Kerala High Court
Baby @ Varghese vs Gopakumar
Author: S.S.Satheesachandran
Bench: S.S.Satheesachandran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE S.S.SATHEESACHANDRAN
WEDNESDAY, THE 20TH DAY OF NOVEMBER 2013/29TH KARTHIKA, 1935
RFA.No. 84 of 2004 (C)
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AGAINST THE JUDGMENT IN OS 410/1995 of SUB COURT, THRISSUR
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APPELLANT/DEFENDANT:
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BABY @ VARGHESE, S/O KULA ANTHONY
KUZHUKULLY VILLAE - DESOM, THRISSUR TALUK.
BY ADV. SRI.K.A.SATHEESA BABU
RESPONDENT/PLAINTIFF:
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GOPAKUMAR, S/O. CHAZHIKULAM PARAMESWARAN
MAILIPADAM DESOM, CHEMBUKAVU VILLAGE
THRISSUR DISTRICT.
BY ADV. SRI.V.RAMKUMAR NAMBIAR
THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 05.11.2013,
THE COURT ON 20-11-2013 DELIVERED THE FOLLOWING:
SD
S.S.SATHEESACHANDRAN,J.
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R.F.A. No. 84 of 2004
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Dated, this the 20th day of November 2013
JUDGMENT
Defendant is the appellant. Suit was for specific performance of an agreement of sale, and injunction. Decree passed in favour of respondent/plaintiff by the learned Sub Judge, Thrissur, is challenged in the appeal.
2. Ext.A3 agreement of sale over the plaint property having an extent of 1 acre 26 cents belonging to the defendant was sought to be enforced in the suit. A decree of injunction was also applied to restrain the defendant from alienating the property to any person other than the plaintiff. Alternatively reliefs for damages and compensation were applied for. Ext.A3 agreement fixing centage R.F.A.No.84/2004 2 value at Rs.650/- for the property and time limit for six months for completion of sale on payment of Rs.10,000/- as advance on the sale price, was admitted by defendant. Plaintiff laid the suit before completion of the period fixed for sale alleging breach of contract by the defendant. Later, he got the plaint amended alleging that after institution of suit defendant collected a further sum of Rs.60,000/- on the sale price and period for completion of sale was extended on mutual consent by parties. The defendant resisted the suit contending that the contract failed on account of the default of plaintiff in fulfilling his obligations under Ext.A3 agreement. He also repudiated the claim canvassed in the amended plaint over the receipt of additional sum towards sale price, filing an additional written statement. Accepting the case of plaintiff that the contract of sale failed on the fault of defendant and that apart from the advance paid under Ext.A1 agreement the defendant had collected Rs.60,000/- towards R.F.A.No.84/2004 3 the sale price after institution of suit, the court below granted decree in favour of the plaintiff directing defendant to execute the sale deed receiving the balance consideration of Rs.11,900/-.In default of defendant to execute the sale deed plaintiff was granted liberty to move for registration of the sale deed through court depositing the balance sale consideration. A decree of permanent prohibitory injunction was also granted in favour of plaintiff restraining the defendant from alienating the property to any other person. That decree is challenged in the appeal.
3. I heard the counsel on both sides.
4. Learned counsel for the appellant contended that the suit filed before expiry of the term fixed for completion of sale under Ext.A1 agreement was premature. Imputing breach of contract by defendant, before expiry of the period stipulated for completing the sale, suit was laid for enforcing the agreement. When that be so, plaintiff is not entitled to get specific R.F.A.No.84/2004 4 performance of that agreement, but, at best only a claim for damages on strict proof thereof, according to counsel. Appellant did not appear and give evidence in support of the suit claim. His power of attorney, PW1, who had no direct knowledge of the transaction involved, was examined in the case. The evidence of that witness no way assisted the plaintiff to get a decree of specific performance, according to counsel. Ext.A2 was produced by plaintiff to substantiate subsequent payment of Rs.60,000/- towards purchase price after institution of the suit. That document was not proved despite denial of its execution and receipt of money stated thereunder by defendant,is the further submission of counsel. PW3 examined in the case was the father of PW1, power of attorney of plaintiff. Both PW1 and PW3 had no direct knowledge of the transaction covered under Ext.A3 agreement. The evidence let in through PW2 and 4, other two witnesses examined by plaintiff, former a sales officer in a co-operative bank and latter R.F.A.No.84/2004 5 a real estate agent no way assisted the plaintiff in substantiating his case for a decree of specific performance, according to counsel. Without appreciating the facts and circumstances involved and evidence let in the case forming erroneous conclusions the court below has granted a decree in favour of plaintiff, which is totally unjust and unsustainable and liable to be reversed , submits the counsel. On the other hand learned counsel for the plaintiff contended that there is no merit in the challenges raised to assail the decree,which, according to counsel is fully supported by the materials tendered. Suit cannot be considered to be premature where the evidence clearly established that there was default by defendant and also refusal on his part to perform the contract, according to counsel. Apprehension of plaintiff that defendant discarding Ext.A3 agreement intended to alienate the property has been shown to be genuine. Institution of suit before expiry of the period fixed under the agreement for R.F.A.No.84/2004 6 completion of sale cannot be raised to challenge the suit as premature, is the submission of counsel relying on Virgo Industries (Eng) Private Ltd v. Venturetech Solutions Private Ltd (2013) 1 SCC 625). Plaintiff need not wait for expiry of due date for filing suit for specific performance in the event of anticipatory breach of agreement by overt act of defendant, is the submission of counsel. The evidence tendered in the case had clearly established that there was culpable default by defendant in fulfilling the terms agreed upon under Ext.A3 agreement for completion of sale and also that he made attempts to alienate the plaint property to others, submits the counsel. Ext.A3 agreement stipulated that defendant had to discharge the encumbrance over the property, but, even after the expiry of period fixed for sale the property continued to be encumbered on failure of defendant to discharge liabilities has also been proved in the case, is the further submission of counsel. The decree R.F.A.No.84/2004 7 granted in favour of the plaintiff is fully supported by materials tendered, and, the challenge raised by defendant is devoid of any merit, submits the counsel urging for dismissal of the appeal.
5. Defendant has challenged maintainability of the suit contending that it was premature. Ext.A3 agreement dated 12.10.94 provided six months period for completion of the contract of sale and as such suit instituted earlier to the period fixed was premature, was the challenge questioning its maintainability. Plaintiff instituted the suit on 28.3.1995 before the expiry of the period fixed for completion of sale under Ext.A3 agreement. Learned Sub Judge relying on Malkhan Singh v. Raghubir Singh (AIR 1981 Allahabad
96) had repelled the challenge over the maintainability of suit holding that the facts and circumstances of the case would justify that plaintiff had no other way but to approach the court to get the sale deed executed by a decree of R.F.A.No.84/2004 8 specific performance and also to prevent the defendant by a decree of injunction from transferring the property to any other person. Reliance was also placed by the learned Sub Judge in Govind Prasad v. Haridutt (AIR 1977 SC 1005) to sustain the above conclusion formed on the premise that in a contract for sale of immovable property period of time stipulated thereunder cannot be considered as essence of that contract. Where a period of time is agreed under the contract by parties for completion of sale if there was breach by one of the parties whether the other party could sue for specific performance of that contract before the expiry of period fixed for performance, is the question involved. In other words, with respect to an anticipatory breach of contract before the expiry of period fixed under the agreement between the parties, can one of the parties who complains breach of contract by the other, sue for specific performance. In Malkhan Singh's case the Allahabad High Court has expressed R.F.A.No.84/2004 9 the view that a suit for specific performance filed few days before the date agreed for execution of the sale deed cannot be held to be premature. In that case no challenge was raised in the written statement that the suit was premature, nor any such ground canvassed to impeach the maintainability of suit before the trial court and also first appellate court. In second appeal challenge raised over maintainability was repelled by the High Court taking note that throughout defendant had resisted the suit claim contending that he had not executed the agreement over which specific performance was claimed. The High Court expressed the view that in the facts of the case, suit cannot be considered as premature since the defendant had clearly refused to execute the sale deed and also made it known to the plaintiff prior to institution of suit. Whatever be the circumstances presented in a case indicating breach of contract by one of the two parties if the agreement stipulated a time limit for performance R.F.A.No.84/2004 10 the other party can sue for specific performance only on expiry of such period of time. If one of the parties has repudiated the contract before the expiry of period stipulated for performance of contract the other party can either treat the breach as putting an end to the contract and sue for damages or may choose to keep the contract alive till the time for performance and claim specific performance. When there is a breach of contract before the expiry of period of time stipulated for performance, that may give an option to the other to treat the breach as putting an end to the contract. If he exercise such an option, he can only sue for damages and not for specific performance. In spite of such anticipatory breach he has the other option to treat the contract alive and, after completion of the period stipulated, sue for specific performance. The apex Court in Jawahar Lal Wadhwa v. Haripada Chakroberty (AIR 1989 SC 606) has considered the above options available to the party in a contract when he R.F.A.No.84/2004 11 suffers anticipatory breach of contract by the other party. Analysing the two options available to the party who suffered anticipatory breach of contract by the other party, it has been held thus:-
"It is settled law that where a party to a contract commits an anticipatory breach of the contract, the other party to the contract may treat the breach as putting an end to the contract and sue for damages, but in that event he cannot ask for specific performance. The other option open to the other party, namely, the aggrieved party, is that he may choose to keep the contract alive till the time for performance and claim specific performance but, in that event, he cannot claim specific R.F.A.No.84/2004 12 performance of the contract unless he shows his readiness and willingness to perform the contract."
When such be the position of law the view expressed by the Allahabad High Court in Malkhan Singh's case that a suit for specific performance instituted before the period stipulated for performance of the contract cannot be held to be premature if the contract is proved to have been repudiated by the other party cannot be accepted as laying down a correct proposition. Learned counsel for plaintiff has relied on Virgo Industries (Eng) Pvt Ltd's case(supra) to support the finding entered by the learned Sub Judge that the suit though filed before expiry of the period for performance in Ext.A3 agreement was not premature. In that case considering the applicability of Order 2 Rule 2 CPC Apex Court has expressed the view that there is no provision in the Specific Relief Act 1963 requiring plaintiff claiming the relief of R.F.A.No.84/2004 13 specific performance to wait for expiry of the due date for performance of the agreement where the defendant had already made his intentions repudiating the contract by his overt acts. The options available to the aggrieved party complaining breach of contract by the other party before the period stipulated for performance, explained by the Apex Court consisting of a larger Bench of three Judges in Jawahar Lal Wadhwa's case supra, it is seen, was not brought to the notice of the bench when the aforesaid decision was rendered in Virgo Industries (Eng.) Pvt. Ltd's case. Of course there is no mandatory bar created by statute which would disable the plaintiff in filing a suit for specific performance before the date fixed for completion of sale by the other party. In a case of anticipatory breach of contract the other party, as pointed out by the Apex Court can treat the contract alive till the time for performance provided is over and then sue for specific performance. An anticipatory breach of contract R.F.A.No.84/2004 14 before the expiry of period for performance would give him only a claim for damages treating the breach as ending the contract. Anticipatory breach of contract could not give him a cause of action to sue for specific performance. When that be so, the suit instituted by the plaintiff before the period of completion of sale complaining anticipatory breach by the defendant was premature.
6. On the facts and circumstances presented and materials placed also, I find the decree of specific performance granted in favour of plaintiff by the court below is unsustainable. Under Ext.A3 agreement a sum of Rs.10,000/- alone out of the purchase price was paid to the defendant. After institution of the suit plaintiff got the plaint amended to advance a case that while the lis was pending before the court subsequent payment of Rs.60,000/- on the purchase price was also paid to defendant and receipt of such payment was acknowledged under Ext.A2. That document was disputed by defendant who denied of R.F.A.No.84/2004 15 receiving any sum other than the amount stated in Ext.A3 agreement. No explanation was offered by plaintiff why such subsequent payment, if any, paid to defendant towards purchase price after institution of the suit was not made with notice to the court. Subsequent payment of Rs.60,000/- after institution of the suit, on 27.4.1995, and allegedly, acknowledged by defendant executing Ext.A2 was projected much later. Application for amending plaint ( I.A.2332/97) to incorporate allegations thereof was filed two years after institution of the suit. Though the amendment had been allowed it would no way assist the plaintiff to show that there was subsequent payment to defendant. Plaintiff has not explained the inordinate delay in seeking amendment to incorporate the allegations in his plaint. Even with the amendment application plaintiff did not produce Ext.A2 but only later i.e on 21.10.98. Imputing anticipatory breach of contract before expiry of the term stipulated in Ext.A3 agreement R.F.A.No.84/2004 16 plaintiff instituted the suit and later it is his case without the juncture of the court while the lis was pending he made subsequent payment towards the purchase price. Subsequent payment was denied by defendant who had questioned the entitlement of plaintiff to seek specific performance of Ext.A3 agreement. Still the plaintiff did not appear before court and examine himself as a witness giving opportunity to test the veracity of his claim by the other side. Power of attorney of plaintiff was examined as PW1. His evidence would show that he had no direct knowledge over the transactions covered by Ext.A3 agreement and also Ext.A2. With respect to Ext.A3 agreement other than claiming of witnessing its execution he had no direct knowledge at all. The only other witness examined by plaintiff to speak about Ext.A3 and Ext. A2 is PW3 who is the father of his power of attorney, examined as PW1. PW3 also did not state of having any direct knowledge over the execution of Ext.A3 agreement by defendant. PW2 who claimed R.F.A.No.84/2004 17 of witnessing the defendant executing a document on 27.4.95, the date shown in Ext.A2 over subsequent payment, has stated in his evidence that defendant subscribed his signature over a revenue stamp affixed in the paper. Ext.A2 is not affixed with any revenue stamp. The evidence of this witness on subsequent payment to defendant towards purchase price after institution of suit, is unworthy of any merit. Two other witnesses were examined by plaintiff as PW2 and PW4 to show that defendant discharged his liability towards a co-operative bank with the sum received under Ext.A2. When the case of plaintiff over subsequent payment made towards purchase price after institution of the suit, which was disputed by defendant, remained not established evidence let in through PW2 and PW4 over the remittance made by defendant to clear his liability to a bank has no value at all.
7. Defendant had repudiated the case of plaintiff that he committed breach of contract and failed to perform his part in terms of Ext.A3 R.F.A.No.84/2004 18 agreement. Other than showing that the defendant failed to clear off the encumbrances over the property plaintiff failed to show that he was ready and willing to take the sale deed in terms of Ext.A3 agreement. The defendant had specifically contended that performance of the agreement of sale failed on account of the fault of plaintiff. Power of attorney of plaintiff examined as PW1 has no direct knowledge over the transaction under Ext.A3 and also over the alleged subsequent payment covered by Ext.A2. His evidence no way assisted the plaintiff to show that he was entitled to a decree of specific performance. Ext.A2 document was denied by the defendant, yet, no attempt was made by plaintiff to show its execution by defendant and that the signature appearing in that document acknowledging receipt of subsequent payment was subscribed by him. Plaintiff had kept away from court from giving evidence in support of his claim for specific performance. Evidence let in through his power of attorney, PW1, who does not R.F.A.No.84/2004 19 have any direct knowledge over the transactions, no way assisted the plaintiff in obtaining the decree applied for. Without looking into any of these aspects court below has granted a decree in favour of the plaintiff for specific performance, which cannot be sustained.
8. Under Ext.A3 agreement of sale defendant received a sum of Rs.10,000/- towards purchase price. He has not shown that he suffered any damages by noncompletion of the sale under Ext.A3. When that be so he has to refund that sum collected as purchase price. Though the suit for specific performance was premature, the alternate reliefs claimed by plaintiff can be taken note to direct defendant to refund the advance collected. Plaintiff can be granted a decree for refund of the sum of Rs.10,000/- collected by defendant towards purchase price as an equitable relief, but nothing more.
Setting aside the decree and judgment of the court below plaintiff is granted a decree for R.F.A.No.84/2004 20 refund of the sum of Rs.10,000/- from defendant with interest at the rate of 6% per annum from the date of institution of the suit till realisation.
Appeal is allowed to the extent indicated directing both parties to suffer their costs.
sd/-
S.S.SATHEESACHANDRAN JUDGE /true copy/ P.S to Judge tpl/-
R.F.A.No.84/2004 21
JUDGMENT 3rd October,2013