Case Number: Civil Appeal Nos. 8050­8051 OF 2022

Judges Name: Hon’ble Judges M.R. Shah J, M.M. Sundresh J

Order dated: 09.11.2022

Facts of the Case:

1. The Respondent herein – original defendant entered into an agreement to sell with the appellant – original plaintiff on 13.07.2005 for a consideration of Rs. 52,500/­ per cent with respect to the property ad­measuring 9 acres 47.41 cents in Re­Survey No. 35/2/1 of Karukutty Village. Under the said agreement to sell a sum of Rs. 1 crore was paid by the appellant to the defendant towards earnest money of which Rs. 65 lakhs were paid in cash and Rs. 35 lakhs were in the form of post­dated cheque dated 25.08.2005. As per the terms of the agreement to sell the last date fixed for payment of the balance sale consideration was 12.01.2006. The post­dated cheque of Rs. 35 lakhs deposited by the defendant came to be dishonoured/returned for the reasons “payment stopped by attachment order”. At this stage, it is required to be noted that there was a raid conducted by the Income Tax Department and the bank account of which the post­dated cheque of Rs. 35 lakhs, was drawn came to be attached by the IT Department.
2. The cheque was returned by the bank vide return memo dated 31.08.2005. The defendant through his advocate served a notice upon the plaintiff drawing the attention of the plaintiff with respect to the return/dishonour of the post­dated cheque vide notice dated 02.09.2005. According to the plaintiff immediately the same was replied on 20.09.2005 and offered to pay the amount of Rs. 35 lakhs in cash which according to the plaintiff the defendant refused to accept the same. The defendant was also called upon to accept Rs. 35 lakhs in cash and the plaintiff was prepared to handover cash. That thereafter vide notice dated 23.09.2005 the defendant terminated the agreement to sell/contract and forfeited Rs. 10 lakhs and called upon the plaintiff to take back an amount of Rs. 55 lakhs. That thereafter vide notice dated 18.10.2005 the plaintiff replied to the termination notice dated 23.09.2005 and called upon the defendant to accept the balance sale consideration within the agreed period i.e., on or before 12.01.2006.
3. Thereafter the plaintiff served a legal notice dated 03.01.2006 and called upon the defendant to execute the sale deed after accepting balance sale consideration. The defendant was called upon to inform the plaintiff the date on which he has to pay the balance sale consideration and to execute the sale deed. As the defendant failed to act as per the legal notice dated 03.01.2006. The appellant – original plaintiff instituted a suit before the learned Trial Court for specific performance of agreement to sell dated 13.07.2005. The defendant filed the written statement repudiating the contract.

Hon’ble Supreme Court observed/held as follows:

• The Supreme court Bench observed that The High Court has non­suited the appellant – original plaintiff on the ground that as the post­dated cheque of Rs. 35 lakhs was returned which was towards part sale consideration and tendering the worthless post­dated cheque cannot be said to be tendering the payment and therefore, there was no concluded contract between the parties. By observing so, the High Court has refused to go into the aspect of the readiness and willingness on the part of the plaintiff. However, it is required to be noted that at the time when the post­dated cheque of Rs. 35 lakhs was tendered the same cannot be said to be worthless cheque. At this stage, it is required to be noted that the cheque was not returned for the reasons of insufficient funds in the bank account. Therefore, the observation made by the High Court that the post­dated cheque was worthless cheque and tendering such worthless cheque cannot be said to be a payment towards part sale consideration cannot be accepted. We do not approve such observations/reasoning given by the High Court.
• The bench while analyzing the findings and the reasoning given by the learned Trial Court refusing to pass a decree for specific performance was concerned as it appeared that though there was no specific issue framed by the learned Trial Court on readiness and willingness on the part of the plaintiff, the Trial Court has given the findings on the same and has non­suited the plaintiff by observing that the plaintiff was not having sufficient funds to make the full balance consideration on or before 12.01.2006. Such a finding could not have been given by the learned Trial Court without putting the plaintiff to notice and without framing a specific issue on the readiness and willingness on the part of the plaintiff. There must be a specific issue framed on readiness and willingness on the part of the plaintiff in a suit for specific performance and before giving any specific finding, the parties must be put to notice.
• In view of the above and for the reasons stated above the present appeals succeeded in part. The impugned common judgment and order passed by the High Court and the judgment and decree passed by the learned Trial Court dismissing the suit preferred by the plaintiff for specific performance of the agreement to sell are hereby quashed and set aside. The matter was remitted back to the learned Trial Court to decide and dispose of the suit afresh in accordance with law and on merits. The learned Trial Court was also directed to frame the specific issue on the readiness and willingness on the part of the plaintiff to perform his part of the contract and thereafter, the parties may be permitted to lead the evidence on readiness and willingness on the part of the plaintiff to perform his part of the contract and thereafter, the learned Trial Court to decide and dispose of the suit on merits and on the basis of the evidence that may be led.