Kerala High Court
Lalithambika vs Varghese on 18 October, 2004
Equivalent citations: III(2005)BC289, 2004(3)KLT892
JUDGMENT R. Bhaskaran, J.
1. This appeal is filed by the defendant in a suit for specific performance of an agreement for sale. The case of the plaintiff is that the plaint schedule property with its adjacent land belonged to the defendant. She executed an agreement on 20.4.1993 for sale of 20 cents for a consideration of Rs. 70,000/- out of which Rs. 50,000A was paid as advance. The sale was to be executed on or before 14.5.1993 after receiving the balance consideration. The title deed of the property, tax receipt and encumbrance certificate were also handed over to the plaintiff. Possession was also given to the plaintiff. The plaintiff was always ready and willing to execute the sale deed. Since the defendant was not ready to execute the sale deed, a letter was sent by registered post and no reply was sent to the plaintiff. The plaintiff went to the Sub Registry Office on 14.5.1993 for paying the balance consideration. But the defendant did not turn up. On these averments, the suit was filed.
2. In the written statement filed by the defendant, the execution of the agreement is admitted. According to the defendant, it was intended only as a security for the loan of Rs. 50,000/- received on 2.4.1993 on the strength of a promissory note for Rs. 50,000/- and a cheque for Rs. 50,000/- issued to the plaintiff on the same day. The plaintiff also pressed for execution of a karar as security for the loan. The agreement was executed in the presence of mediators on 20.4.1993. There was no demarcation or measurement of the property and possession was not given to the plaintiff. The property is lying as a contiguous plot with the admitted property in the possession of the defendant. The plaintiff was not entitled for specific performance. The notice alleged to have been sent on 8.5.1993 was not received by the defendant.
3. The Trial Court framed the following issues:
i) Whether the specific performance of the agreement for sale dated 20.4.1993 is allowable?
ii) Whether the document dated 20.4.1993 was only a security for the loan, as alleged in the written statement?
iii) Reliefs and costs.
The Trial Court found that the mediators named in the written statement were not examined by the defendant. The Trial Court also believed the evidence of PW.2 the scribe of Ext.A1 to come to the conclusion that Ext. A1 was a genuine agreement for sale of the property. The Trial Court also found that the husband of the defendant had earlier borrowed amount from the defendant without any security and therefore the contention that Ext.A1 was executed as security cannot be believed. The Trial Court also found that it was probable that the plaintiff was in possession of the plaint schedule property on the date of agreement. It was also found that the plaintiff was always ready and willing to perform his part of the agreement. The Trial Court also considered the question whether it is a fit case where the discretion for grant of specific performance is to be exercised in favour of the plaintiff. Since the defendant subsequently sold a portion of the property to a stranger, the Trial Court found that there was no reason for not enforcing the agreement in favour of the plaintiff also. In that view of the matter, the Trial Court granted a decree for specific performance.
4. In this appeal, the learned counsel for the appellant advanced two contentions. The first was that Ext.Al was in fact executed only as a security, and the second contention was that even if it is to be found that it was an agreement for sale, it is not a fit case where the discretion has to be exercised in favour of the plaintiff and that the Trial Court did not exercise its discretion properly under S .20 of the Specific Relief Act.
5. The points for consideration in this appeal are (1) Whether Ext. A1 was intended only as security and (2) Whether the discretion under Section 20 of the Specific Relief Act has been properly exercised by the Trial Court.
Point No. 16. The definite case of the defendant is that she obtained a loan of Rs. 50,000/- from the plaintiff on 2.4.1993 and a pronote and a cheque for Rs. 50,000/- was given to the plaintiff on that day. The plaintiff pressed for execution of a karar and the same was executed on 20.4.1993. At the evidence stage, the defendant has developed the case and adduced evidence to the effect that on 2.4.1993 itself an agreement for sale was executed in favour of the plaintiffs brother Ummen and since the plaintiff wanted a sale of the agreement in favour of the plaintiff himself Ext. Al was executed in his favour on 20.4.1993. Ext.B2 was produced as the first and third pages of the agreement so executed on 2.4.1993. According to the defendant, the middle page was taken from that agreement and it formed part of Ext. A1 agreement. The Trial Court has noted that the failure to examine the mediators named in the written statement at whose instance Ext. Al was executed shows that the defendant's case is not proved. Similarly, the execution of Ext.B2 in favour of the plaintiffs brother was also not mentioned in the written statement.
7. PW.2 who is the scribe of Ext. Al as well as Ext.B2, admitted his handwriting in both the agreements. According to him, M.O. Ummen mentioned in Ext.B2 was not the brother of the plaintiff. He however admitted that Rajappan, a witness in Ext. B2, is an employee of the plaintiff in his bus. Rajappan was also present in Court when plaintiff was examined and he admitted the same in evidence. The plaintiff's name is M.O. Varghese and Ext.B2 was executed in favour of M.O. Ummen. In Ext.B2, it is seen that the line where the name of M.O. Ummen appears is struck off. The address of M.O. Ummen shown in Ext.B2 is the same as that of the plaintiff. According to the plaintiff, his brother is known as K.O. Ummen. PW.2 stated that there are two houses with the same house name and M.O. Ummen mentioned in Bxt.B'2 is not the brother of the plaintiff.
8. The defendant was examined as DW. 1 and she has stated that her husband was an accused in a case Under Section 138 of the Negotiable Instruments Act before the Chengannur Magistrate's Court which was posted for judgment on 2.4.1993. Since he was expecting aconviction.and funds were to be found out, the plaintiff was approached for money. He got Rs. 50,000/-from the plaintiff on thatdayoutofwhichRs. 5,000/- was adjusted towards interest. The defendant has also stated in evidence that a cheque by her husband was given on 2.4.1993 and she executed a promissory note for Rs. 50,000/- on the same day. Since an agreement was also required as an additional security, she executed Ext.B2 agreement in favour of the plaintiffs brother. They were residing together. After two weeks, the plaintiff told the defendant that the agreement has to be changed in the name of the plaintiff and thereafter Ext. Al was executed in favour of the plaintiff. On both occasions, the plaintiff had made it clear that he wanted the amount back with interest and not the property. She also stated that the property was not measured or given possession to the plaintiff. The revenue receipt as well as encumbrance certificate were also there along with the original title deed and the plaintiff took all those papers. The property is situated in an important area where various public offices are also situated. She also stated that at the time of execution of Ext. A1, the property would have fetched Rs. 10,000/- to Rs. 30.000/- per cent. She has also given evidence that the plaintiff is a money lender who lends money on security of properties, gold ornaments etc.
9. The learned counsel for the appellant argued that it is not usual when an agreement for sale is executed that the seller will hand over the original title deed, tax receipt and encumbrance certificate. That itself shows that the plaintiff who is a money lender wanted to make sure that the money advanced by him is properly secured. PW. 1 also gave evidence to the effect that the property was measured and separated and was given possession to the plaintiff on the date of the agreement. Though the plaintiff did not take out a Commission to substantiate his case the defendant applied for issuance of a Commission and the Commissioner has submitted a report. He has reported that there is no demarcating line between the admitted property of the defendant and the plaint schedule property and that there are no boundary stones also on any side of the property except that on the western side is a public road and a fence of 31/2 feet height to separate it from the road. It is also reported that the improvements in both the admitted property of the defendant as well as in the plaint schedule property are of the same kind and age. It has to be noted that the Commission was taken out in 1998 whereas the suit was filed in 1993. If as a matter of fact the plaintiff was in separate possession of the property on the basis of the agreement for sale there would have been definitely clear indications for separate enjoyment of the property. When the plaintiff sets up a case that on the basis of the advance given at the time of the agreement for sale, property was given possession to the plaintiff and he was in enjoyment of the property and that case is found against on the basis of the report of the Commissioner it goes a long way in deciding the question whether the transaction between the parties was a genuine agreement for sale or a mere arrangement of security for the amounts advanced by the plaintiff.
10. PW.2 is the scribe who wrote both Ext. A1 as well as Ext.B2. He has admitted that the plaintiff has got a money lending business and that he knew the plaintiff from 1985 onwards. He also admitted that the defendant's husband had borrowed money from the plaintiff earlier. The amount of Rs. 50,000/- was obtained from the plaintiff after one year of the earlier borrowing. But he stated that the agreement was not executed as a security but for sale of the property itself. He also admitted that for the same property an agreement was executed on 2.4.1993 but it did not come into effect. He stated that M.O. Ummen mentioned in that agreement is not the brother of the plaintiff and the house name though that of the plaintiff shown in Ext.B2 is a different house. This version of PW.2 shows that he was interested in giving evidence on behalf of the plaintiff and it is difficult to believe that M.O. Ummen is not the brother of the plaintiff, when the plaintiff himself admitted that he has a brother by name Ummen and the address of both the brothers is the same. The case becomes stronger when the plaintiffs employee is a witness to Ext.B2 and he was present in Court when the plaintiff was examined.
11. There is one more circumstance which shows that there was no handing over possession of the plaint schedule property at the time of execution of Ext. Al agreement. Though the extent of 20 cents is mentioned in Ext. Al only the measurement of the western boundary is shown in Ext. Al and the other measurements on the three other sides are not available in Ext. Al. When there is a definite case that the property was measured by a Surveyor, it is not likely that measurement on one side only will be mentioned in the agreement and the measurement on the three sides will be ignored. It is especially so when the adjacent properties are also in the possession of the defendant or her relatives and to separate the plaint schedule property, the measurements on all sides will be required. Though the defendant has not examined the alleged mediators in the written statement and Ext.B2 is not referred in the written statement and they are factors to be taken into account against the case of the defendant, I am of opinion that the circumstances in this case show that the defendant's case is more probable. When there are circumstantial evidence which are clinching, the non- examination of the mediators will not defeat the case of the defendant. Ext. Al is executed by the defendant only. There is no agreement executed by the plaintiff. Therefore, if Ext. A1 is violated, the plaintiff alone can take action against the defendant. If the defendant takes any action it will be open to the plaintiff to pretend ignorance and contending that he has nothing to do with Ext.Al and he was not aware of it. An agreement for sale is an agreement by two sides to perform the respective obligations and to have their rights enforced. In a case where one party alone signs the document, it is clear that the party who has not signed is at the dominating position. This circumstance itself is an indication to show that it was obtained at the instance of the plaintiff to safeguard his interest while he did not put his signature in the document. The fact that the original title deed of the entire 45 cents is given to the plaintiff for an agreement to sell 20 cents along with revenue receipts and encumbrance certificate is also indicative of the fact that the plaintiff was in a position to dictate and the defendant was obliged to hand over ail the documents in order to get the money at the crucial time. As stated by PW.2 the plaintiff and his wife have two money lending institutions. Therefore, there cannot be any dispute that the plaintiff is a money lender and absolutely defendant's husband has borrowed earlier money from the plaintiff. The above facts probabilises the case of the defendant that Ext. AI was intended only as a security. Point No. 1 is found in favour of the plaintiff.
Point No. 212. Even if it is to be found that Ext. A1 was an agreement for sale, I am of opinion that it is not a case where the discretion has to be exercised in favour of the plaintiff under Section 20 of the Specific Relief Act. There is clear evidence that the plaintiff is a money lender and the defendant was placed in a situation where she had to find out some money to get her husband relieved of the cheque case pending before the Magistrate's Court and Ext. Al was executed. The Trial Court relied on the fact that the defendant has subsequently executed a sale deed in favour of one Shylaja and therefore there is no reason not to execute a sale deed in favour of the plaintiff alone. That the defendant has executed a sale deed in favour of Shylaja with respect to another portion of the same property is not in dispute. That sale was in 1995 long after the agreement in favour of the plaintiff. The Trial Court has also relied on Ext.Al0 which is a sale deed executed by defendant's husband in favour of one Rajeev. But that property was purchased back after one year in the name of the defendant's son as per Ext. Al 1 dated 1.12.1995. That also probabilises the case of the defendant that the sale deed was executed on the understanding to return the same as and when the money was paid. The value of the property has increased several times. It is evident from the fact that at the time of the hearing of the appeal both sides were willing to pay large amounts to get the property. That by itself may not be a ground to deny specific performance but that is a factor to be taken into account along with other circumstances in considering the question of equity between the parties.
13. The fact that the plaintiff has not come to Court with clean hands is one of the circumstances which can be taken into account for denying specific relief. The plaintiff has set up a case that he was handed over possession of the property on the date of agreement. But the Advocate Commissioner has noted that the property in the possession of the defendant and the property which is agreed to be sold are lying a single plot and there is no indication on the spot to show that this property was separately possessed by the plaintiff.
14. As held by the Supreme Court in Prakash Chandra v. Angadlal (AIR 1979 SC 1241), the ordinary rule is that specific performance is to be granted. It ought to be denied only when equitable considerations point to its refusal and the circumstances show that award of damages would constitute an adequate relief. The question to be considered is whether there are circumstances available to persuade the Court to deny equitable relief.
15. The learned counsel for the appellant Shri. Philip T.Varghese relied on the decision of the Calcutta High Court in Sen Mukherjee & Co. v. Chayya Banerjee (AIR 1998 Calcutta 252) wherein specific performance was refused on the ground that the defendant was indebted and to grant the relief was found to be inequitable. The Supreme Court also in various decisions refused specific performance where it was found that in equity the plaintiff was not entitled to get specific performance but only for return of the amount advanced with interest. Though the facts of each case may be different, if the circumstances in which the agreement was executed are such that the defendant was compelled to execute the agreement in unfortunate circumstances and the plaintiff was tajdng advantage of the same it is a case where specific performance can be denied. It is more so when the agreement is in favour of money lender. In Tejram v. Patirambhau (AIR 1997 SC 2702), the Supreme Court had occasion to consider a case where there were many transactions between the appellant and the respondent and the respondent being a money lender had taken documents purporting to be agreements for sale from the loanees. In that case, the respondent waited for three years for issuing notice and filing a suit. The Supreme Court held that ends of justice will be met if the amount so received was directed to be re-paid. The learned counsel for the respondent Smt. Sumathi Dandapani relied on the decision of the Supreme Court in Nirmala Anand v. Advent Corporation (P) Ltd. ((2002) 8 SCC 146) where there was an agreement for sale of a flat in a building for Rs. 60,000/- in 1966 and in 1967 after payment of Rs. 35,000/- the Municipal Corporation cancelled the lease in respect of the land concerned. When the case was earlier heard by a two Judge Bench of the Supreme Court as reported in Nirmala Anand v. Advent Corporation ((2002) 5 SCC 481) there was difference of opinion with regard to the amount payable for execution of the sale deed and the matter was referred to a three Member Bench and it was held that the sale deed will be executed only on payment of Rs. 6,25,000/- etc. and the two Judge Bench was too onerous. In that case, the question considered was whether on account of the escalation of the price after the execution of the agreement specific performance can be granted or not. The circumstances which are relied on in the other decisions of the Supreme Court were not in existence in that case. In Mathew v. Kuruvila (1988 (1) KLT 7) the Supreme Court allowed the appeal in a case where this Court had directed specific performance. It was held that the Court should meticulously consider all the facts and circumstances of the case and the Court is not bound to grant specific performance merely because it is lawful to do so. In Kallathil Sreedharan v. Komath Pandyala Prasanna (1996 (2) KLT 784 (SC) = (1996) 6 SCC 218), the Supreme Court upheld the decision of the High Court where specific performance was denied on the ground of impecunious circumstances in which the agreement came to be executed by respondents and hard-up condition of the respondent woman. In the light of the principles laid down by various decisions of the Supreme Court as referred to in the preceding paragraphs, the question to be considered is whether there are circumstances which should deny specific performance in favour of the plaintiff. The circumstances which I have discussed under point No. 1 to hold that the transaction was in fact a loan transaction are themselves sufficient to persuade this Court not to exercise the discretion in favour of the plaintiff.
16. The defendant had a case that her husband had issued a cheque for Rs. 50,000/- in favour of the plaintiff when the. loan was taken on 2.4.1993 and he had given a stop memo to the Bank after Ext.Al agreement was executed. To prove the same, the defendant examined DW.3 the Branch Manager of the Catholic Syrian Bank. He has produced Ext.Xl ledger sheet relating to the Savings Bank Account regarding the defendant's husband wherein cheque No. 373911 dated 2.4.1993 in favour of the plaintiff for Rs. 50,000/- was requested to be stopped payment as per endorsement on 7.6.1993. Though according to the plaintiff, no such cheque was obtained by him, the fact that a stop memo was issued by the defendant's husband and the Bank recorded the same before the controversy between the parties started, as the suit was filed only in July, 1993, is a circumstance in favour of the defendant.
17. DW.4 is an agricultural labourer who used to work in the defendant's property. He has stated that the defendant was cultivating the plaint schedule property and the adjacent properties. Though PW.3 was examined by the plaintiff to speak to the fact that he was a labourer under the plaintiff and was doing agricultural work in the plaint schedule property, his evidence cannot be believed in the light of the report of the Commissioner. DW.5 is a rubber tapper. He has stated that he was tapping rubber for the defendant from the plaint schedule property also during the relevant period. Though he was cross-examined he has given evidence stating that the defendant was keeping possession of the property.
18. The circumstance that the defendant alone executed Ext.A1 and the plaintiff did not put his signature in Ext. A1 and the plaintiff obtained the signature of the husband of the plaintiff and her son in Ext. A1 and the encumbrance certificate, revenue receipt and the prior title deed in respect of the entire property were obtained at the time of the agreement are indicative of the fact that the plaintiff was in a dominant position and the defendant was submitting to the terms of the plaintiff. The fact that admittedly there was prior loan taken by the defendant's husband from the plaintiff for Rs. 17,000/- also shows that the plaintiff was also lending money to the defendant's husband. The agreement was executed when the husband of the defendant was involved in another cheque and conviction was almost sure and the defendant wanted to make the payment. Taking into account all these circumstances, 1 am of opinion that it is not an ordinary case of agreement for sale where performance of the agreement has to be enforced and the discretion exercised by the Trial Court is against the spirit of Section 20 of the Specific Relief Act and the various decisions of the Supreme Court referred to earlier. Therefore, I find that the plaintiff is not entitled to get specific performance of the agreement.
19. Though the plaintiff has not prayed for return of the amount given on the date of Ext. A1, the learned counsel for the defendant has stated that his client is prepared to repay the entire amount with 12% interest till date. There is no specific prayer in the plaint. Since the plaintiff has prayed for a larger relief, nothing stands in the way of this Court to grant the relief of return of the amount with adequate compensation for the delayed payment of the amount. It is seen that in 1993 the defendant had borrowed Rs. 50,000/-.Overthe years, it must multiply taking into account the subsequent interest. Therefore, by taking into account the subsequent interest and loss and fall in the money value, I am of opinion that interest of justice will be met if the defendant is directed to pay an amount of Rs. 2,15,000/- to the plaintiff instead of executing the sale deed.
In the result, the appeal is allowed and the decree for execution of sale deed in favour of the plaintiff by the defendant as granted by the Trial Courtis set aside. Instead, the plaintiff is given a decree for Rs. 2,15,000/- and there will be a charge on the plaint schedule property for the said amount and if the amount is not paid within two months it will carry interest at the rate of 12% per annum. Since the appellant has succeeded only partially and the plaintiff is granted a decree for return of the money, it is a fit case where both sides should suffer their costs in this appeal.