Kerala High Court
K.S. Krishan vs Krishnan S/O Kizhakkumbrath Arumugha ... on 23 October, 1992
Equivalent citations: AIR1993KER134
JUDGMENT K.P. Balanarayana Marar, J.
1. The main aspect to be considered in this appeal is whether an agreement to sell immovable property by three co-owners can be specifically enforced against one of them in respect of his share.
2. Plaintiff in O.S. 213/85 before Sub-Court, Palghat is the appellant. The suit was filed by him against the defendant seeking specific performance of an agreement executed by defendant and his two brothers on 12-8-1982 by which they agreed to sell the plaint schedule property for a total consideration of Rs. 1,45,200/- of which an amount of Rs. 20,000/- was received on the date of the agreement. Major portion of the property was also put in possession of the plaintiff, and the executants undertook to evict the tenant in occupation of the buildings. The sale was agreed to be completed by 30th of August, 1983. A further sum of Rs. 1,05,000/- was also paid. In the meanwhile one Achuth Bhaskar filed a suit against defendant and his brothers as O.S. 190/83 seeking to restrain them from assigning the property to plaintiff. Plaintiff got himself impleaded in that suit which was dismissed on 26-7-1985. Plaintiff was not able to get the agreement enforced in view of the temporary injunction granted by that Court. Plaintiff wanted defendant and his brother Govindan to execute the sale deed after receiving the balance consideration. In the meantime Govindan had obtained a release of 1/3rd share of his brother Pulendran. Govindan executed an assignment in respect of his 2/3rd share on 26-8-1986.
Defendant was not prepared to perform his part of the contract. Hence the suit seeking specific performance of the agreement by defendant after receiving Rs. 6,667/- his share of the balance consideration.
3. The suit was resisted by the defendant on various grounds. He denied the execution of the agreement and receipt of consideration. The receipt of the further amount of Rupees 1,05,000/- was also denied by him. He contended that he had subscribed his signature in some of the papers taken to him by his brother Govindan and those papers might have been utilised for preparing the agreement and the receipt. He did not agree to sell his share of the property. He therefore contended that the agreement is not enforceable against him.
4. The court below on a consideration of the documents and evidence held Ext. A1 to be a genuine document executed by defendant but denied the relief for the reason that defendant had not received any consideration on the date of the agreement or thereafter and that the agreement is not enforceable against one of the co-owners. It was further found that plaintiff has not expressed readiness and willingness to perform his part of the contract before the expiry of the period mentioned in the document. In consequence the suit was dismissed. Hence the appeal.
5. Heard counsel on both sides.
6. The following points arise for consideration ;
i. Whether the agreement can be enforced against the defendant who is only one of the executants of the agreement?
ii. Whether defendant has received any consideration for the agreement?
iii. Whether defendant had received any amount since the date of the agreement?
iv. Whether plaintiff was ready and willing to perform his part of the contract?
v. Whether there was any default on the part of the defendant in performing his part?
7. Point No. 1: Defendant and his two brothers agreed to assign the plaint schedule property for a total consideration of Rupees 1,45,200/- of which an amount of Rupees 20,000/- was paid on the date of the agreement and a further sum of Rs. 1,05,000/-thereafter. One of the brothers released his share to another brother who executed the assignment in respect of his 2/3rd share. Only performance of the part by the defendant remains. That was sought to be enforced by the plaintiff. The maintainability of the suit was questioned by the defendant before the court below for the reason that what was sought to be enforced is a part of the agreement and Section 12 of the Specific Relief Act is a bar. This contention found favour with the court below. The very same contentions are reiterated by the learned Counsel for respondent before this Court. Learned Counsel for the appellant assails the finding of the court below and contends that there is no legal bar in enforcing the contract against the defendant alone. Counsel on both sides had referred to various decisions on this aspect. Before adverting to those decisions it is profitable to refer to Section 12 of the Specific Relief Act.
8. The general rule in Sub-section (1) of Section 12 is that the court shall not direct the specific performance of a part of a contract except as otherwise provided in that section. The exceptions are provided in Sub-sections (2) to (4). They constitute a complete Code as far as enforcement of a part of a contract is concerned and the reliefs can be claimed or granted only within the terms thereof. Sub-section (2) relaxes the general rule in favour of both parties. Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed bears only a small proportion to the whole in value and admits of compensation in money, the Court may, at the suit of either party, direct the specific performance, of so much of the contract as can be performed, and award compensation in money for the deficiency. That sub-section enables even a party in default to claim specific performance provided the part left unperformed is small in value and admits of compensation. On the other hand, if the part left unperformed forms a considerable part of the whole it is Sub-section (3) that is applicable. That sub-section reads:
"Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either -
(a) forms a considerable part of the whole, though admitting of compensation in money; or
(b) does not admit of compensation in money; he is not entitled to obtain a decree for specific performance; but the Court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party -
(i) in a case falling under Clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and in a case falling under Clause (b), pays or has paid the consideration for the whole of the contract without any abatement; and
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all rights to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant."
9. Under this sub-section a decree for specific performance of a part of the agreement will be granted on reduction from the consideration for the part which is left unperformed provided the following conditions are fulfilled, (i) the part which is left unperformed forms a considerable part of the whole though admitting of compensation in money, (ii) the part left unperformed does not admit of compensation in money, and (iii) the party who is not in default relinquishes all claims to the performance of the remaining part of the contract and all rights to compensation, either for the deficiency or for the loss or damage sustained by him through the default of the defendant. In a case where the part which is left unperformed forms a considerable part of the whole though admitting of compensation in money the party is entitled to obtain a decree on payment of proportionate consideration, viz. the agreed consideration for the whole reduced by the proportionate consideration for the part which must be left unperformed. Under Section 15 of the old Specific Relief Act a part of the contract can be specifically enforced only on deposit of the entire consideration but a change has been effected in the present Act jvhich requires only deposit of proportionate amount where the assessment of compensation in money is possible.
10. The present Section 12 of the Specific Relief Act corresponds to Sections 17, 14, 15, 16 and 13 of the old Act with slight modifications. The Madras High Court had occasion to consider these sections in Abdul Aziz v. Abdul Sammad, AIR 1937 Mad 596. Defendant in that case agreed to sell certain plot of land in which he had only one-third share and the remaining 2/3rd share belonged to his children. The contract became incapable of performance as the two sons were unwilling to fulfil it. The plaintiff sought specific performance. The Madras High Court held that the contract was not divisible into two parts, one relating to a third of the plot and the other relating to the remaining two-thirds. It is observed that the court could not substitute a new bargain and force a new contract on the parties by decreeing the plaintiffs claim with respect to one-third share of the defendant on payment of the price in proportion to that share. It was held that the specific performance of the contract with respect to the defendant's share could not therefore be granted under Section 16 of the Specific Relief Act. It has to be noted that Section 15 of the Act as it then stood permitted specific performance of a part of the contract only on payment of the whole of the amount agreed to be paid. The refusal by the court to enforce the agreement in respect of a part of the agreement by paying part consideration was therefore in accordance with the provisions of law as they stood then.
11. Learned Counsel for respondent has cited the decision in Lakshmikantayya v. Nagayya, AIR 1955 Andh Pra 188, in support of his contention that the agreement is not enforceable against the defendant. That case related to an agreement to sell in respect of 4.03 acres of land of which a portion was sold in court auction. On failure to execute a sale deed in respect of the balance the Andhra High Court held that if the party not in default wanted to exercise his option under Section 15 of the Act he must be prepared to pay the whole purchase price for getting the conveyance. This decision also is of no assistance to the counsel since the enforcement of a part of a contract could be had then only on payment of the entire price agreed upon whereas the party not in default is entitled to get a decree for specific performance now in view of Section 12(3) of the Act provided he pays or has paid the agreed consideration for the whole reduced by the consideration for the part which is left unperformed.
12. Attention is also drawn to the decision of this Court in Balakrishnan v. Kunji-krishnan, 1981 Ker LT 463 : (AIR 1982 NOC 18). An extent of 50 cents of land was agreed to be sold at the rate of Rs. 275/- per cent. The agreement was sought to be enforced in respect of 10 cents only. A Division Bench of this Court held that the case would not come under Sub-section (2) or (3) of Section 12. The contract is one and indivisible. There was no sufficient pleading in that case to justify any relief with regard to enforcement of the agreement for sale of a portion of the property for proportionate consideration.
13. Two other decisions of this Court were also brought to my notice. They are (1) ILR (1983) 1 Ker 599, Narayana Surve v. Pappu Ammal and (2) A. Section 391 of 1982. In the first mentioned decision the agreement was to convey half share in the suit property but he was having only a 1/4 share therein. This Court held that the case falls under Clause (a) of Sub-section (3) of Section 12 of the Specific Relief Act and the plaintiffs are entitled to a decree for the conveyance of a one-fourth undivided share in the suit property for the price fixed under the contract reduced by the consideration for the part which must be left unperformed.
14. A Division Bench of this Court in A. S. 391/82 was considering the question whether an agreement to sell 6 cents of land can be enforced in respect of three cents alone. The Bench held that the contract should be taken in its entirety as intended by the parties to be dealt with as a whole and not piecemeal. This decision was arrived at for the reason that the contract cannot be regarded as a separate contract for selling out portions of the property to different persons. It is observed that the contract cannot be construed or interpreted or enforced as two different contracts to convey the property into equal halves.
15. The position therefore is that if the contract is one and indivisible it can be enforced only in its entirety. But a part of the contract is also enforceable if it comes within one or other of the exceptions provided in Sub-sections (2) to (4) of Section 12. Whatever may be the position under the old Specific Relief Act, the position under the present Act, is that the plaintiff in a suit for specific performance can get relief in respect of a share of the property on paying the proportionate consideration provided therein. That is possible at the instance of either party if the part which is left unperformed bears only a small portion to the whole in value and admits of compensation in money. The court may in such a case direct specific performance of so much of the contract as can be performed and award compensation in money for the deficiency. When the part of the contract unable to be performed forms a considerable part of the whole only the person who is not in default is entitled to obtain a decree and that too if the part left unperformed admits of compensation in money and pays or has paid the proportionate consideration for the part which was left unperformed. Similar is the case where the part left unperformed does not admit of compensation in money but in that case he has to pay the whole of the consideration without any abatement. The further condition is that the person who seeks specific performance shall relinquish all his claims to the performance of the remaining part of the contract and all rights to compensation.
16. Sub-section (4) of Section 12 provides a third exception to the rule that part of a contract is not specifically enforceable. That sub-section reads:
"When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part."
17. This is permissible on the principle that the contract though appearing to be a composite one is actually divisible. When a divisible part of such a contract is thus enforced what is being enforced is an entire and complete contract as far as that divisible part is concerned. The question whether a contract is divisible or not has to be determined on the facts and circumstances of each case. Before granting relief under this section the party who claims specific performance has to establish that the part taken by itself stands on a separate and independent footing from the other part of the contract and that it can and ought to be specifically performed. That can be done only if the other part in respect of which no relief is claimed cannot or ought not to be performed. In other words the subsection deals with a case where part of the contract can be severed from the remaining part. This sub-section therefore applies only if the contract is divisible. If not the court would be substituting a new bargain and enforcing a new contract on the parties which is sought to be prevented by the prohibition contained in Sub-section (I) of Section 12.
18. The law being what has been stated above there cannot be any difficulty in enforcing a contract against one of the co-sharers who had jointly contracted to convey a property. If any of them is unable to convey his portion there is no legal bar in getting specific performance of the remaining portion against the other co-sharers. Each of the co-sharers is entitled to possession and enjoyment of the whole property along with others. He has an equal right to the possession of every part and parcel of the property. It may be that their interests are unequal but still they have got unity of possession and each of the co-sharers can transfer his share and the transferee becomes a co-sharer along with others. Section 44 of the Transfer of Property Act says that the transferee acquires as to such share or interest the transferor' right to joint possession or other common or part enjoyment of the property. The transferee can also enforce partition of his rights but subject to the conditions and liabilities affecting at the date of the transfer. Thus in a case where several co-sharers had contracted to convey a joint property belonging to them the contract can be enforced against one of them if the others are unable to convey their shares.
19. A more or less identical question was considered by the Supreme Court in Kartar Singh v. Harjinder Singh, AIR 1990 SC 854. Respondent in that case and his sister owned some properties. He entered into an agreement with appellant for sale of the property and he undertook to get the sale deed registered. His sister having refused to sell her share, he was not able to perform the contract. In a suit filed for specific performance of the agreement the trial Court granted a decree. On appeal the High Court set aside the judgment and decree relying on the provisions contained in Section 12 of the Specific Relief Act. On further appeal to the Supreme Court it was held that this is not a case which is covered by Section 12 of the Act. The present is not a case of the performance of a part of the contract but the whole of the contract so far as the contacting party, viz. the respondent is concerned. It is observed that the agreement was to sell the whole of the property. The two contracts, viz. for sale of his share and of his sister's share were separate and severable from each other though they were incorporated in one agreement. The Supreme Court held that there was no contract between the appellant and the respondent's sister and the only valid contract was with respondent in respect of his share in the property.
20. The principle enunciated by the Supreme Court applies to the facts of the present case also. The agreement to sell was entered into by respondent and his two brothers. What was sought to be enforced is only the agreement as against the respondent, the rights of the other two brothers having been purchased by the appellant. Respondent refused to perform his part and even denied the execution of the document and receipt of consideration. It was under such circumstances that appellant obtained the assignment of 2/3rd share from one of the brothers, viz. Govindan who had obtained a release of the share of the third brother. The enforcement in the suit is therefore regarding the 1/3rd share belonging to the respondent which as observed by the Supreme Court is the whole of the contract as far as respondent is concerned. Under the agreement respondent had contracted to sell his entire share over the property along with his brothers. What is sought to be enforced is only an agreement regarding that share. Applying the principle of the decision in Kartar Singh's case (AIR 1990 SC 854) (supra) it is held that the enforcement claimed is not that of a part of a contract but the whole of the contract as far as respondent is concerned. That part is severable from the remaining part, viz. the contract in respect of the other two brothers. The part which is sought to be specifically enforcd thus stands on a separate and independent footing from the other part which ought not to be specifically performed, an assignment having been executed in respect of that part by respondent's brother Govindan. The case therefore comes under the exceptions provided in Sectionl2 of the Specific Relief Act. The finding of the court below that plaintiff is seeking to enforce a part of the contract is therefore erroneous and is hearby set aside. The point is answered in favour of the appellant.
21. Points ii & iii: Though the execution of the agreement and receipt of consideration are denied in the written statement defendant in cross-examination admitted his signature contained in Ext. A1. He stated that he along with his brothers had agreed to sell the property to plaintiff and that Ext. A1 is the agreement entered into by them. He further stated that he had read and understood the contents of the document before subscribing his signature and that the recitals contained therein are correct. The execution of the document having been admitted it has to be presumed that he had received his share of the advance amount received thereunder. Towards the balance consideration a further sum was also paid by appellant and a receipt obtained. The execution of this receipt also was disputed by the respondent. His case appears to be that his signatures were taken in various papers by his brother Govindan and that would have been utilised for preparing the agreement and the receipt. The case of respondent regarding the execution of Ext. A1 having been found to be false the only conclusion possible is that Ext. A12 receipt is also genuine. Moreover respondent had admitted the receipt of this amount in the written statement filed by him along with his brothers in O.S. 190/83, a suit filed by one Achuth Bhaskar seeking to restrain respondent and his brothers from executing an assignment in favour of the plaintiff. The execution of the agreement and receipt of the advance of Rs. 20,000/- is admitted in the written statement. It contains an averment that the parties had received a further sum of Rs. 1,05,000/- towards the balance consideration. That is the amount covered by Ext. A12 receipt. The written statement was filed through an advocate. The court below did not place any reliance on the written statement for the reason that the advocate or his clerk was not examined to prove the contents of the written statement. The learned Subordinate Judge is of the view that the statement made in the written statement amounts to an admission and that it is not conclusive and can be proved to be false by the person who has made it, little realising that the admission is contained in a pleading filed in court and that too through a lawyer. The admission relied on by appellant is contained in a previous statement of the party which can be proved by producing a copy of that statement and without the party being confronted with the same. Mere production of the copy by itself is sufficient to rely on the same. The examination of the lawyer who filed that statement in court or the clerk who prepared the same is not necessary. The learned Subordinate Judge committed a grave error in not placing reliance on the written statement Ext. A3. It may be possible for the respondent to explain the circumstances under which such a statement was made. He has a contention that his signatures were; taken in several papers by his brother Govindan. But this contention is found to be false; It appears that respondent has denied every document containing his signature so as to get out of the liability created under Ext. Al. He denied the execution of Ext. Al in his written statement but admitted having executed the document and that too after understanding its contents. Respondent is therefore a person who has no respect for truth. The agreement having been executed by all the three brothers jointly the only inference possible is that Ext. A3 written statement is also filed by them jointly by engaging a lawyer. Reliance can therefore be placed on the averment in Ext. A3. The court below has not pointed out in what manner respondent has explained the admission contained in Ext. A3. Plaintiff has also produced Ext. A12 receipt executed by all the three brothers. Plaintiff has thus discharged his burden to prove due execution of the agreement and payment of consideration. The finding of the court below that defendant had not received any amount on the date of Ext. A1 or subsequently from the plaintiff is not supported by any evidence. On the other hand the evidence on record shows the contrary. The finding of the court below is therefore set aside.
22. Point No. iv: The balance consideration under Ext. Al has to be paid on or before 30-8-1983 and the transaction to be completed before that date. The registered notice asking defendant to execute the assignment deed after receiving his share of consideration was sent on 1-8-1985 and the suit was filed on 15-10-1985. Learned Subordinate Judge is of the view that plaintiff was not ready and willing to perform his part of the contract before the period prescribed in the agreement. That also is one of the reasons given by the court below to non-suit the plaintiff. This reason also is unsustainable. Even before the expiry of the period provided in Ext. Al a suit has been filed against defendant and his brothers as O.S. 190/83 seeking to restrain them from executing the assignment and a temporary injunction was granted by the court. The suit was dismissed only on 26-7-1985. The order of injunction was in force till then. Within a few days therefrom plaintiff issued the notice asking the defendant to execute the assignment deed. The reply notice is seen to have been sent on 14-8-85. Within two months thereafter the suit has been filed. It is observed by the learned Subordinate Judge that there was no injunction against the plaintiff and he could have sought specific performance. One fails to understand how this is possible in View of the order of injunction. Plaintiff also had got himself impleaded in the suit. He was therefore prevented from enforcing the contract against the defendant and his brothers in view of the order of injunction. The readiness and willingness to perform his part of the contract has therefore been manifested by plaintiff in getting himself impleaded in O.S. 190/83 and also in sending Ext. A6 notice immediately after the disposal of that suit. The denial of the relief of specific performance for the reason that plaintiff was not ready and willing to perform his part is therefore improper. Point No. iv answered in favour of appellant.
23. Point No. v: That there was default on the part of the defendant in performing his part admits of no doubt. The registered notice Ext. A6 was sent on 1 -8-85 to respondent and his brother Govindan. Respondent was not willing to execute the assignment whereas he denied execution and receipt of consideration. Govindan executed the assignment in respect of his two-third share. A separate document had to be obtained from Govindan alone in view of the refusal of the defendant to perform his part of the contract. There is sufficient evidence on record to show that default was committed by the defendant in not receiving the balance consideration due to him and in not executing the assignment deed.
For the aforesaid reasons the appeal is allowed and in reversal of the judgment and decree of the court below the suit is decreed and defendant is hereby directed to execute the sale deed in favour of the plaintiff in respect of his one-third share over the plaint schedule property on receiving Rs. 6,667/-being his share of the balance consideration and to put the plaintiff in full possession of the property. Appellant shall deposit this amount in the court below within a period of three months from this date. On such deposit and notice being given to the respondent he shall execute the sale deed in favour of the appellant failing which it will be open to the appellant to move the court below for getting the sale deed executed by the court on behalf of the respondent. Respondent shall pay the costs incurred by the appellant here as well as in the court below.