Bombay High Court
Shri Sharad Pandharinath Mote vs Prakash Madhavrao Yadav And Ors. on 14 July, 2000
Equivalent citations: (2000)102BOMLR160
Author: H.L. Gokhale
Bench: H.L. Gokhale
JUDGMENT H.L. Gokhale, J.
1. This appeal seeks to challenge the judgment and decree dated 29th October, 1996 passed by the Civil Judge, Senior Division, Pune granting a decree to the plaintiff-appellant only in part in his Special Civil Suit No. 1604 of 1991. The principal prayers in that suit were rejected by the said decree and hence being aggrieved by the same, this appeal has been filed.
2. Mr. Vijay Patil and Miss Roshni Patil have appeared for the appellant and Mr. Ketkar and Mr. Khadapkar have appeared for the respondent No. 1.
3. The above referred suit filed by the appellant-plaintiff was concerning a house owned by the respondent No. 1 bearing No. 415 situated in Shukrawar Peth, Pune admeasuring about 131.3 sq. metres and consisting of ground + three floors. The case of the appellant is that sometimes in the first week of June, 1991 the 1st respondent had entered into an oral agreement to sell the said house to the appellant for a consideration of Rs. 4,50,000/-. It is his further case that when the oral agreement was arrived at, two persons namely one Vijay Mohite, an Advocate and one Satish Naik were present. It is his further case that in pursuance thereto, he paid an amount of Rs. 1,00,000/-in cash to the 1st respondent on 10th June, 1991 and that the 1st respondent acknowledged the same in writing. The said receipt when translated from the original Marathi reads as follows:-
Received an amount of Rs. 1.00.000/- in cash on 10.6.1991 towards the transaction of purchase of the property bearing House No. 415 in Shukrawar Peth.
4. It is the further case of the appellant that as per this oral agreement, an amount of Rs. 1,00,000/- was to be paid within one week from arriving at the oral agreement and the rest of the amount was to be paid at the time of execution of the sale deed by Diwali of that year. The appellant's further case is that he was always ready and willing to complete the transaction, but the respondent No. 1 was not responding and hence he was required to give a notice through his Advocate in a daily newspaper which he gave in Marathi daily "Prabhat" published from Pune on 11th October, 1991 informing the world at large that the 1st respondent had agreed to sell the suit house to him for an amount of Rs. 4,50,000/-. On the very day, however the 1st respondent through his Advocate replied the aforesaid notice denying that any such agreement was entered into between him and the appellant. Thereafter further correspondence ensued between the parties. Ultimately the appellant called upon the 1st respondent to execute the sale deed by his notice dated 7th December, 1991 which was refused by the 1st respondent's reply dated 16th December, 1991 leading to the filing of the suit. The appellant prayed for specific performance of the said agreement and for an injunction restraining the respondents from disposing of the property during the pendency of the suit and alternatively prayed for the refund of the earnest money along with the damages valued at Rs. 5,52,151.
5. The respondent No. 1 disputed the claim of the appellant by filing a written statement and denied his entire case. In para 5 of the written statement, a defence was taken apart from the denial as stated above that the 1st respondent was himself to develop the said property by demolishing the suit house, that the appellant along with his mother are tenants of one flat therein and that the respondent had received the amount of Rs. 1,00,000/- only as a settlement for providing one flat to the appellant in the building to be newly constructed on the very premises.
6. As stated above, the appellant had sought an injunction in that suit. That injunction was declined on 9th April, 1992. The appellant carried that matter in appeal in Appeal From Order No. 431 of 1992. It was in the High Court that an injunction came to be granted in favour of the appellant on 28th April, 1992. That was however on the condition that the appellant deposits the remaining part of the consideration viz. Rs. 3,50,000/- as claimed by him. That amount was deposited by the appellant subsequently on 20th August 1992 in the Trial Court.
7. Thereafter the learned Judge of the Trial Court framed necessary issues, namely whether the appellant proves that such an oral contract as claimed by him was arrived at and whether he was entitled for a decree of specific performance and alternatively whether he was entitled to the damages as claimed by him. Thereafter when the trial of the suit proceeded, the appellant examined himself and four other witnesses; two of whom being the material witnesses, namely the earlier referred Satish Naik and Shri Vijay Mohite, Advocate. The respondents examined the 1st respondent and one more witness. After the evidence was led, the learned Judge came to the conclusion that the plaintiff-appellant had failed to prove that any such contract was entered into as claimed by him. He also came to the conclusion that the plaintiff-appellant had failed to establish his readiness and willingness to perform his part of the contract. The learned Judge therefore declined to grant the decree for specific performance as claimed by the appellant. The learned Judge however accepted that the amount of Rs. 1.00.000/- was paid and he also held that the same was paid towards the booking of a flat as claimed by the respondent No. 1. Since the 1st respondent has accepted the receipt of the said amount, the learned Judge granted a partial decree for the refund of the said amount with interest at the rate of 21% per annum.
8. Mr. Patil, learned Counsel appearing for the appellant, assailed the judgment of the Trial Court on various grounds. He firstly emphasised the wording of the receipt. He submitted that the receipt clearly recorded that the amount of Rs. 1.00.000/- was received towards the transaction of purchase of House No. 415 situated in Shukrawar Peth. He pointed out that since the respondent was not responding, the appellant had to give a public notice in a newspaper on 11th October, 1991 and it was only at that stage that the respondent had denied entering into any such agreement, though by sending a reply on the same day and also claiming therein that the amount was received towards the purchase of a flat in the proposed development on the same plot of land. Mr. Patil further pointed out that though the appellant did not pay the remaining amount immediately by Diwali of 1991 as claimed by him, as soon as he obtained the injunction in the High Court on 20th April, 1992 he deposited the remaining amount of Rs. 3,50,000/- within 4 months thereafter. For that purpose, he raised a loan of Rs. 2,50,000/- from a bank. He examined an Accountant from the said bank to explain as to how he took the loan. He sold another house belonging to him for arranging part of the funds. He therefore submitted that the learned Judge of the Trial Court was wrong in coming to the conclusion that the appellant was not ready and willing to perform his part of the contract.
9. The learned Judge of the Trial Court has disbelieved the evidence of Satish Naik that he was present when the alleged agreement took place by commenting as to how he could be present when he was in the employment of the Pune Municipal Corporation and on a working day how he could remain present at the time when the agreement was arrived at without obtaining any leave. Mr. Patil submitted that the learned Judge had given too much importance to such trivial matters when what was most important was as to how the receipt was given and whether there was any material to support that such an agreement had taken place. Mr. Patil also drew my attention to the cross-examination of Satish Naik wherein it was put to him that the transaction amount was Rs. 6,50,000/-. Mr. Patil submitted that therefore the only grievance of the respondents appeared to be with respect to the agreed amount. He submitted that from the very question it follows that the agreement as claimed by the appellant had been entered into. Mr. Patil submitted that all that Section 10 of the Contract Act required was that the concerned agreement had to be entered into by consent of parties for a lawful consideration and with a lawful object and ought not to be expressly declared to be void. He relied upon the observations of the Apex Court in para 13 in the case of Tarsem Singh v. Sukhminder Singh . The said para 13 reads as under:-
Before we proceed to consider what are lawful agreements or what are voidable or void contracts, we may point out that it is not necessary under law that every contract must be in writing. There can be an equally binding contract between the parties on the basis of oral agreement unless there is a law which requires the agreement to be in writing.
Mr. Patil further submitted that the specific performance of only those contracts cannot be enforced which are so specified in Section 16 of the Specific Relief Act, 1963 and the present contract does not fall in those categories. The appellant was therefore entitled to the decree that he had sought and the learned Judge was in error in declining the principal prayer in the suit, namely the one for specific performance of the contract.
10. Mr. Ketkar, learned Counsel appearing for the respondent No. 1, on the other hand, pointed out that it was an oral agreement which was sought to be enforced concerning an immovable property. There were a number of deficiencies in the so-called agreement. Firstly the agreement was sup posed to have been entered into in the meeting wherein the appellant and the 1st respondent were present along with the above referred Satish Naik and Advocate Mohite. The amount of Rs. 1.00.000/- is supposed to have been paid on 10th June, 1991 in pursuance of that oral agreement. Now, as far as the exact date on which that oral agreement or understanding was arrived at is concerned, the plaintiff-appellant has himself in his cross-examination stated as follows:-
The first meeting was held in the first week of June, 1991. I do not remember the specific date.
Mr. Ketkar thereafter pointed out that the appellant's witness Satish Naik, who is stated to have remained present when the amount of Rs. 1,00, 000/- was paid, has denied his presence by stating as follows in his cross examination.
The actual transaction of payment of amount was not taken place when I visited the house of the defendant.
Mr. Ketkar submits that the respondent does not deny having received the amount of Rs. 1,00,000/-, but the aforesaid statement in cross examination made by the appellant's witness goes to demolish his case. The question with respect to the amount of consideration asked to this witness had been emphasised by Mr. Patil. On that Mr. Ketkar pointed out the suggestion that the transaction amount was Rs. 6,50,000/- was made only to emphasise the aspect that there was no certainty and clarity with respect to this very essential aspect of the agreement viz. the consideration involved in the transaction. Mr. Ketkar further emphasised that what is most material is that although the agreement was supposed to have been entered into orally some times in the first week of June, 1991 and although there is a receipt for the amount of Rs. 1,00,000/- issued on 10th June, 1991, some of the terms of the agreement surfaced for the first time in writing only in the notice given by the appellant in the newspaper on 11th October, 1991. Now, if an amount of Rs. 1,00,000/- was paid on 10th June, 1991 and the entire consideration was Rs. 4,50,000/-, there was no reason why it was not specifically stated in the receipt that the balance was Rs. 3,50,000/-. If two persons were witnesses to the payment of Rs. 1,00,000/ -, again there was no reason why both of them have not put their signatures as witnesses on the receipt. Mr. Ketkar also emphasised the fact that in the receipt of 10th June, 1991, it was not stated as to on what date the transaction was to be completed. The date of completion of the transaction is also not stated in the press advertisement of 11th October, 1991. Only when the respondent denied having entered into any such agreement by immediate reply sent on the same day that in their subsequent notice dated 22nd October, 1991 for the first time the appellant contended that the transaction was to be completed by the end of Diwali of 1991. Nothing is stated by the appellant in the press advertisement or in the notice as to who has to bear the stamp and the registration charges. In fact nothing is stated about this aspect in his oral evidence also. Mr. Vijay Mohite is supposed to be an Advocate and yet he did not insist that the agreement be reduced to writing when the understanding was arrived at between the parties in his presence. The above deficiencies clearly point out, according to Mr. K. Ketkar, that in fact no such agreement was entered into as claimed by the appellant.
11. Mr. Ketkar pointed out that as far as the respondent is concerned, as soon as the press advertisement was given by the appellant, on the very day he replied it and in that reply he stated that the press notice given by the appellant was false. In that reply itself, the respondent had stated that because the appellant's mother was a tenant in the premises, that the respondent had received the amount from the appellant for providing a flat to her when the old building is demolished and developed. He had taken the same stand later-on in the written statement. As far as the two witnesses, who are said to have remained present at the time of the oral agreement being arrived at, namely Satish Naik and Advocate Mohite, Mr. Ketkar pointed out that Advocate Mohite himself is a tenant in that property and Naik is a friend of the appellant and that is how their names have been taken as witnesses for the alleged oral agreement. In the submission of Mr. Ketkar, they are nothing more than interested witnesses.
12. Assuming without accepting that any such agreement was entered into, Mr. Ketkar submitted that there was no readiness and willingness on the part of the appellant to perform his part of the contract. According to him, the transaction was to be completed by Diwali of 1991. He did not pay the remaining Rs. 3,50,000/- to the appellant in time. It is only when he got a conditional injunction in appeal that he deposited the remaining amount of Rs. 3,50,000A much later in August, 1992. Mr. Ketkar pointed out that the appellant is a vegetable vendor and it has come in his cross examination that he was not paying income tax. Even the Joan which he subsequently took for allegedly depositing the consideration in Court was in fact sought for a transport business. Assuming that the loan was sought for another purpose but the amount was to be diverted for this transaction, the statement of the Bank Officer disclosed that the loan was sanctioned way back in August, 1991. Yet the appellant did not withdraw that amount until he got the order of injunction in the High Court and it was withdrawn only after 17th August, 1992. Mr. Ketkar therefore submitted that if the appellant was not to get the injunction in the High Court, he would not have deposited the amount of Rs. 3,50,000/-. The appellant was only taking a chance out of the unhappy wording of the receipt and only when the amount was secured inasmuch as it was being deposited in the Court that he deposited the amount accordingly. This clearly indicates that there was no genuine readiness and willingness to pay the balance of amount, assuming without accepting that any such agreement as claimed by the appellant had been entered into. Similarly with respect to the submission of the appellant that part of the consideration amount was arranged by selling a house property, no particulars whatsoever of the house sold were given by the appellant in his evidence.
13. With respect to enforceability of the so-called agreement, Mr. Ketkar drew my attention to the observations of the Apex Court in the case of Ganesh Seth v. Dr. C.S.G.K. Setty of the said judgment, the Apex Court observed that it is well settled that in a suit for specific performance, the evidence and proof of the agreement must be absolutely clear and certain. In para 14 of the said judgment, the Apex Court quoted with approval the observations from Pomeroy on Specific Performance of Contract and which are very useful for our purpose. The said para 14 reads as follows:-
14. In Pomeroy on Specific Performance of Contracts (3rd Edn.)(para 159) it is stated clearly that a greater amount or degree of certainty is required in the terms of an agreement, which is to be specifically executed in equity, than is necessary in a contract which is to be the basis of an action at law for damages. An action at law is founded upon the mere non-performances by the defendant, and this negative conclusion can often be established without determining all the terms of the agreement with exactness. The suit in equity is wholly an affirmative proceeding. The mere fact of non-performance is not enough : its object is to procure a performance by the defendant, and this demands a clear, definite and precise understanding of all the terms; they must be exactly ascertained before their performance can be enforced. This quality of certainty can best be illustrated by examples selected from the decided cases....
In the same judgment in para 19, the Apex Court quoted the relevant observation from Fry on Specific Performance in the context of the evidence on a contract being different from the one alleged by the plaintiff where the defendant has denied the contract. The relevant observations quoted are as follows:-
(3) In considering the case in which a variation has arisen between the contract alleged and that proved, it must be borne, in mind that the burden of proving his case rests, of course on the plaintiff, and therefore, if there be any such conflict of evidence as leaves any uncertainty in the mind of the Court as to what the terms of the parole contract were its interference will be refused.
14. Mr. Ketkar therefore submitted that as held by the Apex Court in the above cited judgment, there is a difference in position between the suit for specific performance and other suits. A suit in equity is wholly an affirmative proceeding and there has to be a clear, definite and precise understanding of all the terms. In the present case, there was no clarity whatsoever and hence there was no question of granting any specific performance of the alleged contract which did not exist at all. There was also no case for claiming any damages since no particulars of any loss suffered had been pointed out by the appellant. The Trial Court had therefore rightly observed that if the decree for specific performance was not granted, the plaintiff was not to suffer any irreparable loss. Mr. Ketkar therefore submitted that undoubtedly the receipt of Rs. 1,00,000/- was not very happily worded, but between the cases put up by the appellant and the respondent, the one which was put up by the respondent was more probable. That was the stand taken by him immediately on the newspaper advertisement being given. The respondent had developed another property in the town and surely he would not have entered into an agreement of sale of his house property orally unless all the terms were properly settled. Although the receipt stated that the amount was received towards the transaction of purchase of House No. 415, in fact the understanding was only for a flat and not for the entire house as claimed by the appellant.
15. I have gone through the rival submissions canvassed by the appellant as well as by the respondent. The guidelines laid down by the Apex Court in the above cited case of Ganesh Shet are very clear. As laid down by the Apex Court, there is a difference in the action in law founded upon a mere non-observance of terms of an agreement and an affirmative proceeding in the nature of specific performance. To grant a decree for specific performance, the Court has got to be satisfied about the terms of the understanding and they have to be clear and definite. This is because the object of specific performance is to procure a performance by the defendant which has got to be with respect to definite terms. In any case, where there is any conflict of evidence which leaves uncertainty in the mind of the Court as to what the terms of the contracts were, the enforcement of the contract will have to be refused. In the present case, although an advocate is supposed to have remained present when the alleged oral understanding was arrived at, at no point of time it was reduced to writing. The case of the appellant that the consideration for the transaction was Rs, 4,50,0007- is not reflected even in the public notice which is the first document of the appellant in point of time apart from the receipt dated 10th June, 1991 for Rs. 1,00,000/-. The claim that the balance consideration was Rs. 3,50,000/- is made for the first time later-on in appellant's notice dated 22nd October, 1991 which is sent after the denial of the public notice by the respondent's Advocate on 11th October, 1991. That the transaction is to be completed by Diwali 1991 is also stated for the first time in this notice. Thus there is no certainty about the amount of consideration. There is no provision for the stamp or registration charges. In the circumstances, it is difficult to infer as claimed by the appellant that any such oral understanding/agreement was arrived at for the sale of the house for Rs. 4,50,000/- as claimed by the appellant.
16. That apart, Section 17 of the Indian Registration Act, 1908 specifies the documents which are required to be registered naturally implying thereby that they ought to be in writing. Section 17(1(a) provides with respect to gift of an immovable property whereas Section 17(1)(b) provides for other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish whether in present or in future any right, title or interest of the value of one hundred rupees and upwards in an immovable property. Further Section 49 of the Act specifically lays down that no document required by Section 17 to be registered shall affect any immovable property unless it is registered in accordance with the provisions of the Act. For that reason also, the oral agreement in immovable property is non-enforceable.
17. Besides, as explained by Mr. Ketkar in his submission, assuming without accepting that there was any such agreement entered into, the conduct of the appellant clearly was such that no readiness or willingness could be inferred on his part. As rightly pointed out by Mr. Ketkar, the amount of Rs. 3,50,000/- was deposited in the Court only after an order of injunction was passed, which clearly indicates that the appellant was taking a chance and until there was an order in his favour, he did not deem it proper to deposit that amount. The Bank loan had been sanctioned in his favour much earlier, as stated by the Bank Officer, in August, 1991 and nothing prevented the appellant from paying the amount when his own case was that the transaction was to be completed by Diwali of 1991. Even on that ground, the appellant would not be entitled to the specific performance of the alleged agreement. Even with respect to the damages, the learned Judge of the Trial Court was right in coming to the conclusion that the appellant had suffered no loss to claim any such amount on that count. The case put up by the respondent was comparatively more probable looking to the other connected circumstances, namely that the mother of the appellant is a tenant in the house property, that respondent No. 1 had developed another property in the town and also considering the fact that the appellant was not even a tax-payer and was required to arrange the funds towards the agreement amount by withdrawing monies from the Bank.
18. In the circumstances, the only relief to which the appellant was entitled was for the refund of the amount of Rs. 1.00.000/- which he had deposited with the respondent and the learned Judge was right in directing return of that amount at the rate of 21% per annum. Mr. Ketkar submits that the interest amount ought to have been less. The submission to reduce the rate of interest cannot be entertained since no cross-objection has been filed by the respondent.
19. In the circumstances, there is no merit in the appeal. The appeal is dismissed. The appellant will be entitled to withdraw the amount of Rs. 3,50,000/-, which is deposited in the Trial Court, and on tendering a certified copy of this order the Trial Court will release that amount with accrued interest thereon, if any, forthwith.
20. With respect to the amount of Rs. 1,00,000/- received by the respondent No. 1, Mr. Ketkar states that because of the injunction granted by this Court, the respondent No. 1 has not been able to develop his house property and he therefore seeks a period of 6 months to pay that amount which now with interest would come to around Rs. 3,00,000/-. The respondent will refund the amount of Rs. 1,00,000/- with interest at the rate of 21% per annum within about 3 months, say by the end of October, 2000. The interest will be calculated upto the date of payment.
21. In the facts and circumstances of the case, both parties will bear their own costs.
Certified copy expedited.