
3. Noted: The first ground in the SLP is that the decree of dismissal against the dead plaintiff-appellant is a nullity (Ramaswamy, J.).
4. Noted: The plaintiff died on 26 December 1994, when the arguments were already heard and judgment reserved. Counsel filed a Memorandum under Order 22 Rule 11-A and asked for time to bring the legal representatives on record. The court declined (Ramaswamy, J.).
5. Noted: The Court quotes Rule 6 of Order 22. It says that, notwithstanding the foregoing rules and whether or not the cause of action survives, there is no abatement by reason of the death of either party between the conclusion of the hearing and the pronouncement of the judgment. The judgment may be pronounced notwithstanding the death, with the same force and effect as if pronounced before the death (Ramaswamy, J.).
6. Held: Because of the explicit language of Rule 6 of Order 22, there can be no abatement by the death of a party between the conclusion of the hearing and the pronouncement of the judgment. The contention that the appellate court's judgment and decree is a nullity is devoid of substance (Ramaswamy, J.).
7. Noted: It is next contended that the plaintiff was always ready and willing. Counsel relied strongly on PW-2, who said he was willing to lend Rs 2,00,000 on a promissory note. It is not necessary that the plaintiff keep the money ready in hand. What is material is that he has the capacity to raise the funds and is ready and willing, which the petitioners said PW-2's evidence showed (Ramaswamy, J.).
8. Held: The Court did not accede to that contention (Ramaswamy, J.).
9. Why: The trial Judge had pointed out several facts. The plaintiff did not deposit Rs 2,00,000 or give a bank guarantee as directed by the order of 11 February 1991 (Ramaswamy, J.):
   • He was dabbling in real estate business and held a house on hire purchase from the T.N. Housing Board. He paid only Rs 7,750 up to 1980, and Rs 29,665 was still payable.
   • He had an agreement with Annamma Philip for Rs 49,500 to sell the house after buying it. He sold it to her on 7 February 1980 after getting a sale deed in his favour.
   • He entered the agreement (Ex. P.1) on 9 April 1979 to buy the suit house for Rs 2,30,000. He could not pay his loans and adjusted Rs 20,000 towards arrears of rent.
   • He paid only Rs 1,975 under Ex. P.30 for the sale consideration of his own house.
   • He could not pay the rent to the respondents and deposited a huge amount towards arrears under court orders.
   • PW-2, though professing willingness to advance Rs 2,00,000, did not have cash. He admitted he would have to raise it by pledging his property and yet was willing to lend it on a promissory note. This was hard to believe.
10. Held: The trial Judge and the Division Bench took these circumstances into consideration in concluding that the plaintiff was not ready and willing to perform his part (Ramaswamy, J.).
11. Noted: It is settled law that the remedy of specific performance is an equitable remedy within the court's discretion. The discretion must be exercised according to settled principles of law and not arbitrarily, as Section 20 of the Specific Relief Act, 1963 provides (Ramaswamy, J.).
12. Held: Under Section 20 the court is not bound to grant the relief just because there was a valid agreement of sale (Ramaswamy, J.).
13. Held: Section 16(c) of the Act envisages that the plaintiff must plead and prove that he performed, or has always been ready and willing to perform, the essential terms of the contract that are to be performed by him. This excludes terms whose performance has been prevented or waived by the defendant (Ramaswamy, J.).
14. Held: 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 the court must consider it when granting or refusing the relief. If the plaintiff fails to aver or prove it, he must fail (Ramaswamy, J.).
15. Held: To judge whether the plaintiff is ready and willing, the court must consider his conduct before and after filing the suit, along with other attending circumstances. The amount of consideration he has to pay must of necessity be proved to be available (Ramaswamy, J.).
16. Held: From the date of the execution until the date of the decree, he must prove that he is ready and has always been willing to perform his part. The court may infer from the facts and circumstances whether the plaintiff was always ready and willing (Ramaswamy, J.).
17. Held: In view of the factual findings and the legal position, the High Court rightly concluded that the plaintiff hopelessly failed and showed reluctance rather than readiness. The Court quotes the Division Bench's reasons (Ramaswamy, J.):
    • He was at no time ready with money or resources to fulfil his part of the contract.
    • The single Judge's other circumstances showed that the aim of entering into the agreement with the first defendant alone, though the plaintiff knew of the death of Dr. R. Surya Rao and the devolution of his interest, was somehow to enter the property. The stipulated rent was also not paid.
    • The trial court noted that the defendants had no legal necessity to part with the suit property. It held that the contract was speculative in nature, made by a plaintiff dabbling in real estate with no means to buy a substantial immovable property.
18. Held: The finding is well supported by the facts and circumstances. Being a finding of fact, the Court saw no infirmity in the judgment that warranted granting leave. The special leave petition is dismissed (Ramaswamy, J.).

B.L. Hansaria, J.

The heading lists Hansaria, J. on the bench. The order gives no separate opinion by him. K. Ramaswamy, J. delivered the order.

Authorities

The order names no decided cases. It relies on these provisions only:

• Order 22 Rule 11-A, Code of Civil Procedure: the memorandum of death filed by the plaintiff's counsel.
• Order 22 Rule 6, Code of Civil Procedure: no abatement by death after the hearing and before judgment. Quoted in full.
• Section 20, Specific Relief Act, 1963: discretion of the court to decree specific performance.
• Section 16(c), Specific Relief Act, 1963: the plaintiff must aver and prove he performed, or has always been ready and willing to perform, the essential terms.

Also cited in footnotes: the order has no footnotes.

Judgement

1. The special leave petition is dismissed.
2. The dismissal of the special leave petition leaves the Division Bench's judgment of 3 January 1985 in place.
3. The order does not state any order as to costs.

Legal Principle / Ratio

A plaintiff who sues for specific performance must plead and prove, under Section 16(c), that he has always been ready and willing to perform his part. The court judges it from his conduct before and after the suit and the attending circumstances, and he must prove the money was available from the agreement until the decree. The key holding: The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance.

Critical Analysis

Analysis based on the judgment text.

• The order is short and decides the case on findings of fact. It says the finding of fact needs no interference.
• The order says it is not necessary to keep the money in hand. It also says the amount to be paid must be proved to be available. It does not say how the two points fit together.
• The order does not discuss how Order 22 Rule 6 applies if the legal representatives are never brought on record. It treats the point as covered by the plain words of the Rule.

Significance

• The order states the rule that readiness and willingness must be shown from the date of the agreement until the date of the decree.
• It ties the rule to Section 16(c) and to the equitable discretion under Section 20.
• It shows the kinds of conduct the court looks at: orders to deposit, other dealings, payment of rent and whether a willing lender's evidence is believable.

Exam-Important Points

• Rule first: under Section 16(c) the plaintiff must plead and prove he has always been ready and willing. If he fails to aver or prove it, he must fail.
• Readiness and willingness must be shown from the date of the agreement until the date of the decree.
• The court judges it from his conduct before and after filing the suit and the other circumstances. The consideration must be shown to be available.
• Specific performance is an equitable remedy. The court is not bound to grant it just because there is a valid agreement.
• Trap: the plaintiff need not keep the money in hand, but he must have the capacity to raise it. A willing lender who has no cash does not prove this.
• Order 22 Rule 6: the death of a party after the hearing and before judgment does not abate the suit. The judgment is not a nullity.

Prepared from the full text of the judgment. The judgment has no numbered paragraphs, so passages are cited by judge. The citation shown is as printed in the source copy.