CASE COMMENT: R LAKSHMIKANTHAM vs. DEVARAJI, (2019).

Mohit R Pise.
Author:

Introduction

A contract, as provided for in Article 2(h) of the Indian Contract Act 1872, states that 'a contract is an agreement enforceable by law.' A contract thus constitutes an agreement between two or more parties that is enforced by law[1].

The Specific Relief Act is an act that provides for a fair remedy. In that regard, the court issues an order requiring a party to perform a specific act, i.e., directs the performance of the contract in accordance with the terms and conditions agreed between the parties, rather than the payment of compensation or damages for non-performance of the contract[2].

Here, in the case of R. Lakshmikantham vs. Devaraji (2019)[3], a contract took place between both the parties [viz., R. Lakshmikantham, (the plaintiff) and Mr. Devaraji, (the defendant)] to sell and to purchase a piece of land. The defendant was found to be trying to wriggle out of the contract by abandoning it despite of several notices and letters. Thus, Specific relief, as a remedy was claimed by the plaintiff, R. Lakshmikantham[4]. This paper describes briefly about the facts of the case, issues regarding the facts before the court, arguments raised by both the parties in their context, and judgements given by the High Court as well as the Hon'ble Supreme Court on the case.

v Research aims and objective

The aim of the researcher is:

1. To critically study the case of R. Lakshmikantham vs. Devaraji (2019) 8 SCC 62.

2. To examine the facts of the case.

3. To analyze the issues of the cases,

4. To analyze the judgement given by Hon'ble Supreme Court of India, and

v Research methodology

The researcher has researched from the following cited cases and statutes as practical research was not needed. Moreover, primary data is used and the research and project as the researcher has collected all the data and has written the project after the analysis of the data.

v Facts of the case:

Mrs. R. Lakshmikantham had entered in a contract with Devaraji for purchasing his property for a negotiated amount of ₹ 3,65,000/- (in words Three Lakhs Sixty-five thousand rupees only) on dated 22.09.2002. Certain clauses were framed in the agreement between them which ere binding on both the parties on their role. Plaintiff, Mrs. R. Lakshmikantham had paid a sum of ₹ 5000/- (in words Five thousand rupees only) towards advance to the defendant, Devaraji and also the defendant had admitted and acknowledged the receiving of the same[5].

The balance consideration of the sale had to be deposited by the plaintiff within three months from today to the defendant. The defendant had agreed to execute a sale deed on the same day on which the balance consideration amount of the sale is to be paid. The plaintiff (second party) had agreed to reimburse a part of the consideration amount of the sale which is ₹ 60,000/- (in words Sixty Thousand rupees only) to the (first party) defendant on or prior to 10th of October[6].

The original title documents of the sale were handed over to the mortgagee and the plaintiff had to pay off the loan and keep the original title documents in his charge, after receiving the same from the mortgagee. There was an obligation on the role of both the parties that, if there is no hindrance to the property (scheduled) and when the plaintiff is ready to pay off the balance amount of consideration of the sale, the defendant shall accomplish the sale deed in favor of the plaintiff or her nominee. And if the defendant refuses to do so, the plaintiff was entitled to take legal action against him. The actual price of the property was roughly Rs. 6 Lakhs, but it was settled down to ₹ 3,65,000/- (in words Three Lakhs sixty-five thousand rupees only) after negotiation between both the parties[7].

It was clearly shown in clause no. 5 & 8 of the judgement that the original title documents of the property which was in the custody of the mortgagee had not been redeemed even after the payment was made by the plaintiff to the defendant. A registered letter was sent by the plaintiff on 18.12.2002 to the defendant, reminding that ₹ 5,000/- had been received on dated 22.9.2002 and ₹ 60,000 had been received on dated 14.10.2002. But despite this, the original title deeds were not received from the mortgagee, and therefore, the mortgagee cannot be discharged[8].

A letter which was again sent to the defendant stating that ‘the plaintiff is prepared with the due amount and the defendant should immediately come forward to discharge the mortgagee, receive all the title deeds and make registration of the sale deed. But the AD letter came back to Mrs. Lakshmikantham, which stated that, the defendant had not received the letter over last one week. Same happened with another legal notice on 19.12.2002, i.e., the very next date[9].

Finally, a legal notice was sent to the defendant on dated 7.7.2003 by the plaintiff referring to the legal notice which was sent earlier on dated 19.2.2003 and called the defendant to obey with the terms of agreement immediately. No reply was given to that notice, which was received by the defendant admittedly at the very same address and hence, this present suit was filed by the plaintiff for specific performance in February 2005[10].

v  Issues before the court:

The major issue before the Hon'ble Supreme court of India was the error judgements passed by the Madras High court subsequently in regard with this case. The supreme court has to examine whether the judgment given by the Madras High court were reliable or not.

The Madras High Court erred in concluding that the willingness and readiness of the second party (appellant-plaintiff) cannot be inferred as the letters, which were posted on dated 18th and 19th of December 2002, had not been served to the defendant, whereas actual fact is that, that the letters were sent to the same address, which was mentioned in the receipt by the defendant itself, though there was no reply for the letter from the defendant. Moreover, the Madras High Court made an error in holding that in spite of having surplus funds, Mrs. Lakshmikantham could not be said to be prepared and willing. The plaintiff was absolutely ready with the balance amount which was to be paid for the property, but the defendant was not ready to come up even after many notices and calls were made[11]. The High Court mentions that, it would not be enough for the plaintiff to prove that, she has sufficient funds, since the case itself was filed belatedly[12]. Moreover, the High court also erred in mentioning that the actual worth of the property was ₹ 10,00,000/- (in words, Ten Lakh rupees only) on the date of the sale agreement, though the defendant did not prove it. Further, the High Court stated that, the AD letter which was sent to the defendant was not served and the plaintiff itself is not willing to pay due to lack of funds, as given by the learned council of the defendant[13].

v Arguments:

The advocate of the defendant argued that, both the letters of which the plaintiff was talking about, had not served to his client (defendant), and hence the readiness and willingness of the plaintiff cannot be proved.

NOTE: At the time of the hearing, the defendant was not present in the courtroom.

The plaintiff argued that, the letters/ notices were sent to the very same address of the defendant, (as stated on the receipt by the defendant itself), but no reply was received by the defendant till date.

v Judgement:

- By its judgement, Trial court on dt. 12.9.2008 held that,

The agreement and all the notices sent to the defendant by the plaintiff have been proved, and it is comprehensible that the defendant is attempting to wriggle out of his obligations, as per the contract [14].

Since the defendant did not include the mortgage address, it was obvious that the defendant was attempting to wriggle out of the arrangement[15].

It was held that, the plaintiff was proved willing and ready by the certainty that she has sufficient funds on the very same date of the agreement and further, as stated by her in the letter on 18th of December 2002[16].

Specific Performance was ordered by the court on the defendant’s part, as the consideration of the sale which was balance, had been already deposited in the court on the very same date of filing the suit[17].

- The Madras High court, in its judgement held that:

Time was of essence, because a span of only three months was given to fulfill the agreement of the sale.[18]

Also, letters sent by the plaintiff on 18.12.2002 and 19.12.2002 could not have been served to the defendant and hence, cannot be proved[19].

The statement of the advocate of the defendant that it was not going to other aspects, except the plaintiff was not ready and willing throughout to perform the sale agreement[20].

For the plaintiff, it would not be sufficient to prove that, she has surplus funds, as the suit itself was filed belatedly[21].

Also, the High Court held that, it would have also been essential for the plaintiff for showing that, she was otherwise willing and ready throughout, which cannot be assumed to be true, having a view that there was a gap of long time in between 29.9.2002 and 07.07.2003 as even the consequent notices and letters were also not proved[22].

The value of the property which was to be sold to the plaintiff was ₹ 10,00,000 (in words, ten Lakh rupees only) on the date of the sale agreement[23].

Keeping the view of the facts, specific performance cannot be ordered and as prior stated, reserved the courts’ concurrent findings [24].

- The Hon'ble Supreme Court of India, on dated 10.07.2019, held that:

In the second appeal, the Madras High Court had gone obviously wrong on several counts[25].

Firstly, it held that ‘in the agreement, time was of essence,’ which is totally wrong statement. Clause no. 3 has to be read with clause no. 5 and clause no. 8. These clauses clearly state that, in reciprocal promise in clause 5, the promise made by the seller had to be bring out primarily, which was to obtain the title documents from the mortgagee after the mortgage is cleared[26].

The High Court is thoroughly incorrect in stating that, ‘both the letters sent by the plaintiff on dated 18.12.2002 and 19.12.2002 cannot be said to have been proved.’ Because, both were the A.D letters which were sent to the defendant’s very same address, which the defendant states he received the legal notice on 07thof July 2003. Moreover, Unless the contrary is shown, the registered letter, once sent, is presumed to have been served on the defendant's stated address at the time it is returned with the remarks listed.[27].

The order of the High Court is incorrect in mentioning that ‘since, the letter sent on 18thand 19th of December 2002 had not been served to the defendant, the willingness and readiness of the plaintiff cannot be proved’[28].

The High Court also wrong in maintaining that, ‘the plaintiff cannot be said to be willing and ready despite having adequate funds’[29].

The High Court was also incorrect in putting a short pause in bringing an action against the plaintiff to say that 'she was not ready and willing to do so.' In India, however, the current rule of equity in England does not apply, so a delay cannot be brought against the plaintiff as long as a particular performance suit is filed during the limitation period[30].

The High Court also erred in stating that the real worth of the property at the time of agreement of the sale, amounted to ₹10,00,000 (in other words, Ten Lakh Rupees only), whereas PW-1, in its cross-examination found that, the actual price of the property on the date of agreement of the sale amounted to ₹6,00,000 (in words, Six Lakh rupees only). It was open to both parties to thresh out the sale price up and down, which in the present case, the parties did. It cannot be inferred, therefore, that the valuable property was sold at a throwaway price[31].

For all these reasons, the Supreme Court ordered Specific Performance, setting aside the Judgement of the Madras High Court[32].

v Analysis:

In the case of R. Lakshmikantham vs. Devaraji (2019)[33], the Supreme Court of India specifically underlined the concept of period of limitation of time for filing a suit of Specific Performance.

The Doctrine of Specific Performance is the primary remedy that the common law provides for an infringement of the contract, including the payment of damages. As all other fair remedies, the cure for specific relief is still said to be discretionary. It will be available wherever it has been shown that damages are insufficient as a remedy. The supreme Court also cited the case of Mademsetty Satyanarayana vs. G. Yelloji Rao & Ors. (1965)[34], the similar case, in which, specific performance was ordered by the Supreme Court and the remedy of Specific Relief was provided to the plaintiff.

“In India, mere delay cannot be a ground for denying the relief of specific Performance, for the statute prescribes the period of limitation. If the suit is in time, delay is sanctioned by law; it is beyond time, the suit will be dismissed as barred by time, in either case, no question of equity arises”[35].

v Conclusion:

Trying to wriggle out from the agreement is equal to breaching the contract. The defendant, Devaraji, had the obligation on his part of being present before the plaintiff while, she was ready to pay the balance consideration amount of the property and to discharge the mortgagee by collecting the title documents of the property from him and handover it to the plaintiff. But rather, the defendant was not present at that time and was trying to wriggle out of the contract.

Secondly, the important disparity in the relief of particular performance between the two frameworks, the English and the Indian-qua. The relief with such effects in England is in the area of equities; in India, the relief is in reference to statutory law. There is no date of limitation in England for the commencement of the complaint, and hence mere delay in time may in fact suffice to reject the relief, depending on the circumstances; but mere delay in India cannot be a cause for rejecting such relief, for it offers a limitation period. If the action has expired, delay shall be stipulated by law; if time has elapsed, the action is refused as barred by time.

[1] Indian Contract Act 1872, S.2(h).

[2] The Specific Relief Act, 1963.

[3] AIR (2019) 8SCC 62.

[4] R. Lakshmikantham vs. Devaraji, (2019), 8 SCC 62.

[5] Supra n. 3.

[6] Ibid.

[7] Supra n. 3.

[8] Ibid.

[9] Id.

[10] Id.

[11] Supra n. 3.

[12] Ibid.

[13] Id.

[14] Supra n. 4.

[15] Ibid.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Supra n. 4.

[22] Ibid.

[23] Ibid.

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Supra n. 3.

[29] Ibid.

[30] Id.

[31] Id.

[32] Id.

[33] Supra n. 3.

[34] AIR (1965) SCR (2) 221.

[35] Supra n. 3.