Madras High Court
P. Retnaswamy vs A. Raja And Anr. on 4 September, 2001
Equivalent citations: AIR2002MAD131, AIR 2002 MADRAS 131, (2001) 3 MAD LW 603
Author: M. Chockalingam
Bench: M. Chockalingam
JUDGMENT M. Chockalingam, J.
1. This suit has been filed for a direction to the defendants to execute the sale deed in respect of the suit property in favour of the plaintiff as per the agreement for sale dated 10-7-1996.
2. Plaint averments are as follows ;
The plaintiff is working as Assistant Engineer in the Rajiv Gandhi Transport Corporation, Chennai while the first defendant is the Deputy Manager in the same Corporation. The first defendant who is the absolute owner of the suit property proposed to sell the same for a price of Rs. 10.05 lakhs. The plaintiff accepted and agreed to purchase the same for the said price. In pursuance of this agreement, the plaintiff paid Rs. 8.05 lakhs to the first defendant as part payment of the above said sale consideration. An agreement for sale was entered into between the plaintiff and the first defendant on 10-7-1996. 9 months' time was given to the plaintiff under the agreement for paying the balance of Rs. 2.00 lakhs to the first defendant and the plaintiff could get the sale deed executed by D1 in his favour. The plaintiff approached the first defendant on 3-2-1997 and asked for the production of the original documents relating to the suit property in order to get legal opinion of his lawyer. D1 neither gave a proper reply nor did he hand over the original title deeds. Instead. D1 started prevaricating about his commitment under the agreement creating a strong doubt about his earnestness in the performance of his part of the agreement. He has now came to know from reliable sources that D1 is actively negotiating with the third parties for the sale of the suit property. As per the agreement, once the plaintiff comes forward with the balance amount of Rs. 2.00 lakhs within 9 months. Dl is bound to execute the sale deed. The plaintiff caused a telegraphic notice to be sent to D1 on 12-2-1997, informing that he is ready and willing to get the sale deed in his favour by paying the balance amount. D1 is even now attempting to sell the suit property to the third parties notwithstanding the fact that he is already informed of the possession of the balance amount of Rs. 2.00 lakhs. Under such circumstances, he has no other alternative except to file this suit for specific performance. At the hearing of the application No. 95/97 filed by the plaintiff seeking an order of Interim injunction restraining Dl from alienating the suit porperty to the third parties. It was Informed to this Court by D1 that the suit property was sold as early as 30-1-1997 in favour of the second defendant, recording this information, the said application was dismissed by this Court on 3-4-1997. Even now D1 is having an interest in the suit property. When the plaintiff made an enquiry in the District Registrar Office, South, he was informed that the suit property was sold in favour of D2 for a price of Rs. 4.60 lakhs. In the encumbrance certificate dated 18-2-1997, it was shown that the first defendant was the owner till 17-2-1997. As the suit property was said to have been sold for a paltry price of Rs. 4.60 lakhs compared to its real worth of more than Rs. 10.00 lakhs, a suspicion crept into the mind of the plaintiff as to whether a genuine sale could have been effected at all for the said price with D2. The plaintiff further came to know that D1 entered into an arrangement with D2, according to which he would execute a sale deed in favour of D2. As a matter of fact, no such amount was paid by the second defendant to the first defendent. D2 has merely lent his name in order that D1 may achieve his object of defeating the interest of the plaintiff in the suit property as an agreement holder for sale. The so called sale deed In favour of D2 is only sham and nominal and there is no sale at all in the eye of law. As no consideration is passed, the alleged sale deed is void. In such circumstance, D1 continues to be the absolute owner of the suit property. As far as D2 is concerned, no right has accrued in his favour in respect of the suit property. However he is impleaded as a party in this suit as he has assisted D1 in the execution of the bogus sale deed. During the pendency of Application No.848/98, D1 issued nine cheques totally amounting to Rs. 9,00 lakhs. As the plaintiff was only interested in the suit property, he did not encash the same. The plaintiff issued a lawyer's notice dated 6-7-1998, to which D1 sent a reply dt. 24-7-1998.
3. The first defendant remained absent and he was set ex parte.
4. In the written statement filed by the second defendant, it is contended that the alleged execution of the agreement of sale on 10-7-1996 is false and there is no evidence to that effect. Plaintiff has to prove the alleged payment made by him in cash on 10-7-1996 to the first defendant and also the said agreement. The falsity of the averments made by the plaintiff is proved due to the fact that without receiving copies of the title deeds and scrutiny of original title deeds of the property and without obtaining a legal opinion on the title to the property, the plaintiff could and would not have given such a huge amount of Rs. 8.05 lakhs in cash towards part payment. The despatch of telegraph notice dt, 12-2-1997 proves clearly that this is a sham agreement. The sum of Rs. 8.05 lakhs received from the plaintiff was only for loan purpose, they being employees in the same organisation and not towards the part payment of consideration for the sale of suit property. It is clear from the counter affidavit filed by the first defendant in application No.95/97 that the so called agreement is sham and the genuineness of the agreement has not been proved and the said application for interim injunction was dismissed on 3-4-1997. The property was purchased by the 2nd defendant as early as 30-1-1997. The encumbrance certificate dated 18-2-1997 alleged to have been received by the plaintiff showing that the property was owned by the first defendant till 17-2-1997 is erroneous and contrary to the fact that the 2nd defendant before purchasing the property had obtained encumbrance certificate to know whether there was charge of any nature over the property. After registration, the 2nd defendant on 20-5-1998 obtained encumbrance certificate for the period from 1-12-96 to 30-4-98 which revealed that the schedule property has been duly sold to the 2nd defendant vide document No. 326 of 1997 dt. 30-1-1997. Though the sale consideration of the suit property was Rs. 4.60 lakhs, the stamp duty paid for the said sale deed was Rs. 1.35 lakhs based on the guideline value of Rs. 10,03,100/-. The sale consideration was apparently low because of many reasons. The property was under the occupation of a tenant and Dl was unable to evict the tenant in spite of his best efforts and D2 took up the responsibility to evict the said tenant. D2 after registration had great difficulty and hardship in evicting the tenant and obtained vacant possession by parting with some amounts. The 2nd defendant is not mere name lender and the defendants 1 and 2 never had any relationship whatsoever. The plaintiff and the first defendant were working in the same department and the alleged sale agreement has been fabricated by the plaintiff taking advantage of the intimacy of the first defendant and D1 has contended that he used to obtain loans through the plaintiff for which purpose he used to hand over to the plaintiff stamp papers and white papers affixed with revenue stamps duly signed and executed by D1 and such papers have been used for preparing the sale agreement, The said sale agreement is sham, void and fabricated. The plaintiff did not even know that the 2nd defendant had purchased the property. The 2nd defendant had no notice of any agreement muchless any commitment of the property at the time of his purchase and he is a bona fide purchaser for value. The plaint also does not reflect that D2 had notice of prior agreement. In such circumstances, the plaintiff cannot insist upon specific performance of the agreement.
Hence the suit which is misconceived, devoid of merits and lacks bona fides is liable to be dismissed with costs.
4. The following Issues were framed :
(1) Whether the plaintiff is entitled to the relief of specific performance of the alleged agreement dated 10-7-96?
(2) Whether the 2nd defendant is a bona fide purchaser for value without notice?
(3) To what other reliefs the parties are entitled to?
5. Issues 1 to 3 :-- The plaintiff has filed this suit seeking for a specific performance of an agreement of sale dated 10-7-1996 and for directions to the defendants to execute the sale deed in favour of the plaintiff.
6. The plaintiff examined himself as P.W. 1. Ex. P1 is the sale agreement dated 10-7-1996. A true copy of the contents of the telegram along with the telegram receipt dated 12-2-1997 is marked as Ex. P2. Ex. P3 series are the 9 cheques Issued by the first defendant to the plaintiff totalling a sum of Rs. 9.00 lakhs. The copy of the lawyer's notice issued by the plaintiff on 6-7-1998 along with the acknowledgment cards is marked as Ex.P4. The reply by D1 dated 24-7-1998 is marked as Ex. P5. Ex. P6 is the Encumbrance certificate in respect of the suit property.
7. The uncle of the second defendant by name Mr. G. Vaidyanathan was examined as D.W. 1 Ex. D1 is the special power of attorney given by the second defendant to him. He would depose that he met the first defendant In respect of the suit property, after seeing the advertisement in "The Hindu". At no point of time D2 personally met D1 in respect of the suit transaction for negotiation. He concluded the transaction with Dl on behalf of D2. He took steps for procuring the encumbrance certificate from 1961, and inspected the original title deeds of the suit property. Exs. D2 and D3 are the encumbrance certificates. The sale price agreed was approximately Rs. 4.94 lakhs whicb was paid by way of two demand drafts Ex. D4 is the true copy of the sale deed dated 30-1-1997 executed by D1 in favour of D2. He attested Ex. D4 at page 10. The sale consideration was paid by way of bank drafts mentioned in Ex. D4 sale deed. Ex. D5 is the original encumbrance certificate obtained by D.W. 1. Ex. D5 mentions about the present sale. The suit property was purchased as per the market price of the property. D2 is the bona fide purchaser of the suit property.
8. Arguing for the plaintiff, the learned counsel would submit that the plaintiff examined as PW. 1 is working as an Assistant Engineer in Rajiv Gandhi Transport Corporation, Madras where the first defendant is working as a Deputy Manager; that the first defendant who is the absolute owner of the immovable property described in the schedule entered into an agreement for sale; with the plaintiff for a price of Rs. 10.05 lakhs; that the plaintiff made the first payment of Rs. 2.00 lakhs in January, 1996, Rs. 2.00 lakhs in March, 1996 and further payment of Rs. 2.00 lakhs in May. 1996 and a further payment of Rs. 2.05 lakhs in July, 1996 and thus out of the sale consideration of Rs. 10.05 lakhs, the plaintiff has paid Rs. 8.05 lakhs; that the terms of the said agreement already entered into between the parties were reduced to writing on 10-7-1996 under Ex. P1 agreement wherein the payment of Rs. 8.05 lakhs has been clearly mentioned; that as per the said agreement, the plaintiff was to pay the balance of consideration within 9 months and on receipt of the same, the first defendant should immediately execute the sale deed; that the plaintiff who was all along ready and willing informed the first defendant on 3-2-1997 that he was ready with the balance of consideration of Rs. 2.00 lakhs; that the first defendant gave an assurance that he would execute the sale deed sooner; that when the plaintiff asked for the original documents of title, the first defendant was giving some evasive answer which created a doubt in the mind of the plaintiff and on enquiry the plaintiff came to know that the first defendant was negotiating for sale of the property with the third parties; that under such circumstances, the plaintiff was constrained to issue a telegraphic notice through his advocate as found under Ex. P2 on 12-2-1997; that under the said notice, the plaintiff made it clear that he was ready with the balance of consideration; that the first defendant was giving false promise to the plaintiff that he would execute the sale deed, but he was negotiating with the third parties for the sale of the suit property; that then the plaintiff had no option than to file the suit against the first defendant seeking for specific performance; that the plaintiff also sought for an interim injunction in Application No. 95/ 97 against the first defendant restraining him from alienating the suit property; that the first defendant who made his appearance in the suit filed a counter in that application stating that he had already sold the suit property on 30-1-1997; that in view of the same, the said injunction application filed by the plaintiff was dismissed; that the plaintiff who approached the Registrar Office to know about the alleged sale came to know that the suit property was sold by the first defendant to the second defendant for a paltry sum of Rs. 4.60 lakhs which was far below the market value; that the guideline value of the suit property was more than Rs. 10.00 lakhs; that on enquiry, the plaintiff came to know that the first defendant continued to be in possession of the property, that then it came to light that the first defendant entered into an arrangement with the second defendant, according to which he would execute a sale deed in favour of the second defendant as if the second defendant paid the sale consideration of Rs. 4.60 lakhs; that as a matter of fact no amount was paid by the second defendant to the first defendant; that the second defendant was merely a name lender to the said transaction; that the so called sale deed in favour of the second defendant is only sham and nominal and hence it cannot be called a proper sale transaction in the eye of law; that the first defendant continues to be the absolute owner of the suit property; that it is pertinent to note that the second defendant has the thorough knowledge about Ex. P1 agreement entered into between the plaintiff and D1; that during the pendency of the suit, the first defendant returned to the plaintiff Rs. 9.00 lakhs by way of 9 cheques which are marked as Ex. P3 series; that though the plaintiff received all those 9 cheques, he did not deposit the same for encashment and did not realise the sum; that after receipt of the same, the plaintiff issued a notice to the first defendant on 6-7-98 as found under Ex. P4 Informing him that he was not prepared to receive the said Rs. 9.00 lakhs, but he was particular to get the sale of the property; that the first defendant who acknowledged the said notice issued a reply on 24-7-98 as found under Ex. P5: that the plaintiff obtained Ex. P6 encumbrance certificate on 17-2-1997 which showed the property free from any encumbrance; that the sale effected by the first defendant in favour of the second defendant in respect of the suit property is neither valid nor binding on the plaintiff because the first defendant had sold the suit property to the second defendant even during the pendency of Ex. P1 agreement and in view of the fact that the second defendant has purchased the property with the thorough knowledge of Ex. P1 agreement. Added further the learned counsel that the first defendant who is the owner of the property has neither filed the written statement nor examined himself as a witness and thus all the contentions putforth by the plaintiffs side seeking for specific performance of an agreement of sale under Ex. P1 are not controverted; that the second defendant who calls himself as a transferee of the property from the first defendant has not got into the box to deny any one of the contentions put-forth by the plaintiffs side in order to put forth his case; that it is curious to note that D.W. 1 a stranger to the property and the second defendant has deposed the case of the second defenfant and hence the evidence of DW 1 does not require any consideration at all; that the plaintiff has sought for the specific performance of an agreement of sale as found under Ex. P1; that a reading of Ex. P1 would clearly indicate that the first defendant has received Rs. 8.05 lakhs towards the part of the consideration; that the first defendant who entered appearance and filed counter in Application no. 95/97 filed by the plaintiff for interim injunction has categorically admitted in his counter-affidavit the execution of the sale agreement; that during the pendency of the suit, the first defendant gave 9 cheques amounting to Rs. 9 lakhs but the plaintiff who received the same was not prepared to encash since he was not willing to get the amount back, but insisted for the execution of the sale and has issued Ex. P4 notice; that in the course of the reply under Ex. P5. the first defendant has categorically admitted that the signatures found in all those cheques were that of himself and this would be indicative of the fact that the first defendant was ready to pay Rs. 9.00 lakhs to settle the dispute; that had the first defendant not received Rs. 8.05 lakhs towards the part of the consideration of the agreement as found under Ex. P1, there was no necessity for him to return Rs. 9 lakhs by way of 9 cheques; that since the execution of Ex. P1 agreement was admitted by the first defendant himself in his counter in Application No. 95/97, the examination of any one of the witnesses to the document became unnecessary and hence the plaintiff has proved the agreement for sale under Ex. P1 and has also proved the payment of consideration to the extent of Rs. 8.05 lakh and that he has all along been ready and willing to purchase the property by paying the balance of consideration of Rs. 2.00 lakhs; that the whole transaction between the first defendant and the second defendant is only sham and nominal and an arrangement between them was to defeat the rights of the plaintiff under Ex. P1 agreement and hence the suit has got to be decreed in favour of the plaintiff directing the defendants to execute the sale in his favour. In support of his contentions, the learned counsel relied on the following decisions viz. (1) ; and (2000) 1 MLJ 33 (SC) (Sic).
9. Vehemently opposing each and every one of the contentions of the plaintiffs side, the learned senior counsel for the 2nd defendant Mr. R. Krishnaswamy would submit that the second defendant has purchased the suit property from the first defendant under a registered sale deed on 30-1-1997 for a sum of Rs. 4.60 lakhs; that the second defendant had no notice of any agreement muchless any commitment of the property at the time when he made the purchase and he is a bona fide purchaser for value; that the second defendant was added as a party to the suit after the first defendant filed a counter in the interim Injunction application No. 95/97 filed by the plaintiff, wherein it was categorically stated by the first defendant that the property has already been sold on 30-1-1997; that the second defendant was added by amending the plaint and paragraphs 8a, 8-b, 8-c, 8-d and 8-e were added to the plaint; that it is pertinent to note that nowhere the plaintiff has specifically pleaded that the second defendant had any notice or any knowledge of the alleged Ex. P1 agreement between himself and the first defendant; that since the plaintiff has not specifically alleged that the second defendant had any notice or knowledge of the prior agreement, the plaintiff cannot make insition for the specific performance of the agreement even assuming that such an agreement existed; that since the second defendant is a bona fide purchaser for value without notice or knowledge of the alleged agreement under Ex. P1, the sale transaction entered into between the second defendant and the first defendant has got to be upheld; that the scrunity of the plaintiffs evidence would not only bring forth the fake nature of the alleged agreement, but also falsify the case of the plaintiff; that according to PW. 1, out of the consideration of Rs. 10.05 lakhs, he made a cash payment of Rs. 8.05 lakhs towards the part payment of the consideration agreed between them without receiving the title deeds and even without scrutiny of the original title deeds and without obtaining a legal opinion as to the title of the property; that the plaintiff has admitted that for the first time, he demanded the title deeds only by way of a telegraphic notice dated 12-2-1997; that it is pertinent to note that the property was already sold by the first defendant to the second defendant on 30-1-1997; that it is highly improbable that the plaintiff made payments of Rs. 2.00 lakhs in January '96, Rs. 2.00 lakhs in March '96, Rs. 2.00 lakhs in May '96 and Rs. 2.05 lakhs without getting any receipt for such payments; that the plaintiff has not produced any evidence to show that he made those payments on the respective dates; that except his assertion before the Court, there is nothing available on record; that apart from that there is no evidence to show that the plaintiff could and would have such a huge amount of Rs. 8.05 lakhs in cash to make payments as contended by the plaintiff; that one strong circumstance which would prove that Ex. P1 is a sham agreement is that the plaintiff has specifically averred that he made a cash payment of Rs. 8.05 lakhs towards the part payment of consideration on 10-7-1996 when Ex.P1 agreement was entered into, but the plaintiff as PW. 1 has deposed that to his knowledge, the contents of Ex. P1 agreement were correct; that when PW. 1 was confronted with the recital in Ex. P1 agreement, he would state that the recital stating that he paid then a sum of Rs. 8.05 lakhs was not correct. Pointing to the recital found in Ex. P1 agreement and that averments made in the plaint, the learned Senior Counsel would submit that had the plaintiff parted with the sum of Rs. 8.05 lakhs as contended by him, there could not have been a deviation in his evidence in that regard: that all the above would go to falsify the contention of the plaintiff that he parted with part of the consideration of Rs. 8.05 lakhs to the first defendent; that it is true that the first defendant who made appearance through his counsel and filed his counter in Application No. 95/97 for Interim injunction did not subsequently file his written statement and he was set ex parte, but in his counter affidavit in the said application, he has categorically denied the execution of Ex. P1 agreement, but has clearly stated that the sale agreement is a cooked up one and prepared by the plaintiff in order to deprive him of his property and hence it would be futile to contend on the part of the plaintiff that the first defendant has admitted the execution of the sale agreement and under such circumstances, the plaintiff should have examined at least one of the witnesses to the document to prove the said agreement between the plaintiff and the first defendant under Ex. P1, but has not done so; that the first defendant has categorically stated the way in which Ex. P1 agreement should have been cooked up and fabricated by the plaintiff; that the contention of the plaintiff that during the pendency of the suit, the first defendant returned the 9 cheques for Rs. 9.00 lakhs which would indicate the part payment of consideration of Rs. 8.05 lakhs has got to be rejected as false and baseless, in view of the reply given by the first defendant under Ex. P5; that it is significant to note that six cheques from and out of those nine cheques have been Issued on a single day viz., 15-6-1998; that this would highly improbablise the Issue of the cheques and apart from the the first defendant could not have issued the nine cheque at all in view of the fact that he entered appearance and filed the counter in the injunction application denying Ex. P1 agreement even as early as 31-3-1997; that the plaintiff has neither proved Ex. P1 agreement nor proved the alleged payment of part of the consideration of Rs.8.05 lakhs and hence the plaintiff is not entitled for the relief of specific performance as asked for. In support of his contentions, the learned Senior Counsel relied on the following decisions; (1) (2000) 2 Mad LW 15; (2) : (3) and (4) (2000) 3 CTC 422.
10. The plaintiff has sought for the specific performance of an agreement of salealleging that the first defendant executed the said Ex. P1 agreement for sale on 10-7-96 in respect of his immovable property more fully described in the schedule of property annexed to the plaint. Originally this civil action was initiated against the first defendant for the said relief. While filing the plaint, the plaintiff filed Application No. 95/97 seeking for interim injunction to restrain the first defendant from alienating the property. The first defendant who appeared through his counsel filed a counter-affidavit denying the averments made by the plaintiff in support of his application. The said application for interim injunction was dismissed by this Court on the averments made by the first defendant in his counter-affidavit that he sold the said immovable property in favour of the second defendant. The plaintiff made an application for amendment of the plaint for impleadment of the second defendant who was a transferee of the property. The second defendant on notice entered appearance though his counsel, filed written statement and contested the suit. Though the first defendant filed the counter to the said application for Interim injunction, he has neither filed the written statement nor prosecuted his defence. At this stage the plaintiff has sought the direction of the Court against both the defendants to execute a sale deed in respect of the immovable property in question. The contesting second defendant has opposed this request of the plaintiff by contending that Ex. P1 agreement is a fake and sham one and the sale in favour of the second defendant cannot be questioned since his purchase was without notice or any knowledge of Ex. P1 agreement and he is a bona fide purchaser for value.
11. The first question that would arise for consideration in the suit is whether the plaintiff is entitled to the relief of specific performance of Ex. P1 agreement dated 10-7-1996. The plaintiff has sought this relief with the specific pleading which runs as follows :
The first defendant proposed to sell the plaint schedule property to the plaintiff for a price of Rs. 10,05,000/- (Rupees Ten lakhs & Five Thousand only) and the plaintiff herein accepted and agreed to purchase the same for the said price. In pursuance of this agreement, the plaintiff paid Rs. 805000/-(Rupees Eight lakhs five thousand only) to the first defendant as part payment of the above said sale consideration. As proof of this agreement, the plaintiff and the first defendant executed an agreement for sale. between themselves on 10-7-1996." As stated supra, the plaintiff has sought for the specific performance of Ex. P1 agreement, which contains the following recital:
The first party proposed to sell the flat, scheduled herein, for a price of Rs. 10,05,000/- (Rs. Ten Lakhs and Five Thousand only) and the second party accepted the said proposal and agreed to purchase the same for the said price.
The second party pays now a sum of Rs. 8,05,000/- (Rupees Eight Lakhs and Five Thousand only) by cash, as part payment of the abovesald sale consideration and the first party having received the said amount, acknowledges the same."
As seen above, according to the recitals in Ex. P1 agreement and the specific pleading in the plaint, the agreement for sale was entered into between the plaintiff and the first defendant on 10-7-1996 and the consideration for the sale was fixed at Rs. 10.05 lakhs out of which the plaintiff has paid a sum of Rs. 8.05 lakhs. The plaintiff who has examined himself as PW. 1 has deposed that the first defendant offered to sell his property in the early part of January, 1996 and the sale consideration was already agreed between them in January, 1996. According to the plaintiff, he gave Rs. 2.00 lakhs in January '96 and has made two payments each Rs. 2.00 lakhs one in March '96 and the other in May '96 and he has also paid Rs. 2.05 lakhs in July, 1996 and thus he has paid a total sum of Rs. 8.05 lakhs as part of the consideration of Rs. 10.05 lakhs. It remains to be stated that nowhere in Ex. P1 agreement or in the plaint, the plaintiff has stated that the agreement was entered into either in January, 1996 or the payments were made in January, March, May and July, 1996. It is very significant to point out that PW. 1 would State that to his knowledge the contents in Ex. P1 agreement were correct. When he was confronted with the recital in Ex. P1 that "the second party pays now a sum of Rs. 8,05,000/-", he would State that that statement was not correct. At this juncture it has to be pointed out that in a suit for specific performance, the plaintiff cannot be allowed to depart from his case as set up in the plaint and therefore if one agreement is set up in the plaint, but an other agreement is attempted to be established. the case of the plaintiff has got to be rejected on that ground alone, In the instant case it is needless to say that the plaintiff in his evidence has made an attempt to substitute entirely a new agreement of sale than one what is found under Ex. P1 agreement and also averred in the plaint. Needless to say that the relief of specific performance is in the nature of an equitable relief and that, even the conduct of the party may disentitle him to the relief asked for. Suffice it to say that in the instant case, the plaintiff who came with a specific averment of an agreement for sale on 10-7-1996 has not adduced any evidence to prove the same. The oral evidence adduced by the plaintiff stands;
contra to the averment found In Ex. Pi;
agreement and In the pleading.
12. The next circumstance which would cast a doubt whether the plaintiff could have parted with a huge sum of Rs. 8.05 lakhs as contended by him is that he has not obtained any receipt from the first defendant for the said instalments alleged to have been made by him in January. March May and July. 1996 nor has he asked for the original documents prior to 12-2-1997 by way of a telegraphic message found under Ex. P4. The contention of the plaintiffs side that the xerox copies of the title deeds were handed over by the first defendant to the plaintiff with an assurance to hand over the original deeds at the time of the execution of the sale deed cannot be accepted for the reason that no such averment is made in the plaint. It is highly unbelievable that even without receiving the copies of the title deeds and without scrutiny of the original title deeds pertaining to the property, the plaintiff parted with a sum of Rs. 8.05 lakhs towards the part of the consideration. Admittedly the plaintiff is an Assistant Engineer in a Transport Corporation during the relevant time. He is unable to place any material before the Court to show that he had the financial source or capacity to make the said three Instalments of Rs. 2.00 lakhs each and one instalment of Rs. 2.05 lakhs totalling to Rs. 8.05 lakhs. The contention of the plaintiffs side that the first defendant has well admitted the execution of Ex. P1 agreement in his counter filed In Application No, 95/97 cannot be accepted in view of the averments made in the said counter stating that Ex.
P1 agreement was cooked up by the plaintiff by using the blank stamped papers containing the signature of the first defendant. It is true that the first defendant has neither filed the written statement nor contested the suit. But it did not mean that the plaintiff need not prove Ex. P1 agreement. Not only the first defendant in his counter in Application No. 95/97, but also the second defendant who is the contesting defendant has also questioned the truth and genuineness of Ex. P1. Under the stated circumstances and in particular In view of the aforestated suspicious circumstances attendant on the document, a duty was cast upon the plaintiff to examine atleast one of the witnesses who witnessed the execution of Ex. P1 agreement. The plaintiff has not tendered any explanation for the non-examination of the said witnesses.
13. Much relying on Ex. P3 series containing nine cheques, the learned counsel for the plaintiff would stress that if Ex. P1 agreement was not entered into between the plaintiff and the first defendant and the plaintiff had not parted with the sum of Rs. 8.05 lakhs, there was no necessity for the first defendant to issue the said nine cheques and the issuance of those cheques by the first defendant would clinchingly prove the truth and genuineness of Ex. P1 agreement. This contention of the plaintiff that the first defendant issued nine cheques under Ex. P3 series cannot be accepted for more reasons than one. The plaintiff has filed the suit in February, 1997. According to PW 1, the first defendant filed his counter in Application No. 95/97 on 31-3-1997 stating that Ex. P1 agreement was a fabricated one. According to PW 1, the first defendant returned Rs. 9.00 lakhs by way of nine cheques and he did not encash the same, but Issued a notice through his lawyer as found under Ex. P4. Ex. P4 notice was issued by the plaintiffs counsel on 6-7-1998 wherein it is stated that the first defendant approached the plaintiff for a compromise offering to return a sum of Rs. 9.00 lakhs by issuing nine cheques drawn on Indian Bank, Esplanade Madras. It is highly difficult to accept whether the first defendant could have issued the said nine cheques during the pendency of the instant suit that too after the first defendant filed a counter stating that Ex. P1 agreement was a cooked up one. The plaintiff has not filed any covering letter of the first defendant along with which the alleged cheques were given to him. On receipt of Ex. P4 notice, the first defendant has issued a reply notice through his counsel on 24-7-1998 under Ex. P5 wherein he has categorically stated that certain blank cheque leaves having his signature, kept by him in his office table drawer were suddenly missing and he has lodged a complaint to the police about the said Incidence and thus there was no occasion for him to give any such cheques to the plaintiff. The plaintiff has not sent any rejoinder communication denying the same. A perusal of all the abovesaid nine cheques under Ex. P3 series would clearly reveal that though they bear the signature of the first defendant, they were filled up by somebody else. Though the plaintiff has alleged that all those nine cheques were handed over to him, he has neither encashed the same nor returned the same nor taken any action on the basis of those cheques. In his notice under Ex. P4 dated 6-7-1998, the plaintiff has given the particulars of the said nine cheques as follows :
------------------------------------------------------------------------------------------------------------------------- 1) Cheque No. 693215 dated 15-6-98 for Rs. 45,000/-
2) Cheque No. 693216 dated 15-6-98 for Rs. 45,000/-
3) Cheque No. 329562 dated 15-6-98 for Rs. 60,000/-
4) Cheque No. 329563 dated 15-6-98 for Rs. 50,000/-
5) Cheque No. 329564 dated 15-6-98 for Rs. 50,000/- 6) Cheque No. 329565 dated 15-6-98 for Rs. 50,000/- 7) Cheque No. 358043 dated 15-6-98 for Rs. 2,00,000/- 8) Cheque No. 358044 dated 15-8-98 for Rs. 2,00,000/- 9) Cheque No. 358045 dated 30-8-98 for Rs. 2,00,000/- _____________ 9,00,000/-" _______________
According to the plaintiff, the cheques from Sl. Nos. 1 to 7 were given on the same day viz. 15-6-1998. When the plaintiff was questioned as to why and under what circumstances all the above 7 cheques were Issued on the same day viz. 15-6-98, the plaintiff had no explanation to offer. The cheques mentioned in Sl. Nos. 8 and 9 above were dated 15-8-98 and 30-8-98 respectively. It is highly surprising to note that Ex. P4 notice was issued by the plaintiffs counsel on 6-7-98 itself. When Ex. P4 notice is verified with the cheques found under Ex. P3 series, the cheque under Sl. No. 7 is shown under Ex. P4 with date 15-6-98 whereas the 7th cheque found under Ex. P3 series is dated 30-7-98. All the above circumstances would clearly indicate that the first defendant could not have Issued the nine cheque under Ex. P3 series either under a compromise or towards the repayment of the part of the consideration as alleged by the plaintiff's side.
14. The learned counsel for the plaintiff would submit that the first defendant has neither filed the written statement nor contested the suit and hence when the plaintiff has come forward with the specific plea that Ex. P1 agreement was executed by the first defendant for the purpose of selling the suit property, it is for the first defendant to defend the same and the burden is on the first defendant to establish his case especially when the execution of the said document is admitted by him, and the second defendant cannot question the validity or otherwise of Ex. P1 sale agreement. In support of his contention, the learned counsel for the plaintiff relied on a decision of this Court (K.R. Manickan v. P. Kumaravel, wherein His Lordship Justice K. Govindarajan has held as follows :
"When the learned Senior Counsel appearing for the 2nd respondent has fairly conceded that the 1st defendant has admitted the signature in the agreement Ex. A1 which amounts to admission of the execution of the document. When the plaintiff has come forward with the specific plea that the said agreement was executed for the purpose of selling the suit property, it is for the 1st defendant to defend the same and establish that the said document was executed to safeguard the interest of the plaintiff and not to sell the suit property as mentioned therein. So, the burden is on the 1st defendant to establish his case especially when the execution of the said document is admitted by him. The intention as alleged by the 1st defendant cannot be established by the 2nd defendant as he is not a party to Ex. A1, nor the 2nd defendant examined anybody to establish the reason for executing Ex. A1., as stated by the 1st defendant under Ex. A25. No other evidence is available to sustain the said submission. Having stated certain reasons for executing the document under Ex. A1, the 1st defendant did not appear before the Court, and he has not filed written statement. He did not get into the witness box and he has not taken any steps to prove his case as mentioned in Ex. A25, to non-suit the plaintiff. As held in the decision in VIdhyadhar v. Manikrao, the 1st defendant did not state the facts mentioned in Ex. A25, in the written statement, and he had avoided the witness box so that he may not be cross-examined. At the instance of the 2nd defendant, such a defence cannot be accepted, especially when there is no specific evidence to that effect."
Countering to the above contention, the learned Senior Counsel for the second defendent would submit that under the provisions of the Specific Relief Act, 1963 or the Indian Contract Act or any common law, there is nothing which would disentitle the subsequent transferee viz. the second defendant herein to plead that the alleged prior agreement of sale in favour of the plaintiff was illegal and not binding on him. In support of his contention, the learned senior counsel for the second defendant relied on a decision of the first bench of this Court consisting of their Lordships Chief Justice K. G. Balakrishnan and Justice K. P. Sivasubramaniam, reported in (2000) 2 Mad LW 15 (M.M.S. Investments Through Its Managing Director v. V. Veerappan), wherein it is held as follows :
"While dealing with the rights of a subsequent purchaser in a suit for specific performance, we may visualise two types of subsequent purchasers. The first would be a purchaser subsequent to an agreement for sale in favour of the plaintiff, but prior to the filing of the suit and the second would be a purchaser after the filing of the suit for specific performance, The bar of lis pendens would apply only to the second case.
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 19(b) 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 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."
In view of the decision of the Division Bench cited above, there is nothing which would prevent the second defendant from questioning the validity and legality of Ex. P1 sale agreement. From the available evidence, it would be very clear that Ex. P1 agreement could not have come into existence as pleaded by the plaintiff.
15. Insofar as the contention of the second defendant that he is a bona fide purchaser for value without notice, the Court has to agree with the said contention. Originally the suit was filed only against the first defendant. On his appearance and filing a counter in the application for interim injunction, the plaintiff sought the amendment of the plaint and added the second defendant. It is significant to note that nowhere the plaintiff has specifically stated that the second defendant had any notice or knowledge of Ex. P1 sale agreement, alleged to have been entered into between the plaintiff and the first defendant. In the absence of any such pleading, the evidence of PW 1 stating that the second defendant had the previous knowledge of the agreement between himself and the first defendant under Ex. P1 has to be brushed aside. The second defendant has purchased the suit property from the first defendant on 30-1-1997 as found under Ex. D4, for a sale consideration of Rs. 4.60 lakhs. There is nothing to hold that the second defendant had any notice or knowledge of Ex. P1 agreement. Under the aforestated facts and circumstances of the case, the Court is of the view that the decision of this Court (Nalluswamy Reddiar v. Marammal) and rendered by his Lordship Justice E. Padmanabhan would squarely apply to the facts of the present case. It would be very advantageous to reproduce the relevant part of the said decision, as follows :
"As already pointed out that there was no plea that the second defendant had knowledge of the alleged sale agreement between the first plaintiff and the first defendant and that the second defendant had purchased the property with full knowledge of the alleged earlier agreement to sell. There is also no pleading that the second defendant with the knowledge of the alleged prior agreement had purchased the suit property. The burden of proof is on the first plaintiff to prove that the second defendant had knowledge about the prior agreement to sell. In terms of Sub-section (b) of Section 19 of the Specific Relief Act, specific performance of an agreement cannot be enforced against a subsequent transferee unless he had notice of prior agreement to sell. It has, been established in the present case that the second defendant had paid the full consideration for the sale deed before the date of sale and he had no notice or knowledge about the alleged prior agreement. The plaintiff was well aware that the second defendant had purchased the property. There is not even a plea that the second defendant had knowledge of the alleged prior agreement and despite knowledge he had purchased the suit property. There is no plea that the second defendant had notice of the alleged prior agreement to sell. There is neither a notice nor a constructive notice. The second defendant being a transferee has no knowledge at all. In the absence of any pleading no amount of evidence could be let in. Further it is also obvious that the plaintiffs are not in possession of the suit property to impute knowledge or notice. According to Section 19 of the Specific Relief Act, the second defendant, the transferee has to establish that his transfer is for a valuable consideration that he had paid the full consideration that his purchase was bona fide and in good faith and his purchase and including payment of money is without knowledge of the alleged contract between the first plaintiff and the first defendant. The first plaintiff had not pleaded that the second defendant had knowledge of the alleged prior agreement to sell. The plaintiff was very much aware of the sale deed executed by the first defendant in favour of the second defendant, but he had not challenged the same as the purchase of the second defendant was with full knowledge of the prior agreement to sell. The second defendant had also stated that he is a bona fide purchaser for valuable consideration without notice and that the first plaintiff had not only to plead but also to prove that the second defendant had knowledge of the alleged agreement to sell in his favour. In any event, the plaintiff had to plead and prove that the second defendant, subsequent purchaser had notice of the agreement in favour of the plaintiff. As already pointed out that there is no such plea and consequently no amount of evidence could be looked into. There is material documents to prove that the second defendant has paid full consideration and the execution of the sale deed by the first defendant had been proved. That apart, as already pointed out, the first plaintiff has not proved his possession and as found by the trial Court Exs. A1 and A2 are artificial and they do not deserve acceptance. There is nothing to show that the first plaintiff is in possession of property pursuant to Ex. A1 or Ex. A2. There was no want of good faith on the part of the second defendant as the purchaser of the suit property and there is nothing to attribute knowledge or notice of the alleged prior agreement of sale between the first plaintiff and the first defendant.
The first appellate Court, as already pointed out, has proceeded on illegal assumptions and surmises, as if the second defendant had knowledge and that he is not a bona fide purchaser. This finding cannot be sustained and the first appellate Court had failed to advert and consider the material portion of oral evidence as well as documents, which were considered elaborately by the trial Court.
The substantial question of law framed has to be answered in favour of the second defendant. The second defendant being a purchaser without notice and being a bona fide purchaser, the first plaintiff cannot seek the relief of specific performance against the second defendant. In the circumstances, the Judgment and decree of the first appellate Court are set aside and that of the trial Court restored. Accordingly the second appeal is allowed, but without costs."
16. Advancing his further arguments for the plaintiff, the learned counsel would submit that the suit property was said to have been sold for a paltry sum of Rs. 4.60 lakhs while the property would be worth more than Rs. 10.00 lakhs and that DW. 1 has admitted that at the time of the registration the stamp duties were paid as per the guideline value of the property which was found at that time Rs. 10.00 lakhs and hence it would be clear that the second defendant had not paid any amount towards the sale consideration as found under Ex. D4 and it was only an arrangement with the second defendant according to which Ex. D4 sale deed had come into existence and it was only a sham and nominal and this would clearly prove that it is a make belief affair. Countering to the above contention, the learned senior counsel for the second defendant would urge that the sale consideration of Rs. 4.60 lakhs found under Ex. D4 sale deed has actually been paid by the second defendant by way of two drafts drawn in favour of the first defendant; that as per the terms of the sale deed. It was agreed that the second defendant should vacate the tenant and obtain vacant possession from him and accordingly it was the second defendant, who paid Rs. 3.00 lakhs to the tenant who were then occupying the premises and got vacant possession and thus he has suffered great difficulty and hardship In evicting the tenant and thus taking into consideration of all the circumstances, the consideration for the property was settled at Rs. 4.60 lakhs. A perusal of Ex. D4 sale deed would reveal that it was executed by the first defendant in favour of the second defendant on 30-1-1997, in respect of the immovable property in question for a consideration of Rs. 4.60 lakhs, which was paid by way of two pay orders dated 27-11-1996 for Rs. 1.00 lakh and dated 10-1-97 for Rs. 3.60 lakhs drawn on Canara Bank, St. Mary's Road, Madras in favour of the first defendant. The said sale deed recites as follows :
The Vendor does hereby covenant that the Purchaser has agreed to purchase the aforesaid Schedule 'C' property subject to his accepting the onerous responsibility to evict the said tenant and obtain a vacant possession of the Schedule 'C' property." The above recitals under Ex. D4 would clearly indicate that the payment of consideration fixed at Rs. 4,60 lakhs has been made by way of two drafts drawn in favour of the first defendant: that the vacant possession was not handed over to the second defendant and the second defendant purchased the property subject to the condition that he should vacate the tenant occupying the property and get vacant possession. Taking into consideration of the above, it would be clear that the contention that the sale under Ex. D4 is only an arrangement between the first and the second defendants and is only sham and nominal cannot be countenanced.
17. Making much comment on the non-examination of the contesting second defendant, the learned counsel for the plaintiff would submit that the second defendant has not proved his defence. It is more significant to point out that the plaintiff who has come forward with the relief of specific performance has not proved that Ex. P1 is a true, genuine and valid document; that the plaintiff has given evidence contrary to the contents of Ex. P1 and thus Ex. P1 agreement is not proved and apart from that the plaintiff himself has not specifically pleaded that the second defendant had any previous knowledge or notice of Ex. P1 agreement. Under the stated circumstances the Court without any hesitation has to hold that the plaintiff is not entitled to the relief of specific performance of Ex. P1 agreement dated 10-7-1996 and the second defendant is a bona fide purchaser for value without notice. All the above issues are answered accordingly.
18. In the result, this suit is dismissed. There shall be no order as to the costs.