Karnataka High Court
A. Ramanath vs L. Sridhar on 28 July, 2023
-1-
NC: 2023:KHC:26656
RFA No. 1357 of 2016
C/W RFA.CROB No. 7 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF JULY, 2023
BEFORE
THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE
REGULAR FIRST APPEAL NO. 1357 OF 2016 (SP)
C/W
RFA CROSS OBJECTION NO. 7 OF 2017 (SP)
IN RFA NO.1357/2016:
BETWEEN:
A. RAMANATH,
S/O. LATE ASHWATHNARAYANA SETTY,
SINCE DECEASED REPRESENTED BY HIS LRS.
1(a) SMT.M.N.SUDHA,
W/O M R NANDISH,
AGED ABOUT 55 YEARS
(DAUGHTER OF APPELLANT NO.1)
R/AT 316, 14TH CROSS,
JAYANAGAR, 2ND BLOCK,
BANGALORE SOUTH, BANGALORE - 560 001.
Digitally
signed by
PRAMILA G V 1(b) SMT.SHETHAL RAJ,
Location: W/O RAJKUMAR,
HIGH COURT AGED ABOUT 53 YEARS,
OF
KARNATAKA (DAUGHTER OF APPELLANT NO.1)
R/T NO.110, EBRAHIM SAHEB STREET,
PARALLEL TO COMMERCIAL STREET,
CANTONMENT, BANGALORE NORTH,
BANGALORE G.P.O,
BANGALORE - 560 001.
1(c) SMT.LAKSHMI SUHAS,
W/O MYSORE LAKSHMANA GUPTA SUHAS,
AGED ABOUT 48 YEARS,
(DAUGHTER OF APPELLANT NO.1),
-2-
NC: 2023:KHC:26656
RFA No. 1357 of 2016
C/W RFA.CROB No. 7 of 2017
R/AT NO.480, 33RD CROSS,
JAYANAGARA, 4TH BLOCK, BANGALORE.
(CAUSE TITLE AMENDED AS PER ORDER
DATED: 14.12.2021).
...APPELLANT
(BY SRI HARIKRISHNA S HOLLA, A/W
MS.MEDINI RAO, ADVOCATE)
AND:
1. L. SRIDHAR
S/O. LATE P.M. LOGANATHAN,
AGED ABOUT 51 YEARS
2. L. SHAKUNTALA,
W/O. LATE P.M. LOGANATHAN,
AGED ABOUT 76 YEARS
3. YASHODA,
D/O. LATE P.M. LOGANATHAN,
AGED ABOUT 47 YEARS,
ALL ARE RESIDING AT NO.18,
7TH CROSS, II BLOCK, JAYANAGAR,
BENGALURU-560 011.
4. V. CHANDRASHEKAR,
S/O. V. VAJARAPPA,
MAJOR, RESIDING AT VAJRAGIRI
NURSERY ANJANAPURA VILLAGE,
ANJANAPURA ROAD,
UTTARAHALLI HOBLI,
BENGALORE SOUTH TALUK.
...RESPONDENTS
(BY SRI. PRASANNA V R, ADVOCATE FOR C/R1 AND R3,
V/O/DT: 31.03.2023 APPEAL AGAINST R2 DISMISSED,
BY SRI SPOORTHY HEGDE NAGARAJA, ADVOCATE FOR R4 -
ABSENT)
-3-
NC: 2023:KHC:26656
RFA No. 1357 of 2016
C/W RFA.CROB No. 7 of 2017
THIS RFA IS FILED UNDER SEC.96 OF CPC., AGAINST
THE JUDGMENT AND DECREE DATED 01.07.2016 PASSED IN
OS NO.4364/2002 ON THE FILE OF THE XXV ADDL. CITY CIVIL
AND SESSIONS JUDGE, BENGALURU (CCH NO.23), PARTLY
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.
IN RFA CROB NO.7/2017:
BETWEEN:
1. SRI L SRIDHAR
S/O LATE P.M.LOGANATHAN,
AGED ABOUT 50 YEARS,
2. SMT. YASHODA,
D/O LATE P.M.LOGANATHAN,
AGED ABOUT 46 YEARS,
BOTH ARE R/AT NO.18/1, 7TH CROSS,
9TH MAIN, 2ND BLOCK JAYANAGAR,
BENGALURU-560011.
...CROSS OBJECTORS
(BY SRI PRASANNA V R, ADVOCATE)
AND:
1. SRI A RAMANATH,
S/O LATE ASWATHANARAYANA SETTY,
AGED ABOUT 78 YEARS,
R/AT NO.127-3/1,
16TH A MAIN ROAD, 30TH CROSS,
III BLOCK, EAST JAYANAGAR,
BENGALURU - 560 011,
SINCE DECEASED REPRESENTED BY HIS LRS.
1(a) SMT.M.N.SUDHA,
W/O M R NANDISH,
AGED ABOUT 55 YEARS
(DAUGHTER OF APPELLANT NO.1)
R/AT 316, 14TH CROSS,
JAYANAGAR, 2ND BLOCK,
BANGALORE SOUTH,
BANGALORE - 560 001.
-4-
NC: 2023:KHC:26656
RFA No. 1357 of 2016
C/W RFA.CROB No. 7 of 2017
1(b) SMT.SHETHAL RAJ,
W/O RAJKUMAR,
AGED ABOUT 53 YEARS,
(DAUGHTER OF APPELLANT NO.1)
R/T NO.110, EBRAHIM SAHEB STREET,
PARALLEL TO COMMERCIAL STREET,
CANTONMENT, BANGALORE NORTH,
BANGALORE G.P.O,
BANGALORE - 560 001.
1(c) SMT.LAKSHMI SUHAS,
W/O MYSORE LAKSHMANA GUPTA SUHAS,
AGED ABOUT 48 YEARS,
(DAUGHTER OF APPELLANT NO.1)
R/AT NO.480, 33RD CROSS,
JAYANAGARA, 4TH BLOCK, BANGALORE.
(AMENDMENT CARRIED OUT AS PER
COURT ORDER DT: 06.06.2023).
2. SRI. V. CHANDRASHEKAR,
S/O SRI. VAJRAPPA,
AGED MAJOR,
R/AT VAJRAGIRI NURSERY,
ANJANAPURA ROAD,
UTTARAHALLI HOBLI - 560 061,
BENGALURU SOUTH TALUK.
...RESPONDENTS
(BY SRI HARIKRISHNA S HOLLA A/W
MS MEDINI RAO, ADVOCATE FOR R1(A) TO R1(C),
BY SRI SPOORTHI HEGDE, ADVOCATE FOR
SRI NAGARAJA, ADVOCATE FOR R2 - ABSENT)
THIS RFA.CROB IN RFA IS FILED UNDER ORDER XLI
RULE 22(1) OF CPC., 1908 AGAINST THE JUDGMENT AND
DECREE DATED 01.07.2016 PASSED IN OS.NO.4364/2002 ON
THE FILE OF THE XXV ADDITIONAL CITY CIVIL AND SESSIONS
JUDGE, BENGALURU, PARTLY DECREEING THE SUIT FOR
SPECIFIC PERFORMANCE.
THIS RFA AND RFA CROB. COMING ON FOR HEARING
THIS DAY THE COURT DELIVERED THE FOLLOWING:
-5-
NC: 2023:KHC:26656
RFA No. 1357 of 2016
C/W RFA.CROB No. 7 of 2017
JUDGMENT
The plaintiff in O.S.No.4364/2002 is in appeal before this Court under Section 96 of the Code of Civil Procedure, 1908 (hereinafter for short referred to as the 'Code').
2. Defendants No.1 and 3 have filed cross-objection No.07/2017 in RFA No.1357/2016.
3. The plaintiff is aggrieved by the decree refusing the specific performance of the contract dated 02.03.2002. The Trial Court has granted a decree for a refund of Rs.6 lakhs earnest money paid by the plaintiff with interest @ 12% per annum and refused the relief of specific performance of the contract, after holding that the execution of sale agreement is proved.
4. The cross-objection is filed assailing judgment and the decree for refund of the earnest money of Rs.6 lakhs and interest thereon and also the fining on the nature of transaction.
5. The suit property is bearing No.18 (old No.14) measuring 45 feet East-West, and 28 feet North-South along -6- NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 with the RCC building measuring 8 square meters situated at 7th cross, II Block, Jayanagar, Bengaluru.
6. Summary of pleadings:
The plaintiff has averred that, the first defendant acquired absolute ownership over the suit property under the registered Will dated 28.11.1988 executed by propositus P.M.Loganathan. On 28.06.2000, one Sunandamma who had agreed to purchase the suit property, from defendant No.1, rescinded the contract and insisted the defendant No.1 to return the advance consideration. The plaintiff who had agreed to sell his residential house to one S.Venkatesh Babu and his wife Anitha Venkatesh on 26.01.2002, proposed to purchase the suit schedule property, for his use, from defendants No.1 to 3, who needed money to refund the earnest money payable to Sunandamma.
7. Defendants No.1 to 3 agreed to sell the property to the plaintiff for Rs.14,18,500/-. The plaintiff on the same day paid Rs.4,95,000/- to Sunandamma. Consequently, the sale agreement between Sunandamma and first defendant was cancelled on 28.02.2002 as she received Rs.4,95,000/- from -7- NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 the plaintiff. The plaintiff further paid Rs.1,05,000/- to first defendant in cash. In all, the plaintiff paid Rs.6 lakhs towards advance sale consideration amount as under the registered sale agreement dated 02.03.2002.
8. Defendants No.1 to 3 were required to get the vacant possession of suit property from the tenants and to execute the sale deed before the first week of April 2002. The plaintiff was required to pay the balance consideration amount, by discharging Rs.5 lakhs loan in the name of defendant No.1 in LIC Housing Finance and the remaining balance consideration amount was required to be paid at the time of execution of the registered sale deed.
9. The plaintiff alleged that defendants No.1 to 3 failed to get the vacant possession of the property from the tenants, before the first week of April 2002, as agreed. The plaintiff issued a notice on 20.05.2002 to defendants No.1 to 3 asking them to execute a sale deed by evicting the tenants from the suit schedule property.
10. The plaintiff further states that he received a notice on 10.06.2002, from fourth defendant which was addressed to -8- NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 the remaining defendants as well, and fourth defendant claimed that he had agreed to purchase the suit property on 30.07.1999 with P.M.Loganathan, the father of the first and the third defendants. The plaintiff alleged that defendants No.1 to 3 have colluded with the fourth defendant and in collusion they got the agreement for sale dated 20.07.1999 concocted to defeat the rights of the plaintiff. Thus, the plaintiff filed the suit for specific performance of the contract dated 02.03.2002.
11. Defendants No.1 to 3 contested the matter. The sale agreement dated 02.03.2002 is disputed. Defendants No.1 to 3 in substance contended that the agreement for sale is got outcome of fraud and misrepresentation which they signed under the bonafide impression that it is an agreement to secure the loan availed by them. Taking undue advantage of lack of English knowledge of defendants No.1 to 3, their signatures were taken on the agreement making them to believe it to be a document securing the loan.
12. Defendant No.4 filed a separate written statement basing his defence on the alleged agreement for sale dated -9- NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 20.07.1999 said to have been executed by the one P.M.Loganathan.
13. The Trial Court decreed the suit in part. After holding that disputed agreement is a sale agreement, declined the decree for specific performance of the contract. The decree is passed for a refund of the earnest money of Rs.6 lakhs along with interest at the rate of 12% per annum. Hence the above- said appeal by the legal representatives of the plaintiff and the cross objection by the first and third defendants.
14. The learned counsel Sri.Harikrishna S.Holla, for the appellants submitted that since the execution of agreement for sale dated 02.03.2002 is proved; the decree should have been granted for the specific performance of a contract. He urged that plaintiff's readiness and willingness to perform his part of the contract is duly established. He further urged that the Trial Court erred in holding that plaintiff was required to discharge the loan of Rs.5 lakhs availed by the first defendant, in LIC Housing Finance within the first week of April 2002. By referring to Clauses No. 5, 8, 16 and 17 in the agreement he submitted that the time limit fixed under the agreement is on
- 10 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 the defendants No.1 to 3 to secure the vacant possession of the suit property from the tenants and not for the plaintiff to discharge the loan amount.
15. The learned counsel for Defendants No.1 and 3 and cross objectors Sri.Prasanna V.R., referring to the contradictions in the evidence of P.W.1 and P.W.2 urged that the execution of an agreement for sale is not proved. He referred to the evidence of P.W.2 in the cross-examination where he has stated that Rs.4,95,000/- is paid on 02.03.2002, whereas the PW-1 has stated that Rs.4,95,000/- is paid on 28.02.2002. He also referred to the cross-examination of PW-1 wherein PW-1 has admitted that the transaction between Sunandamma and defendant No.1 was a loan transaction. Thus, he contends that the subsequent transaction between the plaintiff and defendants No.1 to 3 is also a loan transaction as the loan payable to Sunandamma was paid by the plaintiff.
16. The learned Counsel for the defendants No.1 to 3 also submitted that second defendant died during the pendency of the suit bequeathing her property to her daughter-in-law. And daughter-in-law is not made a party to the suit as such the
- 11 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 suit is defective. He further urged that in the written statement defendants No.1 to 3 have taken a stand that the property belongs to the children of P.M.Loganathan. Hence the suit is not maintainable as admitted Will of P.M.Loganathan reveals that two more children of P.M.Loganathan have right over the property and they are not parties to the alleged agreement for sale.
17. He further urged that the time was the essence of the contract and the plaintiff did not discharge the LIC housing finance loan within three months of the sale agreement.
18. The following points emerge for consideration in the light of the contentions raised:
(i) Whether the plaintiff can enforce the agreement for sale not signed by two children of P.M.Loganathan from his second wife?
(ii) Whether the Trial court is justified in holding that the plaintiff has established the execution of an agreement for sale dated 02.03.2002?
(iii) Whether the plaintiff established that he was ready and willing to perform his part of the contract and he has discharged the obligations imposed on him under the agreement?
- 12 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017
19. At this juncture it is relevant to refer to Order XIV Rule 3 of the Code.
3. Materials from which issues may be framed.- The Court may frame the issues from all or any of the following materials.-
(a) allegations made on oath by the parties, or by any persons present on their behalf, or made by the pleaders of such parties;
(b) allegations made in the pleadings or in answers to interrogatories delivered in the suit;
(c) the contents of documents produced by either party.
(Emphasis supplied)
20. From Order XIV Rule 3 (c) of the Code, it is apparent that apart from the pleadings, the issue may be framed from the documents placed before the Court. The expression "the Court may frame issues from all or any of the following materials" appearing in the provision makes it very clear that the issues need not necessarily be framed only based on the pleadings. Issues may emerge from the documents as well. This is one such case. Thus the contention of the appellants that the Court cannot go into the question of
- 13 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 necessary parties to the suit or validity of agreement for sale is not tenable. The suit is for the specific performance of the contract. The plaintiff/purchaser claims that the first defendant vendor acquired right under Ex.D-24, the Will dated 28.11.1988. The Ex.D-24 being the admitted document, this Court has to consider whether Ex.D-24 confers right on the first defendant vendor. Since the testator survived one of the beneficiaries, the Court has to frame an issue, based on the Will dated 28.11.1988, acting under Order XIV Rule 3(c) of the Code, though the defendants No.1 to 3 did not take a specific defence that the suit is bad for non-joinder of necessary parties.
21. Admittedly, the plaintiff is claiming that the first defendant acquired right over the property under the Will dated 28.11.1988 executed by P.M.Loganathan. The Will is produced at Ex-D-24. The attesting witness was examined. The Will is not disputed. The recital in the Will reveals that the suit property is bequeathed to L.Srinivasan, the eldest son of P.M.Loganathan. Legatee L.Srinivasan died on 13.06.1991, predeceased P.M.Loganathan, the testator who died on 05.01.2000. The Will operates from the date of the death of the testator and not
- 14 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 from the date of its execution. When testator died, the legatee L.Srinivasan was not alive. Thus, under law, there is no testamentary succession in respect of the property bequeathed to L.Srinivasan. Thus, the property bequeathed to L.Srinivasan devolves under the law governing intestate succession on the Class-I heirs of P.M.Loganathan.
22. Ms. Medhini Rao, learned counsel appearing on behalf of the appellants pointing to certain recitals in the Will urged that the property is to be treated as the property bequeathed in favour of L.Sreedharan.
23. This Court has perused the Will.
24. On reading the admitted Will, it is apparent that L.Srinivasan was mentally challenged when the Will was executed. The testator had an apprehension that he may not be able to manage the property and for this reason, it is recited in the Will that in case the legatee L.Srinivasan is unable to manage the property, his second son L.Sreedharan should manage the same. This is an arrangement relating to the management of the property and not a clause conferring title over the property on defendant No.1.
- 15 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017
25. This being the position, this Court has to take a view that after the death of P.M.Loganathan, the property devolved upon the three children of first wife, first wife, as well as two children of second wife. Admittedly, the two children from the second wife are not parties to the agreement for sale.
26. Sri. Harikrishna S.Holla in the alternative urged that if the Court is of the view that the property belongs to two more persons other than defendants No.1 to 3, the Court has to remand the matter to the Trial Court directing the plaintiff to implead the necessary parties. Normally the non joinder of necessary party is not a ground to dismiss the suit and the plaintiff must be given an opportunity to implead the necessary parties. However, it cannot be an absolute rule. If the suit is dismissed only on the ground of non-joinder of necessary parties, then it is necessary to remand the matter with a direction to implead the necessary party. If the suit is dismissed on some other grounds, in addition to the ground of non joinder of necessary parties, and the dismissal on other grounds is sustainable, then neither there is a compulsion nor any justification to remand the matter to implead necessary parties, as no purpose would be served by remanding the
- 16 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 matter. In this case, the plaintiff admits the Will referred to above. It is not his case that the agreement for sale is executed by all the six Class-I heirs of P.M.Loganathan. Thus, this Court is of the view it is a futile exercise to remand the matter. Enough materials are already before this Court to hold that the vendors did not have absolute title over the property, and other joint owners are not parties to the agreement for sale. Under these circumstances, the suit for specific performance to enforce the agreement does not lie. Thus point No.(i) for consideration is answered in the negative.
27. Now the Court has to consider the second point framed above and decide whether the transaction is a sale agreement or loan transaction.
28. The Ex.P-1, the agreement for sale dated 02.03.2002 is a registered document. The defendants No.1 to 3 have admitted the signatures on the said document. Thus, it carries a prima facie presumption that it is executed for the purpose mentioned in the agreement. The contents of the said agreement were corroborated by Ex.P-2, the receipt issued by first defendant who received part of the consideration amount.
- 17 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 The receipt refers to the registered sale agreement dated 02.03.2002. The plaintiff's contention relating to an agreement for sale dated 28.06.2000 in favour of Sunandamma, is also established through Ex.P3, the registered agreement for sale in executed by the first defendant. The plaintiff claims that the sale agreement dated 02.03.2002 was entered into cancelling earlier sale agreement in favour of Sunandamma.
29. The defence of fraud and misrepresentation taken by defendants No.1 to 3, is not established. The particulars relating to fraud and misrepresentation are not pleaded by the defendants as required under Order VI Rule 4 of the Code. The burden is heavy on defendants No.1 and 3 to rebut the presumption arising from the registered sale agreement dated 02.03.2002. The defendants No.1 to 3, heavily relied on Ex.D-7, the letter alleged to have been executed by Sunandamma in favour of the first defendant, wherein Sunandamma is said to have admitted that the transaction with her was a loan transaction. Sunandamma is not examined to prove Ex-D7. The plaintiff has disputed Ex.D7. The contents of the registered agreement dated 28.06.2000 in favour of Sunandamma are not rebutted by mere production of Ex.D7.
- 18 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 Even if the plaintiff admits that the transaction between Sunandamma and the first defendant is a loan transaction, on receipt of her earnest money, Sunandamma has executed a registered agreement cancelling the sale agreement in her favour and said cancellation agreement does not say that the earlier transaction was a loan transaction. Thus, the defendants No.1 to 3 have failed to establish that the agreement dated 02.03.2002 is a loan transaction.
30. The next question is whether the plaintiff has established that he was ready and willing to perform his part of the contract and discharged the obligations imposed under the agreement. Though strictly speaking this question may not arise for consideration, as the Court has already concluded that the agreement dated 02.03.2002 is unenforceable, as the defendants No.1 to 3 did not have absolute ownership over the property in question, this Court deems it appropriate to answer the said question as this question was decided by the Trial Court and contention is raised in this appeal that the said finding is incorrect.
- 19 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017
31. To consider this question, it is necessary to refer to Clauses No.8, 16 and 17 of the agreement which reads as under:
"8. In pursuance of this Agreement the Vendors entrusted the purchaser to discharge the loan with the L.I.C. House Finance Ltd., and also to cancel the Sale Agreement between one of the Vendor and Smt.Sunandamma.
16. The time limit fixed for the registration and delivery of the vacant possession of the schedule property is on or before three months from this date, time is the essence of this Sale Agreement.
17. The Vendors shall secure vacant possession of the entire schedule property from the tenants & to intimate the purchaser before the execution & registration of the sale Deed within the stipulated period referred to above."
32. Under Clause 8, the purchaser/plaintiff has undertaken the responsibility to discharge the loan with LIC Housing Finance and the responsibility of getting the sale agreement cancelled with Sunandamma. Under Clause No.16, three months time is fixed to complete the transaction and the
- 20 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 time is made the essence of the contract. Under Clause No.17, the obligation is on the vendors to secure the vacant possession of the property from the tenants and to intimate the purchaser in this regard.
33. On reading Clauses 8, 16 and 17, it is apparent that the time limit fixed for registration and delivery of the vacant possession of the suit schedule property is three months and in terms of Clause 16, time was made the essence of the contract. The agreement does not provide for payment of the sale consideration amount after the sale, though it is permissible under law. The plaint would also reveal that the parties have understood that the time is the essence of the contract. The plaintiff has further stated that he had already entered into an agreement to sell his property and wanted to purchase the suit property for his use after selling his property. The plaint also reveals that his property is already sold in anticipation of the purchase of the suit property. This being the position and considering the time limit of three months fixed to secure vacant possession of the property, and registration of the sale deed within three months, this Court has to take a view that the obligation under Clause-8 to repay the loan amount in LIC
- 21 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 Housing Finance also came with a stipulation that the plaintiff has to discharge the loan amount within three months. Admittedly, the plaintiff has not discharged the loan amount within three months. The plaintiff's contention that the obligation to discharge the loan amount arises only if vacant possession of the suit property is secured by the defendants is not supported by any such express clause in the agreement. No circumstances are brought out in the evidence to infer in that way.
34. It is also evident to note that the plaintiff has repaid the advance consideration amount paid by Sunandamma. Considering this aspect, it can be safely concluded that vacating the possession of the suit schedule property is not precedent for discharging the loan amount standing in the name of the defendants in LIC Housing Finance and the amount payable to Sunandamma.
35. On overall appreciation of the terms and conditions of the agreement and the circumstances brought on record, it leads to the conclusion that the obligation to discharge the loan amount came with a stipulation that the loan should be
- 22 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 discharged within three months from the date of the agreement. Clauses No.8, 16 and 17 if read together lead to the said conclusion.
36. Admittedly, the plaintiff has not discharged the loan amount in respect of the property standing in the name of defendants No.1 to 3 in LIC Housing Finance as required under Clause 8 of the agreement dated 02.03.2002. Such being the position, the Trial Court has rightly held that the plaintiff has not performed his part of the contract as required under the agreement.
37. Having not performed his part of the contract, the plaintiff cannot seek equitable relief of specific performance of the contract on the premise that he had the capacity to discharge the loan amount and he is willing and ready to discharge the loan amount and that loan amount was not discharged on account of failure on the part of the defendants No.1 to 3 to secure the vacant possession of the suit schedule property. The failure on the part of the defendants 1 to 3 to vacate the suit schedule property cannot be made an excuse for the plaintiff in not discharging the loan amount which he
- 23 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 had undertaken to discharge. The plaintiff could have repaid the loan amount in LIC housing finance to show his readiness and bonafides.
38. Even in the pleadings, the plaintiff has specifically alleged that time was the essence of the contract. This being the position, the plaintiff cannot take a defence that there is a default on the part of the defendants No.1 to 3 to perform their part of the contract within the stipulated period. Such a defence is available to the plaintiff only if he had performed his part of the contract within the stipulated period. There is nothing on record to show that the obligation on the part of the plaintiff to discharge the loan amount is subject to the condition that the defendants No.1 to 3 securing the vacant possession of the property from the tenants.
39. In addition, following facts have to be noticed. Though the plaintiffs have contended that they sold the property on 26.01.2002 in anticipation of the sale of the scheduled property in their favour, the alleged registered sale deed of 2002 for having sold the property is not produced before the Court for the reasons best known to the plaintiff.
- 24 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 This being the position, this Court is not in a position to give a finding that the plaintiff has sold the property in anticipation of the sale of the property by the defendants.
40. Defendant No.2 died during the pendency of the suit and death was reported. The Will is said to have been executed by the 2nd defendant in favour of the daughter-in-law. That Will is produced and marked at Ex.D-23 and one of the attesting witnesses is examined. The said Will is not disputed. Thus the share held by the mother/defendant No.2 devolves on her daughter in law as testamentary heir. The daughter-in-law is not made a party. On this count also, the suit is not maintainable.
41. For the aforementioned reasons, this Court is of the view that the agreement dated 02.03.2002 cannot be enforced to grant a decree for the specific performance of the contract as all the owners have not been made parties to the agreement.
42. By way of alternative submission, it is urged on behalf of the appellant that entire property is to be auctioned and out of the sale proceeds, value of 2/3rd share held by the
- 25 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 heirs of P.M.Loganathan from his first wife, has to be paid to the appellants as compensation.
43. This contention cannot be accepted for three reasons:
(a) There is no prayer to award the compensation and bar contained under Section 21(5) of the Specific Relief Act applies.
(b) There is no prayer for partition in the plaint, thus the bar contained in Section 21(2) applies.
(c) The Court has that the plaintiff is not entitled to specific performance as he has not complied his obligation to discharge the loan.
44. Assuming that the plaintiff is entitled to specific performance, to the extent of 2/3rd share, then also as the 1/3rd share belongs to the two children from the second wife of P.M.Loganathan who are not parties to the suit. Thus, the court cannot compel the sale of the property affecting the interest of the persons who are not parties to the suit. The property being too small measuring 45 feet X 28 feet it is not feasible to divide
- 26 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 the property in to two parts in the proportion of 2/3rd and 1/3 rd.
45. Learned counsel for the appellants has relied upon the judgments of the Apex Court in the case of Laxmishankar Harishankar Bhatt vs Yashram Vasta reported in (1993) 3 SCC 49. It is urged that unless a specific plea is taken in the pleading relating to non-joinder of necessary parties to the suit, the suit cannot be dismissed for non-joinder of necessary parties.
46. It is also urged in the case, the co-owners are made parties, there can be a valid decree in respect of the entire property even though the remaining owners are not made parties to the suit.
47. This Court has perused the said judgment. In terms of paragraph No.11 of the said judgment, the Apex Court has held that Courts should insist on specific material on record to ascertain the ownership/right of other persons who are not made parties to the suit and whose claim over the property is sought to be put forth before the Court. The Apex Court held that in the absence of any specific material to ascertain who
- 27 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 are the owners of the property, the contention that non-joinder of necessary parties cannot be raised at a later stage. However, in this case, as held supra rights of two other persons is easily noticed under the admitted Will of P.M.Loganathan as one of the legatees predeceased him. The ratio laid down in the aforementioned case has no application. Moreover, in the written statement, the defendants No.1 to 3 have disputed the plaintiff's claim that L.Sreedharan is the sole owner of the property. Defendants No.1 to 3 state that the children of P.M.Loganathan are the owners of the property. This being the position, the ratio in the aforementioned judgment has no application to the case on hand.
48. So far as the contention based on the judgment of the Apex Court in the case of BHAGAWANDAS VS MRS. ROASENE JERONE D'SOUZA reported in (1995) 4 KANT LJ 582 this Court is of the view that the said judgment has no application in this case. Unlike in the aforesaid case, this court is not reversing the finding of the Trial Court on the ground of non-joinder of necessary parties. This Court has given a finding based on admitted documents and facts that the two more
- 28 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 persons have right over the property and confirming the finding of the Trial Court.
49. The judgment in RSA No.200198/2011 by this Court relied on by the appellants again has no application to this case. It is a well-settled principle of law that a suit cannot be dismissed for non-joinder of necessary parties and the court has to afford an opportunity to implead the necessary parties. This Court has already assigned the reasons as to why the suit is not being remanded to implead necessary parties.
50. The ratio in the case of UTTAM CHAND VS NATHU RAM reported in (2020) 11 SCC 263 has no application as the sufficiency of plea of adverse possession is not the question involved in this case which was the question decided in the case of UTTAM CHAND supra.
51. Learned counsel for the respondents No.1 and 3 on instructions, submits that the respondents No.1 and 3 have no objection for the appellants to withdraw the amount along with accrued interest deposited before the Trial Court pursuant to the decree passed by the Trial Court. He would further submit on instructions from the respondent No.1, who is also present
- 29 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017 before the Court, that the respondents No.1 and 3, with an intention to put a quietus to the long-pending litigation between the parties, voluntarily undertake to pay Rs.10.00 lakhs, to the appellants, subject to the rider that the appellants do not lay a challenge to this judgment.
52. The submission of the learned counsel appearing for the respondents No.1 and 3 is placed on record. Respondent No.1 has also filed a memo agreeing to pay Rs.10.00 lakhs. It is made clear that payment of Rs.10.00 lakhs is in addition to what is payable as per the judgment and decree of the trial Court.
53. Under the circumstances, this Court is of the view that in addition to the amount decreed by the trial court, respondents No.1 and 3 shall pay Rs.10.00 lakhs to the appellants and the said amount shall be paid within six months from this date.
54. It is made clear that if the amount of Rs.10 lakhs is not paid within six months from today, the said amount of Rs.10 lakhs shall carry interest @ 6% per annum from this date till the date of realisation.
- 30 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017
55. It is further made clear that since the respondents No.1 and 3 have volunteered to pay Rs.10.00 lakhs, on the condition that the appellants shall accept this judgment and shall not question the same, the respondents No.1 and 3 shall not have obligation/liability to pay the said amount of Rs.10 lakhs, if this judgment and decree are questioned by the appellants. However, the liability to pay the sum as ordered by the trial court shall remain on the respondents No.1 and 3 as long as the amount is not paid.
56. The amount in deposit before the Trial Court along with accrued interest shall be released in favour of the appellants.
57. Hence the following:
ORDER
(i) The appellants are not entitled to specific performance of the contract dated 02.03.2002.
(ii) The respondents No.1 and 3 are liable to refund Rs.6 lakhs with interest @ 12% per annum from the date of the suit till realization of the amount.
- 31 -
NC: 2023:KHC:26656 RFA No. 1357 of 2016 C/W RFA.CROB No. 7 of 2017
(iii) The appellants are entitled to receive the amount kept in fixed deposit before the Trial Court to realize the decree for refund of earnest amount, granted by the trial Court, and, if any amount towards interest remains due in terms of the decree passed by the Trial Court, the respondents No.1 and 3 shall pay the same to the appellants.
(iv) As undertaken, the respondents No.1 and 3 shall pay Rs.10 lakhs to the appellants within 6 months from today. If any amount out of Rs.10 lakhs is unpaid same shall carry interest @ 6% per annum from this date till the date of realization.
(v) No order as to the cost.
(vi) The appeal and cross objections are
accordingly disposed of.
Sd/-
JUDGE
GVP/BRN