Buyer Not Complying With Timeline For Payment Can't Seek Specific Performance Of Agreement To Sell : Supreme Court

The Supreme Court in a recent decision held that when a contract stipulates a specific time frame within which the consideration needs to be paid by the 'buyer' to execute the 'agreement to sale' by the 'seller', then the buyer must strictly adhere to such condition, otherwise, the 'buyer' can not avail a remedy of specific performance of the sale deed. Reversing the concurrent judgments passed by the High Court and the First Appellate Court, the Bench of Justices Vikram Nath and Ahsanuddin Amanullah, observed that within six months, there existed the onus of paying the entire balance, however, it is not the case of the respondents that they had even offered to pay the remaining/balance amount before the expiry of the six-month period and the obvious import would be that the respondents had not complied with their obligation under the Agreement within the six-month period. Rejecting the contention of the Respondent (“buyer”) that the time indicated for completion of the transaction by execution of Sale Deed had been relaxed, the court observed that there being no willingness shown by them to pay the remaining amount or getting the Sale Deed ascribed on necessary stamp paper and giving notice to the appellants to execute the Sale Deed, it cannot be said that in the present case, judged on the anvil of the conduct of parties, especially the appellants, time would not remain the essence of the contract. Factual Background The appellants no.1, 2 and 3 (“Appellants”) entered into a registered Agreement of Sale with the respondents on 22.11.1990 to sell the suit property for a consideration of Rs. 21,000/-, against which Rs.3000/- had been received in advance. Further, six months' time was fixed for completion of the transaction. The appellants, in the meantime, had executed a Sale Deed with regard to the property in question with appellant no.7 on 05.11.1997 for a consideration of Rs. 22,000/- On 18.11.1997, the respondents sent a Notice to the appellants calling upon them to execute the Agreement. This led to the respondents filing of original suit before the Munsiff Court against the appellants for specific performance of the Agreement, damages and for recovery of money with interest. The suit stood dismissed by the Principal District Munsiff Judge. Aggrieved by such order, the appeal filed by the respondents was allowed by the First Appellate Court, and the same has been upheld by the High Court by the Impugned Judgment. It is against the impugned order and judgment of High Court passed in Second Appeal, that this Civil Appeal has been filed by the Appellants. Issue Discussed The moot question revolves around whether the Agreement dated 22.11.1990 discloses a fixed time-frame for making payment in full by the respondents that is, in terms of the recitals in the agreement for sale executed by the appellant no.1 in favour of the respondents. Observation by the Court After carefully examining the agreement of sale, the court admitted that the time indicated in the Agreement was six months from 22.11.1990 i.e., till 21.05.1991 and as per the Legal Notice dated 18.11.1997 sent by the respondents to the appellants, only Rs.7000/- was paid within the time stipulated. Further the court also noted that perusal of the Agreement reveals that the respondents had agreed to pay the appellants Rs. 21,000/- for the property in question, out of which Rs. 3,000/- was already paid as earnest money and the rest was to be paid within 6 months. To this effect, the court's observation in Para 25 is meaningful: “At this juncture, the Court would indicate that within six months there existed the onus of paying the entire balance amount of Rs. 18,000/- by the respondent no.1 to the appellant no.1. It is not the case of the respondents that they had even offered to pay the remaining/balance amount before the expiry of the six-month period. Thus, payment of Rs. 3,000/- only out of Rs. 21,000/- having been made, or at best Rs. 7,000/- out of Rs. 21,000/-, which is the amount indicated in the Legal Notice sent by the respondents to the appellants, the obvious import would be that the respondents had not complied with their obligation under the Agreement within the six-month period.” On the submission made by the respondent that the acceptance of the money by the appellant much after the stipulated time relaxed the indicated six months' time frame with in which the sale deed needs to be executed, the Court noted that as the forensic expert found that the thumb-impression of the Appellant No.1, purportedly acknowledging the amount of Rs. 1,000/- from the respondent after the sale deed was executed in the favour of Appellant No. 7, was not found to be matched with the fingerprints of the Appellant No. 1, thus signifies a clear indication that the consideration had to be paid with in six months in order to execute the sale deed. To this effect, the court's observation in Para 26 is meaningful: “Pausing...

Buyer Not Complying With Timeline For Payment Can't Seek Specific Performance Of Agreement To Sell : Supreme Court

Yash Mittal

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