Karnataka High Court
Smt Chikkamma @ Chikkalingamma vs Sri H G Harinatha on 30 November, 2017
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF NOVEMBER 2017
BEFORE
THE HON'BLE MR. JUSTICE SREENIVAS HARISH KUMAR
REGULAR FIRST APPEAL No.1045 OF 2003
BETWEEN
1. Smt. Chikkamma @
Chikkalingamma
W/o. H.Madaiah,
Aged about 70 years,
Residing at:Vandaraguppa
Channapatna Taluk,
Bangalore(R) District.
2. Sri. V.M.Shivamadu,
S/o. Late H Madaiah,
Aged about 52 years,
Residing at: Sy.No.37/2 of
Near Venkateshwar
Kalyana Mantapa,
Chikkabasavanapura Road,
Krishnarajapura,
Bangalore-560036. ...Appellants
(By Sri. B.N.Poojary, Advocate for A1;
Sri. V.Ramesh Babu, Advocate for A2)
AND
1. Sri. H.G.Harinatha,
S/o. Late H.N.Guruva Reddy,
Aged about 47 years,
Prop: Venkateshwara
Kalyana Mantapa,
2
Chikkabasavanapura Road,
Krishnarajapura,
Bangalore-560036.
2. Sri. H.G.Krishna Reddy,
S/o. Late H.N.Guruva Reddy,
(since deased by L.R's)
2(a) Subhalakshamma @ Subamma,
W/o. Late Krishna Reddy,
Aged about 63 years,
2(b) Sri. H.K.Prabhu Reddy @ Prabhu,
S/o. H.G.Krishna Reddy,
Aged about 44 years,
2(c) Sri. H.K.Prathapa Reddy,
S/o. Late H.G.Krishna Reddy,
Aged about 39 years,
2(d) Sri. H.K.Chinna Reddy,
S/o. Late H.G.Krishna Reddy,
Aged about 36 years,
2(e) Sri. H.K.Ramu Reddy,
S/o. Late H.G.Krishna Reddy,
Aged about 33 years,
All are residing at
No.37/2, Devasandra Layout,
Krishnarajapura,
Bangalore-560036.
3. Sri. H.G.Venkatesh Reddy,
S/o. Late H.N.Guruva Reddy,
Since deceased by his L.Rs:-
3(1) Smt. Yashodamma,
W/o. Late H.G.Venkatesh Reddy,
@ G.V.Reddy,
3
Aged about 60 years,
No.681/A, 17th "D" Cross,
Indiranagar, 2nd Stage,
Bangalore-560038.
3(2) Sri. Rajeev @ Rajeeva Reddy,
S/o. Late H.G.Venkatesh Reddy,
@ G.V.Reddy,
Aged about 30 years,
No.681/A, 17th "D" Cross,
Indiranagar, 2nd Stage,
Bangalore-560038.
3(3) G.Vinod @ Vinoda Reddy,
S/o. Late H.G.Venkatesh Reddy,
@ G.V.Reddy,
Aged about 27 years,
No.681/A, 17th "D" Cross,
Indiranagar, 2nd Stage,
Bangalore-560038.
(R3 (1) to (3) amended vide court order
dated 2.6.2010)
...Respondents
(By Sri. H.R.Ananthakrishna Murthy, Advocate for
R1, R2(a-e) & R3(2&3); R3(1)-served)
This RFA filed under Section 96 read with Order 41
Rule 1 of CPC, against the judgment and decree dated
21.06.2003 passed in O.S.No.1641/93 on the file of the XI
Additional City Civil Judge (CCH-8), Bangalore, dismissing
the suit for specific performance & permanent injunction.
This RFA having been heard and reserved on
2.11.2017, coming on for pronouncement this day, the Court
pronounced the following :
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JUDGMENT
This appeal is by the plaintiffs. They filed a suit O.S.1641/1993 before the City Civil Court, Bengaluru, for specific performance of the agreement dated 18.6.1981. Their case is that the first defendant offered to sell to them a site measuring east-west 30' and north-south 43' formed in Sy. No. 37/2 of Krishnarajapura, Bengaluru South Taluk for a sale consideration of Rs.8,775/-. The first defendant received this amount from the plaintiffs, executed an agreement on 18.6.1981 and put them in possession of the said property (suit property). He could not execute the sale deed because registration of revenue sites had been banned at that time. The plaintiffs having taken possession of the suit property constructed a house and leased the same to a tenant. The said property was also assessed to tax by the ITI Notified Area Committee. After the removal of ban on registration of the revenue sites, the plaintiffs requested the first defendant to execute the sale deed, but he went on postponing the execution on one or the other pretext. At last they got issued a notice to the first defendant on 25.5.1992 5 demanding of him execution of sale deed. They state that to their surprise the defendants 2 and 3 who are none other than the brothers of the first defendant issued a notice calling upon them to deliver possession of the suit property to them within one month. The plaintiffs allege that on 3.3.1993 the defendants and their men came near the suit property and threatened them of dire consequences if they would not vacate the suit property. Therefore, the plaintiffs brought a suit for specific performance to enforce the agreement dated 18.6.1981 and also for permanent injunction to restrain the defendants from interfering with their possession and enjoyment of the suit property.
2. The first defendant filed written statement and admitted that he executed an agreement of sale in favour of the plaintiffs on 18.6.1981, received an amount of Rs.8,775/- from them and put them in possession of the suit property. His specific defence is that, after execution of the agreement, he came to know that one Nanjamma had executed a Will on 13.11.1952 in favour of defendants 2 and 3 and, therefore, he came to know that he had no title over 6 the suit property. He admitted that defendants 2 and 3 issued notice to the plaintiffs calling upon them to deliver vacant possession of the suit property to them. Therefore, in these circumstances he pleaded for dismissal of the suit and also stated that he was ready to return an amount of Rs.8,775/- to the plaintiffs and also an amount of Rs.6,000/- being the reasonable amount that the plaintiffs might have spent for constructing a house.
3. Defendants 2 and 3 adopted the written statement of defendant 1. During the pendency of the suit, defendant No.2 died and his legal representatives were brought on record. They also contended by filing a written statement that the suit property belonged to one Nanjamma and she bequeathed the suit property and also other properties to the second defendant and others, but not to the first defendant.
4. The trial Court framed the following issues :-
"1. Whether the plaintiff proves that there was on agreement of sale executed by 1st defendant on 18-6-1981?7
2. Does they further prove that the plaintiffs were put in possession of the suit schedule property by the 1st defendant under the agreement of sale?
3. Whether the defendants-2 & 3 prove that 1st defendant had no right to execute agreement of sale, as they were the absolute owners of the property?
4. Whether the plaintiff proves that the defendants-2 & 3 are colluding with the 1st defendant to deprive the rights of the plaintiffs?
5. Whether the plaintiff proves they were always ready and willing to perform their part of the contract?
6. Does they further prove that the defendant-1 was not ready and willing to perform his part of the contract?
7. Whether the plaintiffs are entitled for suit of decree of specific performance?
8. Whether the plaintiffs are entitled for an order of permanent injunction sought for?
9. What relief? What decree?"8
Addl. Issues
1. Whether the L.Rs of 2nd defendant proves that the suit is bad for misjoinder of parties?
2. Whether the L.Rs of the 2nd defendant proves that the suit is barred by limitation?
5. Thereafter, the trial Court examined three witnesses PWs1 to 3 from the plaintiffs' side and four witnesses DWs1 to 4 from the defendants' side. The plaintiffs produced 15 documents, Exs.P1 to P15 and the defendants produced 6 documents, Exs.D1 to D6. After appreciating the evidence, the trial Court came to conclusion that the suit had to be dismissed and, therefore, by its judgment dated 21.6.2003 dismissed the suit. Aggrieved by this judgment, the plaintiffs are before this Court in appeal.
6. For dismissal of the suit, the main findings given by the trial Court are that though the first defendant admitted to have executed an agreement of sale in favour of the plaintiffs having received total sale consideration of an amount of Rs.8,775/-, he did not have title over the suit 9 property. The burden was on the plaintiffs to prove that there was collusion between first defendant, and the second and third defendants. Ex.P2 is the agreement of sale. It shows that the first defendant acquired the suit property under a General Power of Attorney executed in his name by his mother Kanakamma on 30.10.1980. The plaintiffs did not produce the said Power of Attorney and they also failed to produce the document to show that Smt. Kanakamma was the owner of land bearing Sy. No. 37/2. The tax paid receipts marked as Exs.P6, 7 and 11, demand notice Ex.P10 and no objection certificate issued by Telephone Department as per Ex.P8 disclose that they all stand in the name of the first defendant. Yet, the title deed of first defendant for acquiring the suit property in Sy. No. 37/2 was not produced. Merely because the name of the first defendant is entered in the revenue records, it cannot be presumed that he was the owner of the suit property. Even to prove that Kanakamma was the mother of first defendant, no document was produced. On the other hand, the defendants produced registered Will Ex.D1 executed by Nanjamma and such other 10 revenue documents in respect of Sy. No. 37/2. All these documents would show that the entire land in Sy. No. 37/2 was held by Nanjamma and that she bequeathed the entire land in favour of defendants 2 and 3 by executing a Will. The learned trial Judge held that these documents showed that the land did not belong to first defendant rather it belonged to Nanjamma. For this reason, first defendant could not be compelled to execute a sale deed.
7. Even with regard to other issues concerning the readiness and willingness of the plaintiffs', the trial Court came to the conclusion that the sale agreement was dated 18.6.1981. They got issued the legal notice as per Ex.P3 on 9.6.1992. This long gap would show that the plaintiffs had kept quite without taking any action for enforcing the agreement. The plaintiffs also failed to produce document as to when the Government had imposed the ban for registration of revenue sites and when it was lifted. These events would show that the plaintiffs were not ready and willing to perform their part of the contract. 11
8. With regard to the injunctory relief that the plaintiffs had claimed, the trial Court observed that although they were in possession of the suit property, their possession was on the basis of an agreement which was executed by a person who was not the owner of the property and, therefore their possession was not lawful. Therefore, for this reason the relief of injunction could not be granted.
9. I have heard the arguments of the learned counsel for the appellants and also the respondents. In the light of the grounds urged in the memorandum of appeal and the points canvassed by the learned counsel when they argued, the following points can be formulated for discussion : -
(i) Is the learned trial Judge right in holding that defendants 2 and 3 are the absolute owners of the suit schedule property by virtue of a Will executed in their favour by one Nanjamma and therefore has he committed an error in deciding the title of first defendant transgressing the scope of 12 suit for specific performance filed by an intending purchaser?
(ii) Can the plaintiffs invoke Section 41 of Transfer of Property Act to enforce the agreement executed by the first defendant?
(iii) Has the learned trial Judge committed an error in dismissing the suit for specific performance?
Point No. (i):-
10. Plain reading of the impugned judgment shows that the learned trial Judge dismissed the suit holding that defendant No.1 was not the absolute owner of the suit property. The first defendant contended in the written statement that Nanjamma had executed a Will in favour of defendants 2 and 3 and that he produced the said Will as per Ex. D1. It appears that the learned trial Judge came to conclusion that specific performance of an agreement could not be enforced against a person who was not the owner of the suit property.
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11. Assailing this finding, the learned counsel for the appellants argued that the defendants, especially defendants 2 and 3 failed to prove the execution of the Will in their favour by Nanjamma on 13.11.1952. Defendants 2 and 3 did not file separate written statement taking up the plea that they were the owner of the suit property and that they simply adopted the written statement of first defendant. Having taken a plea with regard to Will executed by Nanjamma, the defendants should have proved the execution of the Will in accordance with law. When the execution of the Will was not proved, the trial Court should not have held that the first defendant was not the owner of the suit property. The first defendant has admitted in his written statement that he executed an agreement of sale as per Ex.P2 in favour of the plaintiff and also the fact that he received the entire sale consideration. This being the factual position, the learned trial judge's finding that first defendant was not the owner of the property is opposed to law and evidence available on record.
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12. The learned counsel for the respondents argued that the trial Court is right in not granting a decree of specific performance against first defendant as he was not the absolute owner of the suit property. He further argued that the first defendant was just a holder of power of attorney executed by Kanakamma in his favour. This Kanakamma is not party to the suit. In this regard he argued that, although the Will executed by Nanjamma in favour of defendants 2 and 3 has not been proved according to law, decree for specific performance cannot be granted in the absence of necessary party, i.e., Kanakamma. The first defendant is just an agent of Kanakamma. There was no transfer of absolute ownership of the suit property in favour of the first defendant, the GPA is not a document evidencing transfer of title. The learned counsel referred to Sections 15 and 19 of the Specific Relief Act to argue that parties to a suit for specific performance must be those parties who are parties to the agreement of sale. In support of his argument, the learned counsel referred to judgment of the Supreme Court in the case of SURAJ LAMP AND INDUSTRIES 15 PRIVATE LIMITED vs STATE OF HARYANA AND ANOTHER [AIR 2011 SCW 6385] .
13. The learned counsel for the appellants replied that in view of the judgment of the Supreme Court in Suraj Lamp Industries (supra), the transfer of properties on the basis of General Power of Attorney prior to date of judgment in that case are all saved. Therefore, non-impleadment of Kanakamma does not affect the suit in any way.
14. The finding given by the learned trial judge that first defendant is not the owner of the suit property and, therefore, the suit cannot be decreed is erroneous. In a suit for specific performance filed by the purchaser against the seller, the title of the seller does not assume importance if the purchaser is ready to purchase the property from a person who has defective title. In this context, it may be useful to refer to the judgment of the Patna High Court in the case of DIWALI LAL AND OTHERS vs BALDEV SINGH AND ANOTHER [AIR 1985 PAT 344] where it is held as below :-
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"9. The first submission of Mr. Prasad was that the learned Subordinate Judge was not right in holding that the defendants had failed to prove the partition of 1969 and that the suit property had fallen in the exclusive share of Bangali Lal. In my opinion, it was wholly unnecessary for the learned Subordinate Judge to go into these questions as it was beyond the scope of a suit for specific performance of contract. Apart from it, the contract, if any, can be enforced only against a person who is a party to it and not against a person who is not a party to it; but the person who is a party to the contract for sale is bound to execute the sale deed if other terms are fulfilled by the purchaser, even though the property in question might not be belonging to him, as in that case the purchaser would take the risk of purchasing from him with his open eyes. It is obvious that the person to whom the property might legally belong cannot be bound by that sale, but all the same the parties to the contract would be bound by the contract to sell and the purchaser under the contract can enforce the vendor under the contract to perform his part of the contract. In such circumstances, I leave the question of title over the suit property open to be decided in a properly framed suit."17
15. On the contrary, if a seller files a suit against the purchaser for enforcing an agreement between them, the purchaser can refuse to purchase a property if the purchaser happens to detect that the seller has no good title conveyed to him. Section 17 of the Specific Relief Act reads as below :
"17. Contract to sell or let property by one who has no title, not specifically enforceable.--
(1) A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor --
(a) who, knowing himself not to have any title to the property, has contracted to sell or let the property;
(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.
(2) The provisions of sub-section (1) shall also apply, as far as may be, to contracts for the sale or hire of movable property."
(emphasis supplied by me) 18
16. Therefore, Section 17 makes it very clear that only in case of suit filed by the seller against the purchaser or a lessor against lessee, question of title will assume importance. Here in this case the plaintiff is the purchaser and the first defendant is the seller as per the agreement marked Ex. P2. If defendant No.1 took up a contention that he was not the owner, and that defendants 2 and 3 were the owners, such a plea of the defendants should not have been upheld by the trial Court to reject the relief of specific performance. If the question of title is allowed to be raised in a suit for specific performance filed by purchaser, the scope of the suit will enlarge into suit for title which is not permitted. Looked from this angle, the learned trial judge has committed an error. Therefore, this point is answered in affirmative.
Point No. (ii):-
17. The learned counsel for the appellant canvassed a point that though first defendant is a Power of Attorney Holder of Kanakamma, the property was ostensibly 19 transferred to him not only by Kanakamma but also by defendants 2 and 3. He argued that the formation of layout and sale of sites formed in that layout by the first defendant, payment of tax for the suit property as per Ex. P5 are some of the instances indicating that first defendant was ostensible owner. Defendants 2 and 3 did not question the sale made by first defendant of some other sites. Only when the plaintiff filed suit for specific performance, they take objection to executing the sale deed by the first defendant. By their conduct, they are estopped from contending that they are the owners of the suit property. The very fact that defendants 2 and 3 did not file separate written statement and adopted the written statement of defendant 1 is also another circumstance from which an inference can be drawn that defendant 1 had all the authority to deal with the suit property. He refers to Section 41 of the Transfer of Property Act in support of his argument.
18. The learned counsel for the respondent argues that ostensible ownership as contemplated under Section 41 of Transfer of Property Act is a question of fact. The 20 plaintiffs should have pleaded that the first defendant executed the agreement of sale in the capacity of ostensible owner of defendants 2 and 3. When there is no pleading and when this point was not urged before the trial Court, the appellant cannot take shelter under Section 41 in the appeal.
19. Section 41 of the Transfer of Property Act reads as below :
"41. Transfer by ostensible owner :
Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it:
PROVIDED that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith."
20. For invoking Section 41 of the Transfer of Property Act, the essential ingredients to be present are, one person 21 should hold the property with the consent, express or implied of the other person who is interested in the immovable property and the person who thus holds the property should transfer the immovable property for consideration. Therefore, it is clear that whether a person holds a property on behalf of other with the express or implied consent, is a factual aspect which should be pleaded and proved. In this case, the plaintiffs' case is not founded on this premise. They assert that the first defendant was the absolute owner of the property and in that capacity he entered into an agreement with the first plaintiff. Without taking this plea in the plaint, for the first time in the appeal, there is no scope for basing the entire claim of the plaintiff on Section 41 of the Transfer of Property Act. Therefore, this point is to be answered in negative.
Point No. (iii):-
21. The judgment of the trial court shows that the suit was dismissed only on the ground that the first defendant was not the absolute owner of the suit property. 22 In view of discussion on point No. (i), it is to be stated that the dismissal of the suit on this ground is not correct, however the judgment of dismissal has to be upheld for a different reason. The plaintiffs' case is that first defendant executed an agreement of sale in their favour on 18.6.1981. Ex.P2 is the agreement of sale. Ex.P2 shows that first defendant is a Power of Attorney Holder of his mother Kanakamma. This Power of Attorney was executed by her on 30.10.1980. Therefore, the first defendant executed the agreement of sale in favour of first plaintiff in the capacity of a Power of Attorney Holder. That means first defendant was the agent of his mother. For this reason, the plaintiff should have made Kanakamma a party to the suit. She was a necessary party.
22. The learned counsel for the appellants argued that Power of Attorney executed by Kanakamma on 30.10.1980 was registered. Possession of the suit property was transferred in favour of the first defendant. Therefore, it was a valid transfer. The learned counsel for the respondent countered this argument by submitting that Power of 23 Attorney cannot be considered as a transfer within the meaning of Section 54 of Transfer of Property Act. It is just a creation of agency. Kanakamma should have been made a party to the suit. She died long back. It is not known who are all the legal representatives of Kanakamma, although first defendant is one of them. In these circumstances, the suit should fail. Both the counsel refer to two judgments of the Supreme Court in Suraj Lamps (supra).
23. The effect of clandestine sale transactions by executing the Power of Attorney, an agreement of sale and a Will is discussed in this decision. In the first Suraj Lamp case [(2009) 7 SCC 363], the Supreme Court clearly holds that these type of transactions are irregular and illegal and that in the absence of registered deed of conveyance, no right, title or interest in an immovable property passes on to the transferee. This observation was made by the Supreme Court in the background of some of the allottees by Delhi Development Authority having entered into sale transactions by executing Powers of Attorney, agreements of sale and the Wills in order to avoid cumbersome procedure in obtaining 24 permission and payment of huge price to BDA. In the first judgment, the Supreme Court requested the Solicitor General to appear and give suggestions as regards steps to be taken to deal with chaotic situation and confusion arising from these type of transactions. Therefore, in the second Suraj Lamp's case [(2012) 1 SCC 656] it was clearly held again that a Power of Attorney was not an instrument of transfer and it was just a creation of agency whereby the grantor would authorize a grantee to do certain acts specified in the document of Power of Attorney. The learned counsel for the appellants referred to para 26 of this judgment to argue that if a Power of Attorney had come into existence before the date of judgment, such a document could be relied upon. The learned counsel for the respondents submitted that what is clearly held by the Supreme Court in para 26 is not that the transactions through Power of Attorney and agreement of sale are saved, but the agreement holders could enforce the specific performance on the basis of Power of Attorney and the agreement. Having gone through these two decisions what is to be mentioned now is 25 that the Supreme Court has clearly held that transactions of sale by executing a Power of Attorney under agreement of sale is illegal and that such agreements and Powers of Attorney could be relied upon by the allottees of land by the DDA seeking regularization. Therefore, the observation made in para 26 of second Suraj Lamp case applies to the facts of that particular case. However, in para 27 the Supreme Court has observed as below : -
"27. We make it clear that our observations are not intended to in any way affect the validity of sale agreements and powers of attorney executed in genuine transactions. For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance. A person may enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings and in that behalf execute an agreement of sale and grant a Power of Attorney empowering the developer to execute agreements of sale or conveyances in regard to individual plots of land or undivided shares in 26 the land relating to apartments in favour of prospective purchasers. In several States, the execution of such development agreements and powers of attorney are already regulated by law and subjected to specific stamp duty. Our observations regarding "SA/GPA/WILL transactions" are not intended to apply to such bonafide/genuine transactions."
24. What I find is a situation as mentioned in para 27. In this case, Kanakamma appointed the first defendant as a Power of Attorney as can be made out from Ex. P2. Plaintiffs have not pleaded about Power of Attorney executed by Kanakamma and it is not the case put forward by them that Kanakamma executed a Power of Attorney in favour of first defendant for a consideration. It is just a creation of agency authorizing the first defendant to enter into transactions. In this view of the matter, Kanakamma is a necessary party to the suit and in her absence suit cannot be decreed. In fact, in this appeal, the appellants' counsel was enquired whether at least Kanakamma could be impleaded. It was submitted that she died long back. The agreement shows that the first defendant is her son. For the reason that Kanakamma was 27 not made a party to the suit, mere presence of the first defendant on record cannot be considered that her estate is duly represented.
25. The learned trial judge has held that the plaintiffs were not ready and willing to perform their part of contract. This finding is unsustainable. On the date of agreement, the plaintiffs paid the entire consideration to the first defendant, they took over possession and constructed a house also. According to plaintiffs, they could not get the sale deed because of ban on registration of revenue sites. This plea of plaintiffs is not controverted by the first defendant. The trial court should have examined as to what remained there for the plaintiffs to perform from their side. They were to bear the registration expenses. The trial court's judgment does not show discussion on this issue. It has negatived the issue only on the ground of delay in filing the suit, which finding is unsustainable.
26. The above observation regarding plaintiffs' readiness and willingness does not entail in appeal to be 28 allowed. The appeal should fail because of non-joinder of necessary party to suit. Therefore, it is concluded that though the reasons assigned by the trial judge for dismissal of the suit is not correct, the ultimate result cannot be disturbed. Appeal is dismissed. There is no order as to costs.
Sd/-
JUDGE ckl