Bangalore District Court
In As.62/2014] : Smt.Venkatalakshmi ... vs Unknown on 5 February, 2019
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 5th day of February, 2019
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City.
A.S.NO:62/2014
And
A.S.NO: 68/2014
PLAINTIFFS
[In AS.62/2014] : Smt.Venkatalakshmi Parthiban,
W/o.Sri.N.Parthiban,
Aged about 46 years,
R/at No.6, I Main, Maruthi Layout,
Banashankari V Stage, Vasanthpura,
Bengaluru-560 061.
[By Pleader - Sri.Subramanya]
[In AS.68/2014] : Smt.Vardhini,
W/o.Sri.Guga Saravanan,
Aged about 49 years,
R/at No.306, 3rd Floor,
Skyline Tower Block,
Nagarbhavi Road, Chandra Layout,
Bengaluru-560 044.
[By Pleader - Sri.D.B.Harish]
/Vs/
AS.62/2014
&
AS.68/2014
2
DEFENDANTS :
[In AS.62/2014] 1) Sri.K.J.Kamath,
S/o.Sri.K.M.Kamath,
Aged about 55 years,
R/at No.29/1, Temple Road,
Malleswaram, Bengaluru-560 003.
2) Sri.K.G.Kamath,
S/o.Sri.K.M.Kamath,
Aged about 50 years,
R/at No.57, 8th Cross,
4th Main, Malleswaram,
Bengaluru-560 003.
[By Pleader - Sri.GS]
3) Sri.S.Guruprasad,
S/o.late Sri.G.Subramanyam,
Aged about 54 years,
R/at No.865/26, 15th Main,
3rd Block, Rajajinagar,
Bengaluru-560 010.
[By Pleader - Sri.VS]
4) Smt.Vardhini,
W/o.Sri.Guga Saravanan,
Aged about 49 years,
R/at No.306, 3rd Floor,
Skyline Tower Block,
Nagarbhavi Road, Chandra Layout,
Bengaluru-560 044.
[By Pleader - Sri.HBB]
5) Sri.B.S.Ramakantha,
District Judge (Retd.) and Sole Arbitrator
R/at No.1075/F, 10th Main,
II Stage, HAL,
Bengaluru-560 038.
AS.62/2014
&
AS.68/2014
3
[In AS.68/2014] : 1) Sri.K.J.Kamath,
S/o.Sri.K.M.Kamath,
Aged about 55 years,
R/at No.29/1, Temple Road,
Malleswaram, Bengaluru-560 003.
2) Sri.K.G.Kamath,
S/o.Sri.K.M.Kamath,
Aged about 50 years,
R/at No.57, 8th Cross,
4th Main, Malleswaram,
Bengaluru-560 003.
[By Pleader - Sri.D.B.Harish]
3) Sri.S.Guruprasad,
S/o.late Sri.G.Subramanyam,
Aged about 54 years,
R/at No.865/26, 15th Main,
3rd Block, Rajajinagar,
Bengaluru-560 010.
[Absent]
4) Smt.Venkata Lakshmi Parthibhan,
W/o.Sri.N.Parthibhan,
Aged about 46 years,
R/at No.6, I Main, Maruti Layout,
Banashankari V Stage,
Vasanthapura,
Bengaluru-560 061.
[By Pleader - Sri.SS]
5) Sri.B.S.Ramakantha,
District Judge (Retd.) and Sole Arbitrator
R/at No.1075/F, 10th Main,
II Stage, HAL,
Bengaluru-560 038.
---
AS.62/2014
&
AS.68/2014
4
COMMON JUDGMENT
The Plaintiffs have filed these suits under
Section 34 of the Arbitration and Conciliation Act,
1996, for setting aside the award dated 08.03.2014
passed by the 5th Defendant/Sole Arbitrator in
CMP.No.21/2007; wherein, the Plaintiffs and their
brother Sri.S.Guruprasad, the Defendant No.3 in
both suits are directed to execute and register the
Deed of Sale by conveying the schedule property
with possession, which is the subject matter of the
Agreement of Sale dated 16.04.2006 (Ex.C.4) in
favour of Defendants No.1 and 2 or in favour of
their nominees on or before 30.06.2014 by paying
the consideration as detailed in the impugned
award.
2) Since both these suits are arising out of
single award dated 08.03.2014 passed by the 5 th
Defendant/Sole Arbitrator in CMP.No.21/2007, for
AS.62/2014
&
AS.68/2014
5
the convenience of the court, both these suits are
taken together for passing common judgment.
3) The Plaintiffs' case is that, Defendants No.1
and 2 being the claimants, before the Sole
Arbitrator/5th Defendant, initiated arbitration
proceedings against the Plaintiffs and the
Defendant No.3 for specific performance of
Agreement of Sale dated 16.04.2006 at Ex.C.4, with
respect to the land bearing New No.25 (Old
Sy.No.10), Peenya Village, Yeshwanthpur Hobli,
Subroto Mukherjee Road, Jalahalli West, Bengaluru,
situated in Bengaluru Mahanagara Palike Ward No.1,
measuring about 100 feet x 436 feet.
(4) The Plaintiffs have stated that the learned
Arbitrator without properly appreciating the facts
and circumstances of the case and without giving
due regard to the contentions of the Plaintiffs had
passed the award directing the Plaintiffs and the 3 rd
AS.62/2014
&
AS.68/2014
6
Defendant to execute and register the Deed of Sale
by conveying the schedule property with possession
on or before 30.06.2014 in favour of the Defendant
No.1 and 2. The Plaintiffs have stated that, the 1 st
and 2nd Defendants were Advocates of the Plaintiffs
and their family members and all along they had
exercised fiduciary relationship with the family
members. The 1st and 2nd Defendants have
represented the Plaintiffs and their family members
both in litigation and non-litigation matters and they
were in position of active confidence. The 1st and 2nd
Defendants have induced the Plaintiffs and the 3rd
Defendant to enter into alleged Sale Agreement and
induced them to sign on dotted lines. The Plaintiffs
were not even aware as to the sale consideration.
The Defendants No.1 and 2 have kept the Plaintiffs
and the Defendant No.3 in total dark by
representing to them that the schedule property is
in various disadvantageous positions and their title
to the same is not clear and even the katha of the
AS.62/2014
&
AS.68/2014
7
schedule property is not yet changed. The 1st and
2nd Defendants by paying a very meager
consideration have made a deliberate attempt to
block the schedule property and in the agreement
of sale, they had reserved absolute control over the
schedule property by reserving their rights even to
trade the schedule property, get the sale deed by
paying only a portion of the consideration and pay
the balance in one year from the date of execution
of the sale deed in their favour with respect to
schedule property. The Plaintiffs have also learnt
that even a document styled Memorandum of
Understanding came to be executed on 16.04.2006,
wherein, out of the total sale consideration, the
Defendants No.1 and 2 have ensured that 20% of
the total sale consideration requires to be paid by
the Plaintiffs and Defendant No.3 as remuneration
for the services rendered to the family members of
the Plaintiffs for over 15 years. Though the schedule
property on 16.04.2006 was valued in excess of
AS.62/2014
&
AS.68/2014
8
Rs.10,00,00,000/- (Rupees Ten Crores Only), the
consideration was only shown at Rs.1,000/- per
square feet. The Plaintiffs had chosen to cancel the
agreement after realizing that the Defendants No.1
and 2 were never capable of performing their part
of the agreement and pay the consideration as
agreed. Since the Defendants No.1 and 2 have
misused and abused their fiduciary relationship and
always kept the Plaintiffs in predicament and
created one sided agreement by keeping the
Plaintiffs in disadvantageous position, the Plaintiffs
had prayed the learned Arbitrator to dismiss the
case of the 1st and 2nd Defendants for specific
performance by imposing exemplary cost. The
learned Arbitrator without appreciating all the
aspects of the case of the Plaintiffs, has passed
impugned award.
5) The Plaintiffs have challenged the impugned
award on the following grounds :
AS.62/2014
&
AS.68/2014
9
(1) The learned Arbitrator without any
legal justification and without even
considering the case of the Plaintiffs has
bluntly passed the impugned award which
is prima facie contrary to the established
principles of law governing specific
performance and the same requires to be
set aside.
(2) The learned Arbitrator has not
even applied his mind to Section 20 of
Specific Relief Act, 1963 containing the
Rules governing granting of Specific
Performance. The learned Arbitrator has
not read the agreement of sale dated
16.04.2006 and applied his mind to the
clauses therein before ordering for specific
performance.
(3) The learned Arbitrator has
proceeded on the matter by treating the
statements made by Defendants No.1 and 2
as sacrosanct though the documents
available on record, pleading of the parties
and the evidences adduced by them speak
contrary to their case dis-entitling them to
AS.62/2014
&
AS.68/2014
10
seek the discretionary relief of specific
performance.
(4) The learned Arbitrator has failed to
appreciate the conduct of the Defendants
No.1 and 2 who have not moved the Court
without clean hands. Even the Plaintiffs
have proved the fiduciary relationship with
Defendants No.1 and 2 and the same has
been proved beyond reasonable doubt, the
learned Arbitrator has proceeded to pass
the impugned order and the same requires
reconsideration.
(5) The learned Arbitrator has failed to
appreciate that the Plaintiffs had no
occasion to suspect or disbelieve the
Defendants No.1 and 2 as the Plaintiffs
were of the bona fide belief that their
interest will be protected in the hands of
Defendants No.1 and 2 being their
advocates.
(6) The learned Arbitrator has failed to
appreciate that the plaintiffs and their
brother were induced by the 1st and 2nd
Defendants to enter into an agreement
AS.62/2014
&
AS.68/2014
11
which apparently is unconscionable and
detriment to the interest of the Plaintiffs
and their brother.
(7) The learned Arbitrator has failed to
appreciate the case of the Plaintiffs who
have specifically contended that the price
was unilaterally fixed by Defendants No.1
and 2 without having any discussions with
them and the value of the property was in
excess of rupees 10 crores as on
16.04.2006.
(8) The learned Arbitrator has failed to
consider the dictum of various decisions of
the Hon'ble Supreme Court and has
granted the discretionary relief of specific
performance, though apparently the
Defendants No.1 and 2 are not entitled for
the same.
(9) The learned Arbitrator has failed to
appreciate that Defendants No.1 and 2
claiming themselves as advocates
practicing on real estate side have made a
futile attempt to block the property of the
Plaintiffs and their brother, trade with the
AS.62/2014
&
AS.68/2014
12
same and make unjust money by depriving
the Plaintiffs of their legitimate rights.
(10) The learned Arbitrator has not dealt
Ex.R.2 properly and effectively which itself
speaks to the true intention of the
Defendants No.1 and 2 to some how knock
off the valuable property of the Plaintiffs
and their brother.
(11) The learned Arbitrator has failed to
appreciate that Defendants No.1 and 2
were never ready and willing to perform
their part of the contract and as such, they
were not entitled to claim discretionary
relief of specific performance. The learned
Arbitrator has failed to appreciate that
though the Defendants No.1 and 2 have
bluntly pleaded their readiness and
willingness throughout the proceedings,
have not produced any documentary proof
to show that they had the requisite
resources to perform their part of the
contract. In fact, the cheques issued by
Defendants No.1 and 2 also got
dishonoured creating serious doubts as to
their conduct. Even on 30.06.2006, the
AS.62/2014
&
AS.68/2014
13
Defendants No.1 and 2 have not paid the
agreed sale consideration. The Defendants
No.1 and 2 have never expressed their
readiness to pay the sale consideration at
any point of time before 30.06.2006. No
communication in this regard is exchanged
and no intimation to the said effect is
admittedly communicated. No efforts were
made to deposit the amount before the
Arbitrator nor satisfactory proof has been
produced proving beyond reasonableness
as to financial credibility of Defendants No.1
and 2 to perform their part of the contract.
(12) The learned Arbitrator has failed to
appreciate that as per Clause 2(b) of Ex.C.4
the payment of 120 lakhs on or before
30.06.2006 is sine-qua-non for enforcing
the agreement as the registration of the
sale Deed was contemplated on payment of
the said amount on or before 30.06.2006.
(13) The learned Arbitrator has
whimsically fixed the consideration to the
detriment of the Plaintiffs and the same
requires reconsideration.
AS.62/2014
&
AS.68/2014
14
(14) The learned Arbitrator has passed
the impugned award despite of knowing
the fact as to initiation of proceedings by
the brother of the Plaintiffs against
Defendants No.1 and 2 for committing
professional misconduct. Even otherwise,
the award passed by the 5th Defendant is
bad in law and the same requires
reconsideration.
(15) The learned Arbitrator has failed to
lay down the rules for deciding the dispute
at the first instance and then chose to not
to go by the Indian Evidence Act, which
itself has caused grave injustice to the
parties.
(16) The approach of the learned
Arbitrator to the whole case suggests that
he has casted the entire onus and burden
on the Respondents to show that Claimants
are not entitled to specific performance.
The fundamental approach of the learned
Arbitrator itself is in negation of the civil
law jurisprudence.
AS.62/2014
&
AS.68/2014
15
(17) The learned Arbitrator ought to
have considered that Ex.R.7 and R.8 were
concerning the subject property as they
were the Will of the mother of the
Respondents and the family arrangement
between the Respondents family.
(18) The learned Arbitrator went on an
irrelevant consideration of understanding if
the entire siblings were sailing together or
not. All the three had engaged different
advocates and the Claimants had never
even tried to establish that they were all
fighting united against the Claimants.
(19) The learned Arbitrator has failed to
appreciate that Claimants did not misuse
the fiduciary relationship before 2006 is not
correct as they had got appointed their
own brother who was an advocate as an
executor of the Will of the mother of the
Respondents.
(20) The aspect of readiness and
willingness of the Claimants has not been
dealt in detail and depth by the learned
Arbitrator as in a claim for specific
AS.62/2014
&
AS.68/2014
16
performance, the readiness and willingness
is the most important aspect of the matter
and that has not been given its due
importance. The learned Arbitrator did not
consider that the Claimants agreeing to
give less than 1/3rd of the sale
consideration at the time of registration
itself showed that they did not have the
money to pay the entire consideration at
once, that they were not prepared for the
purpose of the property.
(21) The learned Arbitrator did not
consider that Claimants had only paid
Rs.10 lakhs each to the 1st and 2nd
Respondents in 2006 and the claim was
being decreed in 2014 with respect to a
property which could fetch very high
market price. The learned Arbitrator did
not consider the fact that before
30.06.2006, the Claimants never called
upon the Respondents to perform anything
if at all there was any non performance by
the Respondents.
(22) The learned Arbitrator did not
consider that a reading of the Agreement
AS.62/2014
&
AS.68/2014
17
of Sale itself showed that there were no
important obligations cast on the
Respondents, the non performance of
which would amount to frustration of the
contract and failed to appreciate that the
reading of the Agreement of Sale clearly
shows that the title to the property is very
clear.
(23) The learned Arbitrator failed to
appreciate that as on the date when the
Agreement was entered into there was
nothing in the title or revenue records that
required regularization and failed to
appreciate that there was no question of
regularizing the title to the property and
incurring expenses as a reading of the
Agreement itself shows that there were no
such issues. Further, the learned Arbitrator
has failed to appreciate the Memorandum
of Understanding dated 16.04.2006 and
the intention of the Claimants and the
dishonesty displayed in this regard by the
Claimants.
(24) The learned Arbitrator has failed to
appreciate that, the MOU proved that the
AS.62/2014
&
AS.68/2014
18
Claimants were not honest and fair at all
with the Respondents in respect of both the
deeds dated 16.04.2006 and that is why
they have weaved a story that they were
forced to sign due to Respondents pressure
and that subsequently it was not acted
upon. The learned Arbitrator ought to have
appreciated that the Claimants being
prudent advocates would never have
signed such a document unless they meant
it to take effect.
(24) The learned Arbitrator has awarded
specific performance at the instance of the
party who is guilty of breach of contract
and has failed to appreciate that the
subject matter is not capable of being
settled by arbitration due to it being
outside the realm of the Agreement to
arbitrate and due to the fact that non
parties to the arbitration are essential
parties in the facts and circumstances of
the claim.
(25) The award is in violation of the
public policy of India.
AS.62/2014
&
AS.68/2014
19
(26) The learned Arbitrator ought to
have refused specific performance due to
the phenomenal increase in price of the
property. Alternatively, additional amounts
keeping in mind the phenomenal increase
in price ought to have been awarded to
Respondents.
(27) The learned Arbitrator has failed to
appreciate that the Claimants had failed to
prove consensus ad idem in entering into
the contract and ought to have considered
the fact that the Respondents were in
possession of the suit schedule property
and refused Specific performance due to
the claimants' violation of the terms of
contract, claimants' failure in performance
of their terms of contract, claimants' acts in
fraud of the contract and their willful acts
in variance with the contract.
(28) The learned Arbitrator ought to
have refused Specific performance due to
the Claimants not being continuously
ready, much less any time ready for the
performance and due to the delay in
initiating the proceedings and since the
AS.62/2014
&
AS.68/2014
20
conduct of the Claimants have never been
blemish less, as they neither performed nor
offered to perform their part of the
contract.
(29) The learned Arbitrator ought to
have refused specific performance as time
was the essence of contract and since
claimants did not perform within time, the
contract got rescinded and due to the
claimants failing to prove that they were
always ready and willing to perform the
contract, being unfair and unequal and the
specific performance would give an unfair
advantage to the Claimants, as the
Claimants never ever called upon the
Respondents to perform within the
contractual period.
(30) The learned Arbitrator ought to
have refused Specific performance due to
the Claimants conduct not being free from
malafide or trickery and as it was a
discretionary remedy and even if it is
lawful, the learned Arbitrator was not
obligated to grant it and it had to be based
on sound, reasonable and judicial principles
AS.62/2014
&
AS.68/2014
21
and looking from any angle the Claimants
were not entitled to the relief.
Hence, for all these reasons the Plaintiffs pray for
setting aside the award.
6) The Defendants No. 1 and 2 have entered
their appearance through their counsel and filed
their statement of objections, wherein, the
Defendants 1 and 2 have denied the averments
made in the plaints and inter alia, they have stated
that the award passed by the 5 th Defendant is in
accordance with law and has been delivered after
following all the due procedures and by observing
wise guidelines of the Apex Court. The basis
adopted for the award is admissions of the parties
and the production of documents before the Court,
further the 3rd Defendant has already accepted the
awrd and executed the sale deed in favour of these
Defendants. Therefore, there are no merits in the
AS.62/2014
&
AS.68/2014
22
suits filed by the Plaintiffs and the same is liable to
be dismissed as devoid of merits.
7) Heard. Perused the pleadings, written
arguments and records placed in these suits.
8) The points that arise for my consideration
are:-
(1) Whether the Plaintiffs have made
out any of the grounds as
enumerated in Section 34 of the
Arbitration and Conciliation Act,
1996 to set aside the award, dated
08.04.2014 passed by the 5th
Defendant/Sole Arbitrator?
(2) What order?
REASONS
9) Point No.1 : The suits in AS.No.62/2014
and AS.No.68/2014 came to be filed by
Smt.Venkatalakshmi Parthiban and Smt.Vardhini
respectively, who were Respondents 3 and 2
respectively before the Arbitral Tribunal against the
Defendants No.1 and 2, who were claimants before
the Arbitral Tribunal in CMP.No.21/2007. The
AS.62/2014
&
AS.68/2014
23
Plaintiffs in their respective suits have made their
brother, S. Guruprasad as Defendant No.3, who was
Respondent No.1 before the Arbitral Tribunal. The
Plaintiff in AS.No.62/2014 has been made as
Defendant No.4 in AS.No.68/2014 and the Plaintiff in
AS.No.68/2014 has been made as Defendant No.4 in
AS.No.62/2014.
10) The Plaintiffs have challenged the impugned
award dated 08.04.2014 passed by the learned
Arbitrator/5th Defendant, wherein, the learned
Arbitrator was pleased to pass award in favour of
Defendants No.1 and 2 against the Plaintiffs and
their brother, directing the Plaintiffs and and their
brother to execute and register the Deed of Sale by
conveying the schedule property with possession,
which is the subject matter of the Agreement dated
16.04.2006 at Ex.C.4 in favour of the Defendants
No.1 and 2 or in favour of their nominees on or
before 30.06.2014 by paying a sum of
AS.62/2014
&
AS.68/2014
24
Rs.4,36,00,000/- (Rupees Four Crores Thirty six
Lakhs Only) and it is held that the Defendants No.1
and 2 are liable to pay a sum of Rs.1,99,79,400/- to
Defendant No.3; Rs.1,99,79,400/- to Plaintiff in
AS.No.68/2014 and Rs.1,12,46,800/- to Plaintiff in
AS.No.62/2014 towards the sale consideration
amount.
11) The Plaintiffs have contended that, the
learned Arbitrator has not applied his mind to
Section 20 of the Specific Relief Act, 1963 which
contains rules governing granting of specific
performance. The learned Arbitrator has failed to
appreciate that by virtue of Section 20(2)(a) of the
Specific Relief Act, 1963, before decreeing specific
performance, the court has to see the terms of the
contract, conduct of the parties at the time of the
contract and other circumstances at the time of
contract, whether results the contract though not
voidable gives Plaintiff an unfair advantage over the
AS.62/2014
&
AS.68/2014
25
Defendants. Clause (c) of Section 20(2) mandates
that, the Court should also overrule the fact that
Defendant had entered into the contract under
circumstances which though not render the contract
voidable makes it inequitable to enforce specific
performance. It is further contended that, the
learned Arbitrator has failed to appreciate that
Defendants No.1 and 2 were never ready and willing
to perform their part of the contract and as such,
they were not entitled to claim discretionary relief
of specific performance. It is also contended that
the learned Arbitrator has failed to appreciate that
though Defendants No.1 and 2 have bluntly pleaded
their readiness and willingness throughout the
proceedings, they have not produced any
documentary proof to show that they had the
requisite resources to perform their part of the
contract. It is contended that, even on 30.06.2006,
the Defendants No.1 and 2 have not paid the
agreed sale consideration. The Defendants No.1 and
AS.62/2014
&
AS.68/2014
26
2 have never expressed their readiness to pay the
sale consideration at any point of time before
30.06.2006. No communication in this regard is
exchanged and no intimation to the said effect is
admittedly communicated. Despite the specific
contentions of the Plaintiffs before the learned
Arbitrator as to readiness and willingness of
Defendants No.1 and 2, no efforts were made to
deposit the amount before the learned Arbitrator
nor satisfactory proof has been produced. The
impugned award is prima facie contrary to the
established principles of law governing specific
performance. It is further contended that, the
learned Arbitrator has grossly erred in law in
passing the impugned award without appreciating
the futile attempts made by Defendants No.1 and 2
to knock off the valuable property of the Plaintiff by
misusing the confidence reposed by the Plaintiffs
and their family members on Defendants No.1 and
2, who have assisted all along the Plaintiffs and
AS.62/2014
&
AS.68/2014
27
their family members both in litigations and
documentation. The impugned award has been
passed without considering the case of the Plaintiffs
that Defendants No.1 and 2 were all along in
fiduciary relationship to influence the Plaintiffs and
their brother to sign the Agreement of Sale and
Memorandum of Understanding. It is contended
that the award is in violation of the Public Policy of
India and the same requires to be set aside.
12) The first and second Defendants have
contended that, the award passed by the learned
Arbitrator is in accordance with law and has been
delivered after following the procedures and by
observing wise guidelines of the Hon'ble Apex
Court. The award has been passed on the basis of
admissions of the parties and production of
documents before the learned Arbitrator. It is
contended that the 3rd Defendant has already
accepted the award and executed sale deed in
AS.62/2014
&
AS.68/2014
28
respect of his share in favour of Defendants No.1
and 2 and hence, there is no merit in the suits.
13) The learned counsels for the Plaintiffs were
pleased to submit that, (i) the award grants what is
prohibited under Section 16(c) and Section 20 of the
Specific Relief Act; (ii) the award has been passed
by dis-regarding the binding effect of the judgments
passed by the Hon'ble High Court of Karnataka as
well as the Hon'ble Supreme Court of India; (iii) the
award is perverse in nature, the inferences drawn
are on the face of it untenable resulting in mis-
carriage of justice; and (iv) the finding is based on
no evidence.
14) It is also submitted that when award is
prohibited by law; opposed to the law of
precedents; perverse in nature and inferences
drawn are not justified and the finding is given on
no evidence, the court shall be entitled to interfere
AS.62/2014
&
AS.68/2014
29
under Section 34 of the Act and set aside the
award.
15) The learned counsel for Defendants No.1 and
2 was pleased to submit that, the grounds urged by
the Plaintiffs are all pertaining to facts of the case
such as "readiness and willingness", "conduct of
parties", etc. The learned Arbitrator has accorded
findings on each of these issues in detail in the
Arbitral Award. It is an established principle of law
that, all these issues are to be determined on the
basis of facts of each case and may vary from case
to case. When the Arbitrator has recorded findings
of facts, the Plaintiffs cannot invoke the jurisdiction
of this Court under Section 34 of the Arbitration and
Conciliation Act and seek interference on the
ground that the Arbitral Award is in conflict with
Public Policy of India. Re-agitating the issues on
facts cannot be permitted. The scope of Section 34
is very limited.
AS.62/2014
&
AS.68/2014
30
16) The learned counsels for the Plaintiffs have
submitted that, the merits of the award can be
assailed when the award is in conflict with the
Public Policy of India. To substantiate their
contentions, they rely upon the following decisions
of the Hon'ble Supreme Court -
(1) (2015)3 SCC 49
(Associate Builders Vs. Delhi
Development Authority)
(2) (2014)9 SCC 263
(Oil & Natural Gas Corporation Ltd. Vs.
Western GECO International Ltd.)
(3) (2001)5 SCC 629
(Sikkim Subba Associates Vs. State of
Sikkim);
17) At this stage, it is relevant to mention Section
34(2)(b) of the Arbitration and Conciliation Act,
1996. It reads as follows :
"34. Application for setting aside arbitral
award
(1) xx xx xx
(2) An arbitral award may be set
aside by the Court only if,-
(a) xx xx xx xx
(b) the court finds that -
(i) the subject-matter of the
dispute is not capable of settlement by
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arbitration under the law for the time
being in force, or
(ii) the arbitral award is in
conflict with the public policy of India.
Explanation I: For the avoidance of any
doubt, it is clarified that an award is in
conflict with the public policy of India, only
if,-
(i) the making of the award was
induced or affected by fraud or corruption
or was in violation of section 75 or section
81; or
(ii) it is contravention with the
fundamental policy of Indian law; or
(iii) it is in conflict with the most basic
notions of morality or justice.
Explanation 2 : For the avoidance of
doubt, the test as to whether there is a
contravention with the fundamental policy
of Indian law shall nor entail a review on
the merits of the dispute.] "
18) At this juncture, it is also relevant to mention
the ratio laid down in Associate Builders' case. The
Hon'ble Supreme Court was pleased to explain the
public policy of India after referring the judgment in
Oil and Natural Gas Corporation Limited. The
Hon'ble Supreme Court differentiates the Public
Policy of India under four headings viz., (i)
Fundamental Policy of Indian Law; (ii) Interest of
India; (iii) Justice or Morality and (iv) Patent
Illegality.
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19) It is further explained that what is meant by
'Fundamental Policy of Indian Law', which is set out
under four headings viz.,
(I) Compliance with statutes and
judicial precedents;
"Violation of Indian statutes i.e. the
awrd which is, on the face of it,
patently in violation of statutory
provisions cannot be said to be in
public interest. Such award/
judgment/decision is likely to adversely
affect the administration of justice and
would be regarded as being contrary to
the fundamental policy of Indian law.
Furthermore, the binding effect of the
judgment of a superior court being
disregarded would be equally violative
of the fundamental public policy of
Indian law"
(ii) Need for judicial approach;
" In every determination whether by a
court or other authority that affects the
rights of a citizen or leads to any civil
consequences, the court or authority
concerned is bound to adopt what is in
legal parlance called a "judicial approach"
in the matter........ .
The juristic principle of a "judicial
approach" demands that a decision be fair,
reasonable and objective. On the obverse
side, anything arbitrary and whimsical
would obviously not be a determination
which would either be fair, reasonable or
objective".
(iii) Natural justice compliance; and
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(iv) Wednesbury reasonableness.
" No less important is the principle now
recognised as a salutary juristic
fundamental in administrative law that a
decision which is perverse or so irrational
that no reasonable person would have
arrived at the same will not be sustained in
a court of law. Perversity or irrationality of
decisions is tested on the touchstone of
Wednesbury principle of reasonableness.
Decisions that fall short of the standards of
reasonableness are open to challenge in a
court of law often in writ jurisdiction of the
superior courts but no less in statutory
processes wherever the same are
available."
" The juristic principle of Wednesbury
reasonableness is that a decision which is
perverse or so irrational that no reasonable
person would have arrived at the same is
important and requires some degree of
explanation.
"It is settled law that where:
(i) a finding is based on no
evidence, or
(ii) an Arbitral Tribunal takes into
account something irrelevant to
the decision which it arrives at;
or
(iii) ignores vital evidence in
arriving at its decision,
such decision would necessarily be perverse"
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20) The fourth head of Public Policy as explained
by the Hon'ble Supreme Court is 'Patent Illegality'. It
is held as follows -
"The fourth head of public policy, namely,
is patent illegality. It must be remembered
that under the Explanation to Section 34(2)
(b)(ii) of the 1996 Act, an award is said to
be in conflict with the public policy of India
if the making of the award was induced or
affected by fraud or corruption. This
ground is perhaps the earliest ground on
which courts in England set aside awards
under English law. Added to this ground (in
1802) is the ground that an arbitral award
would be set aside if there were an error of
law by the arbitrator.
In the 1996 Act, the principle stands as the
'patent illegality' principle, which, in turn,
contains three sub-heads :
(I) Contravention of substantive law of
India:
" A contravention of the substantive
law of India would result in the death knell
of an arbitral award. Violation of Indian
statutes i.e. the award which is, on the
face of it, patently in violation of statutory
provisions cannot be said to be in public
interest. Such award/judgment/decision is
likely to adversely affect the administration
of justice and would be regarded as being
contrary to the fundamental policy of
Indian law. Furthermore, the binding effect
of the judgment of a superior court being
disregarded would be equally violative of
the fundamental policy of Indian law. This
must be understood in the sense that such
illegality must go to the root of the matter
and cannot be of a trivial nature. This
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again is a really a contravention of Section
28(1)(a) of the 1996 Act.
(ii) Contravention of Arbitration and
Conciliation Act, 1996:
A contravention of the Arbitration Act
itself would be regarded as a patent
illegality - for example if an arbitrator
gives no reasons for an award in
contravention of Section 31(3) of the 1996
Act, such award will be liable to be set
aside.
(iii) Contravention of the terms of the
contract :
In all cases, the Arbitral Tribunal shall
decide in accordance with the terms of he
contract and shall take into account the
usages of the trade applicable to the
transaction. Thus, the third sub-head of
patent illegality is really a contravention of
Section 28(3) of the Arbitration Act. This
contravention must be understood with a
caveat. An Arbitral Tribunal must decide in
accordance with the terms of the contract,
but if an arbitrator construes a term of the
contract in a reasonable manner, it will not
mean that the award can be set aside on
this ground. Construction of the terms of a
contract is primarily for an arbitrator to
decide unless the arbitrator construes the
contract in such a way that it could be said
to be something that no fair-minded or
reasonable person could do."
21) The learned counsel for Defendants No.1 and
2 submitted that, when the Court in applying the
"Public Policy" test to an arbitration award, it does
not act as a court of appeal and consequently errors
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of fact cannot be corrected. The counsel for
Defendants No.1 and 2 was pleaded to bring to the
notice of the Court regarding the legal dictum as
laid down in Associate Builders case in this aspect
of the matter. It is as follows :
" A possible view by the arbitrator on facts
has necessarily to pass muster as the
arbitrator is the ultimate master of the
quantity and quality of evidence to be
relied upon when he delivers his arbitral
award. Thus as award based on little
evidence or on evidence which does not
measure up in quality to a trained legal
mind would not be held to be invalid on this
score. Once it is found that the arbitrators
approach is not arbitrary or capricious, then
he is the last word on facts."
From the ratio as laid down in Associate
Builders' case, it has been clear that the merits of
arbitral award can be assailed only when it is in
conflict with Public Policy of India.
22) The Plaintiffs' case is to be looked into in the
light of the legal principles as laid down in Associate
Builders' case. The Plaintiffs' contention is that, the
learned Arbitrator has not applied his mind to
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Section 20 of the Specific Relief Act, 1963, which
contains the Rules governing granting of Specific
performance. The Defendants No.1 and 2 have
contended that the ground urged by the Plaintiffs
are pertaining to facts of the case, such as
readiness and willingness, conduct of parties, etc.
The Plaintiffs cannot invoke the jurisdiction of the
court in respect of finding of fact under Section 34
of the Arbitration and Conciliation Act.
23) To substantiate their contentions, the
Defendants No.1 and 2 relied on the decision
reported in (1999) 5 SCC 651 [Olympus
Superstructures Pvt. Ltd. Vs. Meena Vijay Khetan
and Others]. Para-37 reads as follows :
" 37. This point concerns the issues
between the parties on the merits of the
award relating to default, time being of the
essence, readiness and willingness etc.
These are all issues of fact. If we examine
Section 34(2) of the Act, the relevant
provisions of which have already been
extracted under Points 1 and 2, it will be
seen that under clause (b) of Section 34(2),
inference is permissible by the court only if -
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(i) the subject-matter of the dispute is not
capable of settlement by arbitration under
the law for the time being in force, or
(ii) the arbitral amount is in conflict with the
public policy of India.
The explanation to the provisions says that
without prejudice to the generality of sub-
clause (ii) of clause (b), it is declared for the
avoidance of any doubt, that an award is to
be created (sic treated) as in conflict with the
public policy of India if the making of the
award was induced or effected by fraud, or
corruption or was in violation of Section 75 or
81. Section 75 deals with confidentiality
while Section 81 deals with admissibility of
evidence in other proceedings. We do not
have any such situation before us falling
within Section 34(2)(b)(ii). The factual
points raised in the case before us, to which
we have referred to earlier, do not fall within
Section 34(2)(b)(ii). Coming to Section 34(2)
(b)(i) we have already held that the subject-
matter of the dispute is not incapable of
settlement by arbitration under the law for
the time being in force. Nor is any point
raised that the arbitral award is in conflict
with the public policy of India. We are,
therefore, of the view that the merits of the
award on the facts of the case do not fall
under Section 34(2)(b) of the Act.
.................."
24) The Defendants No.1 and 2 also relied upon
the decision reported in (2010)1 SCC 409 [Ravindra
Kumar Gupta and Company Vs. Union of India],
wherein, the judgment in the Olympus
Superstructures Pvt. Ltd., is cited. The Hon'ble
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Supreme Court was pleased to hold that re-
appraisal of evidence by Court is not permissible.
25) On the contrary, the Plaintiffs have relied
upon the decision reported in (1999) 7 SCC 303
[Ravikumar Agarwal and Another Vs. Thawar Das
(Dead) through Lrs.], wherein, it has been held that,
the finding on the question of readiness and
willingness to perform the contract is a mixed
question of law and fact.
26) Reliance has also been placed by the
Plaintiffs on the judgment reported in (2006) 2 SCC
496 in the case of H.P.Pyarejan Vs. Dasappa (Dead)
by Lrs., and others, wherein, It is also held that, the
finding on the question of readiness and willingness
to perform contract is a mixed question of law and
fact.
27) In the instant case, what should be looked
into is, whether the evidence on record satisfy the
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requirement of law relied upon by the learned
Arbitrator. Under such circumstances, it would not
amount to re-appreciation of evidence. As held in
Associate Builders' Case, the merits of arbitral
award can be assailed only when it is in conflict
with public policy of India. Plaintiffs have
emphatically stated that, the finding of the learned
Arbitrator regarding readiness and willingness is
based on no evidence and the award has been
passed by disregarding the binding effect of the
judgments of the Hon'ble High Court of Karnataka
and Hon'ble Supreme Court of India, under such
circumstances, it is indispensable for the court that
whether the findings of the learned Arbitrator as to
the readiness and willingness is based on no
evidence and that while passing the award, regard
being had to the binding effect of the judgments of
the Hon'ble High Court of Karnataka and Hon'ble
Supreme Court of India. These contentions of the
parties forced this court to assail the merits of the
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arbitral award on the ground of public policy of
India subject to its limitation.
28) On perusal of the award makes it clear that,
the learned Arbitrator was pleased to frame
11(eleven) Issues based on rival contentions of the
parties. The learned Arbitrator has taken all the
issues together for discussion and passed the
impugned award. Facts relating to Agreement of
Sale, Memorandum of Understanding and fiduciary
relationship of the Plaintiffs with Defendants No.1
and 2 are all pure questions of facts that have
been elaborately discussed by the learned
Arbitrator having regard to the oral and
documentary evidence placed by the parties. Issue
relating to whether the Agreement of Sale dated
16.04.2006 superseded by means of Memorandum
of Understanding dated 16.04.2006 was not
pressed by the Plaintiff in AS.No.68/2014, vide
Memo dated 26.10.2013, as pointed out by the
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learned Arbitrator at Para-29(e) of the impugned
award. If this court is inclined to go into the merits
of the impugned award as to execution of the
Agreement, Memorandum of Understanding,
fiduciary relationship of the parties, conduct of the
parties and so on, which are pure questions of fact,
the same would amount to re-appraisal of
evidence. Hence, this court confines to the mixed
question of law and fact as to the readiness and
willingness only.
29) At this juncture, it is relevant to mention the
Issue No.7. It reads as follows -
"Whether the Claimants always were/are
ready and willing to perform their part of
Contract as contended in the Statement of
Claim?
OR
Whether the Claimants were never ready
and willing to perform their part of contract
as contended by the Respondents in their
Statement of Defence? "
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30) To consider Issue No.7 in a perspective
manner, it is relevant to frame the following points
for consideration :
(1) Whether the learned Arbitrator has
granted relief that is prohibited
under Section 16(c) and Section 20
of the Specific Relief Act?
(2) Whether the learned Arbitrator
has disregarded the binding
effect of the judgment passed by
the Hon'ble High Court of
Karnataka as well as Hon'ble
Supreme Court of India?
(3) Whether the finding is based on
no evidence?
31) At this juncture, it is relevant to reproduce
Section 16 of the Specific Relief Act. It reads as
follows :
"16. Personal bars to relief - Specific
performance of a contract cannot be
enforced in favour of a person -
(a) xx xx xx
(b) xx xx xx
(c) who fails to aver and prove that he has
performed or has always been ready and
willing to perform the essential terms of the
contract which are to be performed by him,
other than terms of the performance of
which has been prevented or waived by the
defendant.
Explanation - For the purpose of cluase
(c).-
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(i) where a contract involves the payment of
money, it is not essential for the plainitff to
actually tender to the defendant or to
deposit in court any money except when so
directed by the court;
(ii) the plaintiff must aver performance of, or
readiness and willingness to perform, the
contract according to its true construction."
32) The Plaintiffs have submitted that mere
averring the readiness and willingness by way of
pleading does not ipso facto confer right to the
Defendants No.1 and 2 to obtain specific
performance, unless the same is proved according
to its true construction. To substantiate their
contention, the Plaintiffs have relied upon the
judgment of the Hon'ble High Court of Karnataka
reported in-
ILR 2016 Karnataka 2252
[Sri. Punny Akat Philip Raju, Since
dead by his Lrs. Vs. Sri.Dinesh Reddy]
Para -32, 33, 36, 37 and 38 read as follows :
"32. The proof of readiness necessarily
means demonstration of financial ability or
capacity to pay the balance sale consideration
and take the sale deed. When a person on
oath states in the witness box that he is ready
with the requisite funds, he must produce
some evidence to prove his possession of the
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required funds. The explanation makes it clear
that the proof of requisite funds does not
mean he should produce the currency before
the Court or he should deposit the money in
Court. But at the same time, mere statement
on oath in the witness box that he is
possessed of the requisite funds would also do
not prove possession of funds. The said proof
has to be necessarily by way of documentary
evidence. The reason being, if, the payment
is to be made in cash i.e., by handing over
currency, currency is a documentary
evidence. The explanation makes it clear that
to prove readiness, the plaintiff need not
produce the currency before the Court. If the
balance consideration is to be deposited in
the Court such a deposit is also evidenced by
documentary evidence, which is also not
necessary by virtue of the explanation.
33. Money does not exist in vacuum. Money
has to be necessarily in the form of physical
object. It is in the nature of document.
Money is deposited in banks. Money is in the
nature of securities. Money is capable of
being raised from borrowing. Money could be
raised by sale of properties movable or
immovable. When a person claims that he is
possessed of sufficient funds, he has to
produce some documentary evidence, which
proves his capacity to raise the funds or he
possess the funds. What are the documents
which, the plaintiff can produce to prove his
capacity? It may be a passbook issued by a
Bank where he has kept the balance sale
consideration ready for payment. If he has
invested his money by way of securities, he
has to produce those securities before Court
to show that any time he can encash the
same and pay the balance consideration.
Similarly, if he has kept the money in Fixed
Deposit, in a Bank, that deposit receipt is the
proof of his ability to raise the balance sale
consideration. If he intends to borrow money
from a Nationalized Bank or from his
employer or from any other financial
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institution, it has to be demonstrated by
producing a request for such financial
assistance in writing, sanctioning of the said
loan which has to be necessarily in writing.
These instances are only illustrative. There
may be several other modes by which the
requisite funds are raised. But all of these
instances are evidenced by documentary
evidence.
36. The Apex Court had an occasion to
consider the contention that when there is no
denial of readiness and willingness by the
defendant either in the written statement or
in the evidence, there is no obligation on the
part of the plaintiff to produce any
documentary evidence to prove his
readiness. The Supreme Court in the case of
J.P.BUILDERS & ANOTHER VS.
A.RAMADAS RAO, after referring to Section
16 of the Specific Relief Act has held at para-
21 as under :
21. Among the three clauses, we are more
concerned about clause (c). "Readiness and
Willingness' is enshrined in clause (c) which
was not present in the old Act of 1877.
However, it was later inserted with the
recommendations of the 9th Law
Commission's Report. This clause provides
that the person seeking specific
performance must prove that he has
performed or has been ready and willing to
perform the essential terms of the contract
which are to be performed by him.
At para 22 it is held as under :
The words 'ready' and 'willing' imply
that the person was prepared to carry out
the terms of the contract. The distinction
between 'readiness' and 'willingness' is
that the former refers to financial capacity
and the latter to the conduct of the
plaintiff wanting performance. Generally,
readiness is backed by willingness.
At paras-25, 26 and 27 it is held as under :
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25. Section 16(c) of the Specific Relief Act, 1963
mandates "readiness and willingness" on the
part of the plaintiff and it is a condition
precedent for obtaining relief of grant of specific
performance. It is also clear that in a suit for
specific performance the plaintiff must allege
and prove a continuous "readiness and
willingness" to perform the contract on his part
from the date of contract. The onus is on the
plaintiff.
26. It has been rightly considered by this Court
in R.C.Chandiok V. Chuni Lal Sabharwal that
"readiness and willingness" cannot be treated as
a straitjacket formula. This has to be determined
from the entirety of the facts and circumstances
relevant to the intention and conduct of the
party concerned.
27. It is settled law that even in the absence of
specific plea by the opposite party, it is the
mandate of the statute that the plaintiff has to
comply with Section 16(c) of the Specific Relief
Act and when there is non-compliance with this
statutory mandate, the Court is not bound to
grant specific performance and is left with no
other alternative but to dismiss the suit. It is also
clear that readiness to perform must be
established throughout the relevant points of
time. "Readiness and Willingness" to perform
the part of the contract has to be
determined/ascertained from the conduct of the
parties."
37. Order XIV of the Code of Civil
Procedure deals with the settlement of issues
and determination of suit on issues of law or on
issues agreed upon. Order XIV Rule 1(3) states
how the settlement of issue is framed in a suit.
It provides each material proposition affirmed by
one party and denied by the other shall form the
subject of a distinct issue. Issue may be of fact
or of law.
38. Section 16(c) of the Specific Relief Act
is an exception to this general rule. Unless a
person avers and proves that he has performed
or has always being ready and willing to perform
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the essential terms of the contract which are to
be performed by him, he is not entitled to
enforce the specific performance of the contract.
In other words, before a Court can grant a
decree for specific performance, this mandatory
requirement of the statute has to be complied
with by the Plaintiff irrespective of the defense
taken by the defendant. Only if this mandatory
requirement is complied with, the Civil Court
gets jurisdiction to grant a decree for specific
performance. If this requirement is not met, the
Civil Court has no jurisdiction to grant a decree
for specific performance. Therefore, it is
obligatory on the part of the Court, that, in every
suit for specific performance to frame an issue
regarding readiness and willingness to perform
the essential terms of the contract by the
plaintiff irrespective of the fact whether the
defendant has specifically denied the allegations
in the plaint regarding readiness and willingness
to perform or not. Therefore, what follows is that
a plaintiff, who comes to the Court seeking a
decree for specific performance must aver and
prove that he has performed or is always ready
and willing to perform the essential terms of the
contract which are to be performed by him.
Whether the defendant denied those allegations
are not in the written statement, the Court is
under an obligation to frame an issue regarding
readiness and willingness on the part of the
plaintiff to perform the terms of the contract.
Once that issue is framed, the burden of proving
readiness and willingness is on the plaintiff. It is
not dependent upon the admission of the
defendant either in the written statement or in
the evidence. Unless the plaintiff proves to the
satisfaction of the Court that he was ready and
willing to perform his part of the contract, the
Court gets no jurisdiction to pass a decree for
specific performance. Therefore, the argument
of the learned Counsel for the plaintiff, that, as
there was no serous cross-examination of P.W.1,
regarding readiness and willingness, the oral
evidence of P.W.1 that he was ready and willing
to perform his part of the contract was sufficient
for the Trial Court to decree the suit for specific
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performance is unfounded. The plaintiff has not
produced a scrap of paper to show how he
propose to raise the balance sale consideration
of Rs.65 lakhs, where he has kept that money, is
it in any bank or has he formulated a scheme for
raising the funds and whether he actually
possessed of the said funds. In the absence of
such material, which has to be necessarily in the
form of documentary evidence, not placed
before the Court, the Trial Court committed a
serious error in holding that the plaintiff was
ready and willing to perform his part of the
contract. There is absolutely no discussion in the
entire judgment on this aspect and the said
finding is not supported or based on any legal
evidence on record. In that view of the matter,
we are of the view that the finding recorded by
the Trial Court that the plaintiff was ready and
willing to perform his part of the contract is
vitiated and is hereby set-aside."
33) Reliance has also been placed on the
decision reported in AIR 1986 SC 116 in the case
of N.P.Thirugnanam (D) by L.Rs., Vs. Dr.R.Jagan
Mohan Rao and Others.
Para-5 reads as follows :
"5. It is settled law that remedy for specific
performance is an equitable remedy and is in
the discretion of the court, which discretion
requires to be exercised according to settled
principles of law and not arbitrarily as
enumerated under S.20 of the Specific Relief
Act 1963 (for short, 'the Act'). Under S.20, the
court is not bound to grant the relief just
because there was valid agreement of sale.
Section16(c) of the Act envisages that plaintiff
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must plead and prove that he had performed
or has always been ready and willing to
perform the essential terms of the contract
which are to be performed by him, other than
those terms the performance of which has
been prevented or waived by the defendant.
The continuous readiness and willingness on
the part of the plaintiff is a condition
precedent to grant the relief of specific
performance. This circumstance is material
and relevant and is required to be considered
by the court while granting or refusing to
grant the relief. If the plaintiff fails to either
aver or prove the same, he must fail. To
adjudge whether the plaintiff is ready and
willing to perform his part of the contract, the
court must take into consideration the
conduct of the plaintiff prior and subsequent
to the filing of the suit along with other
attending circumstances. The amount of
consideration which he has to pay to the
defendant must of necessity be proved to be
available. Right from the date of the execution
till date of the decree he must prove that he is
ready and has always been willing to perform
his part of the contract. As stated, the factum
of his readiness and willingness to perform his
part of the contract is to be adjudged with
reference to the conduct of the party and the
attending circumstances. The court may infer
from the facts and circumstances whether the
plaintiff was ready and was always ready and
willing to perform his part of contract."
(underlined by me)
34) Similarly, the Plaintiffs have relied upon the
judgment reported in (2002) 9 SCC 582 in the case
of Pushparani.S. Sundaram and Others Vs. Pauline
Manomani James (deceased) and Others, wherein, it
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has been held that, "Section 16(c) of the Specific
Relief Act requires that not only there be a plea of
readiness and willingness but it has to be proved
so".
35) The Plaintiffs have also placed reliance on
judgment reported in ILR 2014 Karnataka 233 in
the case of Smt.Padmini Raghavan Vs.
Mr.H.A.Sonnappa, since dead by his Lrs., and Ors.
Para-52 reads as follows :
" 52. Thus in a suit for specific
performance, the plaintiff should not only
plead and prove the terms of the agreement,
but should also plead and prove his readiness
and willingness to perform his obligations
under the contract in terms of the contract.
The continuous readiness and willingness on
the part of the plaintiff is a condition
precedent to grant the relief of specific
performance. This circumstance is material
and relevant and is required to be considered
by the Court while granting or refusing to
grant the relief. If the plaintiff fails to either
aver or prove the same, he must fail. It is
indisputable that in a suit for specific
performance of contract, the plaintiff must
establish his readiness and willingness to
perform his part of the contract. The
readiness and willingness on the part of the
plaintiff to perform his part of contract would
also depend upon the question as to whether
the defendant did everything which was
required of him to be done in terms of the
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agreement for sale. The question as to
whether the onus was discharged by the
plaintiff or not will depend upon the facts and
circumstances of each case. No straitjacket
formula can be laid down in this behalf. To
adjudge whether the plaintiff is ready and
willing to perform his part of the contract, the
Court must take into consideration the
conduct of the plaintiff prior and subsequent
to the filing of the suit along with other
attending circumstances. The amount of
consideration which he has to pay to the
defendant must of necessity be proved to be
available. Right from the date of the execution
till the date of the decree, he must prove that
he is ready and has always been willing to
perform his part of the contract. As stated,
the factum of his readiness and willingness to
perform his part of the contract is to be
adjudged with reference to the conduct of the
party and the attending circumstances. The
Court may infer from the facts and
circumstances whether the plaintiff was ready
and was always ready and willing to perform
his part of contact."
(underlined by me)
36) The Plaintiffs have also relied on the
following judgments reported in -
(i) (2013) 15 SCC 27
[ I.S.Sikandar (dead) by LRs., Vs.
K.Subramani and Others]
Para- 45 and 47 reads as follows :
45. " ..... Further, the Plaintiff is required to
prove the fact that right from the date of
executionof the agreement of sale till the date
of passing the decree he must prove that he is
ready and has always been willing to perform
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his part of the contract as per the agreement.
........."
47. Further, there is nothing on record to
show that the plaintiff could have made
arrangement for payment of the balance
consideration amount to them. But, on the
other hand the trial court has recorded the
finding of fact to the effect that the
correspondence between the parties and
other circumstances would establish the fact
that the plaintiff had no money for payment of
balance sale consideration to Defendants 1-4
though they demanded the same from him
through their legal notices dated 6.3.1985
---."
(ii) (2018) 3 SCC 658
[ Kalawati(Dead) through legal
representatives and others Vs. Rakesh
Kumar and others]
Para-19, 20, 21 reads as follows : -
" 19. In I.S.Sikandar V. K.Subramani this
Court noted that the Plaintiff is required to
prove that from the date of execution of the
agreement of sale till the date of the decree,
he was always ready and willing to perform
his part of the contract. In this case, looking at
the attendant facts and circumstances, the
Court upheld the view of the trial Judge that
the plaintiff had no money to pay the balance
sale consideration and was apparently not
capable of making necessary arrangements
for payment of the balance consideration. It
was held in para 45 and para 47 of the
Report : (SCC pp.41-42).
" 45... Further, the plaintiff is
required to prove the fact that right
from the date of execution of the
agreement of sale till the date of
passing the decree he must prove
that he is ready and has always
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been willing to perform his part of
the contract as per the agreement.
47. Further, there is nothing on
record to show that the plaintiff
could have made arrangement for
payment of the balance
consideration amount to them. But,
on the other hand, the trial court
has recorded he finding of fact to
the effect that the corespondence
between the parties and other
circumstances would establish the
fact that the plaintiff had no money
for payment of balance sale
consideration...."
20. Insofar as the present appeal is
concerned, the material on record clearly
indicates that Rakesh Kumar did not have the
necessary funds available with him to pay the
balance consideration. His low income and
low bank balance indicated his incapacity to
make the balance payment. As far as his
capacity to arrange for funds is concerned, it
has come on record that Rakesh Kumar did
take a loan from his cousin but that was only
for his business and not for paying the
balance consideration for the land in dispute.
There is nothing on record to indicate that
Rakesh Kumar could have not only repaid the
loan taken from his cousin, but additionally,
could have arranged sufficient funds to pay
the balance consideration. It is very doubtful,
and it is easy and reasonable to infer this, that
Rakesh Kumar was incapable of meeting both
liabilities.
21. On the facts placed before us, we are
satisfied that the trial Judge was right in
coming to the conclusion that Rakesh Kumar
was not in a position to pay the balance
consideration to Kalawati and the other
vendors, and by necessary implication, it
must be held that he was neither ready nor
willing to perform his part of the agreement."
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37) On the contrary, the Defendants No.1 and 2
have relied upon the following judgments -
(I) (2009) 17 ACC 27
[ AZHAR SULTANA VS. B.RAJAMANI AND OTHERS]
" 31. We are, however, in agreement
with Mr Lalit that for the aforementioned
purpose it was not necessary that the
entire amount of consideration should
be kept ready and the plaintiff must file
proof in respect thereof. It may also be
correct to contend that only because the
plaintiff who is a Muslim lady, did not
examine herself and got examined on
her behalf, her husband, the same by
itself would not lead to a conclusion that
she was not ready and willing to perform
her part of contract. If the plaintiff has
failed to establish that she had all along
been ready and willing to perform her
part of contract, in our opinion, it would
not be necessary to enter into the
question as to whether Defendants 5
and 6 were bona fide subsequent
purchasers for value without notice or
not."
(ii) 2011(1) SCC 429
[J.P.BUILDERS AND ANOTHER VS.
A.RAMADAS RAO AND ANOTHER]
Para-25, 26 and 45 reads as follows :-
" 25. Section 16(c) of the Specific Relief
Act, 1963 mandates "readiness and
willingness" on the part of the Plaintiff and it
is a condition precedent for obtaining relief
of grant of specific performance. It is also
clear that in a suit for specific performance,
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the plaintiff must allege and prove a
continuous "readiness and willingness" to
perform the contract on his part from the
date of the contract. The onus is on the
plaintiff.
26. It has been rightly considered by this
Court in R.C.Chandiok V. Chuni Lal
Sabharwal that "readiness and willingness"
cannot be treated as a straitjacket formula.
This has to be determined from the entirety
of the facts and circumstances relevant to
the intention and conduct of the party
concerned.
45. With the materials placed, specific
assertion in the plaint, oral and
documentary evidence as to execution of
agreement, part-payment of sale
consideration, having sufficient cash and
financial capacity to execute the sale deed,
bank statements as to the monies in fixed
deposits and saving accounts, we are of the
view that the plaintiff has proved his
"readiness" and "willingness" to perform his
part of obligation under the contract. ......"
(underlined by me)
(iii) (2005) 7 Supreme Court Cases 534
[ ANIGLASE YOHANNAN VS. RAMLATHA AND
OTHERS]
" 12. The basic principle behind Section
16(c) read with Explanation (ii) is that any
person seeking benefit of the specific
performance of contract must manifest that
his conduct has been blemishless
throughout entitling him to the specific
relief. The provision imposes a personal bar.
The Court is to grant relief on the basis of
the conduct of the person seeking relief. If
the pleadings manifest that the conduct of
the plaintiff entitles him to get the relief on
perusal of the plaint he should not be
denied the relief."
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In the light of the principles set out in the
above judgments, the findings arrived at by the
learned Arbitrator in respect of 'readiness' and
'willingness' have to be assailed.
38) At this juncture, it is relevant to mention
para-25(d) of the award. It reads as follows :
"25(d). As per Exc.C-4, the contract, the
payment of consideration in all was Rs.4.36
crores and that was to be paid in the following
manner.
(a) Rs.10 lakhs each on the date of executing
the sale agreement Ex.C-4. The receipt of
which has been accepted by all the
Respondents.
(b) Rs.40 lakhs each to be paid by the
claimants to the Respondents at the time of
registering the document in the name of he
purchasers.
Clause 2(b) of the sale agreement Ex.C-4 is as
hereunder:
" .... A sum of Rs.120 lakhs shall be payable at
the time of registering the document in the
name of he vendors at the rate of Rs.40
lakhs each payable either by the purchasers
themselves or by their nominees..."
As seen from the evidence, a payment of
Rs.40,00,000/- to each of the respondent was
payable by 30.06.2006 at the time of
registering the sale deed by the Respondents.
The balance that remained payable after
payment of Rs.40 lakhs by the claimants to the
Respondents was about Rs.2,86,00,000/- and
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that was to be paid to the Respondents within
one year from 16.04.2006 i.e. on or before
15.4.2007.
. This is the spirit and tenor about the mode of
payment of consideration under Ex.C-4. Such a
payment about the balance amount stated was
subject to a rider, and that rider was
specifically reflected in Ex.C-4."
39) It is also relevant to mention Para-44(a), (b)
and (d) of the award. It reads as follows -
"44(a). Further, the claimants have exhibited
their Canara Bank savings bank pass books
pertaining to their individual savings bank
account maintained by them as per Ex.C-5 and
C-6 which indicates that both the claimants had
a credit balance of over Rs.50 lakhs each in
their savings bank account from 6.10.2006 to
16.12.2006 aggregating to over Rs.1 Crore.
That means, the claimants had more than
sufficient financial resources and avenues to
mobilise the consideration at any point of time
to meet the contingency. This fact was also in
the knowledge of the 2nd Respondent as
evidenced by Ex.R.33 which is a Bank Pass
Book extract belonging to the 1st Claimant
maintained at Canara Bank, produced and
marked by the 2nd Respondent wherein it
reflected, that the 1st Claimant had deposited a
sum of Rs.50 lakhs in his Savings Bank account
on 6.10.2006, which sum was available till
16.12.2006.
(b) IN AIR 2009 SC 2157 (Azar Sultan Vs.
B.Rajamani) decided on 17.9.2009, the Apex
Court has clearly laid down that to show
readiness and willingness to perform the
contract, it was not necessary that the entire
amount should be kept ready by the plaintif
and file proof in respect thereof. The claimants
were practicing advocates for more than two
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decades and were also income tax payers and
those pass books clearly goes to show that
they had sufficient balance also in their bank
accounts. These aspects clearly substantiate
that, they were capable of meeting any
eventualities required in any situations, to
mobilise money at the required juncture to
meet such eventualities.
(d)................
It is relevant to mention here that, as already
discussed, both the claimants were having
sufficient means to pay the second installment
and it was in the knowledge of the
Respondents, as could be seen from the fact
that, the 2nd Respondent has produced the pass
book extract of the first claimant and got it
marked as per Exhibit R-33, in which a credit
balance exceeding Rs.51 lakhs is visible
between 6.10.2006 and 16.12.2006, and such
an arrangement was made by the claimants
before the receipt of termination notice got
issued by 1st and 2nd Respondents dated
12.10.2006 (Ex.C-24). Such a readiness and
preparedness under any stretch of imagination
cannot be attributed to be an afterthought."
40) The learned Arbitrator was pleased to hold
that the Defendants No.1 and 2 had more than
sufficient financial resources and avenues to
mobilise the consideration at any point of time to
meet the contingency. In the light of this finding of
the learned Arbitrator, it is necessary to look into
Ex.C-5 and Ex.C-6, which have been produced by
Defendants No.1 and 2 before the learned
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Arbitrator. Ex.C-5, which commences on 18.04.2006
and ends on 06.06.2006. The balance available as
on 06.06.2006 was only Rs.31,228=25. Similarly,
Ex.C-6; it commences from 18.04.2006 and ends on
02.06.2006. Ex.C-4, Agreement for Sale was
entered into between the parties on 16.04.2006.
Ex.C-5 and Ex.C-6 do not disclose the date on
which Ex.C-4 was got executed. Be that as it may.
Both Ex.C-5 and Ex.C-6 commences from
18.04.2006. The date of performance of contract is
on 30.06.2006. However, Ex.C-5 and Ex.C-6 ends
on 06.06.2006. From 18.04.2006 to 06.06.2006,
nowhere it is found that there had been sufficient
sale consideration amount in Ex.C-5 and Ex.C-6.
Moreover, no documents were placed before the
learned Arbitrator to show that as on the date of
performance of contract, i.e. on 30.06.2006, the
Defendants No.1 and 2 had sufficient fund to
meet the balance sale consideration amount to
be paid by them to the Plaintiffs and their
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brother. Ex.R-33, which has been produced by the
Plaintiffs before the learned Arbitrator, commences
from 05.04.2006 and ends on 02.06.2007. It too
does not disclose that the Defendants had
sufficient fund to meet the balance consideration
amount. As per Clause(4) of Ex.C-4-Agreement of
Sale, the registration of the sale deed shall be
finalized by Defendants No.1 and 2 by paying part
sale consideration of Rs.120 lakhs on or before
30.06.2006. However, Ex.C-5, Ex.C-6 and even
Ex.R-33 do not disclose that the Defendants No.1
and 2 were ready with such balance sale
consideration on 30.06.2006. In fact, no such
document has been produced by Defendants No.1
and 2 before the learned Arbitrator. Moreover, no
document has been placed before the learned
Arbitrator to show that from 30.06.2006 to
12.10.2006, the date on which Ex.C-4 was got
cancelled by the Plaintiffs, the Defendants No.1 and
2 were ready with the balance sale consideration
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amount. More so, the Defendants have not
produced any document to establish that they were
ready with the balance sale consideration amount
even after termination of Ex.C-4, till conclusion of
the arbitral proceedings. Ex.R.33-Bank Pass book,
which stands in the name of Defendant No.1, in
which, Rs.50 lakhs were available as on 06.10.2006
and that amount was paid by Defendant No.1 to
one Bindu Promoters on 19.12.2006. Even the said
amount of Rs.50 lakhs was available in the account
during the period from 06.10.2006 to 19.12.2006,
the same would not be sufficient balance sale
consideration amount because the Defendants
were to pay a sum of Rs.4,06,00,000/- to the
Plaintiffs and their brother. Moreover, that amount
of Rs.50 lakhs which was available during the
period from 06.10.2006 to 19.12.2006 shall not be
treated as sale consideration amount, since the
same was paid to Bindu Promoters. Viewed from
any angle, Ex.C-5, Ex.C-6 and Ex.R.33 do not
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substantiate the fact that Defendants No.1 and 2
were ready with sale consideration amount either
on 16.04.2006, the date of the agreement of sale or
on 30.06.2006, the date of performance of contract
or on 12.10.2006 the date of termination of
contract and even after initiation of arbitral
proceedings and till its conclusion.
41) The learned counsels for the Plaintiffs have
relied upon the judgment of the Hon'ble High Court
of Karnataka in the case of Shafiulla Vs. Krishnappa
and submitted that the facts stated in the said
decision were exactly similar to this case. It is
relevant to mention para- 17(c) and (d). It reads as
follows -
"17(c). The documents sought to be
relied includes the bank pass book of the
plaintif and his wife. The entry for
August, 1993, of the Plaintifs pass book,
would show that there was a balance of
Rs.237/-. The next entry on 27th January
1996 shows that he had a balance of
Rs.242/-. The suit was filed on 7-11-1996.
The pass-book entry would show that as
on 3-11-1996 he had a balance of
Rs.9,999/- and on 9-11-1996 he had a
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balance of Rs.27,999/-. The amount
payable was Rs.1,17,000/-. Therefore, it
is evident that the plaintif had no
adequate money at all in order to make
the payment in terms of the agreement
to sell. The pass-book of his wife is also
sought to be relied upon in the present
application. As on 1st August, 1995, her
pass-book shows a balance of Rs.148/-.
As on 1st February, 1996 the balance
would show a sum of Rs.151/-.
(d) The pass-books sought to be relied
upon as a document does not indicate
that the plaintif had any money in order
to execute the sale deed. The agreement
to sell was executed on 11-11-1993 and
the sale deed had to be executed within
3 months. Even the pass-book of the wife
does not indicate that there was any
adequate money at all in her account
also to make the payment. Therefore,
even on a prima facie view of the pass-
books produced, the same would indicate
that the plaintif or his wife evidently had
no money to make the payments.
Therefore even if the additional
document are considered, they will not
come to the aid of the plaintif."
42) The learned counsels for the Plaintiffs were
pleased to rely upon Para-24 and 25 of Shafiulla's
case. It is held as follows -
"24. Therefore, the continuous readiness
and willingness is a condition precedent to
grant the relief of specific performance. The
plaintif has to aver and prove the same. If he
fails to make the averment and he has failed
to prove it, then no relief can be granted to
him. Applying the judgments to the facts &
circumstances of the case, there is no
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hesitation to hold that there is absolute lack
of averments by the plaintif. The only
averments are to be found in Paras-6, 8 & 12
as extracted herein above. These paragraphs
do not aver readiness. Though the plaintif
may be willing, he would also have to aver
and prove that he is ready. Apparently he has
failed to do so.
25. Readiness and willingness refers to the
state of mind and the conduct of the
purchaser. Willingness is a state of mind
wherein the plaintif would have to aver that
he is willing to perform his part of the
contract. To prove readiness is a matter of
fact and conduct. To prove one without the
other is insufficient. Readiness and
willingness would both have to be proved. To
prove readiness the capacity of the plaintif
would have to be established. The capacity
would have to be proved financially through
an averment and evidence to be led in. It is
that evidence that the court would have to
consider to conclude whether there was
readiness or not. In view of the absence of an
averment and proof, it cannot be said that
the plaintif has proved his readiness. So far
as willingness is concerned, it reflects the
mental attitude of the plaintif. The attitude
may manifest through the averments which
should indicate that he is ready to perform
his part of the contract. That both require to
be proved by the plaintif, namely, readiness
and willingness. In view of the absence of
any material, I find no hesitation to hold that
the plaintif has failed to prove readiness and
willingness. Therefore, the decree for specific
performance of contract cannot be granted,
in view of the failure of the plaintif to prove
his readiness and willingness".
43) As laid down by the Hon'ble High Court of
Karnataka in Shafiulla's case, continuous readiness
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and willingness is a condition precedent to grant the
relief of specific performance. The Plaintiff has to
aver and prove the same. To prove readiness the
capacity of the Plaintiff would have to be
established. The capacity would have to be proved
financially through an averment and evidence to be
led in. It is that evidence that the court would have
to consider to conclude whether there was
readiness or not. If he fails to make the averment
and fails to prove it, then no relief can be granted to
him.
44) The Defendants No. 1 and 2 submit that the
entire Passbook was marked before the learned
Arbitrator. The Defendants No. 1 and 2 had these
documents before the trial proceedings, the
Plaintiffs had produced one of the extracts as their
exhibit in Ex.R.33.
45) The arbitral records placed before this court
as well as the arbitral award make it clear that,
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Ex.C-5 and Ex.C-6 were produced by the
Defendants No.1 and 2 and Ex.R-33 was produced
by the Plaintiffs before the learned Arbitrator.
Except Ex.C.5, Ex.C.6 and Ex.R.33, no other
documents have been placed before the learned
Arbitrator to substantiate that the Defendants No.1
and 2 had sufficient source to meet the balance
sale consideration amount. Under such
circumstances, the whole burden lies upon
Defendants No.1 and 2 to prove that they had
documentary evidence to show that they had
sufficient sale consideration amount to perform
their part of the contract. Shifting the burden of
proving readiness and willingness is unknown to
law in the case of specific performance. This
burden lies upon the Defendants No.1 and 2 only
and accordingly, they should have proved the
same.
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46) The learned Arbitrator at para-44(b) of the
award has held that :
" The claimants were practicing
advocates for more than two decades
and were also income tax payers and
those pass books clearly goes to show
that they had sufficient balance also in
their bank accounts. These aspects
clearly substantiate that, they were
capable of meeting any eventualities
required in any situations, to mobilise
money at the required juncture to meet
such eventualities."
(underlined by me)
The learned Arbitrator has come to this
conclusion based on no evidence. The very
document at Ex.C-5, Ex.C-6 and Ex.R.33 establish
that the Defendants No.1 and 2 had no sufficient
sale consideration amount. Despite this valuable
piece of evidence at Ex.C-5, Ex.C-6 and Ex.R.33, the
learned Arbitrator has held that the pass books
produced by the Defendants No.1 and 2 clearly go
to show that they had sufficient balance in their
bank account. It is not known from where the
learned Arbitrator comes to the conclusion that the
pass book clearly goes to show that Defendants
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No.1 and 2 had sufficient balance as on
16.12.2006. The inference regarding sufficient
balance of sale consideration amount cannot be
drawn merely on the basis that Defendants No.1
and 2 are practicing Advocates from two decades
and they are paying income tax, in the absence of
any documentary evidence.
47) The Defendants No.1 and 2 have produced
Agreement of Sale entered into between the
Defendants No.1 and 2 and one Dr.Ravi Subbanna,
which has been marked as Ex.C-53 before the
learned Arbitrator for the purpose of showing their
ability and capacity to pay the amount of sale
consideration in respect of Ex.C-4 as observed by
the learned Arbitrator. The learned Arbitrator has
held that by non-examination of Dr.Ravi Subbanna,
it cannot be held that such an agreement is false
and fabricated and that the claimants (Defendants
No.1 and 2) had no sufficient funds to meet the
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contingencies. The learned Arbitrator has also
come to this conclusion based on presumption that
the agreement of sale entered into between the
Defendants No.1 and 2 and Dr.Ravi Subbanna,
show financial capacity of the Defendants No.1 and
2. On perusal of Ex.C-53 make it clear that, no sale
deed was executed even as on 31.12.2007, the
date for performance of the contract at Ex.C.53.
Under such circumstances, mere production of
Ex.P.53 does not establish that the Defendants
No.1 and 2 were ready with sufficient sale
consideration amount.
48) The Defendants No.1 and 2 rely upon Azhar
Sultana case cited supra, wherein, it is held that, it
would not be necessary that the entire amount of
sale consideration should be kept ready and the
Plaintiff must file proof in respect thereof. Azhar
Sultana case was decided on 17.02.2009. Earlier
to that, in N.P.Thirugnanam's case, stated supra,
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it is specifically held that the amount of
consideration which he has to pay to the Defendant
must of necessity be proved to be available right
from the date of execution till the date of the
decree, he must prove that he is ready and has
always been willing to perform his part of the
contract. The learned counsels for the Plaintiffs
submitted that N.P.Thirugnanam case is relied in
I.S.Sikandar's case (stated supra) and the ratio laid
down in I.S.Sikandar's case has been followed in
subsequent judgment in Kalawati's case (stated
supra). Hence, the later two judgments in
I.S.Sikandar's case and Kalawati's case prevail over
the earlier judgment in Azhar Sultan's case. In
support of the Plaintiffs' contention, the Plaintiffs
have relied upon the decision of the Hon'ble High
Court of Karnataka reported in ILR 2001
Karnataka 2689 in the case of D.V.Lakshmana
Rao Vs. State of Karnataka and others. In
Para-14, it is held as follows :
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"14. It is now well-settled that if there
are two conflicting judgments of the
Supreme Court, of Benches with equal
number of Judges, then the latter will
prevail over the earlier. But where the
earlier judgment is of a larger Bench and
the latter judgment is of a smaller
Bench, then the decision of the larger
Bench will be binding. ---."
49) In view of the legal dictum as laid down by
the Hon'ble High Court of Karnataka in
D.V.Lakshmana Rao's case, in my humble view,
the judgments in I.S.Sikandar and Kalawati
prevail over Azhar Sultan's case.
50) The learned counsel for Defendants No.1 and
2 submits that, even assuming that there were
other submissions or documents or materials that
the learned Arbitrator would have considered, itself
is not a ground for challenging the arbitral award,
as the Arbitrator has given detailed reason for the
findings contained in the said arbitral award. It is
also contended that, when an award given by an
Arbitrator is reasoned and not arbitrary or
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capricious, merely because another view may be
possible on the same set of facts, is not a ground
for challenging the award. The learned Counsel for
Defendants No.1 and 2 has relied upon the decision
reported in (2009) 6 SCC 414 in the case of
G.Ramachandra Reddy and Company Vs.
Uniion of India and another. Para-19 reads as
follows :
" 19. We may, at the outset, notice the legal
principles governing the dispute between the
parties. Interpretation of a contract may fall
within the realm of the arbitrator. The court
while dealing with an award would not re-
appreciate the evidence. An award containing
reasons also may not be interfered with unless
they are found to be perverse or based on a
wrong proposition of law. If two views are
possible, it is trite, the Court will refrain itself
from interfering."
51) The Defendants No.1 and 2 have also relied
upon Associate Builders' case, wherein, it has
been held that, the Arbitrator is the ultimate
master of quality as well as quantity of evidence.
It is true that time and again the Hon'ble Apex
Court was pleased to uphold the object of the
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Arbitration Law and sanctity of arbitral proceedings.
No doubt, the Arbitrator is the ultimate master to
decide the quality and quantity of evidence. If the
award is found to be perverse or based on wrong
proposition of law, then, it does not mean that the
award should be treated as valid award on the
ground that the Arbitrator has been conferred
unbridled power under Section 19 of the Act and
that he is the ultimate master of quality and
quantity of evidence. In G.Ramachandra Reddy's
case it has been specifically held that, "unless they
are found to be perverse or based on wrong
proposition of law". It means that, if the award is
perverse or based on wrong proposition of law, it
can be interfered even award containing reasons.
52) As held by the Hon'ble High Court of
Karatnaka in Smt.Punny Akat Philip Raju's case
stated supra, in a case arising under Section 16(c)
of Specific Relief Act, the obligation is cast on the
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Plaintiff to prove that he was ready with the
balance sale consideration. When the statute
requires, the Plaintiff must plead and prove his
readiness and willingness to perform his part of the
contract and that readiness refers to the possession
of the requisite funds, there is an obligation cast on
that person who has to prove the possession of
funds, to produce documents to show possession of
funds by him. Though he is not expected to tender
or deposit the cash before the Court, he has to
produce such evidence to prove his financial
capability. Only on production of such documentary
evidence, on verification and appreciation of those
documents, Court could come to the conclusion
that the plea of readiness is proved. Mere assertion
on oath that he is ready with the balance sale
consideration, even if it is not challenged in the
cross-examination; is not the proof of the Plaintiff's
readiness with balance sale consideration. He
should produce such evidence to show either he
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possess the requisite funds or he is capable of
raising such funds within the time stipulated. If
such evidence is not forthcoming, it is a case of the
Plaintiff's case being not proved.
53) Here, in this case, Defendants No.1 and 2
have produced passbooks at Ex.C-5 and Ex.C-6
before the learned Arbitrator. Nowhere, it is found
that the Defendants had sufficient balance
consideration amount. The Plaintiffs have also
produced Passbook of Defendant No.1 at Ex.R.33,
which too does not substantiate that the
Defendants were ready with balance sale
consideration amount. Disregarding all these
documentary evidence, the learned Arbitrator has
held that the Defendants No.1 and 2 had more than
sufficient financial resources and avenues to
mobilise the consideration at any point of time to
meet the contingency. This finding of the learned
Arbitrator is based on no evidence. The
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requirement of law as laid down by the Hon'ble
High Court of Karnataka and the Hon'ble Supreme
Court is that, amount of consideration which the
Plaintiff has to pay to the Defendants must of
necessity to be proved to be available right from
the date of execution till the date of decree. He
must prove that he is ready and always been willing
to perform his part of the contract. In the instant
case, the Agreement of Sale entered into on
16.04.2006. The proceedings before the learned
Arbitrator commenced on 21.08.2009 and the
award was passed on 08.04.2014. The learned
Arbitrator does not give a finding to the effect that
funds were available on the date of agreement,
during the proceedings and on the date of award
passed by him. The learned Arbitrator has come to
the conclusion that the Defendants No.1 and 2
were practicing Advocates for more than two
decades and were also Income Tax payers and
those passbooks clearly go to show that they had
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sufficient balance in their bank account and that a
document at Ex.C-53 [Agreement of Sale entered
into between Defendants No.1 and 2 and one
Dr.Ravi Subbanna] produced by Defendants No.1
and 2 shows their ability and capacity to pay the
amount of sale consideration in respect of Ex.C-4, is
an inference drawn on no evidence as to readiness
and willingness to perform the contract.
54) The learned counsel for Plaintiffs submit
that the Defendants had not sought the declaratory
relief to declare the termination as null and void
and the award has been passed on non-existence
Agreement. Ex.C-4, Agreement to Sell got
terminated by the Plaintiffs on 12.10.2006 as per
Ex.C-24. On perusal of the prayer column of the
claim petition makes it clear that, the Defendants
have not sought for declaratory relief to declare the
termination of Agreement of Sale as bad in law. In
I.S.Sikandar's case, stated supra, it is specifically
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held that, in the absence of prayer for declaratory
relief to declare the termination of Agreement of
Sale as bad in law, the suit filed for specific
performance on the basis of non-existence of
Agreement of Sale is wholly unsustainable in law.
Admittedly, no relief has been sought for by the
Defendants No.1 and 2 before the learned
Arbitrator to the effect that termination of the
agreement is bad in law. As on the date of award,
the agreement to sell was not in existence, as the
same was terminated by the Plaintiffs. Under such
circumstances, the award passed by the learned
Arbitrator for specific performance of contract is
wholly unsustainable in law.
55) The Defendants No.1 and 2 have raised a
contention that Defendant No.3, who is the 1 st
Respondent before the learned Arbitrator and
brother of the Plaintiffs has accepted the
correctness of the award and executed Sale Deed
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in respect of his share and challenging the
Agreement of Sale in respect of the same property,
which goes to the root of the matter, it is nothing
but abuse of process of law. The learned counsel
for the Plaintiffs submits that since Order 41 Rule 4
of CPC., provides that, any of the parties can
challenge the order/decree against him in part.
The Defendants No.1 and 2, to substantiate their
contentions have relied upon the following
judgments reported in -
(1) AIR 1963 SC 1901 ( Rameshwar Prasad and
Ors. Vs. Shyam Beharilal Jagannath and Ors.)
(2) (2018)4 Kar.LJ, 760 [Kullappa & Ors. Vs.
C.P.Vijayalakhsmi]
(3) AIR 2003 SC 2252[Sukanya Holdings Pvt.Ltd
Vs. Jayesh H.Pandya and another]
56) In Rameshwara Prasad and others' case,
it is observed that, "these provisions as laid down
in Order 41 Rule 4 of CPC., enable one of the
Plaintifs or one of the Defendants to file an Appeal
against the entire decree. The second appeal filed
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before the High Court was not filed by any one or
by even some of the plaintifs as an appeal against
the whole decree, but was filed by all the plaintifs
jointly, and, therefore, was not an appeal to which
the provisions of Order 41 Rule 4 could apply". It
is further observed that, "when the legal
representatives of the deceased Appellant and the
surviving Appellants were negligent in not taking
steps for substitution, the court is not to exercise
its discretion in favour of such a party. The
discretionary power cannot be exercised to nullify
the efect of abatement of the appeal. In fact,
such an exercise of power will lead to the existence
of two contradictory decrees between the heirs of
Kedar Nath and the Respondents, one passed by
the Appellate court and another to the contrary
efect by the court below which has attained
finality consequent on the abatement of the appeal
in so far as they are concerned".
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57) In the above decision, the suit for ejectment
was decreed against both the Defendants on an
appeal by the Defendant No.2, the District Judge set
aside the decree for ejectment against Defendant
No.2 and confirmed rest of the decree against
Defendant No.1. All the Plaintiffs jointly preferred
appeal against the whole decree. The surviving
appellants were negligent in bringing the legal heirs
of the deceased Appellant and thereby, the appeal
got abated. In the backdrop of this factual matrix
of the case, the Hon'ble Supreme Court was pleased
to hold that the discretionary power cannot be
exercised to nullify the effect of the abatement of
the appeal and such an exercise of power will lead
to the existence of two contradictory decrees. It is
also held that an appeal filed by all the Plaintiffs
was not an appeal under Order 41 Rule 4 of CPC.
58) In Kullappa and Others' case, the
Hon'ble High Court of Karnataka was pleased to
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hold that, when once right of appellant has resulted
in abating the appeal and confirming the judgment
and decree passed by the court below in favour of
Respondent/Plaintiff, a contrary view cannot be
taken in the appeal on behalf of surviving
Appellant. In Sukanya Holdings Pvt. Ltd., case,
Section 8 of the Arbitration and Conciliation Act,
has been dealt with. The proposition of law is as
follows:
"It would be difficult to give an interpretation
to S.8 under which bifurcation of the cause of
action that is to say the subject matter of the
suit or in some cases bifurcation of the suit
between parties who are parties to the
arbitration agreement and others is possible.
This could be laying down a totally new
procedure not contemplated under the
Arbitration and Conciliation Act. If bifurcation of
the subject matter of a suit was contemplated,
the legislature would have used appropriate
language to permit such a course. Since there is
no such indication in the language, it follows
that bifurcation of the subject matter of an
action brought before a judicial authority is not
allowed. Secondly, such bifurcation of suit in
two parts, one to be decided by the arbitral
tribunal and other to be decided by the civil
Court would inevitably delay the proceedings.
The whole purpose of speedy disposal of dispute
and decreasing the cost of litigation would be
frustrated by such procedure. It would also
increase the cost of litigation and harassment to
the parties and on occasions there is possibility
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of conflicting judgments and orders by two
diferent forums."
59) The view taken by the Hon'ble Supreme
Court is that, bifurcation of the subject matter of a
suit between the parties, who are parties to the
arbitration agreement would be frustrated and
there is possibility of conflicting judgments and
orders by two different forums.
60) The learned counsels for the Plaintiffs have
placed reliance upon the judgment of the Hon'ble
Supreme Court in the case of Bajranglal
Shivchandrai Ruia Vs. Shashikant N.Rula and
Others, reported in (2004)5 SCC 272, wherein it
has been held that :
" The second contention has also no merit.
Where there are several defendants, who are
equally aggrieved by a decree on a ground
common to all of them, and only one of them
challenges the decree by an appeal in his own
right, the fact that the other defendants do not
choose to challenge the decree or that they
have lost their right to challenge the decree,
cannot render the appeal of the appealing
defendant infructuous on this ground. In fact,
Rule 4 and Rule 33 of Order 41 CPC are enacted
to deal with such a situation."
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61) Here, the award is challenged by
Respondents No.2 and 3, who are Plaintiffs herein
by way of two separate suits. The Respondent No.1
has not challenged the award, he is said to have
accepted the award and executed the Sale Deed in
respect of his share as contended by Defendants
No.1 and 2. Under such circumstances, the
Plaintiffs are having every right to challenge the
award to protect their interest. Mere accepting the
award by Defendant No.3 does not take away the
right of the respective Plaintiffs to challenge the
award passed by the learned Arbitrator.
Particularly, when Defendant No.3 is not
representing the interest of the Plaintiffs. Under
such circumstances, the ratio laid down by the
Hon'ble Supreme Court in Bajranglal's case is aptly
applicable to the facts of the Plaintiffs' case.
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62) It is relevant to take notice of demeanour of
the Defendant No.3 from the date of termination of
Agreement of Sale at Ex.C.4 till conclusion of the
arbitral proceedings. The Defendant No.3 along
with Plaintiff in A.S.No.68/2014 got terminated the
Agreement of Sale at Ex.C.4, vide notice of
termination dated 12.10.2006, at Ex.C-24.
Immediately, he apologised to Defendants No.1
and 2 vide letters dated 13.10.2006 and
17.10.2006 as per Ex.C.25 and Ex.C.27. Thereafter,
he has contested the claim of the Defendants No.1
and 2 before the learned Arbitrator and again after
passing the award, he has accepted the award and
executed the Sale Deed in respect of his share as
contended by the Defendants No.1 and 2. Hence,
it has been clear that, he never stood by his
contention at any point of time. He used to change
his versions in every stage of transaction. Under
such circumstances, it cannot be said that his
interest is similar to that of the Plaintiffs.
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63) For the foregoing discussion, I am of the
opinion that the award, dated 08.03.2014/
08.04.2014 passed by the learned Arbitrator is
based on no evidence and the learned Arbitrator
passed the award by disregarding the binding
effect of the judgments passed by the Hon'ble High
Court of Karnataka as well as Hon'ble Supreme
Court of India. As held in Associate Builders'
case, when award is passed disregarding the
binding effect of the Judgment of a superior court,
would amount to violation of fundamental policy of
Indian law and when the award is based on no
evidence, the decision of the Arbitrator would
necessarily be perverse. Hence, the award requires
to be set aside. Accordingly, I answer Point No.1 in
the affirmative.
64) Point No.2: In view of the foregoing
discussion and answer to Point No.1, I proceed to
pass the following :
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ORDER
(1) The suit filed by the Plaintiff in AS.No.62/2014 and the suit filed by the Plaintiff in AS.No.68/2014 under Section 34 of the Arbitration and Conciliation Act, 1996, are hereby allowed.
(2) The award dated 08.03.2014/ 08.04.2014 passed by the 5th Defendant/Sole Arbitrator in CMP.No.21/2007; is hereby set aside.
(3) The original of this judgment shall be kept in AS.No.62/2014 and copy shall be kept in AS.No.68/2014.
(Dictated to the Judgment Writer, transcribed and computerized by her, transcript thereof corrected and then pronounced by me in open court, dated this the 5th day of February, 2019.) (RAMA NAIK) VI Addl.City Civil & Sessions Judge, Bengaluru City.
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