MUST READ JUDGEMENT.
Readiness & willingness is a condition for relief of specific performance.
Appendix “A” of the First Schedule of CPC (Form-47), specimen for drafting plaint in the suit for specific performance.
Stale Instrument and stale cheque.
It is a well-settled exposition of law that the relief of specific performance of a contract is discretionary, however the said discretion cannot be exercised arbitrarily or unreasonably but can be invoked to promote fairness and equity. The person seeking specific performance has to put on show that he is geared up and fervent to perform his part of the contract, but the other side is circumventing or evading the execution of his obligations arising out of the contract. While deciding the suit for specific performance of a contract, the Court has to consider and come to a decision regarding whether the plaintiff is ready and willing to perform his part of the contract, which is in fact substantiated by dint of the conduct or demeanor of the plaintiff before and after instituting the lawsuit. The equitable remedy rests on the discretion which is obviously exercised according to the well-established standards and philosophy of law and not whimsically or capriciously. The fundamental insightfulness of the Courts in directing the plaintiff in a suit for specific performance to deposit the sale consideration in Court in fact articulates that the vendee has the capacity to pay the sale consideration or balance sale consideration and is ready and willing to perform his obligations arising from the contract. An incessant readiness and willingness is a condition precedent for claiming relief of specific performance, which in unison also conveys the state of mind of the vendee, his capability to pay, keenness and commitment.
The word “pleadings” articulated under Order VI, Rule 1, CPC has much significance which not only includes the plaint but the written statement as well. In every civil suit, the prime duty of the Courts is to look into the averments of the plaint which not only itemizes the factual aspect or bone of contention between the parties, but also highlights the cause of action with the ultimate relief for which the plaintiff has knocked on the doors of the law. According to Section 121, CPC, the Rules in the “First Schedule” have the same effect as if enacted in the body of this Code until annulled or altered in accordance with the provision of this Part-X. Appendix “A” of the First Schedule of the CPC highlights the specimen and modules of pleadings in which Form-47 relates to the “Suit for Specific Performance” wherein there is a specific condition jotted down in paragraph (3) that is to be incorporated in the plaint that “The plaintiff has been and still is ready and willing specifically to perform the agreement on his part of which the defendant has had notice”. It is unequivocally clear that the plaint instituted for specific performance of a contract should confirm the requirements prescribed in Form 47 of the CPC. Under the letter of the law, the plaintiff ought to communicate the essential particulars: that he approached the defendant for the performance of a contract/agreement which he failed and the plaintiff is still ready and willing to specifically perform his part of the obligation arising from the contract/agreement. The averments in the plaint with regard to readiness and willingness must be assimilated in the tenor which may corroborate the readiness and willingness of the plaintiff who is capable of living up to his obligations. The sanguinity of Section 24 of the Specific Relief Act 1877, “Personal bars to the relief” depicts certain conditions in which specific performance of a contract cannot be enforced in favour of a person and its clause (b) is directly related to a person “who has become incapable of performing, or violates, any essential term of the contract that on his part remains to be performed”. However, in India the Specific Relief Act, 1877 was amended in the year 1963, and thereafter various sections were amended and renumbered. In its present form, Section 24 of the Specific Relief Act 1877 has been renumbered as Section 16 “Personal bars to relief” and its clause (c) has been amended.
Readiness means the capacity of the Plaintiff to perform the contract, which would include the financial position to pay the purchase price. Willingness refers to the intention of the Plaintiff as a purchaser to perform his part of the contract. Willingness is inferred by scrutinizing the conduct of the Plaintiff/purchaser, including attending circumstances. Continuous readiness and willingness on the part of the Plaintiff/purchaser from the date the balance sale consideration was payable in terms of the agreement to sell, till the decision of the suit, is a condition precedent for grant of relief of specific performance.
In a nutshell, the controversy in the present lis is germane to the controversy whether the learned Trial Court, after depositing the cheque, ought to have passed an order for its encashment, rather than handing it over to the officer of the Court for keeping it in his safe custody in order to avoid any possibility of misplacement or misappropriation; and whether the learned High Court has rightly directed the learned Trial Court to deposit the said cheque in a profit bearing account so that at the conclusion of trial either of the parties may seek benefit of the amount. So far as the main case of specific performance is concerned, the learned Trial Court, keeping in view the divergent pleadings, will obviously decide the case on merits after recording the evidence of the parties and reach a conclusion regarding whether the decree of specific performance may be passed or not. However, the crucial point is whether merely depositing the Cheque in Court without its encashment is a valid tender of the balance sale consideration in a suit for specific performance and whether it amounts to exhibiting the good faith, readiness and willingness to complete the transaction in the terms of the agreement between the parties. The petitioner's plea is that the deposit of the Cheque in the Trial Court without its encashment is a valid tender and was upset by the directions of the learned High Court to deposit the same in some profitable scheme till the final adjudication of the law suit. In our view, there was no rhyme or reason, nor any commonsense explanation for retaining the Cheque in the shelf or vault for its cosmetic value without its encashment to gauge the readiness and willingness of buyer in the suit for specific performance. According to Section 6 of the Negotiable Instruments Act, 1881, a "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. While Section 84 of the same Act deals with the consequences where a cheque is not presented for payment within a reasonable time of its issue and, under sub-section (2), it is provided that in determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. While handing over the cheque to the officer of the Court by the learned Trial Court, it was ignored that all cheques remain valid for certain time, thereafter it loses its efficacy/validity. When a cheque runs out its time it becomes unacceptable to the banker unless it is revalidated and confirmed by the drawer. According to the State Bank of Pakistan, Banking Glossary, (Ref: https:/www.sbp.org.pk/cpd/cpd-bank.asp), “A stale cheque is a cheque that has been outstanding for an unreasonable time. A cheque may be outstanding for more than six months and a bank may under its discretion refuse to honor such a cheque. A bank is under no obligation to a customer to pay a cheque, other than a certified cheque, after more than six months of its date, but it can charge its customer's account for a payment made thereafter in good faith”. Whereas in the State Bank of Pakistan, Guidelines for Clearing Operations, the definition of “Stale Instrument” means the payment instrument that is presented with a date of issue that has exceeded six (6) months from the date of the payment instrument or as specified on it”
The learned High Court rightly took judicial notice of the disparity and anomaly in the Trial Court’s order for not investing the amount of cheque in some profit bearing scheme. In order to advance the cause of justice, the Court may take judicial notice of some relevant facts. The doctrine of judicial notice is an exception to the general rules of evidence including the taking of cognizance of certain known facts by the Court which may bring to its own aid for consideration. The mere submission of a cheque, even with the bank statement of a particular period, in Court without its encashment neither expressly means or denotes that the petitioner will surely maintain the equivalent balance in the bank account at all times, nor does it guarantee or represent that the cash flow of the equivalent amount will be maintained and reserved for payment if the suit is finally decreed by the learned Trial Court. Even otherwise, if the cheque is not presented for encashment and only retained in the custody of the Court’s officer, it will become stale after six months, and thereafter nothing will remain in Court to decipher the readiness and willingness of the buyer with good faith to perform his part of the contractual obligation. As an aftermath, the Court has to go back to square one or start from scratch. Even if the stale cheque is revalidated and retained in the possession of Court, nothing will remain in a tangible form to ensure or prove the financial position with readiness and willingness. The expression specific relief means a remedy which precisely aims for the accomplishment of an obligation. The suit for specific performance is brought to ensure the performance of a contract by a person who is in default, but in tandem, it is also a corresponding obligation upon the person who is seeking enforcement or performance to put on view that he is by all means willing to perform his obligations sincerely and is not in default. It is a well recognized perception and tenet of law that the specific relief is meant for performance of a commitment which becomes remedial when the Court commands the specific performance and turns out to be protective when the Court grants an injunctive order to secure the rights of the parties pending adjudication. It is coherently deducible from the law laid down by this Court beyond any shadow of doubt that in the suit for specific performance of a contract to sell, the deposit of sale consideration in the Court may be ordered by the Court. In fact the deposit of the amount in Court, besides showing readiness and willingness, will also put on view the good faith and bona fide intention, subject to the final outcome of the suit on merits, that the vendee was not incapable of performing his part of the contract, at least in terms payment of sale consideration as per the covenant, if not violative of any other essential term of the contract which may debar the relief in terms of Section 24 of the Specific Relief Act 1877 which aspect can only be thrashed out after leading evidence by the parties. We are also sanguine that the deposit of the sale consideration or balance consideration in the Court is not an automatic requirement but there must be an order of the Court for deposit. While passing the order for deposit of sale consideration or balance sale consideration by the Trial Court, some reasonable time to deposit the money in Court should also be afforded for compliance of the order along with the consequences of non-compliance of the order with clarity in advance.
Suit for specific performance/Agreement to sell
C.P.3989/2022
M/s DW Pakistan Private Limited Lahore v. Begum Anisa Fazl-i-Mahmood and others
Mr. Justice Muhammad Ali Mazhar
08-12-2022
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