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Karnataka High Court

Sri S Annadore vs Al Habeeb Education on 29 September, 2023

Author: P.S. Dinesh Kumar

Bench: P.S. Dinesh Kumar

                                           R.F.A No.31/2013

                                1

       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 29TH DAY OF SEPTEMBER, 2023

                           PRESENT

         THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR

                               AND

     THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA

                 R.F.A NO. 31 OF 2013 (SP)

BETWEEN:

SRI. S. ANNADORE
S/O SHIVALINGA MESTRI
AGED ABOUT 42 YEARS
RESIDING AT HUNDRED FEET ROAD
THUNGANAGAR
SHIMOGA CITY-577 205.                             ...APPELLANT

(BY SHRI. ASHOK HARANAHALLI, SENIOR ADVOCATE FOR
    SHRI. S.V. PRAKASH, ADVOCATE)

AND:

AL HABEEB EDUCATION
TRUST (REGD)
REPRESENTED BY ITS PRESIDENT
AND SECRETARY

1.     TAJAMUL FIRDOSE
       S/O K.M. GHOUSE AHMED
       AGED ABOUT 45 YEARS
       PRESIDENT
       AL HABEEB EDUCATION TRUST (REGD).
       TIPPUNAGAR
       SHIMOGA-577 201.
                                             R.F.A No.31/2013

                                2

2.   MOHAMMAD AHMED
     S/O ABDUL WAHID
     AGED ABOUT 46 YEARS
     SECRETARY
     AL HABEEB EDUCATION TRUST (REGD).
     TIPPUNAGAR
     SHIMOGA-577 201.                          ...RESPONDENTS

(BY SHRI. G.S. BALAGANGADHAR, ADVOCATE FOR R1 AND R2)

     THIS RFA IS FILED UNDER SECTION 96 OF CPC, AGAINST THE
JUDGMENT AND DECREE DT 17.11.2012 PASSED IN O.S.NO.25/2011 ON
THE FILE OF PRINCIPAL SENIOR CIVIL JUDGE & C.J.M., SHIMOGA,
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT.

      THIS RFA, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT
ON 17.07.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS
DAY, P.S. DINESH KUMAR, J., PRONOUNCED THE FOLLOWING:-


                          JUDGMENT

This appeal by the Defendant is directed against the judgment and decree dated November 17, 2012 in O.S No. 25/2011 passed by the Principal Senior Civil Judge & C.J.M, Shimoga, decreeing the suit for specific performance of contract.

2. For the sake of convenience, parties shall be referred as per their status before the Trial Court. R.F.A No.31/2013 3

3. We have heard Shri. Ashok Haranahalli, learned Senior Advocate for the defendant/appellants and Shri. G.S.Balagangadhar, learned Advocate for the plaintiff/respondent.

4. Plaintiff's case is, it is an Education Trust registered under Co-operative Societies Act and it runs an Education Institution in Tippu Nagar since 2006-07. Defendant is the owner of the suit property. As per the 'Agreement to Sell' dated 16.11.2009, defendant had agreed to sell the suit property in favour of the Trust for Rs.69/- per sq. Plaintiff had paid Rs.2 lakhs as advance to defendant. Inspite of several requests, defendant did not execute the Sale Deed. Hence, plaintiff has brought the instant suit for specific performance of the contract.

5. Defendant resisted the suit by filing written statement contending inter alia that defendant was in need of money for construction of his house. The estimated cost for construction was Rs.25 lakhs. Therefore, he had entered into R.F.A No.31/2013 4 the sale agreement. The time fixed for completion of the contract was six months. The Trust has failed to pay the balance consideration for more than one and half years from the date of agreement. The Trust is forbidden from purchasing the agricultural property as per Karnataka Land Reforms Act, 19611. As claimed by the Trust, it is not registered under Co-operative Societies Act. The Trust is indulging in entering into agreements and selling the properties for higher price.

6. Based on the pleadings, the learned Trial Court has framed following issues and additional issues:

1. Whether the defendant proves that time was the essence of contract?

2. Whether the plaintiff proves that he was always ready and willing to perform his part of agreement?

3. Whether the plaintiff is entitled for specific performance of contract?

1

'the KLR Act' for short R.F.A No.31/2013 5

4. Whether the plaintiff is entitled for relief claimed?

5. What decree or order?

Additional issue No.1:

Whether the defendant proves that intention of the Trust is only for unlawful gain?

7. On behalf of plaintiff, three witnesses were examined as P.W.1 to 3 and Exs. P1 to P17 marked. On behalf of Defendant, three witnesses were examined as D.W.1 to 3 and Exs. D1 to D15 marked. Answering issues No. 2 to 4 in the affirmative, issue No. 1 and additional issue No.1 in the negative, the Trial Court has decreed the suit.

8. Shri. Ashok Haranahalli, for the defendant, praying to allow this appeal, mainly submitted that:

 the time was the essence of the contract;  all the Trustees of the trust have not joined together to file the suit. There is no authorization by the remaining Trustees for two of them who have filed the suit;

6  the Trust being non-agriculturist is prohibited from acquiring and holding agricultural lands under the KLR Act and therefore the agreement for sale is void and against the public policy;  the Trust has neither issued a notice nor produced any document to show that it was ready and willing to perform its part of contract;  as per Order 32 Rule 2 of the CPC, 1908, all trustees shall be made parties to the suit filed by a Trust.

9. Shri. Balagangadhar, for the Trust, mainly submitted that:

 in para 3, 4, 8 of the Written statement defendant has admitted the execution of Agreement to Sell and receipt of advance amount. Therefore, the ground that all Trustees have not filed the instant suit cannot be raised for the first time in appeal; R.F.A No.31/2013 7  once defendant has agreed to sell the land to the Trust under an agreement, he is estopped from taking shelter under the Karnataka Land Reforms Act to frustrate the agreement;  defendant has not substantiated his contention that the Trust was not ready and willing to perform its part of the contract, by placing any cogent evidence;

 the cause of action is clearly forthcoming in para 5 of the plaint, when defendant was trying to alienate the suit property through one Mohammed Akram, a Real Estate broker.

With the above submissions, Shri. Balagangadhar prayed for dismissal of this appeal.

10. We have carefully considered rival contentions and perused the records.

8

11. In the light of the above discussion, the following points arise for our consideration:

(i) Whether the suit filed by only two Trustees is maintainable?

(ii) Whether the Trust proves that it was ready and willing to perform their part of the Contract?

(iii) Whether the impugned judgement calls for any interference?

Re. point No.(i):

12. The first ground raised by defendant is that the instant suit filed by the Trust represented by only two trustees is not maintainable. To support this contention, Shri.Haranhalli has placed reliance upon Shivalingaiah Vs. Ananda Social and Educational Trust2. In the said case the Court was considering the question whether action on behalf of the Trust can only be brought by all the Trustees. We have perused the said authority and various other authorities on this point. 2 ILR 1985 KAR 1950 (para 18) R.F.A No.31/2013 9

13. In Shivalingaiah, this Court has referred to Dulchand Vs. M/s. Mahabit Pershad Trilokchand Charitable Trust, Delhi3. That judgment is based on the Full Bench decision of Gujarat High Court in Atmaram Ranchhodbhai Vs. Gulamhusein Gulam Mohiyaddin and another4. We have gone through the Full bench judgement of the Gujarat High Court.

14. In the case of Gopal Sridhar Mahadev Vs. Sashi Bhusan Sarkar5, a contract for giving lease of certain debutter property was entered into with the plaintiffs by defendant No.3 acting on behalf of defendant No.2 who was the shebait. Defendant No.2 on coming to know of the contract of lease repudiated it and that led to the filing of a suit for specific relief by the plaintiffs. The suit was resisted by defendant No.2 and one of the defences raised by her was that even if defendant No.3 had the authority to enter into the contract of lease on behalf of defendant No.2, such authority was 3 AIR 1984 Delhi 145 4 A.I.R. 1973 Gujarat 113 5 AIR 1933 Cal 109.

10 ineffectual since granting of lease was a matter of fiduciary obligation and it could not be delegated by defendant No.2 to defendant No.3. That judgment is based on R.S. Bannerji v. Sitanath Das6, where a lease granted by a power-of-attorney holder of a trustee was challenged. The Judicial Committee of the Privy Council speaking through Lord Buckmaster held that the lease was executed by a person without authority and was, therefore, void. These authorities have been considered by the Full Bench of Gujarat High Court. In the instant case, admission of P.W.1 in his cross- examination clearly discloses that the Trust did not have Rs.2 Lakhs in its name. Therefore, all Trustees had pooled in their personal funds and gave advance sale consideration. He has also admitted in the cross-examination that he has not produced any document authorising him to file the suit. Ex.P9 is the Trust Deed and it shows that there were 10 Trustees. Admittedly, suit is filed by the Trust represented by only two Trustees, Tajammul Firdoose and Mohammad Ejaz Ahamad. As in the case of Gopal Sridhar Mahadev, 6 AIR 1922 PC 209 R.F.A No.31/2013 11 purchasing immovable property is also a matter of fiduciary obligation. The instant case is more worse because the Trust did not have the advance sale consideration of Rs.2 Lakhs. Hence, we have no hesitation to hold that legal position is well settled that an action on behalf of the Trust can only be brought by all Trustees unless otherwise provided. The Board of Trustees have been vested with certain powers as per Clause X of the Trust Deed to administer the Trust. Clause X

(g) reads as follows:

"X.....

a.....

b....

c....

d....

e....

f...

g. To represent the trust through any of the trustees, duly authorized on this behalf by the Board in all course (Original and appellate jurisdiction) or before any authorities or departments of government, semi-government and local authorities, board and corporation."

(emphasis Supplied) R.F.A No.31/2013 12

15. As per the above Clause, the Board of Trustees shall have power to represent the Trust through any of the Trustees 'duly authorized in that behalf by the Board'. The Trust has examined in all three witnesses. Out of them P.W.1 is one of the Trustees. P.W.2 is a witness to the agreement and P.W.3 is the scribe. As recorded hereinabove, P.W.1 has admitted in his cross-examination that he has not produced any document to show that he was authorised to file the suit. In view of the said admitted fact coupled with the settled position of law that an action on behalf of the Trust can only be brought by all the Trustees, we answer point No.(i) in the negative and in favour of the defendant. Re.Point No.(ii):

16. It is settled that in a suit for specific performance, plaintiff has to prove that all along and till the final decision of the suit, he was ready and willing to perform his part of the contract (See U.N.Krishnamurthy Vs. R.F.A No.31/2013 13 A.M.Krishnamurthy7). In this case, P.W.1 has admitted that the Trust did not have even the advance sale consideration of Rs.2 Lakhs. He has also admitted that he has not produced any document to show that the Trust had the balance sale consideration of Rs. 33 Lakhs. Hence we answer point No.(ii) in the negative and in favour of the defendant. Re.Point No.(iii):

17. The learned Trial Judge has decreed the suit mainly on two counts. Firstly, he has recorded the contention of the defendant that the Trust was not property constituted. On this point, the learned Trial Judge has taken a view that the subject matter was not the validity of the Trust. He has held that when defendant had admitted the agreement he cannot question the validity of the Trust. This finding, in our view is perverse because the Trust could not have maintained the suit without making all trustees as plaintiffs or in the alternative, the two trustees who have filed the suit had authorization. 7 (2022) SCC OnLine SC 840 (para 46) R.F.A No.31/2013 14

18. Secondly, while considering the aspect of readiness and willingness and the capacity of the Trust to pay the amount, the learned Trial Judge has held that one of the Trustees was working in Dubai and P.W.1 had stated that all the Trustees were ready to pay the money, and therefore according to him, the Trust was always ready and willing to perform its part of the contract.

19. In view of the admitted facts and settled position of law recorded hereinabove, we are unable to concur with the view taken by the learned Trial Judge. In this appeal, defendant has urged a specific ground that the suit filed by the Trust not represented by all the Trustees is not maintainable. For reasons recorded hereinabove, we have upheld that contention.

20. With regard to the second aspect namely, readiness and willingness, the law is settled as held in Unnikrishnan. Therefore, the learned Trial Judge's view on this aspect, placing reliance on statement of P.W.1 that one of the R.F.A No.31/2013 15 Trustees was in Dubai and all Trustees were ready to pay money, is perverse and not sustainable in law. Hence, point No.(iii) is answered in the affirmative and in favour of the defendant.

21. Resultantly, this appeal merits consideration. Hence the following:

ORDER

(i) Appeal is allowed.

(ii) Judgment and decree dated November 17, 2012 in O.S No. 25/2011 is set-aside.

(iii) Suit in O.S No. 25/2011 is dismissed.

No costs.

Sd/-

JUDGE Sd/-

JUDGE SPS