Allahabad High Court
Mohd. Ibrahim And Anr. vs Mohd. Yusuf And Anr. on 1 May, 2007
Equivalent citations: 2007(4)AWC3539, AIR 2007 (NOC) 1923 (ALL.) = 2007 (4) ALJ 429, 2007 (4) ALL LJ 429, 2007 (5) ABR (NOC) 829 (ALL.) = 2007 (4) ALJ 429, 2007 A I H C 2477, (2007) 67 ALL LR 739, (2007) 2 ALL RENTCAS 731, (2007) 4 ALL WC 3539
Author: Dilip Gupta
Bench: Dilip Gupta
JUDGMENT Dilip Gupta, J.
1. This second appeal has been filed by the defendants for setting aside the Judgment and decree dated 24th May, 1982 passed by the learned VIth Additional District Judge, Moradabad by which the appeal filed by the plaintiff was allowed and the judgment and decree dated 12th September, 1980 passed by the trial court was set aside and the claim of the plaintiff for specific performance of the contract was decreed and it was further directed that the defendant No. 1 will execute the sale deed in favour of the plaintiff within a period of one month after receipt of the balance amount of Rs. 500.
2. Original Suit No. 130 of 1997 was filed by Mohd. Yusuf initially against Mohd. Iliyas for specific performance of the agreement to sell dated 2nd June, 1976 and in the alternative, for recovery of Rs. 6,000 from the defendant with interest. It was stated in the plaint that the aforesaid agreement to sell dated 2nd June, 1976 was executed between the plaintiff and defendant No. 1 and the same was also registered; that the defendant had received a sum of Rs. 6,000 as earnest money towards the total consideration of Rs. 6,500 and the balance amount of Rs. 500 was to be paid at the time of execution of the sale deed; that the plaintiff was always ready and willing to perform his part of the contract but the defendant avoided it and, therefore, a notice was sent to the defendant to get the sale deed executed on 1st December, 1976 in the office of the Sub-Registrar and that the plaintiff went to the office of the Sub-Registrar on 1st December, 1976 alongwith the balance amount of Rs. 500 but the defendant did not turn up even though the plaintiff waited in the office for the entire day.
3. Written statement was filed by defendant No. 1 stating inter alia that the plaintiff was his nephew and as there were huge sales tax dues against him and he was afraid that the property may be auctioned and sold for realisation of the said dues, he executed a fictitious agreement to sell the property in favour of the plaintiff; that he never received the amount of Rs. 6,000 at the time of execution of the agreement; that he had in fact sold the property to Mohd. Ibrahim and Jamil Ahmad through a registered sale deed on 16th May, 1977 for a consideration of Rs. 12,000 and, therefore, the suit for specific performance was infructuous and was liable to be dismissed.
4. In view of the aforesaid statement made in the written statement filed by defendant No. 1, the plaintiff impleaded Mohd. Ibrahim and Jamil Ahmad as defendant Nos. 2 and 3. Separate written statements were filed by defendant Nos. 2 and 3 mentioning therein that they had purchased the property from defendant No. 1 by a registered sale deed on 16th May, 1976 and they were entitled to the benefit of Section 41 of the Transfer of Property Act as they had acted in good faith after taking reasonable care to ascertain that the transferor had the power to make the transfer. It was also stated that the plaintiff and defendant No. 1 were closely related inasmuch as the plaintiff was the nephew and in order to defeat the claim of defendant Nos. 2 and 3, the said suit had been filed.
5. The trial court framed as many as six issues. The first Issue was whether defendant No. 1 had executed to sell dated 2nd June, 1976 in favour of the plaintiff and whether earnest money of Rs. 6,000 was paid to him at the time of execution of the agreement. The second issue was whether the defendant Nos. 2 and 3 had knowledge of this agreement and whether they were entitled to the benefit of Section 41 of the Transfer of Property Act. The third issue that had been framed by the trial court was whether defendant No. 1 had executed an agreement to sell dated 1st March, 1976 In favour of defendant Nos. 2 and 3. The fourth issue was as to what relief the plaintiff was entitled to while the fifth and sixth issue related to undervaluation of the suit and deficiency of court fees.
6. The fifth and sixth issues were decided against the defendant. In respect of issue No. 1, the trial court observed that the plaintiff had examined, himself as well as Shakil Ahmad P.W. 2. On the basis of the evidence led by both these witnesses, the trial court decided the issue in favour of the plaintiff that the aforesaid agreement to sell dated 2nd June, 1976 had been duly executed between the plaintiff and defendant No. 1 and that Rs. 6,000 had been paid to defendant No. 1 as earnest money. In respect of issue Nos. 2 and 3 the trial court noticed that though defendant Nos. 2 and 3 had filed their written statement but they did not appear before the Court to give their evidence. The Court also noticed that both the plaintiff and defendant No. 1 admitted that the registered sale deed had been executed by defendant No. 1 in favour of defendant Nos. 2 and 3 on 16th May, 1976 and though it was the duty of defendant No. 1 to bring it to the notice of defendant Nos. 2 and 3 that he had earlier executed a registered agreement to sell on 2nd June, 1976 in favour of the plaintiff and defendant Nos. 2 and 3 should have also made the necessary enquiries about any earlier deed having been executed in respect of the property but still as defendant No. 1 had withheld this information from defendant Nos. 2 and 3 and they Were closely related to each other they had cheated defendant Nos. 2 and 3 by colluding and, therefore, in such circumstances, on equitable grounds, the defendant Nos. 2 and 3 were entitled to the benefit of Section 41 of the Transfer of Property Act. As regards Issue No. 3 the trial court decided it against the defendants as they had failed to prove that the agreement to sell dated 1st March, 1976 by defendant No. 1 in favour of defendant Nos. 2 and 3 had been executed. As regards issue No. 4, the trial court observed that though the plaintiff had proved that the agreement to sell dated 2nd June, 1976 had been duly executed between the plaintiff and defendant No. 1 and that Rs. 6,000 had been paid by the plaintiff to defendant No. 1, yet as defendant Nos. 2 and 3 were entitled to equitable relief in view of the findings given in respect of issue No. 2 it would be in the interest of Justice that defendant No. 1 was directed to return the amount of Rs. 6,000 to the plaintiff and the sale deed executed by defendant No. 1 in favour of defendant Nos. 2 and 3 should be protected. The trial court also noticed while deciding this issue that 5th September, 1980 had been fixed for giving of evidence but after the plaintiff had given his evidence, defendant No. 1 moved an application for adjournment which was allowed on cost of Rs. 50 and 11th September, 1980 was fixed for giving of evidence by the defendants and cross-examination of the witnesses produced on behalf of the plaintiff. The trial court also noticed that though defendant No. 1 was present in the Court but he left without giving his evidence or cross-examining the plaintiffs witness. Defendant Nos. 2 and 3, however, did not come to the Court. The trial court, however, did not consider it appropriate to grant the decree for specific performance of contract and granted the alternative relief for refund of Rs. 6,000 with interest at the rate of 6% per annum.
7. Feeling aggrieved by the aforesaid judgment and decree dated 12th September, 1980, the plaintiff filed an appeal which was allowed by the judgment and decree dated 24th May, 1982. The Judgment and decree of the trial court was set aside and the claim of the plaintiff for specific performance of the contract was decreed and the defendant No. 1 was directed to execute the sale deed in favour of the plaintiff within a period of one month after receipt of Rs. 500 from the plaintiff/appellant. It was further ordered that defendant Nos. 2 and 3 will join the execution of the sale deed in favour of the plaintiff. The appellate court observed that the defendant had failed to assail the agreement to sell dated 2nd June, 1976 and, therefore, It confirmed the finding recorded by the trial court that the agreement to sell dated 2nd June, 1976 had been executed by the defendant No. 1 in favour of plaintiff and that he had also received Rs. 6,000 towards earnest money. In respect of the agreement to sell dated 1st March, 1976 which is said to have been executed by defendant No. 1 in favour of defendant Nos. 2 and 3, the appellate court also confirmed the findings recorded by the trial court that the defendants had failed to prove it. It noticed that the said agreement had not been filed by defendant No. 1 and not even by defendant Nos. 2 and 3 in the appeal. The appellate court then examined whether the defendant Nos. 2 and 3 had knowledge of the agreement dated 2nd June, 1976 and whether they were entitled to the benefit of Section 41 of the Transfer of Property Act. The appellate court observed that since the agreement to sell dated 2nd June, 1976 was registered, defendant Nos. 2 and 3 could have known about Its execution if they had taken care to find out from the office of the Sub-Registrar. It, therefore, held that defendant Nos. 2 and 3 had constructive notice of the execution of the agreement and they were not entitled to the benefit of Section 41 of the Transfer of Property Act. It also noticed that defendant Nos. 2 and 3 had not produced any evidence for availing the benefit of Section 41 of the Transfer of Property Act. The plea taken up by the defendants in appeal that the suit for specific performance is a discretionary and equitable relief was also rejected by the appellate court.
8. The present second appeal has been filed by defendant Nos. 2 and 3 alone. Notice upon defendant No. 1/respondent No. 2 was found sufficient by the order dated 30th July, 1976 but no one has put in appearance on behalf of the said respondent.
9. I have heard Sri M.A. Qadeer, learned Counsel for the appellant and Sri P.N. Saxena, learned senior Counsel appearing for the plaintiff/respondents.
10. At the time of admission of the appeal, the substantial questions of law were not framed by the Court. After hearing the learned Counsel for the parties I framed the following two substantial questions of law.
(a) Whether the appellants are bona fide purchaser and are entitled to the benefit of Section 41 of the Transfer of Property Act.
(e) Whether the trial court was justified in refusing to grant the relief for specific performance as it was discretionary.
11. Sri M.A. Qadeer, learned Counsel for the appellant placed reliance upon Section 19(b) of the Specific Relief Act and contended that specific performance of a contract could be enforced against either of the parties or against any person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. He contended that defendant Nos. 2 and 3 had paid the sale consideration in good faith arid had no notice of the earlier agreement to sell dated 2nd June, 1976, executed between the plaintiff and defendant No. 1 and, therefore, the plaintiff could not enforce the specific performance of the contract. Sri Qadeer further contended that in view of the provisions of Section 20 of the Specific Relief Act, the jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so, and that in view of the provisions of Section 21(2) of the Specific Relief Act, the trial court had rightly compensated the plaintiff instead of decreeing the suit for specific performance.
12. Sri P.N. Saxena, learned senior Counsel appearing for the plaintiff/respondent No. 1, however, contended that there was no infirmity in the findings recorded by the appellate court and the appeal was likely to be dismissed. He further submitted that defendant Nos. 2 and 3 are not entitled to the benefit of Section 41 of the Transfer of Property Act as they had not led any evidence before the trial court to substantiate their claims and had merely filed their written statements. He further contended that though it is true that the relief for specific performance is discretionary but the discretion of the Court is not arbitrary but sound and reasonable and in the present case the appellate court after a careful perusal of the evidence on record had decided to decree the suit for specific performance and none of the grounds mentioned in Sub-section (2) of Section 20 of the Specific Relief Act were attracted in the present case.
13. I have carefully considered the submissions advanced by the learned Counsel for the parties.
14. The first question that arises for consideration is whether defendant Nos. 2 and 3/appellants were entitled to the benefit of Section 41 of the Transfer of Property Act. Section 41 of the said Act provides as follows:
Transfer by ostensible owner.--Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it : Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.
15. It is, therefore, clear that it is for the transferee to show that he had taken care to ascertain that the transferor had the power to make the transfer and had acted in good faith. In the instant case, the agreement to sell that had been executed by defendant No. 1 in favour of the plaintiff was a registered document. Section 3 of the Transfer of Property Act defines that "a person is said to have notice" and the same is as follows:
"a person is said to have notice" of a fact when he actually knows that fact, or when but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it.
Explanation I.--Where any transaction relating to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration or, where the property is not all situated in one sub-district, or where the registered instrument has been registered under Sub-section (2) of Section 30 of the Indian Registration Act, 1908 (XVI of 1908) from the earliest date on which any memorandum of such registered instrument has been filed by any Sub-Registrar within whose sub-district any part of the property which is being acquired, or of the property wherein a share or interest is being acquired, is situated:
Provided that-
(1) the Instrument has been registered and its registration completed in the manner prescribed by the Indian Registration Act, 1908 (XVI of 1908) and the rules made thereunder, (2) the instrument of memorandum has been duly entered or filed, as the case may be, in books kept under Section 51 of the Act, and (3) the particulars regarding the transaction to which the instrument relates have been correctly entered in the indexes kept under Section 55 of that Act.
16. It was, therefore, the duty of defendant Nos. 2 and 3 to have made proper enquiry from the office of the Sub-Registrar. It has not been stated that they had made enquiries but were unable to ascertain this fact. In fact, they had not appeared as witnesses before the trial court. In such a situation, the finding recorded by the appellate court that they were not entitled to the benefit of Section 41 of the Transfer of Property Act does not suffer from any infirmity. Section 19 of the Specific Relief Act also provides that specific performance of a contract may be enforced against either of the party thereto or any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. Benefit to defendant Nos. 2 and 3 cannot also be given as it cannot be said that they did not have notice of the original contract.
17. The second contention raised by Sri Qadeer, learned Counsel for the appellant is that the decree for specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawfull to do so. In support of his contention, he has placed reliance upon the decisions of the Supreme Court in A.C. Arulappan v. Smt. Ahalya Naik ; V. Muthusami (Dead) by L.Rs. v. Angammal and Ors. ; P.V. Joseph's Son Mathew v. Nedumbara Kuruvila's Son and Ors. and in Ganesh Shet v. Dr. C.S.G.K. Shetty and Ors. , and has contended that the Court should take care to see that the agreement is not used as an instrument of oppression to have an unfair advantage over the plaintiff and the Court can also decline to decree specific performance where It would be inequitable to enforce specific performance.
18. Sri P.N. Saxena, learned senior Counsel appearing for the plaintiff/respondent No. 1, however, contended that in the facts and circumstances of the present case, the lower appellate court rightly decreed the suit for specific performance and in support of his contention he has placed reliance upon the decision of the Supreme Court in Devalsab (D) by L.Rs. v. Ibrahimsab F. Karajagi and Anr. .
19. In my opinion none of the cases relied upon by Sri Qadeer, learned Counsel for the appellants are applicable to the facts of the present case. In P.V. Joseph's (supra), the Supreme Court observed:
Section 20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff. The High Court has failed to consider the motive with which Varghese instituted the suit.
20. In Ganesh Shet (supra), the Supreme Court had examined the principles of law applicable to suits of specific performance in regard to the discretion which is to be exercised under Section 20 of the Specific Relief Act when there is a conflict between the pleading and the evidence and in this context observed that while normally It is permissible to grant relief on the basis of what emerges from the evidence even if not pleaded provided there is no prejudice to the opposite party, but such a principle cannot be applied in suits relating to specific performance.
21. In A. C. Arulappan (supra), the Supreme Court observed:
Granting of specific performance is an equitable relief, though the same is now governed by the statutory provisions of the Specific Relief Act, 1963. These equitable principles are nicely incorporated in Section 20 of the Act. While granting a decree for specific performance, these salutary guidelines shall be in the forefront of the mind of the Court. The trial court, which had the added advantage of recording the evidence and seeing the demeanour of the witnesses considered the relevant facts and reached a conclusion. The appellate court should not have reversed that decision disregarding these facts and, in our view, the appellate court seriously flawed in its decision. Therefore, we hold that the respondent is not entitled to a decree of specific performance of the contract.
22. In V. Muthusami (supra), observed that if performance of a contract involves some hardship on the defendant which he did not foresee while non-performance would not involve any such hardship on the plaintiff then in that situation, the Court may exercise its discretion not to decree specific performance. It was also observed that one of the ground on which the Court would decline to enforce specific performance is when it would be inequitable to enforce specific performance.
23. In the present case, both the courts below have recorded a categorical finding of fact that the agreement to sell dated 2nd June, 1976, which had also been registered had been duly entered between the parties. The courts below have also recorded a categorical finding of fact that Rs. 6,000 had been paid by the plaintiff to defendant No. 1 as earnest money at the time of execution of the agreement. The plaintiff had also averred and proved that he had performed and was always ready and willing to perform the terms of the contract. The case set up by defendant No. 1 that the agreement to sell was a sham transaction as it was merely intended to save the property from being auctioned for recovery of sales tax dues has not been found to be correct. The benefit of Section 41 of the Transfer of Property Act was also not available to the defendant Nos. 2 and 3 who were subsequent purchasers in view of the finding recorded above.
24. The Supreme Court in Devalsab (supra) observed:
In fact, so far as the question of fact are concerned, all the three Courts are unanimous that the plaintiff entered into an agreement for purchase of the suit premises first in point of time, that the plaintiff had already issued advertisement in the press which was published in the daily newspaper that the suit property has been purchased by him. The courts below have also held against defendant No. 2 that it cannot be said that defendant No. 2 was not aware of the transactions between the plaintiff and defendant No. 1. It has also been held that defendant No. 2 cannot be treated as a bona fide purchaser of value. But learned single Judge of the High Court has invoked Section 20 of the Specific Relief Act, 1963 and held that it will be more harsh to defendant No. 2 as he has already paid the consideration and he is residing in the very premises for a very long time and the suit premises are in his possession, therefore, It would be more harsh to him than to the plaintiff-appellant herein. Therefore, instead of granting decree for specific performance of the agreement to sell against defendant No. 1, learned single Judge of the High Court modified the decree and denied relief of specific performance of the agreement being discretionary remedy and directed the defendant No. 1 for refund of the purchase money for a sum of Rs. 15,500 with future interest and costs and dismissed the suit of the plaintiff for possession of the suit schedule property.
Learned Counsel for the plaintiff-appellant submitted that in fact exercise of discretionary relief in favour of defendant No. 2 is not correct as this kind of discretion if exercised in favour of defendant No. 2 then it is likely to lay down a bad precedent. This will give premium to unethical transaction and a bona fide purchaser will be left high and dry. Learned Counsel for the defendants submitted that it is true that Section 20 of the Specific Relief Act is a discretionary remedy that is not always necessary to grant a decree for specific relief if it appears to be inequitable and causes hardship to the other side. But looking to the facts of the present case we are of the opinion that it will be unfair and inequitable not to grant a decree for specific relief in favour of the plaintiff-appellant herein because he is a bona fide purchaser and he has done every thing which is possible, that he has purchased the stamp paper and was ready and willing to perform his part of the contract, that he went alongwith defendant No. 1 to the Sub-Registrar's Office for registration but somehow defendant No. 1 sneaked away from that place as he had already entered into another agreement to sell the present premises, so much so that a sham suit was got filed by defendant No. 2 against defendant No. 1 and on the same day a compromise decree was obtained. These facts go to show that there is not much equity left in favour of defendant No. 2 as it appears that the suit by defendant No. 2 was a pre-arranged affair with connivance with defendant No. 1. Otherwise the suit would not have been filed on the same day and a compromise decree would not have been obtained the very same day. This shows that there was a pre-conceived agreement between defendant Nos. 1 and 2 in order to cheat the plaintiff-appellant herein. Therefore, we are of the opinion that the discretionary power exercised by learned single Judge of the High Court was not correct. In fact, it appears that defendant No. 2 has purchased the litigation and therefore, there is no equity in his favour.
25. I, therefore, in view of the aforesaid decisions of the Supreme Court, find considerable force in the contentions advanced by Sri P.N. Saxena, learned Counsel for the respondents that the appellate court was justified in decreeing the suit for specific performance.
26. There is, therefore, no merit in this second appeal. It Is, accordingly, dismissed.