Karnataka High Court
T Venkataswamy Reddy vs M H Malik S/O Late G D Chouhan on 20 November, 2023
Author: V Srishananda
Bench: V Srishananda
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NC: 2023:KHC:41675
RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE V SRISHANANDA
REGULAR FIRST APPEAL No.2314 OF 2007
C/W
RFA CROSS OBJECTION No.17 OF 2010
IN RFA No.2314/2007
BETWEEN:
T VENKATASWAMY REDDY
S/O LATE THIMMA REDDY
AGED 63 YEARS,
R/AT.NO.132, BANASWADI,
K.R.PURAM HOBLI,
BANGALORE SOUTH TALUK.
...APPELLANT
(BY SRI. K. BHANU PRASAD, ADVOCATE)
Digitally
signed by R
MANJUNATHA AND:
Location:
HIGH COURT 1. M H MALIK
OF
KARNATAKA S/O LATE G D CHOUHAN
AGED 57 YEARS,
R/AT.NO.34/2, HARIRAM COMPLEX,
(NEXT TO SAGAR THEATRE)
KEMPEGOWDA ROAD,
BANGALORE-9.
2. SMT SAYEEDA BEGUM
W/O M.E.USMAN,
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NC: 2023:KHC:41675
RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010
AGED 55 YEARS,
R/AT.NO.316, CHITRAMALA APARTMENT,
BYRASANDRA JAYANAGAR,
BANGALORE-11.
3. SMT KALA RAMALINGAM
W/O P.H.RAMALINGAM,
AGED 41 YEARS,
R/AT.NO.41,11TH MAIN,
VASANTHNAGAR,
BANGALORE-52.
...RESPONDENTS
(BY SRI. R. VIJAYKUMAR, ADVOCATE FOR R2 & R3
R1 SERVED)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CODE OF CIVIL PROCEDURE AGAINST THE JUDGMENT
AND DECREE DATED 07.08.2007 PASSED IN O.S.No.8329/95
ON THE FILE OF THE XXVII ADDL. CITY CIVIL JUDGE,
BENGALURU (CCH-16), PARTLY DECREEING THE SUIT FOR
SPECIFIC PERFORMANCE AND ETC.,
IN RFA CROB 17/2010
BETWEEN
1. SMT SAYEEDA BEGUM
W/O M.E.USMAN,
AGED 58 YEARS,
R/AT.NO.316, CHITRAMALA APARTMENT,
BYRASANDRA JAYANAGAR, BANGALORE
NOW R/A NO.95,
4TH CROSS, R B EXTENSION
III BLOCK EAST JAYANAGAR
BANGALORE
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NC: 2023:KHC:41675
RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010
2. SMT KALA RAMALINGAM
W/O P.H.RAMALINGAM,
AGED 43 YEARS,
R/AT.NO.41,11TH MAIN,
VASANTHNAGAR,
BANGALORE-52.
... CROSS OBJECTORS
(BY SRI. VIJAYA KUMAR R, ADVOCATE FOR CROSS
OBJECTORS)
AND
1 . T VENKATASWAMY REDDY
S/O LATE.THIMMA REDDY
AGED 63 YEARS,
R/AT.NO.132, BANASWADI,
K.R.PURAM HOBLI,
BANGALORE SOUTH TALUK.
2 . M H MALIK
S/O LATE G D CHOUHAN
MALIK DISPENSARY
R/AT.NO.34/2, HARIRAM COMPLEX,
(NEXT TO SAGAR THEATRE)
KEMPEGOWDA ROAD,
BANGALORE-9.
.......RESPONDENTS
(V/O DT. 18/7/2022 SRI. P. KRISHNAPPA, ADVOCATE FOR R1
(VK NOT FILED) V/O DTD. 18/07/2022 NOTICE TO R2 IS
DISPENSED WITH)
THIS RFA.CROB IS FILED UNDER ORDER XLI RULE 22 OF
CODE OF CIVIL PROCEDURE AGAINST THE JUDGMENT DATED
07.08.2007 PASSED IN O.S.No.8329/1995 ON THE FILE OF
THE XVII-ADDL. CITY CIVIL JUDGE, BANGALORE CITY, PARTLY
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE AND ETC.,
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NC: 2023:KHC:41675
RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010
THIS APPEAL ALONG WITH CROSS OBJECTION, COMING
ON FOR FINAL HEARING, THIS DAY, THE COURT DELIVERED
THE FOLLOWING:
JUDGMENT
Heard Sri K.Bhanu Prasad, counsel for appellant and Sri R.Vijaya Kumar, counsel for respondents 2 and 3.
The present appeal is filed by the plaintiff being not satisfied with the decree of refund of money with damages by virtue of the judgment and decree passed in O.S.No.8329/1995 dated 07th August 2007 on the file of the XVII Additional City Civil Judge, at Bengaluru (CCH-16).
2. The Cross Objection came to be filed belatedly in RFA Cross Objection No.17/2010 by respondents/defendants 2 and 3 opposing the decree insofar as directing the defendants 2 and 3 to return Rs.55,000/- with damages of Rs.55,000/- and interest at the rate of 6% per annum from the date of agreement of sale on the earnest money, till realization.
3. For the sake of convenience, parties are referred to as plaintiff and defendants as per their original ranking before the Trial Court.
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4. The brief facts which are utmost necessary for disposal of the present appeal and cross objection are as under:
A suit came to be filed by the plaintiff initially against first defendant in O.S.No.8329/1995 for the relief of judgment and decree directing the first defendant to comply with the terms of the agreement of sale dated 18.10.1995 and execute the sale deed in favour of the plaintiff at the cost of the plaintiff by receiving balance amount in a sum of Rs.65,000/- or such amount determined by the Court, failing which, the sale deed be executed in accordance with law and consequential relief of possession of the property directing the first defendant along with defendants 2 and 3 to put the plaintiff in possession of the suit schedule property.
5. The suit property is described as under:
"All that piece and parcel of the property bearing site Nos.16 and 17 bearing house list No.245, situated at Babusabarapalya, Chellakere Gramatana, K.R.Puram Hobli, Bengaluru South Taluk, and measuring East to West 40 feet and North to South 60 feet, bounded on the:
East by : Srinivasa Reddy's property,
West by : Road,
North by : Site No.15,
South by : K.R.Mahadevan's property.
And including A.C.sheet house roofing compound.-6-
NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010
6. Upon service of suit summons, defendant entered appearance and filed written statement stating that first defendant has alienated the property in favour of private persons by virtue of registered sale deed dated 27.11.1995 whereby, plaint got amended and subsequent purchasers were impleaded as defendants 2 and 3. Consequentially, prayer column was also amended seeking direction to all the defendants to execute the sale deed.
7. In the plaint it is contended that defendant No.1 is the owner of the suit property and he has entered into agreement of sale of suit property in favour of plaintiff on 18.10.1995 for total consideration of Rs.1,60,000/-. According to the plaintiff, a sum of Rs.55,000/- was paid as advance sale consideration to the defendant No.1 and as per the terms of the agreement, balance sale consideration of Rs.1,05,000/- was agreed to be payable by plaintiff to defendant No.1 on the date of execution of sale deed and two months' time was stipulated for completion of the sale transaction under sale agreement.
8. Plaintiff further contended that within the stipulated period, plaintiff was always ready and willing to pay balance -7- NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 sale consideration of Rs.1,05,000/-. However, it is the contention of the plaintiff that, there was a demand made by defendant No.1 to the plaintiff for payment of Rs.40,000/-
towards balance sale consideration and as such, plaintiff paid further sum of Rs.40,000/- on 07.11.1995, but there was no receipt passed on by defendant No.1 to the plaintiff. But first defendant promised that same will be adjusted towards balance sale consideration at the time of registration of the sale deed.
9. Even after payment of said sum of Rs.40,000/-, plaintiff was ready and willing to pay balance sum of Rs.65,000/- and he demanded the first defendant to execute the sale deed in his favour and also demanded the title deeds to be furnished to him for preparation of the sale deed. All such demands went in vain and plaintiff came to know that first defendant is planning to alienate the suit property in favour of third parties and therefore, plaintiff caused a legal notice dated 20.11.1995 through registered post to the first defendant.
10. Plaintiff further contended that after issuance of notice on 20.11.1995, first defendant replied the legal notice on -8- NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 01.12.1995. Since there is denial in the reply notice, plaintiff was constrained to file the above suit with the aforesaid prayer.
11. After the plaint got amended, further plea was added by the plaintiff by stating that sale made by first defendant in favour of defendants 2 and 3 is a clandestine sale and same is made only to defeat the rights of the plaintiff. As such, defendants 2 and 3 are not bonafide purchasers for value and sale deed executed by first defendant in favour of defendants 2 and 3 is a sham. Therefore, plaintiff sought for decreeing the suit.
12. The first defendant filed the written statement denying the plaint averments in toto. First defendant also contended that the suit property has been sold in favour of defendants 2 and 3 and therefore, suit is to be dismissed.
13. Defendants 2 and 3 filed written statement stating that they are bonafide purchasers for value, inasmuch as they have entered into agreement with first defendant for sale of the property on 08.09.1995 which is much earlier to the suit -9- NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 agreement and in pursuance to the said agreement, sale deed came to be executed by first defendant in their favour on 27.11.1995 and the averments made by plaintiff with regard to sale deed of defendants are incorrect and sought for dismissal of the suit.
14. In view of the rival contentions of the parties, the Trial Court raised the following issues:
ISSUES (1) Whether the plaintiff proves the agreement of sale dated 18.10.1995 executed by the defendant in respect of the schedule site?
(2) Whether he proves payment of Rs.55,000/- by way of advance under the agreement?
(3) Whether he proves further payment of Rs.40,000/- to the defendant on 07.11.1995?
(4) Whether the defendant proves that the sale agreement is void and unenforceable under law?
(5) Whether the plaintiff is entitled to the relief of specific performance as claimed?
(6) What relief/reliefs the parties are entitled to?
Additional Issue framed on 04.12.2003 (1) Whether the defendant Nos.2 and 3 proves that they are the bonafide purchaser of the suit
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 schedule property for value with notice of the prior agreement?
Additional Issue framed on 02.09.2004 (1) Whether the suit is barred by limitation? (2) Whether the suit is bad for mis-joinder of parties? (3) Whether the plaintiff is entitled to the reliefs sought against defendant Nos.2 and 3?
Additional Issue framed on 25.08.2006 (1) Whether the 1st defendant proves that he has entered into an agreement with 2nd and 3rd defendants on 8.9.1995?
(2) Whether the 1st defendant furthers proves that plaintiff created the agreement of sale in favour of the plaintiff?
(3) Whether the plaintiff proves that he is always ready and willing to perform his part of contract?
15. In order to prove his case, plaintiff got examined himself as P.W.1 and relied on seven documents which were exhibited and marked as Exs.P.1 to 7, comprising of sale deed at Ex.P.1, copy of legal notice at Ex.P.2, reply to the legal notice at Ex.P.3, certified copy of sale deed at Ex.P.4, encumbrance certificate at Ex.P.5, copy of the sale deed at Ex.P.6 and RP acknowledgment at Ex.P.7.
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16. Per contra, on behalf of defendants, first defendant-M.H. Malik got examined as D.W.1, one of the subsequent purchaser viz., Kala Ramalingam was examined as D.W.2 and one Mohammed Haneef, an advocate got examined as D.W.3. On behalf of defendants, two documents were exhibited and marked as Exs.D.1 and D.2 comprising of agreement of sale dated 08.09.1995 at Ex.D.1 and sale deed dated 27.11.1995 at Ex.D.2.
17. On conclusion of recording of evidence, learned Trial Judge heard the parties in detail and on cumulative consideration of the oral and documentary evidence placed on record by the parties, decreed the suit of the plaintiff in part, as under:
"In the result, the suit is partly decreed with costs.
The prayer for specific performance of contract for execution of sale deed in favour of plaintiff is hereby rejected.
The plaintiff is entitled for refund of earnest money of Rs.55,000/- with damages of Rs.55,000/- and interest at the rate of 6% per annum from the date of agreement of sale on the earnest money till realization from the defendant Nos.1 to 3."
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010
18. Being aggrieved by the said judgment and decree, plaintiff has preferred the present Regular First Appeal No.2314/2007 on the following grounds:
The appellant plaintiff has examined himself as Pw.1 & whereas the 1st defendant has been examined as Dw.1 and the 3rd defendant has been examined as Dw.2 and one Mohammed Haneef has been examined as Dw.3.
Pw.1 has deposed as to the contents of the plaint and on a perusal of the cross-examination of Pw.1 made by the 1st defendant, it is clear as to the execution of the Agreement of sale vide Ex.P1 and the signature of the 1st defendant has been marked as Ex.P1(a) and signature of the appellant - plaintiff has been marked as Ex.P1(b) and the signatures of Mahadevan and Venkatesh, who are the attestors are marked as Exs.P1(c) & (d). The legal notice issued by the appellant plaintiff is marked as Ex.P2 and the reply sent by the 1st defendant is marked as Ex.P3 and hence, from his evidence, it is clear that the first defendant having admitted para-9 of the Agreement of sale and he having admitted that the plaintiff is only entitled to liquidated damages as per the terms of the Agreement and hence, the first defendant cannot and he is not entitled to deny the Agreement of Sale in question executed by him in favour of the appellant - plaintiff.
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 Dw.2 is by name Kala Ramalingam, the third defendant has been examined and his evidence is contrary to the written statement filed by him. One M.I.Mohammed Haneef has been examined as Dw.3 and his evidence do not help the defendants in any manner.
The Trial Court as per Issue No. I has held that the Agreement dt:18/10/95 vide Ex.P1 executed by the first defendant in favour of the appellant - plaintiff is proved.
So far as Issue No.2 is concerned, the Trial Court has held that a sum of Rs.55,000/- was paid by way of advance under the said Agreement of Sale. So far as Issue No.4 is concerned, it is held that the alleged Agreement vide Ex.P1 is enforceable under law.
So far as additional issue framed on 4/12/2003 and additional issue No.1 framed on 25/8/2006 i.e., as to whether the defendants 2 & 3 are the bonafide purchasers of the suit property without notice and as to whether the first defendant proves that he had entered into an Agreement of Sale with the defendants 2 & 3 on 8/9/95 and the Trial Court erred in holding that the defendants 2 & 3 are the bonafide purchasers and that the first defendant had executed the Agreement of Sale dt:8/9/95 in favour of the defendants 2 & 3. Such a finding is incorrect in view of the Written Statement filed by the first defendant as well as the written statement filed by the third defendant, wherein they have conceded that the plaintiff is only entitled to refund of money with
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 liquidated damages and hence, it is admitted both by the first and the third defendants as to the existence and execution of the Agreement of Sale vide Exhibit
- Pl and also having held that a sum of Rs.55,000/- has been paid under the said Agreement of Sale and having held that the Agreement of Sale vide Exhibit - P1 is proved and hence, the Agreement of Sale vide Exhibit - P1 is binding not only as against D1, but also as against D2 & D3, since D2 & D3 had the knowledge of the Agreement of Sale and also, when the first defendant had sent the reply as per Exhibit- P3 to the notice of the plaintiff vide Exhibit-P2, the first defendant has not revealed as to the execution of the alleged Agreement of Sale dt:8/9/95 in favour of defendants 2 & 3 and hence, the alleged Agreement of Sale dt:8/9/95 and the alleged Sale Deed dt:27/11/95 were got up only with an intention of depriving the plaintiff-appellant and hence, the finding of the Court below that the defendants 2 & 3 are the bonafide purchasers is incorrect. So far as additional issue No.3 framed on 25/8/2006, the Trial Court has clearly held that the plaintiff has always been ready. and willing to perform his part of the contract and in view of such a finding also, the suit ought to have been decreed.
So far as additional issue No.4 is concerned as to whether the defendant proves that the Sale Agreement executed in favour of the plaintiff is void and unenforceable under law, the Court has held that the defendants have proved that the Agreement is unenforceable under law and such a finding is
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 incorrect and holding the said issue in favour of the first defendant is not sustainable under law. So far as additional Issue No.1 framed on 2/9/2004 as to whether the suit is barred by limitation and the same is also held in favour of the plaintiff and on this count also, the suit ought to have been decreed. So far as additional Issue No.2 framed on 2/9/2004 with regard to as to whether the suit is bad for mis- joinder of parties and the court has held that the suit is not bad for mis-joinder of parties. So far as additional Issue No.5 is concerned as to whether the plaintiff is entitled to the relief of specific performance and the said issue is held in negative holding that the defendants 2 & 3 will be put into hardship and loss due to escalation in the land value and such a finding is without any basis and without evidence and besides, contrary to law. So far as Issue No.6 and additional Issue No.3 dt:2/9/2004 i.e., with regard to whether the plaintiff is entitled to the relief as sought for and the court grossly erred in holding that the plaintiff is entitled to the refund of the amount with liquidated damages and such a finding is contrary to law.
The appellant submits that during the subsistence of the Agreement of Sale vide Exhibit-P1, the first and the defendants 2 & 3 have colluded among themselves in creating the Agreement of Sale dt:8/9/95 and also in getting the Sale Deed dt:
27/11/95 executed by the first defendant in favour of the defendants 2 & 3, which clearly demonstrates that the defendants have played fraud only with an
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 intention to deprive the plaintiff - appellant of his legitimate right over the property in question and the Court ought to have decreed the suit for the relief of specific performance as against all the defendants. The appellant submits that Sec. 12(c) and 21(a) of the Specific Relief Act is for the benefit of the promisor i.e., the first defendant and not for the benefit of the subsequent purchasers, who are the defendants 2 & 3 and that too, when they have entered upon the venture of purchase of the property with full knowledge of the Agreement vide Exhibit-P1 and as such the defendants 2 & 3 cannot plead that the appellant - plaintiff is only entitled to the payment of advance amount and liquidated damages and in view of such a pleading putforth by the defendants 2 & 3, they were aware of the Agreement of Sale in favour of the plaintiff and from the same, it is clear that the alleged Agreement dt:8/9/95 is the created document and which fact is also clear from the reply sent by the first defendant to the notice of the plaintiff.
On a perusal of the evidence on record there are no equitable considerations in favour of the defendants 2 & 3, since the property in question lies as the vacant property without any kind of improvements or putting up any kind of constructions by the defendants 2 & 3 over the property in question.
The clause No.9 in the Agreement of Sale vide Exhibit - P1 with regard to stipulation of damages was made only for the purpose of securing performing the contract and not for refund of the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 money or damages and the court grossly erred in interpreting the said clause in favour of the defendants and such a finding is contrary to law. On a perusal of the documents on evidence on record, the appellant-plaintiff has not contravened the terms of the Agreement of Sale within the stipulated time and on the other hand, he was always ready and willing to comply with the terms of the Agreement of Sale and even the appellant plaintiff had also issued the notice to the first defendant within the stipulated period and the Trial Court grossly erred in refusing the relief of specific performance in favour of the plaintiff. There has been no delay even on the part of the appellant- plaintiff in exercising his right over the property under the Agreement of Sale.
The appellant submits that in decreeing the suit for specific performance no hardship or loss or injury will be caused to either the first defendant or the defendants 2 & 3.
The appellant submits that U/s.20 of the Specific Relief Act, the discretion exercised by the Trial Court is arbitrary and the same is unreasonable and not guided by the established judicial principles and consequently, the Trial Court ought to have granted the relief of specific performance in favour of the plaintiff.
The alleged Agreement of Sale dt:8/9/95 is very much doubtful and it amounts to creating of such document, which is clear from the evidence on record and on this count also, the Court grossly
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 erred in refusing to grant the relief of specific performance."
19. Insofar as decreeing the suit in part and directing defendants 2 and 3 to pay a sum of Rs.55,000/- with interest at the rate of 6% per annum, being the advance sale consideration and also sum of Rs.55,000/- as damages, is being questioned by defendants 2 and 3 in the RFA Cross Objection No.17/2010, on the following grounds:
The Trial Courts erred in decreeing the suit of the Plaintiff even in part, whereas the suit Ought to have been dismissed atleast against these defendants in toto. The suit as a whole, having come to the conclusion that Plaintiff has failed to prove the payment of Rs.40,000/- as alleged in the Plaint. The conduct of the Plaintiff having been questioned by the learned trial judge, inter-alia holdings that the Plaintiff has come up with a false case and therefore the learned Judge ought not to have decreed the suit even in part.
The Trial judge grossly erred in holding that the suit being barred by time, against these Defendants, even though they were impleaded in the suit as party later, no prayer was sought against these defendants in time and therefore, that should have been sufficient for the Trial Judge to have dismissed the suit. Assuming but not conceding that such a prayer was not to be asked even then, the trial Court ought not
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 to have directed these Defendants to refund any part of the money stated to have been paid by the Appellant to the 1st Defendant or pay any interest on the said amount to the Plaintiff, in view of the admitted position that what was alleged to be have been paid by the Plaintiff is to the Defendant No.1 and not to these Defendants and therefore if at all there could be a Decree in favour of the Appellant, as ordered by the Trial Court, it ought to be only against the 1st Defendant and not against these Defendants. The Trial Court could not have passed any kind of decree against these Defendants to any extent. If at all the Plaintiff was entitled to any relief, at the most it should have been only against first Defendant and not against these Defendants whilst the Trial Court came to the conclusion that the Agreement in favour of Defendant No.2 and 3 were earlier in point of time to the Agreement claimed by the Plaintiff, the Agreement relied upon by the Plaintiff must necessarily yield to the sale deed executed by the 1st Defendant in favour of Defendant 2 and 3. The only relief the Plaintiff would have been entitled to if he had proved the Agreement in his favour which admittedly was later in point of time, would be for refund of the advance amount only allegedly paid by the Plaintiff to 1st Defendant and that too from the 1st Defendant only and not from the other Defendants. The Trial Court having come to a definite conclusion that the Plaintiff is not entitled to Schedule Property having applied the well settle principle of law that equitable discretion should not be exercised in favour
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 of a person who has come to court with unclean hands, should not have decreed the suit even in part, but should have dismissed the suit in its entirety. The Trial Court having found that the Plaintiff is a speculator and not a truthful witness and having weighed the evidence on golden scales should have dismissed the suit in toto.
At all events, the judgments and Decree of the Trial Court in decreeing the suit of the Plaintiff in part is wrong and untenable, so far as it relates to fastening the liability on these Defendants. The decree passed against these defendants are contrary to the evidence on record, documents produced and relied upon by the parties and also contrary to the settled principles of law.
20. Reiterating the grounds urged in the appeal memorandum, Sri K.Bhanu Prasad, counsel representing the appellant vehemently contended that the plaintiff was always ready and willing to perform his portion of the contract and he has paid sum of Rs.55,000/- as advance sale consideration under Ex.P.1 which is sale agreement. Thereafter, at the request of first defendant, he has paid sum of Rs.40,000/- as second advance of the sale consideration on 07.11.1995. But the same was not evidenced by executing any receipt and plaintiff believed the promise made by the first defendant that
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 the said sum of Rs.40,000/- would be adjusted in the final sale consideration.
21. He further contended that despite receiving major portion of the sale consideration, plaintiff clandestinely sold the property in favour of defendants 2 and 3 by concocting the document marked at Exs.D1 and D2. He further contended that the sale deed Ex.D.2 is dated 27.11.1995 i.e, after receipt of legal notice issued by the plaintiff marked at Ex.P.2 and after the sale has been effected, reply notice came to be issued by first defendant and in the reply notice, there is no whisper by the first defendant about the earlier agreement or sale deed which exposes the cunning nature of the first defendant. As such, defendant Nos.2 and 3 are not to be termed as bonafide purchasers of the suit property and their sale deed is nothing but a sham document which has come into force only to defeat the right of the plaintiff under Ex.P.1 and sought for allowing the appeal.
22. He further pointed out that mere non passing of receipt by the first defendant for having received Rs.40,000/- as additional sale consideration cannot be a circumstance which
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 would non suit the claim of the plaintiff in getting the suit decreed for specific performance and sought for allowing the appeal.
23. He also argued that the sale deed in favour of defendant Nos.2 and 3 executed by first defendant on 27.11.1995 is well within a period of two months i.e., the time that has been stipulated under Ex.P.1 which is dated 18.10.1995 and therefore, the sale in favour of 2nd and 3rd defendant cannot be countenanced by this Court and sought for allowing the appeal.
24. It is his further argument that if the first defendant is righteous and prudent person, he should not have entered into an agreement on 18.10.1995 with the plaintiff if there was an agreement on 08.09.1995 as is propounded by defendants 2 and 3. The silence on the part of the first defendant while executing the agreement on 18.10.1995 which stands proved by placing cogent and convincing evidence on record by plaintiff, would speak volumes about the conduct of the first defendant in clandestinely selling the suit property in favour of defendants 2 and 3 and therefore, sought to allow the appeal.
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010
25. Sri Bhanu Prasad also contended that the suit of the plaintiff needs to be decreed in toto and therefore, cross objection is meritless and same needs to be dismissed.
26. Per contra, Sri R.Vijayakumar, learned counsel representing defendants 2 and 3 who are respondent Nos.2 and 3 in this appeal contended that the agreement entered into by the first defendant on 08.09.1995 is marked at Ex.D.1.
27. He further contended that the stamp papers purchased for preparation of the said document by the first defendant also mentions the date as 08.09.1995 and it has come into being in natural course.
28. He further argued that in pursuance of the agreement dated 08.09.1995, sale deed came to be executed on 27.11.1995 by first defendant in favour of defendants 2 and 3 vide Ex.D.2.
29. He also brought to the notice of this Court that the first defendant was competent enough execute the sale deed in favour of defendants 2 and 3 vide Ex.D.2 after receipt of
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 necessary sale consideration mentioned in Ex.D.2 and therefore, defendants 2 and 3 are to be construed as bonafide purchasers for value.
30. He also argued that the first defendant was cross examined in extenso by the plaintiff whereunder, it is not suggested that agreement dated 08.09.1995 is concocted by the first defendant in active collusion with defendants 2 and 3.
31. He also contended that if the first defendant has played fraud on the plaintiff by executing an agreement on 18.10.1995 with plaintiff by suppressing the agreement dated 08.09.1995 marked at Ex.D.1, remedy for the plaintiff is to proceed solely against the first defendant.
32. Therefore, Trial Court decreeing the suit of the plaintiff against defendants 2 and 3 by directing them to pay the advance sale consideration in a sum of Rs.55,000/- with interest at 6% per annum and also directing to pay damages of Rs.55,000/- is incorrect and sought for dismissal of the appeal filed by the plaintiff as against defendants 2 and 3 and also sought for allowing cross objection whereby the obligation
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 created under the decree insofar as defendants 2 and 3 needs to be set aside with costs.
33. In reply, Sri Bhanu Prasad, counsel submitted that defendants 2 and 3 cannot possess a better title than what first defendant possessed.
34. Therefore, liability on the suit property will have to be now met by defendants 2 and 3 and they are also liable to execute the sale deed in favour of plaintiff by allowing the present appeal. In support of his arguments, counsel placed reliance on the following judgments, wherein, it is held as under:
Durga Prasad and another v. DeepChand and others AIR 1954 SC 75,
36. Now arises a question which touches the Custodian, Uttar Pradesh. The contract was for Rs 62,000. The plaintiff paid Rs 10,000 as earnest money but this was later returned, so Rs 62,000 is still due. But there is a conveyance outstanding in favour of the appellants for which they have paid, according to their case, Rs 58,000. If the Rs 62,000 due to the Nawab is paid to him, or to the Custodian, U.P. who represents his estate, it is evident that the Nawab, who is at fault, will be paid twice over for the same property and his
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 estate will benefit accordingly while the appellants will be left to pursue their remedies against the Nawab or his estate. The question is whether we have the power to direct that the Rs 58,000 be paid to the appellants instead of to the Nawab and thus obviate further, and possibly fruitless, litigation. But before we decide that, we will consider another question which is bound up with it, namely, the proper form of decree in such cases.
37. The practice of the courts in India has not been uniform and three distinct lines of thought emerge. (We are of course confining our attention to a purchaser's suit for specific performance.) According to one point of view, the proper form of decree is to declare the subsequent purchase void as against the plaintiff and direct conveyance by the vendor alone. A second considers that both vendor and vendee should join, while a third would limit execution of the conveyance to the subsequent purchaser alone.
42. In our opinion, the proper form of decree is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his title to the plaintiff. This was the course followed by the Calcutta High Court in Kafiladdin v. Samiraddin [Kafiladdin v. Samiraddin, AIR 1931 Cal 67 : 1930 SCC OnLine Cal 46] and appears to be the English practice. See Fry on Specific Performance, 6th Edn., p. 90, Para 207;
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 also Potter v. Sanders [Potter v. Sanders, (1846) 6 Hare 1 : 67 ER 1057] . We direct accordingly.
43. That brings us to the question of the Rs 62,000. We do not think it would be right to lay down that in every case the balance of the purchase money should be paid to the subsequent transferee up to the extent of the consideration paid by him. There may be equities between the vendor and the subsequent transferee which would make that improper, so unless they fight the question out as between themselves and it is decided as an issue in the case, the normal rule should be to require that the money be paid to the vendor. But the circumstances here are peculiar. The parties before us were prepared to compromise, and had the Nawab been here it is more than probable that he would have been glad to agree so as to avoid further litigation. But he is in Pakistan and is beyond the jurisdiction of the Indian courts. We think it would be inequitable to leave the appellants to pursue what in all probability is only a will-o'-the-wisp and for us to augment the Nawab's estate by what would appear to be an unjust enrichment. This is an equitable relief and we have a wide discretion. We joined the Custodian, U.P. to afford him the opportunity of showing why we should not take what appears to be the just and equitable course. We have afforded him an opportunity of showing how the Nawab could have defended a suit by the appellants for refund of the consideration. As he has not been able to show us anything in the contract between the Nawab and the appellants, or in the covenants of their deed, which would disentitle the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 appellants from claiming Rs 58,000 from the Nawab, we consider it right that Rs 58,000 should be paid to them and Rs 4000 to the Custodian, U.P. All that the Custodian, U.P. was able to urge was that the whole amount had vested in him and so was his. But that is not so. The plaintiff was directed to pay a sum of Rs 62,000 into court as a condition precedent to the execution of a sale deed in his favour. Curiously enough, the decree does not say what is to be done with the money when it is paid into court. But so long as it is in court under those conditions it lies there subject to such decree as may ultimately be passed in appeal. We therefore have full power to direct payment of Rs 58,000 to the appellants instead of to the Nawab, especially as there is this curious lacuna in the decree.
Ramesh Chandra Chandiok v. Chuni Lal Sabharwal, AIR 1971 SC 1238
8. Coming to the last point, the High Court has held that the appellants were disentitled to a decree for specific performance because a statement was made at the Bar that during the pendency of the appeal they had executed the decree of the trial court and an amount of Rs 7500 had been deposited by the respondents pursuant to the execution proceedings. It is true that the appellant could not accept satisfaction of the decree of the trial court and yet prefer an appeal against that decree. That may well have brought them within the principle that when the plaintiff has elected to proceed in some other manner than for specific performance be
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 cannot ask for the latter relief. This is what Scrutton, L. J., said in Dexters Limited v. Hill Crest Oil Company, Bradford Ltd. [(1926) 1 KB 348, 358] at p. 358:
"So, in my opinion, you cannot take the benefit of a judgment as being good and then appeal against it as being bad."
It was further observed:
"It startles me to hear it argued that a person can say the judgment is wrong and at the same time accept payment under the judgment as being right."
This illustrates the rule that a party cannot approbate and reprobate at the same time. These propositions are so well-known that no possible exception can be taken to them. In the present case, however, the above rule cannot apply because the appellants had, by consistent and unequivocal conduct, made it clear that they were not willing to accept the judgment of the trial court as correct. It has already been mentioned at a previous stage that after the decision of the trial court, the appellants had even applied on March 31, 1958 for an injunction restraining the respondents from selling or otherwise disposing of the plot as it was apprehended that they were trying to do so. It was stated in this application that the plaintiffs would be preferring an appeal but it would take time to secure certified copies. An appeal was in fact preferred and seriously pressed before the High Court on the relief relating to specific performance. This relief is discretionary but not arbitrary and discretion must be exercised in accordance with the sound and reasonable
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 judicial principles. We are unable to hold that the conduct of the appellants, which is always an important element for consideration, was such that it precluded them from obtaining a decree for specific performance.
9. It is common ground that the plot in dispute has been transferred by the respondents and therefore the proper form of the decree would be the same as indicated at p. 369 in Lala Durga Prasad v. Lala Deep Chand [(1954) SCR 360 : AIR 1954 SC 75] viz. "to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his title to the plaintiff." We order accordingly. The decree of the courts below is hereby set aside and the appeal is allowed with costs in this court and the High Court.
Abdul Kayum Ahmad Mohammad Siddik Husan v. Damodhar Paikaji Kinhekar, AIR 1964 Bom 46
6. According to him, granting pecuniary compensation for non-performance of the agreement would afford adequate relief to the plaintiff and, therefore, specific performance ought not to be allowed. Shri Mandlekar submitted that these sections require the Court to consider the equities between the parties to the agreement, so that the subject-matter of the agreement may be saved for the promisor and the promisee may
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 be adequately compensated in money. Upon this very argument, these sections appear to me to be entirely inapplicable to the facts of the present case. Here the promisor, defendant No. 1, has already parted with the house in favour of the appellants and there is no question of saving that house for the promisor, who cannot get back the house even if he were to be required to give to the plaintiff monetary compensation only. The submission of Shri Mandlekar seemed to imply that these sections could also be availed of by the subsequent purchasers, even if they had purchased the property with full knowledge of the prior agreement by the vendor. No authority was shown in support of that suggestion. These sections appear to be only for the benefit of the promisor, so that the property may be saved for him and not for the benefit of subsequent purchasers, particularly when they have entered upon the venture of the purchase with full knowledge of the prior agreement. The appellants, who are subsequent purchasers, cannot claim to take up cudgels for defendant No. 1 and to urge on his behalf that only a decree for monetary compensation should be passed against him. It would be interesting to note that defendant No. 1, who alone could have sought protection of those sections, has not cared to do so and has not joined in this prayer of the appellants. Moreover, there is nothing on record to show that defendant No. 1 is or would be in a position to pay monetary compensation, if decreed.
11. The learned counsel for the appellants then urged that there were more equities in favour of the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 defendant-appellants than in favour of the plaintiff. However, he did not show which were those greater equities in favour of the appellants as claimed. The only thing which he could pin-point in this connection was that the appellants had paid Rs. 2,200 while the plaintiff had paid Rs. 2,000 as per the findings of the Courts below. The mere fact that the appellants had paid Rs. 2,200 would be neither here nor there when it would be seen that they did it, if at all they had paid that or any consideration, with the knowledge that the plaintiff had acquired a right to get a sale-deed of this house on the strength of the agreement, dated December 26, 1952. By merely purporting to pay a larger consideration for that house, defendants Nos. 2 to 4 cannot say that equities are more in their favour. Again, a person claiming equities must come with clean hands. In the instant case, these appellants have not only tried to steal a march over the plaintiff by securing this sale in the circumstances which I have discussed at considerable length but they had gone to the length of raising false defences in the suit. Under the circumstances, no question of equities in favour of the appellants could arise.
Prakash Chandra v. Angadlal & ors, AIR 1979 SC 1241, "9. The ordinary rule is that specific performance should be granted. It ought to be denied only when equitable considerations point to its refusal and the circumstances show that damages would constitute an adequate relief. In the present case, the conduct of the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 appellant has not been such as to disentitle him to the relief of specific performance. He has acted fairly throughout, and there is nothing to show that by any act of omission or commission he encouraged Mohsinali and Qurban Hussain to enter into the sale with the first and second respondents. There is no evidence that the appellant secured an unfair advantage over Mohsinali and Qurban Hussain when he entered into the agreement. Nor is there anything to prove that the performance of the contract would involve the respondents in some hardship which they did not foresee. In our opinion, there is no reason why the appellant should not be granted the relief of specific performance. An application has been filed before us by the first and second respondents alleging that said respondents had raised certain constructions on the site during the pendency of the litigation and, therefore, specific relief should not be granted to the appellant. It is denied by the appellant that any permanent constructions have been erected on the land in dispute. It is said that a temporary wooden structure only has been put up on a portion of the land. The respondents have attempted to show by reference to a map and photographs that permanent constructions have been made on the site. Having regard to the material before us, we are unable to hold that any permanent constructions have been raised on the said land. If the first and second respondents have in fact raised any constructions on the site, it will be open to them to remove the building material when possession is delivered to the appellant.
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10. It is urged by learned counsel for the first and second respondents that the contract for sale contains a clause for payment of damages in case of breach of the contract and that, therefore, damages should be awarded instead of specific performance. A perusal of the terms of the contract indicates that the stipulation for damages was made only for the purpose of securing performance of the contract and not for the purpose of giving an option of Mohsinali and Qurban Hussain of paying money in lieu of specific performance. Even if a sum has been named in the contract for sale as the amount to be paid in case of a breach the appellant is entitled in law to the enforcement of the agreement.
14. The appeal is allowed, and the judgment and decree of the High Court are set aside. The appellant is required to deposit Rs. 1,000, which is the balance of the purchase price, in the trial Court for payment to respondents No. 3 within one month of the receipt of the record from this Court. Such deposit being made within the said period the respondents No. 3 will execute a sale deed in favour of the appellant in accordance with the terms of the contract dated September 11, 1956, and the respondents Nos. 1 and 2 will join the conveyance. On execution of the sale deed, the appellant will be entitled to delivery of possession of land from the first and second respondents. In the event of respondents No. 3 failing to execute the sale deed or the first and second respondents failing to join the conveyance, the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 appellant shall be entitled to obtain the sale deed through the trial Court. In the circumstances of the case, there is no order as to costs of this appeal. "
M. L. Devender Singh and ors v. Syed Khaja, (1973) 2 SCC 515, "25. Lastly, it was urged before us that the High Court should not have lightly interfered with the exercise of its discretion by the trial court to grant or not to grant specific performance on the facts and circumstances of this case. It is clear that the discretion, as laid down in Section 22 of the old Act (corresponding to Section 20 of the Act of 1963), is not to be exercised arbitrarily but on sound and reasonable grounds "guided by judicial principles so that it is capable of correction by a Court of appeal". It appeared, quite rightly, to the High Court that the trial court had gone completely astray in the exercise of its discretion on the footing that the plaintiff respondent enjoyed an "unfair advantage"
over the first defendant-appellant, where as, on the facts and circumstances of the case, it was the first defendant who was placed in a position to exploit the need of the plaintiff and the plaintiff's allegedly insecure position under the first agreement. It is clear that the plaintiff-respondent had dealt very fairly and squarely with the first defendant-appellant. The trial court's error in the exercise of its discretion on an utterly untenable, fanciful and unsound ground was rightly corrected by the High Court."
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 Mademsetty Satyanarayana v. G. Yelloji Rao, AIR 1965 SC 1405
6. At the outset we shall construe the relevant sections of the Specific Relief Act and the Limitation Act unhampered by judicial decisions.
22. 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.
The following are cases in which the court may properly exercise a discretion not to decree specific performance:
I. Where the circumstances under which the contract is made are such as to give the plaintiff an unfair advantage over the defendant, though there may be no fraud or misrepresentation on the plaintiff's part.
Illustrations *** II. 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.
Illustrations *** The following is a case in which the court may properly exercise a discretion to decree specific performance:
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 III. Where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
Illustrations *** The First Schedule to the Limitation Act Description of Period of Time from which suit Limitation period begins to run Article 113. For Three The date fixed for specific years the performance, or, performance of if no such date is a contract fixed, when the plaintiff has notice that performance is refused.
Under Section 22 of the Specific Relief Act, relief of specific performance is discretionary but not arbitrary : discretion must be exercised in accordance with sound and reasonable judicial principles. The cases providing for a guide to courts to exercise discretion one way or other are only illustrative; they are not intended to be exhaustive. As Article 113 of the Limitation Act prescribes a period of 3 years from the date fixed thereunder for specific performance of a contract, it follows that mere delay without more extending up to the said period cannot possibly be a reason for a court to exercise its discretion against giving a relief of specific performance. Nor can the scope of the discretion, after excluding the cases mentioned in
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 Section 22 of the Specific Relief Act, be confined to waiver, abandonment or estoppel. If one of these three circumstances is established, no question of discretion arises, for either there will be no subsisting right or there will be a bar against its assertion. So, there must be some discretionary field unoccupied by the three cases, otherwise the substantive section becomes otiose. It is really difficult to define that field. Diverse situations may arise which may induce a court not to exercise the discretion in favour of the plaintiff. It may better be left undefined except to state what the section says, namely, discretion of the court is not arbitrary, but sound and reasonable guided by judicial principles and capable of correction by a court of appeal.
7. Mr Lakshmaiah cited a long catena of English decisions to define the scope of a court's discretion.
Before referring to them, it is necessary to know the fundamental difference between the two systems -- English and Indian -- qua the relief of specific performance. In England the relief of specific performance pertains to the domain of equity; in India, to that of statutory law. In England there is no period of limitation for instituting a suit for the said relief and, therefore, mere delay -- the time lag depending upon circumstances -- may itself be sufficient to refuse the relief; but, in India mere delay cannot be a ground for refusing the said relief, for the statute prescribes the period of limitation. If the suit is in time, delay is sanctioned by law; if it is beyond time, the suit will be dismissed as barred by time; in either case, no question of equity arises.
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8. With this background let us look at the English text-books and decisions relied upon by the learned counsel for the appellant. In Halsbury's Laws of England, Vol. 36, at p. 324, it is stated:
"Where time is not originally of the essence of the contract, and has not been made so by due notice, delay by a party in performing his part of the contract, or in commencing or prosecuting the enforcement of his rights, may constitute such laches or acquiescence as will debar him from obtaining specific performance. The extent of delay which has this effect varies with circumstances, but as a rule must be capable of being construed as amounting to an abandonment of the contract. A much shorter period of delay, however, suffices if it is delay in declaring an option or exercising any other unilateral right; and if the other party has already given notice that he does not intend to perform the contract, the party aggrieved must take proceedings promptly if he desires to obtain specific performance."
In Fly on Specific Performance, 6th Edn., at p. 517, it is said:
"Where one party to the contract has given notice to the other that he will not perform it, acquiescence in this by the other party, by a comparatively brief delay in enforcing his right, will be a bar : so that in one case two years' delay in filing a bill after such notice, in another case one year's delay, and in a third (where the contract was for a lease of collieries) five months' delay was held to exclude the intervention of the Court."
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 Learned counsel cited many English decisions in support of his argument that there shall be promptitude and diligence in enforcing a claim for specific performance after a repudiation of the contract by the other party and that mere continual claim without any active steps will not keep alive the right which would otherwise be defeated by laches :
see Clegg v. Edmondson [(1857) 114 RR 336] , Eads v. Williams [(1854) 43 ER Chan 671] , Lehmann v. McArthur [(1968) LR 3 Ch AC 496] , Watsoh v. Reid [(1830) 39 ER Chan 91] , and Emile Erlanger v. New Sombrero Phosphate Company [(1878) LR 3 AC 1218] . But as stated earlier, the English principles based upon mere delay can have no application in India where the statute prescribes the tune for enforcing the claim for specific performance. But another class of cases which dealt with the doctrine of laches have some bearing in the Indian context. In Lindsay Petroleum Company v. Prosper Armstrong Hurd, Abram Farewell, and John Kemp [(1874) LR 5 PCA 221, 239-240] Sir Barnes Peacock defined the doctrine thus:
"Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material."
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 This passage indicates that either waiver or conduct equivalent to waiver along with delay may be a ground for refusing to give a decree for specific performance. In Caesar Lamare v. Thomas Dixon [(1873) 6 HLC 414, 423] Lord Chelmsford said:
"The conduct of the party applying for relief is always an important element for consideration."
The House of Lords in Emile Erlanger v. New Sombrero Phosphate Company [(1878) LR 3 AC 1218] approved the passage in Lindsay Petroleum Company v. Prosper Armstrong Hurd, Abram Farewell, and John Kemp [(1874) LR 5 PCA 221, 239-240] which we have extracted earlier.
11. The result of the aforesaid discussion of the case law may be briefly stated thus : While in England mere delay or laches may be a ground for refusing to give a relief of specific performance, in India mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant does not empower a court to refuse such a relief. But as in England so in India, proof of abandonment or waiver of a right is not a pre-condition necessary to disentitle the plaintiff to the said relief, for if abandonment or waiver is established, no question of discretion on the part of the Court would arise. We have used the expression "waiver" in its legally accepted sense, namely, "waiver is contractual, and may constitute a cause of action : it is an agreement to release or not to assert a right"; see Dawson's Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha [(1935) LR 62 IA 100, 108] . It is not possible or
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 desirable to lay down the circumstances under which a court can exercise its discretion against the plaintiff. But they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief.
12. Bearing these principles in mind let us now look at the facts of the case. Both the lower courts found that the appellant repudiated the contract even on the next day of the auction i.e. August 24, 1954. The 1st respondent issued a notice to the appellant on August 30, 1954, asking him to obtain from him one-fourth of the auction price as earnest money at any time within 24 hours and the balance within a period of one week thereafter and execute a sale deed in his favour. The appellant did not reply to this notice. The 1st respondent in his evidence says that he could not take effective steps to enforce the contract for a period of 7 months as his wife was ill and as the Hyderabad Municipal Corporation had demolished one of his houses. The High Court accepted the explanation given by the 1st respondent for the delay in his taking steps in enforcing the contract. In the affidavit filed by the 1st respondent in the trial court on October 18, 1955, he stated that his house had been demolished by the Municipal Corporation before a year and a half and his wife was also seriously ill for the "last two years" and that, therefore, he was worried. From this statement it is argued that both the circumstances which are said to
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 have been the reasons for the delay were in existence even before the auction and, therefore, the High Court went wrong in accepting the explanation of the 1st respondent for the delay. It is true that the 1st respondent's wife was ill even before the auction, but she continued to be ill even after the auction and there is clear evidence that she was being treated in a hospital. This continual illness of the 1st respondent's wife must have unnerved him and when the High Court accepted his evidence we cannot say that it went wrong. It is also true that the notice by the Municipal Corporation to demolish the house was given two months prior to the auction, but there is nothing on the record to show when the house was actually demolished. Some time must have elapsed between the notice and the actual demolition. The only evidence in regard to the demolition of the house is that of the 1st respondent; and it is not suggested in the cross- examination that the demolition of the house was before the auction. On the uncontradicted evidence of the 1st respondent, we must hold, agreeing with the High Court, that the 1st respondent was in a worried state of mind because of the said two circumstances which might have been responsible, to some extent, for his not taking immediate active and effective steps to enforce his right. The most important circumstance in the case is, when did the 1st respondent come to know of the commencement of the building operations by the appellant on the suit site? The 1st respondent says in his evidence that 7 or 8 months after the auction he passed by the suit site and saw foundations had been
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 dug therein and a few days thereafter he filed the suit. The appellant, on the other hand, says in his evidence that he started the construction after the disputed auction and that it was completed in 5 or 6 months. Though he says in the cross-examination that he applied to the Municipality for permission to build, he did not produce either a copy of that application or the sanction issued to him by the Municipality. He is not even prepared to deny that he got the sanction only in March 1955. The trial court surmised without any evidence that at the time the 1st respondent saw the foundations the stage of the construction indicated that the building operations must have commenced two months earlier. The High Court rightly pointed out that it was a pure surmise and accepted the evidence of the 1st respondent that a few days after he saw the foundations being dug in the suit site he filed the suit. But all these are beside the point, for it is not the case of the appellant that because of the 1st respondent's conduct he was induced to put up the building at a heavy cost :
his case throughout was that there was no contract at all. If so, there was no question of his being induced to act to his detriment because of the conduct of the 1st respondent. Therefore, except for some delay, there are no circumstances within the meaning of the aforesaid decisions which should induce a court to refuse in its discretion to give a relief of specific performance. The High Court rightly held that it was a fit case where the plaintiff should have been given a relief of specific performance.
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 B. R. Rangaswamy vs D. Syed Younous & ors, ILR 1999 KAR 2539 "Head Note: (C) SPECIFIC PERFORMANCE ACT, 1877 (Central Act No.l of 1877) SECTION When it is proved that the Agreements that have came into existence subsequent to the Agreement to sell in favour of the plaintiff, are of doubtful nature, the Court should order specific performance of the Agreement in favour of the plaintiff."
Sant Lal v. Shyam Dhawan, AIR 1986 Del 275 "16. Even after finding and holding that the defendant had failed to perform his part of the contract inasmuch as he had failed to discharge the aforesaid three obligations cast upon him under the agreement to sell, the plaintiff, in order to succeed in this suit for specific performance, has to aver and prove that he has always been ready and willing to perform the essential terms of the contract which are to be performed by him and this is the requirement of S.16(c) of the Specific Relief Act, 1963. In other words, the aforesaid requirement of law has to be proved by the plaintiff notwithstanding the aforesaid default on the part of the defendant in respect of the performance of the obligations cast upon him. The averments of continuous readiness and willingness to perform the essential terms of the contract in question are set out in the plaint and
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 now the only question to be answered and which forms the subject-matter of issue No.1 is the continuous readiness and willingness on the part of the plaintiff to perform his part of the contract and the only essential term of the contract to be performed by the plaintiff is the payment of the balance price at the time of the execution and the registration of the sale deed by the defendant. The question of payment of balance price could occur only after the defendant had got the sale permission from the D.D.A. as also the income-tax clearance certificate and the vacant possession of the house in question from his tenant. The stage of the payment of the balance price never arose in this case on account of the failure on the part of the defendant in the matter of performance of his part of the contract. The requirement of law is simply the continuous readiness and willingness on the part of the plaintiff to perform his part of the contract throughout from the commencement of the agreement to sell till the hearing of the suit but that does not mean that the plaintiff was expected to carry on the cash balance price of Rs.1,45,000/- in his pocket during all the aforesaid period, but what he was to show was simply his continuous readiness and willingness to pay that balance price only as and when the appropriate occasion for the same was to arise. The expression "readiness and willingness" cannot be treated as a strait- jacket formula and has to be determined from the totality of facts and circumstances relevant to the case and also to the conduct of the party concerned and in order to be real has to be backed by the capacity to do so.
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17. In dealing with the conduct of the plaintiff one has to look to the replies Exts. P11 to P13 sent by the plaintiff to the various notices of the defendant. In Ext. P11 dated 10-3-1980 and Ext. P12 dated 9-4-1980 the plaintiff not only denied the allegations of the defendant doubting the financial capacity of the plaintiff to pay the balance price of Rs. 1,45,000/- but further asserted his being in possession of ready money to purchase the property and to fulfil his part of the contract and further called upon the defendant to perform his part of the contract and to get the necessary sale permission so that the sale deed could be executed. Finally he also threatened the defendant to file a suit in case the defendant defaulted to comply with the same. Similarly the plaintiff further threatened the defendant to bring legal proceedings against him for specific performance of the contract in case he failed to inform him within a week of the receipt of the same that he had already applied for the grant of sale permission and was ready and willing to perform his part of the contract and to execute the sale deed in his favour. It would be also seen that the plaintiff gave in these notices only 7 days time to the defendant to obtain the sale permission from the D.D.A. and not unreasonably long time so as to evince an intention on the part of the plaintiff that he was trying to dodge the defendant and was not interested in the finalisation of the sale transaction. On the other hand, the above mentioned assertions and denials on the part of the plaintiff in Ext. P11 to Ext. P13
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 go to show his keenness for the finalisation of the sale. The plaintiff's having immediately returned the affidavit sent to him by the defendant for obtaining sale permission from D.D.A., after completing the same still goes to strengthen the aforesaid inference in favour of the plaintiff, notwithstanding the aforesaid assertions on the part of the plaintiff the defendant, under a lame excuse, as already pointed out above, withdrew his application for the grant of sale permission from the D.D.A. The story about the plaintiff having expressed his incapacity to pay the balance sale price on the 'namkaran' ceremony of the defendant's nephew and wanting a further period of about six months to enable him to arrange the same, has already been found to be dubious especially when there was no occasion for the same in view of the defendant not having performed his part of the contract.
19. The conclusion about the plaintiff having been always ready and willing to perform his part of the contract in respect of the payment of the balance price is supported on a number of authorities. In Bank of India Ltd. v. Jamsetji A.H. Chinoy. Chinoy and Co., AIR 1950 PC 90 (at p. 96) it was observed as follows:--
".........It is true that plaintiff 1 stated that he was buying for himself, that he had not sufficient ready money to meet the price and that no definite arrangements had been made for finding it at the time of repudiation. But in order to prove himself ready and willing a
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 purchaser has not necessarily to produce the money or to vouch a concluded scheme for financing the transaction. The question is one of fact and in the present case the appellate Court had ample material on which to found the view it reached."
Their Lordships of the Privy Council then added to concur with Chagla A.C.J. whose observations run as under:--
"In my opinion, on the evidence already on record it was sufficient for the Court to come to the conclusion that plaintiff 1 was ready and willing to perform his part of the contract. It was not necessary for him to work out actual figures and satisfy the Court what specific amount a bank would have advanced on the mortgage of his property and the pledge of these shares. I do not think that any jury -- if the matter was left to the jury in England -- would have come to the conclusion that a man, in the position in which the plaintiff was, was not ready and willing to pay the purchase price of the shares which he had bought from defendants 1 and
2."
18. The testimony of the plaintiff as PW 1 shows that he was prepared to pay the entire balance price agreed upon even at the time of the execution of the agreement to sell Ext. P2 and since then up-till now he had been prepared to pay the same. The authenticity of this assertion in his testimony finds full support from the fact
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 that he had actually brought in Court a sum of Rs. 1,60,000/- and was prepared to pay it to the defendant at that time and this cash amount he had brought in Court even on the previous date of hearing, as stated by him in his cross-examination which was not challenged. His cross-examination shows that up-till 25-2-1980 there was a sum of Rs. 70,000/-belonging to him in his firm M/s. Lakshmi Paper Mart and another sum of Rs. 11,000/- in his wife's name in that very firm and further that he had jewellery also at his house. He has further deposed that approximately a sum of Rs. 75,000/- was lying in the said firm in his name on 29-9-1979, the date of the agreement to sell in question. He further goes on to say that the aforesaid amounts in his name as also in the name of his wife in the said firm were continuing and the amount in his name must have swollen to Rs. 80,000/- approximately. Regarding the cash amount of Rs. 1,60,000/- having been brought by him in Court during the course of his testimony he stated that he had brought this cash amount from his aforesaid firm and his brothers. The aforesaid facts would certainly go to prove the continuous readiness and willingness on the part of the plaintiff to perform his part of the contract, i.e., the payment of the balance price at the appropriate time as and when it could come about and the contention of the learned counsel for the defendant that the plaintiff had not brought the account books of his firm nor the income- tax return for the year 1979-80 and for which reason his aforesaid testimony ought not to be believed, cannot be accepted. The plaintiff was bold enough to assert in his cross-examination that he sent his income-tax returns
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 every year and that the income-tax return for the year 1979-80 included his aforesaid deposits. The agreement to sell was executed on 29-9-1979 and the plaintiff stated that on that day a sum of Rs. 75,000/- approximately would be lying in his aforesaid firm in his name. He conceded that he had not brought the books of account pertaining to that day but hastened to assert that if it was sought he would bring the same also, and thereafter the defendant did not muster courage to request for the production of the same in Court by the plaintiff. His bringing in Court a cash amount of Rs. 1,60,000/- is convincingly sufficient to dispel the contentions of the learned counsel for the defendant regarding the continuous readiness and willingness on the part of the plaintiff to perform his part of the contract regarding his ability to pay the balance price at the appropriate time as and when it could come and this inference is fortified from the plaintiff's conduct asserted in his notices Exts. P11 to P13 also referred to above. It could not be difficult for him to arrange the money from his said firm and his brother. However, he was under no obligation to show the cash amount or a bank draft in the sum of Rs. 1,45,000/- to the defendant who had failed to perform his part of the contract and that demand on the part of the defendant in his notices sent to the plaintiff was unwarranted and totally premature.
20. In Ramesh Chandra Chandiok v. Lal Sabharwal, (dead) by his legal representatives, AIR 1971 SC 1238 A agreed to purchase on 18-7-1955 from R a leasehold plot and which receipt for earnest money provided that the balance of consideration was to be paid within a month at
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 the time of the execution of the registered sale deed which one of the conditions of the leasehold which was executed subsequently by the Government in R's favour only on 21-5-1956 was that the lessee was required to obtain sanction of the Government before transfer of the lease hold plot. R informed A by letter dated 11-8-1955 that the sale deed would be executed by him only after required sanction and further undertook to inform A as soon as the sanction was obtained. R, however, never took any steps till 11-11-1956 to apply for sanction but on the other hand informed A that he was not willing to wait indefinitely for want of sanction and that if the rest of the consideration was not paid within a week, the earnest money would be forfeited and the agreement cancelled. Even though R applied for and obtained the required sanction on 20-11-1956, he did not inform A about it and cancelled the contract. On 4-12-1956 A filed a suit for specific performance after inquirying himself from the Government about the giving of sanction. It was observed as follows:--
"....Be that as it may R could not call upon A to complete the sale and pay the balance money until the undertaking given in Exhibit P-7 dated 11-8-1955 (regarding sanction) had been fulfilled by R. The sanction was given in November 1956 and even then R did not inform A about it so as to enable A to perform its part of the agreement of sale.........."
It was also held as follows:--
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 "On the facts and circumstances of the case A must be held to be ready and willing to perform his part of the contract till date of suit and was therefore entitled to a decree for specific performance. Readiness and willingness cannot be treated as a strait-jacket formula. These have to be determined from the entirety of facts and circumstances relevant to the intention and conduct of the party concerned. There was no material on record to show that A at any stage was not ready and willing to perform his part of contract or that he did not have the necessary funds for payment when the sale deed would be executed after the sanction was obtained........."
29. Thus, in view of the aforesaid discussions, I hold that the plaintiff has always been ready and willing to perform his part of the contract and the defendant had failed to perform his part of the contract, and both these issues are decided in favour of the plaintiff and against the defendant.
30. In view of my findings in issues 1 and 2, I pass a decree for the specific performance of the agreement of sale in question dated 29-9-1979 with costs in favour of the plaintiff and against the defendant and the defendant is directed to do all acts necessary, viz., (i) to obtain the sale permission from the D.D.A.
(ii) to obtain the income-tax clearance certificate and
(iii) to put the plaintiff into full actual physical
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 possession of the house in question. These conditions be satisfied by the defendant within three months from today and thereafter the sale deed be executed and got registered by him within one month thereafter on receipt of the balance sale price from the plaintiff.
Order Accordingly."
35. In support of the arguments that has been putforth on behalf of respondent Nos.2 and 3, counsel has placed reliance on the judgment of the Apex Court in the case of Lourdu Mari David and others vs. Louis Chinnaya Arogiaswamy and others reported in AIR 1996 SC 2814 and drew the attention of this Court to paragraphs 1 to 3 wherein, it is held as under:
"1. This special leave petition arises from the judgment of the Division Bench of the High Court of Madras made on 12-6-1996 in LPA No. 72 of 1991. The petitioner had filed OS No. 6 of 1977 on 10-9-1980 before the Second Additional Sub-Judge at Pondicherry for specific performance of the agreement of sale dated 18-10-1976 to convey the property in possession as tenants under the agreement. It is their case that a sum of Rs 31,000 was sale consideration and a sum of Rs 4000 and odd was paid as part consideration. The balance consideration was Rs 28,500. He was always ready and willing to perform his part of the contract but the respondents were avoiding to execute the sale deed. Though the trial court found that Respondents 1 and 2
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 committed breach of the agreement of sale but denied to them specific performance of the agreement on the ground that Respondent 3 was a bona fide purchaser for value without notice of prior agreement with the petitioner. The petitioner filed the appeal in the High Court. Pending appeal, he died. Therefore, his legal representatives have come on record. The learned Single Judge by judgment and decree dated 11-9-1980 agreed with those findings and held that the 3rd respondent was a bona fide purchaser without notice of the agreement. In the impugned judgment, the Division Bench rejected the claim on the additional ground that the plaintiff did not come to the Court with clean hands. Therefore, he is disentitled to relief of specific performance. Under Section 20 of the Specific Relief Act, 1963, (for short "the Act") the decree for specific performance is in the discretion of the court but the discretion should not be refused arbitrarily. The discretion should be exercised on sound principles of law capable of correction by an appellate court.
2. It is settled law that the party who seeks to avail of the equitable jurisdiction of a court and specific performance being equitable relief, must come to the court with clean hands. In other words the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief. The Division Bench has pointed out in the judgment three grounds which disentitle the plaintiff to the equitable relief as he
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 came with a positive case of incorrect and false facts as set out in paras 4 to 6 thus:
"On a perusal of the records we are entirely in agreement with the view expressed by the learned Judge. It is quite clear that the plaintiff has not come to Court with clean hands. There are three circumstances which are pointed out by the learned Judge and we find that they are sufficient to warrant refusal of the claim for specific performance. First is that the plaintiff claimed that he was already in possession of Door No. 2/53 as a lessee and he was given possession of Door No. 1/53 on the date of the agreement itself, viz., 18-10- 1976 by Defendants 1 and 2. But, in the course of evidence he did not say anything about taking possession pursuant to the sale agreement. On the contrary, he deposed falsely that he did not mention in the plaint about getting possession of Door No. 1/53 on 18-10-1976. It is mentioned in the evidence that Door No. 1/53 was not given to the plaintiff at any time in December 1976. The tenant who was occupying the said portion has vacated the same and gave possession to Defendants 1 and 2 who in turn handed over the same to the third defendant. Thus, the case of the plaintiff regarding possession of Door No. 1/53 is
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 false. Learned counsel contends that there was no mention in the plaint as to the date on which he took possession of Door No. 1/53. This contention is not correct. In para 5 of the plaint it is mentioned specifically that in pursuance of the agreement, the plaintiff who was in possession of Item 2 was given possession of Item 1 on that date and that he was in possession of both the items since then under the agreement dated 18- 10-1976. This plea is clearly false. DW 3 who was occupying Door No. 1/53 has given evidence that the portion was vacated on 12-12-1976 by his father by taking a sum of Rs 2500 from the prior owner. The plaintiff has himself stated as PW 1 that the tenant delivered possession to the owner of the property on 15-12-1976. That relied his case that he had taken possession even on the date of agreement viz., 18-10-1976. But, in another place PW 1 has stated that the tenant of Door No. 1/53 vacated the portion on 5-12-1976. Thus, his evidence is not only false, but also discrepant.
5. The second circumstance is that the plaintiff has made an express allegation in paras 7 and 9 of the plaint that he informed the third defendant in the first week of December 1976 about the agreement when the third defendant inspected the house for
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 the purpose of purchasing the same. This plea is also false. PW 1 has not chosen to make a whisper about this in his deposition. On the other hand, it is contended that there is no denial of the said allegation in the written statement but it is not correct. In the written statement, the third defendant has clearly stated that at no time he had any talk with the plaintiff and he was never informed about the agreement with the plaintiff.
6. The third circumstance is that the plaintiff claimed that he had paid a sum of Rs 400 in addition to the sum of Rs 4000 paid as advance to the second defendant at the latter's request for vacating Door No. 1/53. In the deposition he had stated that he had mentioned the same in his plaint, but it is not so. It is also a false plea as found correctly by the learned Judge. The above three circumstances are sufficient to uphold the refusal of specific performance. It has been held by this Court repeatedly that a person who has come to court with a false plea is not entitled to the equitable relief of specific performance."
3. In addition, the Division Bench also agreed with the learned Single Judge and held that the third respondent had no knowledge whatever of the plaintiff's agreement and, therefore, he was a bona fide purchaser
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 for value without notice. This is a concurrent finding of fact after appreciation of evidence. It would thus be seen that on both the grounds, the courts below rightly refused to exercise the discretion on legal principles to grant specific performance. It does not, therefore, warrant interference."
36. In view of the above arguments putforth on behalf of the parties and the material evidence available on record, in the background of the legal principles enunciated in the aforesaid decisions, the following points would arise for consideration:
(i) Whether the plaintiff has made out a case for grant of decree of specific performance?
(ii) Whether the plaintiff has successfully established that he was always ready and willing to perform his portion of the contract?
(iii) Whether defendants 2 and 3 establish before the Court that they are the bonafide purchasers of suit property for value, as such, they are not liable for repayment of earnest money and damages?
(iv) Whether the impugned judgment is suffering from legal infirmity and perversity and thus calls for interference?
(v) What Order?
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NC: 2023:KHC:41675
RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010
37. Regarding Point Nos.1 to 4:In the case on hand, first defendant flatly denied the very execution of suit agreement marked at Ex.P.1. However, the cross-examination of D.W.1 and the cross examination made by counsel for first defendant to P.W.1 on cumulative consideration would sufficiently establish that suit agreement stands proved. The signature found on Ex.P.1 on all pages is admitted by D.W.1 stating that it is his signature and he has also put the date on Ex.P.1 which is dated 18.10.1995. First defendant is an Ayurvedic Doctor and therefore, it should not lie in the mouth of first defendant that he has subscribed his signature on blank document which has been misused by the plaintiff for concocting the suit agreement marked at Ex.P.1. Since Ex.P.1 stands proved as per judgment of the Trial Court, and in the absence of any challenge made by the first defendant by filing a cross objection or supporting the cross-objection filed by defendants 2 and 3 before this Court, and having remained absent before this Court, it is to be held that suit agreement stands proved by the plaintiff. Consequently, payment of Rs.55,000/- as advance sale consideration made by plaintiff to the first defendant also
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 stands proved. Hence detailed discussion insofar as proof of suit agreement is necessary in this appeal.
38. However, according to P.W.1, he has paid a further sum of Rs.40,000/- on 07.11.1995 at the request of first defendant.
In this regard, except oral testimony of P.W.1 there is no evidence placed on record. When a sum of Rs.55,000/- is paid by plaintiff to first defendant and same has been entered in the agreement of sale, why would the plaintiff make payment to first defendant within a short span of time in a sum of Rs.40,000/- that too without taking documentary proof thereof is a question that remains unanswered by the plaintiff.
39. No explanation whatsoever is forthcoming on record in the oral testimony of the plaintiff in this regard except a vague sentence is found in plaint as to non taking the document which would evidence the payment of additional sum of Rs.40,000/-.
It is pertinent to note that in the notice which is marked at Ex.P.2, no such explanation is forthcoming. While drafting the plaint, however, plaintiff has chosen to explain that defendant promised that he would adjust the additional sum of Rs.40,000/- in the balance sale consideration. Therefore,
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 plaintiff did not insist for any documentary proof insofar as additional payment of Rs.40,000/- is concerned.
40. Fact remains that the agreement is dated 18.10.1995 and legal notice came to be issued on 20.11.1995. Within such short span of time, how can plaintiff make number demands for execution of sale deed is also a question that remains unanswered by the plaintiff. Admittedly, two months' time was no doubt stipulated in Ex.P.1 for completion of sale transaction.
41. The sale deed executed in favour of defendants 2 and 3 by the first defendant is dated 27.11.1995. In this regard, there is sufficient force in the argument canvassed on behalf of plaintiff that after receipt of notice Ex.P.2, first defendant has executed sale deed in favour of defendants 2 and 3. In this regard, material evidence placed on record would go to show that there was an agreement of sale dated 08.09.1995 which is almost 40 days earlier to the execution of Ex.P.1. According to plaintiff, Ex.D.1 which is the agreement entered into by defendant No.1 in favour of defendants 2 and 3 is a concoction
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 and it is only to defeat the rights of the plaintiff in respect of the suit agreement marked at Ex.P.1 dated 18.10.1995.
42. As such, this Court perused Ex.D.1 in a meticulous manner. Ex.D.1 is proved by defendants not only by examining 2nd defendant, but also by examining one of the witnesses to Ex.D.1 who is none other than the son-in-law of the first purchaser under Ex.D.2. He is examined as D.W.3, who, in his evidence has stated that he is an advocate and he has drafted Exs.D.1 and D.2. It has also come in the evidence that D.W.3 has witnessed the sale consideration being passed on and the same was paid through cheques from the bank account of the husband of the first purchaser.
43. These aspects of the matter would go to show that it is the first defendant who is the mischief monger in the whole transaction who has executed agreement with defendants 2 and 3 on 08.09.1995 and he suppressed the said agreement when he entered into suit agreement with the plaintiff.
44. In other words, it is plaintiff who is the second agreement holder or subsequent agreement holder in respect of suit property. Agreement of defendants 2 and 3 with defendant
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 No.1 is first in time. Therefore, contentions urged on behalf of plaintiff that defendants 2 and 3 cannot be construed as bonafide purchaser for value, cannot be countenanced in law.
45. The contents of Exs.D.1 and D.2 on comparison would clearly corroborated each other and compliment to each other inasmuch as in the sale deed which is marked at Ex.P.2 executed by first defendant in favour of defendants 2 and 3, there is a mention about suit agreement and the date of the agreement is also mentioned as 08.09.1995.
46. It is pertinent to note that while cross-examining the first defendant, except suggesting that first defendant in active collusion with defendants 2 and 3 has concocted the document, no other question is put to first defendant as to why he suppressed the said agreement while executing the suit agreement.
47. These aspects of the matter when viewed cumulatively in respect of the suit property, depicts that defendants 2 and 3 have contracted to purchase the suit property on 08.09.1995 and ultimately culminated in execution of the sale deed by the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 first defendant in favour of defendants 2 and 3 vide Ex.D.2.
First defendant might have thought that if property is sold in favour of defendants 2 and 3 he would be absolved from his liability to execute the sale deed in favour of the plaintiff.
Therefore, principally the remedy for plaintiff is against defendant No.1.
48. Furthermore, since the property is sold to the 2nd and 3rd defendant by first defendant on 27.11.1995, the suit which came to be filed by plaintiff on 11.12.1995 after coming to know of the reply notice initially against first defendant and subsequently amending plaint averments and impleading defendants 2 and 3 to the suit would go to show that plaintiff being deceived by first defendant was entitled to have remedy only against first defendant at the first instance.
49. Be it what it may, fact remains that the sale in favour of defendants 2 and 3 by first defendant being in pursuance of the agreement dated 08.09.1995, the said sale is to be held as a proper sale.
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010
50. Having said so, it is settled principles of law and requires no emphasis that the liability on the property, if any, would pass on with the property. No doubt, while passing the decree, learned Trial Judge has ordered for refund of Rs.55,000/- with interest at 6% per annum. However, the learned Trial Judge has also directed to pay additional sum of Rs.55,000/- as damages with interest at 6% per annum. The reason for ordering damages by the Trial Court in a additional sum of Rs.55,000/- is based on clause No.9 of Ex.P.1. P.W.1, in his cross-examination has flatly denied clause No.9 of Ex.P.1.
51. It is the evidence of P.W.1 that he is the person who instructed the stamp vendor to prepare Ex.P.1 and stamp vendor prepared the contents of Ex.P.1 based on the instructions given by P.W.1 himself. When P.W.1 has flatly denied clause 9, the learned Trial Judge directing that sum of Rs.55,000/- is to be paid as damages based on clause 9 and penalizing defendants 2 and 3 insofar as damages is concerned is thus incorrect and needs interference by this Court.
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010
52. However, since the first defendant has not challenged the decree insofar as first defendant is concerned, the decree passed by the Trial Court needs no interference.
53. Further, there cannot be any dispute as to principles of law enunciated in the decisions relied on by counsel for appellant or respondents.
54. In the case of Durga Prasad supra, their Lordships of the Apex Court were of the opinion that subsequent transferee under the conveyance outstanding in his favour having paid the purchase money when succeeds, what is the proper form of the decree. In the case of hand, since the defendants have got an agreement in their favour on 08.09.1995, they cannot be termed as subsequent transferee and therefore, same is not applicable to the facts of the present case.
55. In the case of Ramesh Chandra Chandiok supra, their Lordships of the Apex Court ruled as to how discretion for grant of specific performance must be exercised. Again, having regard to the facts and circumstances of the case, since defendant Nos.2 and 3 are to be treated as earlier agreement
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 holders, they cannot be termed as third party vis-à-vis, plaintiff and hence, said judgment is not applicable to the facts of the case.
56. In the case of Abdul Kayum Ahmad supra, their Lordships had taken into consideration Section 12(c) and 21(a) of the Specific Relief Act, and dealt with benefit of the promisor so as to exercise discretion in his favour for specific performance.
They also ruled that subsequent purchaser cannot claim to take up cudgels for the original promisor. The said decision is also of no use to the appellant/plaintiff inasmuch as it is the defendants who are the agreement holders first in time.
57. In Prakash Chandra's case supra, the Court dealt with ordinary rule of specific performance in granting decree of specific performance and refusal should end up in damages which should constitute adequate relief.
58. In the case on hand, since the defendant Nos.2 and 3 are the prior agreement holders than that of the appellant and the same is established by placing necessary evidence on record, Prakash Chandra supra cannot be taken advantage by the
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 plaintiff. Further, this Court is now enhancing the interest rate from 6% to 12% which should meet the interest of the appellant and he has been adequately satisfied.
59. In M. L. Devender Singh case supra, dealt with the discretion of the Trial Court in grant or otherwise of the specific performance in the given set of circumstances. In the said ruling, the Apex Court ruled that the Trial Court in such circumstances, while exercising discretion, should not exercise discretion arbitrarily but on the sound and reasonable grounds guided by judicial principles.
60. In the impugned judgment, learned Trial Judge has rightly applied the said guidance while ordering refund of money in the facts and circumstances of the case.
61. In the case of Mademsetty Satyanarayana supra, the Court dealt with Section 22 of the Specific Relief Act and has ruled as to how the Court should exercise its discretion and also dealt with the Limitation Act and the time for completion of the contract. The said decision can also be distinguished on facts
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 with regard to the present case and therefore, same is not of any avail in advancing the case of the appellant further.
62. In the case of B. R. Rangaswamy's supra, this Court held that when the agreement is proved, subsequent agreement to sell in favour of the plaintiff are doubtful, Court should order for specific performance in favour of the earlier agreement holder.
Infact, said decision helps the defendants rather on plaintiff inasmuch as on 08.09.1995 there was an agreement entered into by the first defendant in favour of defendant Nos.2 and 3.
63. In Sant Lal's case, Delhi High Court, while dealing with the grant of specific performance or otherwise, has dealt in detail the principles of law that would govern the field of specific performance and ultimately ruled that conditions have been satisfied by the defendants and therefore, sale deed is to be executed. The facts of the said case are different from the facts of the present case and therefore, same is not of any use in taking the case of the plaintiff further.
64. In the decision relied upon by the learned counsel for respondent in the case of Lourdu Mari David supra, Apex Court
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 while dealing with a situation about the equitable jurisdiction of a Court, while grant specific performance, in para-2 referred to supra, has clearly held that the Courts are to be guided by the circumstances which would allow a plaintiff to have a decree or rejection thereof.
65. Applying the principles of law enunciated in the case of Lourdu Mari David supra to the case on hand, since the defendant Nos.2 and 3 are the earlier agreement holders, they are entitled for decree of specific performance and therefore, dismissal of the suit of the plaintiff by the Trial Court is just and proper.
66. Further, as discussed supra, since there is suppression of material facts by the first defendant while entering into suit agreement on 18.10.1995 about the earlier agreement dated 08.09.1995, principles of law enunciated in the decisions relied on by the plaintiff will not be much avail in allowing the appeal prayer.
67. Further, since the liability of payment of advance amount with interest would pass on with the property, defendants 2 and 3 are bound to satisfy the payment of Rs.55,000/- with
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010 interest at 6% per annum. However taking note of the fact that amount was paid by plaintiff which was even denied by first defendant by denying Ex.P.1 and also taking note of the fact that immovable property would always appreciate, the impugned judgment and decree needs modification insofar as interest rate at 12% per annum instead of 6% per annum.
68. However, if defendants 2 and 3 were to satisfy the decree of payment of Rs.55,000/- being advance sale consideration with 12% interest per annum, by virtue of indemnity clause under Ex.D.2, defendants 2 and 3 would always be entitled to recover the said sum of money from the other assets of the first defendant.
69. Insofar as damages are concerned, defendants 2 and 3 being not a party to Ex.P.1 and their agreement is being earlier to suit agreement, they cannot be held liable for damages of Rs.55,000/- as ordered by the learned Trial Judge. More so, when the plaintiff himself has denied clause 9 in Ex.P.1.
Therefore, to that extent, the impugned judgment and decree needs interference by this Court.
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NC: 2023:KHC:41675 RFA No. 2314 of 2007 C/W RFA.CROB No. 17 of 2010
70. In view of the foregoing discussion, point Nos.1 and 2 are answered in the negative and, point Nos.3 and 4 partly in the affirmative.
71. Regarding Point No.5: In view of the finding of this Court on point Nos.1 to 4 as above, the following:
ORDER
(i) Appeal and Cross Objection are allowed in part.
(ii) While modifying the decree of the Trial Court, plaintiff is entitled for refund of earnest money of Rs.55,000/- with 12% interest per annum payable by all defendants and Rs.55,000/- as damages recoverable by the plaintiff from first defendant only, with interest at 6% per annum.
(iii) Cross Objection insofar as awarding damages of Rs.55,000/- payable by defendants 2 and 3 with 6% per annum is hereby set-aside.
(iv) No order as to costs.
Sd/-
JUDGE
kcm
List No.: 1 Sl No.: 31