Karnataka High Court
Smt. B N Shivamma vs Sri T Srinivasaiah on 6 November, 2012
Author: Aravind Kumar
Bench: Aravind Kumar
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 06TH DAY OF NOVEMBER, 2012
BEFORE
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
R.F.A.NO.564/2005
BETWEEN:
Smt. B.N.Shivamma
W/o. M.V. Narasimhaiah
Aged about 55 years
R/at No.59A, RMV 2nd Stage
60 Feet Road
Bhupasandra New Extension
Bangalore-56 0094
Represented by her power
Of Attorney holder
Sri.M.V. Narasimhaiah .....Appellant
(By Sri. C.S.Prasanna Kumar, Advocate for M/s Kumar &
Kumar
Associates)
AND:
1. Sri.T.Srinivasaiah
S/o Late Thiruvangadaiah
Aged about 62 years
R/At No.12:13, IV Cross
Kempapura Agrahara
2
Magadi Road
Bangalore-560 023
2. Sri.H.Srikantan
Since deceased by LR's
2 (a) Pushpa Srikantan
W/o H.Srikantan
R/at No.1193, East Sadana,
2nd Stage, Rajajinagar,
Bangalore-560 010
2(b) Sharada Srikantan
D/o H.Srikantan
R/at No.1193, East Sadana,
2nd Stage, Rajajinagar,
Bangalore-560 010
2(c) Shalini Srikantan
D/o H.Srikantan
R/at No.1193, East Sadana,
2nd Stage, Rajajinagar,
Bangalore-560 010 ...Respondents
(By Sri.Basavaraja Belavangala, Advocate for R1;
Sri.A.S. Krishna Murthy, Advocate for C/R2)
This Regular First Appeal is filed under section 96 of
C.P.C praying to set aside the judgment and decree dated
12.1.2005 passed in O.S.No.1606/1993 on the file of the XI
Addl. City Civil Judge, Bangalore City (CCH-8), partly
decreeing the suit of the appellant herein by holding that the
respondent no.1 herein by holding that the respondent no.1
herein is directed to pay a sum of `. 8,500/- to the appellant
herein A/w interest at the rate of 9% p.a. from the date of
suit till the date of realisation and dismissing the same
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against the respondent no.2 herein and also rejecting the
relief of specific performance.
This Appeal coming on for orders this day, the court
delivered the following:
JUDGMENT
This is plaintiff's appeal assailing the judgment and decree passed by XI Addl. City Civil Judge, Bangalore City in O.S.No.1606/1993 dated 12.01.2005 whereunder suit filed by plaintiff for specific performance came to be partly decreed directing first defendant to pay a sum of `.8,500/- to the plaintiff along with interest at the rate of 9% p.a. from date of suit till date of realization and dismissing the suit against second defendant and rejecting the claim of the plaintiff for the relief of specific performance.
2. Parties are referred to as per their rank in trial Court.
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3. I have heard the arguments of Sri C S Prasanna Kumar, learned Advocate appearing for plaintiff and Sri A S Krishna Murthy, learned Advocate appearing for respondent No.2. Though respondent No.1 is served and represented by learned counsel, there is no representation on behalf of first respondent.
4. Plaintiff filed a suit seeking for the relief of specific performance of agreement of sale dated 24.01.1982 interalia contending that first defendant was ready and willing to sell his property bearing site No.21 formed in land bearing Sy.No.47/1 situated at Malgalu village, Yeshwanthpur Hobli, Bangalore North Taluk (hereinafter referred to as 'suit schedule property' for a total consideration of `.14,250/- on account of necessity and on the date of execution of agreement, plaintiff received a sum of `.3,500/- as advance/part sale consideration and agreed to receive the balance 5 sale consideration on or before expiry of three months from the date of execution of the agreement. It was further contended that plaintiff had expressed her readiness and willingness to get the sale deed registered in respect of the suit schedule property and on account of the State having imposed ban on registration of revenue sites, it could not be registered and contrary to the assurance given by first defendant and with ulterior motive first defendant addressed a letter to the plaintiff on 18.01.1983 threatening the plaintiff that she had to pay balance sale consideration and secure a deed of sale within a week thereof, which came to be duly replied on 31.01.1983 informing the first defendant that ban imposed by the State was still in force and as such, it would not be legal and correct on the part of the plaintiff to obtain or secure registration of the sale deed. Further contention of the plaintiff in the suit was that first defendant insisted upon the plaintiff to get the deed 6 registered and called upon the plaintiff to pay balance consideration and immediately plaintiff claims to have responded to the demand of first defendant and obtained stamp paper and deed was written on the said stamp paper. It was further contended that both plaintiff and first defendant proceeded to the office of the Sub Registrar for registration but the Sub Registrar refused to register the document in view of the existing ban and the consideration shown in the document was `.6,000/- and not `.14,500/- and registration could not be done for the reason of ban being in existence and plaintiff sought refund of the value of stamp paper purchased and in the process she lost a portion of the value of the stamp papers.
5. It is the further contention of plaintiff that first defendant did not wait for lifting of ban to get registration of sale deed and prevailed upon the plaintiff 7 to pay balance sale consideration in the month of April, 1983 and agreed that he would execute registered deed of agreement to sell in order to confirm the commitment and as such it was contended by the plaintiff that with the fond hope of securing the property for her, she agreed for the said proposal of first defendant and accordingly she paid a sum of `.10,000/- to first defendant to make up the consideration paid totalling a sum of `.13,500/- and thereby leaving the balance of `.1,000/- and on such payment, registered deed of agreement to sell dated 08.04.1983 came into existence. Plaintiff further contended that first defendant prevailed upon the plaintiff to show sale consideration in the registered deed of agreement of sale as only `.6,000/- as against `.14,500/- as agreed upon. Plaintiff further claimed that first defendant on execution of the registered deed of agreement of sale, assured the plaintiff, in view of the entire consideration having been 8 paid leaving a balance of `.1,000/- only, deed of sale would be executed after ban was lifted by the State. It was further case of the plaintiff that in the registered agreement of sale, first defendant got incorporated that small construction with ACC roof being there even though schedule property was actually a vacant site.
6. Plaintiff further claimed that after obtaining registered agreement of sale, she was constantly enquiring with the first defendant as to whether ban on registration has been lifted and during the course of enquiry, she came to know that contrary to terms of the agreement entered into with her and with the sole intention of making a wrongful gain for himself and without disclosing existence of registered agreement of sale executed by him in favour of plaintiff, first defendant stealthily with a malafide intention, sold the suit schedule property in favour of second defendant. 9 First defendant in order to defeat rights of plaintiff had sold the suit schedule property to second defendant though he was not entitled to. It was also contended that first defendant had misled second defendant not to verify about existence of registered deed of agreement of sale in respect of suit schedule property. Further claim of the plaintiff was that number of the suit schedule property is mentioned differently in the sale deed executed by first defendant in favour of second defendant and there cannot be any dispute with regard to identity of the property since boundaries reflected in both the documents are one and the same. It was further claimed that second defendant had no manner of right, title and interest over the suit schedule property in view of the registered agreement of sale already having been executed by first defendant in favour of plaintiff. Plaintiff contended that she got issued a notice to defendants on 08.07.1992 calling 10 upon first defendant to receive balance sale consideration of `.1,000/- and execute a registered deed of sale in her favour which came to be replied on untenable grounds by first and second defendant. In view of non-compliance of demand made in the legal notice, plaintiff instituted a suit for specific performance of agreement of sale and for a decree against defendants with a prayer to direct the first defendant to receive a sum of `.1,000/- and execute deed of sale by getting it registered in respect of suit schedule property in favour of plaintiff and in the event of first defendant's failure to execute such deed of conveyance, to be executed through Court and to pay costs of the suit.
7. On suit summons being issued, both defendants appeared filed their separate written statements opposing claim of the plaintiff. First defendant in his written statement contended that he 11 was not ready to sell the said site in view of the necessities as claimed by the plaintiff and execution of the agreement to sell dated 24.01.1982 by receiving consideration of `.3,500/- as advance came to be denied. Other averments with regard to ban on registration of revenue sites, first respondent demanding balance sale consideration at the time of getting the said deed registered were denied. It was further contended that first defendant is an illiterate person and knew only to affix his signature in Kannada and taking advantage of this fact, plaintiff fabricated the documents in her favour and he had no knowledge about such fabricated documents. First defendant contended that different sale consideration shown in the documents would itself go to show that there was manipulation by the plaintiff and as such, first defendant denied the execution of the agreement to sell. It was further contended that all the original documents 12 were in the custody of the first defendant and at the time of executing sale deed in favour of second defendant, it was handed over to second defendant by first defendant. First defendant also contended that plaintiff used to conduct chit transaction, money lending business, etc., and he used to contact plaintiff in respect of said chit transactions and he had also borrowed money from her and plaintiff had taken stamp papers signed by first defendant in connection with said chit transaction and same has been misused to suit her convenience to snatch the property of first defendant. On these grounds amongst other pleas put forward in the written statement, first defendant sought for dismissal of the suit.
8. Second defendant filed detailed written statement opposing the claim of the plaintiff. The defendant -1 has filed his detailed written statement inter alia contending that it is true that this defendant 13 appraised the plaintiff about the existence of the site bearing No.21, formed in Sy.No.47/1, situated in Malgalu Village. It is false to allege that this defendant was ready to sell the said site in view of the necessities. It is false to allege that this defendant agreed to sell the Schedule Property for a sum of `.14,500/- to the plaintiff and executed the agreement to sell dated 24.01.1982 by receiving a sum of `.3,500/- as advance and agreed to receive the balance sale consideration within a period of three months. The averments made in para 5 of the plaint are all false, hence denied. It is false to allege that this defendant informed the plaintiff that the State has imposed ban on registration of revenue sites and at the same time demanding the balance amount and to get the sale deed registered within a week. The averments made in para 6 of the plaint are all false, hence denied. This defendant is an illiterate and he has learnt only to sign in Kannada. 14 Taking advantage of this weakness, the plaintiff has fabricated all the records in his favour and the defendant has no knowledge of those fabricated documents. The Plaintiff alleges that the purchase price agreed was `.14,250/- in one place and `.14,500/- in another place and also alleges that this defendant prevailed of her to show as `.6,000/- in the document. It is obvious therefore in the series of manipulation done by the plaintiff to snatch away the property, he has kept in his mind with the least stamp duty incorporated in the process. This defendant is not aware of the averments made in para-7 of the plaint. The averments made in para -8 of the plaint are all false, hence denied. When this defendant no executed any agreement to sell in favour of the plaintiff in respect of the schedule property, the question of disclosing the same to a party to purchase the site does arise. All the original documents, which were in the possession of this 15 defendant, were scrutinised by the 2nd defendant, who purchased the property from this defendant.
9. It is further contended in the written statement that the averments made in para-10 of the plaint are all false, hence denied. The Plaintiff had no access to the title deeds and in the course of manipulation managed to show some katha number which is quite different from appearing in the schedule of the original sale deed. The documents produced by the plaintiff as shown in para-12 of the plaint are all fabricated and they are not genuine. The averments made in para 13 of the plaint are all false, hence denied. The plaintiff having managed to create documents in her favour would have definitely managed to get the title deed in her possession. If the transactions were genuine, nobody would leave the title deeds with the vendor. There is no cause of action for the plaintiff to 16 file this suit. Since, there was no agreement, as such there is no breach of agreement. The plaintiff has not approached the court with clean hands for the reason set out in para 14 of the written statement.
10. It is further contended in the written statement that the plaintiff used to conduct chit transaction, money lending business etc., and this defendant used to contact with the Plaintiff in that chit transaction. He had also borrowed money from her and the plaintiff has taken stamp papers signed by this defendant in connection with chit transaction. It is now cleared that she has misused those stamp papers to suit her convenience and ill designs to take the property. The suit of the plaintiff is barred by limitation. On this ground alone, the suit is liable to be dismissed. Hence the defendant -1 has prayed to dismiss the suit of the plaintiff with costs. 17
11. The defendant-2 has filed his detailed written statement inter alia contending that this defendant is not known the averments made in paras 2 and 3 of the plaint. The agreement referred to in para 4 of the plaint dated 24.01.1982 is an unregistered document and the consideration mentioned as `.14,250/-. To the best of knowledge of the defendant the site referred to in the plaint schedule will describe as vacant site, was not a vacant site at all but one which has ACC roofed house of one square on it. The averment that the sale could not be put through is false. The plaintiff has caused suppression of an essential detail in the schedule to the plaint with the sole aim of himself leading this court to obtain a relief, which he is not entitled to in law. The consideration shown is `.14,500/- whereas in para 4 of the plaint, it has been mentioned as `.14,250/-. This inconsistency has not 18 been explained. Moreover, the plaintiff claimed that the first defendant wanted the consideration to be shown as `.6,000/-, which he accepted. In a transaction it is the purchaser who usually asked for a lower figure to be shown in the sale deed to save the stamp duty. The alleged agreement between the first defendant and the plaintiff show the sale transaction at `.6,000/- instead of higher agreed figure is clearly against the public policy and hit by Sec.23 of the Indian Contract Act. This defendant is unaware of the contents of the para-7 of the plaint. The plaintiff cannot seek the assistance of this court in cheating the government on revenue. The plaintiff statement that the sale deed could not be registered in view of the ban on registration of revenue sites is unbelievable as the agreement clearly mentioned about the existence of ACC house on the schedule site. The plaintiff has chosen to file this suit almost ten years 19 after the date of the agreement, hence the suit is clearly barred by limitation.
12. It is further contended in the written statement that the plaintiff was making enquiries regarding the lifting of the ban of the revenue sites was denied. This defendant purchased the property after verifying all the revenue records, like encumbrances, katha, payment of tax and legal document regarding prior titleholder. In point of time, the Encumbrance Certificate was obtained two days prior to the date of sale and the certificate did not show any encumbrance on the property. Only after such detailed verification deed, he go through with the purchase from the first defendant. The identity of the property purchased by this defendant is established by this defendant is different from one described in the schedule to the plaint. It is true that this defendant received a notice 20 from the counsel of the plaintiff dated 08.07.1992. After receiving the same, he wrote a letter on 27.07.92, seeking some clarification and after receiving the same, he wrote a detailed letter dated 19.08.92 repudiating the false demand made in the earlier notice.
13. It is further contended in the written statement that the plaintiff has no cause of action and cannot insist for specific performance of the contract. At the first instance the suit is clearly barred by limitation, secondly the identity of the property purchased by this defendant being different from that of the suit schedule property. The plaintiff is guilty of mis- joinder of parties. The contract is a vague one and the period of three years would have been applicable from the date of the agreement. As the suit has been filed nearly after lapse of ten years, the suit is barred by law of limitation. This defendant is not at all necessary 21 party to the present suit. By dragging this defendant to this proceeding, the plaintiff has not only caused a tremendous loss to this defendant, but the loss are counting by day to day. This defendant has availed loan from the Government of India to the extent of `.2 lakhs for the purpose of construction and for this purpose he has mortgaged the property to the President of India by registered mortgage. The house has constructed to an advanced stage and the electricity connection was given to the house. Hence the defendant-2 has prayed to dismiss the suit of the plaintiff with costs in the interest of justice and equity".
14. On the basis of the pleadings of both parties, trial Court framed following issues for its adjudication.
(1) Whether the plaintiff proves that she entered into an agreement with the 1st defendant to purchase the suit property for consideration of `.14,250/- on 24.01.1982?22
(2) Whether the plaintiff proves that she paid advance of `.3,500/- to the 1st defendant towards sale consideration?
(3) Whether the plaintiff proves that subsequently the 1 st defendant executed another agreement of sale dated 08.04.1983?
(4) Whether the plaintiff proves that she is ever ready and willing to perform her part of agreement?
(5) Whether the plaintiff proves that she is entitled for specific performance of the agreement of sale?
(6) Whether the 1st defendant proves that plaintiff had obtained her signatures on the stamp papers in connection with chit transaction and said stamp papers used to create the suit sale agreement?
(7) Whether the 1st defendant proves that the suit is time barred?
(8) What decree or order?
15. Plaintiff in support of her claim got examined her power of attorney holder as P.W.1 and also examined one witness by name Sri T.L. Lingareddy as P.W.2. She produced 28 documents which came to be marked as Exs.P-1 to P-28. On behalf of defendants, 23 first defendant got himself examined as D.W.1 and second defendant got examined himself as D.W.2 and in support of their case, they produced in all 11 documents and got them marked as Exs.D-1 to D-11. Trial Court, on analysing the pleadings and on scrutinizing the evidence tendered by parties and after considering the arguments advanced by the respective learned Advocates, held issues 1 to 4 in the affirmative namely in favour of the plaintiffs and issue No.5 was held in the negative against plaintiff by holding that she is not entitled for specific performance of agreement of sale and issue Nos.6 and 7 were held in the negative against first defendant and in favour of plaintiff. While answering issue No.5 to 8, trial Court held that second defendant is bonafide purchaser for value without notice and accordingly rejected the claim for specific performance and decreed the suit in part namely directing the first defendant to pay the amount of 24 `.8,500/- with interest @ 10% from the date of suit till the date of realisation. It is this judgment which is assailed by plaintiff in present appeal insofar as rejection of claim of specific performance of agreement of sale.
16. It is the contention of Sri Prasanna Kumar, learned counsel appearing for the plaintiff that first defendant has executed an agreement of sale in her favour and has got it registered and second defendant being subsequent purchaser ought to have made search with regard to there being any encumbrance over the property in question and having failed to do so, second defendant is estopped from raising a plea of having purchased the suit property as a bonafide purchaser without notice, more particularly when there was an existing registered agreement of sale in favour of plaintiff. He contends that plea of second defendant being a bonafide purchaser for value without notice is a 25 hollow claim and said plea would not come to the rescue of second defendant and neither he can press into service clause (b) of Section 19 of Specific Relief Act, 1963 which has been used as a tool by the trial Court to reject the claim of plaintiff. He would further contend that when trial Court has held all the issues namely, issue Nos.1 to 4 in favour of plaintiff and issue Nos.6 & 7 against first defendant, it ought not to have answered issue No.5 in favour of second defendant so as to deny the rightful claim of the plaintiff and decree the suit for specific performance of the agreement of sale in favour of plaintiff. He would elaborate his submissions by contending that transaction relating to immovable property requires to be registered under the Indian Registration Act, 1908 and when such a document is registered as required under Section 17 of the Indian Registration Act, then, automatically Section 3 of Transfer of Property Act, 1882, Explanation-I thereto 26 would get attracted and there is deemed notice of such transaction. As such, he contends that second defendant cannot plead ignorance of existence of a registered agreement of sale in favour of plaintiff or contend that he is a bonafide purchaser for value without notice. In this regard, he would also contend that there has been no such specific plea raised by the second defendant in the detailed written statement filed and on this ground alone, claim of second defendant ought to have been rejected and suit ought to have been decreed in favour of plaintiff in toto namely as prayed for.
In support of his submissions, he relies upon the following judgments:
1) AIR 2007 SC 2663 - M.M.S.INVESTMENTS, MADURAI & OTHERS vs V VEERAPPAN & OTHERS 27
2) AIR 2000 SC 2921 - RAM NIWAS (DEAD) THROUGH L.Rs Vs SMT.BANO & OTHERS
3) AIR 1999 ALLAHABAD 357
4) CDJ 2000 SC 297
17. Per contra, Sri A.S.Krishna Murthy, learned counsel appearing for second defendant would support the judgment and decree passed by trial Court and would contend that suit is erroneously framed namely description of the property as described in the plaint schedule is contrary to records namely, agreement of sale dated 18.04.1983 - Ex.P-3 relied upon by the plaintiff whereunder schedule has been specifically described by depicting existence of ACC sheet property and description of suit schedule property in the plaint is contrary to records namely, Exs.P-15, 16, 17 to 19 . He would also bring to the notice of the Court that 28 document - sale deed dated 03.02.1992 which came to referred as Ex.P-4 is the sale deed executed by first defendant in favour of second defendant, and schedule property therein has been described as consisting of an asbestos sheet roof house being in existence and in the plaint suit schedule property it is described as vacant site and this itself would clearly establish that there is mis-description of the plaint schedule property. He would also contend that question of raising a plea regarding bonafide purchaser for value without notice need not be pleaded so in specific terms, if otherwise it is decipherable from the pleadings of parties and submits that such a plea has been raised and would draw the attention of the Court to paragraphs 9 & 16 of written statement filed by second defendant to buttress his argument that it would substantiate the plea put forth by second defendant and trial Court having considered said plea, in the circumstances of the case 29 has rightly negatived the claim of plaintiff for grant of specific performance and answered issue No.5 against the plaintiff and in favour of defendant and it does not suffer from any infirmity whatsoever.
18. He would also rely upon the judgment of MMS Investments reported in AIR 2007 SC 2663 by pressing into service paragraph 5 of the said judgment. He would also submit that in the instant case, plaintiff has not entered the witness box and power of attorney holder who was not aware of factual aspects has attempted to speak and the same ought not to be eschewed by this Court since Order 3 Rule 2 Code of Civil Procedure would not give absolute power or authority to an agent to act on behalf of a member to speak about factual aspects which was not within his knowledge. On these grounds, he seeks for dismissal of the appeal and prays for confirming the judgment and decree passed by Court below.30
19. Having heard the learned advocates appearing for the parties, I am of the considered view that following points would arise for my consideration:
(1) Whether judgment and decree passed by trial Court rejecting the claim of plaintiff for specific performance of agreement of sale is to be sustained or set aside or modified;
(2) Whether second defendant can be said to be a bonafide purchaser for value without notice and entitled to protection provided under Section 19(b) of Specific Relief Act, 1963;
(3) What order?
20. Points (1) and (2) formulated herein above at stages, are likely to get overlapped when being examined with reference to pleadings and evidence and as such, both these points are being taken up together for adjudication.
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RE: POINT NOS.1 AND 2:
21. Regarding issue Nos.(1) to (4), burden was cast on the plaintiff in so far as entering into an agreement of sale dated 24.01.1982 with first defendant to purchase suit schedule property for a consideration of `.14,250/- and payment of advance amount of `.3,500/- to the first defendant and thereafter obtaining subsequent agreement of sale on 08.04.1983 which came to be registered and plaintiff's being ready and willing to perform her part of the contract, came to be examined, analysed and answered in favour of plaintiff namely in the affirmative. Issue Nos.6 and 7 were based on the plea of defence by first defendant wherein he had contended that he being an illiterate person, plaintiff had obtained his signature on blank papers and suit was barred by time. Both these issues were answered in the negative i.e., against first defendant. 32
22. At this juncture, contentions raised by learned counsel for plaintiff are required to be noticed and answered. It was strongly contended that trial Court has adjudicated issue Nos.1 to 4 in favour of plaintiff and issue Nos.6 and 7 against first defendant and as such, suit ought to have been decreed as prayed for and it ought not to have directed first defendant to pay to plaintiff a sum of `. 8,500/- along with interest @ 9% p.a. from date of Suit till date of realization. Said contention cannot be accepted for reasons more than one. Judgment and decree for enforcement of specific contract being a discretionary relief, Courts are vested with discretionary powers and by taking into consideration the totality of circumstances of the case and after weighing the evidence tendered by the parties namely, both oral and documentary evidence it can mould the relief accordingly. It is in this background, 33 pleadings as well as evidence tendered by parties will have to be scrutinised and examined in the instant case as to whether trial Court was justified in not exercising discretionary power by not granting the relief of specific performance in favour of the plaintiff.
23. In the instant case, plaintiff claims that at the first instance, an agreement of sale was executed by first defendant in her favour on 24.01.1982 which document came to be marked as Ex.P-2. Admittedly, said document is an unregistered document. Thereafter, on 08.04.1983 second agreement of sale in respect of property described therein came to be executed in favour of plaintiff by first defendant which is duly registered in the office of Sub Registrar, Bangalore North Taluk. Second defendant claims to have purchased suit schedule property under Ex.D-1 from first defendant under a registered sale deed dated 34 03.02.1992. Claim of plaintiff is that there was a registered agreement of sale in her favour which was subsisting at the time of purchase made by second defendant and if the second defendant made valid search or conducted an enquiry, he would not have lost sight of the fact about existence of agreement of sale dated 08.04.2003 - Ex.P-3 which was in favour of plaintiff but for his willful abstention from making reasonable enquiries sale of suit schedule property by first defendant in favour of second defendant could not have taken place.
24. It would be advantageous to note at this juncture that a transferee of an immovable property normally obtains whatever rights a transferor has and if there are any encumbrances on the property conveyed to a transferee, said encumbrance it passes with the property and transferee does not get any better title 35 than that of transferor in regard to burden of such encumbrance. This is even so with regard to obligation annexed to the ownership of the land. However, only exception to this rule can be found in clause (b) of Section 19 of the Specific Relief Act, 1963 which provides that except as otherwise provided by Chapter 2 of Specific Performance of a contract may be enforced also against a person other than the party thereto claiming under him by a title arising subsequent to the contract. Again this rule is subject to exception that it cannot be so enforced against a transferee for value who had paid money in good faith and without notice of the original contract. Enforcement of contract of sale of immovable property is enforcement of the obligation annexed to ownership of the property.
25. It would be necessary to refer to Section 91 of the Indian Trust Act, 1882 which prescribes that where a person acquires property with notice that 36 another person has entered into an existing contract affecting that property, in respect of which specific performance could be enforced, the former would hold that property for the benefit of the latter to the extent necessary to give effect to the contract. It does not in turn create a trust but only creates obligation which is characterized to be a trust. But again, Section 96 of the Indian Trust Act, 1882 is a saving provision which protects rights of transferees in good faith for consideration for the exclusion of Chapter IX of the Trust Act whereunder Section 91 can be found. Irrespective of whether person acquiring property in respect of which specific performance can be enforced is under obligation to hold the property for the benefit of a party to agreement of sale in regard to that property, provisions under Section 90 will not operate in case it is demonstrated that rights sought to be impaired are that of a transferee who in good faith has purchased it for 37 valuable consideration. In other words, if property has been acquired by a person with notice of existence of previous agreement of sale, then such transferee will hold the property for the benefit of person who is entitled to enforce the agreement of sale or contract unless he is a transferee in good faith for consideration of the property in the hands of transferee who had notice of the obligation under an earlier agreement of sale purchased by a person in good faith for consideration, section 91 would not operate against such person since he would be saved by Section 96 of the Indian Trust Act, 1882 which is to the following effect:
"96: Saving of rights of bona fide purchasers.--- Nothing contained in this Chapter shall impair the rights of transferees in good faith for consideration, or create an obligation in evasion of any law for the time being in force."38
26. Thus, incidental question that would arise in the instant case is whether it is constructive notice or actual notice. For the purpose of actual notice, an illustration in this regard would reflect as to what would constitute actual notice. For instance, if the vendee is in possession of the property sought to be sold or the purchaser who for his willful abstention does not make an enquiry or fails to ascertain as to who is the person who is in actual possession which otherwise he would have come to know of existing facts, is deemed to have actual notice of such existence, and the only circumstance the purchaser of vendor's rights would not be entitled to protection under Section 19 (b) of Specific Relief Act, 1963 in a suit field by vendee or agreement holder for specific performance of agreement existing in his favour. Such situation does not arise in the instant case at all. Inasmuch as, neither the plaintiff has pleaded that defendant had actual notice of plaintiff 39 being in possession of the property or second defendant having been divested of possession of the property.
27. This leads to the next question namely what would constitute constructive notice? Section 3 of the Transfer of Property Act, 1882 namely, interpretation clause defines as to "a person is said to have notice" of a fact but for willful abstention from making such enquiry or search which he should have made or when there is gross negligence. Hence, for better appreciation of rival contentions raised in this regard, it would be appropriate to extract the said Section which reads as under:
"(3) Interpretation clause: - In this Act, unless there is something repugnant in the subject or context, -----
xxxxxxx "a person is said to have notice" of a fact when he actually knows that fact, or when, but for willful abstention from an enquiry or search which he ought to have 40 made, or gross negligence, he would have known it."
28. Thus, doctrine of notice cannot be confined to cases of actual notice but it extends to all cases of constructive notice. As seen from the definition of words viz., "a person is said to have notice" as found in Section 3 of the Transfer of Property Act, 1882 it is plain that the word "notice" is ... referable to the word 'knowledge' . Person may not have knowledge of the fact but he may have notice of fact. Having regard to the explanation(I) it is notice that in the instant case, this clause has been strongly relied upon by learned counsel for plaintiff to contend that there was an existing registered agreement of sale executed by first defendant in favour of plaintiff which is dated 08.04.1983 marked as Ex.P-3 and as such, second defendant cannot plead either ignorance or ignorance of 41 existence of Ex.P-3 or contend that he is purchaser for value without notice. When there is registered document in existence, namely, document which requires to be registered as contemplated under the Indian Registration Act, 1908 namely when it is compulsorily registrable document under Section 17 of the Act and if such document is in existence, then the burden lies very heavily on a person (in the instant case, second defendant) claiming to be purchaser for value without notice of the original contract of proof to demonstrate that he fulfils that character and as such he is entitled to the relief under clause (b) of Section 19 of the Specific Relief Act. In other words, when a person claims to be a transferee for value without notice of the original contract, burden lies upon him to prove that he fulfils that character. On the other hand, on the available records as also evidence, it is permissible for the Court to decipher that when he actually purchased 42 the property, did he know about existence of prior agreement and without making necessary enquiry in this regard namely as to whether any agreement of sale was in existence and whether the property was either in the process of being sold or contract was concluded between the first defendant vendor and plaintiff, and if so such transferee cannot be a transferee without notice. Thus, where transferee has knowledge of such facts which he would have found on enquiry, and such enquiry would have disclosed about previous agreement subsisting, such transferee is not a transferee without notice of the original contract within the meaning of exception carved out under Section 19(b) of the Specific Relief Act, 1963.
29. In the background of the above contours facts on hand requires to be examined namely as to whether the plea of the defendant No.2 would fall within 43 the exception clause namely Clause (b) of Section 19 of the Specific Relief Act as held by the Trial Court. Trial Court while answering issue No.5 has held that defendant No.1 sold the suit schedule property in favour of defendant No.2 on 03.02.1992, which sale deed came to be marked as Exhibit D1. Defendant No.2 has purchased the suit schedule property even prior to the filing of the suit and prior to same he obtained the photocopies of all the documents and obtained legal opinion of the title of the vendor to sell the property, applied for certified copy of the encumbrance certificate and obtained the same from the jurisdictional office of Sub-Registrar which related to period from 21.01.1981 to 31.07.1992, which was produced before the Trial Court and marked as Exhibit D2. Said Encumbrance Certificate reflects only one entry to the effect namely the sale transaction dated 23.01.1981 between defendant No.1 and his vendor, Smt.Amruthammal. It 44 has been held by the Trial Court that though agreement of sale has been executed by defendant No.1 in favour of plaintiff on 08.04.1983 which is registered it has not been reflected in the said Encumbrance Certificate.
30. As already discussed hereinabove the issue would be as to whether defendant No.2 had either 'constructive notice' or 'actual notice'. The question of actual notice would not arise in the instant case since the parties have not raised any plea in this regard. Hence, it down to the fact with regard to 'constructive notice', since there is a registered agreement of sale dated 08.04.1983, which is marked as Exhibit P3, Explanation I to Section 3 of the Transfer of Property Act has been pressed into service by learned counsel for plaintiff to contend that there was 'constructive notice' of the document in view of registered Agreement of sale Ex.P.3 being in existence as on the date of purchase of 45 suit schedule property by second defendant. As such it requires to be examined in the circumstances of the case as to whether defendant No.2 had taken all reasonable steps to ascertain the existence of the registered document executed by defendant No.1 in favour of plaintiff and had he taken reasonable steps by making enquiries or query in this regard as is expected of a prudent purchaser. Explanation I provides for deemed notice, in view of the fact of existence of a registered document. Thus, if in the circumstances of a given case if the purchaser abstains himself from making any enquiry and either willfully does not do so or has been negligent, he cannot later on contend that he is a purchaser for value without notice. In this background the plea raised by defendant requires to be looked into. In paragraph 9 of the written statement filed by defendant No.2 it is averred / pleaded as under:-
46
"9. It is denied xxxxxxxxxxxxxxxx as stated. This defendant purchased the property after verifying all the revenue records like encumbrance, khatha, payment of taxes and legal document regarding the prior title holder. In point of fact the Encumbrance Certificate was obtained two days prior to the date of sale and the certificate did not show any encumbrance on the property. Only after such detailed verification did he go through with the purchase from the first defendant. The identity of the property xxxxxxxxxxx statement of objections. These documents may please be perused to establish the bonafide purchase made by this defendant."
(emphasis supplied by me) Again at paragraph 16 it has been pleaded by defendant No.2 as under:-
"16. Defendant herein xxxxxxxxxxxxxxx day by day. This defendant states that he has availed a loan from the Government of India to the extent of `.2,00,000/- for the purpose of construction and for this purpose he has mortgaged the property in favour of the President of India by a registered mortgage which is produced along with statement of objections to I.A.II. The house has been constructed to an advanced stage and 47 Electricity connection has been given to the house. Hence, the Defendant is entitled to get heavy costs from the plaintiff."
31. Reiterating the contentions raised in the written statement, defendant No.2 has deposed before the Trial Court as DW2 in his examination-in-chief has stated to the following effect;
"3. The sale deed xxxxxxxxxxxxx Hon'ble Court. Prior to purchasing the property I got photocopies of all the documents and obtained legal opinion on the title of the vendor to sell the property to me. The encumbrance certificate for the property for the period 21-1-81 to 31.1.1992 showed just one entry on it and that was sale deed obtained from Smt.Amruthamma by the first defendant on 23.03.1981. The tax demand certificate also showed the first defendant as the owner of the property."
Again at paragraph 4 of DW2 has contended to the following effect:
"4. As a Central Government official, xxxxxxxx 22.03.1983. Thus I am a bonafide purchaser of my site described in paragraph 2 above and I have done all these acts openly 48 by registering not only the sale deed but also the mortgage. Even the borewell installed in February 1993 was done in the open."
In the cross examination dated 16.08.2004 of DW2, it has been elicited as under:-
"Prior to purchase of the site, I had verified all the original sale deeds as well as the encumbrance certificate and tax paid receipts. I have not produced the documents which were verified by me prior to the purchase, except the encumbrance certificate."
32. At this juncture it requires to be noticed that plaintiff has neither called upon defendant No.2 to produce the original title deeds nor it has been suggested to the said witness that these documents are not in his possession. It is not the case of the plaintiff that these documents namely original title deeds of the suit schedule property are in his possession. A perusal of the evidence of PW1 does not reflect that there is any such plea put forward in his evidence. Though a suggestion has been made to DW1 by the plaintiff in the 49 cross examination dated 16.08.2004 at paragraph 2 that defendant No.2 had knowledge of existence of registered agreement and sale in favour of plaintiff. Said suggestion has been denied by DW1 and no other contra evidence has been brought on record by plaintiff to establish about the fact that defendant No.2 had in fact knowledge of the agreement of sale-Exhibit P3 being in existence as on the date he purchased the Suit Schedule property. In other words it has not been brought on record by the plaintiff about defendant No.2 having knowledge of the said agreement-Exhibit P3 being in existence, and but for second defendant willful abstention he would have known this fact. The only contention put forward by the learned counsel for appellant is that by virtue of Explanation I to Section 3 of Transfer of Property Act, second defendant is deemed to have constructive notice of Ex.P.3. At the cause of repetition, defendant No.2, if he had not taken 50 reasonable steps as expected of a prudent person by making enquiries, searches and obtaining the copies from the jurisdictional Sub Registrar's Office, the say of plaintiff might have been accepted.
33. In the instant case it has been brought on record by DW2 that prior to the purchase of suit schedule property from defendant No.1, he made enquiries to find out as to whether their were any prior encumbrances, he conducted a search by applying for a copy of the Encumbrance Certificate to find out and ascertain as to whether there was any existing encumbrance on the suit schedule property and obtained Exhibit-D2-Encumbrance Certificate which was for a period of 12 years, namely, for the period 21.01.1981 to 31.01.1992 wherein sale transaction between defendant No.1 and his vendor Smt.Ammruthammal dated 23.3.1981 alone had been 51 reflected. It is not the case of plaintiff that said Encumbrance Certificate has been issued contrary to the statutory provisions namely, the Registration Act and Rules made thereunder. At this juncture it would be appropriate to note the provision of the Indian Registration Act, 1908 namely Section 51 which mandates the Registering Officer to maintain certain books which includes sale transactions relating to immovable properties, which reads as under:-
"51. Register-books to be kept in the several offices.:- (1) The following books shall be kept in the several offices hereinafter named, namely:--
A--In all registration offices--
Book 1, "Register of non-testamentary documents relating to immovable property".
Book 2, "Record of reasons for refusal to register".
Book 3, "Register of wills and authorities to adopt", and Book 4, "Miscellaneous Register".
B -In the offices of Registrars -
52
Book 5, "Register of deposits of wills".
(2) In Book 1 shall be entered or filed all documents or memoranda registered under sections 17, 18 and 89 which relate to immovable property, and are not wills.
(3) In Book 4 shall be entered all documents registered under clauses (d) and
(f) of section 18 which do not relate to immovable property.
(4) Nothing in this section shall be deemed to require more than one set of books where the office of the Registrar has been amalgamated with the office of a Sub-
Registrar."
In Book 1, all transactions relating to documents as required to be referred under Section 17 of the Act would be entered and it is this entry which would be reflected in the encumbrance certificate.
34. In exercise of the powers conferred under Section 69 of the Indian Registration Act, the State has made Karnataka Registration Rules, 1965 and Rule 148 53 provides for issuance of Certificate of Encumbrance. Said rule reads as under:-
"148 CERTIFICATE OF ENCUMBRANCE-- When an application is made for a search for encumbrance in respect of any immoveable property or for list of documents executed by or in favour of a single individual, and the applicant desires that a certificate of encumbrance or a list of documents found in the course of such search should be furnished to him by the Registering Officers the request shall be complied with the certificates or list being in Form Numbers 15 to 17 of Schedule B, as the case may be."
35. Plaintiff in the instant case claims that by virtue of a registered agreement of sale executed by defendant No.1 in his favour on 08.04.1983 Exhibit P3, defendant No.2 is deemed to have constructive notice of said agreement, since it was a transaction relating to immovable property and said document was required to be registered under Section 17 of the Registration Act. Section 51 (1) A of the Registration Act as noted hereinabove mandates several Registers are required to 54 be maintained in all registration offices which relates to non-testamentary documents relating to immovable property and Sub Section (2) provides for entering or filing or recording the memorandum of such of those documents registered under Section 17, 18 and 89 of Registration Act which relates to immovable property and which are not Wills. A person who intends to know whether an immovable property is encumbered or not is required to apply for grant of certificate of encumbrance specifying the period and when such application is made, the Registering Officer would carry out the search and find out whether there are any such transactions which had taken place during the period to which an application is made and furnish the certificate or list in Form No.15 to 17 of Schedule B to the Rules. Exhibit- D2 is issued under Rule 148 in Form No.15 as required under Rule 148 of the Karnataka Registration Rules, 1965, which reflects there is only one transaction 55 relating to the suit schedule property namely sale transaction between defendant No.1 and his vendor. There is no reference to the agreement of sale dated 08.04.1983, Exhibit P3. Thus, it cannot be construed or held that defendant No.2 did not carry out any search or make enquiries as is expected of a prudent buyer and the only conclusion that can be arrived is second defendant had taken all reasonable caution and steps to find out as to whether there was any existing encumbrance over the suit schedule property and after being satisfied that there are no such encumbrance in view of the certificate of encumbrance issued by the Jurisdictional Sub Registrar in respect of the suit schedule property as per Exhibit-D2 he has ventured to get the sale deed registered on 03.02.1992 as per Exhibit-D1. In view of the same, I am of the considered view that the finding of Trial Court answering issue No.5 56 in favour of second defendant or against plaintiff cannot be faulted with.
36. Learned counsel for plaintiff has relied upon judgment in MMS Investments referred to supra whereunder it has been held as follows:
"5. Questioning the plea of readiness and willingness is a concept relatable to an agreement. After conveyance the question of readiness and willingness is really not relevant. Therefore, the provision of the Specific Relief Act, 1963 (in short the 'Act') is not applicable. It is to be noted that the decision in Ram Awadh's case (supra) relates to a case where there was only an agreement. After the conveyance, the only question to be adjudicated is whether the purchaser was a bona fide purchaser for value without notice. In the present case the only issue that can be adjudicated is whether the appellants were bona fide purchasers for value without notice. The question whether the appellants were ready and willing is really of no consequence. In Ram Awadh's case (supra) the question of the effect of a completed sale was not there. Therefore, that decision cannot have any application so far as the present case is concerned. Once there is a conveyance the concept would be 57 different and the primary relief could be only cancellation."
37. In the said case, the issue was regarding whether readiness and willingness could be a matter of consideration in a situation where the vendor has sold the property to third party came up for consideration and it has been held by their Lordships such issue or contention recedes to the background and the only issue which requires to be considered was whether appellants were bonafide purchasers for value without notice. There cannot be any difficulty in applying the said principles or the dicta laid down by the Apex Court to the facts on hand and in fact said decision assists the defendants in the instant case and learned Counsel for defendant has also relied upon the said judgment for the reason that while answering issue No.5, the Trial court has come to a conclusion that the relief of specific performance cannot be granted in favour of plaintiff in 58 view of second defendant being a purchaser for value without notice and thereby he comes within the exception clause carved out in Clause (b) of Section 19 of the Specific Relief Act.
38. In Godaverma's case referred to supra it has been held by the Allahabad High Court that if the purchaser does not make necessary enquiry with regard to any existing agreement by inspecting the records in the Sub-Registrar's Office or by getting it inspected by somebody who is said to be acquainted, he is said to have actual knowledge or deemed knowledge of agreement and cannot claim to be a bonafide purchaser for value without notice and ignorance of knowledge of agreement of sale can not be pleaded. As already discussed hereinabove in the instant case DW2 has infact conducted a search, and obtained encumbrance certificate as expected of a prudent purchaser. Hence, 59 said judgment does not come to the rescue of the plaintiff. In that view of the matter, I am of the considered view that point Nos.1 and 2 formulated hereinabove is to be answered against plaintiff and in favour of defendant No.2.
39. One another contention raised by the learned counsel for defendant No.2 also deserves to be considered, analyzed and answered, since this appeal being first appeal and same being continuation of original proceedings and issues being kept open are required to be examined afresh by reappreciating the evidence. In the instant case the learned counsel for second defendant has contended that plaintiff has not entered the witness box. There cannot be any dispute to this fact. As to whether power of attorney holder is entitled to enter the witness box and state actual facts and such evidence can be eschewed by the court in the 60 issue which requires to be considered in the instant case. Plaintiff has examined her husband Sri.M.V.Narasimha as PW1 on her behalf. He has stated that when the first agreement of sale was executed on 24.01.1982 he was present and defendant No.1 along with his wife was also present apart from Sriyuths. Lingareddy and Fakhruddin. Subsequently another agreement of sale has come into existence i.e., the said document i.e., on 08.04.1983 which came to be registered before Sub Registrar's Office. Witnesses to the said documents are (1) Subbarao and (2) Manikya. Even in the first document this power of attorney holder, claims to have been present at the time of the agreement but does not state in his evidence that it was written in his presence. In fact P.W.1 stated that he has given the instructions to the Advocate to file the suit and it is not the plaintiff. However, plaint would disclose that it has been signed by the plaintiff herself 61 and not by her power of attorney holder. In fact the power of attorney has come into existence only on 05.11.2000 i.e., after 7 years after filing of the suit or 17 years after the execution of Exhibit P3. A presumption can be raised when a plea put forward by the plaintiff which cannot be accepted to be the true statement in such circumstances. In this regard the judgment of the Hon'ble Apex Court in the case of Vidhyadhar Vs. Manikrao reported in (1999) 3 SCC 573 can be looked up whereunder it has been held as follows:
"17. Where a party to the suit does not appear in the witness box and state his own case on oath and does not offer himself to be cross examined by the other side, a presumption would arise that the case set up by him is not correct...."
40. Authority of the agent to act on behalf of the principal is to speak with reference to all those events in his/her knowledge and excluding the events relating to personal knowledge of the principal. It would confine 62 only in respect of acts done by the power of attorney holder in exercise of the power granted by the said instrument. In this regard the judgment of the Apex Court in the case of Janki Vashdeo Bhojwani and Another Vs. Indusind Bank Ltd., and Others reported in (2005) 2 SCC 217 can be noticed whereunder it has been held as follows:
"13. Order 3 Rules 1 and 2 Code of Civil Procedure empower the holder of power of attorney to "act" on behalf of the principal. In our view the word "acts" employed in Order 3 Rules 1 and 2 CPC confines only to in respect of "acts" done by the power-of-attorney holder in exercise of power granted by the instrument. The term "acts" would not include deposing in place and instead of the principal. In other words, if the power-of-attorney holder has rendered some "acts" in pursuance of power-of-attorney, he may depose for the principal in respect f such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross- examined."63
41. There is no material placed as to what impediment plaintiff had to enter the witness box. The word "acts" used in Order 2 of Rule 3 CPC does not include the act of Power of Attorney holder to appear on behalf of a party. Power of Attorney holder as a party can appear only as a witness in his personal capacity and whatever knowledge he has got he can depose, but he cannot appear as a witness on behalf of the party in the capacity of that party. If the plaintiff was unable to appear before the Court, a commission for recording her evidence could have been sought under Code of Civil Procedure, which exercise admittedly has not been done by the plaintiff in the instant case. Hence, for this reason also the contention of learned counsel for appellant also deserves to be accepted that P.W.1 did not have any personal knowledge of the transactions relating to Ex.P.3 and his evidence cannot be accepted. 64
42. For the reasons aforesaid this Court is of the considered view that judgment and decree passed by the Trial Court deserves to be affirmed as it does not suffer from the vice of infirmities either in law or on facts. Hence the following:
ORDER i. Appeal is hereby dismissed.
ii. Judgment and decree dated 12.01.2005 passed by the XI Addl. City Civil Judge, Bangalore, in O.S. No.1606/1993 is hereby affirmed.
iii. Parties to bear their costs.
iv. Registry to draw the decree accordingly.
Sd/-
JUDGE
*sp/DR