Karnataka High Court
Poonam W/O Harish Gulbani vs Abhinandan S/O Vanraj Lengade on 26 September, 2022
Author: B.M.Shyam Prasad
Bench: B.M.Shyam Prasad
1
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 26TH DAY OF SEPTEMBER, 2022
PRESENT
THE HON'BLE MR JUSTICE B.M.SHYAM PRASAD
AND
THE HON'BLE MR JUSTICE G.BASAVARAJA
REGULAR FIRST APPEAL NO. 100044 OF 2016
BETWEEN:
POONAM W/O HARISH GULBANI,
AGE: 51 YEARS, OCC: TRADE,
R/O: 530 ADARSH T.V. CENTRE,
HANUMAN NAGAR, DIST: BELAGAVI-590001.
...APPELLANT
(BY SRI.ANANT MANDAGI, SENIOR COUNSEL FOR
SRI.SHIVARAJ BALLOLI, ADV.)
AND:
ABHINANDAN S/O VANRAJ LENGADE,
AGE: 51 YEARS, OCC: BUSINESS,
R/O: 2034 KORE GALLI, SHAHAPUR,
DIST: BELAGAVI-590001.
...RESPONDENT
(BY SRI.G.BALAKRISHNA SHASTRY, ADV. FOR
SMT. SUNITHA P. KALASOOR, ADV.)
THIS RFA IS FILED UNDER ORDER 41 RULE 1 READ
WITH SECTION 96 OF CPC., AGAINST THE JUDGMENT &
DECREE DATED 25.01.2016, PASSED IN O.S. NO.149/2009 ON
THE FILE OF THE 1ST ADDITIONAL SENIOR CIVIL JUDGE AND
CJM, BELAGAVI, DISMISSING THE SUIT FILED FOR SPECIFIC
PERFORMANCE OF CONTRACT.
THIS RFA COMING ON FOR PRONOUNCEMENT OF
JUDGMENT, THIS DAY, B.M.SHYAM PRASAD J., DELIVERED THE
FOLLOWING:
2
JUDGMENT
This appeal is by the defendant in O.S. No.149/2009 on the file of the 1st Additional Senior Civil Judge and CJM, Belagavi (for short, 'the civil Court'). The civil Court by the impugned judgment has decreed the respondent's suit for specific performance of the agreement of sale dated 16.01.2009 ('the sale agreement') directing the appellant to execute sale deed for non-agricultural plot bearing No.519 ad measuring 4000 square feet consisting of built up area in R.S. No.1389 (as per R.S. No.1389/2/P2), scheme No.13, Race Course Road, Belagavi ('the subject property') within two months from the date of the impugned judgment upon receiving the balance sale consideration from the respondent. The parties to the proceedings, for reasons of convenience, are referred to as they are arrayed before the civil Court.
2. The plaintiff's case is that the defendant and her husband were intending to purchase immovable property adjacent to the property known as 'the Adarsha Palace', College Road, Belagavi [for convenience referred to as 'the Adarsh property'] from its owner, Sri.Shamlal Wadhwa, 3 ensuring that a property on Khanapur Road, Belagavi is transferred in his favour because he was otherwise not willing to sell 'the Adarsh property'. The plaintiff owned a property on Khanapur Road, Belagavi and therefore, the defendant and her husband prevailed upon him to agree to sell this property on Khanapur Road, Belagavi [for convenience referred to as, 'the Khanapur property'] to Sri.Shamlal Wadhwa.
3. The plaintiff asserts that terms for sale of these three properties were finalized with including the defendant and her husband with the defendant's husband, agreeing to purchase 'the Adarsh property' from Sri.Shamlal Wadhwa, he agreeing to sell the Khanapur property in favour of Sri.Shamlal Wadhwa and the defendant agreeing to sell the subject property in his favour. The three agreements for the respective transfer of the Adarsh property, the Khanapur property and the subject property were finalized on 16.01.2009.
4. The plaintiff contends that he agreed to purchase the subject property for a total sale consideration of Rs.80,00,000/- offering to pay Rs.50,00,000/- thereof as 4 advance. Thus, the agreement of sale is executed by him and the defendant with the defendant acknowledging that she has received a sum of Rs.50,00,000/- from him through a cheque dated 16.01.2009. He has repeatedly approached the defendant for the completion of the transaction, but the defendant postponed the same. Therefore, he has caused a letter dated 15.04.2009 conveying his ready and willingness to pay the balance sale consideration and requesting the defendant to execute sale deed for the subject property in part performance of the sale agreed at the earliest. The plaintiff has adverted to the defendant's reply to such letter on 18.04.2009 and the further exchange of letters and legal notices.
5. The plaintiff has alleged that the defendant and her husband, taking undue advantage of certain documents executed as part of the transaction between him and Sri.Shamlal Wadhwa, has manipulated documents to avoid completion of the sale transaction. The defendant, who was called upon to furnish a copy of such document in the course of exchange of legal notices as aforesaid, has refused 5 to furnish a copy. Therefore, appropriate adverse inference must be drawn against the defendant.
6. The defendant, without disputing the execution of the sale agreement or the receipt of Rs.50,00,000/-, has denied the tripartite transaction for the Adarsh property, the Khanapur property and the subject property. The defendant has contended that she intended to sell the subject property, and the plaintiff, on coming to know about her intention to sell the subject property, approached her. After negotiations, the sale agreement is executed incorporating the plaintiff's assurance that the remaining balance sale consideration of Rs.30,00,000/- will be paid within 60 days from the date of the sale agreement.
7. The defendant has alleged that the plaintiff, who did not complete the sale transaction for the reasons best known to him, has issued letter dated 15.04.2009 suppressing the fact that the amount of Rs.50,00,000/- paid at the time of the execution of the sale agreement is returned to him on 06.03.2009 on his request. The plaintiff has signed 'Cash Voucher' in the presence of two witnesses. The plaintiff has initiated a false suit to tarnish her fair 6 reputation as a person engaged in thriving businesses and participating in society concerned related activities. Crucially, the defendant has denied that the plaintiff was ready and willing to complete the sale transaction contending specifically that the sale agreement was not in force as of the date of the agreement.
8. The civil Court has framed Issues which require the plaintiff to prove that the defendant has entered into sale agreement for the sale of the subject property for a total sale consideration of Rs.80,00,000/- receiving earnest money of Rs.50,00,000/-and he is ready and willing to perform his part of the sale agreement. The civil Court has also framed an Issue on whether the plaintiff is entitled for refund of earnest money along with the interest at the rate of 18% from 16.01.2009 in the light of the plaintiff's alternative prayer for refund of the advance amount, and an additional Issue1 on whether the plaintiff is entitled to damages in a sum of Rs.30,00,000/-.
1 The plaintiff has filed an application for casting of certain Additional Issues. The proposed Additional Issues related to the defence of refund of Rs.50,00,000/- and the plaintiff's claim to damages. The application is partly allowed by the order dated 19.07.2011 and its order is confirmed in W.P. No.65320/2011. Consequentially, the Additional issue is considered by the civil Court. 7
9. The plaintiff has examined himself as PW1 and the defendant has examined herself as DW1. The defendant has also examined one of the attesting witnesses to the sale agreement and to the 'Cash Voucher' as DW2 and her Chartered Accountant as DW3. On behalf of the plaintiff, the sale agreement [Ex.P1], revenue record for the subject property [Ex.P3], a copy of the sale deed for the subject property in favour of the defendant [Ex.P4], the letters and the legal notices exchanged [Exs.P5 to P12], the sale deeds dated 06.02.2009 executed for the Khanapur property and for the Adarsh property [Exs.P13 and P14], his VAT Registration Certificate [Ex.P15] and IT returns for the years commencing from 2009-10 to 2013-14 [Exs.P16 to P19] are marked as exhibits. On behalf of the defendant, her VAT Registration Certificate and other Registration Certificates with the different State Government Departments [Exs.D1 to D6], a list of her business concerns [Ex.D8], her Tax Returns for the year 2009-10 [Ex.D9], a certified copy of the Cash Book Extract [Ex.D10] and the Cash Voucher [Ex.D11] are marked as exhibits.
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10. The civil Court as regards Issue No.1, which relates to the plaintiff proving the sale agreement and payment of Rs.60,00,000/-, has opined that, because the defendant has admitted the execution of the sale agreement setting up the defence of cancellation thereof and refund of the balance sale consideration on 06.03.2009, the burden of establishing the cancellation of the sale agreement and refund of Rs.50,00,000/- would be on the defendant and she must discharge this burden. As such, the civil Court has examined whether the defendant is able to discharge such burden without recasting Issue No.1 or framing an Issue in this regard.
The Civil Court on execution and cancellation of the Sale Agreement2:
11. The civil Court has examined the corresponding evidence on the cancellation of the sale agreement as against the backdrop of the admitted facts that the plaintiff is in the business of sale of silver and gold ornaments for over 20 years prior to the date of the suit with commercial 2 This is on the Issue No.1 which requires the plaintiff to prove the due execution of the said agreement and payment of Rs.50,00,000/-. 9 establishment in Shahapura, Belagavi and that the defendant, who is also in business, is a MBA graduate with multiple business entities. The civil Court has opined that it must presume that persons in business generally enter into commercial transactions on proper advice from the concerned to ensure that there is no room for any litigation.
12. The civil Court has construed Exs.P13 and P14 [the sale deeds for the Adarsh property and the Khanapur property in favour of Sri.Shamlal Wadhwa and the defendant's husband and his partners], both of which are executed on 06.02.2009, as admitted documents because the defendant does not contest that her husband has attested the sale deed in favour of Sri.Shamlal Wadhwa for the Khanapur property and the plaintiff has attested the sale deed for the Adarsh property in favour of the defendant's husband and his partners. The civil Court has opined that these documents indicate that the defendant and her husband have actively participated in the transaction for the aforesaid properties but the defendant, who admits in her cross-examination that her husband has mediated the transaction between the plaintiff and 10 Sri.Shamlal Wadhwa, has very audaciously denied knowledge of these transactions, and this indicates that she is not fair in her evidence. Further, the civil Court from these circumstances and the terms of the sale agreement [Ex.P1] has inferred that the plaintiff has paid Rs.50,00,000/- to the defendant from out of the consideration received by him from Sri.Shamlal Wadhwa from the sale of the Adarsh property.
13. The civil Court, with these conclusion as the preface, has examined the defendant's case that the sale agreement is cancelled on 06.03.2009 and the plaintiff has executed Cash Voucher [Ex.D11] acknowledging the cancellation and repayment of Rs.50,00,000/-. The civil Court has disbelieved Ex.D11, and the defendant's testimony on cancellation, for different reasons that are as now mentioned.
[a] The admitted author of this document, Sri.Amit Maikar, is not examined;
[b] The defendant contends that she has repaid Rs.50,00,000/- by way of cash but has not 11 explained how she was able to source such cash.
[c] The defendant is not certain whether the plaintiff has executed Cash Voucher or Payment Voucher to acknowledge the receipt of Rs.50,00,000/-.
[d] The Chartered Accountant [Sri.Umesh S/o.
Gurusiddappa Bolmal - DW3] states that the defendant has returned Rs.50,00,000/- to the plaintiff in Cash but he admits that this transaction is not mentioned in his Audit Report.
[e] The defendant's witness [Sri.Nagaraj Shrishailappa Nandeppanavar - DW2] has stated that the defendant also signed the Cash Voucher [Ex.D11] but this document does not bear the defendant's signature and therefore, the defendant must be presenting a false case.
[f] The Cash Book Ledger Extract [Ex.D10] mentions voucher number as No.2983 but the 12 Cash Voucker [Ex.D11] is a Payment Voucher without any number.
14. The civil Court has also disbelieved the evidence of the defendant's witnesses [Sri.Nagaraj Shrishailappa Nandeppanavar - DW2 and the Chartered Accountant DW3]. Sri.Nagaraj Shrishailappa Nandeppanavar has attested both the sale agreement and the Cash voucher. The civil Court has observed that Sri.Nagaraj Shrishailappa Nandeppanavar admits he is engaged in real estate business and generally whenever a sale agreement is cancelled, an endorsement of cancellation is made on the agreement itself and if the advance amount is returned, the vendor retains the agreement with the endorsement taking further action such as paper publication and execution of a formal cancellation agreement. This witness states that he advised the defendant to obtain an endorsement of cancellation on the original, but the defendant, despite the advice of a person who is familiar with the manner in which a sale transaction is cancelled, has not explained why such endorsement is obtained. Sri.Nagaraj Shrishailappa Nandeppanavar, is also silent about the same, and the civil Court has counted this 13 as one of the circumstances that creates doubt about the alleged cancellation and the credibility of the witness.
15. The civil Court has observed the Chartered Accountant [Sri.Umesh S/o. Gurusiddappa Bolmal - DW3] has deposed that the defendant has returned Rs.50,00,000/- to the plaintiff in Cash but he admits that it has not been mentioned in his Audit Report, and has opened that these irreconcilable statements not only creates doubt about the defendant's case of cancellation of the said agreement and refund of Rs.50,00,000/- but also about the credibility of this witness's testimony. The civil Court has further impeached the credibility the testimony of the Chartered Accountant because of its reading of the provisions of Section 269SS of the Income Tax Act, 1961 (for short, 'the IT Act'). The civil Court has opined that with this provision there is a prohibition against the payment of any cash in excess of Rs.20,000/-, but the Chartered Accountant stated that the defendant has paid Rs.50,00,000/- in cash. The civil Court has also disbelieved the defendant's case of repayment of Rs.50,00,000/- by cash because of the provisions of Section 269SS of the IT Act. 14
16. The Court, after this consideration of the probative value of the documents and the testimony of the witnesses, has considered the significance of the exchange of the correspondence and legal notices. The plaintiff has first corresponded with the defendant on 05.04.2009 calling upon her to execute the sale deed for the subject property in performance of the sale agreement, and in response to this correspondence, the defendant has set up the Cash Voucher [Ex.D11]. The defendant, while responding to the plaintiff's demand for a copy of the Cash Voucher [Ex.D11] in her response, has stated that the plaintiff has taken a copy of this Cash Voucher. The civil Court has observed that the defendant could have produced another copy, but this is not done, and a copy of the Cash Voucher [Ex.D11] is not produced even after the issuance of the final legal notice by the plaintiff.
The civil Court on plaintiff's ready and willingness3:
17. The civil Court, as a preclude to its consideration of the plaintiff's case in this regard, has recorded that it is 3 This Issue No.2 which requires the plaintiff to prove his ready and willingness to perform his part of the contract. 15 settled law that there cannot be a straitjacket formula on how a plaintiff must plead ready and willingness and it all depends on the facts of the case. The civil Court, apart from recording the same as a settled proposition of law on grant of the decree of specific performance, adverting to the authorities cited by the learned counsels for the parties, has also recorded that there cannot be any serious dispute about the proposition that, given the mandate under section 16(c) of the Specific Relief Act, 1963, if there is a failure to plead and prove ready and willingness, that would be fatal to the suit.
18. Insofar as the present case, the civil Court has opined that the plaintiff has pleaded that he was always ready and willing to tender Rs.50,00,000/- in cash and get the sale deed executed, but the defendant did not come forward to execute the sale deed and therefore, he corresponded with her and also issued legal notices. It appears to this Court that the civil Court has opined that this pleading should suffice on the plaintiff's ready and willingness.
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19. The civil Court, on the plaintiff's evidence on ready and willingness, has opined that there cannot be any dispute about the plaintiff's capacity to pay Rs.30,00,000/- because the defendant has not only admitted in her cross- examination that the plaintiff has his own business at Shahapur and he is an income tax assessee but also that he is financially well-off. The civil Court has asked itself whether anymore is required to hold that the plaintiff is financially well-off and ready and willing to perform his part of the contract.
20. The civil Court, almost as an answer to this question, has opined that if the defendant does not dispute that the plaintiff has paid Rs.50,00,000/- at the time of the execution of the sale agreement, the plaintiff's ability to mobilise a further sum of Rs.30,00,000/- cannot be seriously doubted. The civil Court has also relied upon the plaintiff's Income Tax returns [Exs.P16 to P19] to opine that the plaintiff has demonstrated that he deals in lakhs and the defendant does not dispute that he had sufficient stock-in- trade as of the date of the agreement and subsequent thereto.
17The civil Court on whether there should be a decree for specific performance or a decree for refund of Rs.30,00,000/- along with interest.4
21. The civil Court has referred to the settled law that merely because the plaintiff establishes ready and willingness is no reason to grab specific performance and the courts must exercise its discretion of the jurisdiction in the facts and circumstances of the case, and has opined that the defendant, who has admitted she has received a sum as high as Rs.50,00,000/-, cannot be permitted to take undue advantage of this receipt especially relying upon unbelievable case of cancellation of the sale agreement and refund of amount. The Civil Court has opined that the defendant's conduct in setting up a false case of cancellation and repayment of Rs.50,00,000/- must play a vital role in deciding on whether there must be grant of specific performance or refund of the advance part of the agreed consideration. Thus, the civil Court, has decreed the suit declaring that the plaintiff will be entitled for specific 4 This is in answering Issue Nos.3 and 4 which required the civil Court to decide on the grant of specific performance or refund of Rs.50,00,000/- with interest at the rate of 18% per annum from the date of the sale agreement.
18performance of the sale agreement directing the defendant to execute the sale deed for the subject property within two [2] months upon receiving the balance sale consideration of Rs.30,00,000/-.
22. Sri.Anant Mandagi, the learned Senior Counsel for the appellant/defendant, and Sri Balakrishna G. Shastri, the learned counsel for the respondent/plaintiff are heard. The learned Senior Counsel and the learned counsel, who have taken this Court through the exhibits marked by both the plaintiff and the defendant and their ocular evidence, canvass arguments that ultimately require this Court to decide on the following two questions:
[i] Whether the civil Court has erred in its appreciation of evidence and its findings on the defendant's case that the sale agreement is cancelled with the plaintiff executing on 06.03.2009 Cash Voucher [Ex.D11] on receipt of Rs.50,00,000/- from the plaintiff.
[ii[ Even if the answer to the first point is in the negative, whether this Court must interfere with the civil Court's finding on the plaintiff's ready and willingness and dismiss the suit 19 insofar as the prayer for the grant of decree of specific performance.
23. Sri.Anant Mandagi also submits that this Court must interfere with the civil Court's judgment and refuse specific performance of the sale agreement because the plaintiff has not challenged the cancellation of the sale agreement. He canvasses that the plaintiff, from the very beginning, is informed that the sale agreement is cancelled, and if the sale agreement is cancelled, the plaintiff cannot succeed unless the cancellation is declared bad. The plaintiff, without such declaration, cannot be entitled for specific performance. He relies upon the decision of the Hon'ble Supreme Court in I.S.Sikandar (D) by LRs. vs. K.Subramani and others5. In the present case, the assertion that sale agreement is cancelled is contested, and this Court must essentially examine whether the defendant has established the cancellation as alleged by her. Reg. Question No.1:
24. Sri.Anant Mandagi submits that the civil Court's finding that the defendant has failed to establish the due 5 (2013) 15 SCC 27 20 execution of Cash Voucher [Ex.D11] is for reasons such as the defendant has spoken about execution of a Cash Voucher, but Ex.D11 is a Payment Voucher; this Voucher does not bear any number but the Cash Book Extract [which is part of Ex.D10] mentions a particular number; the Chartered Accountant's evidence is that the payment of Rs.50,00,000/-is not shown in the defendant's books of account/audit report. However, the civil Court has erred in each of the aforesaid findings, and he elaborates thus.
25. Sri.Anant Mandagi argues that the defendant's evidence is that the plaintiff approached her in the morning of 06.03.2009 for the return of the advance amount of Rs.50,00,000/- pleading immediate requirement and after the defendant spoke to her husband, and her accountant, she could organized cash from the cash balance available with her because of the different businesses that she manages. When the plaintiff returned in the evening, she gave this amount to the plaintiff in the presence of DW2 after the plaintiff executed Ex.D11. It is common practice amongst persons engaged in business to tender cash as 21 against vouchers and to reflect the same in the Books of Accounts as is permissible.
26. Sri.Anant Mandagi elaborates that the other side cannot dispute that in business, cash vouchers are handed over to the accountant, who makes necessary entries in the computer system which auto generates the numbers which are reflected in the Cash Book, and as the numbers for the cash payments are auto generated this number is not reflected in the voucher. He argues that in the light of the defendant's evidence on the manner in which cash is mobilized and is handed over to the plaintiff as against Ex.D11, the fact that it does not reflect a number is no reason to disbelieve the same.
27. Sri.Anant Mandagi submits that the defendant has not only accounted the receipt of Rs.50,00,000/- at the time of execution of the said agreement in her firm's Books of Accounts6, but has also the return of this amount with the plaintiff executing Ex.D11. The defendant and her 6 The Exhibit Audit Report, which is marked as Ex.D10 with the Cash Book Extract, is for the year 2009-2010 and relates to the defendant's business under the name and style, M/s.Amarcon Dress Materials and Matching Centre.
22Chartered Accountant are categorical that the return of Rs.50,00,000/- is shown in the Income Tax Returns as part of her drawings7. The receipt of Rs.50,00,000/-, or the repayment thereof, is not required to be shown under any other head because the said transaction is not completed, and in any event, it cannot be part of the Auditor's report. He relies upon the decision of the Hon'ble Supreme Court in Rohitbhai Jivanlal Patel v. State of Gujarat8 to contend that even if there is any error in reflecting the receipt and return of Rs.50,00,000/- in the Income tax Returns, defendant [the assessee] at the most be liable for action under the Income Tax laws but, because the defendant has otherwise shown the return of Rs.50,00,000/-, the returns cannot be disbelieved. He submits that though this declaration is in the proceedings emanating from Section 138 of the Negotiable Instruments Act, 1881, the same must be applied in the facts and circumstances of the present case.
7 He invites the attention of this Court to Page 61 of Ex.D10 to bolster his submission that the payment is shown in the Income Tax returns 8 (2019) 18 Supreme Court Cases 106 23
28. Sri.Anant Mandagi canvasses that the plaintiff relies upon a purported tripartite transaction including the transaction under the sale agreement and the conclusion of the two transactions for the Adarsh property and the Khanapur property with the execution of Sale Deeds as per Exs.P13 and P14 to support his case. The plaintiff wants to contend that if the two transactions are completed with the execution of the respective sale deeds as per Exs.P13 and P14, there was no reason for the plaintiff to cancel the transaction under the sale agreement. However, neither Sri.Shamlal Wadhwa, who is asserted to be a party to the said tripartite transaction, is examined as a witness nor any document [other than the sale deeds] is produced to demonstrate such transaction. The plaintiff's ocular evidence and the attestation of the sale deeds9 by themselves do not demonstrate any tripartite transaction and in fact, he is categorical that the plaintiff relies upon unconnected and irrelevant material.
9 It is undisputed that the sale deeds [Exs.P13 and P14] are attested by the defendant's husband and Sri.Shamlal Wadhwa insofar as the sale deed executed in favour of the other. 24
29. Sri.Anant Mandagi argues that the failure to establish the tripartite agreement must receive due consideration, especially with the defendant bringing on record material that shows cancellation of the sale agreement. In continuation of his canvass in these regards, submits that the plaintiff has categorically stated in the first communication [Ex.P5] after the execution of the sale agreement, that he met the defendant in the first week of March 2009. Though the plaintiff contends that this meeting was to request for completion of the transaction, it cannot be denied that the Cash Voucher [Ex.D11] is executed in the first week of March, 2009. This admission must largely corroborate the due execution of Ex.D11. Sri.Anant Mandagi concludes contending that this Court, on a cumulative reading of the evidence on record, must conclude that the civil Court has erred in opining that the defendant has failed to prove cancellation of the sale agreement.
30. Sri.Balakrishna G. Shastri, while relying upon each of the circumstances emphasized by the civil Court to return a finding in favour of the plaintiff on Ex.D11, submits that the defendant's evidence that the receipt of 25 Rs.50,00,000/- is mentioned as her capital and the repayment is mentioned in the Income tax returns as withdrawal is a self-serving testimony inasmuch as the increase in the capital is not forthcoming in the Income Tax returns [Ex.D9] and the defendant's Chartered Accountant [DW3] is categorical that the amounts reflected in the Income Tax returns are based upon the statements made by the defendant/her accountant and he has no personal knowledge. He also is categorical that he cannot explain the sum of Rs.52,05,144/- mentioned as the opening balance in the cash book extract which is produced as part of Ex.D10. Therefore, neither the Chartered Accountant's testimony nor the defendant's evidence in this regard is of no significance.
31. Sri.Balakrishna G. Shastri next submits that the defendant cannot advantage of the plaintiff stating in his correspondence dated 15.04.2009 [Ex. P-5] that he met the defendant on this date to in the first week of March, 2009 because the plaintiff in the same breathe has stated that he met the defendant and on this date to request her for execution of the sale deed accepting the balance sale consideration of Rs.30,00,000/-. This statement is 26 consistent with the plaintiff's case that with the execution of the sale deeds for the Adarsh property and the Khanapur property on 06.02.2009, he requested the defendant to complete the said transaction but the defendant postponed the same for the reason that if the transaction is complete after 31 March 2009, it would help her manage of books of accounts and therefore her husband has executed acknowledgement as per Ex.P2.
32. Sri.Balakrishna G. Shastri submits that this document, Ex.P2, is an acknowledgement executed by the defendant's husband stating that the sale deed is due to be executed on seventh of April and he is requesting extension by two months upto seventh of June with the assurance to pay interest at the rate of 15% per annum. This must be the reading of this document because it is written very colloquially. However, Sri.Anant Mandagi has argued that this document cannot relate to the subject of transaction under the sale agreement because it is nobody's case that sale it was agreed to be executed on seventh of April and it is unimaginable that the defendant, who had to received 27 Rs.30,00,000/- as remaining part of their creed sale consideration, would agree to pay interest.
33. At the very outset, this Court must observe that some of the reasons assigned by the civil Court for disbelieving Ex.D11, come across has very formidable. The defendant in her evidence is categorical that when the plaintiff approached her with a request for refund of Rs.50,00,000/-, her husband asked her to check the cash balance and her accountant told her that there was sufficient cash balance to return Rs.50,00,000/-. Sri.Amit Maikar, from her accounts section handed over Rs.50,00,000/- in cash and this was made over to the plaintiff in the evening in the presence of the afore said Sri.Amit Maikar and the real estate agent, Sri.Nagaraj Shrishailappa Nandeppanavar, who is examined as DW2.
34. However, Sri.Amit Maikar is not examined, and Sri.Nagaraj Shrishailappa Nandeppanavar is elaborate in stating that whenever a sale agreement is cancelled an acknowledgement is obtained on the agreement itself with the vendor retaining the original with the subsequent publication in a daily as a follow-up action. He does not 28 explain why this is not done in the present case though it is admitted that the sale agreement is executed in duplicate with both the plaintiff and the defendant one of the originals. The defendant is completely silent about the execution of the sale agreement in duplicate and her difficulty in obtaining the acknowledgement for cancellation in the duplicate retained by her. These circumstances, and the other circumstances relied upon by the civil Court, create serious doubts about the genuineness of this Cash Voucher [Ex.D11].
35. Further, the civil Court is also justified in examining the evidence on record bearing in mind that both the plaintiff and the defendant are admittedly engaged in businesses and when a transaction of the present nature is finalized all due care and attention is taken under guidance from the concerned. The defendant states that she spoke to her accountant, but he/she is not even named and even the person from the account's section who is named is not examined. There is no explanation for the same. A heavy reliance is placed on the defendant's Income Tax Returns and the Chartered Accountant's testimony, but neither is 29 helpful to the defendant's case. The Chartered Accountant has denied personal knowledge and in fact, he states that he has filed the Returns on the instructions received and the defendant is categorical that her accountant has instructed the Chartered Accountant.
36. The details as mentioned in the Income Tax Returns and in the Cash Book Extract are also not of any assistance to the defendant in this Court's considered view because it is admitted that the cash balance of Rs.52,05,144/- in the Cash Book Extract [which is part of Ex.D10] is not explained and the defendant, without furnishing details or examining the accountant who is supposed to have sourced Rs.50,00,000/-, has stated that this amount is drawn from the cash balance available from the different businesses managed by her. Though it is contended that both the receipt and the repayment of Rs.50,00,000/- are shown as the defendant's capital in the Books of Accounts with the necessary accretion and depletion, the Chartered Accountant has not spoken about it and it is not, as admitted, easily borne out from the Books of Accounts for this Court to deduce the same. Therefore, 30 notwithstanding the civil Court's reference to the provisions of Section 269SS of the IT Act, which is dealt in detail by Sri.Anant Mandagi, this Court is not persuaded to opine that the civil Court has erred in disbelieving the Cash Voucher [Ex.D11] relied upon by the defendant to buttress her case that the said transaction under the sale agreement stands cancelled with effect from 06.03.2009. The first question is answered accordingly.
Reg. Question No.2:
37. Sri.Anant Mandagi submits that the plaintiff must fail in the suit notwithstanding the defendant's case of cancellation of the sale agreement because it is settled that unless a plaintiff avers and proves ready and willingness to perform his part of the contract as mandated under Section 16(c) of the Specific Relief Act, 1963, a Court cannot assume jurisdiction to pass a decree for specific performance. He contends that therefore it was incumbent upon the civil Court to consider the entire material on record to test the plaintiff's case as against the twin requirements of readiness and willingness as required in law instead of proceeding on presumptions and a purported admission. As regards the 31 proposition that a Court cannot assume jurisdiction to pass a decree for specific performance unless the twin requirements of readiness and willingness are established, Sri.Anant Mandagi relies upon multiple decisions including the decision of this Court in R. Chowdamma [Since Dead through LRs.] and another vs. M. Narayanappa and others10 and Basavaraje Gowda vs. N Vasanth11, and draws the attention of this Court to the following enunciation in the later decision:
It is settled law that the section 16(c) of the Specific Relief Act mandates the plaintiff, who approaches the Court for the relief of specific performance, has to plead and prove his readiness and willingness to perform his part of the contract. He must produce such evidence which is acceptable to the Court and demonstrate that he was ready with the balance sale consideration. Unless the plaintiff has proved his readiness and thereafter willingness to pay the balance sale consideration agreed upon, the Court gets no jurisdiction to grant a decree for specific performance. The plaintiff proving his readiness and willingness to perform his part of the contract is a condition precedent for the Court to exercise its 10 HCR 2014 Kant. 677 11 HCR 2015 Kant. 897 32 discretion in granting the relief of specific performance.
38. Sri.Balakrisha G. Shastri does not contest this salient proposition. This Court, which can only reiterate the said proposition in view of a catena of decisions in this regard including the decision of the Hon'ble Supreme Court in N.P.Thiruganam [Dead] by LRs. vs. Dr.R.Jagan Mohan Rao and others12, must therefore examine whether the plaintiff has established his ready and willingness, a condition precedent, to be entitled for grant of specific performance notwithstanding the confirmation of the civil Court's finding on the defendant's case that the sale agreement is cancelled.
39. Sri.Anant Mandagi submits that the inviolable condition of the sale agreement is the plaintiff's assurance to pay the balance consideration of Rs.30,00,000/- within 60 days from the date of the sale agreement and the further condition that if the plaintiff fails to pay the balance sale 12 (1995) 5 Supreme Court Cases 115, a decision which is also referred to by the Hon'ble Supreme Court in its recent decision in U.R.Krishna Murthy vs. A.M.Krishna Murthy reported in 2022 SCC Online SC 840.
33consideration within the said 60 days, the sale agreement shall stand cancelled forthwith and the defendant shall refund the amount of Rs.50,00,000/- with interest at the rate of 12% per annum. The terms in this regard, which cannot be disputed, leave no room for doubt that the plaintiff and the defendant have stipulated 60 days from the date of the sale agreement for payment of the balance consideration of Rs.30,00,000/- as the essence of the contract without stipulating the corresponding a time limit for the execution of the sale deed. It was therefore, incumbent upon the plaintiff to plead and prove not only his readiness i.e., his capacity to pay Rs.30,00,000/- within the agreed 60 days period but also his willingness to pay the same.
40. Sri.Anant Mandagi emphasizes that the plaintiff is silent about these conditions in his correspondences, the legal notices issued, in the plaint and also in his evidence. He argues that the plaintiff has neither pleaded, much less proved, that he was both ready and willing to pay Rs.30,00,000/- within 60 days. A bald pleading in this regard would not suffice given the express terms in the sale 34 agreement. The civil Court has failed to consider this aspect but it has proceeded to hold that because the defendant has admitted that the plaintiff is a businessman nothing more is required to establish the plaintiff's readiness and willingness. The civil Court has completely misdirected itself in opining that because Rs.50,00,000/- is admittedly paid by cheque, there cannot be any serious doubts about the plaintiff's readiness and willingness to pay the balance consideration of Rs.30,00,000/-. The civil Court has thus extended the benefit of a presumption when the law is that the plaintiff must plead and prove his readiness and willingness.
41. Sri.Anant Mandagi, relying upon the decision of the Hon'ble Supreme Court in Saradamani Kandappan and others vs. S.Rajalakshmi and Others13 urges that generally time is not the essence of a contract for sale of an immovable property, but it is settled that time must be construed as the essence of the contract when the intention of the parties in this regard can be gathered from the express terms of the contract or if its impliedly in the 13 (2011) 12 Supreme Court Cases 18 35 express terms of the contract. When the parties have agreed upon a certain timeline for payment of consideration as the essence of the contract, and not for the execution of the sale deed, the timeline for payment of the consideration would constitute the essence of the contract; if there is any default in paying the balance consideration within the agreed time, the plaint must fail as against the touchstone of readiness and willingness.
42. Sri.Anant Mandagi, on the evidence placed on record by the plaintiff to prove his ready and willingness, submits that it is only the sale deeds marked as Exs.P13 and P14 and the plaintiff's Balance Sheet as on 31.03.2009 apart from his Income Tax Return Intimation as per Ex.P16. He argues that the sale deeds are not relevant because there is nothing on record to tie up the transaction with the sale of the subject property under the said agreement with the transactions under the aforesaid sale deeds, and on the plaintiff's balance sheet as of 31.03.2009 and the intimation under the Income Tax Act, he argues that the plaintiff's income for that year is shown only in a sum of Rs.4,00,000/- and the value of the closing stock in a sum of 36 Rs.3,00,000/-. These figures do not render themselves to reasonable reading that the plaintiff had the capacity, or that he was willing to pay the amount of Rs.50,00,000/- and as such, there is no tangible evidence and the plaintiff's ocular evidence is only self-serving.
43. Sri.Balakrishna G. Shastri, without contesting the legal positions relied upon by Sri.Anant Mandagi, submits that in the present case, the plaintiff's readiness and willingness must be necessarily examined in the light of the fact that the sale agreement is part of a tripartite arrangement for sale of three immovable properties viz., the Adarsh property, the Khanapur property and the subject property. There cannot be any dispute about this because the transaction insofar as the Adarsh property and the Khanapur property is completed with the execution of the sale deeds on 06.02.2009. Even according to the defendant, her husband has attested the sale deed executed by the plaintiff in favour of Sri.Shamlal Wadhwa for the Khanapur property. The proximity of the transaction and the attestation is a strong circumstance. The time for payment of Rs.30,00,000/- and execution of the sale deed for the 37 subject property is extended only at the defendant's insistence to accommodate her interest. He relies upon Ex.P2 to bolster his submission in this regard.
44. Sri.Balakrisha G. Shastri submits that, as rightly observed by the civil Court, the defendant does not dispute that the plaintiff is engaged in the business of gold jewellery for decades and owns a commercial establishment in a prime place in Belagavi. The plaintiff nevertheless, has produced documents which establish that he is in such business and he has the capacity to pay the balance sale consideration of Rs.30,00,000/-. The details of the plaintiff's business during the relevant year, as seen in the balance sheet as on 31.03.2009 [Ex.P16], cannot be ignored, especially when it is undisputed that the plaintiff has paid substantial part of the agreed sale consideration. Sri.Balakrishna G. Shastri also submits that this Court, when reconsidering the question of the plaintiff's readiness and willingness, must consider the fact that the plaintiff, with the execution of the sale deed on 06.02.2009 for the Khanapur property, has received a sum of Rs.75,00,000/- 38 and it was not difficult for the plaintiff to pay the remaining amount of Rs.30,00,000/-.
45. The terms of the sale agreement, on payment of the balance sale consideration of Rs.30,00,000/- read as under:
"3. The vendor acknowledges for having received part sale consideration of Rs.50 lakhs from purchaser. The purchaser shall pay balance consideration of Rs.30 lakhs within 60 days from the date of this indenture of agreement of sale. The vendor shall execute registered Sale Deed for sale of schedule of property in favour of the purchaser after accepting the said balance sale consideration
4. In case the purchaser do not pay the balance sale consideration within 60 days from the date of this agreement to vendor then this agreement stands cancelled forthwith & thereby vendor shall refund the part sale consideration of Rs. 50 lakhs to purchaser with interest at the rate of 12% per annum to purchaser.
46. The plaintiff does not refer to these terms, or the extension of time, in the plaint, or for that matter in the legal notice issued before the commencement of the suit. The plaintiff in the plaint does refer to the tripartite 39 transaction for the sale of the Adarsh property, the Khanapur property and the subject property and the defendant's husband's participation in concluding this tripartite transaction, but without explaining how the transaction for the other two properties was relevant. The plaintiff without any pleading in these regards, states in the plaint, as well as in the earlier legal notices, that when he repeatedly approached the defendant, and the defendant went on postponing the same constraining him to issue letter dated 15.04.2009. It is in response to this letter that the defendant informs the plaintiff that he had executed Ex.D11 acknowledging the cancellation of the sale agreement upon receipt of Rs.50,00,000/-. This Court cannot but observe that the plaintiff has presented his plaint, and therefore his evidence, on how the defendant has falsely set up a document to contend that the sale agreement is cancelled without explaining his readiness and willingness in the context of the agreed term.
47. This Court is of the considered view that this cannot justify any mitigation of the requirement in law on the plaintiff to plead and prove that he was ready and willing 40 to attend the sum of Rs.30,00,000/-. This aspect assumes greater significance because the parties have agreed that if the plaintiff does not pay the balance sale consideration of Rs.30,00,000/- within 60 days from the date of the sale agreement, the plaintiff would be entitled only to receive back this amount along with interest at the rate of 12% per annum as against the transfer of the subject property. On the importance of the plaintiff being ready and willing to contend that this amount within 60 days from the date of the sale agreement, this Court must necessarily consider the same in the light of the decision of the Hon'ble Supreme Court in Saradamani Kandappan and others vs. S.Rajalakshmi and others [supra].
48. In this case, the Hon'ble Supreme Court has said that till the issue in this regard is considered in appropriate case, it could reiterate certain propositions. This is while enunciating that in a contract relating to immovable property, if time is specified for payment of the sale price but not in regard to the execution of the sale deed, time will become essence only with reference to payment of sale price 41 but not in the execution of the sale deed. The guidelines are as follows:
"43. Till the issue is considered in an appropriate case, we can only reiterate what has been suggested in K.S. Vidyanadam (supra) :
(i) Courts, while exercising discretion in suits for specific performance, should bear in mind that when the parties prescribe a time/period, for taking certain steps or for completion of the transaction, that must have some significance and therefore time/period prescribed cannot be ignored.
(ii) Courts will apply greater scrutiny and strictness when considering whether the purchaser was `ready and willing' to perform his part of the contract.
(iii) Every suit for specific performance need not be decreed merely because it is filed within the period of limitation by ignoring the time-limits stipulated in the agreement. Courts will also `frown' upon suits which are not filed immediately after the breach/refusal. The fact that limitation is three years does not mean a purchaser can wait for 1 or 2 years to file a suit and obtain specific performance. The three year period is intended to assist purchasers in special cases, as for example, where the major part of the consideration has been paid to the vendor and possession has been delivered in part 42 performance, where equity shifts in favour of the purchaser."
49. The plaintiff's ready and willingness must be examined in the absence of the necessary pleadings and, this Court must also say in the absence of clear evidence on the waiver of the condition to tender the balance sale consideration of Rs.30,00,000/- within 60 days from the date of the sale agreement. The evidence on record must be strictly scrutinized in the light of the stipulation to pay the balance sale consideration within 60 days and the further stipulation that the agreement shall stand cancelled if there is failure.
50. The plaintiff has relied upon two circumstances to substantiate his case that he was ready and willing to pay the balance sale consideration of Rs.30,00,000/- and obtain the sale deed. Firstly, He and Sri.Shamlal Wadhwa have completed the two transactions for the Adarsh property and the Khanapur property and in such transaction, he has received Rs.75,00,000/-. Even if a sum of Rs.50,00,000/- out of Rs.75,00,000/- is not considered, because the plaintiff has paid Rs.50,00,000/- by way of cheque on the 43 date of the sale agreement, the petitioner undoubtedly had Rs.25,00,000/-. This demonstrates the plaintiff's capacity to pay the balance sale consideration. Secondly, because he is a businessman engaged in gold jewellery over two decades, and the readiness and willingness is also demonstrated because he has completed a substantial part of his bargain with the execution of the sale deed for the Adarsh property.
51. This Court is not persuaded to return a finding in favour of the plaintiff on his ready and willingness because this is not a case that is putforward in the pleadings or in the evidence, or even before the civil Court. If the plaintiff is permitted to set up this case for the first time in the present proceedings, that would be in complete violation of the mandate in law that there must be sufficient pleading and evidence on ready and willingness though not as a compliance with a particular straitjacket formal. This Court must observe that the civil Court has not at all considered the plaintiff's ready and willingness to pay the balance sale consideration within 60 days from the date of the sale agreement. The second question, for these reasons, is answered in favour of the defendant.
44
52. In view of this Court's finding on the aforesaid question, the plaintiff cannot succeed in the prayer for a decree of specific performance of the sale agreement and the defendant cannot succeed in the defence that the sale agreement is cancelled. Then, would be only reasonable to conclude that the plaintiff must succeed in the alternative prayer which is for refund of the amount of Rs.50,00,000/- but with the agreed rate of interest of 12% per annum from 16.01.2009, the date of the sale agreement. In fact Sri.Anant Mandagi, when querried about the rate of interest if this Court were to hold the second question in favour of the defendant was categorical that the plaintiff, in view of the express terms of the sale agreement, cannot deny the rate of interest. Hence, the following ORDER The appeal is allowed in part modifying the civil Court's impugned judgment dated 25.01.2016 dismissing the plaintiff's prayer for specific performance of the sale agreement but granting the decree for recovery of Rs.50,00,000/- alongwith the interest at the rate of 12% per 45 annum from 16.01.2009 till the date of actual payment. There shall be no costs.
The decree shall be drawn accordingly.
Sd/-
JUDGE Sd/-
JUDGE RSH