Karnataka High Court
Sri K N Nagaraja Setty vs Sri K G Thimmappa Since Deceased By His ... on 7 December, 2022
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RSA No. 77 of 2007
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF DECEMBER, 2022
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
REGULAR SECOND APPEAL NO. 77 OF 2007 (SP)
BETWEEN:
SRI. K.N. NAGARAJA SETTY,
S/O LATE SRI. M. NANJUNDAIAH SETTY
AGED 60 YEARS,
ANNAPURNA RADIO HOUSE,
MAIN ROAD, KORATAGERE-572 129,
TUMKUR DSITRICT.
...APPELLANT
(BY SRIYUTHS R.B. SADASIVAPPA, G.S.VENKATA SUBBA RAO,
MOHAN KUMAR T., ADVOCATES)
AND:
1. SRI. K.G. THIMMAPPA
SINCE DECEASED BY HIS LRS.,
a) SMT. JAYAMMA
W/O LATE SRI. K.G.THIMMAPPA
AGED 57 YEARS,
Digitally b) SRI. K.T. LAKKAPPA
signed by S/O LATE SRI K.G. THIMMAPPA,
SUMA
SINCE DECEASED BY HIS LRS.
Location:
HIGH
COURT OF b(i) SMT. SUMITHRA
KARNATAKA
W/O LATE SRI. K.T.LAKKAPPA
AGED 36 YEARS,
b(ii) KUM. LAKSHMI
D/O LATE SRI. K.T. LAKKAPPA,
AGED 14 YEARS,
SINCE MINOR REP. BY
NATURAL GUARDIAN MOTHER
SMT. SUMITHRA,
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RSA No. 77 of 2007
c) SRI. K.T. VENKATESH,
S/O LATE SRI. K.G.THIMMAPPA
AGED 32 YEARS,
d) SMT. NAGAMANI,
S/O LATE SRI. K.G.THIMMAPPA
AGED 37 YEARS,
1(a) to 1(d) ARE ALL R/A
NEAR KARNATAKA BANK,
KORATAGERE-572 129,
TUMKUR DISTRICT.
2. SRI. H.N. SATHYANARAYANA SETTY,
S/O LATE SRI. HEMA NANJUNDA SETTY
AGED 62 YEARS,
3. SMT. H.S. SUKANYA,
W/O SRI. H.N. SATHYANARAYANA SETTY,
AGED 54 YEARS,
2 AND 3 ARE R/AT ARALIMARADA PALYA ROAD,
NEAR SIRA GATE, TUMKUR-572137.
...RESPONDENTS
(BY SRI. M.S. RAJENDRA PRASAD ALONG WITH SRI. JAYANTH RAO
SINDHE D., ADVOCATES FOR RESPONDENT NOS.2 AND 3;
NOTICE SERVED ON RESPONDENT NOs.1(a) TO 1(d))
THIS RSA IS FILED UNDER SECTION 100 OF THE CODE OF
CIVIL PROCEDURE, 1908 AGAINST THE JUDGMENT AND DECREE
DATED 18.09.2006 PASSED IN R.A. NO.211/2004 (OLD
R.A.NO.38/1997) ON THE FILE OF THE III ADDL. DISTRICT JUDGE,
TUMKUR, DISMISSING THE APPEAL FILED AGAINST THE JUDGMENT
AND DECREE DATED 10.04.1997 PASSED IN O.S. NO.589/1989 ON
THE FILE OF THE MUNSIFF AND JMFC, KORATAGERE.
THIS APPEAL, COMING ON FOR FURTHER HEARING, THIS DAY,
THE COURT DELIVERED THE FOLLOWING:
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RSA No. 77 of 2007
JUDGMENT
Heard learned counsel for the appellant and Sri M.S. Rajendra Prasad, learned senior counsel for 2nd and 3rd respondents.
2. This Regular Second Appeal is filed challenging the concurrent finding in O.S. No.589/1989 on the file of the Munsiff and JMFC., Koratagere, and judgment and decree passed in R.A. No.211/2004 on the file of III Additional District Judge, Tumakuru.
3. The brief facts necessary for adjudication of the case can be summarized as under:
The suit is filed to enforce the agreement for sale dated 10.09.1986 executed by 1st defendant. The property involved in the case is bearing municipal khaneshumari No.465/457. The extent of the property is shown as: 42 feet East to West and 45 feet North to South. The boundaries of the properties are also described in the plaint as under:
On the East: adjoining property of the plaintiff; On the West: the property of Srinivasaiah;-4- RSA No. 77 of 2007
On the North: road; and On the south: the property of the vendor.
The plaintiff would contend that the first defendant agreed to sell the same for Rs.20,000/-. The plaintiff claims that he has paid Rs.16,500/- as advance cash payment and balance Rs.3,500/- was required to be paid within two months from the date of the agreement. The suit was filed as 2nd defendant filed a caveat against the plaintiff under Section 148 of the Code of Civil Procedure, 1908 (for short, 'the CPC') stating that 1st defendant and his brothers and sisters have executed agreement dated 23.09.1986 in respect of the entire property.
Thereafter, it appears that the sale deed was executed on 25.09.1986 in favour of 2nd and 3rd defendants.
4. The suit was resisted by the defendants. 1st defendant is the vendor. The 2nd and 3rd defendants are the purchasers from the 1st defendant. The 1st defendant took a contention that the property belongs to the joint family and he alone cannot execute the agreement of sale. The 2nd and 3rd defendants took a stand that they are the bona fide purchasers -5- RSA No. 77 of 2007 for value without notice of the earlier agreement in favour of the plaintiff.
5. The Trial Court has concluded that the execution of the agreement dated 10.09.1986 in favour of the plaintiff by 1st defendant is established. The Trial Court also holds that 2nd and 3rd defendants were aware of the agreement for sale dated 10.09.1986 in favour of the plaintiff executed by 1st defendant in respect of the suit property. Thus, contention relating to bona fide purchase raised by 2nd and 3rd defendants was rejected by the Trial Court. However, the Trial Court has also noticed that the property is the joint family property of 1st defendant and his brothers and sisters and the Trial Court has also come to the conclusion that the brothers and sisters have executed relinquishment deed in favour of 2nd and 3rd defendants (after sale of property by 1st defendant in favour of 2nd and 3rd defendants) and has refused to grant the decree for specific performance and granted a decree for refund of the amount. The Trial Court has not assigned any reasons as to why decree of specific performance cannot be granted in favour of the plaintiff.
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6. Aggrieved by the said Judgment and decree, the plaintiff filed R.A. No.211/2004 referred above. Aggrieved by the judgment and decree granting decree for refund of money in favour of the plaintiff, 1st defendant filed R.A. No.225/2004 and 2nd and 3rd defendants, purchasers, also filed R.A. No.274/2004 on the file of III Additional District Judge, Tumkur challenging the decree for refund of the amount.
7. The First Appellate Court has dismissed all the Regular Appeals concurring with the judgment and decree passed by the Trial Court. Though the appeals are dismissed, the First Appellate Court has granted interest at the rate of 6% per annum as against 2% p.a. awarded by the Trial Court.
8. The defendants did not pursue the matter further. It is only the plaintiff who has filed this second appeal questioning the decree refusing specific performance of the contract.
9. This appeal was admitted on 28.10.2009 to consider the following substantial questions of law: -7- RSA No. 77 of 2007
a) Whether the courts below are justified in dismissing the suit for specific performance when the plaintiff had proved the execution of the agreement, payment of the earnest money/advance money and the plaintiff was ready and willing to perform his part of the contract as observed by the courts below?
b) Whether the discretion exercised by the courts below are judicial discretion or the same is arbitrary?
c) The courts below having found that the defendants 2 & 3 are not bonafide purchasers and they had the notice of the agreement and having dismissed the appeal filed by the purchasers whether justified in dismissing the suit for specific performance?
10. Learned counsel for the appellant would raise the following contentions:
(i) The Trial Court and the First Appellate Court have held that the execution of the agreement dated 10.09.1986 is proved and they have also held that 2nd and 3rd defendants were aware of the agreement dated 10.09.1986 in respect of the suit property. Despite that they proceeded to purchase the property as such they are not the bona fide purchasers, and not entitled to any relief from the Court.-8- RSA No. 77 of 2007
(ii) Accepting the finding of the Trial Court and the First Appellate Court that 1st defendant was not the absolute owner of the property and accepting that he was having only 1/4th share in the suit schedule property, decree for specific performance could have been granted in respect of 1/4th share by exercising power under Section 12 of the Specific Relief Act, 1963 (for short, 'the Act').
(iii) The Trial Court and the First Appellate Court have not assigned any reasons as to why the decree for specific performance cannot be granted in favour of the plaintiff. Merely because the 1st defendant did not own the entire property, the power of the Trial Court and the First Appellate Court to mould the relief and to grant the relief in respect of part of the property as contemplated under Section 12 of the Act is not taken away and failure to exercise the power under Section 12 of the Act has resulted in miscarriage of justice.
11. Learned counsel, Sri M.S. Rajendra Prasad, appearing for 2nd and 3rd respondents would raise the following contentions:
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(i) Since 1st defendant did not own the entire property, the Trial Court as well as the First Appellate Court were justified in rejecting the relief for specific performance.
(ii) The plaintiff has not made out any case to pass a decree in respect of part of the property which was owned by 1st defendant. The 2nd and 3rd defendants, purchasers, would be put to substantial hardship in case if the relief of specific performance was granted in respect of 1/4th portion of the property belonging to 1st defendant.
12. This Court has considered the rival contentions raised at the bar.
13. The fact that the agreement dated 10.09.1986 in favour of the plaintiff executed by 1st defendant is proved and said finding has attained finality. The finding of the Trial Court as well as the First Appellate Court that the 2nd and 3rd defendant are not the bona fide purchasers of the property has also attained finality. Under these circumstances, the only point that needs to be considered in this appeal is:
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Whether the Trial Court and the First Appellate Court are justified in declining the relief of specific performance without assigning any reasons and without adverting the attention to Section 12 of the Specific Relief Act, 1963?
14. Section 12 of the Specific Relief Act, 1963 reads as under:
12. Specific performance of part of contract.-
(1) Except as otherwise hereinafter provided in this section the court shall not direct the specific performance of a part of a contract.
(2) Where a party to a contract is unable to perform the whole of his part of it, but the part which must be left unperformed by only a small proportion to the whole in value and admits of compensation in money, the court may, at the suit of either party, direct the specific performance of so much of the contract as can be performed, and award compensation in money for the deficiency.
(3) Where a party to a contract is unable to perform the whole of his part of it, and the part which must be left unperformed either--
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RSA No. 77 of 2007
(a) forms a considerable part of the whole, though admitting of compensation in money; or
(b) does not admit of compensation in money, he is not entitled to obtain a decree for specific performance; but the court may, at the suit of other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, if the other party--
(i) in a case falling under clause (a), pays or has paid the agreed consideration for the whole of the contract reduced by the consideration for the part which must be left unperformed and a case falling under clause (b), pays or had paid the consideration for the whole of the contract without any abatement; and
(ii) in either case, relinquishes all claims to the performance of the remaining part of the contract and all right to compensation, either for the deficiency or for the loss or
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damage sustained by him through the default of the defendant.
(4) When a part of a contract which, taken by itself, can and ought to be specifically performed, stands on a separate and independent footing from another part of the same contract which cannot or ought not to be specifically performed, the court may direct specific performance of the former part.
Explanation:-For the purposes of this section, a party to a contract shall be deemed to be unable to perform the whole of his part of it if a portion of its subject matter existing at the date of the contract has ceased to exist at the time of its performance.
15. As far as this case is concerned, Section 12(3) of the Act is relevant and under Section 12(3) of the Act, when the suit for specific performance cannot be granted in respect of the entire property as one of the parties to the agreement cannot perform the whole part of the contract and if portion of the property in respect of which contract can be performed is a smaller portion, then the plaintiff if he is able to pay the entire consideration amount in respect of portion of the property in
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RSA No. 77 of 2007respect of which the agreement can be performed, then the Court can pass a decree in favour of the plaintiff in respect of that portion of the property for which the performance is permissible.
16. In the instant case, the learned counsel for the appellant would submit that out of Rs.20,000/- consideration amount agreed to be paid, he has already paid Rs.16,500/- and balance that requires to be paid is Rs.3,500/-. He further submits that the plaintiff would pay the balance consideration amount in favour of 1st defendant and he would seek only specific performance in respect of portion of the property owned by 1st defendant. It is also his contention that the portion of the property is suit property adjacent to the property which is already purchased and where he has constructed a residential house. It is his contention that grant of specific performance in respect of 1/4th share held by 1st defendant is also desirable considering the equity in favour of the plaintiff, as he is an adjoining holder and the 2nd and 3rd defendants are bona fide purchasers.
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RSA No. 77 of 2007
17. This Court has considered the relevant provision of the Specific Relief Act, 1963, namely, Section 12(3). There is no doubt that the relief of specific performance is a discretionary relief. Court is not bound to grant a decree for relief of specific performance merely because it is lawful to do so. However, it is to be noticed in this case that the Trial Court as well as the First Appellate Court having come to the conclusion that 2nd and 3rd defendants are not bona fide purchasers and have refused to grant a decree for specific performance on the premise that the 1st defendant did not own the entire property. Declining the relief of specific performance has enured to the benefit of 2nd and 3rd defendants who purchased the property despite being aware that the agreement for sale dated 10.09.1986 is in favour of the plaintiff. Under these circumstances, the Trial Court and the First Appellate Court should have exercised their discretion in favour of the plaintiff who had already paid Rs.16,500/- out of the total consideration of Rs.20,000/- agreed between the parties. Having given a finding that the plaintiff was ready and willing to perform his part of the contract and having given a
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RSA No. 77 of 2007finding that the plaintiff has established the contract, the Trial Court and the First Appellate Court committed a mistake in not granting the relief of specific performance by exercising power under Sections 12(3) of the Act. Since the plaintiff is ready to pay the entire balance consideration of Rs.3,500/- and also considering the fact that the property is adjacent to the property of the plaintiff, this Court is of the view that the substantial questions of law framed by this Court are to be answered in favour of the appellant and against the respondents.
18. For the aforementioned reasons, the following:
ORDER
(i) The appeal is allowed.
(ii) The judgment and decree dated 10.04.1997 passed by the Munsiff and JMFC., Koratagere in O.S. No.589/1989 as well as the judgment and decree dated 18.09.2006 passed by the III Additional District Judge, Tumkur, in R.A. No.211/2004 are set aside.
(iii) The suit of the plaintiff is decreed in part.
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RSA No. 77 of 2007
(iv) The plaintiff is entitled to decree for specific performance in respect of 1/4th share held by 1st defendant in the suit schedule property.
(v) It is also made clear that the plaintiff shall pay the balance consideration of Rs.3,500/- along with interest at the rate of 12% per annum from the date of agreement till the date of payment.
(vi) The appellant shall deposit the amount before the Trial Court within two months from the date of receipt of a copy of this order and thereafter, the defendants shall execute the registered sale deed in favour of the plaintiff in respect of the 1/4th share and it is also made clear that this order is passed considering the fact that the plaintiff is the adjoining owner of the suit property. 1/4th share is to be carved out of the property adjacent to the property of the plaintiff. No order as to costs.
Sd/-
JUDGE sma List No.: 1 Sl No.: 34