Karnataka High Court
M/S Sun Rama Exports Private Limited vs Smt Shantha Srinivas on 4 April, 2025
Author: Krishna S Dixit
Bench: Krishna S Dixit
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RFA No.178 OF 2015
C/W RFA CROB NO.19 OF 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF APRIL, 2025 R
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE G BASAVARAJA
RFA NO.178 OF 2015 (SP)
C/W
RFA CROB NO.19 OF 2015 (SP)
IN RFA NO.178/2015:
BETWEEN:
M/S SUN RAMA EXPORTS PRIVATE LIMITED,
A COMPANY REGISTERED UNDER THE
INDIAN COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
SANJAY PLAZA, 6TH FLOOR, A.B. NAIR ROAD,
JUHU, MUMBAI-400 049.
REPRESENTED BY HEREIN BY ITS AUTHORISED SIGNATORY
MR. SANJAY ABBAS KHAN
...APPELLANT
(BY SRI.S S NAGANAND., SENIOR COUNSEL A/W
SRI.VIJAYKUMAR DESAI., ADVOCATE)
AND:
1. SMT. SHANTHA SRINIVAS,
W/O SRI. D. SRINIVASA MURTHY,
AGED ABOUT 41 YEARS,
RESIDING AT NO. 1399, 12-B, CROSS ROAD,
SECOND STAGE, BASAVESWARANAGAR,
BANGALORE-560 096.
2. SRI. G. PRASAD REDDY
SON OF SRI. G. SRINIVAS REDDY
AGED ABOUT 62 YEARS,
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RESIDING AT NO.659,5TH CROSS,
3RD BLOCK, KORAMANGALA,BANGALORE-560 034.
...RESPONDENTS
(BY SRI.JAYAKUMAR S PATIL., SENIOR COUNSEL A/W
SRI.H N BASAVARAJU., ADVOCATE FOR R1;
SRI.M R RAJAGOPAL., SENIOR COUNSEL A/W
SRI.B M SHIVAJI., ADVOCATE FOR R2)
THIS RFA IS FILED UNDER SEC.96 AND ORDER XLI RULE
1 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED
13.1.2015 PASSED IN O.S.NO.271/2009 ON THE FILE OF THE
SENIOR CIVIL JUDGE, NELAMANGALA, PARTLY DECREEING THE
SUIT FOR SPECIFIC PERFORMANCE.
IN RFA CROB NO.19/2015:
BETWEEN:
SMT SHANTHA SRINIVAS
W/O SRI.D.SRINIVASA MURTHY,
AGED ABOUT 38 YEARS,
REPRESENTED BY HER POWER OF
ATTORNEY HOLDER,
SRI.D.SRINIVASA MURTHY,
S/O LATE DODDAMUTHAIAH,
AGED ABOUT 48 YEARS,
R/O NO.1399, 12-B, CROSS ROAD, II STAGE,
BASAVESWARANAGAR, BANGALORE-560 096.
...CROSS OBJECTOR
(BY SRI.JAYAKUMAR S PATIL., SENIOR COUNSEL A/W
SRI.H N BASAVARAJU., ADVOCATE)
AND:
1. M/S SUN RAMA EXPORTS PRIVATE LTD.,
A COMPANY REGISTERED UNDER THE INDIAN
COMPANIES ACT,1956
HAVING ITS REGISTERED OFFICE AT
SANJAY PLAZA,6TH FLOOR, A.B.NAIR ROAD,
JUHU, MUMBAI-400049.
REPRESENTED HEREIN BY ITS
AUTHORISED SIGNATORY
MR.SANJAY ABHAS KHAN.
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RFA No.178 OF 2015
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2. SRI.G.PRASAD REDDY,
S/O SRI.G.SRINIVASA REDDY,
AGED ABOUT 56 YEARS,
R/AT NO.659, 5TH CROSS, 3RD BLOCK,
KORAMANGALA, BANGALORE-560 034.
...RESPONDENTS
(BY SRI. S S NAGANAND., SENIOR COUNSEL A/W
SRI. VIJAYKUMAR DESAI., ADVOCATE FOR R1;
SRI.M R RAJAGOPAL., SENIOR COUNSEL A/W
SRI.B M SHIVAJI., ADVOCATE FOR R2)
THIS RFA CROB IS FILED UNDER ORDER 41 RULE 22(2)
OF CPC., AGAINST THE JUDGMENT AND DECREE DATED
13.01.2015 PASSED IN OS.NO.271/2009 ON THE FILE OF THE
SENIOR CIVIL JUDGE, NELAMANGALA, PARTLY DECREEING THE
SUIT FOR SPECIFIC PERFORMANCE.
THIS RFA AND RFA CROB. HAVING BEEN HEARD AND
RESERVED FOR ORDER, THIS DAY, KRISHNA S. DIXIT.J.,
PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
HON'BLE MR JUSTICE G BASAVARAJA
CAV JUDGEMENT
(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)
These twain appeals seek to call in question the
same judgment & decree entered by a learned Sr. Civil
Judge at Nelamangala whereby a specific performance suit
in O.S.No.622/2005, later re-numbered as
O.S.No.271/2009 having been negatived so far as the
prayer for decree of specific performance of Agreements to
Sell, plaintiff is held to be entitled to recover advance
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earnest money in a sum of Rs.25 lakh from the 1st
defendant with 6% interest per annum from the date of
agreement i.e., 17.02.2001. Appeal in R.F.A.No.178/2015
is by the plaintiff whereas Cross Objection is by the
defendant inasmuch as refund of advance amount with
interest, is directed.
2. FOUNDATIONAL FACTS OF THE CASE:
2.1 Plaintiff is a Company incorporated under the
provisions of erstwhile Indian Companies Act, 1956. It is
carrying on the business of developing resorts & health
clubs. 1st defendant Smt.Shantha vide agreement dated
17.02.2001 had agreed to sell the suit lands for a
consideration of Rs.74,80,000/- only. On the date of
agreement, an advance of Rs.25 lakh was paid by the
plaintiff, of which Rs.22,30,000/- was by cash and
Rs.2,70,000/- was by bank cheque.
2.2 On the same day, another agreement to sell was
duplicated wherein a lesser consideration amount ie.,
Rs.52,50,000/- was shown, all other terms & conditions of
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the first agreement having been retained intact. Plaintiff
alleges that this was done at the instance of and to help
the 1st defendant who did not want to reflect the cash
component of Rs.22,30,000/- in record. The agreement
inter alia stipulated the condition of getting the suit lands
converted to non-agricultural user and of obtaining
clearance/permission from the Income Tax Department,
for facilitating the sale transaction.
2.3 Plaintiff alleges that because of coercive tactics, he
agreed to increase the sale consideration by an additional
amount of Rs.5 lakh and for this, defendant obtained Post
Dated Cheques aggregating to Rs.54,80,000/-. The
defendant without complying with the conditions tried to
encash one of the cheques by presenting it before the
specified date and contrary to what was agreed between
the parties. The drawee bank did not honour the
presentation. Plaintiff purchased a Demand Draft for
Rs.20 lakh in favour of the said defendant, which he did
not collect despite intimation.
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2.4 The 1st defendant neglected to comply with the
conditions of agreement and was not showing any
inclination to discharge the contractual obligations resting
on her shoulders. Strangely she got issued a legal notice
dated 25.02.2004 'purporting to terminate the agreement'
unilaterally, making false allegations. The plaintiff sent
reply dated 03.03.2004. It is the case of plaintiff that
despite being ready & willing, the 1st defendant is avoiding
the agreement with no justification whatsoever. In the
backdrop of these assertions, the subject suit came to be
filed seeking a decree for specific performance.
2.5 The 1st defendant after service of summons entered
appearance through her advocate and filed the Written
Statement resisting the suit, principally contending that
despite her readiness & willingness to perform all terms &
conditions, the plaintiff himself was not ready & willing to
perform his part of obligations; he has committed breach
of essential terms of contract; the suit in its present form
& substance was not maintainable; the plaintiff has not
approached the court with clean hands and therefore is
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not entitled to any relief; she has sold the suit land to
another person vide registered sale deed dated
26.11.2005 and entries in the property records have been
accordingly mutated.
2.6 Buyer of the suit land came to be impleaded as
defendant No.2 and he too has filed Written Statement
denying execution of subject agreements to sell; he has
acquired marketable title over the schedule property for
consideration and after bona fide enquiry; the subject land
has been got converted to residential purpose; suit is
barred by limitation; plaintiff has suppressed material facts
and therefore is not entitled to any relief. He has also filed
Additional Written Statement, eventually resulting into
amendment of the plaint.
3. AS TO ISSUES FRAMED BY THE TRIAL COURT:
3.1 On the basis of pleadings of parties and
accompanying documents, initially five principal issues
were framed and later on 17.08.2009, two additional
issues came to be added. On 11.11.2014, one more
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additional issue came to be framed. Thus in all, eight
issues were enlisted in the following form:
"1. Whether the plaintiff proves that the
defendant entered in to an agreement with him
to sell the suit property for Rs.74,80,000 on
17.02.2001?
2. Whether the plaintiff father proves that
the defendant received Rs.25,00,000 as an
earnest money and executed an agreement of
sale?
3. Whether the plaintiff is ever ready and
willing to perform his part of the contract?
4. Whether the defendant proves that he has
created rights of one C. Prasad Reddy under
sale deed dated 26.11.2005.
5. Whether the plaintiff is entitled for the
relief of specific performance of contract as
sought for?
6. Whether the plaintiff proves that suit
schedule property and the property purchased
by defendant No.2 is one and same?
7. Whether the defendant No.2 proves that
he is the bonafide purchaser of the suit
schedule property without the knowledge of the
agreement of sale between the plaintiff and the
1st defendant?
8. Whether Defendant No.2 proves that the
Suit of Plaintiff is barred by law of limitation?"
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C/W RFA CROB NO.19 OF 2015
4. TRIAL OF THE SUIT:
4.1 From the side of plaintiff-company, one Mr.Sanjay
Abbas Khan being the Managing Director filed his affidavit
evidence dated 23.10.2010. His examination-in-chief was
done on 24.10.2010 through the Court Commissioner.
Subsequently he was cross examined on several dates. In
his deposition, as many as twelve documents came to be
produced & marked as Exs.P1 to P12. Amongst other,
these documents comprised of Company's Authorization
Resolution, two agreements to sell, letter from I.T. Dept.,
defendant's legal notice, plaintiff's reply notice,
records/extracts from bank, etc.
4.2 From the side of defendants, the 1st defendant-
Smt.Shantha Srinivas did not enter the witness box.
However, her husband Sri.Srinivas filed his affidavit
evidence dated 15.1.2014. His examination-in-chief and
cross-examination were conducted on several dates.
Similarly, from the side of 2nd defendant, one Mr.Syed
Aleemuddin being the Special Power of Attorney holder
deposed as DW.2, filed his affidavit evidence dated
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10.9.2014. He was subjected to examination-in-chief and
cross-examination. In the deposition of defendants, as
many as 33 documents came to be produced and got
marked as Exhibits D1 to D33 which inter alia comprised
of agreement, power of attorney, cheque, bank debit slips
and endorsements, notices, reply notice, sale deed, MR
order, etc.
4.3 The trial Court heard the submissions at the Bar in
the light of pleadings and evidentiary material loaded to its
record and entered the impugned judgment & decree. That
is how the appeal by the plaintiff and cross-objections by
the defendants have been placed at our hands. We tried to
explore the possibility of amicable settlement, that
however did not bear fruit, is beside the point.
5. Having heard learned Sr. Advocates appearing for
the parties and having perused Appeal Paper Books along
with the original LCR, we have framed the following
questions for consideration:
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C/W RFA CROB NO.19 OF 2015
5.1 Whether execution of first Agreement dated
17.2.2001 at Ex.P2 is proved, and if answer is in the
affirmative, can it be held that 1st defendant has received
Rs.22,30,000/- in cash towards consideration amount...?
(This is answered by the Trial Court in the affirmative)
5.2 Whether the second Agreement dated 17.2.2001 at
Ex.P4 does constitute novatio...?
(This is not articulately discussed by the Trial Court)
5.3 Under the subject Agreement(s), what are the
obligations respectively resting on the shoulders of parties
i.e,. plaintiff & 1st defendant...?
(This aspect is to some extent discussed by the Trial
Court)
5.4 Whether learned trial Judge is justified in rejecting 1st
defendant's application for amendment of Written
Statement...?
(This question obviously did not arise before the Trial
Court)
5.5 Whether the plaintiff was ready & willing to perform
his part of obligations under the subject Agreement(s)...?
(This issue is answered in the Negative by the Trial Court)
5.6 Whether the 1st defendant has performed her part of
obligations under the subject Agreement(s)...?
(This aspect is frugally discussed by the Trial Court)
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5.7 Whether alleged culpable conduct of 1st defendant in
selling the suit property to the 2nd in violation of T.I. order
has any bearing on the matter...?
(This issue was not framed nor properly discussed by the
Trial Court)
5.8 Whether the 2nd defendant who is a buyer pendente
lite is entitled to retain the suit land...?
We have framed the above questions being conscious that
a few of them do overlap, only for methodically deciding
the sustainability of impugned judgment & decree, and for
granting appropriate relief.
6. AS TO PROOF OF EXECUTION OF AGREEMENTS AT
EXHIBITS P2 & P4 AND ENDORSEMENTS AT EXHIBITS P3
& P5:
6.1 Averredly, there are two Agreements to Sell, both
being dated 17.2.2001; first is produced & marked as
Ex.P2 and the other is produced & marked as Ex.P4; the
first ENDORSEMENT/RECEIPT at Ex.P3 and the second
ENDORSEMENT/RECEIPT at Ex.P5 are ditto in all respects
as if they are copied from each other; both they are dated
25.12.2003; they mention about additional sum of
Rs.5,00,000/- and enlist three bank cheques. These
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documents are produced and marked in the deposition of
PW.1. We hasten to add that the second Agreement at
Ex.P4 is admitted in the pleadings of the parties and in
their evidence as well. There is no dispute that all these
Exhibits relate to suit property only. The signatures
appearing on Ex.P2, Ex.P3 & Ex.P5 are specifically
admitted by DW.1 who is none other than the husband of
1st defendant. He has also admitted Ex.P3 Endorsement, in
para 4 of his cross-examination dated 3.9.2014 and
therefore, he cannot deny Ex.P5 endorsement. It is
relevant to note that Ex.P3 is written on the back page of
Ex.P2 and similarly Ex.P5 is written on the back page of
Ex.P4. That being the position, the execution of agreement
at Ex.P2 has to be held as having been duly proved. The
net effect of this is the proof of receipt of Rs.22,30,000/-
as a cash component, there being nothing to rebut the
shifted burden. This view gains support from the decision
of Apex Court in KALIANNA GOUNDER vs. PALANI
GOUNDER1.
1
AIR 1970 SC 1942
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6.2 We repeat that both the Agreements namely Ex.P2
& Ex.P4 bear signatures of PW1 & 1st defendant as parties
on each of their pages. In the last of the pages, DW1
admits, his signature as a witness also appears. Both
these agreements have the same terms & conditions; they
mention the very same cheque bearing No.171955 dated
17.2.2001 drawn on the same bank namely the Global
Trust Bank, M.G. Road Branch, Bangalore. That being said,
there is one significant difference: in Ex.P2, the sale price
is stated as Rs.74,80,000/- only whereas, in Ex.P4, it is
Rs.52,50,000/-. At paragraph 2(i)(a) of Ex.P2, receipt of
Rs.22,30,000/- paid in cash is mentioned. Paragraph
2(i)(b) mentions about receipt of Rs.2,70,000/- by
cheque. Same paragraph reads '... total sum of
Rs.25,00,000/- (Rupees Twenty five lakhs only) as
advance the vendor hereby adjust and acknowledge...'.
Paragraph (ii) reads 'A sum of Rs.34,80,000.00 (Rupees
Thirty Four lakhs and Eighty Thousand only) on or before
05.03.2001.' Paragraph (iii) says that the plaintiff shall
pay the balance of Rs.15,00,000/- to the 1st defendant on
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the date of execution & registration of the sale deed,
before the Sub-Registrar.
6.3 DW.1, who is none other than the husband of 1st
defendant specifically admits in his cross-examination
dated 20.8.2014 that both Exs.P2 & P4 are signed by PW.1
& 1st defendant as parties and he has signed them as a
witness. Further, he has admitted that the
ENDORSEMENTS/RECEIPTS i.e., Exs.P3 & P5 appearing on
the back page of both Exs.P2 & P4 bear the signatures of
himself, his wife & PW.1. Added, in 1st defendant's Legal
Notice dated 25.02.2004 at Ex.D14 and her Rejoinder
Notice dated 18.3.2004 at Ex.D20, the said endorsement
is admitted. Ex.P4 is an admitted document. Further, at
para 4 of his cross-examination dated 3.9.2014, DW.1 has
specifically admitted Ex.P3 Endorsement. He further says
that in terms of said Endorsement, plaintiff has to pay
additional sum of Rs.5,00,000/-. By way of extra caution
we also compared the signatures of the parties and of
DW1 appearing on all these documents by using the lens,
keeping in view the factors such as pen pressure, pen run,
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slant, size, shading, letter forms, etc. There is nothing to
doubt their authenticity. We are conscious that ordinarily
courts would not on their own undertake forensic
examination of handwritings. However, in the light of
certain admissions both in pleadings and in evidence
coupled with attending circumstances, we venture such an
examination. We noted the signatures on Ex.P4 which is
an admitted document.
6.4 The ENDORSEMENT/RECEIPT dated 25.12.2003 came
to be drawn between the parties at Ex.P3. Although, para
8 of the plaint avers this, the Written Statement at para 8
denies the same. Obviously, the endorsement bears the
signatures of PW1 & 1st defendant as parties, and of DW.1
as a witness. The 1st defendant in her Written Statement
dated 2.2.2008 at paragraph No.2 has specifically
admitted Ex.P4, although she has denied execution of
Ex.P2. PW.1 in his cross-examination dated 13.11.2012
has specifically stated that Ex.P4 was drawn mentioning
lesser sale price by excluding the cash component stated
in Ex.P2 at the instance of 1st defendant only. Regard
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being had to general tendency of commoners, we assume
that, it is done by the plaintiff to lessen her financial
burden in terms of stamp duty which is payable ad
valorem and also Capital Gains Tax, since the property is
in the vicinity of Bangalore City Corporation. DW.1 in his
cross-examination dated 3.9.2014, at paragraph 2, admits
about the liability of Capital Gains Tax. Every page of
Ex.P2 is signed by PW.1 & 1st defendant as parties and
DW.1 as a witness. He has also admitted that the
'ENDORSEMENT/RECEIPT' dated 25.12.2003 which is on
the back page of Ex.P2 bears the signatures of 1st
defendant and plaintiff and that he has signed it as one of
the witnesses.
6.5 Ex.P3 extends the stipulated period for
accomplishment of sale transaction; the plaintiff had
agreed to pay additional sum of Rs.5,00,000/- also and
handed three Punjab National Bank cheques; one bearing
No.786342 dated 25.2.2004 is for a sum of
Rs.29,80,000/-, the second bearing No.786343 dated
15.3.2004 for a sum of Rs.20,00,000/- and the third
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bearing No.786344 dated 5.4.2004 for a sum of
Rs.5,00,000/- (toward additional amount); all the cheques
are drawn in favour of 1st defendant. However, she did not
enter the witness box and no explanation is offered for
herself not deposing as a witness; DW.1 has specifically
stated that his wife is a graduate and can read & write
English. Of course, he had made one stray sentence that
she does not know English. He also admits that she is hale
& healthy and residing in Bangalore. Very importantly he
admits that 1st defendant has no difficulty to come to court
and that she in fact had visited court.
Conclusion: We are of the considered opinion that the
subject documents ie., Ex,P2, P3 & P5 are genuine
documents. As a concomitant of this, the receipt of cash
component i.e., Rs.22,30,000/- is proved beyond doubt;
further Rs.2,70,000/- has been admittedly received by
cheque. Therefore we concur with the finding of the trial
court on its Issue Nos.1 & 2 that the 1st defendant on
17.02.2001 agreed to sell the suit property to the plaintiff
for Rs.74,80,000/-, and that she has received a sum of
Rs.25,00,000/- as earnest money. In other words, the
execution of first Agreement at Ex.P2 is perfectly proved.
7. AS TO THE INVOCABILITY OF DOCTRINE OF
NOVATIO:
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7.1 As already observed above, there are two
agreements namely Exhibits P2 & P4 successively drawn
on the same day, substantially with same terms &
conditions, except as to price variation. In the former,
price is shown to be Rs.74,80,000/-, whereas in the latter
it is Rs.52,50,000/-; we repeat rest all remains same.
Ordinarily, mere change of price alone may not amount to
novatio. It is more so when there is a tacit understanding
between the parties that for all practical purposes, higher
price should be kept in consideration and only for the
limited purpose of saving stamp duty, capital gains tax,
etc., the official figure should be lesser. In a sense, to that
extent, it is a case of tax avoidance which is culpable both
legally and morally. One cannot gainfully argue that it is a
case of tax planning, intent being corrupt. However, that
has been done at the instance of the 1st defendant, at
whose hands plaintiff's substantial amount was already
placed and thus, he had no much say in the matter, lest
the intended transaction should fail. Therefore, much
culpability cannot be laid at the threshold of the plaintiff,
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in this regard. This aspect of the matter has not been
adverted to by the Trial Court from this angle, although
such an angular view assumes significance, while
adjudging conduct of a party to the transaction.
7.2 Section 62 of the Indian Contract Act, 1872 which
enacts doctrine of novatio, reads as under:
"If the parties to a contract agree to substitute
a new contract for it, or to rescind or alter it,
the original contract need not be performed."
Apex Court in LATA CONSTRUCTION vs.
DR.RAMESHCHANDRA RAMNIKLAL SHAH2, has
observed as under:
"...One of the essential requirements of
`Novation'; as contemplated by Section 62, is
that there should be complete substitution of a
new contract in place of the old. It is in that
situation that the original contract need not be
performed. Substitution of a new contract in
place of the old contract which would have the
effect of rescinding or completely altering the
terms of the original contract, has to be by
agreement between the parties. A substituted
contract should rescind or alter or extinguish
the previous contract. But if the terms of the
two contracts are inconsistent and they cannot
stand together, the subsequent contract cannot
be said to be in substitution of the earlier
contract..."
2
AIR 2000 SC 280
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Mere alteration to the structure of the terms of the
contract is insufficient. The substitution must have the
effect of completely rescinding, altering or extinguishing
the previous contract vide LUCKNOW DEVELOPMENT
AUTHORITY vs. M.M.GUPTA3. Keeping this in mind, if
we peruse the terms & conditions of Exs.P2 & P4, we
cannot readily jump to the conclusion that Ex.P4 has
brought about novation. If there is no case of novatio in
the light of discussion in the immediately preceding sub-
paragraph (a), both agreements namely Exs.P2 & P4 have
to be read together in ascertaining the content & intent of
the transaction between the parties.
7.3 In fact, the first issue framed by the Trial Court
having been answered in the affirmative by it, logically
supports the view that the doctrine of novatio, stricto
sensu is not invocable in the case at hand. However, in the
light of artificially altered price factor, should there be any
conflict between the two agreements, then obviously the
prior one has to yield to the latter. Whether there is
3
(1994) 1 SCC 243
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novation or not, depends on the intention of parties, as
seen from the substance of the agreement and not merely
from its form. If there is no intention to rescind the prior
arrangement altogether, there is no substitution, and the
original contract still remains enforceable. This being the
settled position of law, governs the case of parties at
hand, a few stray sentences uttered by PW.1 from the
witness box that the suit is founded on Exhibit P4,
notwithstanding.
Conclusion: Case of the parties does not admit the
doctrine of novatio, all terms & conditions of Exhibits P2 &
P4 being substantially same, except the price component,
the differential thereof paid in cash having been retained
by the 1st defendant herself and further this having been
clandestinely done for the purpose of duty/tax avoidance.
8. AS TO THE OBLIGATION OF PARTIES TO THE
AGREEMENTS/ENDORSEMENTS:
8.1 Since pleadings of the parties are essentially founded
on the second agreement at Exhibit P4, argued novation
vide Exs.P3/P5, let us examine what obligations which
party undertook: We have already recorded a finding that
the sale price was Rs.74,80,000/- of which Rs.22,30,000/-
was paid in cash and Rs.2,70,000/- by cheque has been
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received by the 1st defendant. This is on the basis of Ex.P2
which learned trial Judge has rightly held as proved. Thus,
more than 1/3rd of the price component is already paid
and what remains to be paid is Rs.49,80,000/-.
Vouchsafing the title to property is a predominant
obligation of the vendor, vide condition Nos.6, 7 & 8 in
Ex.P4, is not disputed before us. Paragraph 2 stipulates
that the plaintiff has to pay this amount in two
installments: First installment of Rs.34,80,000/- to be paid
on or before 5.3.2001 and the other installment i.e.,
balance of Rs.15,00,000/- to be paid before the Sub-
Registrar, when the sale deed after due execution is
presented for registration.
8.2 Para 3 of Ex.P4 stipulates a period of sixty days for
execution of sale deed, and this has to be reckoned from
the date of agreement, and alternatively, within a period
of seven days reckoned from the obtainment of No
Objection under Chapter XXC and Certificate under section
230A of the Income Tax Act, 1961, as per the requirement
of law, then obtaining. 1st defendant has to obtain
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conversion of the subject land to non-agricultural user
under section 95 of the Karnataka Land Revenue Act,
1964 inasmuch as the plaintiff could not acquire and hold
the suit land because of bar enacted in section 79A of
Karnataka Land Reforms Act, 1961, as the provision then
existed. This bar has been done away with by 2020
Amendment which is held to have retrospective effect.
8.3 So far as the obligation in relation to the requirement
of obtaining No Objection and Certificate mentioned
above, condition No.4 of Ex.P4 rests it on both the parties,
the requirement of law itself being that way. In fact, both
the parties have walked hand in hand in filing necessary
statement in Form 37-I of the 1961 Act as stipulated
under condition No.4 of Ex.P4. However, this is not the
end of matter: Condition No.5 of Ex.P4 specifically
stipulates that the vendor herself has to obtain Income
Tax Clearance Certificate under section 230A. Further,
condition No.6 stipulates as many as 11 obligations to be
discharged by the vendor. The text in which these clauses
appear makes it abundantly clear that they are
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meticulously stipulated by & between the parties with all
seriousness and not as a matter of formality. In fact, the
subject agreements themselves mention involvement of a
law firm of repute.
8.4 Condition No.7 specifically states that the sale shall
be subject to clear & marketable title of the vendor. Even
otherwise, that is the normal legal position. This obviously
rest on the shoulders of the 1st defendant vendor. A bit
reverting to condition No.6(x), the vendor has undertaken
to produce all documents in original and also a necessary
Certificate from the Assistant Commissioner that there is
no tenancy claim and that the suit land is not an Inam
Land, within thirty days from the date of agreement Ex.P4.
Further, condition No.6(xi) obligates the 1st defendant to
apply for conversion of suit land for non-agricultural
(commercial use) immediately after the execution of
agreement and to take all steps to expeditiously get such
conversion. Of course, it also says that the expenses
towards this to be borne out/reimbursed by the plaintiff
only.
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8.5 Under the ENDORSEMENTS/RECEIPTS both dated
25.12.2003 at Exs.P3 & P5, at unnumbered first
paragraph, delay 'to complete the sale deed in favour of
the purchaser' is mentioned. Obviously, this delay cannot
be attributed to the plaintiff merely because he has
undertaken to pay additional sum of Rs.5,00,000/-
escalating the payables from Rs.49,80,000/- to
Rs.54,80,000/-. The plaintiff has handed to the 1st
defendant three cheques of Punjab National Bank, IFB,
M.G. Road, Bangalore, in that connection, as under:
(a) Cheque bearing No.786342 dated 25.2.2004 for a
sum of Rs.29,80,000/-.
(b) Cheque bearing No.786343 dated 15.3.2004 for a
sum of Rs.20,00,000/-.
(c) Cheque bearing No.786344 dated 5.4.2004 for a sum
of Rs.5,00,000/-.
The plaintiff has to secure necessary permission for
conversion of suit land as stipulated in Ex.P4 and only
thereafter, has to execute/register the sale deed, is again
stipulated in this document also.
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9. AS TO WHO PERFORMED THE OBLIGATIONS AND
WHO BREACHED THEM:
9.1 The vehement submission of learned Sr. Advocate
Mr.Jayakumar S Patil that the obligation to obtain land
conversion to commercial user in the text & context of
Exs.P2, P3, P4 & P5 rests with the plaintiff himself, is
difficult to agree with. As already mentioned above, the
stipulation at Para 6(xi) reads:
"The vendor undertakes to apply for conversion
of the schedule property for non-agricultural
commercial use immediately after the
execution of this agreement and to take all
steps to expeditiously get such conversion..."
The very same condition stipulates that the plaintiff has to
reimburse the expenditure of obtaining such conversion. It
is not that the payment of likely expenditure towards the
same is a precondition for the 1st defendant applying for
and securing such conversion order under section 95 of
1964 Act.
9.2 Mr.Patil's contention that condition No.8 of Exs.P2/P4
is in the nature of stand-alone obligation whereunder, the
plaintiff should have paid second installment of
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Rs.34,80,000/- so that the 1st defendant could have
handed over all original documents of title along with a
Power of Attorney in his favour for getting conversion, is
difficult to sustain. Let us see how this condition is texted:
"The Vendor shall hand over all the original
documents of title relating to the schedule
property and grant a Power of Attorney in
favour of the Purchaser or their nominee
authorizing them to apply for conversion of the
land and to do all acts necessary in that regard
before the appropriate authorities on receipt of
the second installment of Rs.34,80,000/-
(Rupees Thirty Four Lakhs Eighty Thousand
only) as stipulated in clause 2(ii) above."
Prime purpose of interpretation of a document is to
ascertain the intention of parties manifested at the time
when the document was executed. When an instrument is
couched in a language which is clear and definite, there is
no need to resort to the rules of interpretation. Lord Davey
in N.E.RAILWAY CO. vs. HASTINGS4 observed:
"...the deed must be read as a whole in order to
ascertain the true meaning of its several
clauses, and ... the words of each clause should
be so interpreted as to bring them into
harmony with the other provisions of the deed
if that interpretation does no violence to the
meaning of which they are naturally
susceptible..."
4
[1900] AC 260, HL
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Courts cannot be carried away by the mere letters found in
an instrument. One single clause of a document cannot be
read in isolation of other clauses. Very exceptions to the
rule prove the rule. Viewed from this angle, the above
reproduced condition in Exhibit P2/P4 cannot be construed
as diluting the primary obligation of 1st defendant to apply
for and obtain inter alia land conversion to commercial
user. We also do not agree that the obligation to do this is
contingent upon plaintiff making payment of
Rs.34,80,000/- inasmuch as the 1st defendant has right of
reimbursement under condition No.6(xi).
9.3 Learned Sr. Advocate Mr.S.S.Naganand is right in
submitting that it is the statutory obligation under section
55 of the Transfer of Property Act, 1882 mounted on the
shoulders of vendor to vouch a clear and marketable title,
unless contrary is contracted. It has been held by the Privy
Council in MOTILAL vs. NANHELAL5 that there is an
implied covenant by the vendor to do all things necessary
to effect a transfer; so when a vendor contracts to sell
5
57 IA 333, p.338
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such land, which can only be transferred after obtaining
sanction at the hands of authorities, he must apply for
such sanction and obtain one. The Delhi High Court in
RAGHUNATH RAI vs. JAGESHWAR PRASHAD
SHARMA6 has held that the vendor cannot avoid the
agreement on his own ipse dixit for non-performance of
the terms on his part. Condition No.8 enabled the plaintiff
to obtain GPA to apply for conversion of land on behalf of
1st defendant by making the payment of second
installment of Rs.34,80,000/- as stipulated in condition
No.2(ii) of Exs.P2 & P4. This view gains support from the
following paragraph of the ENDORSEMENT/RECEIPT at
Exs.P3 & P5:
"The Vendor agrees to execute the sale deed
transferring the schedule property in favour of
the Purchaser or her nominee/s after securing
necessary permission for conversion of the
schedule property under the Karnataka Land
Revenue Act."
Thus subsequent documents both dated 25.12.2003
reinforce the obligation. Added, it is not the case of 1st
defendant in her Legal Notice at Ex.D14 and Rejoinder
6
AIR 1999 Del 383
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Notice at Ex.D20 that she had applied for and obtained the
land conversion and that despite demand, the plaintiff was
not reimbursing the expenditure incurred or to be incurred
towards it. The 1st defendant post revocation of agreement
in question applied for conversion of land and obtained the
conversion certificate on 10.6.2014 at the hands of Special
Deputy Commissioner, Bengaluru District. There is
absolutely no explanation whatsoever as to why she did
not do this within the period stipulated in Exs.P2, P3, P4 &
P5, that too having received substantial amount from the
plaintiff.
10. AS TO READINESS & WILLINGNESS OF PLAINTIFF TO
PERFORM HIS PART OF OBLIGATION:
10.1 The reasoning of learned trial Judge as to readiness
& willingness lacking on the part of plaintiff, does not
much impress us. DW1 in his cross examination dated
28.02.2014 has specifically admitted that the Conversion
Order u/s.95 of 1964 Act has been obtained only on
10.06.2004 and that till then the suit land had agricultural
character. He has also admitted receipt of cheques issued
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by the plaintiff as has been mentioned in Exs.P3 & P5. His
version that he has given back these cheques to the
plaintiff does not merit acceptance inasmuch as he has
specifically admitted in the very same cross-examination
that he had made use of these cheques while giving
instructions to his lawyer for issuing the subject Legal
Notice and Rejoinder Notice. On which subsequent date, at
what place and to whom these cheques were handed back
has not been pleaded. Had he handed back as claimed,
some evidentiary record would have been generated in all
probability. In her letter dated 30.8.2001, the 1st
defendant has falsely claimed that she was ready with all
the documents for execution of the sale deed, when
admittedly there was no order converting the land to non-
agricultural user. That came long thereafter as mentioned
above.
10.2 The version of the plaintiff that he had instructed
1st defendant not to present the subject cheques for
encashment till after 24.2.2004 inasmuch as he had
bought two demand drafts dated 25.2.2004, one bearing
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No.567805 for Rs.15,00,000/- and another bearing
No.757526 for Rs.5,00,000/- in favour of 1st defendant.
The trial Court has recorded a finding at paragraph 41 of
impugned judgment that as on 28.2.2004, plaintiff had a
bank balance of Rs.51,70,656.93/- vide Bank Account
Ledger Extract at Ex.P12. It sounds strange that the 1st
defendant got issued Legal Notice dated 25.2.2004 i.e.,
the day on which BANK DRAFTS were bought by the
plaintiff. It can be justifiably presumed that this, 1st
defendant did after she was telephonically informed of the
said Drafts and apparently it is a clandestine act designed
to suit her intent.
10.3 The vehement submission of Mr. Patil appearing for
the 1st defendant that the plaintiff has bought the subject
Bank Drafts only to generate evidence in his favour as an
afterthought, cannot be accepted: Firstly, it is not the
case of 1st defendant that the plaintiff knew that on the
same day when he bought the Bank Drafts, the 1st
defendant was issuing notice rescinding the Agreements in
question. Throughout evidence of PW1 & DW1, there is
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not even a whisper in this regard. Mr.Patil's submission
that even assuming that the plaintiff had bought these
Bank Drafts to handover them to the 1st defendant, still
the amount comprised therein is only Rs.20 lakh as
against Rs.29,80,000/- plus Rs.5,00,000/- (additional
amount), is true. However, as already mentioned above,
there was no obligation on the part of plaintiff to make
said payment when admittedly the 1st defendant had not
obtained Conversion Order as undertaken.
10.4 Plaintiff already having parted with about 1/3rd of
consideration amount, was holding the subject Bank Drafts
and that there was a huge amount i.e., Rs.51,70,656.93/-
in his Bank Account vide Ledger Extract at Ex.P12.
Therefore, presumably he would not have refused to make
good the deficit, which apparently was a small part. There
is no reason to doubt the version of plaintiff that he had
told the 1st defendant not to present the subject cheques
for encashment. That is the reason why he bought the said
bank drafts, gains credence. It cannot be readily presumed
in the totality of circumstances that the plaintiff was not
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ready & willing or that he had failed to discharge his part
of obligation.
Conclusion: Plaintiff was ready & willing to perform his
part of obligation and therefore the finding of learned trial
Judge to the contrary is unsustainable. Further we hold
that it is the 1st defendant who has not performed her part
of obligations.
11. AS TO LEGALITY OF PARTLY REJECTING 1ST
DEFENDANT'S I.A.No.26 FOR AMENDMENT OF WS:
11.1 Learned Sr. Advocate Mr.Patil contended that the
learned trial Judge grossly erred in rejecting 1st
defendant's application filed under Order VI Rule 17 of CPC
seeking leave to amend the Written Statement dated
31.01.2012 and that having prejudiced her, the
companion Cross-Objection is filed laying a challenge to
the decree for refund of the earnest money with interest.
He drew attention of the court to the contents of said
application wherein para 5 of the Written Statement was
sought to be amended. Learned Sr. Advocate
Mr.Naganand appearing for the plaintiff made submission
in justification of rejection of the said application. He told
us that the rejection order was challenged in
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W.P.Nos.4956-4959/2012 (GM-CPC) and the same came
to be rejected vide order dated 23.02.2012; even their
applications in I.A.Nos.1 & 2/2014 seeking restoration of
Writ Petitions were also negatived by the learned Single
Judge vide order dated 26.8.2014 and therefore, legality
of rejection of amendment application cannot be now
reopened; even otherwise, the order disallowing
amendment is well structured and therefore, it should be
left with impunity. Let us examine these rival contentions.
11.2 The vehement submission of Sri.S.S.Naganand that
the 1st defendant lost the challenge to the trial court's
order rejecting Amendment Application, going by the
record, is partly true. Defendant's W.P.Nos.4956-
4959/2012 (GM-CPC) challenging said order along with
other orders were disposed off on 23.02.2012 as having
become infructuous since on the same day, learned Trial
Judge had pronounced the judgment by decreeing the suit.
Therefore, learned Single Judge has not examined the
validity of trial Judge's orders on merits. Even 1st
defendant's applications to recall dismissal order in these
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Petitions were not favoured because in R.F.A.No.852/2012
C/w R.F.A.No.833/2012 filed by the defendants herein, a
Coordinate Bench vide order dated 24.06.2013 having set
aside the judgment & decree, remanded the matter to the
trial Court for consideration afresh. This happened much
before the subject Recall Applications were taken up for
consideration, as rightly submitted by Mr.Patil appearing
for the 1st defendant. These applications came to be
disposed off by the learned Single Judge with certain
observations, a relevant part of which we discuss in due
course. However, much of the contention raised by
Mr.Naganand would pale into insignificance in view of our
discussion infra.
11.3 Originally, the suit for specific performance was
filed in 2005 vide O.S.No.622/2005 and because of
alteration of pecuniary jurisdiction, the same having been
transferred to the Court of Civil Judge (Sr. Dn),
Nelamangala, it was re-numbered as O.S.No.271/2009. 1st
defendant had filed her Written Statement on 2.2.2008.
Originally, the issues were framed on 13.3.2008. Plaintiff
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had filed I.A.No.20 seeking a direction to the 1st defendant
to produce the original Bank Cheque bearing No.786342
drawn for a sum of Rs.29,80,000/-. The said application
was founded on a specific ground that on the blurb of said
cheque, it was specifically instructed in writing that the 1st
defendant would present it for encashment on or after
25.02.2004. At this stage, for the first time, defendant
took up the stand in her objections to the said I.A. that
the subject cheque was different from the one issued to
her.
11.4 The learned trial Judge vide order dated 15.12.2011
disposed off the said application of the plaintiff observing
that adverse inference could be drawn against the said
defendant should original cheque be not produced. Only
after this, the subject Amendment Application in I.A.No.26
came to be filed on 31.1.2012. The stand taken in the said
application seeking leave to amend the Written Statement
if permitted, virtually amounted to permitting the 1st
defendant to withdraw the admissions in the pleadings, as
rightly observed by the learned trial Judge; he also said
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that it would amount to setting up a new case from the
side of answering defendant. Learned trial Judge repelled
the prayer for amendment that was sought to be
introduced at line No.8 of para 5 of Written Statement, as
sought for in para 2 of the application. However, he
permitted amendment relating to cheque numbers since it
was a matter of typographical error. Learned Judge has
rightly referred to Apex Court decision in
AJENDRAPRASADJI PANDEY vs. SWAMI
KESHAVPRAKESHDASJI7. He has also recorded an
adverse finding against the 1st defendant that the prayer
for amendment lacked bonafide and that it was moved
very belatedly.
11.5 Post 2002 amendment to CPC, ordinarily leave to
amend the pleadings cannot be granted once the trial of
suit commences, subject to few just exceptions into which
argued case of the 1st defendant is not shown to fit.
Mr.Naganand is right in telling us that the 1st defendant
vide subject application had sought for leave to introduce
7
AIR 2007 SC 806
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altogether new cheques that were not mentioned in
Ex.P3/P5 and that nothing about them was mentioned in
the Legal Notice at Ex.D14 & Rejoinder Notice at Ex.D20.
There was no whisper made to PW.1 whilst he was in the
witness box. Added whatever amendment was reasonable
has been permitted by the trial Judge in his accumulated
wisdom. A discretionary order of the kind may give scope
for arguing on either side. A different conclusion could
have been arrived at on the same set of facts pleaded in
the amendment application, is a poor ground for upsetting
such an order. This order of learned Judge cannot be
faltered on any count.
11.6 There is one finer aspect which we cannot leave
unattended:
i) As already mentioned above, the amendment
application having been substantially rejected
vide order dated 04.02.2012, the trial was
accomplished and the learned trial Judge
decreed the suit on 23.03.2012. The 1st
defendant filed RFA No.852/2012 and the 2nd
defendant filed RFA No.833/2012 laying a
challenge to the said decree. A Co-ordinate
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Bench of this court vide common order dated
24.06.2013 allowed these appeals, set aside
the impugned judgment & decree and
remanded the matter for fresh consideration.
The order rejecting amendment application
admittedly is not enlisted under Order XLIII
Rule 1 of CPC, 1908 and therefore was not
appealable. However, that could have been
made one of the grounds in the subject appeals
for laying a challenge to the impugned decree,
as is provided under Order XLIII Rule 1A of the
Code. Such a ground admittedly was not
taken up and this aspect of the matter has
been a bit discussed by the learned Single
Judge in his order dated 26.08.2014 whereby
1st defendant's I.A.Nos.1 & 2 of 2014 were not
entertained. These applications were filed
seeking recall of the order dated 23.02.2012
whereby her W.P.No.4956 & 4959 of 2012
were disposed off, as having become
infructuous in view of suit itself being decreed.
ii) Absolutely no explanation is offered as to
why the trial Court's order partly rejecting
amendment application was not made a ground
in the said RFAs. This conduct on the part of
both the defendants gives scope for assuming
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that they had acquiesced in the validity of said
order or that they have waived their right to
challenge it. That being the position, the
ground now taken up in the Cross Objection
filed by the 1st defendant is only an
afterthought to secure dismissal of plaintiff's
appeal, in any circumstance. Therefore, the
finding of trial Judge that the subject
application for amendment lacked bona fide is
further strengthened.
12. AS TO DISCRETION TO GRANT DECREE FOR
SPECIFIC PERFORMANCE IN VIEW OF 2018 AMENDMENT
TO 1963 ACT:
12.1 The suit in O.S.No.622/2005 was filed on
14.03.2005 and on transfer on account of change in
pecuniary jurisdiction, it was renumbered as
O.S.No.271/2009. Amongst other Sec. 10 of Specific
Relief Act, 1963 came to be amended w.e.f. 01.08.2018
greatly diminishing discretion of Courts to decline decree
for specific performance, which otherwise availed to them.
Learned Sr. Advocate Mr.Naganand submits that the
amendment is with retrospective effect whereas Mr.Patil
appearing for the 1st defendant and Mr.M.R.Rajagopal
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representing the 2nd defendant (pendente lite buyer)
submit that it is prospective in operation. This debate need
not be carried forward since the matter is no longer res
integra because of Apex Court decision in KATTA
SUJATHA REDDY vs. SIDDAMSETTY INFRA PROJECTS
PVT.LTD.,8 wherein it has been categorically held that the
subject amendment bringing change in substantive law, is
prospective in effect. Though this decision was reviewed
on 8.11.2024 vide 2024 INSC 861, the declaration of law
as such is left intact. Therefore, amendment would not
enure to the benefit of plaintiff. That being said, decree of
specific performance cannot be denied to him inasmuch
as, his case demonstrably falls within the spectrum of
granting primary relief, merits galoring in his favour and
equity too shifting to his side because of culpable conduct
of the 1st defendant.
13. AS TO CULPABLE CONDUCT OF 1ST DEFENDANT:
13.1 It hardly needs to be stated that a suit for specific
performance of contract to sell immovable property is
8
(2023) 1 SCC 355
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treated in equitable jurisdiction in the sense that despite
proof of all essentials, Court may decline primary relief of
specific performance and instead, accord secondary relief
like refund of amount paid, quantum meruit, damages,
etc.,. In other words, granting a decree for specific
performance as such is discretionary. However, it is not
the discretion which a Moghul Emperor would have
exercised. Lord Halsbury in SUSANNAH SHARP vs.
WAKEFIELD9 observed that discretion to be exercised in
accordance with the rules of reason & justice. Equity
demands that. In all civilized jurisdictions, conduct of
parties in relation to the case concerned assumes
relevance when such discretion is invoked by the litigants.
Therefore, if conduct is culpable in relation to subject
matter of litigation, ordinarily Courts would not come to
the aid & rescue of culpable party. Eventually, the other
party like the plaintiff herein would stand to gain some
points in his favour because of shifting of equity, which
otherwise would have availed to other party. Of course,
this is a broad perspective and exceptions do exist.
9
(1891) AC 173
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13.2 Learned trial Judge has declined to grant the primary
relief namely, a decree for specific performance of the
contract to sell the suit land. Instead, he has granted the
secondary relief namely the decree for refund of advance
sale consideration of Rs.25 lakh with 6% interest per
annum. A contract is concluded between the parties
essentially for the purpose of accomplishing a particular
transaction, notwithstanding a clause, if any, specifying
the consequence of its non-performance. The culpable
conduct of 1st defendant disentitled her to any leniency;
conversely, the plaintiff is entitled to the decree for
specific performance and not just to the refund of amount
paid, albeit with interest. Reasons for this are specified
below:
a) During the pendency of suit, learned trial Judge after
hearing the parties, vide order dated 15.03.2005, had
directed them to 'maintain status quo regarding title of the
property' and this order was continued throughout. In
flagrant violation of this order, 1st defendant sold the suit
land to 2nd defendant vide registered sale deed dated
26.11.2005 vide Ex.D31. At internal page 5 i.e. covenant
No.4 of the conveyance, the 1st defendant has stated 'The
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vendor further declares and assures unto the purchaser
that there are no litigation/s pending in any Court..... nor
any injunction restraining the alienation....'. Thus, she has
no respect for the Court orders. Nothing prevented her
from making an application under Section 52 of 1882 Act
seeking permission for alienation. No explanation, much
less plausible one is offered in justification of this order.
This is highly culpable on her part.
b) Apparently, apart from violating court order, the 1st
defendant has played fraud not only on the Court but, on
plaintiff as well, if not on the 2nd defendant too. Merely
because more than double the sale price qua plaintiff's
transaction was given, she has readily sold the suit land.
Only money matters to her and not law & justice. The
Apex Court in S.P.CHENGALVARAYA NAIDU vs.
JAGANNATH10, observed that fraud vitiates everything. A
party seeking justice at the hands of court should have
'clean heart, clean hand & clean head'. All that is lacking in
the 1st defendant.
c) 1st defendant disputed the execution of first
agreement 17.2.2001 at Ex.P2 both in her pleadings and
evidence. We have specifically recorded a finding that
Ex.P2 is proved by very admission of her husband who was
examined as DW.1, she having stayed away from the
witness box, with no plausible justification. Secondly,
10
AIR 1994 SC 853
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DW.1 has specifically admitted all the signatures appearing
on all the pages of Ex.P2, including his own. Under this
instrument, 1st defendant had received an amount of
Rs.22,30,000/- in cash and Rs.2,70,000/- by cheque. If
version of the 1st defendant was accepted, the plaintiff
would have been defrauded at least to the extent of cash
component. What dismays us is, that she denied Ex.P2
though Ex.P3 which she admitted has been returned on
the back pages of Ex.P2.
d) 1st defendant sent the legal notice dated 25.02.2004
at Ex.D14/Ex.P7 rescinding the agreement in question. In
the ultimate paragraph it is written ".....u may arrange to
collect the advance paid by you under the agreement from
my client..." In all fairness, she should have sent a cheque
or bank draft or even cash back to the plaintiff. This is
another act of fraud. Clandestinely, she does not mention
the specific amount which she was asking the plaintiff to
collect back. Obviously, this is because of cash component
involved in the transaction, which he would have retained
with impunity.
e) To add insult to the injury, 1st defendant has filed
Cross Objections laying a challenge to the decree for
refund of the amount with interest. Admittedly, she has
received Rs.1.20 crore of which, Rs.1.10 crore is through
Bank Drafts/Cheques and remaining Rs.10 Lakh is by cash.
The amount roughly approximates to Guideline Value of
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Registration, presumably, market value being far in
excess. This is not a case of greed simplicitor but a
celebration of fraud. What equity such a guilty mind can be
bestowed with, is not a question.
f) Ordinarily courts in their discretion can deny decree
for Specific Performance where the subject matter is land
or building, is true. This is inter alia on the premise that
the vendor and his family would have emotional
attachment to the property. In the case involving land,
Rulings do galore to support the view that land may be a
source of livelihood and therefore, at times, vendor is
permitted to retain the land subject to refund of money
paid or payment of damages or the like. However, that is
not the case here inasmuch as the 1st defendant has sold
the suit land to the 2nd defendant by registered instrument
for a much higher price and that is done in gross violation
of court order. Therefore, not only equity does not avail to
the defendants but it shifts to the side of plaintiff.
14. AS TO 2ND DEFENDANT'S RIGHT TO RETAIN SUIT
LAND PURSUANT TO HIS SALE DEED:
14.1 Learned Sr. Advocate Mr.M.R.Rajagopal appearing
for the 2nd defendant vehemently argued that his client
being innocent has bought the property for a valuable
consideration with no notice of plaintiff's agreement and
much less restraint order of the court below and therefore,
for the fault of 1st defendant, he should not be punished.
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Learned Sr. Advocate Mr.Naganand per contra submitted
that when property is bought in violation of restraint order
of the court, it is no transaction at all even if it is assumed
that the buyer pendente lite had made all reasonable
enquiry and only thereafter he innocently bought it. He
also pressed into service the doctrine of lis pendens,
enacted in section 52 of 1882 Act which does not depend
upon absence of notice. He also pointed out admission of
DW.1 that 1st defendant had informed the 2nd about the
pendency of suit and restraint order. To put it shortly, he
told us that there is absolutely no justification whatsoever
for the 2nd defendant to retain the property to the
disadvantage of plaintiff.
14.2 As already mentioned, the Agreement to Sell is of the
year 2001, be it disputed document at Ex.P2 or admitted
ones at Exs.P3, P4 & P5; plaintiff has paid about 1/3rd of
the price. He had also kept ready the bank draft for a sum
of Rs.20 lakh on 25.2.2004 and on the very same day,
surprisingly, 1st defendant got issued revocation notice
through her lawyer. Plaintiff had a huge amount of money
in his bank account. Suit was originally filed in 2005 and
court directed status quo qua transfer of title. It is not the
case of 1st defendant that she was not aware of this order
that was continued after hearing her. She has stated in
her cross-examination that 2nd defendant was informed of
the transaction of plaintiff. A feeble attempt was made
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from the side of defendants that the status quo order
essentially relates to possession and not alienation. That
attempt should fail, because of textual clarity of the order
itself which specifically employs the word 'title'.
14.3 True it is, courts in order to maintain equities, grant
interim protection in their discretion. If language of court
lacks precision & clarity, the intelligibility of its order will
be at crisis, may be to the potential advantage of one or
the other party. Ordinarily, status quo simplicitor relates to
possession of property, is also true. Court below vide ad
interim order dated 15.6.2005 had said 'status quo
regarding title of the property'. Mr.Rajagopal in his
rhetoric style tried to impress upon us that this interim
order cannot be construed as restraining alienation of suit
land. We do not subscribe to this view. This is a tricky
argument. Of course to put it humorously, law is an
avocation and lawyering is art of tricks. It is not
impertinent to reproduce what Professor of Law Ms.Wendy
Nicole Duong11 in her Article "LAW IS LAW AND ART IS
ART AND SHALL THE TWO EVER MEET? -- LAW AND
LITERATURE: THE COMPARATIVE CREATIVE PROCESSES"
wrote:
"1. As disciplines, law and the literary art share
commonalities. For example, both disciplines
depend and thrive on the artful use of
language. Both disciplines can, and have,
become effective tools for advocacy and social
11
Vol.15:1, Southern California Interdisciplinary Law Journal, pg.2
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reform. Law can benefit from the craft of the
literary art, and can borrow therefrom.
Conversely, the drama of the law practice and
notions of jurisprudence can, and have,
become a rich source of material for the literary
artist to explore human nature and society.
2. Yet, in my view, these two disciplines remain
divergent and incompatible in three core
aspects: (i) the mental process of creation and
the utilization of facilities, (ii) the work product
or output, and (iii) the raison d'etre of law
versus art. For example, the mental process
and utilization of facilities inherent in law has
little to offer the creation of art, and the two
creative processes are antagonistic and hence
should not intermingle or be treated as the
same. In fact, the rationality and logic
properties of law -- the objective of rendering
certainty to future outcomes that are uncertain
in order to maintain order -- will interfere with,
and can even destroy, the creation of art."
14.4 More than century & a half, the Chancery Court in
BELLAMY vs. SABINE12, observed that the property in
dispute could not be transferred in a way that would affect
the rights of the parties involved in the lawsuit. The sale of
property by Mr. Sabine during the pendency of the
litigation was deemed invalid and the subsequent
purchaser held to have acquired no rights to the property.
Years thereafter, the 1882 Act came into force and Section
52 broadly enacts the English doctrine of lis pendens which
does not depend upon notice/knowledge of litigation or
consideration for the transfer. This view is reiterated by
12
(1857) 1 De G&J 566
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the Apex Court decision in SHINGARA SINGH vs.
DALJIT SINGH13. For the first time, the 1st defendant
disclosed about the transfer made in favour of 2nd, when
she filed the Written Statement. Therefore, plaintiff's
impleading application having been rightly favoured, the
2nd defendant was added to the Cause Title of the suit. He
too has filed his Written Statement separately. It is not his
case that the plaintiff perpetrated any fraud against him. A
beneficiary of fraud cannot retain the benefit to the
disadvantage of an innocent party.
14.5 Mr.Naganand is right in submitting that the case of
defendants is not one of lis pendens simplicitor but of
transfer of suit land in gross violation of restraint order of
the court. Ordinarily, any transaction accomplished by the
parties in violation of restraint order of the kind cannot be
taken cognizance of; such a transaction would not have
any efficacy in law, subject to a few just exceptions into
which argued case of the 2nd defendant does not fit. There
is a sea difference between transfer pendente lite
simplicitor and transfer in violation of court order. It is
true that the transfer pendente lite automatically does not
become void, but the decree for Specific Performance
binds the transferee vide HARDEV SINGH vs. GURMAIL
SINGH14, whether he is a party eo nomine to the
proceeding or not. In the latter, the transaction is void, if
13
2024 INSC 770.
14
AIR 2007 SC 1058
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not ab initio void. An argument to the contrary would
amount to placing premium on illegality. This view is well
established by a catena of decisions of Apex Court e.g.,
SUJIT SINGH vs. HARBANS SINGH15. It hardly needs to
be stated that no person can be permitted to retain the
benefit of a transaction brought about in violation of court
order, even if his innocence is demonstrated. In DELHI
DEVELOPMENT AUTHORITY VS. SKIPPER
CONSTRUCTION CO. (P) LTD.16, it is observed that the
Court has a duty to issue appropriate directions for
remedying or rectifying the things done in violation of the
orders. In that regard, the Court may even take restitutive
measures at any stage of the proceedings.
14.6 It is not that the 2nd defendant is a poor farmer or a
labourer. In his cross-examination dated 25.9.2014, he
has admitted that he is carrying on real estate business.
Admittedly, he resides in Bangalore city and not in some
remote village. His registered sale deed dated 26.11.2005
produced & marked as Ex.D31, mentions Rs.1.20 crore as
being the price paid for the land in question. Therefore,
there is no scope for plea of poverty. It has come in the
evidence of DW.1 that this defendant was informed of
plaintiff's transaction. As a businessman, he ought to have
made reasonable enquiry, obviously that would include
about the court proceedings. What enquiries were made as
15
AIR 1996 SC 135
16
AIR 1996 SC 2005,
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a scrupulous businessman, in this regard, is not
forthcoming with material particulars. It cannot be readily
presumed that this defendant did not know about the
pendency of suit. A host of statute law, in these
circumstances would come to the aid of plaintiff.
15. INTERPLAY OF SEVERAL STATUTES THAT ENTITLE
THE PLAINTIFF TO SPECIFIC PERFORMANCE QUA THIRD
PARTY BUYER:
15.1 There is interplay of Section 91 of the Indian Trusts
Act, 1882, Section 3, illustration (g) of Specific Relief Act,
1963 and illustration to Section 40 of Transfer of Property
Act, 1882. Section 91 of Trusts Act reads as under:
"Property acquired with notice of existing
contract:
Where a person acquires property with notice
that another person has entered into an
existing contract affecting that property, of
which specific performance could be enforced,
the former must hold the property for the
benefit of the latter to the extent necessary to
give effect to the contract."
Section 3, illustration (g) of Specific Relief Act has the
following text:
"A buys certain land with notice that B has
already contracted to buy it, A is a trustee,
within the meaning of this Act, for B, of the
land so bought."
Illustration to Section 40 of T.P. Act, runs as under:
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"A contracts to sell Sultanpur to B. While the
contract is still in force he sells Sultanpur to C,
who has notice of the contract. B may enforce
the contract against C to the same extent as
against A."
15.2 The matter was comprehensively considered by the
Apex Court keeping provisions/illustrations of above
several statutes in focus and their interplay, in LALA
DURGA PRASAD vs. LALA DEEP CHAND17. It is
observed as under:
"...The only statutory provisions which bear on
this point are section 91 of the Indian Trusts
Act, 1882, section 3 of the Specific Relief Act,
1877, illustration (g), and section 27 of that
Act, and section 40 of the Transfer of Property
Act. Section 91 of the Trusts Act, does not
make the subsequent purchaser with notice a
trustee properly so called but saddles him with
an obligation in the nature of a trust (because
of section 80) and directs that he must hold the
property for the benefit of the prior
"contractor", if we may so describe the
plaintiff,. "to the extent necessary to give effect
to the contract."
Section 3 illustration (g) of the Specific Relief
Act makes him a trustee for the plaintiff but
only for 'the purposes of that Act. Section 40 of
the Transfer of Property Act enacts that this
obligation can be enforced against a
subsequent transferee with notice but not
against one who holds for consideration and
without notice. Section 27 of the Specific Relief
Act does not carry the matter any further. All it
17
AIR 1954 SC 75
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savs is that specific performance may be
enforced against "
"(a) either party thereto;
(b)any other person claiming under him by a
title arising subsequently to the contract,
except a transferee for value who has paid his
money in good faith and without notice of the
original contract."
15.3 It is not that the 2nd defendant is left to the lurch and
remediless. He can institute appropriate proceedings
against the 1st defendant to recover what has been paid
for the property and also other reliefs. We need not state
that for such a proceeding, the cause of action arises and
becomes choate on the pronouncement of this judgement.
It is also open to the 1st defendant to take up whatever
defence that avails in law, should such a proceeding is
instituted against her. Had the 2nd defendant structured
his pleadings qua the 1st and led evidence to vouch the
same, arguably the court below itself would have granted
appropriate relief to him. Perhaps, we too would have.
However, there is no sufficient pleading muchless the
evidence for us to do it in these appeals. Therefore, we
reserve liberty to the 2nd defendant to take up appropriate
proceedings, if he is so advised. That being said, whatever
amount deposited by the plaintiff in the court below needs
to be paid to the 2nd defendant in the fitness of things.
In the above circumstances, we make the following:
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ORDER
[i] Appeal in R.F.A.No.178/2015 is allowed and the impugned judgment & decree of court below are set at naught; appellant's suit in O.S.No.271/2009 is hereby decreed for Specific Performance of the contract for sale of suit land, with costs. The 2nd defendant is directed to execute & register the sale deed(s) in favour of appellant- Plaintiff affecting the suit land, within eight weeks, usual terms & conditions applying thereto.
[ii] The amount deposited in the court below by the plaintiff shall be paid to the 2nd defendant on his executing & registering the sale deed(s) as directed above. However, if he fails to do it, the court below shall execute & register or cause that to be done by taking all requisite steps therefor within three months.
[iii] R.F.A.Cross-Objection No.19/2015 filed by the 1st defendant is dismissed with a cost of Rs.1,00,000/- (Rupees One Lakh) only, which she shall remit to the plaintiff within eight weeks, failing which she shall be liable to pay Rs.500/- per day of delay for the first month and Rs.1,000/- per day for the period next following.
[iv] It is open to 2nd defendant-buyer pendente lite to institute appropriate proceedings against the 1st defendant-seller for refund of money paid by him, minus
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Sd/-
(KRISHNA S DIXIT) JUDGE Sd/-
(G BASAVARAJA) JUDGE Snb, cbc List No.: 1 Sl No.: 1