08 Jun 2121

If the property is susceptible to partition and vendors are competent to enter into a contract on their own, then, there is no impediment in enforcement of the contract qua the vendors who are sue juris - Bombay High Court

Case : G. Premjee Trading Private Limited v. Abdul Kader Haji Noormohammed and Ors. Suit No. 1754 of 1994

Court : Bombay High Court

Bench : Justice N. J. Jamadar

Decided on : 08 Jun 2121

Relevant Statutes

Rule 5 of Order VIII & Order XXXII of the Civil Procedure Code, 1908.

Section 230A, Chapter XXC-Sections 269UD & 269UL (3) of the Income Tax Act, 1961.

Section 55(6) (b) of the Transfer of Property Act,1882.

Section 16(c) of the Specific Relief Act, 1963.

Brief Facts and Procedural History

1. The defendant Nos. 1 to 6 executed an agreement dated 26.06.1993 to sell the suit premises to the plaintiff for a consideration of Rs. 4 crores subject to compliance of the provisions contained in Chapter XXC of the Income Tax Act, 1961. The defendant Nos. 4 to 6 were minor on the date of the execution of the suit agreement and, thus, defendant No. 2 being their mother executed the suit agreement on their behalf in the capacity of their natural guardian.

2. It was agreed that the consideration of Rs. 4 crores to be paid in three instalments. The contingency of the agreement was that the defendants would get vacant the suit premises from the persons who were in occupation of its different portions, on the plaintiff depositing a sum of Rs. 45 lakhs with the solicitors of the defendants.

3. The plaintiff claimed that he had complied with his part of the contract and was and has always been ready and willing to perform its part of the contract. However, the defendants willfully neglected and failed to perform their part of the obligation, including making out of a marketable title and obtaining possession from the persons who were in occupation of the portions of the suit premises. Hence, the plaintiff filed the present suit for the specific performance of the contract.

4. The suit was resisted by the defendants on the ground that defendant nos. 4 to 6 were minors and so the agreement was void ab initio as defendant no. 2 had no competence to convey the interest of the minors. Further, the plaintiff was never ready and willing to perform his part of the contract.

The Issues of the Case

Whether defendant No. 2 was legally competent to enter into a contract to sell the interest of the defendant Nos. 4 to 6 in the suit premises?

Whether time was the essence of the contract?

Whether Plaintiff was ready and willing to perform his part of the contract?

The Observations of the Court

1. The Honourable Bombay High Court observed that under the Mohammedan Law, the legal guardianship of the property of the minor is vested only in the father or grandfather. The father and grandfather are further entitled to appoint a person as the executor by will and, in that case, such executor becomes the legal guardian. However, the plaintiff failed to produce any cogent evidence to prove that defendant no.2 who is the mother of defendant nos.4 to 6 was appointed as an executrix. Therefore, the suit agreement is void qua the interest of defendant nos. 4 to 6.

2. The Honourable Bombay High Court explained that the suit agreement remains enforceable qua the interest of the defendant nos. 1 to 3 as the property is susceptible to partition and the defendant nos. 1 to 3 are competent to enter into a contract on their own.

3. Pertaining to the 2nd issue, the Honourable Bombay High Court observed that as per clause 3 of the contract, the sale was to be completed within two weeks after the appropriate authority under the Income Tax Act, 1961, clear the proposal. However, a mere stipulation of time in the agreement for sale for the performance of the contract is not the be-all and end the matter. In the case of Govind Prasad Chaturvedi vs. Hari Dutt Shastri and Anr., (1977) 2 SCC 539, the Supreme Court held that it is settled law that the fixation of the period within which the contract has to be performed does not make the stipulation as to the time the essence of the contract. When a contract relates to the sale of the immovable property it will normally be presumed that time is not the essence of a contract.

4. The Honourable Bombay High Court thereafter noted that reading the suit agreement as a whole, it becomes explicitly clear that the delivery of the vacant possession of the suit premises was the prime condition of the completion of sale. The stipulation of time for performance of the contract was thus made conditional to and dependent upon the vendors obtaining the delivery of the vacant possession of the entire suit premises and the parties were open to the possibility of extending time if the vendors fail to vacant the premises within three months. Therefore, time was not the essence of the present suit agreement.

5. Pertaining to 3rd issue, the court observed that the condition put by the plaintiff that the defendants should obtain a clear and vacant portion of the suit premises before the sum of Rs. 45 Lakhs is released to them is contrary to the terms of the suit agreement and does not reflect readiness on his part, when in fact, the amount of Rs.45 Lakhs was to be used by the defendants to vacant possession of the suit premises.

The Decision Hed by the Court

1. The Honourable Bombay High Court held that the Plaintiff is not entitled to relief of specific performance against the defendant Nos. 1 to 3 qua their respective right, title and interest in the suit premises. The suit stands partly decreed. The claim for a refund of the earnest amount stands allowed.

2. The defendant Nos. 1 and 3(in her individual capacity and in the capacity of the legal representative of defendant No.2) and Nos. 4 to 6 (in the capacity of the legal representatives of defendant No. 2) shall pay to the plaintiff the sum of Rs. 60 lakhs along with simple interest @ 10% p.a. from 26th June 1993 till realization.

3. There shall be a charge over the suit premises, to the extent of defeated Nos. 1, 2 and 3’s interest in the suit premises until the realization of the aforesaid amount of Rs. 60 lakhs along with interest accrued thereon and such charge shall stand automatically vacated if the amount is deposited by the defendants or realized.

4. The amount of Rs. 45 lakhs deposited in this Court by M/s. Lao Charter along with interest accrued thereon be paid to the plaintiff.

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