Buyer Not Fulfilling Payment Timeline Can’t Seek Specific Performance of Agreement to Sell: Supreme Court

Buyer Not Fulfilling Payment Timeline Can’t Seek Specific Performance of Agreement to Sell: Supreme Court

Sets aside the impugned judgment passed by the High Court and the first appellate Court

The Supreme Court has 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 Sell' by the 'seller', the buyer must strictly adhere to such condition, otherwise, the 'buyer' cannot avail a remedy of specific performance of the sale deed.

The bench of Justice Vikram Nath and Justice Ahsanuddin Amanullah, thus, reversed the concurrent judgments passed by the High Court and the first Appellate Court.

The Court observed that the onus of paying the entire balance existed within six months. However, the respondents (buyers) did not offer to pay the amount before the term’s expiry. It implied they did not comply with their obligation under the agreement.

The bench rejected the contention of the buyers that the time indicated for completion of the transaction by execution of the sale deed was relaxed. It observed that no willingness was shown by them to pay the remaining amount or get the Sale Deed ascribed on necessary stamp paper and gave notice to the appellants to execute it. Therefore, judging on the anvil of the parties’ conduct, especially the appellants, time was not the essence of the contract.

Appellants no.1, 2, and 3 entered a registered Agreement of Sale with the respondents on 22 November 1990 to sell the suit property for a consideration of Rs.21,000 against which Rs.3000 was received in advance. Thereafter, six months were fixed for the completion of the transaction.

Meanwhile, on 05 November 1997, the appellants executed a Sale Deed for the property with appellant no.7 for Rs.22,000.

On 18 November 1997, the respondents sent a notice to the appellants to execute the agreement. It led the respondents to file the original suit before the Munsiff Court against the appellants for specific performance of the agreement, damages, and recovery of money with interest.

However, the Principal District Munsiff Judge dismissed it.

Aggrieved by the order, the appeal was filed by the respondents before the first appellate Court, which accepted it. The High Court upheld the impugned judgment.

Thus, it was against the impugned order and judgment of the High Court in the second appeal, that the appellants filed the present civil appeal.

The matter pertained to whether the 22 November 1990 agreement disclosed a fixed timeframe for making the full payment.

The Top Court admitted that the time indicated in the agreement was six months (22.11.1990 to 21.05.1991). As per the 18 November 1997 notice, sent by the respondents to the appellants, only Rs.7000 were paid within the stipulated time.

The bench observed that the agreement revealed that the respondents agreed to pay the appellants Rs.21,000 for the property, out of which Rs.3,000 was already paid as earnest money. The balance was to be paid within six months.

The Judges took note of the respondent’s submission that the acceptance of the money by the appellant much after the stipulated time relaxed the time frame within which the sale deed needed to be executed. They noted that the forensic expert found the thumb impression of appellant No.1, acknowledging the amount of Rs.1,000 from the respondent (after the Sale Deed was executed in favor of appellant No.7), did not match. It signified that the balance amount was to be paid within six months to execute the sale deed.

The Court observed, “The appellant no.1 having accepted payment of Rs.1,000 on 21.04.1997 (after executing a Sale Deed in favor of appellant no.7 on 05.11.1997), coupled with the fact that the forensic expert found the two thumb-impressions purportedly acknowledging payment after the expiry of the time fixed not matching the fingerprints of appellant no.1 is clearly indicative that time having not been extended, no enforceable right accrued to the respondents for getting relief under the 1963 Act.”

It also stated that no relief was sought for cancellation of the Sale Deed by the respondent even at the first appellate Court and the High Court. Therefore, a suit for specific performance for execution of the Sale Deed qua the same property could not be maintained.

By taking note of the Supreme Court judgment passed in the K.S. Vidyanadam vs Vairavan case, the Court observed, “The decisions relied upon by the respondents relating to the conduct of the parties are of no avail.”

Thus, while setting aside the impugned judgment passed by the High Court and the first appellate Court, the bench restored the trial Court’s order and allowed the appeals.