Karnataka High Court
Kalyani Poojarthy vs P Purushotham Nayak on 3 April, 2013
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IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 3rd DAY OF APRIL 2013
BEFORE
THE HON'BLE MR.JUSTICE H.BILLAPPA
R.S.A.No.245/2004
BETWEEN:
Smt.Kalyani Poojarthy,
W/o.Krishna Poojary,
Major,
Agriculturist,
Residing at Bolje Udyavar Village,
Post Udyavar,
Udupi District. ...Appellant
(By Sri.Yoganarasimha, Sr.Counsel for
S.Vishwajith Shetty, Avv.,)
AND:
Sri.P.Purushotham Nayak,
Since dead rep. by LRs.
a. Smt.Pangal Prema Nayak,
W/o.Sri.Purushotham Nayak,
Residing at Building No.3,
Flat No.8, I Floor,
Saraswathi Nagar Co-operative
Housing Society Ltd.,
Kopri Colony,
Thane (E) - 400 603.
b. Mr.Pangal Vamen Nayak,
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S/o.Sri.P.Purushotham Nayak,
Residing at Building No.3,
Flat No.8, I Floor,
Saraswathi Nagar Co-operative
Housing Society Ltd.,
Kopri Colony,
Thane (E) - 400 603.
2. Sri.U.Raghavendra Acharya,
S/o.Venkatakrishna Acharya,
Major,
Residing in Pankaj Mansion,
7th Floor, Worlie, Naka,
Mumbai - 400 018. ...Respondents
(By Sri.Srivatsa, Sr.Counsel for
Rawley Muddappa, Adv.,)
******
This Regular Second Appeal is filed under Section 100
of CPC., against the Judgment and Decree dated
29.11.2003 passed in R.A.No.11/2001 on the file of the
District Judge, Udupi, dismissing the appeal and
confirming the judgment and decree dated 22.04.1995
passed in O.S.No.30/84 on the file of the Civil Judge
(Sr.Dn) Udupi.
This appeal coming on for Dictating Judgment this
day, the Court made the following:-
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JUDGMENT
This appeal by the defendant is directed against the judgment and decree, dated 22.4.1995, passed by the Civil Judge, Udupi, in O.S.No.30/1984 which has been confirmed by the District Judge, Udupi in R.A.No.11/2001.
2. By the impugned judgment and decree passed in O.S.No.30/1984, the trial Court has decreed the suit of the plaintiffs for specific performance of the sale agreement dated 18.05.1982 and has directed the 2nd respondent to deposit a sum of `.53,650/- within two weeks. The appellant is directed to execute the registered sale deed in favour of the 2nd respondent in respect of the suit 'A' schedule property. The Appellate Court by its judgment and decree dated 29.11.2003 has dismissed the appeal confirming the judgment and decree passed by the trial Court.
3. Aggrieved by that, the appellant/defendant has filed this second appeal.
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4. Briefly stated the facts are:
The respondents-plaintiffs filed suit in O.S.No.30/1984 for specific performance of the sale agreement dated 18.5.1982. The case of the respondents- plaintiffs was that the appellant-defendant agreed to sell the suit 'A' schedule property for a sum of `.78,650/- as per registered sale agreement dated 18.5.1982. The appellant agreed to put the 1st respondent in possession of the suit 'A' schedule property on the date of sale. The appellant received advance amount of `.25,000/- from the 1st respondent on the date of sale agreement. The appellant agreed to sell the suit schedule property within six months from the date of sale agreement and also agreed to get the land converted for non agricultural purpose and to complete the sale transaction after obtaining necessary permission.
5. It is stated, the appellant did not comply with the conditions of the sale agreement dated 18.5.1982. The -5- appellant was not able to obtain necessary permission and complete the sale transaction. The 1st respondent asked the appellant to specifically perform the sale agreement. The 1st respondent sent notice dated 15.3.1983 calling upon the appellant to execute the sale deed after complying with clauses 3, 4 and 5 of the sale agreement dated 18.5.1982 within one month. The appellant received the notice on 16.3.1983. The notice was replied on 11.4.1983 contending that the appellant was ready and willing to execute the sale deed and called upon the 1st respondent to take the sale deed. But, the 1st respondent did not take the sale deed. The 1st respondent sent reply dated 3.1.1983 to the alleged notice dated 30.12.1982 which was not a notice at all. Only a blank paper was sent in an envelope. The contentions raised in the reply notices dated 22.2.1983 and 11.4.1983 are false and frivolous. Copy of the notice dated 30.12.1982 sent along with the reply notice is a fabricated document.
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6. It is stated, the 1st respondent was always ready and willing to perform his part of the contract. The appellant was never ready. She was trying to frustrate the agreement dated 18.5.1982.
7. It is stated, clause-8 of the agreement dated 18.5.1982 provides for appointment of a nominee. The 1st respondent appointed the 2nd respondent as his nominee to claim specific performance. The appellant was duly notified. The appellant failed to execute the sale deed in respect of the suit 'A' schedule property in favour of the 2nd respondent by receiving the balance sale consideration amount inspite of notice dated 1.10.1983.
8. The respondents are ready and willing to perform their part of the contract. The 2nd respondent is still ready and willing to pay the balance purchase money in respect of the suit 'A' schedule property. The respondents would be put to irreparable loss and injury if the specific performance is denied. Therefore, the -7- respondents have prayed for specific performance of the sale agreement dated 18.5.1982. Alternatively, the respondents have claimed refund of advance amount.
9. The appellant-defendant has filed her written statement contending that the suit is not maintainable. The appellant has admitted the execution of the sale agreement dated 18.5.1982 and has contended that time was the essence of the contract. It is stated, the appellant sent notice dated 30.12.1982 to the 1st respondent expressing her willingness to perform her part of the contract and to execute the registered sale deed in favour of the 1st respondent. The said notice was typed in an inland letter and sent. It was not sent in any envelope. It is denied that only a blank paper was sent. It is also denied that reply dated 3.1.1983 sent by the first respondent to the notice dated 30.12.1982 is either true or proper. It is admitted that the appellant sent reply dated 22.2.1983 to the reply notice dated 3.1.1983. It is stated, along with the -8- notice dated 22.2.1983 the appellant sent true copy of the notice dated 30.12.1982.
10. It is stated, the appellant was always ready and willing to perform her part of the contract. The 1st respondent was never ready and willing to perform his part of the contract. At one point of time, the 1st respondent told the appellant's husband Krishna Poojary that he did not want to purchase the suit schedule property and the appellant may sell the suit schedule property to one Prabhakar Shenoy of Udyavara. The 1st respondent handed over the original documents to the said Prabhakar Shenoy. The 1st respondent was not ready and willing to perform his part of the contract. Therefore, the appellant rescinded the contract. The agreement of sale stands terminated and the amount of `.25,000/- has been forfeited. The 1st respondent or his nominee are not entitled for specific performance. The appellant has not received any notice dated 1.10.1983. The respondents are not entitled for any -9- relief. The suit is barred by various provisions of the Specific Relief Act. Therefore, the appellant has prayed for dismissal of the suit.
11. The Trial Court considering the material on record has held that the respondents are entitled for specific performance of the sale agreement dated 18.5.1982 and has decreed the suit. The appellate court by its judgment and decree dated 29.11.2003 has confirmed the judgment and decree passed by the Trial Court. Therefore, this second appeal.
12. At the time of admission, this court has formulated the following substantial questions of law for consideration:
1. Whether the judgment and decree passed by the courts below, decreeing the suit of the plaintiffs for specific performance subject to the conditions imposed in the decree is perverse and arbitrary, being contrary to law an the material on record?
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2. Whether the courts below were justified in decreeing the suit for specific performance, when possession had not been handed over to the plaintiffs and the land is not converted for non- agricultural use and the discretion exercised by the courts below in decreeing the suit of the plaintiff for specific performance, is contrary to law?
13. It is noticed, in substantial question of law No.2, it is stated, "when possession had been handed over to the plaintiffs" instead of "when possession had not been handed over to the plaintiffs". It is corrected, accordingly.
14. At the time of hearing, the following additional substantial questions of law have been formulated;
i) Whether the Courts below are justified in holding that the 2nd plaintiff, who is stated to be the nominee of 1st plaintiff, is entitled to seek specific performance of the agreement Ex.P1, though there was no privity of contract between 2nd plaintiff and the defendant?
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ii) Whether the courts below are justified in holding that the 1st plaintiff being the prospective purchaser of the property under the agreement Ex.P1 was ready and willing to perform his part of the contract and has complied with the requirement of Section 16(c) of the S.R.Act, though he had parted with his interest in the agreement in favour of 2nd plaintiff?
iii) Having regard to the facts and circumstances of the case, whether the courts below, in law, could have exercised discretion at all for decreeing specific performance in favour of the 2nd plaintiff, who is not a party to the contract?
15. This Court by its judgment dated 6.3.2009 has allowed RSA No.245/2004 and has set aside the judgment and decrees passed by the courts below. In modification, refund of advance amount has been ordered.
16. Aggrieved by that, the respondents-plaintiffs have approached the Hon'ble Supreme Court in Civil Appeal No.1206/2012. The Hon'ble Supreme Court by its
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order dated 31.1.2012 has remanded the matter for reconsideration after hearing the parties on additional substantial questions of law.
17. Heard the learned counsel for the parties.
18. The learned counsel for the appellant contended that the impugned judgment and decrees cannot be sustained in law. He also submitted that the courts below have failed to consider the evidence on record in proper perspective. Further he submitted that the nominee has no right to claim specific performance. He also submitted that the 1st respondent does not claim specific relief for himself. Further he submitted that there is no assignment. He also submitted that conversion is a condition precedent to purchase the property. Notice was issued terminating the sale agreement. The contract with the third party is a new contract and a novation. There is no privity of contract between the 2nd respondent and the appellant. The 1st respondent was never ready and willing to perform his part
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of the contract. Specific performance is a discretionary relief and cannot be granted as a matter of course. Inviting my attention to sections 12, 16 and 20 of the Specific Relief Act, the learned counsel for the appellant submitted that there is no plea or proof regarding readiness and willingness and specific relief cannot be granted. Alternative relief is claimed and it may be considered.
19. As against this, the learned counsel for the respondents 1 and 2 submitted that the impugned judgment and decrees do not call for interference. He also submitted that the courts below on proper consideration of the material on record have concurrently held that the respondents are entitled for specific performance and therefore, the impugned judgment and decrees do not call for interference. Further he submitted that Section 15 of the Specific Relief Act provides that a specific performance can be obtained by the party to contract or representative in interest. The 1st respondent is a party to the contract.
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The 2nd respondent is the nominee of the 1st respondent and representative in interest. He also submitted that there is no pleading that the 2nd respondent is not a nominee or representative in interest. Clause 8 of the sale agreement provides for nomination. The appellant has agreed to execute the sale deed to the 1st respondent or his nominee. The 2nd respondent is the nominee of the 1st respondent. Further he submitted that there is no response to Ex.P10 notice. He also submitted that the pleadings are in order and as required under law. Money is deposited into the court. The obligation on the part of the respondents is completed. They are entitled for specific performance. There is no novation of contract. The same contract has been enforced. He therefore submitted that the impugned judgment and decrees do not call for interference.
20. Placing reliance on the decisions reported in MANU/SC/0712/1995 and MANU/GH/0107/1961 the
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learned counsel for the respondents submitted that the nominee can enforce the agreement for specific performance and therefore, impugned judgment and decrees do not call for interference.
21. I have carefully considered the submissions made by the learned counsel for the parties with reference to the substantial questions of law raised for consideration.
22. The substantial questions of law raised for consideration are interlinked and therefore, they are considered together.
23. The execution of the sale agreement dated 18.5.1982 between the appellant and the 1st respondent is not in dispute. It is admitted. The sale consideration agreed is `.650/- per cent. A sum of `.25,000/- has been paid as advance. In Ex.P1 it is stated that the appellant shall obtain necessary permission and conversion and inform the 1st respondent through registered post.
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Thereafter, within one month the 1st respondent shall take the sale deed by paying the balance sale consideration amount. Clause-8 of the sale agreement provides for nomination. It is agreed that the appellant shall execute the sale deed either to the 1st respondent or his nominee. The appellant contends that she was always ready and willing to perform her part of the contract. Through notice dated 30.12.1982, the appellant called upon the 1st respondent to take the sale deed by paying the balance sale consideration amount. The 1st respondent did not take the sale deed. Thereafter, notice dated 22.2.1983 i.e., Ex.P9 was sent stating that first respondent has failed to take the sale deed inspite of registered notice dated 30.12.1982 and therefore, the agreement dated 18.5.1982 stands cancelled. The first respondent denies it and contends that blank paper was sent. On 3.1.1983, the first respondent wrote to the appellant as per Ex.P3 informing her that he received the registered letter dated 30.12.1982 with blank paper and nothing was written.
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There is no convincing evidence on record to show that notice dated 30.12.1982 was sent as contended by the appellant. Thereafter, as per Ex.P6, the 1st respondent has informed the appellant that she has not complied with clauses 3, 4 and 5 of the agreement and notice dated 22.2.1983 is invalid and has called upon the appellant to comply with clauses 3, 4 and 5 of the agreement and execute the sale deed. The appellant has sent reply as per Ex.P8 on 11.4.1983. It is stated, as per notice dated 30.12.1982 the 1st respondent was called upon to take the sale deed within 8.2.1983 by paying the balance sale consideration amount and the 1st respondent did not turn up. Thereafter, registered letter dated 22.2.1983 was written stating that agreement has become infructous as the first respondent was not prepared to perform his part of the contract. It is also stated, the agreement stands revoked from 8.2.1983. Thereafter, the respondents have sent notice dated 1.1.1984 as per Ex.P10 informing the appellant that the 1st respondent has appointed the 2nd
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respondent as his nominee to take the sale deed in terms of the sale agreement dated 18.5.1982. The 2nd respondent is willing to take the sale deed from the appellant by paying the balance sale consideration amount. The appellant is called upon to comply with clauses 3, 4 and 5 of the sale agreement dated 18.5.1982 and inform the 2nd respondent through his counsel that she is ready to execute the sale deed in favour of the 2nd respondent within 15 days from the date of receipt of notice. If the appellant fails to comply with the demand made in the notice, the second respondent shall proceed in accordance with law. It is clear from Ex.P10 that the respondents have asked the appellant to execute the sale deed in favour of the 2nd respondent. The 2nd respondent is willing to take the sale deed and prepared to pay the balance sale consideration amount. Ex.P1 is the sale agreement dated 18.5.1982. It is between the 1st respondent and the appellant. The obligation under Ex.P1 is between the appellant and the first respondent. Clause 8 provides for nomination. The first respondent can
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nominate a person to take the sale deed. In Ex.P10 notice, it is stated, the 1st respondent has appointed 2nd respondent as his nominee and 2nd respondent is willing to take the sale deed and pay the balance sale consideration amount. Prior to Ex.P10, only a sum of `.25,000/- has been paid as advance. The notice Ex.P10 states that the balance sale consideration amount will be paid by the 2nd respondent. The appellant shall comply with clauses 3, 4 and 5 of the agreement and intimate the 2nd respondent for further action. There is no privity of contract between the appellant and the 2nd respondent. The contract is between the 1st respondent and the appellant. The 1st respondent after performing his part of the contract can nominate a person. In the present case, the first respondent without performing his part of the contract has nominated a person and asked the appellant to execute the sale deed in favour of the 2nd respondent and 2nd respondent will pay the balance sale consideration amount. There is no privity of contract between the appellant and the second respondent.
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In Ex.P.10 there is no whisper that the first respondent was ready and willing to perform his part of the contract.
24. Section 15 of the Specific Relief Act provides that specific performance can be obtained by any party to the contract or a representative in interest. In the present case, the second respondent is not a party to the contract and claims to be the nominee. The first respondent without performing his part of the contract has sent Ex.P.10 notice asking the appellant to execute the sale deed in favour of second respondent and second respondent will pay the balance sale consideration amount. There is no privity of contract between the 2nd respondent and the appellant. There is no whisper in Ex.P.10 that the first respondent was ready and willing to perform his part of the contract. Therefore, specific performance cannot be granted.
25. Section 16 (c) of the Specific Relief Act provides that specific performance of the contract cannot be enforced in favour of a person who fails to aver and prove
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that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.
26. It is clear, the contract for specific performance cannot be enforced unless readiness and willingness is averred and proved. In the present case, Ex.P10 shows that the first respondent has asked the appellant to execute the sale deed in favour of the second respondent and the second respondent will pay the balance sale consideration amount. There is no privity of contract between the appellant and the second respondent. In Ex.P.10 there is no whisper that the first respondent was ready and willing to perform his part of the contract. It is clear from Ex.P.10 that the first respondent was not ready and willing to perform his part of the contract. Therefore, specific performance cannot be enforced. The decisions relied upon by the learned counsel for the respondents relate to
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assignment and not nominee and therefore, not applicable to the facts of the present case.
27. Section 20 of the Specific Relief Act provides that the jurisdiction to decree specific performance is discretionary. The court is not bound to grant specific relief merely because it is lawful to do so. The discretion of the court should be exercised judiciously. In the present case, the sale agreement is between the first respondent and the appellant. Through Ex.P10 the first respondent has asked the appellant to execute the sale deed in favour of the 2nd respondent and second respondent will pay the balance sale consideration amount. There is no privity of contract between the appellant and the second respondent. Without performing his part of the contract, the first respondent has asked the appellant to execute the sale deed in favour of the second respondent. It is clear from Ex.P.10 that the first respondent was not ready and willing to perform his part of the contract. Therefore, decree for specific
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performance cannot be granted. In the circumstances, the Courts below were not justified in decreeing the suit for specific performance.
28. However, the respondents have claimed refund of `.25,000/-. It is not in dispute that a sum of `.25,000/- was paid as advance to the appellant. The appellant has admitted that a sum of `.25,000/- was paid as advance in the year 1982. Therefore, it is appropriate to direct the appellant to refund `.25,000/- to the LRs of 1st respondent with interest at 12% p.a. from the date of agreement.
29. The questions of law raised for consideration are answered accordingly. The courts below were not justified in decreeing the suit for specific performance. The second respondent cannot enforce the agreement for specific performance.
30. Accordingly, the appeal is allowed. The impugned judgment and decrees passed by the courts
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below in O.S.No.30/1984 and RA No.11/2001 are hereby set aside. The suit of the plaintiffs/respondents is decreed for a sum of `.25,000/- with interest at 12% per annum from the date of sale agreement till the date of realization. The appellant shall pay the amount to the LRs of 1st respondent.
Sd/-
JUDGE Dvr/Vk