Karnataka High Court
Venkatesh Srinivas Kulkarni vs S.Ramachandra Reddy on 10 April, 2017
Bench: B.S Patil, K.Somashekar
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 10TH DAY OF APRIL, 2017
PRESENT
THE HON'BLE MR.JUSTICE B.S.PATIL
AND
THE HON'BLE MR.JUSTICE K.SOMASHEKAR
R.F.A. No. 100078/2014 (SP)
BETWEEN:
VENKATESH SRINIVAS KULKARNI,
AGE: 45 YEARS, OCCN: AGRICULTURE,
AT AND POST SIRUR VILLAGE,
MUNDARAGI TQ: GADAG DIST-580 266.
- APPELLANT
(BY SRI. S.S. YADRAMI, ADV.)
AND:
S. RAMACHANDRA REDDY,
S/O CHINNAPPA REDDY,
AGED 45 YEARS, OCCU: AGRICULTURE,
R/O BEHIND KVG BANK, HEAD OFFICE,
CHIKKAMALLIGAWAD ROAD,
DHARWAD-580 001.
- RESPONDENT
(BY SRI. K.L. PATIL, ADV.)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96
R/W ORDER XLI RULE 1 OF CPC AGAINST THE JUDGMENT AND
DECREE DATED 25.02.2014 PASSED IN O.S. NO. 162/2011 ON THE
FILE OF THE ADDL. SENIOR CIVIL JUDGE, GADAG, DECREEING THE
SUIT FILED FOR SPECIFIC PERFORMANCE OF CONTRACT & ETC.
THIS APPEAL COMING ON FOR HEARING ON INTERLOCUTORY
APPLICATION THIS DAY, B.S.PATIL J., DELIVERED THE FOLLOWING:
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JUDGMENT
This regular first appeal is filed by the defendant in O.S. No. 162/2011 aggrieved by the judgment and decree dated 25.02.2014 passed by the learned Addl. Senior Civil Judge, Gadag, thereby decreeing the suit filed by the plaintiff- respondent herein for specific performance of the agreement of sale dated 17.05.2011. The Court below while decreeing the suit directed the defendant to receive balance sale consideration of Rs.2,50,000/- out of the total sale consideration of Rs.17 lakhs and execute registered sale deed in favour of the plaintiff.
2. Facts, briefly stated are that agricultural land bearing Sy. No. 12/2 measuring 11 acres situated at Sirur village in Mundaragi taluk of Gadag District was owned by the defendant. He offered to sell the suit land for his family necessity. Plaintiff accepted the offer to purchase the land for Rs.17 lakhs. The defendant executed a registered agreement of sale in respect of the said property on 17.05.2011 in the 3 office of Sub Registrar, Mundaragi. Plaintiff asserted that, on the date of agreement, he paid a sum of Rs.14,50,000/- by way of advance sale consideration by cash, the receipt of which was acknowledged by the defendant: defendant agreed to execute the sale deed on or before the following Ugadi festival: however, possession of the land was not handed over and they agreed that on the date of execution of sale deed, possession of the property would be handed over.
3. According to the plaintiff, although he was ready and willing to perform his part of the contract the defendant postponed his obligation on one pretext or the other and as the plaintiff learnt that he was trying to alienate the suit land legal notice was issued on 02.08.2011 calling upon the defendant to execute the sale deed by receiving balance sale consideration of Rs.2,50,000/-: the said notice was returned with a postal endorsement "refused". As a result, the plaintiff was constrained to institute the suit for specific performance. 4
4. The defendant appeared and contested the case by filing written statement. He admitted that the land in question was owned and possessed by him but denied the fact that he offered to sell the same for his family necessity to the defendant. According to him, the registered agreement of sale dated 17.05.2011 was in the nature of a collateral security for the purpose of repayment loan amount of Rs. 5 lakhs borrowed by the defendant from the plaintiff. He denied having received the sale consideration of Rs.14,50,000/-.
5. Based on the pleadings, the trial Court framed the following issues.
ISSUES
1) Whether the plaintiff proves that the defendant agreed to sell the suit schedule property for consideration of Rs.17,00,000/- and received Rs.14,50,000/- as in advance and executed agreement of sale dated 17.05.2011 in his favour?
2) Whether the plaintiff further proves that he is ever ready and willing to perform his part of contract?
3) Whether the plaintiff is entitled to relief of specific performance of contract?
4) Whether the plaintiff alternatively proves that he is entitled to refund of the earnest money with interest as sought for?
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5) Whether the defendant proves the alleged agreement is not intended to be an agreement is not intended to be an agreement of sale it is only a security document for the loan?
6) Whether the plaintiff is entitled to relief as sought for?
7) What order or decree?
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6. In support of his case, plaintiff examined himself as P.W.1. A witness to the agreement of sale, one Rajiv Rokhade was examined as P.W.2. Exs.P.1 to P6 were marked in evidence. Defendant examined himself as D.W.1. A witness to the agreement by name Govinda Gowda, was examined as D.W.2. Sreenivas Bheemasena Rao Joshi, the scribe of the document was examined as D.W.3. Exs.D.1 to D.3 were produced and marked in evidence.
7. On consideration of oral and documentary evidence, the trial Court has come to the conclusion that plaintiff successfully proved due execution of the agreement of sale dated 17.05.2011. The Court below has further held that a sum of Rs.14,50,000/- was received by the defendant as advance amount and that plaintiff was ready and willing to perform his part of the contract by paying the balance 6 amount of Rs.2,50,000/-. The defence set up by the defendant that the agreement was not intended to be an agreement of sale but was executed as a collateral security for repayment of loan amount of Rs.5 lakhs availed by the defendant from the plaintiff was held not proved.
8. In coming to this conclusion the Court below has taken note of the fact that D.W.2, one of the witnesses to the agreement of sale, examined by the defendant had himself deposed in favour of the plaintiff and in support of the due execution of the document. The Court below has also taken note of the fact that there were no mitigating circumstances or hardship faced by the defendant so as to deny the relief of specific performance of the agreement of sale.
9. Learned counsel appearing for appellant Sri.Yadrami urges the following contentions:
(a) The nature of the transaction set up by the plaintiff and the conduct of the parties, particularly that of the plaintiff disclosed that the transaction evidenced by 7 Ex.P.1-agreement was not an agreement to sell but was indeed a collateral security. In this connection, he points out that, although as per plaintiff's version substantial amount of Rs.14,50,000/- out of Rs.17 lakhs had been paid as advance strangely possession of the land was not parted with by the defendant in favour of the plaintiff;
(b) It is his next contention that, if at all consideration had passed in a sum of Rs.14,50,000/- before the Sub Registrar at the time the registered agreement was entered into, the Sub Registrar would have made an endorsement on the document in that connection. He also points out in this regard that, recital in the agreement does not support the fact that advance amount of Rs.14,50,000/- was paid on the date the agreement was executed but it gave an indication that the amount had already been paid.
(c) He further points out that conduct of the plaintiff in filing the suit well before the due date of performance of 8 the agreement by the parties for execution of the registered sale deed disclosed that his intention was to secure the loan advanced by him and recover the same and not so much to enforce specific performance of the agreement;
(d) With regard to hardship allegedly faced by the defendant, it is pointed out by the learned counsel appearing for the appellant by taking us through evidence of the witness P.W.2 that he admitted regarding the fracture suffered by the defendant in an accident. He therefore, points out that as the defendant had suffered a major accident, he was in distress and was in a disadvantageous position and therefore agreement entered into under such circumstances, agreeing to sell the valuable property cannot be enforced having due regard to the unfortunate circumstances faced by the defendant;
(e) He also points out that D.W.3, scribe who was examined by the defendant has categorically stated that he did not 9 draft the agreement but had only put his seal and signature to the document which had been already prepared.
(f) Inviting our attention to the provisions contained in Sec.
20(2)(a) and (2)(b) of the Specific Relief Act, 1963, Sri Yadrami contends that where the terms of the contract or the conduct of the parties at the time of entering into the agreement or other circumstances under which the contract was entered into were such that though they were not sufficient enough to avoid the contract but give the plaintiff an unfair advantage over the defendant, the Court may exercise its discretion not to decree specific performance sought;
(g) He also points that, as per Sec. 20(2)(b) of the Act where the performance of contract would involve some hardship to the defendant which he did not foresee whereas its non performance would involve no such hardship on the plaintiff, then also the Court may 10 legally exercise its discretion not to decree the suit for specific performance;
(h) He also points out that a suit has been filed in O.S. No. 156/2014 by the sister of the defendant against the defendant and other family members seeking partition of the family properties including the suit schedule property which also would be a factor to be taken into consideration while decreeing the suit.
10. Per contra, the learned counsel appearing for the respondent-Sri K.L. Patil, strongly supports the findings recorded by the trial Court. He also takes us through the evidence on record to contend that, as due execution of the registered agreement to sell has been proved by examining the witnesses to the agreement and as huge sum of Rs.14,50,000/- has been received by the defendant towards sale consideration while executing the agreement, the defendant is not entitled for exercise of any discretion in his favour to deny specific enforcement of the contract. 11
11. He points out that there is absolutely no evidence lead by the defendant regarding hardship faced by him and that the written statement is silent about any such hardship or for that matter fracture suffered by the defendant in the accident. He also points out that O.S. No. 156/2014 filed by the sister of the plaintiff is subsequent to the judgment and decree passed by the trial Court on 25.02.2014 and therefore it will not, in any manner, come to the help of the defendant.
12. Having heard learned counsel for both parties, the points that arise for consideration are:
1) Whether the trial Court was right and justified in recording the finding that the agreement to sell dated 17.05.2011 had been duly proved by the plaintiff and that plaintiff was entitled for specific performance of the agreement to sell?
2) Whether the Court below has committed any illegality in exercising its discretion to grant decree of specific performance of the contract? 12
13. For the sake of convenience both these points are taken up together for consideration.
14. As already noticed above, in proof of execution of the agreement for sale, apart from producing original of the registered agreement dated 17.05.2011, plaintiff has examined himself as PW.1 and one witness to the agreement by name Rajeev Rokhade as PW.2. In his evidence PW.2 has categorically stated that plaintiff agreed to purchase the land for a total consideration of Rs.17.00 lakhs: defendant accepted the offer and executed a registered agreement of sale on 17.05.2011. He has also spoken to the fact that he was present when agreement was registered and has also deposed regarding putting his signature as witness along with one G.F.Thimmanagoudra.
15. In the cross-examination nothing is elicited to discredit the version of this witness. He has denied the suggestion made to him that the agreement to sell was executed only as 13 a security for repayment of a sum of Rs.5.00 lakhs availed as loan from the plaintiff. In addition, it is very important to notice here that the other witness to the registered agreement to sell by name Govindagouda Fakkiragouda Thimmanagoudra has been examined by the defendant as DW2. He has stated in the examination-in-chief itself that on 17.05.2011 the agreement to sell was executed: it was got written from the stamp vendor and that he has signed as a witness to the transaction. He has also spoken regarding payment of advance sale consideration of Rs.14,50,000/- and with regard to due execution of the document by and between the plaintiff and the defendant. Though, this witness has been cross-examined with permission of the Court by the defendant treating him as hostile, nothing is elicited from him which would help the defendant. Therefore, it is amply clear that both witnesses to the transaction, namely PW2 and DW2 have supported due execution of the document, payment of advance sale consideration and with regard to the nature of the transaction as an agreement to sell. Except the self 14 serving assertions made by DW1, in his evidence there is no other material produced to show that the agreement was entered as a security for repayment of loan of Rs.5.00 lakhs allegedly advanced by the plaintiff to the defendant. When the defendant has come up with such a story, which is contrary to the terms of the registered document, the burden was very heavy on him to establish his assertions. He has utterly failed to produce any material, in this connection.
16. The contention urged by learned counsel for the appellant Shri S.S.Yadrami, that conduct of the plaintiff in not taking over possession of the land, though admittedly he had paid substantial sum of Rs.14,50,000/- out of the total consideration of Rs.17.00 lakhs itself disclosed that it was not a genuine transaction of agreement to sell but was in the nature of security furnished for the loan transaction. We are afraid, such inference cannot be drawn in the face of the overwhelming materials produced by the plaintiff, apart from the fact that the transaction is registered one and it is 15 evidenced by registered document supported by both the witnesses to the document.
17. The next contention urged by him is that there is no clear recital in the agreement regarding payment of advance amount of Rs.14,50,000/- at the time the document was registered and the Sub-Registrar has not made any endorsement on the document regarding passing of such consideration. This contention also cannot take the defendant anywhere in as much as the registered document recites that advance amount of Rs.14,50,000/- has been paid. The witnesses have categorically stated that the amount was paid at the time when the document was registered. For proof of due execution of the document and passing of consideration the recital in the document coupled with the evidence of the witnesses is sufficient. Therefore we do not find any substance in this contention.
18. Coming to the hardship pleaded by the appellant/defendant and the contention urged by the learned 16 counsel Shri S.S.Yadrami that the Court below ought not to have exercised its discretion in favour of granting specific performance of the agreement to sell, we have to first make it clear that discretion vested in the Court for decreeing specific performance has to be exercised judiciously and the same cannot be exercised in an arbitrary manner. It is true that a decree for specific performance is not granted only because the agreement to sell has been proved and that it would be lawful to pass such a decree. Section 20 of the Specific Relief Act, 1963, lays down the criteria for exercise of discretion and justification for the Court to deny grant of decree for specific performance. Some such circumstance, as noted in sub clause (2) of Section 20, are that where the terms of the contract or the conduct of the parties at the time of entering into a contract or other circumstances under which the contract was entered into or the contract though not voidable gives the plaintiff an unfair advantage over the defendant or where the performance of the contract could involve some hardship on the defendant, which he did not forsee it. 17 Whereas, its non-performance would involve no such hardship on the plaintiff or where the circumstances leading to the contract would make it inequitable to enforce the specific performance.
19. Thus, it is evident that discretion to direct specific performance of an agreement has to be undoubtedly exercised on sound, reasonable, rational and acceptable principles. Section 20, only lists some of the circumstances whereunder Court can refuse to exercise its discretion in favour of the plaintiff. The ultimate guiding factor would be principles of fairness and reasonableness, as may be dictated by the peculiar facts of a given case. Therefore, as held by the Apex Court, it is the experienced judicial mind, which has to perceive from the facts on record as to whether it would be fair, reasonable and equitable to grant specific performance or to deny it. We may usefully rely on the judgment of the Apex Court in this regard in the case of SATYA JAIN (DEAD) 18 THROUGH LRS. AND OTHERS vs. ANIS AHMED RUSHDIE (DEAD) THROUGH LRS. AND OTHERS (2013) 8 SCC 131.
20. In the instant case, defendant has not taken up any plea in the written statement with regard to the hardship faced by him. The alleged fracture suffered by him on account of a motor vehicle accident at the time when the transaction was entered into and its gravity has not been pleaded let alone established before the Court. Even though PW2 admits in the cross-examination regarding the fracture suffered by the defendant in an accident, that does not mean that due to the fractural injury suffered, defendant was placed in a disadvantageous position and the plaintiff had an unfair advantage over him, while entering into the transaction. Whether the fractural injury had pushed the defendant into financial distress and therefore, he was not in a position to exercise his free will and consciously agree to the terms and conditions of the agreement to sell are, matters neither pleaded or placed before the Court by way of evidence. 19 In the absence of the same, attempt made by the learned counsel for the appellant in this appeal to persuade us to deny specific performance to the plaintiff on ground of fractural injuries suffered by the defendant cannot be accepted. Specific performance of the contract cannot be denied on such ground.
21. Lastly, counsel for the appellant has contended that DW3-scribe has stated that he did not draft the document but had only put his seal and signature to the same, therefore, due execution of the document has not been proved. Evidence of DW3 cannot be taken to doubt the genuineness of the document. He has admitted the fact that he has subscribed his signature and seal to the document stating that document was drafted by him. His version that he did not actually draft the document, but the same had been already drafted when it was placed before him, only shows that he is trying to distort his version and is not coming forward with complete truth. In such circumstance, evidence 20 of the scribe in the facts and circumstances of the present case cannot be taken to disbelieve the due execution of the document. Particularly, when both the witnesses to the document have unequivocally stated that the transaction took place in their presence and they were signatories to the same.
22. We must notice here about the conduct of the defendant in taking up a defence that the transaction was not an agreement to sell but was a loan transaction and the document was executed as a collateral security. Having come up with such defence, it is not open for the defendant to contend that on the grounds of equity and fairness the Court should not decree the suit for specific performance. A person who comes to the Court and pleads for equity must show his bonafides and his clean conduct. This is a case where the defendant denies payment of the substantial sale consideration of Rs.14,50,000/- by way of advance. He denies the terms of the agreement to sell and puts up a defence that he had availed loan of Rs.5.00 lakhs and as 21 security for repayment of the same, the document was executed. Having failed to establish any semblance of truth in his defence, the defendant cannot be permitted to contend that decree of specific performance, if granted would cause hardship to him and therefore, the said relief has to be denied to the plaintiff.
23. Hence, there is absolutely no merit in this appeal. The judgment and decree passed by the trial court does not suffer from any illegality or perversity.
Hence, this appeal is dismissed with costs.
Sd/-
JUDGE Sd/-
JUDGE BVV-upto para-10 HMB/SH/Vnp*