# SMT. KATTA SUJATHA REDDY & ANR v. SIDDAMSETTY INFRA PROJECTS PVT. LTD.& ORS

- **Citation:** [2022] 17 S.C.R. 416
- **Court:** Supreme Court of India
- **Decided:** 2022-08-25
- **Case number:** Civil Appeal No. 5822 of 2022
- **Bench:** N. V. Ramana, Krishna Murari, Hima Kohli
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/smt-katta-sujatha-reddy-anr-v-siddamsetty-infra-projects-pvt-ltd-ors-35519
- **Pages:** 35

## Headnote

Specific Performance - Limitation Act, 1963 - Article 54 -
Limitation period for Specific Performance - Specific Relief Act,
1963 - ss. 10, 12 - Appellant herein (Purchaser) entered into an
agreement with the Respondents herein (Vendors) in 1997 to
purchase two stretches of land, and paid 90% of total amount by
cash and cheque - Remaining 10% was to be paid within 3 months
as per clause 3 of the agreement, which was defaulted by the
appellant - However, appellant sent two notices to the respondents
in 2000 and 2002 seeking performance of the agreement by agreeing
to deposit the balance sale consideration - Thereafter, appellant
filed a suit seeking specific performance in 2002 - Trial court
dismissed the suit holding that it was barred by limitation - Appellant
approached High Court - High Court held that the trial Court erred
in making the distinction between time fixed for payment of sale
consideration and time for performance of contract - Further, held
that the purchaser was ready and willing to perform his contract,
and through his acts, proved his bonafides by already paying 90%
of the sale consideration within the stipulated period and by later
depositing the balance amount in court - Also held that amended
Section 10 of the Specific Relief Act, which provides that specific
performance shall be enforced by courts subject to conditions
mentioned, shall apply retrospectively and therefore benefit the
appellent - HC partly allowed the appeal and directed the resondents
to register the suit property in favour of the appellant to the extent
of the amount paid by the appellant, i.e., 90% of the total sale
consideration, within a period of 3 months - Aggrieved, both
appellant and respondents approached this Court - Held: Fixed
time period was mandated by Clause 3 of the agreement and
accordingly, the suit filed by the purchaser was clearly barred by
[2022] 17 S.C.R. 416
416
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limitation in view of the provision provided under Article 54 of the
Limitation Act - Amended Section 10 of the Specific Relief Act
brought by the amendment of 2018 was not mere procedural
enactment, rather it had substantive principles built in it and thus,
the same would not apply retrospectively - As far as entitled to the
relief of specific performance is concerned, it is clear that the
purchaser did not voluntarily adhere to the time stipulation under
the contract - In order to bypass the condition of time being the
essence, the purchaser invoked the standard of good faith - Unless
such duty is expressly stipulated, good faith standard cannot be
implicitly read into any contract - Prior to 2018 amendment, general
standard of good faith to imply broader good faith obligations
cannot be accepted to give a go-by to the explicit conditions for
maintaining the sanctity of contract - Such broad standards will
have potentially far-reaching consequences - The purchaser was
not ready or willing to perform his part of the contract within the
time stipulated and accordingly, specific performance cannot be
granted for the entire contract - There is no doubt that the claim of
appellant is hit by delay and laches on their part as they did not
take appropriate measures within the stipulated time and filing of
the suit was delayed by almost five years - Thus, no relief can also
be granted to the appellant u/s. 12 of the Specific Relief Act -
Respondents directed to repay the deposited amount with interest.
Disposing of the appeals, the Court
HELD:
1. The vendors were entitled to rescind the contract as
there was a breach of condition, i.e, 'time was the essence'.
Coming back to the point of limitation, it is clear that Article 54
of the Limitation Act mandates that in this case at hand, the date
fixed for payment of consideration was three months from the
date of the agreements (i.e. 26.03.1997 and 27.03.1997). In any
case, the time period for filing the suit had commenced from 26/
27.6.1997 and would have expired after three years, i.e., in the
e

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SMT. KATTA SUJATHA REDDY & ANR.
v.
SIDDAMSETTY INFRA PROJECTS PVT. LTD.& ORS.
(Civil Appeal No. 5822 of 2022)
AUGUST 25, 2022
[N. V. RAMANA, CJI, KRISHNA MURARI AND
HIMA KOHLI, JJ.]
Specific Performance - Limitation Act, 1963 - Article 54 -
Limitation period for Specific Performance - Specific Relief Act,
1963 - ss. 10, 12 - Appellant herein (Purchaser) entered into an
agreement with the Respondents herein (Vendors) in 1997 to
purchase two stretches of land, and paid 90% of total amount by
cash and cheque - Remaining 10% was to be paid within 3 months
as per clause 3 of the agreement, which was defaulted by the
appellant - However, appellant sent two notices to the respondents
in 2000 and 2002 seeking performance of the agreement by agreeing
to deposit the balance sale consideration - Thereafter, appellant
filed a suit seeking specific performance in 2002 - Trial court
dismissed the suit holding that it was barred by limitation - Appellant
approached High Court - High Court held that the trial Court erred
in making the distinction between time fixed for payment of sale
consideration and time for performance of contract - Further, held
that the purchaser was ready and willing to perform his contract,
and through his acts, proved his bonafides by already paying 90%
of the sale consideration within the stipulated period and by later
depositing the balance amount in court - Also held that amended
Section 10 of the Specific Relief Act, which provides that specific
performance shall be enforced by courts subject to conditions
mentioned, shall apply retrospectively and therefore benefit the
appellent - HC partly allowed the appeal and directed the resondents
to register the suit property in favour of the appellant to the extent
of the amount paid by the appellant, i.e., 90% of the total sale
consideration, within a period of 3 months - Aggrieved, both
appellant and respondents approached this Court - Held: Fixed
time period was mandated by Clause 3 of the agreement and
accordingly, the suit filed by the purchaser was clearly barred by
[2022] 17 S.C.R. 416
416
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limitation in view of the provision provided under Article 54 of the
Limitation Act - Amended Section 10 of the Specific Relief Act
brought by the amendment of 2018 was not mere procedural
enactment, rather it had substantive principles built in it and thus,
the same would not apply retrospectively - As far as entitled to the
relief of specific performance is concerned, it is clear that the
purchaser did not voluntarily adhere to the time stipulation under
the contract - In order to bypass the condition of time being the
essence, the purchaser invoked the standard of good faith - Unless
such duty is expressly stipulated, good faith standard cannot be
implicitly read into any contract - Prior to 2018 amendment, general
standard of good faith to imply broader good faith obligations
cannot be accepted to give a go-by to the explicit conditions for
maintaining the sanctity of contract - Such broad standards will
have potentially far-reaching consequences - The purchaser was
not ready or willing to perform his part of the contract within the
time stipulated and accordingly, specific performance cannot be
granted for the entire contract - There is no doubt that the claim of
appellant is hit by delay and laches on their part as they did not
take appropriate measures within the stipulated time and filing of
the suit was delayed by almost five years - Thus, no relief can also
be granted to the appellant u/s. 12 of the Specific Relief Act -
Respondents directed to repay the deposited amount with interest.
Disposing of the appeals, the Court
HELD:
1. The vendors were entitled to rescind the contract as
there was a breach of condition, i.e, 'time was the essence'.
Coming back to the point of limitation, it is clear that Article 54
of the Limitation Act mandates that in this case at hand, the date
fixed for payment of consideration was three months from the
date of the agreements (i.e. 26.03.1997 and 27.03.1997). In any
case, the time period for filing the suit had commenced from 26/
27.6.1997 and would have expired after three years, i.e., in the
end of June 2000. [Para 35][434-B-C]
2. The purchaser has contended that the legal notice issued
by them on 31.03.2000, would be sufficient to get past the bar of
limitation, as the purchaser has paid the advance amount to a
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY
INFRA PROJECTS PVT. LTD.
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large extent. Although this argument seems to be very attractive
at first blush, the same cannot be sustained in the eyes of the law
for the reason that when a condition of a contract is breached and
the consequences ensue for that breach, a party cannot claim
equity to escape such consequences. In this context, this Court
notes that Article 54 of the Limitation Act provides for two
consequences based on the presence of fixed time period of
performance. It is only in a case where the time period for
performance is not fixed that the purchaser can take recourse to
the notices issued and the vendors' reply thereto. In the case at
hand, the aforesaid circumstances do not come into play as a fixed
time period was clearly mandated by Clause 3 read with Clause
23 of the agreements to sell, as explained above. [Paras 36 and
37] [434-D-F]
3. In light of the above, this Court notes that the suit filed
by the purchaser was clearly barred by limitation in view of the
first part of Article 54 of the Limitation Act and no amount of
payment of advance could have remedied such a breach of
condition. [Para 38][434-F-G]
4. This Court does not subscribe to the aforesaid reasoning
provided by the High Court for the simple reason that after the
2018 amendment, specific performance, which stood as a
discretionary remedy, is not codified as an enforceable right which
is not dependent anymore on equitable principles expounded by
judges, rather it is founded on satisfaction of the requisite
ingredients as provided under the Specific Relief Act. For
determination of whether a substituted law is procedural or
substantive, reference to the nature of the parent enactment may
not be material. Instead, it is the nature of the amendments which
determine whether they are in the realm of procedural or
substantive law. [Para 45][436-D-E]
5. Having come to the conclusion that the 2018 amendment
was not a mere procedural enactment, rather it had substantive
principles built into its working, this Court cannot hold that such
amendments would apply retrospectively. [Para 51][438-G]
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6. It is clear that when a substantive law is brought about
by amendment, there is no assumption that the same ought to be
given retrospective effect. Rather, there is a requirement for the
legislature to expressly clarify whether the aforesaid amendments
ought to be retrospective or not. [Para 53][440-C]
7. In the case at hand, the amendment act contemplates
that the said substituted provisions would come into force on
such date as the Central Government may appoint, by notification
in the Official Gazette, or different dates may be appointed for
different provisions of the Act. It may be noted that 01.10.2018
was the appointed date on which the amended provisions would
come into effect. [Para 55][440-F]
8. This Court does not have any hesitation in holding that
the 2018 amendment to the Specific Relief Act is prospective
and cannot apply to those transactions that took place prior to its
coming into force. [Para 56][440-G]
9. It was necessary that the purchaser should have taken
immediate steps to complete the transaction and if such steps
were immediately completed then the purchaser would have a
clear right for seeking enforcement for 3 years reckoned from
the last date decided for completion of the contract. [Para 59][442D-E]
10. It is clear that the purchaser did not voluntarily adhere
to the time stipulation under the contract. In order to by-pass
the condition of time being the essence, the purchaser invoked
the standard of good faith. Aforesaid standard prescribes a higher
duty of care for parties entering into a contract. Unless such duty
is expressly stipulated, good faith standard cannot be implicitly
read into any contract. [Para 65][444-D]
11. This Court does not subscribe to acceptance of a general
standard of good faith to imply broader good faith obligations only
to give a go-by to the explicit conditions for maintaining the
sanctity of contract. Such broad standards will have potentially
far reaching consequences. This Court agrees that such an
implicit reading would come into play post the 2018 Amendment
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY
INFRA PROJECTS PVT. LTD.
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to the Specific Relief Act which enables specific performance of
contracts to uphold their sanctity. However, from the facts and
circumstances of this case, we cannot accept that such higher
standards of good faith was relevant. [Para 66][444-E-F]
12. It is clear that Section 16(c) of the Specific Relief Act
would only come into force if the purchaser was ready and willing
to perform the contract within the three month period prescribed
under Clause 3 of the agreements. The aforesaid conclusion is
also bolstered by the fact that specific performance can only be
granted when essential terms of contract are not violated in terms
of Section 16(b). [Para 68][444-G-H]
13. This Court does not think that it is an appropriate case
for granting relief to the purchaser in terms of Section 12 of the
Specific Relief Act, 1963 as the claim of the purchaser is barred
by delay, laches and limitation. [Para 78][449-E]
14. This Court is of the firm opinion that the contract was
breached due to the conduct of the plaintiff/purchaser, who were
not willing to perform the contract after entering into a time
sensitive agreement. In any case, it is an admitted fact that plaintiff
had paid only part consideration. Though there is a forfeiture
clause in the agreement, this Court with a view of rendering
complete justice between the parties, deems it appropriate to
direct the vendors/appellants to repay the said amount with
interest @ 7.5% p.a. from the date such payment was made by
the purchaser to the vendors, till the entire amount is paid back.
We further direct the vendors to pay the entire amount to the
credit of the suit account within six months from the date of receipt
of a copy of the order. [Para 79][449-E-G]
Chand Rani (dead) by Lrs. v. Kamal Rani (dead) by Lrs.
(1993) 1 SCC 519 : [1992] 3 Suppl. SCR 798;
Whiteley Limited v. Hilt
(1918) 2
K.B. 808;
Shyam Sunder and Others (2001) 8 SCC 24: [2001] 1
Suppl.
SCR
115;
Saradamani Kandappan v.
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S. Rajalakshmi and Other, (2011) 12 SCC 18 : [2011]
8 SCR 874; Jaswinder Kaur v. Gurmeet Singh (2017)
12 SCC 810 : [2017] 5 SCR 430; Rachakonda
Narayana v. Ponthala Parvathamma (2001) 8 SCC 173;
[2001] 2 Suppl. SCR 71; Radheshyam Kamila v. Kiran
Bala Dasi AIR 1971 Cal 341; Adhunik Steels Limited v.
Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC
125 : [2007] 8 SCR 213 - referred to.
Case Law Reference
[1992] 3 Suppl. SCR 798
referred to
Para 31
[2001] 1 Suppl. SCR 115
referred to
Para 44
[2011] 8 SCR 874
referred to
Para 57
[2017] 5 SCR 430
referred to
Para 76
[2001] 2 Suppl. SCR 71
referred to
Para 77
[2007] 8 SCR 213
referred to
Para 46
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5822
of 2022.
From the Judgment and Order dated 23.04.2021 of the High Court
for the State of Telangana at Hyderabad in Appeal Suit No. 998 of 2010.
With
Civil Appeal Nos. 5823 and 5824 of 2022.
H.N. Salve, Mukul Rohatgi, Dushyant A. Dave, Harin P. Raval,
Manan Kumar Mishra, Sr.Advs, Mahesh Agarwal, Ankur Saigal, Rishabh
Parikh, Sundeep Reddy, Rajesh Kumar, E. C. Agrawala, Ms. Bina
Madhavan, Krishna Kumar Singh, Ms. Rao Vishwaja, Durga Dutt,
Ms. Anjul Dwivedi, Rohit Priyadarshi, U.N. Mishra, Vaibhav Shukla,
Advs. for the appearing parties.
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY
INFRA PROJECTS PVT. LTD.
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The Judgment of the Court was delivered by
KRISHNA MURARI, J.
1. Leave granted in all the matters.
C.A. NO. 5822 OF 2022 (ARISING OUT OF SLP (C) NO.
13565 OF 2021)
2. The present civil appeal arises out of the impugned judgment
dated 23.04.2021 in A.S. No. 998 of 2010, passed by the High Court
for the State of Telangana at Hyderabad.
3. Siddamsetty Infra Projects Pvt. Ltd., who is the respondent
herein, had filed a suit for specific performance against the appellants,
Smt. Katta Sujatha Reddy and Smt. Kamireddy Geetha Reddy, who
were respondents 6 & 8 respectively, among others in the suit.
4. A conspectus of the facts necessary for the disposal of the
appeals is as follows: One late D Narayana, predecessor-in-interest of
the respondent no. 2 and 3, was the owner of an agricultural land bearing
Sy. No. 300-309, admeasuring 141.05 acres, situated in Budvel Village,
Rajendra Nagar Mandal, Ranga Reddy District, Hyderabad. The
appellants herein acquired certain extent of the land from the aforesaid
predecessor-in-interest through an agreement dated 19.03.1994. In
pursuance to this agreement, two registered Joint GPA'S dated
28.03.1994 were executed in the name of the defendant Nos. 5 and 6
from the above-mentioned owners, for an extent of Acs. 127.27 gts. of
land.
5. The agreement dated 19.03.1994 and the registered GPA, in
favour of the respondent no. 1/purchaser (Siddamsetty Infra Projects
Pvt. Ltd.) could not materialize. Parties entered into two fresh
agreements dated 26.03.1997 and 27.03.1997 inter alia appellant
(hereinafter referred to as 'vendors') herein to purchase an extent of
Acs. 40.08 gts. The agreement dated 26.03.1997 pertained to Acs. 35.15
gts. land for a consideration of Rs.38,37,500/- while the agreement dated
27.03.1997 pertained to Acs 1.33 gts of land for a consideration of
Rs.1,82,500/-.
6. The total suit scheduled property thus consists of Acs. 40.08
gts of land situated in Sy No. 301 (part), 302, 303, 304 (part) of Budvel
Village, Rajendranagar Mandal, R.R. District for which a total
consideration of Rs.40,20,000/- was agreed upon between the parties.
Out of the total agreed consideration, Rs.34,80,850/- was paid by the
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purchaser to the vendors by way of cash and cheques, which fact is not
disputed.
7.The remaining amount of Rs.5,39,150/- was to be paid within 3
months, as per clause 3 of the agreements. This amount had admittedly
not been paid within the stipulated time. On 31.03.2000, the purchaser
allegedly sent the first notice dated 08.02.2000 to the vendors seeking
specific performance of the agreement. Thereafter, a second notice was
sent by the plaintiff on 06.07.2002. The purchaser, having no other
alternative, filed the present suit, being OS No. 88 of 2002, before the
Additional District Judge, Ranga Reddy District, LB Nagar, Hyderabad,
seeking specific performance. The trial Court framed 5 issues for
consideration which are as under:
1. Whether the purchaser is entitled for Specific Performance of
agreement dt. 27.3.1997 and 26.3.1997 directing the vendors
to execute a registered sale deed in favour of purchaser in
respect of suit land?
2. Whether the time is essence of the contract as pleaded by the
vendors, if so whether the purchaser is not entitled for Specific
Performance of agreement of sale as pleaded by him?
3. Whether the suit filed by the purchaser is barred by limitation?
4. Whether the purchaser is entitled for alternative reliefs of
delivery of possession and for refund of Rs. 34,80,850/- with
interest @36% per annum as pleaded in the plaint?
5. To what relief?
8. In response to issues (1) and (2), taking into consideration the
evidence available on record, the trial Court held that the purchaser was
never put in possession of the property. On the issue of payment, it was
held that the purchaser never made the total payment of Rs.34,70,000/-
under the agreement of sale. It was discovered during the course of
cross and chief examination, that the purchaser had issued a cheque for
Rs. 5,00,000/- which was dishonoured. This information was not shared
by the purchaser and hence the purchaser had suppressed material
evidence.
9. The trial Court further held that the burden of proof lies on the
person who pleads that time is the essence of the contract. It was further
observed that in respect of an immovable property, time is not the essence
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
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of the contract unless the same is explicitly mentioned in the agreement
of sale and the parties through their conduct have treated time as the
essence of the contract. The lower Court observed that Clause 3 in the
contract stipulates a time bar of 3 months for the payment of the sale
consideration and furnishing of necessary certificates by the purchaser
and the vendor respectively. The vendor through their conduct had never
intended to treat time as the essence of the contract. On delay of payments
made by the purchaser, the vendor never issued any notice to them. This
showed that the vendor never intended to treat time as the essence of
the contract. The vendor also painted a picture that it did procure the
necessary documents as required under clause 3 of the contract, but it
never did the same. The vendor made a false plea about the duty to be
performed by it under clause 3 of the contract.
10. The trial Court further held that while there exists a false
plea on the part of the vendor, the same however does not benefit the
case of the purchaser because there are grave laches on his part too.
The purchaser himself having approached the Court with unclean hands,
he cannot get the benefit of the false plea made by the vendor.
11. The trial court also came to the conclusion that the purchaser
was never ready to pay the balance sale consideration, if so, he would
have either issued a notice to the vendor making out his willingness to
pay. Hence, on the basis of all the above mentioned observations, it was
held that the purchaser is not entitled for specific performance of the
agreements of sale and that the parties never intended to treat time as
an essence of the contract.
12. With regard to issue (3), the trial Court held that part one of
Article 54 of the Limitation Act,1963 will come into operation, as per
which the three-year period has to be computed from the date so stipulated,
which comes to on or before 27.06.2000, in the present case. The current
suit however was presented on 09.08.2002, after a lapse of two years.
Even for the recovery of the advance amount, the suit was barred by
time as provided under Article 47 of the Limitation Act. When the main
suit itself is barred, then alternative relief also cannot be granted. Hence,
the trial Court held that the suit is barred by limitation. In the light of
the above findings, the trial Court dismissed the suit holding that the
plaintiff is not entitled for the relief of specific performance.
13.Aggrieved by the aforesaid order of the trial Court, the plaintiff/
purchaser approached the High Court by way of a first appeal, being
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A.S. No. 998/2010. The High Court framed 7 issues for adjudication of
the matter which are as under;-
1.
Whether the suit is barred by limitation?
2.
Whether the purchaser proved it's possession over the suit
schedule property?
3.
Whether the plaintiff was ready and willing to perform his
part of the contract and paid balance sale consideration within
the stipulated time in the suit agreements?
4.
Whether the trial court is right in holding that the time is not
the essence of the contract and whether the same can be
attacked by the defendants without filing cross objections?
5.
Whether the trial court is right in not exercising its discretion
for granting relief of specific performance?
6.
Whether Section 10 of the Act as substituted by Act 18 of
2018 is prospective or retrospective in nature?
7.
To what relief?
14. In response to point (1), the High Court has held that Clause 3
of the agreements did not stipulate time as the essence of the contract.
Moreover, the vendor has not exercised the option of forfeiting the
advance amount as per Clause 3 of the agreements. The High Court
further held that the trial Court has erred in making the distinction between
time fixed for payment of sale consideration and time for performance
of contract.
15.On point (2), the High Court held that the vendors surrendered
almost all their rights over the suit schedule property and allowed the
purchaser to exercise his rights over the suit property as per the contract.
It was wrongly held by the trial Court that since the name of the
purchaser was deleted in Exs. B10 & B11, the purchaser was not in
possession of the property. On the basis of this, the trial Court also held
that the purchaser did not approach the court with clean hands. One
more point that came in favour of the purchaser was that one of the
parties to the sale agreement had categorically admitted that the purchaser
was put in possession of the property. This fact was never contested by
any party. The High Court held that just because the possession aspect
is not mentioned in Exs. A2, A3, A4, A5, A29 & A30 or in the first notice,
SMT. KATTA SUJATHA REDDY v. SIDDAMSETTY
INFRA PROJECTS PVT. LTD. [KRISHNA MURARI, J.]
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it cannot be said that the purchaser was not in possession of the suit
schedule property.
16. On point (3), the High Court observed that the vendors were
at fault for not obtaining the necessary certificates as per Clause 3 of
the contract for completing the sale transaction. Further, to show his
bonafides, the purchaser filed an application for permission to deposit the
balance sale consideration of Rs. 5,39,150/- and the same was ordered
and became final. The High Court further held that no person would
drag on the matter for this long for a payment of 10% of total sale
consideration. The purchaser was ready and willing to perform his
contract, had already paid 90% of the sale consideration within the
stipulated period and had deposited the balance amount in Court. Hence,
the purchaser was ready and willing to perform his contract, and through
his acts, proved his bonafides.
17.On point (4), the High Court held that the trial Court had correctly
assessed the judgments and the fact situation and held that time is not
the essence of the contract in the present case.
18. On point (5), the High Court held that the trial Court should
have exercised its discretion and should have granted specific performance
in favour of the purchaser. It was held that the vendors took a false plea
in their written statements as well as in their chief examinations stating
that they did not receive the sale consideration. The vendors further
took the false plea that the necessary documents and certificates as per
clause 3 of the contract were obtained from the concerned departments,
and hence the said point was answered in favour of the purchaser.
19. On point (6), the High Court held that when a provision is
replaced by way of substitution, the substituted legislation operates
retrospectively and not prospectively. It further held that specific relief
in essence is a part of the law of procedure, and hence it is a
retrospective law. The High Court then went on to state that an appeal
is a continuation of the suit, and hence any change in law between the
date of passing of the decree and the decision of the appeal must be
taken into consideration. Based on the above analysis, the High Court
held that Section 3 of the Amended Act is retrospective in nature and
applies to pending proceedings.
20. On point (7), the High Court held that since the purchaser
succeeded on all points, it partly allowed the appeal and directed the
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vendors to register the suit property in favour of the purchaser, to the
extent of the amount paid by the purchaser, i.e., 90% of the total sale
consideration, within a period of 3 months. Further, it was ordered that
the sum of Rs.5,39,150/- deposited by the purchaser, by virtue of the trial
Court order dated 11.07.2005 in IA No. 925/2005, was to be refunded to
the purchaser with interest, if any accrued thereon.
21. Aggrieved by the impugned judgment, both the vendors and
the purchaser are in appeal before this Court.
22. Mr. Dushyant Dave and Mr. Harin P. Raval, learned Senior
Counsel appearing on behalf of the purchaser, submitted as follows:
i.
The High Court was correct in exercising its jurisdiction
and the impugned judgment is based on both, oral and
documentary evidence. The reasons given for granting the
relief of specific performance are in accordance with the
settled principles of law.
ii.
Both the trial Court and the High Court have concurrently
found that time is not the essence of the contract. No time
was fixed for the performance of the contract itself. The
period of 3 months stipulated under Clause 3 of the
agreements to sell, is only for payment of the sale
consideration. As a result, when no date is fixed for the
performance of the contract, the limitation period
commences from the date of specific refusal. In the case
at hand, specific refusal of the vendors to perform their
obligations had occurred on 14.04.2000 and 22.07.2002 and
therefore, the suit was filed well within the limitation period.
iii.
The purchaser has clearly established that they were always
ready and willing to perform their part of the contract. They
have admittedly paid 90% of the sale consideration within 3
months of the agreements to sell. The purchaser also issued
two legal notices dated 08.02.2000 and 06.07.2002 to the
vendors indicating their readiness to pay the balance amount.
The vendors avoided receiving the sale consideration despite
the purchaser's repeated requests. Additionally, the vendors
did not procure the requisite permissions.
iv.
Defendant No.5 has admitted in her pleadings that the
purchaser was put in possession of the suit property. Such
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statement was neither challenged by the vendors in the
rejoinder and nor was it mentioned in the evidence led by
the DWs that her statement is incorrect. Moreover,
Defendant No.5 is a proper party to the suit.
v.
The stand of the parties on possession cannot be a ground
on which the Court can refuse grant of specific
performance. Delivery of possession is ancillary to the relief
sought and such an issue would be inconsequential.
vi.
In the light of the amendment to Section 10 of the Specific
Relief Act, the jurisdiction to grant specific performance of
a contract is no longer discretionary and it is mandatory
for Courts to grant such relief, unless the case at hand
falls within the statutorily carved out exceptions.
23. Mr. Mukul Rohatgi and Mr. Harish Salve, learned Senior
Counsel appearing on behalf of the vendors, submitted as follows:
i.
The purchaser did not approach the Court with clean hands.
The balance amount was not paid within the stipulated time
period and the trial Court found the purchaser's statement
regarding possession to be false inter alia, for the following
reasons:
(a)
In the suit, there was an alternate prayer seeking
possession. If the purchaser was already in possession,
such a prayer would not have been made.
(b)
The purchaser has not mentioned any specific date as to
when they were put in possession of the property.
(c)
As per the draft sale deed prepared by the purchaser,
there is no mention of the fact that they had already
been granted possession of the property. In fact, the draft
sale deed indicates that the purchaser would be put in
possession on execution of the sale deed.
(d)
PW2 (neighbour) deposed that the purchaser had laid
roads, constructed two rooms, put up fencing, etc. on the
property. However, the same is falsified by the documents
on record. The photographs of the property show that
there are no road or rooms on the property. Additionally,
no such pleading is made in the suit.
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ii.
The suit filed by the purchaser is barred by limitation and the
trial Court held so correctly. The parties executed the
agreements to sell on 26.03.1997 and 27.03.1997 and the
purchaser was to pay the balance amount within 3 months,
i.e., by 27.06.1997. It is the purchaser's case that the vendors
evaded execution of the sale deed as early as in June 1997.
Therefore, the limitation would start running in June 1997 and
expire in June 2000. The suit, however, was filed only on
09.08.2002 and is, therefore, clearly barred by limitation. The
purchaser's oral evidence also shows that the right to sue
accrued in the year 1997 itself.
iii. Additionally, the notice purportedly dated 08.02.2000, was
actually despatched on 31.03.2000 and was purposely
backdated.
iv. The purchaser was not ready and willing to perform the
contract. The evidence on record indicates that the purchaser
not only failed to pay the balance consideration within the
stipulated 3 months, but also failed to pay the same within a
period of 3 years of the agreement.
v.
A suit for specific performance cannot be decreed in a
piecemeal manner. The High Court ought to have accepted
the trial Court's decision and rejected the purchaser's appeal.
Moreover, grant of specific relief only to the extent of 90%
itself indicates that the purchaser was not ready and willing to
perform the contract and consequently, is not entitled to the
decree.
vi. The High Court, while overturning the trial Court's judgement,
stated that the discretion to grant specific performance was
taken away by the 2018 amendment to Section 10 of the
Specific Relief Act. However, both the Delhi High Court and
Karnataka High Court have rightly taken the view that the
amendment, being substantive, would be applicable
prospectively. The impugned judgement erroneously states that
the amendment is merely procedural and would apply
retrospectively.
vii. The High Court has misconstrued Section 12 of the Specific
Relief Act. The section would not be applicable to the present
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case as the question of 'inability to perform a contract' does
not arise.
viii. Reliance on Defendant No.5's pleadings in support of the
plaintiff is misplaced. She has nothing to do with the agreements
in question and had filed a collusive written statement.
Moreover, knowing such a statement is collusive, she never
entered the witness box.
24. We have heard the learned Senior counsel appearing on either
side and perused the entire material available on record. In the light of
the arguments advanced, the following issues fall for consideration.
A. Whether the suit for specific performance is barred by
limitation?
B. Whether the amended Section 10 of the Specific Relief Act
is prospective or retrospective in operation?
C. Whether the purchaser is entitled to the relief of specific
performance?
D. In any case, whether the purchaser is entitled to take benefit
of Section 12 of the Specific Relief Act in view of the part
payment made in respect of the contract?
Issue A
25.Before dealing with issue "A", we would like to highlight certain
facts which may be relevant. On 26.03.1997 and 27.03.1997 two
agreements to sell were executed between the vendors and purchaser
for two separate parcels of land in survey no. 301(part), 302, 303, 304
(part). The sale considerations for the aforesaid land were
Rs.38,37,500/- and Rs. 1,82,500/- respectively. Out of the above sale
considerations, the vendors received an advance of Rs.34,70,000/- and
Rs.10,850/- in furtherance of the performance of the aforesaid agreement.
26. A notice dated 08.02.2000 was despatched by the purchaser
on 31.03.2000, calling upon the appellants herein to execute the sale
deed at a convenient date, suitable to the vendors herein.
27. The vendor replied to the aforesaid notice by letter dated
14.04.2000 by stating that the purchaser never offered to pay the balance
sale consideration and issuance of the notice dated 08.02.2000, was nothing
but a subterfuge to get over the limitation.
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28.Thereafter, a suit was filed by the purchaser only on 09.08.2002.
In the suit, the averments made by the purchaser as to the limitation are
as under:
"LIMITATION: The suit is within limitation in continuation
of efforts. Some defendants are agreeing to execute the sale
deed and some defendants are continuing and evading the
execution of the sale deed. Time is not the essence of the
contract. The suit is within limitation in view of reply notice."
29. The Defendant No.6-vendors herein filed a written statement
dated 25.10.2002, wherein they replied to the question of limitation as
under:
"8 (Pg NO. 175) .It is submitted that, in reply to Para no. 10
of the plaint that, the plaintiff has got issued legal notice dated
8.02.2000 to the defendant & the defendant no. 8 and posted
the said notice on 31.3.2000 under the registered post, the
said fact is revealed that, the Plaintiff purposefully made the
notice dated as 8.2.2000 which was posted on 31.03.2000
with ulterior motive. The Plaintiff to cover up the limitation
period of 3 years creates the date 8.02.2000. It is not true
that, the defendant and the defendant no. 8 Smt. Kamreddy
Geetha Reddy are not the joint GPA holder of the vendors. It
is false that, there was no response from defendant no. 6 and
defendant no. 8 to the said notice, in fact the defendant got
issued a reply legal notice dated 14.04.2000 to the said alleged
legal notice dated 8.2.2000. After receipt of the reply legal
notice the Plaintiff kept quiet for nearly 2 1⁄2 years and got
issued another legal notice dated 6.7.2002. The defendant
had got issued reply legal notice on 22.7.2002 to the notice
dated 6.7.2002 by stating that the agreements are barred by
limitation and the plaintiff never in possession of the suit
property and moreover he has not performed his part
performance in paying the balance sale consideration within
the stipulated period and the notice dated 8.02.2000 was
posted on 31.02.2000 with malafide intention."
30. In the above light, the first question that this Court needs to
consider pertains to the aspect of limitation. The First Schedule to the
Limitation Act, 1963 provides for the period of limitation in the following
manner:
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The High Court, while dealing with the aspect of limitation, has
given a reasoning that Clause 3 of the agreements to sell did not have a
specific calendar date for performance of the contract, but rather, provided
only for payment of the entire sale consideration within 3 months from
the date of the agreements. Further, the High Court construed the obligation
of the vendors to produce requisite certificates and permission as a
condition for the purchaser to complete the sale transaction. In view of
the same, the High Court concluded that the first part of Article 54 was
incorrectly applied by the trial Court and accordingly held that the suit
was not barred by limitation.
31.At the outset, this Court has perused Clause 3 of the agreements,
which is in two parts. The first part provides for the purchaser's obligation,
while the second part details the obligation of the vendors to provide the
requisite certificates. Although both the obligations were required to be
completed within the stipulated period of three months, there is a
substantive difference between these two sets of obligations. The
obligation upon the vendors concerned was production of certain
certificates, such as income tax exemption certificate and agriculture
certificate. No consequences were spelt out for non- performance of
such obligations. Whereas the obligation on the purchaser, was to make
the complete payment of the sale consideration within three months.
The clause further mandates forfeiture of the advance amount if the
payment obligation is not met within the time period stipulated therein.
In this context, this Court in Chand Rani (dead) by Lrs. v. Kamal
Rani (dead) by Lrs1., held as under:
"25. From an analysis of the above case law it is clear that in
the case of sale of immovable property there is no presumption
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as to time being the essence of the contract. Even if it is not of
the essence of the contract the Court may infer that it is to be
performed in a reasonable time if the conditions are:
1. from the express terms of the contract;
2. from the nature of the property; and
3. from the surrounding circumstances,
for example: the
object of making the contract."
32. Coming to the aforesaid indicators, the language of the
agreements makes it clear that severe consequences of forfeiture would
ensue if the payment is not made within three months of the date of the
agreements. It may be noted that as per Clause 21, the parties had
entered into an earlier agreement to sell dated 19.03.1994, which did
not materialize and accordingly the agreed price therein was no longer
applicable. It is in this context that the fresh agreements were entered
into between the parties, so as to provide a last opportunity for them to
successfully enter into a sale-purchase agreement. The aforesaid intention
of the parties is also made clear through Clause 23 of the agreement to
sell, which reads as under:
"23. The parties of the second part herein undertake on any
pretext they will not make any claim for enhancing the agreed
sale consideration."
33. The aforesaid clause clearly freezes any enhancement of the
agreed sale consideration, which cannot be independent of a fixed time
period. A contrary interpretation would render the contract commercially
unreasonable and unworkable. The moratorium on the enhancement of
rates prescribed under Clause 23 should be interpreted to be predicated
on a fixed time and be executable within a reasonable period. The same
should not be utilized to render the commercial wisdom between the
parties otiose, which is inherent in drafting such clauses.
34. From the above analysis, it is clear that the contract was
strictly conditioned on a time frame. At this stage, it may be relevant to
quote Section 55 of the Contract Act, which reads as under:
"55. Effect of failure to perform at fixed time, in contract in
which time is essential When a party to a contract promises
to do a certain thing at or before a specified time, or certain
things at or before specified times, and fails to do any such
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thing at or before the specified time, the contract, or so much
of it as has not been performed, becomes voidable at the option
of the promisee, if the intention of the parties was that time
should be of the essence of the contract."
35.In view of the aforesaid provisions, the vendors were entitled
to rescind the contract as there was a breach of condition, i.e, 'time
was the essence'. Coming back to the point of limitation, it is clear that
Article 54 of the Limitation Act mandates that in this case at hand, the
date fixed for payment of consideration was three months from the date
of the agreements (i.e. 26.03.1997 and 27.03.1997). In any case, the
time period for filing the suit had commenced from 26/27.6.1997 and
would have expired after three years, i.e., in the end of June 2000.
36.