Trial Court’s Failure To Frame Issue On Maintainability Of Suit Touching Jurisdictional Fact By Itself Can’t Trim Powers Of Higher Court To Examine Whether Jurisdictional Fact Exists: SC
The Supreme Court clarified that any failure or omission on the part of the Trial Court to frame an issue on maintainability of a suit touching jurisdictional fact by itself cannot trim the powers of the higher Court to examine whether the jurisdictional fact did exist for grant of relief as claimed, provided no new facts were required to be pleaded and no new evidence led.
The appellants-sellers had approached the Apex Court with a Civil Appeal challenging a judgment of the Madras High Court granting decree for specific performance of an agreement for sale in favour of the first respondent-buyer in respect of land together with a tenanted building. Another appeal was instituted by a Company(subsequent purchaser) who had purchased the property, forming the subject of the Agreement, from the sellers when the first appeal was pending before the High Court.
The Division Bench comprising Justice Dipankar Datta & Justice Sanjay Karol said, “No higher court, much less the Supreme Court, should feel constrained to interfere with a decree granting relief on the specious ground that the parties were not put specifically on notice in respect of a particular line of attack/defence on which success/failure of the suit depends, more particularly an issue touching the authority of the trial court to grant relief if the ‘jurisdictional fact’ imperative for granting relief had not been satisfied.”
Senior Advocate Rana Mukerjee represented the Appellants while Advocate E.R. Kumar represented the Respondents.
The facts of the case suggested that the parties executed the Agreement for sale of the property. Towards consideration, the buyer agreed to pay Rs. 2.3 crore to the sellers. The sellers cancelled the Agreement claiming that the said period of 4 months had expired and that the buyer had not shown interest to complete the deal. The sellers asserted that the buyer had no right to claim purchase of the property as the Agreement had already been cancelled. It was also claimed that the buyer, who earlier was not ready and willing, was trying to grab the property as the value of the property had gone up multiple times. It is this factual background that litigation between the buyer and the seller commenced with the institution of suit for specific performance.
For the sellers, it was argued that the buyer did not make the payment as agreed by and between the parties and time being the essence of the contract, the Trial Court was justified in dismissing the suit (although on the point of time being the essence of the contract, it had held otherwise).
For the buyer, it was contended that both the Trial Court and High Court had concurrently found that time was not the essence of the contract. The buyer’s obligation to pay the balance consideration was to be fulfilled only after the sellers had performed their part of the bargain, which was to be ready to hand over the vacant possession of the property by evicting the tenants.
The Supreme Court referred to its judgment in A. Kanthamani v. Nasreen Ahmed (2017) 4 SCC 654 and observed that unless an issue as to maintainability is framed by the Trial Court, the suit cannot be held to be not maintainable at the appellate stage only because appropriate declaratory relief has not been prayed. The Bench explained that a suit for specific performance of a contract for sale, normally, is premised on a written agreement between the contracting parties, signifying a meeting of minds of two persons or more.
On a perusal of the clauses in question, the Bench made it clear that the Trial Court and the High Court were right in concluding that time was not the essence though the Agreement provided that “time mentioned in this agreement shall be of the essence.” It was also observed that despite being aware of the property having been vacated by all the tenants, the buyer started raising the bogey of failure of the sellers to share with her the ‘encumbrance certificate’. Moreover, despite multiple reminders, the buyer did not come forward for execution of the sale deed.
“Moving further, a perusal of the buyer’s cross-examination reveals her admission of not having enough fund in either of her bank accounts to pay the balance sale price. This, in our opinion, is sufficient proof of her financial incapacity to perform her part of the contract”, it said while also adding, “Such conduct of the buyer, seen cumulatively, does not inspire confidence in granting her the discretionary relief of specific performance, the Bench held while allowing the appeal.”
The Bench also took note of the discordant note struck by the decision in A. Kanthamani (supra) while distinguishing I.S. Sikandar v. K. Subramani (2013) 15 SCC 27. Both the judgments highlight that where the vendor unliterally cancels an agreement for sale, the vendee who is seeking specific performance of such agreement ought to seek declaratory relief to the effect that the cancellation is bad and not binding on the vendee. However, it further stated in Kanthamani (supra) if maintainability were not an issue before the trial court or the appellate court, a suit cannot be dismissed as not maintainable.
It was further clarified that in a fit and proper case, notwithstanding omission of the trial court to frame an issue touching jurisdictional fact, the higher court would be justified in pronouncing its verdict upon application of the test laid down in Shrisht Dhawan (Smt) v. Shaw Bros.(1992) 1 SCC 534, wherein it has been held that that assumption of jurisdiction/refusal to assume jurisdiction would depend on existence of the jurisdictional fact.
The Bench held,“...we clarify that any failure or omission on the part of the trial court to frame an issue on maintainability of a suit touching jurisdictional fact by itself cannot trim the powers of the higher court to examine whether the jurisdictional fact did exist for grant of relief as claimed, provided no new facts were required to be pleaded and no new evidence led.”
Thus, allowing the appeal, the Bench dismissed the suit instituted by the buyer and held that the buyer shall be entitled to return of the advance sum of Rs.25 lakh by the sellers.
Cause Title: R. Kandasamy(Since Dead) v. T.R.K.Sarawathy [Neutral Citation: 2024 INSC 884]
Appearance:
Appellants: Senior Advocate Rana Mukerjee, Advocates B Ragunath, N.C. Kavitha,AOR Vijay Kumar, Senior Advocate V. Mohana, Advocates N Sridhar, Bhavya Pandey, Gokul Athiya, AOR Sriram P.
Respondents: Advocates E.R. Kumar, Swati Bhardwaj, Pratyusha Priyadarshini, Aadya Malik, AORs M/S. Parekh & Co., Movita, Advocates B Ragunath, Nc Kavitha, AOR Vijay Kumar