Calcutta High Court
Shyama Enclave Pvt. Ltd vs Sanjib Kr. Roy & Ors on 29 June, 2017
Author: Sahidullah Munshi
Bench: Sahidullah Munshi
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
CS 262 of 2001
SHYAMA ENCLAVE PVT. LTD.
... Plaintiff
-Versus-
SANJIB KR. ROY & ORS.
... Defendants/
Proforma Defendants
Mr. Joy Saha, Sr. Adv.,
Ms. Sulagna Mukherjee,
Mr. Amalaksha Jana
... for the plaintiff
Mr. K. Thakkar
Mr. Loknath Chatterjee,
Mr. B.K. Singh,
Mr. D.K. Chakrabarti,
Mr. Koushik Bhadra
... for the defendant nos. 2(zvii), 2(zviii) and 2(zix)
BEFORE:
THE HON'BLE JUSTICE SAHIDULLAH MUNSHI
June 29, 2017.
The Court : This suit for specific performance of contract was
filed by Shyama Enclave Private Limited, a company duly registered
under the Companies Act, 1956, originally against Sri Sanjib Kumar
Roy and Smt. Jamuna Bala Roy. Plaint was amended by an order
dated 30th November, 2004 and subsequent purchasers have been
added as defendant nos. 2(b) to 2(zx). On the death of defendant no.2,
Smt. Jamuna Bala Roy, her name was struck off and her death has
been recorded. One Shyam Sunder Dalal had also been added as
defendant no.2(a). Defendant no.2, Jamuna Bala Roy, is the widow of
Lalchand Roy and her son Sanjib Kumar Roy is the plaintiff no.1.
Originally, defendant nos.1 and 2 were the owners of the suit
property. They entered into an agreement for sale of the suit property
to the extent of their respective shares of 6/7th and 1/7th. By an
agreement in writing dated 22nd January, 2000, the defendants
allegedly agreed to sell and the plaintiff represented by its Director,
T.C. Gupta, agreed to purchase the suit property at a total
consideration of Rs.1,70,00,000/- (Rupees One Crore Seventy Lakh)
only. According to the plaintiff, the original defendants in the said
agreement agreed -
(a) That the vendor would apply and get permission from
the Income Tax authorities under Section 269 UC of the
Income Tax Act, 1961;
(b) That after getting permission from Income Tax
authorities under the aforesaid provision, the purchaser
would pay to the vendor the total amount of
Rs.1,70,00,000/- (Rupees One Crore Seventy Lakh)
only. A sum of Rs.70,00,000/- (Rupees Seventy Lakh)
only, was to be paid immediately, Rs.50,00,000/-
(Rupees Fifty Lakh) only, was to be paid within three
months and the balance of Rs.50,00,000/- (Rupees Fifty
Lakh) only, within six months of the permission from
the Income Tax authorities;
(c) Upon receiving such payment of Rs.70,00,000/-
(Rupees Seventy Lakh) only, from the purchaser, the
vendor would hand over vacant and peaceful possession
of the entire premises no.7, Grant Lane, Kolkata -12
except the ground floor and 50% of the first floor and on
receiving the second payment of Rs.60,00,000/- (Rupees
Sixty Lakh) only, from the purchaser, the vendor would
hand over vacant and peaceful possession of the 50% of
the first floor and on receiving the balance amount of
Rs.50,00,000/- (Rupees Fifty Lakh) only, from the
purchaser, the vendor would hand over vacant and
peaceful possession of the entire ground floor of the
entire premises for the exclusive use, sale or otherwise
transfer of the purchaser.
(d) The entire suit property (premises no.7, Grant Lane,
Kolkata - 700012) was free from encumbrances and the
vendor had a clear and undisputed marketable title to
the said property.
(e) All the original documents, title deeds regarding the suit
property would be handed over by the vendor to the
purchaser at the time of making first payment of Rs.70
Lakh.
(f) The purchaser would have every right to sell, transfer
and otherwise dispose of the entire and/or part area of
the portion under the possession of the purchaser in the
suit premises.
(g) Until permission is obtained from Income Tax Authority
as mentioned, the purchaser would be allowed to make
internal works such as brick portions, electrical jobs,
minor repairs, replacing asbestos roofs at top floors on
behalf of the vendor.
The said agreement (Exhibit A) was executed by and between
the plaintiff, Shyama Enclave Private Limited and the defendant nos.
1 and 2, namely, Sanjib Kumar Roy and his mother, Smt. Jamuna
Bala Roy, the original defendant nos. 1 and 2. Defendant no.1 signed
the agreement for sale and on behalf of his mother as her constituted
attorney.
A supplementary agreement (Exhibit B) for sale was executed
by and between the plaintiff and the defendant nos. 1 and 2 on 22nd
February, 2000. Such supplementary agreement was executed by
modifying, varying and/or amending the original agreement for sale
dated 22nd January, 2000 and by the supplementary agreement, the
parties agreed, inter alia, the following terms and conditions in order
to make the new terms and conditions as part of the agreement dated
22nd January, 2000. Both the said two agreements dated 22nd
January, 2000 and supplementary agreement dated 22nd February,
2000, constituted, according to the plaintiff, as an agreement for sale
of the suit property. The supplementary agreement, inter alia,
contained the following terms :-
i) The suit property is free from all encumbrances and the
vendor has a clear marketable title subject to placement
for personal guarantee of the vendor as collateral security
to the West Bengal Industrial Development Corporation
Limited and the West Bengal Financial Corporation
Limited. However, the said financial Institutions, i.e., the
West Bengal Industrial Development Corporation and
West Bengal Financial Corporation have already
expressed their willingness to release the said property
vide their letter no. F.1-83(277/13)I..718 dated 27th
December, 1999 provided a sum of Rs.1,00,00,000/-
(Rupees One Crore) only, is repaid to them.
ii) To implement the original agreement dated 22nd January,
2000 for sale of the suit premises the purchaser would
pay a total sum of Rs.5,00,000/- (Rupees Five Lakh)
only, on execution of the supplementary agreement,
which the vendor accepted and acknowledged.
iii) The purchaser would pay another sum of Rs.25,00,000/-
(Rupees Twenty Five Lakh) only, by 22nd March, 2000 to
the vendor. However, the consent to sell of the said
property was obtained from the West Bengal Industrial
Development Corporation and West Bengal Financial
Corporation and would produce to the purchaser before
making the payment of Rs.1,00,00,000/- (Rupees One
Crore) only, to the West Bengal Industrial Development
Corporation and West Bengal Financial Corporation.
iv) That the purchaser was also authorized by the vendor to
repay Rs.1,00,00,000/- (Rupees One Crore) only, to the
West Bengal Industrial Development Corporation Limited
and the West Bengal Financial Corporation directly on
behalf of the vendor as part payment out of the total
consideration money of Rs.1,70,00,000/- (Rupees One
Crore Seventy Lakh) only, of the said property.
v) On execution of the supplementary sale agreement the
vendors would hand over absolute and peaceful vacant
possession of the entire second floor comprising of a
carpet area of 4195.50 square feet and one room
attached with bathroom at the first floor of the suit
premises. The purchaser would have all rights to divide
the entire second floor into small offices and realize rent
with the proportionate right and title in landing and all
the common facilities, easement, passages, etc.
vi) The lift, generator, AC and DC light connections, water
motor etc. would remain as part and parcel of the suit
property.
vii) That the purchaser would forego the claim over ground
floor without deducting any consideration money, i.e.,
Rs.1.70 Crore for the entire suit property for providing
more time to pay the consideration money in terms of the
earlier agreement dated 22nd January, 2000. All other
terms and conditions, save and except mentioned in the
supplementary agreement, the original agreement dated
22nd January, 2000 for sale of suit property, would
remain unchanged and would be binding upon both the
parties.
It is the plaint case that upon execution of the said agreement
for sale as well as supplementary agreement thereto plaintiff paid to
the defendants a total sum of Rs.8,00,000/- (Rupees Eight Lakh)
only, by way of part payment and/or by way of deposit. The
particulars of the payments have been indicated in the plaint itself.
The plaintiff also paid a further sum of Rs.43,849/- (Rupees Forty
Three Thousand Eight Hundred Forty Nine) only, on the instruction
of the defendant or on behalf of their liabilities and/or it is payable to
them towards Kolkata Municipal Corporation and also of a sum of
Rs.5873/- (Rupees Five Thousand Eight Hundred Seventy Three)
only, towards Calcutta Telephone on behalf of the vendors.
According to the plaintiff, although, the agreement for sale was
executed on 22nd January, 2000 and under the said agreement it was
declared that the defendants had absolute right, title and interest and
had saleable interest in the suit property, it was subsequently
detected by the plaintiff that the suit property was hypothecated in
favour of West Bengal Industrial Development Corporation Limited as
well as the West Bengal Financial Corporation Limited. The
defendants offered the said property as collateral security to the
aforesaid Financial Institutions. The business of the defendants,
namely, M/s. Lal Chand Roy and Company Private Limited became
sick and as such, they and/or their company proposed to make
certain proposals and thereby the defendants sought for a direction
to dispose of the said property in order to liquidate their liabilities
with the Financial Institutions. It has been pointed out by the
plaintiff that in a Minutes of Meeting held by the defendants in one
hand and the representatives and officers of the aforesaid Financial
Institutions on the other on 23rd December, 1999, resolved:
"immediate permission is to be granted by FLS to the company for
sale of immovable properties at 7, Grant Lane, Kolkata - 700012,
offered as collateral security to FLS. The entire sale proceeds of
Rs.100 Lakh as expected, while negotiating with a very potential
buyer, would be paid to FLS. This process will be completed
maximum within March, 2000." Any legal instruction to be executed
and/or any legal procedure to be adopted to ensure payment of entire
sale proceeds to FLS would be acceptable to the company. According
to plaintiff, by a letter dated 24th January, 2001, an offer was made
for payment in order to enable the defendants to get confirmation
from the Financial Institutions in the matter of sale of the suit
property. The mode of payment offered by the plaintiff were as
follows:
a) Rs.15,00,000/- (Rupees Fifteen Lakh) only, for entire third
floor.
b) Rs.45,00,000/- (Rupees Forty Five Lakh) only, for entire
second floor and mezzanine floor.
The plaintiff communicated copies of the said letter dated
24.01.2001 to both the Financial Institutions in order to get
confirmation from the Financial Institutions at an early date.
According to the plaintiff, by a letter dated 22nd February, 2000, the
defendants, in order to implement the agreement for sale dated 22nd
January, 2000 (Exhibit A) and also the supplementary agreement for
sale dated 22nd February, 2000 (Exhibit B), proposed to hand over
absolute physical and peaceful vacant possession of entire second
floor comprising a built up area of 4195.20 square feet and one room
attached with bathroom at first floor of the suit property and thereby
the parties implemented the said agreement for sale in part. It is
alleged in the plaint that despite receipt of a sum of Rs.8,49,722/-
(Rupees Eight Lakh Forty Nine Thousand Seven Hundred Twenty
Two) only, as and by way of part consideration, the defendants failed
and/or neglected to complete the sale of the suit property in terms of
the agreements and at the same time, the defendants also did not
take steps to get confirmation from the Financial Institutions in order
to complete the sale of the said property in terms of agreements and
were bent upon to negotiate with other purchaser for their personal
gain.
It is also the plaint case that the plaintiff was ready and willing
to complete the transaction in accordance with the terms of both the
said two agreements dated 22nd January, 200 and also the
supplementary agreement dated 22nd February, 2000 but the
defendants, having refused to complete the sale in terms thereof, the
present suit was filed. The plaintiff claimed for -
a) A decree for specific performance of the agreement for sale
dated 22nd January, 2000 and supplementary agreement
dated 22nd February, 2000, entered into by and between the
plaintiff and the defendant nos. 1 and 2.
b) Alternatively Rs.3.20 Crores towards damages.
c) Refund of the deposit of a sum of Rs.8,49,722/- (Rupees
Eight Lakh Forty Nine Thousand Seven Hundred Twenty
Two) only, together with interest thereon at the rate of 24%
per annum.
d) Interest pendentelite.
The plaint has been amended once by an order dated 30th
November, 2004 thereby adding defendant no.2(b) to 2(zx). Vide
another order dated 30th September, 2013, in G.A. No.2945 of 2013,
the original defendant no.2 was struck off and in her place defendant
no.2(a) was substituted.
From an order dated 16th April, 2014, passed by Hon'ble
Justice Soumen Sen, it appears that despite substituted service,
excepting defendant nos.2(c), (d), (e), (j), (k), (l), (o), (u), (x) and (y),
other defendants failed to turn up and appear in the proceeding and
in view thereof, by the said order, His Lordship directed the suit to be
treated as an undefended suit against remaining defendants. The suit
was directed to be immediately placed before the learned Senior
Master who was directed to pass directions which would be
preemptory in nature in order to make the suit ready for hearing and
was directed to be placed in the list immediately after completion of
all formalities. In view of the aforesaid order passed by His Lordship,
matter was placed before the learned Senior Master and Official
Referee on 25th June, 2014 and directed the plaintiff and defendant
no.1 and nos.2(c), (d), (e), (j), (k), (l), (o), (u), (x) and (y) to peremptorily
disclose their documents by 03.06.2014 and to take inspection by
10.06.2014 and the plaintiff to file Judge's Brief of documents by
20th June, 2014. It was recorded that the plaintiff filed its affidavit of
documents and Judge's Brief of documents.
Learned advocate appearing for the defendants prayed for leave
to file affidavit of documents of defendant nos.2(d), (l) and (x). leave
was also granted to file affidavit of documents of defendant nos. 2(d),
(l) and (x) in Court. Matter was directed to be placed before the Court
and the parties were directed to be ready with suggested issues.
Suggested issues were framed in this case by an order dated 8th April,
2015. Following issues were framed :
1) Is the plaintiff entitled to a decree for specific
performance of the agreements dated 22nd January, 2000
and 22nd February, 2000?
2) Is the plaintiff entitled to refund of the sum of
Rs.8,49,722/- (Rupees Eight Lakh Forty Nine Thousand
Seven Hundred Twenty Two) only, with interest at the
rate of 24% per annum; in the alternative to specific
performance?
3) Is the plaintiff entitled to a decree for a sum of Rs.3.20
Crore as damages; in the alternative to specific
performance?
4) Was the suit property given as collateral security by the
predecessor-in-interest of the defendant no.1 to the
defendant nos.3 and 4?
5) Has possession of the second floor and a portion of the
third floor been handed over to the plaintiff for part
performance of the agreement?
6) Whether the defendant no.1 had initially neglected
and/or refused to obtain the necessary approval from the
defendant nos. 3 and 4?
7) Did the plaintiff pay a sum of Rs.8 Crore to the first
defendant and a sum of Rs.43,849/- (Rupees Forty Three
Thousand Eight Hundred Forty Nine) only, to the Kolkata
Municipal Corporation and a sum of Rs.5,873/- (Rupees
Five Thousand Eight Hundred Seventy Three) only, to the
Calcutta Telephones?
8) Whether any relief can be claimed against the defendant
nos. 2(a) to 2(bxi) and if so, to what extent?
9) Whether there has been any subsequent valid transfer in
favour of the defendant nos. 2(a) to 2(zx)?
10) Whether the transfer made in favour of the defendant
nos. 2(1) to 2(zx) should be set aside, delivered up and
cancelled?
11) To what other reliefs, if any, is the plaintiff entitled to?
Record reveals that defendant no.2(a), Shyam Sundar Dalal,
defendant no.2(zvii), Shyam Sundar Dalal (HUF), defendant no.
2(zviii), Renu Dalal, defendant no. 2(zix), S.S. Dalal, entered
appearance in the suit and filed written statement on 31st August,
2015. The said written statement was verified and affirmed on 6th
June, 2015 by Shyam Sundar Dalal as Karta of Shyam Sundar Dalal
(HUF), defendant no.2(zvii) and also as authorized signatory of the
defendant no.2(zviii)/Renu Dalal and 2(zix)/S.S. Dalal. The said
defendants, Shyam Sundar Dalal (HUF), Renu Dalal and S.S. Dalal
are only contesting the suit. So far other defendants are concerned,
defendant no.2(x), Binod Maskara, has filed written statement on 11th
March, 2014 but not contesting the suit. Defendant no.2(o), Anand
Kumar Sharma, filed his written statement on 11th March, 2014 but
not contesting the suit. Defendant no. 2(d), Manjit Kaur, filed her
written statement on 11th March, 2014 but not contesting the suit.
Defendant no.1, Sanjib Kumar Roy, filed written statement on 20th
May, 2002 but not contesting the suit.
Defendant no. 2(l), Ajoy Kumar Singh, filed written statement
on 11th March, 2014, but not contesting the suit.
None of the defendants have made any prayer either for
counterclaim or for set off.
The only contesting defendants, Shyam Sundar Dalal (HUF),
Renu Dalal and S.S. Dalal, in their written statement have denied the
plaint case by, inter alia, alleging
a) That the agreements in question are unregistered
agreements. The properties were lying mortgaged with the
defendant nos. 3 and 4 in January, 2000, therefore, the
agreement could not have been executed in January, 2000
as the property was not free from encumbrances.
b) That It is false that the plaintiff made payment of Rs.8 Lakh
and odd to the defendant nos.1 and 2.
c) That by a letter dated 27th December, 1999 defendant nos.3
and 4 permitted defendant nos.1 and 2 to sell the property
in order to raise funds for repayment of the dues of Lal
Chand Roy and Company Private Limited and, therefore,
there was no impediment for the plaintiff to complete the
purchase of the said premises in terms of the said purported
agreements dated 22nd January, 2000 and 22nd February,
2000.
d) That the entire first floor of the suit property was in
possession and control of the defendant nos.1 and 2. The
entire space on the second floor of the suit property is in
possession and control of the defendant nos.2 (h), (i), (j), (k),
(l), (m), (n), (o), (p), (zii), (ziii), (ziv) and (zv), by virtue of
evidence executed in their favour by defendant nos.1 and 2.
e) Admittedly, defendant nos.1 and 2 obtained permission from
defendant nos.3 and 4 to sell the said property in order to
raise funds for repayment of the loans availed from Lal
Chand Roy and Company Private Limited. The plaintiff failed
to perform its obligation under the purported agreements for
sale. That apart, in an application field in the suit an order
was passed on 28th September, 2001 wherefrom it appears
that the plaintiff had specifically instructed its banker not to
honour cheques issued by it to the defendants. The plaintiff
suppressed such fact in the plaint and, accordingly, it is
contended that the plaintiff is not entitled to any equitable
relief.
f) That the plaintiff was not ready and willing to complete the
sale. The defendant nos.1 and 2 entered into agreement for
sale with the defendant no.2(a) on 16th January, 2002 under
which the defendant nos.1 and 2 agreed to sell the said
property to the defendant no.2(a) or his nominees at and for
a consideration of Rs.95 Lakh.
According to the defendants, certain terms of the agreement
dated 16th January, 2002 were modified by a supplementary
agreement dated 13th April, 2002. The defendant no.2 has paid the
entire consideration of Rs.95 Lakh in terms of the agreement dated
16th January, 2002 and 13th April, 2002. Such payment of Rs.95
Lakh has been made to the defendant nos.3 and 4 on the instruction
of the defendant nos.1 and 2 towards redemption of mortgage of the
said property.
Defendant nos.1 and 2 executed deed of conveyance in favour
of the defendant no.2 (c), 2(e), 2(i) 2(j), 2(n), 2(r), 2(u), 2(v), 2(w), 2(x),
2(z), 2(zii), 2(ziii), 2(ziv), 2(zvi) and 2(zvii), who were nominees of the
defendant no.2(a). The defendants have disclosed the particulars of
the sale by the deed of conveyance executed by the defendant nos.1
and 2 in favour of other defendants in a schedule annexed to the
written statement filed by defendant no.2(a).
The said defendant no.1, Sanjib Kumar Roy, after filing the
written statement, abandoned the suit and for reasons best known to
him he has stopped contesting the same, however, in his written
statement he has admitted the execution of both the agreements
dated 22nd January, 2000 and the supplementary agreement dated
22nd February, 2000. He says that the plaintiff paid a paltry sum of
Rs.8 Lakh and thus shows that he has received the earnest money in
the agreement in question. In his written statement he stated that
West Bengal Financial Corporation was taking steps to place the
matter relating to liquidation of loan in its meeting scheduled to be
held on 30th December, 1999 at the office of West Bengal Financial
Corporation but such decision was never intimated to the plaintiff by
the defendant. Plaintiff was also not kept informed about the follow
up action taken by the defendant no.1 in the matter. It was disclosed
that there was a minutes of a meeting dated 23rd December, 1999
which provides - "the requisite permission for the aforesaid sale
would be granted to the company as and when needed." But the
outcome of the said meeting dated 30th December, 1999 when the
decision was supposed to be taken by the Finance Corporation was
not made known to the plaintiff. However, defendant no.1 never
deposed in support of his pleading in the written statement.
Mr. Thakkar, learned counsel appearing for the defendant nos.
2(a), 2(zvii), 2(zviii) and 2(zix), has strenuously argued that the
plaintiff has failed to make out any case for specific performance of
contract on the basis of the agreements referred to in the plaint. He
submits that -
1) The plaintiff has failed to comply with terms embodied in the
agreement dated 22nd January, 2000. According to Mr.
Thakkar, out of the total consideration of Rs.1 Crore 70
Lakh, a sum of Rs.70 Lakh was to be paid immediately and
Rs.50 Lakh within three months and the balance of Rs.50
Lakh within six months of the permission from the Income
Tax authorities.
2) Clause (i) of the supplementary agreement for sale dated
22nd February, 2000 which is appearing at page 30 of the
Judge's Brief of Document, makes references to a letter
dated 27th December, 1999 issued by the Financial
Institutions, namely, West Bengal Industrial Development
Corporation Limited and West Bengal Financial Corporation
Limited, wherein, they have expressed their willingness to
release the suit property provided a sum of Rs.1 Crore is
repaid to them. The said letter dated 27th December, 1999
is, however, not on record of the instant suit.
3) That in terms of letters on January 24, 2001, collectively
being Exhibit F, there has been a novation of the purported
agreements dated 22nd January, 2000 and 22nd February,
2000 whereby fresh terms have been introduced by the
plaintiff.
4) Plaintiff was never ready and willing to pay the balance
amount of consideration to the original defendants and,
therefore, the plaintiff cannot get any relief of specific
performance of contract in the present suit. He further
submitted that plaintiff had failed to make payment of initial
consideration of Rs.17 Lakh which ought to have been paid
even prior to sanction being obtained from the Income Tax
authorities; he submits that the plaintiff had to make
payment of a sum of Rs.5 Lakh on the execution of the
supplementary agreement dated February 22, 2000 for
obtaining possession of the second floor although, plaintiff's
obligations under initial agreement of 22nd January, 2000
were not done away with; the plaintiff has failed to
demonstrate any evidence of ability to pay and of readiness
and willingness to honour its obligations under the
agreements between the parties.
According to Mr. Thakkar, the plaintiff had sought to make
different quantum and for other portions in the said property which
had not been contemplated in the earlier agreements of 22nd January,
2000 and 22nd February, 2000. According to him, fresh terms have
been introduced by the plaintiff resulted in the novation of earlier
agreements. He says that oral contract regarding cheques cannot be
relied upon since not pleaded originally in the plaint and in this
respect, he relies on some decisions in the case of -
• Ganesh Shet - Vs. - Dr. C.S.G.K. Setty & Ors., reported
in (1998) 5 SCC 381;
• Smt. Sandhya Rani Sarkar - Vs. - Smt. Sudha Rani
Debi & Ors., reported in (1978) 2 SCC 116;
• Syed & Company & Ors. - Vs. - State of Jammu &
Kashmir & Ors., reported in 1995 Supp (4) SCC 422.
In paragraph 7 of the decision in the case of Ganesh Shet
(supra), few points have been raised which are required to be taken
into consideration for decision in a suit for specific performance of
contract
1) Whether there was a concluded contract between the
parties;
2) Having not agreed in the High Court to amend the plaint
and pleading that there was a concluded contract whether
relief for specific performance of an agreement can be
granted, including,
3) What are the legal principles applicable to suits for specific
performance under Section 20 of the Specific Relief Act,
1963 where there is variation between pleadings and
evidence in regard to the date or other terms of the
contract?
The fact of the case cited is that the appellant before the
Hon'ble Supreme Court filed a suit praying for specific performance of
a contract, according to the plaintiff, it was a concluded contract.
Defendant filed a written statement denying that the agreement did
not reach final stage and, therefore, the same could not be treated to
be a concluded contract. There was only proposals and counter-
proposals. Trial Court, after considering the oral and documentary
evidence, held that the contract was concluded at Delhi between the
plaintiff and defendants. It held that plaintiff was ready and willing
and that the plaintiff was entitled to specific performance of the
agreement. Defendants 1-3 appealed to the High Court. High Court
reversed the decree and dismissed the suit. Against that plaintiff filed
Special Leave Petition which was dismissed by the Hon'ble Supreme
Court. While dismissing the appeal the Hon'ble Apex Court held that
"inasmuch as the relief was for specific performance of an agreement
of sale dated 25.01.1984 and no such agreement was proved, it must
be held that the plaintiff did not come to Court with clean hands and
discretion could not be exercised in his favour. It was also stated that
the plaintiff, when he was asked if he wanted to rely on any
agreement of April, 1984 and if he would amend the plaint, the
plaintiff's counsel was not willing to amend the plaint. Hence the suit
was liable to be dismissed. The appeal was allowed accordingly."
Therefore, the principles laid down in the cited case are different from
that of the present case.
Relying on paragraph 7 in the case of Smt. Sandhya Rani
Sarkar (supra) Mr. Thakkar pointed out that there cannot be any
evidence without specific pleading. The ratio decided in the said
judgment as to whether a party who is in possession over the
property, can pray for specific performance of contract even after a
period of delay. Portion of paragraph 13 may be quoted below :
"13. ... In this background it is not possible to accept the
submission that even if the plaintiff was guilty of delay in performing
her part of the contract, in view of the fact that she is in possession of
a substantial portion of the property which is the subject-matter of
this appeal, the delay should be overlooked and a decree for specific
performance should be granted."
The Hon'ble Apex Court further held that "in fact, the
correspondence would show that the fixtures could be removed in a
short time and the defendant was always willing to remove the
fixtures. But the Trial Court held that the defendant committed a
default in this behalf and recorded a finding that as both the plaintiff
and the defendant committed default, law must take its own course,
viz. the plaintiff should get a decree for specific performance of the
contract. The High Court examined this contention meticulously. So
have we done here. In fact, it prominently appears that the plaintiff
put off performing her part of the contract presumably because she
had not the necessary wherewithal to take the conveyance when she
would be obliged to pay the balance of consideration and having
obtained possession stuck on to it without meeting her obligation. If
in this background the High Court interfered with the decree of the
Trial Court, we see nothing objectionable in it. The decree for specific
performance in this case has been rightly refused and this appeal is
liable to be dismissed."
In this background of the matter, the Special Leave Petition by
the plaintiff was dismissed because the plaintiff, on evidence, could
not prove that she was ready and willing to perform her part of
obligation under the agreement.
The decision in the case of Syed & Company (supra) has been
cited in the same line to show that without specific pleadings,
evidence could not be led since it is the settled principle of law that
no part of evidence can be looked into unless there is a pleading. The
fact involved in the cited case relates to a suit filed by the
respondent-State for recovery of a sum of account royalty arrears
together with interest against the appellant/defendant. The suit was dismissed.
Aggrieved thereby, Civil Appeal was filed before the High Court by the State. The appeal was dismissed but it was held that the authority in Section 52 of the Jammu & Kashmir Forest Act was not competent to direct the drawing up of a decree, therefore, that part of the order of the prescribed authority was set aside.
S.L.P. has been filed against that order and the appeal has been dismissed by the Hon'ble Apex Court. Therefore, this case has no bearing in the present one.
On the question of readiness and willingness Mr. Thakkar has also cited a decision in the case of Bal Krishna & Anr. - Vs. - Bhagwan Das (dead) by LRS. & Ors., reported in (2008) 12 SCC
145. Relying on this judgment Mr. Thakkar submitted that plaintiff should not get unfair advantage. He has also emphasized that the case which has been made out in the plaint the plaintiff has developed something else and the same is not permissible in law. The cited decision is on the question based on Section 16(3) and 10 of the Specific Relief Act, 1963 as to whether in absence of necessary averments and proof the relief of specific performance for reconveyance is barred under the law or not. It is held in the said judgment that on a reading of the plaint it did not appear to the Court that there is any reference of the agreement sought to be specifically performed has been mentioned and the plaintiffs failed to show that they were ready and willing to perform their part of the contract as per the agreement. It is held by the Hon'ble Apex Court that "from the tenor of the plaint, it is clear that the plaintiffs have pleaded for their readiness and willingness to perform their part of the contract as per the agreement dated 19.07.1952. The agreement dated 21.07.1952 has been referred to only for the purpose of accounting to be made for the payment of the consideration for resale of property and there also the plaintiffs have specifically stated that they have already paid Rs.1,000/- on 13.10.1953 and Rs.4,000/- on 01.02.1955 and the defendant is entitled to receive the balance of Rs.5,000/- less the net rental income of the house received by them. It was found by the Hon'ble Apex Court in the given case that "Exhibit P1 being agreement dated 19.07.1952 which was sought to be specifically performed, was not executed by the defendant in favour of the plaintiffs. The suit for specific performance was dismissed on the ground that according to the agreement, the plaintiff was liable to pay Rs.25,000/- but the evidence on record shows that only Ten Thousand Rupees was paid and, therefore, Courts held that the plaintiff was not at all ready and willing to make payment of the same as per the agreement. In that context, the Hon'ble Supreme Court dismissed the appeal of the plaintiff. The fact of the present case is somehow different and the ratio decided in the facts and circumstances of the said cited decision cannot be made applicable in the present case.
Mr. Thakkar has relied on a decision in the case of N.P. Thirugnanam (dead) by LRS. - Vs. - Dr. R. Jagan Mohan Rao & Ors., reported in (1995) 5 SCC 115. The case is based on a fact that whether the plaintiff was ready and willing to perform his part of the contract which has been demonstrated by the evidence of PW 2. Court disbelieved the same. Trial Judge pointed out that on an application filed by the defendants a direction was given to the plaintiff by order dated 11.02.1991 to deposit an amount of Rs.2 Lakh or furnish bank guarantee by 11.03.1991. He neither deposited the amount, nor had given bank guarantee. It was also found that the plaintiff was dabbling in Real Estate business. In that context, the Hon'ble Apex Court in paragraph 5 of the judgment held -
"5. It is settled law that remedy for specific performance is an equitable remedy and it is the discretion of the Court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under Section 20 of the Specific Relief Act, 1963 (for short, the said Act). Under Section 20, the Court is not bound to grant the relief which is because there was a valid agreement of sale. Section 16(C) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The tenor readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the Court while granting or refusing to grant the relief ..."
Therefore, the ratio decided in the case has no application in the present one particularly the decision is distinguishable on facts.
On a similar issue Mr. Thakkar has relied on a decision in the case of Pushparani S. Sundaram & Ors. - Vs. - Pauline Manomani James (deceased) & Ors., reported in (2002) 9 SCC 582. He submitted that pleading with respect to readiness and willingness will not be sufficient, proof of the same is required. This judgment is based on a fact where that although, the plaintiff pleaded readiness and willingness but not evidence led to prove such readiness and willingness. In that context, the Hon'ble Apex Court held that only pleading is not sufficient, it has to be proved. On the facts of that case, the Hon'ble Supreme Court found from the evidence that the total amount paid was insignificant, short of the balance amount for the execution of the sale deed. The Hon'ble Apex Court also observed that not only the plaintiff has come in the witness box, but not even sent any communication of notice to the defendants about his readiness and willingness to perform his part of the contract. Therefore, the said decision is distinguishable on fact and more particularly to say no ratio has been deduced in the said decision.
Mr. Thakkar submitted that since the property has passed to the hands of subsequent purchasers the plaintiff is not entitled to any relief in the present suit. In support of his contention he relies on a decision in the case of Sahadeva Gramani (dead) by LRS. - Vs. - Perumal Gramani & Ors., reported in (2005) 11 SCC 454. The fact involved in this case is that the suit was instituted praying specific performance after the sale has been executed which is not the case here. In the said decision it was held that the vendee, against whom specific performance was sought for, had no notice of the earlier agreement and he was a bona fide purchaser without notice for valuable consideration. However, the case is distinguishable on fact because the sale was made and, thereafter the plaintiff-appellant filed the suit for specific performance. In the present case, suit was filed and during the pendency of the suit subsequent purchasers purchased the property. They have been added as defendants in the suit by virtue of an order passed by the Hon'ble Division Bench and the Hon'ble Division Bench by an order on 18th February, 2015, held that the sale in question would be subject to the doctrine of lispendens. Therefore, it cannot be simply held that since there has been a conveyance in favour of the contesting defendants the relief sought for by the plaintiff is barred by law.
Mr. Thakkar in reiteration of his submission submits that an evidence has to be relevant to the pleadings and as such, no evidence can or should be led which is not supported by any pleading. In support of such proposition he refers -
• The decision in the case of Siddik Mahomed Shah - Vs.
- Mt. Saran & Ors., reported in AIR 1930 Privy Council
57. Appeal was dismissed by Privy Council holding that the submission made in appeal was contrary to the concurrent finding of Courts on fact. Therefore, Court held that no amount of evidence can be looked into upon a plea which was never put forward and on such basis, the appeal was dismissed. This is, although, a settled principle of law but has no application in the present case.
• The decision in the case of K.S. Vidyanadam & Ors. - Vs. - Vairavan, reported in (1997) 3 SCC 1. This decision is based on a principle whether the plaintiff is to implement the agreement within a reasonable time in absence of any recital made in the agreement saying that time is the essence of contract. The Hon'ble Court said the completion must be made within a reasonable time and on fact. The Hon'ble Apex Court found that the plaintiff was negligent to perform his part of duty and denial of decree for specific performance was affirmed by the Hon'ble Apex Court. This is not the case here and the ratio decided in the case is not applicable. Paragraph 15 of the said judgment is relevant for the purpose and is quoted below:-
"15. Shivasubramaniam submitted that as on today, the fourth appellant alone is fighting the litigation, that he has purchased the property after the decree of the trial court which means that he has consciously purchased litigation and that, therefore, there are no equities in his favour. The counsel submitted that as between the plaintiff and the fourth defendant, equities are in favour of the plaintiff. We are not impressed. The plaintiff has paid only a sum of Rs.5000 in December 1978 as against the consideration of Rs.60,000. The trial court dismissed the suit for specific performance on 4-9-1982, while decreeing the refund of their earnest money.
Defendant 4 purchased the suit house on 19-11-1982 for a consideration of Rs.90,000. May be, he knew he was purchasing litigation and probably it was for that reason that he may not have paid the full amount of the value. In any event, we cannot ignore the fact that Defendants 1 to 3 are also appellants before us. We are also not prepared to say that as between plaintiff and the fourth defendant, the equities are in favour of the plaintiff alone." • The decision in the case of Saradamani Kandappan - Vs.
- S. Rajalakshmi & Ors., reported in (2011) 12 SCC 18. This judgment has been cited by Mr. Thakkar to show that the Court should take judicial notice of the steep rise in the value of the immovable properties. According to Mr. Thakkar, since the property was transferred long ago and value of the property has substantially increased, the plaintiff cannot expect a decree for specific performance on the paltry sum which was agreed on the day of agreement. There is no hard and fast rule that only because of rise in valuation of the property a person who has bona fide entered into an agreement for sale after paying earnest money should be deprived from executing the terms of the agreement. However, I will discuss the circumstances applicable to the plaintiff in the later part of the judgment.
Both Mr. Joy Saha, learned senior counsel appearing for the plaintiff and Mr. Thakkar, learned counsel appearing for the defendant {contesting defendant nos. 2(zvii), 2(zviii) and 2(zix)} were given fullest opportunity to place their case in addition to parties were given liberty to file their respective written notes of arguments.
I have considered the submissions of the parties and perused the records in detail. The first objection which has been raised on behalf of the contesting defendant/purchasers in this suit is that the agreement including the supplementary agreement dated 22nd January, 2000 and the subsequent supplementary agreement dated 20th February, 2000 on the basis of which the plaintiff has prayed for specific performance is not maintainable inasmuch as the instrument is not admissible in evidence in view of Section 35 of the Stamp Act. The defendant contended that the document was insufficiently stamped and, therefore, the same is not admissible in evidence. Consequently, on the basis of such insufficiently stamped document, no relief of specific performance can be granted by this Court. In order to dispel such doubts raised by Mr. Thakkar, Mr. Saha, learned senior counsel appearing for the plaintiff, has submitted that when a document had already been admitted in evidence under Section 36 of the Stamp Act, 1889, the bar under Section 35 of the Stamp Act cannot be made applicable. Section 35 creates a bar that no instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence or shall be acted upon registered or authenticated by any such person or by any public officer unless such instruments is duly stamped. Section 35 also contains certain provisos. Provisions of Section 35 and 36 of Stamp Act are set out below :
"35. Instruments not duly stamped inadmissible in evidence, etc. - No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instruments is duly stamped:
Provided that -
(a) any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when then times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion;
(b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it;
(c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;
(d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (5 of 1898);
(e) nothing herein contained shall prevent the admission of any instrument in any court when such instrument has been executed by or on behalf of the Government or where it bears the certificate of the Collector as provided by Section 32 or any other provision of this Act.
36. Admission of instrument where not to be questioned. -
Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped."
In the present case, it is true, that the instruments (Exhibits and being agreement and supplementary agreement) are not sufficiently stamped. Question arises whether in such a situation the document can at all be relied upon by the parties. In a situation where such an unstamped or insufficiently stamped document is admitted in evidence and the defendant having not made any objection when those documents were marked as Exhibits, whether the plaintiff is entitled to get any benefit or to be allowed to act upon the said document or not. According to Mr. Saha, his client is entitled to get relief of specific performance of contract even if the agreement was not properly stamped but by virtue of the fact that the document was admitted in evidence and has been marked as an Exhibit without there being any objection at the instance of the defendants. He submits that Section 36 comes in his rescue. According to Mr. Saha, if an instrument has been admitted in an evidence, such admission shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. Undoubtedly, the defendants are raising objection in the selfsame suit where the document has been admitted and marked as an Exhibit. Therefore, the documents (agreements) cannot be called in question save and except as provided under Section 61 of the Stamp Act. In this regard Mr. Saha has relied on the following decisions in the case of • Mt. Bittan Bibi & Anr. - Vs. - Kuntu Lal & Anr., reported in AIR 1952 ALL 996;
• Javer Chand & Ors. - Vs. - Pukhraj Surana, reported in AIR 1961 SC 1655;
• Shyamal Kumar Roy - Vs. - Sushil Kumar Agarwal, reported in (2006) 11 SCC 331.
Relying on this judgment Mr. Saha submitted that once a document has been admitted in evidence it is not open either to the Trial Court or to a Court of appeal or revision to take a different view not to rely on the same. In Mt. Bittan Bibi & Anr. (supra) the Hon'ble Judge of Allahabad High Court differed from each other on the question whether a decree passed by the Trial Court on the basis of an unstamped document admitted in evidence can be challenged in appeal and whether the Appellate Court is debarred by Section 36 from questioning acting upon such document. Justice Dayal held that the Appellate Court cannot reverse the decree on this question. Justice Desai differed and held otherwise. Consequence of a difference of opinion between Justice Dayal and Justice Desai, the Third Judge Hon'ble Justice Brij Mohan Lall answered the question whether, if a Trial Court erroneously admits in evidence an unstamped promissory note or agreement and passes a decree on its basis, is an Appellate Court debarred by Section 36 from setting aside the decree on the ground that the document should not have been acted upon? The Hon'ble Third Judge, after discussing the scope and ambit of Sections 35 and 36 of the Stamp Act, has answered in the affirmative and agreed to the view of Justice Dayal and has held that "once a document has been admitted by the lower Court in evidence, the Appellate Court has no power to prevent. It is being used for all purposes. It has been held by His Lordship that object of enacting Section 36 was to debar an appellate Court from excluding from consideration of a document not duly stamped which had been wrongly admitted in evidence by the lower Court." While dealing with the question His Lordship Justice Brij Mohan Lall has also considered the view taken by Their Lordships of the Privy Council in the case of Lachhmi Narayan - Vs.
- Rameswar Prasad, reported in AIR 1924 Privy Council 221(1). Their Lordships in the Privy Council affirmed the decision of the Patna High Court in the case of Braj Mohan Singh - Vs. - Lachmi Narain, where a lessor had sued the lessee of a mine for royalty and commission. The lease had been executed on a stamp payable of Rs.40. Out of this sum of Rs.40 a sum of Rs.20 was paid in respect of Salami and the balance of Rs.20 was intended to cover the commission and royalty. The plaintiff (lessor) had sued to recover a large sum of money. But the defence was that, since the stamp duty paid on the original lease in respect of commission and royalty was Rs.20 only, not more than a sum of Rs.2,000 could be recovered as commission and royalty by virtue of the provisions of Section 26, Stamp Act, because that was the highest amount which was covered by the stamp duty of Rs.20. the plaintiff's argument, however, was that he could, by paying extra duty and penalty under Section 35, enforce the lease and recover the entire amount due to him. The learned Civil Judge held "under Section 35, Stamp Act, the plaintiff was entitled, upon paying the deficit due and penalty, amounting in all to Rs.1980, to enforce his contract to the full amount of the commission payable under the lease."
This decision was upheld by the Patna High Court which decreed the claim for the full amount. Their Lordships of the Privy Council affirmed the judgment of Patna High Court. Their Lordships held that by payment of duty and penalty the document, which was not originally duly stamped, could not only be admitted in evidence but also be acted upon."
In the said decision of Allahabad High Court Justice Desai differed from Justice Dayal. Justice Desai held that such a document may be admitted in evidence but cannot be acted upon. The position has been clarified by Justice Brij Mohan Lall, as His Lordship then was.
In Javer Chand & Ors. (supra) the Hon'ble Apex Court held that once a document has been marked as an Exhibit and the Trial Court has proceeded on the footing that the document was an Exhibit in the case and has been raised by the parties in examination and cross-examination of their witnesses, Section 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence as aforesaid it will not be open either to the parties or to the Court itself or to a Court of appeal or revision to go behind that order. such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction.
In Shyamal Kumar Roy (supra) the Hon'ble Apex Court has held that Section 36 would operate even if a document has been improperly admitted in evidence. It is of little or no consequence as to whether a document has been admitted in evidence on determination of a question as regards admissibility thereof or upon dispensation of formal proof thereof. According to Hon'ble Apex Court, if a party to the lis intends that an instrument produced by the other party being insufficiently stamped should not be admitted in evidence, he must raise an objection thereto at the appropriate stage. He may not do so only at his peril. The Hon'ble Court further held that objection as regards admissibility of a document, has to be specifically required to be taken that it was not duly stamped. On such objection only the question is required to be determined judicially.
In consonance with the views taken by the Hon'ble Apex Court and the Allahabad High Court, there cannot be any doubt that the insufficiently stamped agreement which has been admitted in evidence and marked Exhibit and parties availed the opportunity of examining and cross-examining the witnesses, there is hardly any scope for the defendant to raise any question that no decree for specific performance can be granted on the basis of the said insufficiently stamped document. Therefore, the issue raised by the defendant that the document being insufficiently stamped cannot be relied on, is decided against the defendant.
The defendant has urged that the plaintiff is not entitled to the relief claimed for in the suit for the fact that the defendants have purchased the property from the original defendant nos.1 and 2 on good faith. He had no knowledge about the transaction in between the plaintiff and the original defendant nos.1 and 2. Only after being added as defendants they have acquired knowledge about the agreement between the plaintiff and the defendant. According to the defendant they are bona fide purchaser for valuable consideration without notice. Therefore, Court of equity should lean in favour of the purchasers having no fault on them in purchasing the property on good faith. The defendant/purchasers have entered appearance, filed written statement but stayed away from the suit in leading any evidence in support of the pleading in their written statement. Nowhere from the written statement even, it appears that the purchasers ever issued any notification in the newspaper seeking any objection from any interested parties even if a property of such a high stake is under proposal for sale; any man of ordinary prudence will enquire as to whether such a property is litigated or not; as to whether any agreement has been entered into in respect of the property with a third party or not; whether the property is encumbered one or not; whether the property is under any trust or any lis or not. But in the present case, even on perusal of written statement it does not appear that the defendant/purchasers have come forward with a case that they had made all searches and, ultimately, having not found any suspicious circumstances they entered into agreement for purchase of the suit property with the original defendant nos.1 and 2 and purchased the same for the consideration as mentioned in the Deed of Conveyances. If a party files written statement and no evidence is led in support of the pleading reasonable inference which a Court may draw is that the party is unable to prove what he has stated in his pleadings and, therefore, he has chosen the better way to stay away from the Court proceeding. The agreement was entered into on 20th January, 2000 (Exhibit A). Thereafter by consent of the parties a supplementary agreement was entered into (Exhibit B). The plaintiff issued a letter dated 24th January, 2001 (Exhibit F) to the original plaintiff Sanjib Kumar Roy to provide the consent of two Financial Institutions from which loan was obtained. No reply was furnished by the original defendant Sanjib Kumar Roy. On 18th May, 2001 plaintiff filed the instant suit praying for specific performance of contract. Therefore, looking at the conduct of the plaintiff one can understand that the plaintiff was eager to complete the conveyance but it is because of the original defendant Sanjib Kumar Roy and his non-cooperation and/or inaction or attitude to avoid the implementation of the agreement the plaintiff was put into in a state that caused him to rush to Court in May, 2001 for the desired relief.
Mr. Joy Saha, learned Senior Counsel appearing for the plaintiff, has submitted that all purchases have been made by the defendants after 2000 and more so, those are during the pendency of the suit. He submits that original defendant nos.1 and 2, the vendors were not contesting the suit. The so-called purchasers, although, have filed their written statements, but only Shyam Sundar Dalal and his group, i.e., defendant no.2(a), 2(zvii), 2(zviii) and 2(zix) are contesting the suit by filing written statement. Although, B.K. Singh Associates and Advocates filed written statement on behalf of defendant nos.2(a), 2(zvii), 2(zviii) and 2(zix) and although, they are contesting the suit but no evidence laid by any of the defendants despite repeated opportunity was given to them.
Mr. Saha, in support of the claim for specific performance of contract and the other allied issues in the suit, namely, issue nos.(1,5,6,7,8,9 and 10), pointed out that all the subsequent purchasers are bound by doctrine of lispendens because such sale was effected after the year 2000 and during the pendency of the suit. The suit was filed on 20th September, 2001. The defendant nos.2(a), 2(zvii), 2(zviii) and 2(zix) (hereinafter referred to as the contesting defendants) have filed their written statement in 2015 disclosing various deeds by which the contesting defendants along with other defendants purchased the suit property from schedule 'A' to the plaint. Record reveals that all the purchases were made during the pendency of the suit. The said defendants have neither disclosed the particulars of the sale deeds in favour of the purchasers, nor have they disclosed any previous agreement with the original defendant nos.1 and 2, nor have they led any evidence with regard to such subsequent purchase of the suit property. Mr. Saha submits that although, belatedly but an application was filed for amendment of the plaint which was initially rejected by the learned Trial Judge but an appeal was filed and the Hon'ble Appellate Court passed an order on 18th February, 2015 and, inter alia, held that - " ... it is needless to say that if the appellant/plaintiff would be able to establish that his agreement of sale was genuine and he was always ready and willing to perform his part of the contract while the defendant no.1 was dodging the same on unreasonable grounds, still it is discretionary for the Court to grant or refuse the relief of specific performance of the contract. However, if the Court opines that the discretionary relief has to be granted in favour of the appellant/plaintiff, consequence of the same would automatically come into play including the benefits arising out of lispendens and the same has to be considered by the learned Single Judge at the time of disposal of the matter.
The above observations including the observations made in the impugned order would be subject to the result of the suit..."
Mr. Saha, in support of his submission regarding doctrine of lispendens, relied on a decision in the case of Govinda Pillai Gopala Pillai - Vs. - Aiyyapan Krishnan, reported in AIR 1957 Kerala 10. Mr. Saha submitted that pendency of suit or proceeding for the purpose of doctrine of lispendens shall be deemed to all proceedings from the date of presentation of the complaint or the institution of proceedings in the Court of competent jurisdiction.
Mr. Saha submitted that admittedly, not a single demand for payment of money was, however, made by the original defendant nos.1 and 2 nor had there been any termination of the original agreement dated 22nd January, 2000 or the supplementary thereto. He submitted that by failing to terminate those agreements the original defendant nos.1 and 2 have not exercised their mind to avoid the contracts and are thus bound by the same.
Mr. Saha submitted that in the agreement it was categorically provided that the plaintiff would be under obligation to pay further sum after getting permission from Income Tax authorities under Section 269 UC. This part, according to Mr. Saha, has not been complied with by the defendant nos.1 and 2 and that being so, question of readiness and willingness on the part of the plaintiff cannot be alleged to be not available although, fact remains that the plaintiff admittedly, paid Rs.5 Lakh, on 22nd February, 2000, Rs.2.25 Lakh between 6th April, 2000 and 18th April, 2000 and Rs.75,000/- on 23rd March, 2000. Mr. Saha submitted that the plaintiff thereafter, made over 31 post-dated cheque for a total sum of Rs.23.25 Lakh under cover of letter dated 26th February, 2000. After Exhibit M which provides that "to be deposited on our further written instructions only." Mr. Saha submitted that his clients addressed a letter dated 24th January, 2001 (Exhibit F) requesting Sanjib Kumar Roy to provide consent of the two Financial Institutions so that the plaintiff could make further payments for implementation of the commitment in the agreement. According to Mr. Saha, plaintiff was always ready and willing to perform the contract but it is the defendant who failed and neglected to perform their duties. They rather avoided the plaintiff and entered into agreements for sale with other parties keeping the plaintiff totally in dark.
As regards the submission made by Mr. Thakkar on the question of probability of granting a decree for specific performance of contract when it is the admitted fact that the property has been transferred by way of sale to a third party. Mr. Thakkar submitted that the property once transferred the suit has really become infructuous. In reply to his such submission Mr. Saha draws the attention of this Court with regard to the provisions of Section 52 of the Transfer of Property Act. It is submitted by Mr. Saha that explanation to Section 52 which says that pendency of a suit or proceeding shall be deemed to commence from the date of presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction. According to Mr. Saha, the aforesaid explanation to Section 52 of the Transfer of Property Act 1882 makes it clear that lispendens will commence from the date of presentation of the plaint or the institution of the proceeding in a competent Court having jurisdiction over the matter. In the present case, the alleged transfer in favour of defendant no.2(a), 2(zvii), 2(zviii) and 2(zix) took place on 10th January, 2004, in favour of Mr. Shyam Sundar Dalal (HUF) {2(zvii)} and Renu Dalal {2(zviii)}. So far Shyam Sundar Dalal (2a) and S.S. Dalal {2(zix)}, no transfer commenced in their favour. Neither any deeds of conveyance have been disclosed, nor exhibited. No details have been disclosed in Annexure A to the written statement. The suit was filed on 18th May, 2001 and the alleged purchase by the said defendants was on 10th January, 2004 almost three years after the institution of the suit. The property in question was sold to the said defendants by the original plaintiffs. According to Mr. Saha, since the sale took place during the pendency of the suit more particularly after presentation of the plaint, the defendant/purchasers' acquisition of title over the property is said to the doctrine of lispendens as enunciated under Section 52 of the Transfer of Property Act, 1882.
From the above discussion it is clear that the purchase so made by Mr. Thakkar's client is hit by doctrine of lispendens as provided under Section 52 of the Transfer of Property Act, 1882 and the right of the plaintiff in the suit cannot be said to have become infructuous or it cannot be said that the claim of the plaintiff rendered frustrated by virtue of defendant's action of transferring the suit property to the contesting defendants. The plaintiff's cause of action for the suit continues during the pendency of the suit and when plaintiff having satisfied the Court that all through he was ready and willing to complete the conveyance but it is the defendant who, instead of getting clearance from the Financial Corporations or having avoided to get the property released from such Financial Corporations, transferred the same to some other person in order to frustrate the terms of the agreement entered into between the original defendants and the plaintiff herein. I am afraid, if such a contention is upheld then not a single suit for specific performance can get a decree. If this situation is allowed to survive then relief prescribed under Section 20 of the Specific Relief Act, 1963, although, discretionary in nature, cannot at all be looked into and Courts are not required to exercise their judicial discretion to justify whether a suit of this nature should be decided or should be thrown simply on the basis of an averment made in the written statement that the property has changed hands. Section 10 of the Specific Relief Act, 1963 says that except and otherwise provided in Chapter II of the Specific Relief Act, specific performance of any contract may, in the discretion of the Court, be enforced. Specific performance is an equitable relief given by the Court in case of breach of contract. It is an obligation on the part of the contracting parties arising out of a contract. If a party to contract fails to discharge his part of obligation, other party's right arises to sue for specific performance or claim for damages. Claim for damages is an alternative claim to specific performance of contract but such damages may not be the appropriate relief for the plaintiff in all cases. There has to be some object of standard for ascertaining the actual damage caused by non- performance of the act agreed to be done.
In the present case, evidence on record does not at all support ascertainment of such actual damages caused to the plaintiff by the non-performance of the act agreed to be done by the original defendants. In the present case, the original defendants neither proposed, nor offered to return even the earnest money to the plaintiff before or after filing the suit. Mr. Thakkar submitted that Section 20 of the Specific Relief Act is a discretionary relief and this cannot be said that only because the parties agreed to perform certain act and having failed to perform the same, Court is bound to give a decree for specific performance. The proposition is undisputed but the discretion not necessarily is to be exercised in favour of the defendant always. Court may not be bound to give a decree for specific relief merely because it is lawful to do so but such discretion must not be arbitrary and should be based on sound and reasonable exercise of jurisdiction and to be guided by judicial principles. Sub-Section (2) of Section 20 provides three situations where Court may properly exercise discretion not to decree specific performance, namely,
i) Where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable gives the plaintiff an unfair advantage over the defendant,
ii) Where the performance of the contract would involve some hardship on the defendant which he did not foresee whereas such non-performance would involve no such hardship on the plaintiff and
iii) Where the defendant entered into a contract under the circumstances which though not rendering the contract voidable makes it inequitable to enforce specific performance.
So far the first exception is concerned, it is not a situation where the plaintiff gets an unfair advantage over the defendant if a decree is granted to the plaintiff.
So far the question regarding hardship on the part of the defendant is the performance of the contract which the defendant could not foresee and that its non-performance should involve no such hardship on the plaintiff, it is apparent on the face of the records that no such case has been made out by the defendant that he did not foresee the hardship if the contract is performed. It is very natural that once a property is sold the party purchasing the property utilized the same for its own purpose. In the fact situation of this case if we hold that the property is situated in a centrally located place and commercial transaction can be made on such premises and hold that the property can be exploited for commercial purposes then the money invested by the contesting defendants in purchasing the property would be said to be an investment for commercial transaction. In that case, the defendants who purchased the property contrary to the plaintiff's agreement with the original defendants, may claim interest at the commercial rate over the amount of money which they have invested for purchase of the property. Therefore, at best, the defendant can get an interest @ 24% per annum over the sum paid by the defendants/purchasers by way of consideration to the original defendants and the plaintiff having agreed to pay such interest on the principal sum to the contesting defendants, it may get a decree for reconveyance of the property by the purchaser/defendants in favour of the plaintiffs.
The third situation is also not applicable in the present case where it is stated that if the defendant entered into the contract under circumstances which though not rendering the contract voidable makes it inequitable to enforce specific performance. In this case, the original defendants are not before the Court and having no defence they have already transferred the property. So, now the contest is between the intermediate purchaser and the plaintiff. On this point of discretionary relief under Section 20 of the Specific Relief Act Mr. Saha has relied on few decisions in the case of • S.V.R. Mudaliar (Dead) by LRS. & Ors. - Vs. - Rajabu F. Buhari (Mrs.) (Dead0 by LRS., reported in (1995) 4 SCC 15;
• Nirmala Anand - Vs. - Advent Corporation (P) Ltd. & Ors., reported in (2002) 8 SCC 146 and • Narinderjit Singh - Vs. - North Star Estate Promoters Limited, reported in (2012) 5 SCC 712.
These decisions are based on the fact relating to escalation of price during the pendency of the suit, vis-à-vis, the plaintiff's right to get specific performance in view of the provisions of Section 20 and Section 10 of the of Specific Relief Act, 1963. These decisions also deal with questions regarding the fate of pendentelite transfer.
In the first decision in the case of S.V.R. (supra) the Hon'ble Apex Court has held that delay in disposal of the case and the rise in prices during interregnum, cannot go against the interest of the plaintiff if such delay has not been occasioned by any act of negligence on the part of the plaintiff. The plaintiff cannot be punished for the same on the principle of "actus curiae neminem gravabit" because an act of Court shall prejudice no man. As regards the rise in prices, the Hon'ble Court held that merely because the prices have risen during the pendency of litigation, Court cannot deny the relief of specific performance, if otherwise due. According to the Hon'ble Apex Court, this factor should not normally weigh against the suitor in exercise of discretion by a Court in a case like this. In the instant case, the Hon'ble Court restored the decree for specific performance granted by the Trial Judge.
To sum up the case I wish to discuss the cardinal points favouring grant of decree. Towards grant of decree and refusal to accept the argument of the contesting defendants it may be pointed out that the defendants have failed to make out any acceptable case to refuse the plaintiff a decree for specific performance on the grounds that -
1) Agreement dated 22nd January, 2000 (Exhibit A) contained a clause that the purchaser shall pay the vendor the total amount of Rs.1,70,00,000/- (Rupees One Crore Seventy Lakh) only, after getting permission from the Income Tax authorities under Section 269 UC of the Income Tax Act. It was agreed by the plaintiff that certain amount mentioned in the agreement would be paid. It was agreed by the plaintiff that out of total amount of Rs.1,70,00,000/- (Rupees One Crore Seventy Lakh) only, the plaintiff would make payment of Rs.50 Lakh within three months and the balance Rs.50 Lakh within six months of such permission from the Income Tax authorities. From the foregoing discussions with regard to the evidence on record and other materials placed on record by the parties, it does not appear that the defendant produced such permission and the plaintiff failed to make payment even after such permission was placed before the plaintiff. It is more important to take note that during pendency of the agreements dated 22nd January, 2000 being Exhibit A [Clause (ii), (iv) and (viii)] and agreement dated 22nd February, 2000 being Exhibit B [Clause (iii), (v) and (viii)] supports the contention of the plaintiff that he had no occasion to have acted in breach of the terms of the agreement.
2) As discussed earlier and the law held by the Hon'ble Apex Court and having regard to the fact that the agreement, although, not sufficiently stamped but admitted in evidence, the defendant cannot be permitted to say that the plaintiff cannot get a decree for specific performance on the said agreement simply because of the fact that the same was not properly stamped in view of the provisions of Section 35 of the Stamp Act. In my considered view, the plaintiff is entitled to get the benefit of Section 36 of the Stamp Act to the effect that where an instrument had been admitted in evidence it cannot be called in question at any stage of the suit or proceeding on the ground that the instrument has not been duly stamped. The objection having not been made by the defendant the document has been marked as an Exhibit and this is not the time the Court should entertain such objection of the defendant. Therefore, objection of the defendant on the ground of bar under Section 35 of the Stamp Act cannot stand in the way of the plaintiff's getting a decree for specific performance of the contract. It is also pertinent that in view of Section 53 of the Contract Act when a contract contains reciprocal promises and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented. If it is alleged by the defendant that the plaintiff had no bona fide to act in terms of the agreements (Exhibit A and B), defendant nos. 1 and 2 could have terminated the agreement and could have returned the earnest money but this was not the course chosen by the original defendants. He even did not issue any letter demanding the plaintiff to show his readiness and willingness to perform his obligation under the contract. Absence of this act of defendant clearly shows that the property was not free from encumbrances and that the defendant was not in a position to make the conveyance in favour of the plaintiff having regard to the fact that clearance from the financial authorities could not be procured by that time. That apart, according to the provisions of Section 55 of the Contract Act, when a party to a contract promises to do certain thing at or before a specified time and fails to do any such thing at or before the specified time, the contract or so much of it as has not to be performed, becomes voidable at the option of the promisee, if the intention of the parties so that time should be essence of a contract although, there was no mention that time should be essence of contract but even one can assume that the contractual obligation to be completed by the plaintiff within a reasonable time, but such reasonable approach could be made by the plaintiff only after the original defendants were ready for the conveyance which was only possible after taking clearance from the Income Tax authorities which is absolutely absent in this case. Therefore, fact remains that contract between the parties is not rendered void automatically by non-performing part of the obligation by the plaintiff unless there was any intention communicated by the owners regarding termination of the agreement.
3) The argument advanced by Mr. Thakkar that the transaction is hit by the principle of lispendens, is also not much help to him, rather, the plaintiff gets the benefit from such doctrine simply because the original defendants made the conveyance in favour of Mr. Thakkar's client. The argument by Mr. Thakkar that plaintiffs became non-suited, cannot, in my opinion, be supported because explanation to Section 52 of the Transfer of Property Act suggests that pendency of a suit or proceeding shall be deemed to commence from the date of presentation of the plaint or the institution of the proceeding in a Court of competent jurisdiction and to continue until the suit or proceeding has been disposed of by final decree or order. In this case, the transfer having commenced during the pendency of the suit, such transfer must be held to be subject to the result of the suit instituted by the plaintiff.
4) A question often arises, as in this case, as to whether if the owner of the property transfers the suit property under agreement to a purchaser after the initial order of injunction is lifted by Court or to say that when a transfer has been effected at a period when there is no prohibition by Court order to make such transfer and if it so happens whether such transfer ipso facto gives any right to the transferee purchaser and whether because of such subsequent event of transfer the party in whose favour the agreement was executed gets nothing in the suit. The answer, of course, will be in the affirmative. A party, after execution of an agreement for sale, if transfers the property during the life of the agreement, he does so at his own risk and peril and the transferee does not get any benefit out of such conduct whether collusively or otherwise made by and between the original defendant and the contesting defendants. In this case, an order was passed initially prohibiting transfer but subsequently, taking note of some development that plaintiff instructed his Banker not to encash the cheques issued by the plaintiff in favour of the original defendants, the cheques were dishonoured and, therefore, the order of injunction was not allowed to be continued. This event of lifting of injunction from the suit property does not make the original defendants entitle to transfer the property and even if any such transfer is made the same itself creates no title in favour of the purchaser rather the purchase during the pendency of the suit gets annulled by the ultimate fate of the suit and particularly when such fate is decided in favour of the plaintiff. While passing an order on 28th September, 2001, the Hon'ble Single Judge of this Court recorded that "the interim order granted earlier stands vacated." His Lordship also recorded "under the aforesaid circumstances I am not inclined to extend the interim order granted in favour of the plaintiff. The doctrine of lispendens, in my view, will be sufficient to protect the interest of the plaintiff in the event, the plaintiff succeeds in the long run." Therefore, the order itself is sufficient to protect the ultimate interest of the plaintiff in the pending suit. The said order dated 28th September, 2001 has been marked as Exhibit 1. The view that the transfer would be bound by the final relief, if any, is made in favour of the plaintiff. It has also got approval by the order dated 18th February, 2015 passed by the Hon'ble Division Bench on the appeal of the plaintiff being A.P.O.T. 48 of 2015. I have already discussed the sum and substance of this order in the preceding pages of this judgment. Therefore, injunction or no injunction before the transfer was made, the sale which has been caused by the original defendants in favour of the pendentelite purchasers are bound by the result of the suit and since I have held that the plaintiff is entitled to a decree, such sale has got no value in the eye of law and the purchasers have acquired no title out of those documents. Therefore, even if the sale deeds are not brought on record and no prayer for cancellation of the deeds has been specifically made in the plaint, the plaintiff is entitled to the cancellation of such deeds of transfer pendentelite as a relief consequential to the main reliefs prayed for in the suit.
5) On the question of readiness and willingness the discussion I have made earlier will make it clear that there was no laches on the part of the plaintiff to show his bona fide to complete the transaction so also his readiness and willingness to complete the purchase. According to the terms of the agreement, he made initial payment for a sum of Rs.8 Lakh and the balance was to be paid after clearance from the Income Tax authorities. Apart from such payment of Rs.8 Lakh, 31 post-dated cheques for a total of Rs.23.25 Lakh under cover of a letter dated 26th February, 2000 (Exhibit M) was handed over to the vendor which provided that "to be deposited on our further written instruction only." By letter dated 24th January, 2001 (Exhibit F) the plaintiff called upon Sanjib Kumar Roy to provide consent of the Financial Institutions but nothing proceeded further. Therefore, it cannot be said that the plaintiff was in default with regard to the readiness and willingness.
As pointed out in the body of the judgment that even if Section 20 of the Specific Relief Act, 1963 provides that the relief for specific performance is a discretionary relief and Court is not bound to give a decree simply because the agreement is a lawful agreement, the plaintiff has made out a strong case in support of grant of decree even if there has been a steep rise of price in the market on the Real Estate. The plaintiff has made a strong case in support of getting a decree particularly when the defendant stayed away from leading any evidence either for themselves or for their vendors. Court is helpless to protect the sale made in favour of the contesting defendants. In this regard, as held by the Hon'ble Supreme Court in the case of Nirmala Anand (supra) (cited by Mr. Saha) I am of the opinion that even Court can grant a decree for specific performance of contract by exercising its use of discretion imposing reasonable condition including payment of additional amount. Whether the purchaser shall be directed to pay an additional amount to the seller or conveyors would depend upon the facts and circumstances of a case. Their Lordships, in the said decision, has held that ordinarily the plaintiff could be denied the relief of specific performance only on account of the phenomenon, increase of price, during the pendency of litigation that may be, in the given case, one of the considerations beside many thus to be taken into consideration for refusing the decree of specific performance. Therefore, I do not find any justification to refuse the decree for specific performance in favour of the plaintiff. In my opinion, the plaintiff has been able to make out a case for getting a decree for specific performance of contract on the basis of the agreements (Exhibit A and B) and it is ordered that the suit be decreed on contest against defendant nos. 2(zxvii), 2(zxviii) and 2(zxix) on contest and ex parte against the rests.
I direct the defendant nos. 2(zxvii), 2(zxviii) and 2(zxix) to make a reconveyance of the suit property in favour of the plaintiff subject to payment by the plaintiff of the total consideration money paid by those defendants to the original defendants together therewith a sum equivalent to a total amount of simple interest @ 9% per annum to be calculated on and from the date when the property was purchased by the defendant nos. 2(zxvii), 2(zxviii) and 2(zxix) till such time reconveyance is made. The plaintiff shall make such payment through Pay Order or by Demand Draft in the name of individual defendant/purchasers. Plaintiff shall also bear all other charges for getting the deed of reconveyance registered in his favour. The plaintiff is entitled to get such Deed of reconveyance registered by defendant nos. 2(zxvii), 2(zxviii) and 2(zxix) subject to payment of the said sum to the said defendants (purchasers from original defendants) as indicated hereinabove within a period of 3 (three) months from the date of the decree being drawn up and completed and communicated to the said defendants, failing which the plaintiff will be at liberty to put the decree in execution.
Urgent Photostat certified copy of this judgment, if applied for, be delivered to the learned counsel for the parties, upon compliance of all usual formalities.
(Sahidullah Munshi, J.)