Madras High Court
K.Chandrapaul vs C.Sivasamy on 2 August, 2012
Author: V.Periya Karuppiah
Bench: V.Periya Karuppiah
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 02.08.2012 CORAM THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH S.A.No.1362 of 2001 K.Chandrapaul ... Appellant vs. 1.C.Sivasamy 2.N.Amirtham 3.Rathnam@Naga Rathnam 4.Ramalingam 5.Malarkodi 6.Dhanalakshmi ... Respondent Appeal filed under Section 100 of C.P.C. against the judgment and decree dated 26.06.2000 in A.S.No.109 of 1999 on the file of the Principal District Munsif, Salem, reversing the judgment dated 13.01.1999 in O.S.No.544 of 1996 on the file of the II Additional District Munsif Court, Salem (O.S.No.715 of 1988, on the file of the Sub-Court, Salem). For Appellant : Mr.V.Sekar for Mr.D.Shivakumar For Respondents : Mr.R.Singaravelan J U D G M E N T
This appeal is directed against the judgment and decree passed by the 1st appellate court in A.S.No.109 of 1999 dated 26.06.2000 in reversing the judgment and decree passed by the trial court made in O.S.No.544 of 1996 dated 13.01.1999 in dismissing the suit for the main relief and decreeing the alternative relief of refund of Rs.3,000/- with at 6% per annum without costs.
2. The appellant was the 2nd defendant and the respondents 1 and 2 were the plaintiffs, the respondents 3 to 6 are the legal representatives of the deceased 1st defendant.
3. For convenience the ranks of parties before the trial court is maintaining in this judgment.
4. The case of the plaintiff as stated in the plaint would be as follows:-
The 1st defendant entered into an agreement with the plaintiffs to sell the suit property on 13.04.1988 at the rate of Rs.100/- per sq.ft. The plaintiffs paid an advance of Rs.3000/-. Possession of the suit property was handed over to the plaintiffs on the same date. It was agreed that the sale would be completed within three months. One Pachiammal and Mariyayee owned 2/3 share in the suit property. They also agreed to sell their share by agreement dated 08.04.1988. The plaintiffs were always ready and willing to perform their part of the contract. Pachiammal and Mariyayee executed a sale deed for their 2/3rd share on 01.08.1988 in favour of the plaintiffs. The plaintiffs are in possession of the entire suit property. While so, one Pachiammal W/o. Sankaran of Kitchipalayam attempted to encroach upon the property and therefore a notice was issued on 15.04.1988 by the plaintiffs. The plaintiffs, first defendant, Pachiammal and Mariyayee filed a caveat petition before the District Munsif's Court, Salem on 25.04.1988 against the said Pachiammal W/o. Sankaran. In all the proceedings it was specifically admitted by the 1st defendant that he executed the agreement of sale and received a sum of Rs.3000/- as advance and handed over possession. But in order to defeat the claim of the plaintiffs, the 1st defendant colluding wit 2nd defendant executed a sale deed in favour of the 2nd defendant on 17.06.1988. The 2nd defendant is not a bonafide purchaser without notice of the earlier agreement. Therefore, the sale deed dated 17.06.1988 is not binding on the plaintiffs, as such the plaintiffs are entitled to seek relief against the 2nd defendant also. Hence the plaintiffs issued notice dated 05.07.1988 to the 1st defendant and others informing their readiness and willingness. But the 1st defendant has not issued any reply. Therefore, the suit is for specific performance and alternatively directing the 1st defendant to refund Rs.3000/- paid as advance together with interest at 24% per annum from the date of payment of till realisation and for permanent injunction.
5. The objections of the 1st defendant as stated in the written statement would be as follows:-
The averments contained in the plaint is not correct. It is false to say that this defendant entered into an agreement with the plaintiffs on 13.04.1988 to sell the suit properties to them. It is false to say that he received Rs.3000/- as advance and possession was handed over t the plaintiffs. The agreement is a forged document. This defendant borrowed a loan of Rs.3000/- from the plaintiffs, at that time they obtained the signatures of this defendant in blank stamp papers. So, this defendant suspects it appears to have been created. This defendant entered into an agreement with one Thangaraj on 05.10.1981 and received a sum of Rs.2000/- from him and handed over possession of the property. The said Thangaraj assigned his right in favour of the 2nd defendant on 30.12.1986 after receiving a sum of Rs.3000/-and also handed over the possession of the suit properties to the 2nd defendant. Since the 2nd defendant is in possession and enjoyment of the suit property, this defendant entered into an agreement with the 2nd defendant on 13.04.1988 to sell the property and on 17.06.1988 he executed a sale deed. Therefore, it is valid and binding upon the plaintiffs. The 2nd defendant is a bonafide purchaser. Since the plaintiffs issued false notice, it was not replied. The plaintiffs are not entitled to refund of the advance amount paid. There is no cause of action for the suit. Hence the suit is liable to be dismissed.
6. The objections of the 2nd defendant as stated in the written statement would be as follows:-
It is not correct to say that on 13.04.1988 the plaintiffs entered into sale agreement with the 1st defendant and the possession was handed over to the plaintiffs. It is a forged document. This defendant was not aware of the sale deed said to have been executed by Pachiammal and Mariyayee. This defendant is in possession of the property. The suit property is a vacant site and it is used by this defendant for manufacturing steel furniture's under the name and style 'Kavitha Industries'. This defendant entered into an agreement with the 1st defendant on 10.12.1987 to purchase the property for Rs.30000/- and paid an advance of Rs.5000/- on the same day. On 17.06.1988 the 1st defendant executed a sale deed in favour of this defendant after receiving the balance of sale price. It is false to say that Pachiammal and Mariyayee sold their shares to the plaintiffs. This defendant is a bonafide purchaser for value. Therefore, the plaintiffs are not entitled to ask for any relief. Hence the suit is liable to be dismissed.
7. On the above pleadings, the trial court had framed necessary issues and entered trial. After appraising the evidence addued before the trial court, it had come to the conclusion of dismissing the main relief of specific performance and permanent injunction but decreed the alternative relief of refund of Rs.3,000/- with interest at the rate of 6% per annum from the date of agreement till the date of realisation.
8. Aggrieved upon the said judgment of the trial court, the plaintiff preferred the appeal before the 1st appellate court in A.S.No.109 of 1999.
9. The 1st appellate court, after hearing both parties had come to the conclusion of setting aside the judgment and decree passed by the trial court, and decreed the suit for specific performance filed by the plaintiffs against the defendants as prayed for with costs.
10. The aggrieved 2nd defendant had preferred this second appeal in this Court.
11. On admission of the second appeal before this Court formulated the following substantial questions of law for consideration in this appeal:-
"1. When the plaintiffs have not come to the Court with clean hands, is the lower appellate court correct in law in granting the discretionary relief of specific performance ?
2. Whether the lower appellate court ought not to have taken note of the fact that 1st defendant as noted by the trial court had come forward to give evidence, but could not give evidence because of his illness and had subsequently died, therefore failure on the part of the 1st defendant to give evidence cannot be held against the defendants ?
3. Is the Lower Appellate Court correct in holding that the pleading of the first defendant is not supported by this defendant, without considering the subsequent purchaser (the appellant herein) in good faith is entitled to raise any defendants against the grant for decree for specific performances, as held by this Honourable Court in MMS Investments through its Managing Director and 4 others versus V.Veerappan and 8 others reported in 2000 (1) CTC at page No.538 ?"
12. Heard Mr.V.Sekar learned counsel appearing on behalf of Mr.D.Shivakumar for the appellant/2nd defendant and Mr.R.Singaravelan, learned counsel for the respondents 1 and 2 / plaintiffs.
13.The learned counsel for the appellant would submit in his argument that the 1st appellate court had reversed the findings of the trial court in decreeing the alternative relief of refund of Rs.3,000/- as advance to the suit agreement and had decreed the suit for specific performance in its entirety, which is not in accordance with the facts and circumstances of the case. He would also submit that the plaintiff must state true facts, while getting an order of equitable nature. He would further submit the admitted case that only 1/3rd of undivided 662 sq.ft has been made as suit property, it could not be possible to enter into possession of such undivided share. When such is the proof before the court, the plaintiff cannot be stated to have uttered correct facts in order to get the relief of specific performance. He would also submit that the plaintiff claimed the actual extent of the land as per partition deed Ex.A6 and A13, as he was aware of the said transactions. He would also submit that the said 1/3rd share cannot be brought under the agreement of sale and Ex.A3 would show that there was already a division in the suit property. He would further submit that the trial court had correctly reached a finding to decree the suit for alternative prayer since it was not a case to pass an order of specific performance. He would also submit that the sale deed produced in Ex.B1 in favour of the 2nd defendant was not acted upon, is negatived by Ex.B2 patta, dated 16.09.1988. He would also submit that the 2nd defendant was a bonafide purchaser from the 1st defendant since he has no notice of the suit agreement. He would also submit in his argument that the 1st appellate court could have fixed a higher price, incase when it was about to decree the suit as per the prevailing market value. But, it was not done. He would also submit that the suit has been filed in the year 1996 and it is pending for more than 16 years and the market price of the land had gone on several times than that of in the year 1996. He would also submit that there is no bar in granting a specific performance decree by fixing an enhanced sale consideration, after ascertaining the intention of parties. He would also cite a judgment of Hon'ble Apex Court reported in 2010 (7) SCC 717 (Laxman Tatyaba Kankate and another v. Taramati Harichandra Dhatrak). Quoting the aforesaid judgment, he would argue that the 1st appellate court, while decreeing the suit after it reversed the decree should have considered the intention of parties and to pass such an order. He would also submit that in view of non-compliance of the law laid down by the Hon'ble Supreme Court, the case of the 2nd defendant may be accepted and a suitable decree should have been passed. He would also submit that the trial court judgment was quite acceptable and it has been modified by the 1st appellate court without any reasons and therefore, the judgment and decree passed by the 1st appellate court may be reversed or modified according to the facts of the case. He would also suggests that the value of the suit land was considered as Rs.100/- per sq.ft and the decree was passed. However the present value of the said property could be more and a sum of Rs.400/- may be fixed per sq.ft in order to approve the sale agreement entered into between parties. In case, this Court is of the view to confirm the grant of specific performance suitable orders may be passed fixing at Rs.400/- per sq.ft and modifying the decree of 1st appellate court. Therefore, he would request the Court to allow the 2nd appeal.
14. The learned counsel for the respondents 1 and 2 / plaintiffs would submit in his argument that the judgment and decree passed by the 1st appellate court in reversing the judgment of trial court is quite right and it is not liable to be reversed. He would also submit that the 1st appellate court had corrected the factual errors committed by the trial court and the decision reached by the 1st appellate court was in accordance with the evidence adduced before the trial court. He would also submit that the 1st defendant failed to prove the case and yet the trial court had come to the conclusion of negativing the claim of the plaintiff and the 2nd defendant / appellant was wrongly found to be a bonafide buyer, which was also correctly interfered by the 1st appellate court and the findings of the 1st appellate court need not be interfered in the second appeal. He would further submit that the submission of the learned counsel for the appellant seeking for fixing the higher price of the land comprised in their agreement since number of years have been passed from the date of the agreement, could be applied in appropriate cases. He would also submit that the 2nd defendant's case was that he was only a bonafide buyer and if it is the case of the purchaser, straight away the same principle can be agitated and therefore, the said argument has no legs to stand and therefore, the judgment and decree passed by the 1st appellate court have to be confirmed and the appeal may be dismissed.
15. I have given anxious thoughts to the arguments advanced on either side.
16. The suit was filed by the respondents 1 and 2 / plaintiffs against the defendants 1 and 2 for the following reliefs:-
"a. directing the defendants to execute and get registered sale deed in favour of the plaintiffs with respect to the suit property and in default of defendants the court itself be pleased to execute and registered the sale deed on behalf of the defendants.
Alternatively b. directing the 1st defendant to refund Rs.3000/- paid as advance together with interest at 24% per annum from the date of payment till realisation;
c. pass a decree of injunction restraining the defendants and their men from in any way interfering with the plaintiffs possession and enjoyment of suit property;
d. grant costs of the suit."
17. The 2nd defendant was impleaded as necessary party since he had purchased the property including the suit property namely 1/3rd share belonging to the 1st defendant despite there was an agreement of sale in favour of the plaintiffs. The case of the plaintiffs against the 2nd defendant was that the 2nd defendant was not a bonafide buyer without notice of the sale agreement. Similarly, the 1st defendant had put-forth a plea of loan transaction for which, he had entered into a suit agreement dated 13.04.1988 with the plaintiffs. The trial court relied upon the case of the 1st defendant and had denied the relief of specific performance, but had ordered only the alternative relief of refund of money for a sum of Rs.3,000/- with further interest. Further, the 1st appellate court had reversed the findings of the trial court and had come to a conclusion of decreeing the suit as prayed for by holding that the 2nd defendant was also not a bonafide purchaser for value without notice of the sale agreement. The 1st defendant did not appeal against the said judgment of the 1st appellate court, however, the 2nd defendant had come to this Court, challenging the judgment and decree passed by the 1st appellate court. No doubt, the 2nd defendant, who is a purchaser from the 1st defendant had stepped into the shoes of the 1st defendant and there is no necessity that the 1st defendant should also file the appeal, so as to challenge the reversal judgment of the 1st appellate court. Now, the 2nd defendant alone is having the right over the said property, but, for the suit agreement and therefore, the appeal preferred by the 2nd defendant would be on behalf of the 1st defendant also.
18. Moreover, in the 3rd question of law framed, the judgment of this Court reported in 2000(1) CTC 538 (M.M.S. Investments Through Its ... vs V. Veerappan And 8 Others) has been quoted as to the right of the subsequent buyer to raise pleas not only in respect of the subsequent purchase made by him, but also the pleas which ought to have been pleaded by the 1st defendant who is the vendors. The said principle laid down in 2000(1) CTC 538 (M.M.S. Investments Through Its ... vs ... V. Veerappan And 8 Others) would entitle the 2nd appellant to raise the pleas what are all to be raised in the suit against the grant of specific performance. The relevant portion of the above said judgment would be as follows:-
"8. As regards the first category of subsequent alienee prior to the filing of the suit is concerned, there is nothing either under the provisions of the Specific Relief Act, 1963 or the Indian Contract Act or any common law principle which would disentitle him to plead that the prior agreement of sale in favour of another person was illegal and not binding on him. He merely steps into the shoes of the vendor and is bound to suffer a decree as would be enforceable against his vendor. It is true that Section 16(c) of the Specific Relief Act, 1963 (hereinafter called "the Act") entitles the decree holder for specific performance to enforce it as against another person claiming transfer of title subsequent to the agreement for sale other than a transferee in good faith for value and without notice of the agreement for sale. In other words, the decree cannot be enforced against a subsequent purchaser if his purchase is bona fide and without notice of the sale agreement. That is only an enabling provision which entitles the decree holder to have it enforced against all subsequent alienees who had notice of the agreement and who had not acted in good faith. Section 40 of the Transfer of Property Act also recognises similar rights. But no disability is cast upon a subsequent purchaser whether he had prior notice of the agreement or not, to plead that the prior sale agreement was illegal and unenforceable. For instance, the terms of the sale agreement may be totally void or opposed to public policy or entered into by a person who had no proper legal authority, for example in the case of a minor's property and the subsequent purchaser may choose to purchase the same after he attains majority. The agreement may be a collusive or fraudulent or a sham one specifically intended to defeat the claim of the creditors. The vendor as on the date of the agreement may have no capacity to deal with the property. For example, the person who had executed the agreement may be only a limited life estate holder or only a joint owner or the agreement may have become unenforceable by efflux of time or due to negligence -of the buyer not having complied with the conditions of the agreement. In such circumstances, the subsequent purchaser, though he is aware of the sale agreement, is also aware that the agreement is totally illegal and unenforceable and is prepared to take the risk of purchasing the property. There is no reason why he cannot do so and to assail the legality of the prior sale agreement. He is prepared to face the risk by stepping into the shoes of the vendor. If is a matter of common experience that whenever the legality of alienation by a Hindu Family manager or by an undivided coparcener or any co-owner asserting title to specific items of properties is called in question, it is the alinee who pleads and seeks to prove legal necessity or the fact of an alleged earlier partition so as to justify his purchase. If so, afortiori, there is no reason why a subsequent purchaser cannot plead and prove any illegality attached to a prior sale agreement in favour of a third party. It has to be borne in mind that a mere agreement, for sale does not by itself create interest in the property (Section 54 of the Transfer of Property Act). Indian Law stands specifically departed from and does not recognise the English doctrine that a contract for sale transfers an equitable estate to the agreement holder. Therefore, the rights of a holder of agreement for sate is far lesser and an inchoate right compared to the rights of a coparcener or a co-owner. In fact, the relief to be granted under the Specific Relief Act is a discretionary one and not to be granted "merely because it is lawful to do so" (Section 20). The equity Court has to take into consideration all circumstances before granting or refusing the relief and one of the paramount issues for consideration would be the comparative hardship."
19. The said principle laid down by this Court go to show that the 2nd defendant can raise what are all pleas available to the 1st defendant, in his absence.
20. However, the 1st appellate court had come to the conclusion that the 2nd defendant failed to prove the plea of the 1st defendant raised in the written statement by examining himself as one of the witnesses, on the side of the defendants cannot be assailed since the 1st defendant was the best witness to say about the nature of the transaction had with the plaintiffs. When the 1st defendant has not submitted himself for cross-examination, while he was examined as DW2, he ought to have been subjected to the cross-examination by the appointment of Commissioner even before his death. The findings of the 1st appellate court that the plea of the 2nd defendant that he was having a right to purchase the property from the 1st defendant through the sale agreement Ex.B7, was not acceptable in view of the difference in the dates of stamp papers in the year 1984 and the contradictory pleadings in his written statement that he entered into an agreement with one Mr.Thangaraj on 05.10.1981. The said facts of the findings cannot be agitated before this Court and therefore, the claim of the 2nd defendant that he was having a right over the agreement of the plaintiffs with the 1st defendant, cannot be considered in this 2nd appeal. The 1st appellate court had thoroughly considered the evidence and perceived the evidence properly and it disbelieved the evidence of the DWs 3 and 4 , who were examined by the 2nd defendant in support of his case.
21. Furthermore, the claim of the 2nd defendant that he was a bonafide purchaser, was considered and was negatived by the 1st appellate court. In view of such findings reached by the 1st appellate court, the appellant/2nd defendant should have shown to Court that the plaintiffs have come forward with the prayer of specific performance with unclean hands. But no such instance has been shown by any evidence. Therefore, I could see that the questions of law framed in point Nos. 1 and 2 in this appeal cannot be ended in favour of the appellant/2nd defendant.
22. According to the 3rd question of law, the 2nd defendant is entitled to put forth the defence of not only bonafide buyer but also the defence raised by the 1st defendant, in order to substantiate his claim and therefore, it was decided in favour of the 2nd defendant/appellant.
23. However, I could see that the contract was entered into between parties on 13.04.1988 at Rs.100/- per sq. ft. Now several decades have been passed and the price of the properties have been raised in multiples. According to the alternative submission of the learned counsel for the appellant/2nd defendant, in the case of the plaintiffs claim is up-held by this Court, the judgment of Hon'ble Apex Court reported in 2010 (7) SCC 717 (Laxman Tatyaba Kankate and another v. Taramati Harichandra Dhatrak) may be considered and reasonable enhancement in the price may be adopted for enforcing the suit agreement, executed in the year 1988. He would also suggest that a sum of Rs.400/- per sq. ft. may be fixed towards the consideration for the suit property excluding the sale consideration already deposited before the trial court. He would also submit that the 2nd defendant who has paid consideration for the suit property to the 1st defendant and is now stepping into the shoes of the 1st defendant be entitled to withdraw the sale consideration on execution of the sale deed, in favour of the plaintiff. Considering the said statement made by the learned counsel for the 2nd defendant, I could see that the principles laid down in the juedgment of Hon'ble Apex Court reported in 2010 (7) SCC 717 (Laxman Tatyaba Kankate and another v. Taramati Harichandra Dhatrak) have been dealt with in paragraphs 22, would be as follows:-
"22. The discretion of the court has to be exercised as per the settled judicial principles. All the aforesaid principles are squarely satisfied in the present case and it is the appellants before us who have taken advantage of the pendency of the proceedings. They have used the sum of Rs.10,000/-, which was given as earnest money for all this period, as well as, have enjoyed the fruits of the property. The present case does not fall within the ambit of any of the aforesaid cases specified under Section 20(2) of the Act. In the present case, it is not only lawful but even equity and facts of the case demand that a decree for specific performance should be granted in favour of the respondent. Besides all this, the respondent before us has agreed to pay much higher consideration than what was payable in terms of the agreement to sell between the parties."
24. The learned counsel for the respondents 1 and 2 / plaintiffs would submit in answering to the claim of the learned counsel for the appellant/2nd defendant that no doubt the value has been raised to several multiples and the delay has been caused only due to the appeal preferred by the appellant before this Court. However, he would submit that the said suggestion made by the appellant's counsel that the value of the property at Rs.400/- per sq.ft is acceptable to him. Considering the said submission made by the learned counsel for the appellant/2nd defendant and the respondents/plaintiffs, I could see that the judgment and decree passed by the 1st appellate curt is liable to be modified to that extent only.
25. Accordingly, the sale price of the suit property namely 1/3rd share in 662 sq.ft is fixed at Rs.400/- per sq.ft and the said amount at Rs.300/- per sq.ft has to be deposited and on such deposit of the said money within a period of one month from the date of receipt of a copy of this order, the defendants are directed to execute the sale deed in favour of the plaintiff. On such failure of the execution of sale deed by the defendants, the Court shall execute the sale deed, in favour of the plaintiff's in one month thereafter.
26. With the aforesaid modification, the appeal is allowed to that extent. The said money deposited towards the sale consideration will be disbursed in favour of the 2nd defendant since the 1st defendant had transferred the entire right over the suit property in favour of the 2nd defendant.
27. With the aforesaid observation, the second appeal is partly allowed to that extent. No order as to costs.
To
1. The Principal District Munsif, Salem.
2. The II Additional District Munsif Court, Salem (O.S.No.715 of 1988, on the file of the Sub-Court, Salem).
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