Karnataka High Court
Sri R Narayanaswamy vs Sri A V Narayana Swamy on 24 March, 2016
Equivalent citations: 2016 (3) AKR 690, (2016) 3 ICC 727 (2017) 1 CIVLJ 266, (2017) 1 CIVLJ 266
Author: A.N.Venugopala Gowda
Bench: A.N.Venugopala Gowda
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
®
DATED THIS THE 24TH DAY OF MARCH, 2016
BEFORE
THE HON'BLE MR. JUSTICE A.N.VENUGOPALA GOWDA
REGULAR SECOND APPEAL NO.1886/2014
BETWEEN:
SRI R. NARAYANASWAMY
S/O ALAVATHA RAMAPPA,
AGED ABOUT 42 YEARS,
R/AT ANOORU VILLAGE,
KASABA HOBLI,
CHINTHAMANI TALUK,
CHICKBALLAPURA DISTRICT - 563 125.
... APPELLANT
(BY SRI K.S. NARAYANASWAMY, ADV.)
AND:
SRI A.V. NARAYANA SWAMY
S/O LATE VENKATAPPA,
AGED ABOUT 60 YEARS,
R/AT ANOORU VILLAGE,
KASABA HOBLI,
CHINTHAMANI TALUK,
CHICKBALLAPURA DISTRICT - 563 125.
... RESPONDENT
(BY SRI RAGHUNATH, ADV.)
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THIS RSA IS FILED UNDER S.100 OF CPC., AGAINST THE
JUDGEMENT & DECREE DATED 28.8.2014 PASSED IN
R.A.NO.44/2013 ON THE FILE OF THE SENIOR CIVIL JUDGE &
JMFC, CHINTHAMANI, DISMISSING THE APPEAL AND
CONFIRMING THE JUDGEMENT AND DECREE DATED 16.3.2013
PASSED IN OS.NO.218/2009 ON THE FILE OF THE ADDITIONAL
CIVIL JUDGE & JMFC, CHINTHAMANI.
THIS RSA COMING ON FOR ADMISSION THIS DAY, THE
COURT DELIVERED THE FOLLOWING:
JUDGMENT
This appeal is by the defendant. The plaintiff - respondent sued for specific performance of an agreement to sell the suit property. Demand made in the notice to receive the balance sale consideration amount and execute the sale deed having not been complied, suit was instituted, to pass decree for specific performance of the agreement to sell dated 31.07.2007.
2. The defendant filed written statement and raised several defences.
3. The Trial Court raised the following issues for trial:
"1) Whether the plaintiff proves that the defendant has executed a Registered sale agreement dated 31.07.2007 in his favour for a sum of 3 Rs.2,00,000/- in respect of suit schedule property and received Rs.1,50,000/- as advance amount by agreeing to sell the suit schedule property?
2) Whether the plaintiff further proves that he is always ready and willing to perform his part of contract?
3) Whether the plaintiff is entitled the relief sought for?
4) What order or decree?"
3.1. The plaintiff got examined himself as PW.1 and examined two witnesses as PWs.2 and 3 and produced 6 documents, which were marked as Exs.P-1 to P-6. The defendant got examined himself as DW.1 and examined 3 witnesses as DWs.2 to 4 and produced 5 documents, which were marked as Exs.D-1 to D-5.
3.2. The Trial Court answered the issues in favour of the plaintiff and decreed the suit with cost and directed the defendant to execute the absolute sale deed by receiving balance sale consideration amount of Rs.50,000/- along with interest at 8% p.a. i.e., on the balance sale consideration from the date of filing the suit till its payment.
4. The defendant filed an appeal under Section 96 of Code of Civil Procedure, 1908. The Senior Civil Judge 4 and JMFC, Chintamani, having heard the learned advocates, raised the following points for consideration:
"1) Whether the trial court is justified in holding that the defendant has executed a sale agreement for sale of property and not for security for the payment of loan?
2) Whether the judgment and decree of the trial court warrants interference?
3) What order?"
4.1. By a judgment dated 28.08.2014, passed in R.A.No.44/2013, he concurred with the decision of the Trial Court and dismissed the appeal.
5. Feeling aggrieved, the defendant filed this second appeal under Section 100 CPC.
6. Substantial question of law which arises for consideration is, whether the impugned decrees are unsustainable for non-consideration of the case by the courts below with reference to Section 20 of the Specific Relief Act, 1963?
7. Heard the learned advocates on both sides and perused the record. Main ground urged for the appellant is 5 that both courts below have not applied their minds to the material aspect required under law by virtue of Section 20 of the Specific Relief Act, 1963 (for short 'the Act') and thus, there is abdication of statutory duty. Learned advocate for the respondent on the other hand made submission in support of the decrees passed by the courts below.
8. Normally, a suit for specific performance of agreement for sale of immovable property, when filed, raises questions like, 1) Whether the plaintiff has satisfied the requirements of Section 16 of the Act, 2) whether it is a case in which specific performance of the contract is enforceable in terms of Section 10, 3) whether in terms of Section 20 of the Act, the discretion to decree specific performance should be exercised by the court, 4) in case the defence has been raised with regard to the suit being barred by limitation with reference to Article 54 of the Limitation Act, whether the suit is barred by limitation, and
5) whether the plaintiff has been guilty of negligence or 6 laches which disentitles for a decree for specific performance.
9. To answer the substantial question of law raised, Section 20 of the Act being relevant is extracted herein below for ready reference:
"20. Discretion as to decreeing specific performance.--
1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
2) The following are cases in which the court may properly exercise discretion not to decree specific performance:--
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1.--Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).
Explanation 2.-- The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
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3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party."
10. Section 20 provides that the jurisdiction to decree specific performance is discretionary and the court is not bound to grant such relief merely because it is lawful to do so. Sub-section (2) of Section 20 of the Act provides the three situations in which the court may exercise discretion not to decree specific performance. The discretion should not be arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal.
11. In PARAKUNNAN VEETILL JOSEPH'S SON MATHEW vs. NEDUMBARA KURUVILA'S SON AND OTHERS, 1987 (Supp) SCC 340, Apex Court having examined the scope and ambit of Section 20 of the Act has held as follows:
"14. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of courts as to decreeing specific performance. The court should meticulously consider all facts and circumstances of the case. The court is not bound to grant specific performance merely because it is 8 lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff."
12. In GOBIND RAM vs. GIAN CHAND, (2000) 7 SCC 548, Apex Court has held as follows:
"7. It is the settled position of law that grant of a decree for specific performance of contract is not automatic and is one of the discretions of the court and the court has to consider whether it will be fair, just and equitable. The court is guided by principle of justice, equity and good conscience. As stated in P.V. Joseph's Son Mathew (1987 Supp SCC 340) the court should meticulously consider all facts and circumstances of the case and motive behind the litigation should also be considered."
13. In BAL KRISHNA AND ANOTHER vs. BHAGWAN DAS (DEAD) BY LRS. AND OTHERS, (2008) 12 SCC 145, Apex Court has held as follows:
"14. It is also settled by various decisions of this Court that by virtue of Section 20 of the Act, the relief for specific performance lies in the discretion of the court and the court is not bound to grant such relief merely because it is lawful to do so. The exercise of the discretion to order specific performance would require the court to satisfy itself that the circumstances are such that it is equitable to grant decree for specific performance of the contract. While exercising the discretion, the court would take into consideration the circumstances of the case, the conduct of parties, and their respective interests under the contract. No specific performance of a contract, though it is not vitiated by fraud or 9 misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee. In other words, the court's discretion to grant specific performance is not exercised if the contract is not equal and fair, although the contract is not void."
14. In the present case, both courts below have not examined, whether by reference to Section 20 of the Act, it is a fit case for exercising discretion to decree the specific performance or not. As a material issue with reference to Section 20 of the Act was not raised, considered and the case decided, the appeal deserves to be allowed. Since the important legal aspect has not received consideration, the aforesaid substantial question of law is answered in the affirmative.
In the result, the appeal is allowed and the impugned judgments and decrees are set aside. The case is remanded to the Trial Court to proceed from the stage of hearing of main arguments and for decision afresh.
In order to expedite the hearing, both parties are directed to appear before the Trial Court on 02.04.2016 10 and receive further orders. The Trial Court shall proceed from the stage of hearing of arguments of the suit and decide the suit with expedition and before 30.07.2016.
The appellant is entitled to refund of court fee, in accordance with law.
Sd/-
JUDGE ca