Karnataka High Court
Smt. S. Prasanna vs Miss Shany Jalal on 22 January, 2024
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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NC: 2024:KHC:3178
RFA No. 1059 of 2015
C/W RFA No. 1057 of 2015
IN THE HIGH COURT OF KARNATAKA AT BENGALURU R
DATED THIS THE 22ND DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR
REGULAR FIRST APPEAL NO. 1059 OF 2015 (SP)
C/W
REGULAR FIRST APPEAL NO. 1057 OF 2015(SP)
IN R.F.A.No.1059/2015
BETWEEN:
SMT. S. PRASANNA
W/O P.K.SOMASHEKAR REDDY
AGED ABOUT 52 YEARS,
R/AT NO.5, PANATHUR POST,
VIA VARTHUR, BANGALORE EAST TALUK
BANGALORE-560 087.
...APPELLANT
(BY SRI. A. RAVISHANKAR,ADVOCATE)
AND:
1. MISS SHANY JALAL
D/O M.JALALUDDIN
AGED ABOUT 28 YEARS,
R/AT 2883, 2ND MAIN,
KODIHALL, HAL 2ND STAGE,
Digitally signed by BANGALORE-560 008.
VANDANA S
Location: HIGH 2. MR.M.MOHAMMED AMJAD
COURT OF
KARNATAKA S/O LATE DR.M.MOHD. GOUSE,
AGED ABOUT 37 YEARS,
R/AT NO.482, 100FT ROAD,
INDIRANAGAR,
BANGALORE-560 008.
...RESPONDENTS
(BY SRI. ASHOK B PATIL ., ADVOCATE FOR C/R-1
SMT. PRAMILA NESARGI, SENIOR COUNSEL APPEARING FOR
SRI. MUNISWAMY GOWDA S.G., ADVOCATE FOR R-2)
THIS RFA IS FILED UNDER SEC.96 OF CPC.,AGAINST THE
JUDGMENT AND DECREE DATED 30.06.2015 PASSED IN O.S.NO.594/2005
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NC: 2024:KHC:3178
RFA No. 1059 of 2015
C/W RFA No. 1057 of 2015
ON THE FILE OF THE XI ADDL.CITY CIVIL JUDGE BANGLORE CITY,
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.
IN R.F.A.No.1057/2015
BETWEEN:
MR.M.MOHAMMED AMJAD
S/O LATE DR.M.MOHAMMED GOUSE,
AGED ABOUT 37 YEARS,
R/AT NO.482, 100FT ROAD,
INDIRANAGAR,
BANGALORE-560 008.
...APPELLANT
(BY SMT. PRAMILA NESARGI, SENIOR COUNSEL APPEARING FOR
SRI. MUNISWAMY GOWDA S.G., ADVOCATE
AND:
1. MISS SHANY JALAL
D/O M.JALALUDDIN
AGED ABOUT 28 YEARS,
R/AT 2883, 2ND MAIN,
KODIHALL, HAL 2ND STAGE,
BANGALORE-560 008.
2. SMT. S. PRASANNA
W/O P.K.SOMASHEKAR REDDY
AGED ABOUT 52 YEARS,
R/AT NO.5, PANATHUR POST,
VIA VARTHUR, BANGALORE EAST TALUK
BANGALORE-560 087.
...RESPONDENTS
(BY SRI. ASHOK.B.PATIL, ADVOCATE FOR C/R-1
SRI. A. RAVISHANKAR., ADVOCATE FOR R-2)
THIS RFA IS FILED UNDER SEC.96 R/W ORDER 41 RULE 1 OF
CPC.,AGAINST THE JUDGMENT AND DECREE DATED 30.06.2015 PASSED
IN O.S.NO.594/2005 ON THE FILE OF THE XI ADDL.CITY CIVIL JUDGE
BANGLORE CITY, DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.
THESE APPEALS ARE COMING ON FOR DICTATING JUDGMENT,
THIS DAY, THE COURT DELIVERED THE FOLLOWING:
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NC: 2024:KHC:3178
RFA No. 1059 of 2015
C/W RFA No. 1057 of 2015
JUDGMENT
Both these appeals arise out of the impugned judgment and decree dated 30.06.2015 passed in O.S.No.594/2005 by the XI Addl. City Civil Judge, Bengaluru City. The respondent No.1 herein was the plaintiff in the said suit which was decreed by the trial court in her favour against the defendants. RFA No.1057/2015 is preferred by 1st defendant, in which plaintiff is arrayed as respondent No.1 and defendant No.2 is respondent No.2. So also, RFA No.1059/2015 is preferred by the 2nd defendant, in which, plaintiff is arrayed as respondent No.1 and defendant No.1 is respondent No.2.
2. In the aforesaid suit which was contested by both defendants and decreed against them in favour of the respondent No.1 - plaintiff, she sought for the following reliefs:-
"(i) Declaring that the purported sale deed dated 06.10.04 executed by the 1st defendant in favour of the second defendant, registered as BNG(U)-
BLR(S)/17383/2004-05 dated 06.10.04 in the Office of the sub-Registrar, Bangalore south taluk, Bangalore is a sham transaction, not binding on the plaintiff in the interest of justice and equity.
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(ii) Canceling the sale deed dated 06.10.04 executed by the 1st defendant in favour of the second defendant, registered as BNG(U)-BLR(S)/17383/2004-05 dated 06.10.04 in the Office of the sub-Registrar, Bangalore south taluk, in the interest of the justice and equity.
(iii) Directing the defendant to execute the sale deed and get it registered in pursuance of the Land Sale agreement dated 27.11.01, in respect of the suit schedule property, on receiving the balance sale consideration of Rs.5 Lakhs, and put the plaintiff in possession of the same, in the interest of justice and equity.
(iv) In the event of the defendant, failing to execute the sale deed, and get it registered, this Hon'ble court may be pleased to execute the sale deed on behalf of defendant and get the same registered at the expense of the plaintiff, in the interest of justice and equity.
(v) Directing the defendant by way of perpetual injunction, restraining him from alienating the suit schedule property to any third party in any manner.
(vi) Granting such other relief as this Hon'ble court deems fit under the facts and circumstances of the case, in the interest of justice and equity, including the award of costs."
3. For the purpose of convenience, parties are referred to their respective rankings before the Trial Court.
4. Brief facts leading to the present appeals are as under:-
-5-NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 The plaintiff instituted the instant suit interalia contending that defendant No.1 was the owner in possession and enjoyment of the suit schedule property; that on 22.11.2001, the defendant No.1 executed a Land Sale Agreement in favour of the plaintiff in respect of the suit schedule property for a total sale consideration of Rs.9 lakhs; out of the total sale consideration of Rs.9 lakhs, a sum of Rs.1 lakh had already been paid by the plaintiff to Dr. Mohammed Ghouse, father of defendant No.1, which was agreed to be treated as advance and part of the sale consideration under the Agreement dated 22.11.2001.
4.1 It was contended that as per the aforesaid Agreement, the balance sale consideration of Rs.8 lakhs was agreed to be paid by the plaintiff to defendant No.1 viz., Rs.5 lakhs on or before 10.12.2001, Rs.1 lakh on or before 15.04.2002 and the balance amount of Rs.2 lakhs on or before 15.07.2002 subject to defendant No.1 obtaining khatha, paying of up-to-date taxes and proper site marking. Plaintiff further alleged that defendant No.1 agreed to get the khatha changed to his name, pay taxes and get proper site marking done prior to receiving the additional payment of Rs.5 lakhs. It was also contended that defendant No.1 agreed to -6- NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 construct boundary wall on three sides of the land and that the actual cost would be paid by the plaintiff.
4.2 Plaintiff also contended that on 01.02.2002, defendant No.1 received Rs.3 lakhs and executed an endorsement acknowledging receipt of the said amount from the plaintiff. Further, during February, 2002, plaintiff got the suit schedule property enclosed by a compound wall comprising of hallow cement blocks on western and southern sides and incurred expenditure of Rs.60,000/- for the said work. It was further alleged that despite repeated requests and demands made by the plaintiff and her father - Jalaluddin, defendant No.1 did not get khatha changed to his name nor performed the obligations cast upon him under the agreement. On 04.12.2004, plaintiff arranged a sum of Rs.5 lakhs towards balance sale consideration and called upon defendant No.1 to execute the Sale Deed by issuing a Legal Notice dated 10.12.2004 and also got published a Public Notice in "Deccan Herald, Daily Newspaper" on 11.12.2004 cautioning the general public not to deal with the suit schedule property; that instead of complying with the demands made in the lawyer's notice dated 13.12.2004, defendant No.1 attempted to alienate and dispose of the suit schedule property in favour of the third parties, as a result -7- NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 of which, the plaintiff instituted the aforesaid suit for specific performance and other reliefs as stated supra on 20.01.2005.
5. Defendant No.1 filed his written statement interalia admitting that he had executed a Land Sale Agreement dated 22.11.2001 in favour of the plaintiff for a total sale consideration of Rs.9 lakhs. It was further contended that as per the said Land Sale Agreement, time was essence of the contract and it was incumbent upon the plaintiff to pay a sum of Rs.5 lakhs to defendant No.1 on or before 10.12.2001, another sum of Rs.1 lakh on or before 15.04.2002 and balance sum of Rs.2 lakhs on or before 15.07.2002. It was contended that the plaintiff was never ready and willing to perform her part of the contract and did not make payments as agreed and undertaken by her and as a result of which, the Land Sale Agreement stood cancelled due to breach and non-performance of the agreement by the plaintiff.
5.1 Defendant No.1 also contended that he got the khatha changed to his name, site marking and putting up of compound wall was done by him and not by the plaintiff as alleged by her.
Defendant No.1 also contended that he had performed all the obligations cast upon him under the Land Sale Agreement and was -8- NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 always ready and willing to receive the balance sale consideration from the plaintiff in terms of the Land Sale Agreement and since the plaintiff did not come forward to perform her part of the contract, due to financial commitments, defendant No.1 was constrained to sell the suit schedule property in favour of defendant No.2 under the registered Sale Deed dated 06.10.2004. It is therefore contended that the claim of the plaintiff for specific performance, declaration, etc., was liable to be rejected.
5.2 Defendant No.1 also contended that the suit was barred by limitation since it was beyond the period of three years from the date of execution of the Land Sale Agreement. In addition thereto, except certain averments made in the plaint which were admitted by him, the defendant No.1 denied and disputed all other allegations and claims made by the plaintiff. Under these circumstances, defendant No.1 sought for dismissal of the suit.
5.3 Defendant No.2 filed a separate written statement interalia disputing and denying the various contentions, allegations and claims put-forth by the plaintiff. It was contended that the suit was not maintainable and defendant No.2 being a pre-suit purchaser of the suit schedule property, the claim of the plaintiff was liable to be dismissed. It was also contended that defendant -9- NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 No.2 was a bonafide purchaser for valuable consideration in respect of the suit schedule property without notice or knowledge of the alleged Sale Agreement and the Sale Deed having been executed in favour of 2nd defendant on 06.10.2004, prior to the institution of the suit, subsequently on 20.01.2005, suit was liable to be dismissed. Defendant No.2 also contended that the suit was barred by limitation and the plaintiff not being ready and willing to perform her part of the contract was not entitled to any reliefs as sought by her. Under these circumstances, defendant No.2 also sought for dismissal of the suit.
6. Based on the above pleadings, the Trial Court framed the following issues:-
1. Whether the defendant No.1 prove that the time was the essence of the contract?
2. Whether the defendant No.1 prove that the plaintiff has committed the breech of the sale agreement dated 22.11.2001 by not performing her part of the contract within the time stipulated?
3. Whether the defendant No.1 proves that due to the non-performance of the contract the same stood cancelled?
4. Deleted vide court order dated 21.06.2008
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5. Deleted vide court order dated 21.06.2008
6. Whether the plaintiff proves that she has been always ready and willing to perform his part of the contract?
7. Whether the plaintiff is entitled to the relief of Specific Performance of contract?
8. Whether the plaintiff is entitled to the relief of Permanent Injunction as sought for?
9. What order or Decree?
Additional Issues:-
1. Whether plaintiff proves that sale deed dated 06.10.2004 executed by 1st defendant in favour of 2nd defendant in respect of suit schedule property is not binding on her?
2. Whether defendant proves that the suit of the plaintiff is barred by limitation?
3. Whether 2nd defendant proves that she is a bonafide transferee for value who has paid money in good faith and without notice of the Agreement to Sell in favour of the plaintiff dated 22.11.2001?
7. Plaintiff examined herself as PW1 and the witness to the Agreement as PW-2 on her behalf and documentary evidence at Exs.P1 to P14 were marked. Defendant No.1 examined his younger brother as DW2. Defendant No.2 examined her husband /
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 P.A.Holder as DW1 and Exs.D1 to D24 were marked on their behalf. After hearing the parties, the Trial Court decreed the suit in favour of the plaintiff against the defendants,who are before this Court by way of the present appeals.
8. Heard Smt. Pramila Nesargi, learned Senior Counsel for the appellant in RFA No.1057/2015 and Sri. A. Ravishankar, learned counsel for the appellant in RFA No.1059/2015 as well as Sri.Ashok B. Patil, learned counsel for respondent No.1 in both the appeals and perused the material on record.
9. In addition to reiterating the various contentions urged in the memorandum of appeal and referring to the material on record, learned Senior Counsel for the appellant in RFA No.1057/2015 made the following submissions: -
(i) The plaintiff had not performed her part of the contract and had not paid the balance sale consideration within the stipulated timeframe under the Agreement, which was sufficient to come to the conclusion that the plaintiff had committed breach of the terms and conditions of the contract and the Trial Court committed an error in upholding the claim of the plaintiff.
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(ii) The terms and conditions of the Land Sale Agreement indicates that time was the essence of the contract under the agreement and non-performance of the terms and conditions by the plaintiff, especially paying the balance sale consideration would prove that she had committed breach, as a result of which, the contract stood cancelled.
(iii) The plaintiff was not ready and willing to perform her part of the contract and her claim was liable to be rejected.
(iv) The plaintiff did not come forward to pay the balance sale consideration and get the Sale Deed registered and the 1st defendant sold the suit schedule property in favour of defendant No.2 vide registered Sale Deed dated 06.10.2004, which is perfectly alegal and valid document and the plaintiff has no locus standi to challenge the said sale deed.
(v) The plaintiff was not entitled to the discretionary and equitable relief of specific performance and the suit was barred by limitation and was liable to be dismissed on these grounds.
(vi) The trial court committed an error in deleting issues 4 and 5 which arose out of the pleadings of the plaintiff and reliefs sought for by her and the findings recorded by the trial court in this
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 regard and also on additional issue No.1 are contrary to the material on record.
(vii) The trial court failed to consider and appreciate the pleadings and evidence in their proper perspective which has resulted in erroneous conclusion warranting interference in the present appeal.
In support of her contentions, learned Senior counsel has placed reliance upon the following judgments: -
(i) Mrs.Sharadamani Kandappan vs. Mrs.S.Rajalakshmi& others - AIR 2011 SC 3234;
(ii) Padmini Raghavan & Another vs. H.A.Sonnappa and others - ILR 2014 KAR 233;
10. Learned counsel for the appellant in RFA No.1059/2015 who was 2nd defendant in the suit would adopt and reiterate the submissions made by the learned Senior counsel for appellant - 1st defendant in RFA No.1057/2015. In addition thereto, he submitted that since the alleged Land Sale Agreement in respect of the suit schedule property / vacant site was an unregistered document, defendant No.2 was completely unaware of the execution of the said Agreement in favour of the plaintiff; the 2 nd defendant was a bonafide purchaser for valuable consideration from 1st defendant
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 vide sale deed dated 06.10.2004 without notice or knowledge of the Agreement dated 22.11.2001. It was submitted that the suit was barred by limitation and the trial court committed an error in upholding the claim of the plaintiff by passing the impugned judgment and decree which deserves to be set aside. In support of his contentions, learned counsel has relied upon the judgment of the Apex Court in the case of C.S.Venkatesh vs. A.S.C.Murthy -
(2020) 3 SCC 280.
11. Per contra, Sri. Ashok B. Patil, learned counsel for respondent No.1 - plaintiff would support the impugned judgment and decree and submits that the Trial Court has correctly and properly appreciated and considered the entire material on record and has decreed the suit by passing the impugned judgment and decree, which does not warrant interference by this Court in the present appeals. In support of his contentions, learned counsel has placed reliance upon the following judgments: -
(i) Janaki Vashdeo Bhojwani v. Indusind Bank Ltd. - (2005)2 SCC 217;
(ii) S. Kesari Hanuman Goud v. Anjum Jehan - (2013) 12 SCC 64;
(iii) Motilal Jain v. Ramdasi Devi - (2000) 6 SCC 420;
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(iv) Syed Dastagir v. T.R.Gopalakrishna Setty - (1999)6 SCC 337;
(v) T.Mohan v. Kannammal - (2002) 10 SCC 82;
(vi) Chand Rani v. Kamal Rani - (1993) 1 SCC 519;
(vii) Bhavyanath v. K.V.Balan - (2020) 11 SCC 790;
(viii) Ramachandra Narayan Nayak v. Karnataka Neeravari Nigam Ltd. - (2013) 15 SCC 140;
(ix) Dilvey v. Arun Verghese - (2008) 11 SCC 45;
(x) R.C.Chandiok v. Chuni Lal Sabharwal - (1970) 3 SCC 140;
(xi) Sarju Pershad v. Raja Jwaleshwari Pratap Narain Singh - AIR 1951 SC 120;
(xii) Santosh Hazari v. Purushottam Tiwari - (2001) 3 SCC 179;
(xiii) Tarak Nath Sha v. Bhutoria Bros. (P) Ltd. - (2002) 5 SCC 15;
(xv) R.S. Anjayya Gupta v. Thippaiah Setty - (2019) 7 SCC 300.
12. A perusal of the impugned judgment and decree will indicate that the trial court answered issues 1 to 3 in favour of the plaintiff thereby holding that the time was not the essence of contract under the sale agreement dated 22.11.2001 and that the plaintiff had not committed breach thereof and also that the Agreement did not stand cancelled on account of non-performance by the plaintiff. So also, the trial court came to the conclusion that the plaintiff was ready and willing to perform her part of the contract
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 and was entitled to the relief of specific performance and permanent injunction and answered issues 6 to 8 in favour of the plaintiff. Further, the trial court answered additional issues 1 to 3 in favour of the plaintiff by holding that the 2 nd defendant was not a bonafide transferee for value without notice of the sale agreement, that the suit was not barred by limitation and that the sale deed by the 1st defendant in favour of 2nd defendant was not binding upon her. Accordingly, the trial court decreed the suit in favour of the plaintiff against the defendants by passing the impugned judgment and decree which is assailed in the present appeals.
13. After hearing the parties, the following points arise for consideration in the present appeals:
(i) Whether the Trial Court was correct in coming to the conclusion that the plaintiff was ready and willing to perform her part of the contract and that she was entitled to specific performance and other reliefs sought for in the suit?
(ii) Whether the trial court was justified in holding that the 2nd defendant was not a bonafide purchaser for value without notice of the sale Agreement dated 22.11.2001?
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(iii) Whether the impugned judgment and decree warrants interference in the present appeals?
Re-Point No.1:-
14. A perusal of the material on record will indicate that it is an undisputed fact that the 1st defendant executed the sale Agreement dated 22.11.2001 in favour of the plaintiff, under which, the total sale consideration was fixed at Rs.9 lakhs out of which, Rs.1 lakh already paid by plaintiff to Mohammed Ghouse father of 1st defendant was treated as advance and part of the total sale consideration. As per the Agreement, the balance sale consideration of Rs.8 lakhs was to be paid by the plaintiff to the 1st defendant as per the payment schedule hereunder:
(a) Rs.5 lakhs on or before 10.12.2001;
(b) Rs.1 lakh on or before 15.04.2002;
(c) Rs.2 lakhs on or before 15.07.2002;
14.1 It is also borne out from the material on record that the plaintiff did not pay the balance sale consideration as per the aforesaid timelines; instead, Rs.3 lakhs was paid by the plaintiff to the defendant on 01.02.2002. It is also a matter of record that after
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 01.02.2002, the plaintiff did not pay any portion of the balance sale consideration of Rs.5 lakhs to the 1st defendant.
14.2 In the impugned judgment and decree, the trial court took up issues 1 to 3 and issue no.6 as well as additional issue No.1 together and came to the conclusion that there was no breach committed by the plaintiff for non-performance of her part of the contract, as a consequence of which, it was held that the plaintiff was ready and willing to perform his part of the contract and that the sale deed dated 06.10.2004 executed by 1 st defendant in favour of the 2nd defendant was not binding upon the plaintiff. In this context, it is relevant to state that the trial court clearly misdirected itself in taking up all the aforesaid issues together without appreciating that the same are independent of each other warranting separate scrutiny of the material on record. It is however an undisputed fact that from 01.03.2002 onwards, the plaintiff did not pay the balance sale consideration of Rs.5 lakhs to the 1st defendant towards the sale transaction.
14.3 It is trite law that in order to succeed in a suit for specific performance of contract, it is incumbent upon the plaintiff to aver and prove that he was always ready and willing to perform his part of the contract as contemplated under Section 16(c) of the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 Specific Relief Act. It is equally well settled that while readiness has been construed and interpreted as the plaintiff having the capacity to pay the balance sale consideration, willingness is intention on the part of the plaintiff to perform his part of the contract. It is also significant to note that the relief of specific performance to be granted in favour of the plaintiff is circumscribed by the principles enjoined in Section 20 of the Specific Relief Act, since the same is in equitable and discretionary relief to be granted depending on the facts and circumstances of the case. So also, the plaintiff would not be entitled to the relief of the specific performance, even if the suit is not barred by limitation if he is guilty of delay and laches and his conduct disentitled him to the said relief.
14.4 The law in this regard is no longer res integra as laid down by the Apex Court and this Court in various judgments including the Hon'ble Division Bench of this Court in Padmini Raghavan's case supra, wherein it is held as under: -
"18. In the light of the aforesaid facts and the rival contentions, the points that arise for our consideration are as under: -
(1) Whether the suit agreement of sale is interpolated so as to render it void and unenforceable?
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 (2) Whether the plaintiff was ready and willing to perform his part of the contract?
(3) Whether defendants 3 and 4 are bona fide purchasers for valuable consideration without notice of the agreement of sale in favour of the plaintiff?
(4) Whether the application filed by the plaintiff in the Appellate Court under Order XXI Rule (2) of CPC, is maintainable and requires to be allowed or whether the suit of the plaintiff is barred by limitation in so far as defendants 3 and 4 are concerned?
(5) Whether the suit of the plaintiff is liable to be dismissed on the ground of delay and latches?
POINT NO.2 - READINESS AND WILLINGNESS
40. In a suit for specific performance the plaintiff should not only plead and prove the terms of the agreement, but also plead and prove his readiness and willingness to perform his obligation under the contract in terms of the contract.
41. Section 16 of the Specific Relief Act reads as under: -
"16. Personal bars to relief.- Specific performance of a contract cannot be enforced in favour of a person-
(a) who would not be entitled to recover compensation for its breach; or
(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or
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(c) who fails to aver and prove that he has 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 terms the performance of which has been prevented or waived by the defendant.
Explanation.- For the purposes of clause (c),-
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.
42. This provision has been the subject matter of interpretation by the Apex Court on several occasions:
43. The law on the point is well settled. The Supreme Court in the case of N.P.THIRUGNANAM (DEAD) BY LRS vs DR R.JAGAN MOHAN RAO AND OTHERS [(1995) 5 SCC 115] has held as under: -
"5. It is settled law that remedy for specific performance is an equitable remedy and is in 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 Act'). Under Section 20, the court is not bound to grant the relief just because there was 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 continuous 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
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract."
44. The Supreme Court in the case of HIS HOLINESS ACHARYA SWAMI GANESH DASSJI vs SITA RAM THAPAR [(1996) 4 SCC 526] has held as under: -
"2. There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. For contract, the conduct has to be properly scrutinised. There is no documentary proof that the plaintiff had ever funds to pay the balance of consideration. Assuming that he had the funds, he has to prove his willingness to perform his part of the contract. According to the terms of the agreement, the plaintiff was to supply the draft sale deed to the defendant within 7 days of the execution of the agreement, i.e., by 27.2.1975. The draft sale deed was not returned after being duly approved by the petitioner. The factum of readiness and willingness to
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 perform plaintiff's part of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract. The facts of this case would amply demonstrate that the petitioner/plaintiff was not ready to perform his part of the contract as he had no financial capacity to pay the consideration in cash as contracted and intended to abide for the time which disentitles him as time is the essence of the contract."
45. The Supreme Court in the case of RAM AWADH (DEAD) BY LRS AND OTHERS Vs ACHHAIBAR DUBEY AND ANOTHER [2000 (2) SCC 428] interpreting section 16 of the Specific Performance Act 1963 has held as under: :
"6. The obligation imposed by Section 16 is upon the court not to grant specific performance to a plaintiff who has not met the requirements of clauses (a), (b) and (c) thereof. A court may not, therefore, grant to a plaintiff who has failed to aver and to prove that he has performed or has always been ready and willing to perform his part of the agreement the specific performance whereof he seeks. There is, therefore, no question of the plea being available to one defendant and not to another. It is open to any defendant to contend and establish that the mandatory requirement of Section 16(c) has not been complied with and it is for the court to determine whether it has or has not been complied with and, depending upon its conclusion, decree or decline to decree the suit. We are of the view that the decision in Jugraj Singh's case is erroneous.
46. The Apex Court in the case of P.D'Souza v. Shondrilo Naidu [ 2004 (6) SCC 649] has held as under :
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 "It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of the contract. The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale. The question as to whether the onus was discharged by the plaintiff or not will depend upon the facts and circumstances of each case. No straitjacket formula can be laid down in this behalf."
47. The Supreme Court in the case of ANIGLASE YOHANNAN V. RAMLATHA (2005) 7 SCC 534 [SCC p 540, para 12) has held as under:
"12. The basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief. The provision imposes a personal bar. The Court is to grant relief on the basis of the conduct of the person seeking relief. If the pleadings manifest that the conduct of the plaintiff entitles him to get the relief on perusal of the plaint he should not be denied the relief."
This Court further held that the averments relating to readiness and willingness are not a mathematical formula which should be expressed in specific words and if the averments in the plaint as a whole, do clearly indicate the readiness and willingness of the plaintiff to fulfil his part of the obligations under the contract, the fact that the wording was different, will not militate against the readiness and willingness of the plaintiff. The above observations cannot be construed as requiring only a pleading in regard to readiness and willingness and not `proof' relating to readiness and willingness. In fact, in the very next para, this
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 Court clarified that Section 16(c) of the Act mandates the plaintiff to aver in the plaint and establish the fact by evidence aliunde that he has always been ready and willing to perform his part of the contract. Therefore, the decision merely reiterates the need for both pleadings and proof in regard to readiness and willingness of the plaintiff.
48. The Supreme Court in the case of M.M.S. INVESTMENTS, MADURAI AND OTHERS Vs V.VEERAPPAN AND OTHERS [2007 AIR SCW 4809] has held as under:-
"5. Questioning the plea of readiness and willingness is a concept relatable to an agreement. After conveyance the question of readiness and willingness is really not relevant. Therefore, the provision of the Specific Relief Act, 1963 (in short the 'Act') is not applicable. It is to be noted that the decision in Ram Awadh's case (supra) relates to a case where there was only an agreement. After the conveyance, the only question to be adjudicated is whether the purchaser was a bona fide purchaser for value without notice. In the present case the only issue that can be adjudicated is whether the appellants were bona fide purchasers for value without notice. The question whether the appellants were ready and willing is really of no consequence. In Ram Awadh's case (supra) the question of the effect of a completed sale was not there. Therefore, that decision cannot have any application so far as the present case is concerned. Once there is a conveyance the concept would be different and the primary relief could be only cancellation."
49. The Supreme Court in the case of AZHAR SULTANA vs B. RAJAMANI AND OTHERS [AIR 2009 SC 2157] has held as under:-
"18. Section 16(c) of the Specific Relief Act, 1963 postulates continuous readiness and willingness on the part
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 of the plaintiff. It is a condition precedent for obtaining a relief of grant of specific performance of contract. The court, keeping in view the fact that it exercises a discretionary jurisdiction, would be entitled to take into consideration as to whether the suit had been filed within a reasonable time. What would be a reasonable time would, however, depend upon the facts and circumstances of each case. No hard and fast law can be laid down therefor. The conduct of the parties in this behalf would also assume significance.
50. The Supreme Court in the case of MAN KAUR (DEAD) BY LRS vs HARTAR SINGH SANGHA [(2010) 10 SCC 512] has held as under:-
"12. Section 16(c) of the Specific Relief Act 1963 (`Act' for short) bars the specific performance of a contract in favour of a plaintiff "who fails to aver and prove that he has 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 terms of the performance of which has been prevented or waived by the defendant).
Explanation (ii) to section 16 provides that for purposes of clause (c) of section 16, "the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction. Thus in a suit for specific performance, the plaintiff should not only plead and prove the terms of the agreement, but should also plead and prove his readiness and willingness to perform his obligations under the contract in terms of the contract.
51. Thus, 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 continuous readiness and willingness on the part of the plaintiff is a condition
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 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. If the plaintiff fails to either aver or prove the same, he must fail. The basic principle behind Section 16(c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief. The provision imposes a personal bar. The Court is to grant relief on the basis of the conduct of the person seeking relief.
52. Thus in a suit for specific performance, the plaintiff should not only plead and prove the terms of the agreement, but should also plead and prove his readiness and willingness to perform his obligations under the contract in terms of the contract. The continuous 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. If the plaintiff fails to either aver or prove the same, he must fail. It is indisputable that in a suit for specific performance of contract, the plaintiff must establish his readiness and willingness to perform his part of the contract. The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale. The question as to whether the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 onus was discharged by the plaintiff or not will depend upon the facts and circumstances of each case. No straitjacket formula can be laid down in this behalf. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till the date of the decree, he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract.
53. Readiness and willingness refer to the state of mind and conduct of the purchaser, as also his capacity and preparedness on the other. One without the other is not sufficient. There is a distinction between readiness to perform the contract and willingness to perform the contract. By readiness may be meant the capacity of the plaintiff to perform the contract which includes his financial position to pay the purchase price. In so far as willingness is concerned, it reflects the mental attitude of the plaintiff to part with or pay the balance sale consideration agreed to be paid. If there are any reservations without any justification, or it is made conditional on the happening of any event
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 which is not agreed upon, it shows his unwillingness to perform his part of the contract. The obligation imposed by Section 16 is upon the court not to grant specific performance to a plaintiff who has not met the requirements of clauses (a), (b) and (c) thereof. A court may not, therefore, grant to a plaintiff who has failed to aver and to prove that he has performed or has always been ready and willing to perform his part of the agreement the specific performance whereof he seeks. There is, therefore, no question of the plea being available to one defendant and not to another. It is open to any defendant to contend and establish that the mandatory requirement of Section 16(c) has not been complied with and it is for the court to determine whether it has or has not been complied with.
54. Therefore, it is necessary to see whether there is a proper plea which satisfies the requirement of Section 16(c) of the Specific Relief Act, 1963. In para 4 it is stated that the plaintiff was ever ready and willing to perform his part of the obligation and he was ever ready with the balance sale consideration amount and that the plaintiff requested the defendant more than a dozen times to come and execute the sale deed. In para 5 of the plaint the plaintiff has averred that right from the date of execution of the agreement he was ready to perform his part of the obligation as contemplated under the agreement. On the other hand the defendant had evaded to execute the sale deed on one pretext or the other. The plaintiff during 1993 had got issued two legal notices to the defendant. Though
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 the defendant received the said notice, she never replied nor complied.
55. The 1st defendant has specifically traversed these allegations. She specifically contends that the time agreed was only three months from the date of the agreement, but the plaintiff failed to obtain sale deed within the stipulated period in spite of repeated demands and requests made by the defendant to obtain the sale deed. The averments in the plaint that the plaintiff was ready and willing to perform his part of the obligation arising out of the agreement is utter falsehood and are averred just for the purpose of the suit. Further, it is stated that the averment in para 5 of the plaint that the plaintiff was ever ready to perform his part of the agreement and the defendant had postponed the execution of the sale deed on one pretext or the other was denied as false. It is because of these material allegations in the plaint which were denied in the written statement, issue No.5 in the suit was framed as under : -
"Whether the plaintiff proves that he was always ready and willing to perform his part of the contract and obtain a regular sale deed and it is the first defendant who has evaded to execute the sale deed?"
Therefore, the plea of readiness and willingness to perform the essential terms of the contract is found in the plaint.
56. In support of his plea of readiness and willingness the plaintiff has adduced evidence. In his evidence he stated that by employing bulldozers he got the schedule land flattened, planted mango plants, dug a bore well, installed a
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 pump set at a cost of Rs.8,00,000-00. Within 13 months from the date of the agreement, he was in possession of the balance amount payable under the agreement of sale. He met the first defendant about 30 to 40 times in those 13 months. It is the first defendant who is the cause for not completing the sale transaction. She was expected to get the measurement of the property done which she did not do. However, he was ready with the balance sale consideration. Even on the day he was giving evidence he was ready with the said amount. This is what he said in the examination in chief. In cross-examination he deposed he has no document to show that he was in possession of the balance amount. However, he again asserted that he is in possession of the balance sale consideration. Except this evidence we have no evidence on record. In other words except repeating these words that he was ready and willing to perform his part of the contract in the witness box, he has not placed any evidence on record to show that he was firstly ready with the balance sale consideration and secondly he was willing to part with the sale consideration to the first defendant.
57. If the plaintiff after entering into the sale agreement took possession of the schedule property under the agreement and thereafter leveled the entire land by using the bulldozers, dug a bore well, installed a pump set and planted mango trees and spent nearly Rs.8,00,000-00 towards these expenses which is twice the amount of the sale consideration, he should have produced evidence to substantiate this fact. If he had employed a bulldozer to
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 level the entire land he should have paid money to the owner of the bulldozer and obtained receipts even if cash payment is made. Similarly, if a bore well is dug, there should have been evidence to substantiate the said fact. If a pump set had been installed, he should have had a receipt evidencing the purchase of the said pump set. If he has fenced the land, again there should be a receipt to show the purchase of barbed wire because the land to be fenced is about 28 acres 37 guntas. Except the oral assertion, absolutely no scrap of paper is produced to substantiate this fact. He has not said where he had kept that money. In these days it is very difficult to keep so much cash in the house. If he was ready with the balance sale consideration and approached the 1st defendant 30 to 40 times in those 13 months period as spoken to by him, he could not have kept the cash in the house. If he was really interested in purchasing the property or at least when he issued a legal notice and filed a suit, he would have deposited the amount in some bank and could have produced documents showing that he was ready with the balance sale consideration. At least on the day he issued the legal notice or he filed the suit or at least on the day he was giving evidence, he should have demonstrated that he was ready with the balance sale consideration. Absolutely no effort is made in this direction.
58. The plaintiff in order to succeed has to prove the continuous readiness and willingness from the date of the agreement till the date of hearing of the case. To adjudge whether the plaintiff is ready and willing to perform his part
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 of the contract, the Court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. His conduct should be blemishless throughout entitling him to the specific relief. The mere assertion in the witness box that he is ready and willing to perform his part of the contract or he is ready with the balance sale consideration would not meet the requirements of law. Seen from this angle if we look into the evidence on record in the first place, there is no evidence apart from the interpolated recital in the suit agreement that he has paid Rs.1,75,000/- under the agreement. The first defendant has admitted the receipt of Rs.75,000/-. She has specifically denied the payment of Rs.1,00,000/- and has contended that such a writing is an interpolation. Therefore, in the first instance it was necessary for the plaintiff to prove by acceptable evidence other than the recital in the agreement that a sum of Rs.1,00,000/- was paid in addition to Rs.75,000/- on execution of the agreement of sale. Subsequently, 13 months is the period prescribed according to the plaintiff to pay the balance sale consideration. Absolutely no evidence is adduced to show that in these 13 months period the plaintiff was ready with the balance sale consideration. It is the specific case of the plaintiff that about 30 to 40 times plaintiff approached the first defendant with the balance consideration and requested her to execute the sale deed. No evidence is coming forward to prove this fact of plaintiff approaching defendant 30 to 40 times and during the said period he had the balance sale consideration in his hand. Two legal notices have been issued asserting
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 readiness and willingness to pay the sale consideration. But, no evidence is adduced to show that on the day when these legal notices were issued, the plaintiff was ready with the balance sale consideration. Even after the filing of the suit till the day he gave evidence in Court, no evidence is adduced to show during that period that he was ready with the balance sale consideration. It is the specific case of the plaintiff which is averred in the plaint and also spoken to in his evidence that after the agreement of sale, he has spent Rs.8,00,000/- for the purpose of flattening the land, digging bore well, installing a pump set, fencing the land and planting mango trees. Absolutely no evidence is adduced to show that the plaintiff was in possession of Rs.8,00,000/- and how much he has spent out of Rs.8,00,000/- on these different heads and from where he got the money. Therefore, the evidence on record clearly establishes that the plaintiff has failed to prove the possession of the balance sale consideration as pleaded by him. There is absolutely no evidence on record to show that he was willing to pay the said amount. When he was not in possession of the amount at all, the question of willing to part with that money would not arise. Therefore, the plaintiff has failed to prove the legal requirement of readiness and willingness to pay the balance sale consideration. As the proof of readiness and willingness to pay the sale consideration is a condition precedent for grant of a decree of specific performance, the plaintiff has miserably failed in this regard and therefore the plaintiff is not entitled to the relief of specific performance.
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015
59. The trial Court has proceeded on the basis that, the evidence of PW2 and legal notices at Exs.P5 and P8 clearly goes to show that the plaintiff was/is ready and willing to perform his part of the contract from the agreement till the date of filing the suit and subsequently also. Further it held that, in spite of service of notices the defendant No.1 did not respond to the said notices. So under such circumstances an inference has to be drawn that the plaintiff was always been ready and willing to perform his part of contract as per the agreement. Then, the trial Court took note of the fact that, in the cross-examination of DW1, it is elicited that the plaintiff after getting the agreement approached the first defendant several times and requested her to execute the sale deed by receiving the balance consideration amount. So, the admission made by DW1 in the cross-examination will cut the contention of the defendants 2 to 4 that the plaintiff was not ready and willing to perform his part of the obligation under the agreement dated 5.11.1990.
60. This reasoning only demonstrates a very superficial approach on the part of the trial Court in appreciating the evidence. It failed to notice that mere assertion in the witness box and issue of a legal notice is not a proof of readiness and willingness to pay the balance sale consideration. The plaintiff should not only aver, but also prove the readiness and willingness to the satisfaction of the Court. No inferences are permissible in law. Readiness and willingness is purely a question of fact. The plaintiff has to produce before the Court such evidence so as to satisfy the Court that he was ready with the balance
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 sale consideration and he was willing to part with the balance sale consideration. As set out above, the evidence on record clearly demonstrates he was neither ready with the balance sale consideration nor he made any attempt to pay the balance sale consideration. On the contrary he has taken false pleas which are not substantiated by any evidence. Therefore, the finding recorded by the trial Court that the plaintiff has established his readiness and willingness is not based on any legal evidence and as such it is vitiated and requires to be set aside and accordingly it is set aside.
61. Section 19 of the Specific Relief Act is pressed into service by the plaintiff to bind defendants 3 and 4 and to compel them to execute the sale deed in their favour. Defendants 3 and 4 have taken a specific contention that they are bona fide purchasers for valuable consideration without notice of this agreement of sale and therefore they are not bound by the said contract and no decree for specific performance can be passed against them.
62. Section 19 of the Specific Relief Act, 1963 reads as under:-
"19. Relief against parties and persons claiming under them by subsequent title.- Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against -
(a) either party thereto;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 who has paid his money in good faith and without notice of the original contract;
(c) any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant;
(d) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;
(e) when the promoters of a company have, before its incorporation, entered into a contract for the purpose of the company and such contract is warranted by the terms of the incorporation, the company:
Provided that the company has accepted the contract and communicated such acceptance to the other party to the contract.
63. The section lays down a general rule that the original contract may be specifically enforced against persons who are not parties to the original contract. It provides the categories of persons against whom specific performance of a contract may be enforced. Among them is included, under clause (b), any transferee claiming under the vendor by a title arising subsequently to the contract of which, specific performance is sought. However, a transferee for value, who has paid his money in good faith and without notice of the original contract, is excluded from the purview of the said clause. It is clearly for the transferee to establish the circumstances which will allow him to retain the benefit of a transfer which, prima facie, he had no right to get. Further, the subsequent transferee is the person within whose knowledge the facts as to whether he has paid and whether he had notice of the original contract lie, and the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 provisions of Sections 103 and 106 of the Indian Evidence Act, 1872, have a bearing on the question. The plaintiff does not necessarily have knowledge of either matter. To fall within the excluded class, a transferee must show that:
(a) he has purchased for value the property (which is the subject-matter of the suit for specific performance of the contract);
(b) he has paid his money to the vendor in good faith; and
(c) he had no notice of the earlier contract for sale (specific performance of which is sought to be enforced against him).
A bona fide purchaser for valuable consideration who obtains a legal estate at the time of his purchase without notice of a prior equitable right is entitled to priority in equity as well as at law.
64. Under Section 19(b) a specific performance of a contract can be enforced not only against either party thereto, but against any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of original contract. Further, Section 91 of the Indian Trusts Act, 1882 lays down that where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which a specific performance could be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract. An agreement to sell immovable property does not create any interest in the said property unless a sale deed is executed conveying the said property. The vendor, who has not transferred his interest in the property, though he entered
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 into an agreement with another to sell the same, can certainly confer title on a third party by executing a sale deed in his favour. As between the vendor and the subsequent purchaser, there can be little doubt that there is a transfer of ownership and, therefore, the title to the property vests in the latter. But the title of the subsequent purchaser with notice of the prior agreement in favour of another is subject to the obligation under S. 91, Trusts Act. He holds the property for the benefit of the latter to the extent necessary to give effect to the contract. The person in whose favour there was a prior agreement can specifically enforce his agreement under Section 27(2) Section 27(b)), Specific Relief Act, and compel him to execute a sale deed in his favour. But till such a sale deed is executed by the subsequent purchaser, the person in whose favour there was a prior agreement cannot acquire any title to the same. It is well settled that the initial burden to show that the subsequent purchaser of suit property covered by earlier suit agreement was a bona fide purchaser for value without notice of the suit agreement squarely rests on the shoulders of such subsequent transferee. Once evidence is led by both the sides the question of initial onus of proof pales into insignificance and the Court will have to decide the question in controversy in the light of the evidence on record. Where a transferee has knowledge of such facts which would put him on inquiry which if prosecuted would have disclosed a previous agreement, such transferee is not a transferee without notice of the original contract. It is the bounden duty of the purchaser to make all such necessary enquiries and to
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 ascertain all the facts relating to the property to be purchased prior to committing in any manner and hence they cannot simply come forward to put up the general plea that they are the bonafide purchasers for value and without notice. Explanation II appended to the interpretation clause in section 3 of the Transfer of Property Act says: "Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.
65. Thus, it is seen that a statutory presumption of "notice" arises against any person who acquires any immovable property or any share or interest therein of the title, if any, of the person who is for the time being in actual possession thereof. Where there is a tenant in possession under a lease or an agreement, a person, purchasing part of the estate, must be bound to inquire, on what terms that person is in possession.
66. Section 3 of the Transfer of Property Act is the interpretation clause. It defines when a person is said to have notice. It reads as under:-
"3. Interpretation- clause.- In this Act, unless there is something repugnant in the subject or context,--"
xxx xxx xxx "a person is said to have notice" of a fact when he actually knows that fact, or when, but for willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. Explanation I.- Where any transaction relating to immoveable property is required by law to be and has been
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 effected by a registered instrument, any person acquiring such property or any part of, or share or interest in, such property shall be deemed to have notice of such instrument as from the date of registration or, where the property is not all situated in one sub- district, or where the registered instrument has been registered under sub- section (2) of section 30 of the Indian Registration Act, 1908 (16 of 1908), from the earliest date on which any memorandum of such registered instrument has been filed by any Sub- Registrar within whose sub- district any part of the property which is being acquired, or of the property wherein a share or interest is being acquired, is situated:
Provided that--
(1) the instrument has been registered and its registration completed in the manner prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made thereunder, (2) the instrument or memorandum has been duly entered or filed, as the case may be, in books kept under section 51 of that Act, and (3) the particulars regarding the transaction to which the instrument relates have been correctly entered in the indexes kept under section 55 of that Act.
Explanation II.- Any person acquiring any immoveable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof.
Explanation III.- A person shall be deemed to have had notice of any fact if his agent acquires notice thereof whilst acting on his behalf in the course of business to which that fact is material:
Provided that, if the agent fraudulently conceals the fact, the principal shall not be charged with notice thereof as against any person who was a party to or otherwise cognizant of the fraud."
67. Thus, it is seen that a statutory presumption of notice arises against any person who acquires any immovable property or any share or interest therein of the title, if any, of
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 any person who is for the time being in actual possession thereof. Notice is defined in Section 3 of the Transfer of Property Act. It may be actual where the party has actual knowledge of the fact or constructive. A person is said to have notice of a fact when he actually knows that fact, or when, but for willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. From the definition of the expression, a person is said to have notice in Section 3 of the Transfer of Property Act, it is plain that the word notice is of wider import than the word knowledge. A person may not have actual knowledge of a fact but he may have notice of it having regard to the aforementioned definition and Explanation II thereto. If the purchasers have relied upon the assertion of the vendor or on their own knowledge and abstained from making enquiry into the real nature of the possession of the tenant, they cannot escape from the consequences of the deemed notice under Explanation II to Section 3 of the Transfer of Property Act.
68. Section 3 was amended by the Amendment Act of 1929 in relation to the definition of 'notice'. The definition has been amended and supplemented by three explanations, which settle the law in several matters of great importance. Explanation-II states that actual possession is notice of the title of the person in possession. Prior to the amendment there had been some uncertainty because of divergent views expressed by various High Courts in relation to the actual possession as notice of title. A person may enter the property in one capacity and having a kind of interest, but
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 subsequently while continuing in possession of the property his capacity or interest may change. A person entering the property as a tenant later may become a usufructuary mortgagee or may be an agreement holder to purchase the same property or may be some other interest is created in his favour subsequently. Hence with reference to subsequent purchaser, it is essential that he should make an inquiry as to title or interest of the person in actual possession as on the date when sale transaction was made in his favour. The actual possession of a person itself is deemed or constructive notice of the title if any, of a person who is for the time being in actual possession thereof. A subsequent purchaser has to make inquiry as to further interest, nature of possession and title under which the person was continuing in possession on the date of purchase of the property. When a person purchases a property from the owner knowing that it is in the possession of another, he is under a duty to inquire into the nature of that possession, and, in the absence of such inquiry or knowledge of title under which possession is held, the same should be attributed to the purchaser. Where there is a tenant in possession under a lease and an agreement of sale in his favour, a person purchasing part of the estate must be bound to inquire on what terms that person is in possession. A tenant being in possession under a lease, with an agreement in his pocket to become the purchaser, those circumstances altogether give him an equity repelling the claim of a subsequent purchaser who made no inquiry as to the nature of his possession. It is the duty of the subsequent purchaser to inquire from the persons in
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 possession as to the precise character in which they were in possession at the time when subsequent sale transaction was entered into. If there be a tenant in possession of land a purchaser is bound by all the equities which the tenant could enforce against the vendor and such equity extends not only to the interest connected with the tenancy, but also to interests under the actual agreement.
69. The law on the point is well settled. The principle of constructive notice of any title which a tenant in actual possession may have, was laid down by LORD ELDON IN DANIELS VS. DAVISON [(1809) 16 VES. 249 AT P.254]. The learned law Lord observed:
"Where there is a tenant in possession under a lease, or an agreement, a person purchasing part of the estate must be bound to inquire on what terms that person is in possession..........that a tenant being in possession under a lease, with an agreement in his pocket to become the purchaser, those circumstances altogether give him an equity repelling the claim of a subsequent purchaser who made no inquiry as to the nature of his possession"."
(emphasis supplied)
70. In the case of BHUP NARAIN SINGH vs GOKUL CHAND MAHTON AND OTHERS [AIR 1934 PRIVY COUNCIL 68] it is held as under:-
"In their Lordships' opinion, the section lays down a general rule that the original contract may be specifically enforced against a subsequent transferee, but allows an exception to that general rule, not to the transferor, but to the transferee, and, in their Lordships' opinion, it is clearly for the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 transferee to establish the circumstances which will allow him to retain the benefit of a transfer which, prima facie, he had no right to get. Further, the subsequent transferee is the person within whose knowledge the facts as to whether he has paid and whether he had notice of the original contract lie, and the provisions of Sections 103 and 106 of the Indian Evidence Act, 1872, have a bearing on the question. The plaintiff does not necessarily have knowledge of either matter......"
71. The High Court of Andhra Pradesh in the case of MUMMIDI REDDI PAPANNAGARI YELLA REDDY VS. SALLA SUBBI REDDY AND OTHERS, AIR 1954 AP 20 referring to various decisions in paragraph 8 has stated thus:
"It may be mentioned here that an Explanation was introduced into the Transfer of Property Act by the Amending Act 21 of 1929.
Even prior to this amendment, the law, as declared in decided cases, was that, when a person purchased property from the owner knowing that it is in the possession of another, he is under a duty to inquire into the nature of that possession, and, in the absence of such inquiry, knowledge of title under which possession is held, should be attributed to the purchaser. The leading case on the subject, relied on in a number of Indian decisions.
72. A Division Bench of the High Court of Madras in VEERAMALAI VANNIAR vs. THADIKARA VANNIAR (AIR 1968 MAD. 383) has held as under:-
"that it is also the duty of the subsequent purchaser to inquire from the persons in possession as to the precise character in which he was in possession at the time when
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 subsequent sale transaction was entered into. If there be a tenant in possession of land a purchaser is bound by all the equities which the tenant could enforce against the vendor and such equity extends not only to the interest connected with the tenancy but also to interests under the actual agreement".
73. The Apex Court in the case of GOVINDDAS (DR.) VS. SHANTIBAI (1973) 3 SCC 418 has held asunder:-
"14. It will be noticed that the evidence is contradictory and we have to decide whose version is more acceptable. The learned counsel for the appellants contended that the onus of proof was very light on the appellants and they had discharged it by entering the witness-box and stating that they had no knowledge. We are unable to agree with him that in the circumstances of this case the onus was light on the appellants. The circumstances that tell heavily against the version of the appellants are these. First, all the parties are residents or have shops in the same vicinity and in places like this it is not probable that the appellants would not come to know of the execution of the agreement (Souda- Chitthi) of the plaintiff. Secondly, the haste with which the sale-deed in favour of the appellants was executed was unusual. It is more usual for an agreement to be executed in such cases rather than arrive at an oral agreement on one day and have the sale-deed executed the next day and registered the following day. For some reason the appellants were in a hurry to get the deed registered. What was the reason? In view of all the circumstances we are inclined to accept the evidence of Hem Raj Chauhan, and corroborated by Hayat, that Goverdhandas knew of the execution of the agreement with the plaintiff on March 1, 1960."
74. The Bombay High Court in the case of MURLIDHAR BAPUJI VALVE vs YALLAPPA LALU CHAUGULE AND OTHERS (AIR 1994 BOMBAY 358) has held as under:-
"20......It is well settled law that the onus to prove the exception carved out in S.19(b) of the Specific Relief Act, 1963 is on the subsequent purchaser. S.19 of the Act
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 clearly provides that specific performance of a contract may be enforced against either party thereto or any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract."
75. The Supreme Court in the case of R.K. MOHAMMED UBAIDULLAH AND OTHERS vs HAJEE C ABDUL WAHAB (D) BY LRS AND OTHERS [(2000) 6 SCC 402] has held as under:-
"As can be seen from Section 19 (a) and (b) extracted above specific performance of a contract can be enforced against (a) either party thereto and (b) any person claiming under him by a title arising subsequent to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. Section 19(b) protects the bona fide purchaser in good faith for value without notice of the original contract. This protection is in the nature of exception to the general rule. Hence the onus of proof of good faith is on the purchaser who takes the plea that he is an innocent purchaser. Good faith is a question of fact to be considered and decided on the facts of each case. Section 52 of the Penal Code emphasizes due care and attention in relation to the good faith. In the General Clauses Act emphasis is laid on honesty.
15. Notice is defined in Section 3 of the Transfer of Property Act. It may be actual where the party has actual knowledge of the fact or constructive. "A person is said to have notice"
of a fact when he actually knows that fact, or when, but for
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. Explanation II of said Section 3 reads:
"Explanation II - Any person acquiring any immoveable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof."
Section 3 was amended by the Amendment Act of 1929 in relation to the definition of 'notice'. The definition has been amended and supplemented by three explanations, which settle the law in several matters of great importance. For the immediate purpose Explanation-II is relevant. It states that actual possession is notice of the title of the person in possession. Prior to the amendment there had been some uncertainty because of divergent views expressed by various High Courts in relation to the actual possession as notice of title. A person may enter the property in one capacity and having a kind of interest. But subsequently while continuing in possession of the property his capacity or interest may change. A person entering the property as tenant later may become usufructuary mortgagee or may be agreement holder to purchase the same property or may be some other interest is created in his favour subsequently. Hence with reference to subsequent purchaser it is essential that he should make an inquiry as to title or interest of the person in actual possession as on the date when sale transaction was made in his favour. The actual possession of a person itself is deemed or constructive notice of the title if any, of a person who is for the time being in actual possession thereof. A subsequent purchaser
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 has to make inquiry as to further interest, nature of possession and title under which the person was continuing in possession on the date of purchase of the property. In the case on hand defendants 2 to 4 contended that they were already aware of the nature of possession of the plaintiff over the suit property as a tenant and as such there was no need to make any inquiry. At one stage they also contended that they purchased the property after contacting the plaintiff, of course, which contention was negatived by the learned trial court as well as the High court. Even otherwise the said contention is self- contradictory. In view of Section 19(b) of the Specific Relief Act and definition of 'notice' given in Section 3 of the Transfer of Property Act read along with explanation II, it is rightly held by the trial court as well as by the High Court that the defendants 2 to 5 were not bona fide purchasers in good faith for value without notice of the original contract.
76. The Apex Court in the case of RAM NIWAS (DEAD) THROUGH LRS vs BANO (SMT) AND OTHERS [(2000) 6 SCC 685] has held as under:-
(a) "3. Section 19 provides the categories of persons against whom specific performance of a contract may be enforced. Among them is included, under clause (b), any transferee claiming under the vendor by a title arising subsequently to the contract of which, specific performance is sought.
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 However, a transferee for value, who has paid his money in good faith and without notice of the original contract, is excluded from the purview of the said clause.
4. The said provision is based on the principle of English law which fixes priority between a legal right and an equitable right. If 'A' purchases any property from 'B' and thereafter 'B' sells the same to 'C', the sale in favour of 'A', being prior in time, prevails over the sale in favour of 'C' as both 'A' and 'C' acquired legal rights. But where one is a legal right and the other is an equitable right "a bona fide purchaser for valuable consideration who obtains a legal estate at the time of his purchase without notice of a prior equitable right is entitled to priority in equity as well as at law." [Snells Equity -
13th Edn p.48].
7. Thus, it is seen that a statutory presumption of "notice" arises against any person who acquires any immovable property or any share or interest therein of the title, if any, of the person who is for the time being in actual possession thereof.
77. The Supreme Court in the case of VASANTHA VISWANATHAN AND OTHERS vs V.K.ELAYALWAR AND OTHERS [(2001) 8 SCC 133] has held as under:-
"13...... Section 19(b) of the Specific Relief Act, 1877 (sic 1963), which occurs in Chapter II, applies to movables by virtue of the provisions of Section 58 of the Sale of Goods
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 Act referred to above. Under Section 19(b) a specific performance of a contract can be enforced not only against either party thereto but against any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of original contract. Further, Section 91 of the Indian Trusts Act, 1882 lays down that where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which a specific performance could be enforced, the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract......"
From this evidence it is clear that, it is not as if that defendants 2 to 4 did not make any enquiries before purchase of the land. They did make enquiries through their agents. It is not the law that the purchaser should make enquiry personally. Explanation II states that, any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof. In other words, for application of Explanation II, the possession of the property by the plaintiff is a must. It is only thereafter if no enquiry is made or search which he ought to have made, is not made, then he is deemed to have notice. In so far as search is concerned, the evidence on record shows that plaintiff's name was not entered in the RTC. No katha was made out. Agreement was not registered. The evidence of the defendants clearly
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 establish that they obtained an encumbrance certificate, they obtained pahanis, they obtained katha, all of which showed the name of the first defendant-the vendor. Except the recital in the agreement of sale that the plaintiff was put in possession, there is absolutely nothing on record to show that he was put in possession and more so he continued in possession. His case of carrying out developmental activities is held to be not proved. Therefore, on the day the defendants 3 and 4 purchased the property, there is nothing on record to show that the plaintiff was in possession of the property. The plaintiff relies on a notice issued to the defendant No.2 by the revenue authorities calling upon her to be present at the time of survey where a reference is made to the effect that the plaintiff is in possession of the property. Relying on that piece of evidence which is marked as Exs. P16 and 17 it was contended that it shows the plaintiff's possession. The evidence on record shows that the plaintiff is an adjoining land owner. After purchase, when applications were filed for mutating the name of the second defendant, he has raised objections contending that he is in possession. It is in that context he was able to get that recital in Exs. P16 and 17, the document which has come into existence subsequent to the date of sale and subsequent to the dispute between the parties. That is not a document which establishes the possession of the plaintiff over the schedule property. In fact, mutation entries were made in pursuance of the sale deed in favour of defendants 3 and 4 in respect of the property which they have purchased and there was no such objection. Ultimately, the mutation entries were made in the name of the second
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 defendant after enquiry when they found that the claim of the plaintiff is baseless. Therefore, the evidence on record do not show plaintiff's possession over the schedule property on the day defendants 2 to 4 purchased the property and as such they cannot be attributed any notice of any title which the plaintiff possessed over the schedule property. It is here, it is necessary to mention that a contract for sale of immovable property is a contract that sale of such property shall take place on terms settled between the parties and it does not itself create any interest in or charge of such property. Therefore, plaintiff acquired no interest under the agreement of sale. Secondly, the said agreement is interpolated resulting in its cancellation. Thirdly, in part performance of the agreement of sale nothing is done. The plaintiff was not ready and willing to perform his part of the contract and therefore no right under Section 53A is acquired by the plaintiff under the agreement. Defendants 3 and 4 have purchased the property. The sale is not in dispute. Payment of consideration is not in dispute. Now, mutation entries are made on the basis of the sale deed in their name. The sale deed recites that possession is delivered to them on the date of sale. They have been paying taxes. Subsequently, the plaintiff has amended the plaint seeking the relief of possession which shows he is not in possession. In the light of these proved facts on record, the contention that the plaintiff was in possession of the land from the date of the agreement of sale, defendants 2 to 4 failed to make enquiries, therefore they are deemed to have notice of the plaintiff's right over the property and they cannot be construed as bona fide purchasers for
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 valuable consideration without notice of the agreement of sale is not established. On the contrary, the defendants have established that they are bona fide purchasers for valuable consideration and defendants 3 and 4 have also established that they have no notice of the agreement of sale.
94. The trial Court was of the view that from the evidence of DW6 it goes to show that defendant No.3 purchased the property without making any proper enquiry which is mandatory under law. It did not accept the case of defendants 3 and 4 that they have purchased the portion of the suit property without the knowledge of the prior agreement between the first defendant and plaintiff. According to the trial Court, the document alleged to be got executed by defendants 2 to 4 appears to be suspicious nature of document and they have not purchased the property for valuable consideration can be gathered from their evidence only. Therefore, the contention that they are the bona fide purchasers for value without knowledge of the agreement falls to the ground. It relies on Exs. P16 and 17 notices issued by the survey authorities where it is mentioned that plaintiff was in possession of the suit land and defendants 2 to 4 never came in possession of the purchased lands at any point of time. Defendants 2 to 4 without verifying as to who are in possession of the property and without making proper enquiry with any of the adjoining land owner or villagers, they have ventured to purchase the property and they have got executed the sale deeds from the first defendant. Hence, it cannot be said that they
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 are bona fide purchasers for value without notice of the prior agreement.
95. This reasoning runs counter to the evidence on record. The execution of the sale deeds in favour of defendants 2 to 4 is not in dispute at all. DW1 has admitted in his evidence that the said sale deeds came to be executed without his knowledge. The executant of the sale deed, the Power of Attorney Holder of the first defendant has been examined in this case. The sale deeds are all duly registered. The consideration mentioned clearly go to show that the properties were sold for valuable consideration. The revenue authorities acting on these registered sale deeds have made mutation entries entering the names of the purchasers. They have been paying taxes. It is because of the objection of the plaintiff to mutate the name of the second defendant, proceedings were initiated. It is in that context Exs. P16 and 17 came to be issued by the survey authorities. What the survey authorities are expected to do before conducting the survey is to issue notice to the adjoining land owners. They are not the authorities to say who is in possession of the land. They issued notices to the adjoining owners on the basis of the title deed. They are not concerned with possession. Even before conducting survey, they cannot say in the notice issued for conducting survey who is in possession of the property. In this background if it is mentioned in Exs. P16 and P17 that the plaintiff is in possession of the schedule property, it is because he is the owner of the adjoining land and because he had filed objections and as the suit had already been filed by the time
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 the said proceedings were initiated, he wanted to create evidence and therefore he has got the same mentioned in the notice. That notice is not proof of possession of the plaint schedule property by the plaintiff. Unfortunately, the trial Court did not consider this document in a proper perspective. It failed to take note of the contents of the registered sale deed which are validly executed and which are not in dispute. It erred in holding that the sale deeds are all executed in suspicious circumstances which is not a case pleaded by any of the parties. It is on that assumption it has recorded a finding that defendants 3 and 4 are not the bona fide purchasers for valuable consideration, a finding which is contrary to the evidence on record and as such, it is vitiated and the same is hereby set aside.
POINT No.5: DELAY AND LATCHES
115. It is contended on behalf of the defendants that the date of agreement is dated 5.11.1990. The legal notice is issued on 19.1.1993, i.e., nearly after 2 years after the date of the agreement. Even thereafter immediately suit is not filed. 8 months thereafter second legal notice was issued on 21.9.1993. It is only thereafter the suit is filed on 22.10.1993, few days prior to the expiry of three years period. Though the suit is filed within three years, whether there was any justification for the delay in filing the suit. It is only after the property is sold by the first defendant to defendants 2 to 4, the suit is brought by interpolating the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 suit agreement, i.e., the agreement of sale. The dates speak for themselves.
116. The law on the point if fairly well settled. The Supreme Court in the case of VEERAYEE AMMAL V. SEENI AMMAL [(2002) 1 SCC 134] held as under:-
"11. When, concededly, the time was not of the essence of the contract, the appellant-plaintiff was required to approach the court of law within a reasonable time. A Constitution Bench of this Hon'ble Court in Chand Rani v. Kamal Rani held that in case of sale of immovable property there is no presumption as to time being of the essence of the contract. Even if it is not of the essence of contract, the court may infer that it is to be performed in a reasonable time if the conditions are (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding circumstances, for example, the object of making the contract. For the purposes of granting relief, the reasonable time has to be ascertained from all the facts and circumstances of the case."
It was furthermore observed:
13. The word "reasonable" has in law prima facie meaning of reasonable in regard to those circumstances of which the person concerned is called upon to act reasonably knows or ought to know as to what was reasonable. It may be unreasonable to give an exact definition of the word "reasonable". The reason varies in its conclusion according to idiosyncrasy of the individual and the time and
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 circumstances in which he thinks. The dictionary meaning of the "reasonable time" is to be so much time as is necessary, under the circumstances, to do conveniently what the contract or duty requires should be done in a particular case. In other words it means, as soon as circumstances permit.
In P. Ramanatha Aiyar's The Law Lexicon it is defined to mean:
`A reasonable time, looking at all the circumstances of the case; a reasonable time under ordinary circumstances; as soon as circumstances will permit; so much time as is necessary under the circumstances, conveniently to do what the contract requires should be done; some more protracted space than `directly'; such length of time as may fairly, and properly, and reasonably be allowed or required, having regard to the nature of the act or duty and to the attending circumstances; all these convey more or less the same idea.'
19. It is also a well settled principle of law that not only the original vendor but also a subsequent purchaser would be entitled to raise a contention that the plaintiff was not ready and willing to perform his part of contract. [See Ram Awadh (Dead) by LRs. & Ors. v. Achhaibar Dubey & anr; [(2000) 2 SCC 428 para 6]
20. We are, however, in agreement with Mr. Lalit that for the aforementioned purpose it was not necessary that the entire amount of consideration should be kept ready and the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 plaintiff must file proof in respect thereof. It may also be correct to contend that only because the plaintiff who is a Muslim lady, did not examine herself and got examined on her behalf, her husband, the same by itself would lead to a conclusion that she was not ready and willing to perform her part of contract.
21. If the plaintiff has failed to establish that she had all along been ready and willing to perform her part of contract, in our opinion, it would not be necessary to enter into the question as to whether the defendant Nos.5 and 6 were bona fide subsequent purchasers for value without notice or not."
117. The Supreme Court in the case of K.S.VIDYANADAM AND OTHERS vs VAIRAVAN [AIR 1997 SC 1751] has held as under: -
"9. Article 54 of the Limitation Act prescribes three years as the period within which a suit for specific performance can be filed. The period of three years is to be calculated from the date specified in the agreement for performance or in the absence of any such stipulation, within three years from the date the performance was refused.
10. It has been consistently held by the courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 two circumstances, it does not follow that any and every suit for specific performance of the agreement [which does not provide specifically that time is of the essence of the contract] should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time- limits prescribed by the parties in the agreement have no significance or value and that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time- limits specified in the agreement have no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the court by both Sections 10 and 20. As held by a Constitution Bench of this Court in Chand Rani v. Kamal Rani , "it is clear that in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not of the essence of the contract, the court may infer that it is to be performed in a reasonable time if the conditions are (evident?): (1) from the express terms of the contract; (2) from the nature of the property; and (3) from the surrounding circumstances, for example, the object of making the contract". In other words, the court should look at all the relevant circumstances including the time-limits specified in the agreement and determine whether its discretion to grant specific performance should be exercised. Now in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973*.
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015
11. ...... Indeed, we are inclined to think that the rigor of the rule evolved by courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were stable and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban immovable properties. It is high time, we do so. learned Counsel for the plaintiff says that when the parties entered into the contract, they knew that prices are rising; hence, he says, rise in prices cannot be a ground for denying specific performance. May be, the parties knew of the said circumstance but they have also specified six months as the period within which the transaction should be completed. The said time- limit may no amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time-limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that where time is not made the essence of the contract, all stipulations of time provided in the contract have no significance or meaning or that they are as good as nonexistent? All this only means that while exercising its discretion, the court should also bear in mind that when the parties prescribe certain time-limits for taking steps by one or the other party, it must have some significance and that the said time-limits cannot be ignored altogether on the ground that time has not been made the essence of the contract [relating to immovable properties].
118. The Apex Court in the case of MADEMSETTY SATYANARAYANA V. YELLOJI RAO [AIR 1965 SC 1405], held as under : -
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 "As Article 113 of the Limitation Act prescribes a period of 3 years from the dated fixed thereunder for specific performance of a contract, it follows that mere delay without more extending up to the said period cannot possibly be a reason for a court to exercise its discretion against giving a relief of specific performance. Nor can the scope of the discretion, after excluding the cases mentioned in Section 22 of the Specific Relief Act, be confined to waiver, abandonment or estoppel. If one of these three circumstances is established, no question of discretion arises, for either there will be no subsisting right or there will be a bar against the assertion. So, there must be some discretionary field unoccupied by the three cases, otherwise the substantive section becomes otiose. It is really difficult to define that field. Diverse situation may arise which may induce a court not to exercise the discretion in favour of the plaintiff. It may better be left undefined except to state what the section says, namely, discretion of the court is not arbitrary but sound and reasonably guided by judicial principles and capable of correction by a court of appeal.
[emphasis supplied] Subba Rao, J., speaking for the Bench, pointed out the distinction between Indian Law and the English Law on the subject and stated the conclusion in the following words: "While in England, mere delay or laches may be a ground for refusing to give a relief of specific performance, in India mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant does not empower a court to refuse such a relief.... It is not possible or desirable to lay down the
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 circumstances under which a court can exercise its discretion against the plaintiff. But they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendants to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief."
13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2½ years in clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices - according to the defendants, three times - between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff."
119. From the aforesaid judgment of the Apex Court it is clear that, in the case of sale of immovable property there is no presumption as to time being the essence of the contract. Even if it is not the essence of the contract, the Court may infer that it is to be performed within a reasonable time, if the conditions are evident from the express terms of the contract, from the nature of the property and from the surrounding circumstances. For example, the object of making the contract. In other words, the Court should look at all the relevant circumstances including the time-limits specified in the agreement and
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 determine whether its discretion to grant specific performance should be exercised. One such fact which the Courts should take note of is that in the case of urban properties in India, it is well-known that their prices have been going up sharply over the last few decades - particularly after 1973. This rule that the time is not the essence of the contract in the case of immovable properties was evolved in times when prices and values were stable and inflation was unknown. The same requires to be relaxed, if not modified, particularly in the case of urban immovable properties. Where time is not the essence of the contract, but still when stipulations of time is provided in the contract, the significance or meaning of such stipulation as to time cannot be completely ignored. The Court while exercising the discretion should also bear in mind that when the parties prescribe certain time limits for taking steps by one or the other party, it must have some significance and that the said time limits cannot be ignored altogether on the ground that time has not been made the essence of the contract. While in England, mere delay or laches may be a ground for refusing to give a relief of specific performance, in India mere delay without such conduct on the part of the plaintiff as would cause prejudice to the defendant does not empower a Court to refuse such a relief. If the conduct or neglect of the plaintiff is directly responsible in inducing the defendants to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief, the Court will be well within its jurisdiction to refuse specific performance.
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015
120. In the instant case, the agreement stipulates 6 months as the period of stipulation. According to the parties it was reduced to 3 months by way of correction. Subsequently, 3 months has been made 13 months by way of interpolation. As is clear from the terms of the agreement, out of the sale consideration of Rs.3,47,100/-, Rs.75,000/- was paid under the agreement according to the first defendant. According to the plaintiff Rs.1,75,000/- was paid. According to the interpolated term, Rs.1,00,000/- has to be paid within 13 months and the balance amount is to be paid within 3 months. As is clear from the terms of the agreement, there is no corresponding obligation which is to be performed by the first defendant before the plaintiff pays the balance consideration agreed upon. Within the time stipulated plaintiff has not pointed out to the defendant No.1 what is the obligation she was expected to perform so that the plaintiff could pay the balance consideration and obtain a sale deed. In the evidence an attempt is made to contend that, in the agreement of sale it is mentioned that the balance consideration was payable only after the property is surveyed and the sale deed is to be executed. There is no such recital in the sale deed. On the contrary, the recital is, it is the responsibility of the first defendant to get the measurement of the property done and boundaries fixed. She has already handed over xerox copies of all the documents of title. The said survey and fixing the boundary was not a condition precedent for the plaintiff to pay the balance sale consideration as contended. Therefore, the plaintiff ought to have paid the balance consideration according to them within 13 months, according to the first
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 defendant within 3 months. However, the plaintiff has not paid the amount even according to his own case. It is because he did not possess the requisite money, he agreed to the cancellation of the sale deed. Consequently, the first defendant sold the property and from the consideration received the first defendant instead of forfeiting the amount has returned Rs.75,000/- received under the agreement of sale to the plaintiff. It is in this context, if really the plaintiff has paid Rs.1,75,000/- as contended by them and was ready and willing to pay the balance amount of Rs.1,72,100/- within 13 months and if the defendant has not come forward to execute the sale deed, though time is not the essence of the contract, the suit for specific performance ought to have filed within a reasonable time. It is here for nearly two long years the plaintiff has not raised his little finger. There is no demand in writing. As set out earlier, there is no material placed on record to show that he was ready with the balance sale consideration. The plaintiff has chosen to file the suit few days prior to the expiry of the period of limitation. In that context, it is not a case of mere delay, it is a case of total inaction on the part of the plaintiff for two years in clear violation of the terms of the agreement which required him to pay the balance consideration and then ask for execution of the sale deed. Further, as the plaintiff was badly in need of money after cancelling the agreement of sale, she has proceeded to sell the property to defendants 2 to 4. They have purchased the property for a valuable consideration. The second defendant has purchased it on the assumption that the suit agreement is cancelled. In so far as defendants
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 3 and 4 are concerned, they are not aware of the agreement of sale at all. As the defendants 2 to 4 have purchased the schedule property for valuable consideration and have taken possession of the property and have invested money for its improvement coupled with the fact that the mutation entries are made in their name, they are paying taxes, the delay in filing the suit has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff. Moreover, when the plaintiff has not come to the Court with clean hands, he has interpolated the material terms of the agreement of sale, certainly such conduct disentitles the plaintiff from invoking the discretionary relief of specific performance at the hands of this Court."
14.4 In the instant case, as stated supra, the plaintiff did not pay the balance sale consideration as per the time lines fixed under the Agreement executed in her favour; as per the Agreement, the entire sale consideration was to be paid by 15.07.2002 and having not paid the said amount,the plaintiff was clearly not ready and willing to perform her part of the contract.
14.5 According to the plaintiff, since various obligations were cast upon the 1st defendant including getting the khata in her name, constructing the boundary wall etc., non-payment of the balance sale consideration cannot be held against the plaintiff in relation to her readiness and willingness to perform her part of the contract; in
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 my considered opinion, apart from the fact that there are certain obligations cast upon the 1st defendant under the Agreement, the contractual and statutory obligations cast upon the plaintiff to aver and prove her readiness and willingness under Section 16(c) of the Specific Relief Act cannot be dispensed with or stand obviated on account of non-performance of certain obligations by the 1 st defendant; further , the tax paid receipt at Ex.D2 dated 28.11.2001, the khata extract at Ex.D3 for the year 2001-02, the demand register extracts at Exs.D4 and D5 for the said period are sufficient to come to the conclusion that the khata of the suit schedule property had been made out in the name of the 1st defendant in 2001-02 itself and no reliance can be placed upon the said recital in the sale agreement by the plaintiff to contend that she was ready and willing to perform her part of the contract.
14.6 The material on record also discloses that from 01.03.2002 up to 10.12.2004, when the plaintiff got issued a Lawyer's notice to the 1 st defendant, there was complete and total inaction and silence on the part of the plaintiff to perform her part of the contract; in other words, the long and total inaction, delay and latches on the part of the plaintiff to perform her part of the contract for more than 2 years 9 months is also yet another circumstance
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 pointing to the absence of readiness and willingness on the part of the plaintiff to perform her part of the contract.
14.7 The plaintiff contends that she had established her readiness and willing by purchasing a demand draft on 04.12.2004 for the balance sum of Rs.5 lakhs payable to the 1st defendant. In this regard, it is relevant to state that though the said demand draft was purchased on 04.12.2004 by the plaintiff who got issued the legal notice on 10.12.2004 which was received by the 1 st defendant only on 13.12.2004, the said demand draft for Rs.5 lakhs was not encashed or sent by the plaintiff to the 1 st defendant along with the legal notice; on the other hand , on 12.12.2004 itself, the plaintiff got the said demand draft cancelled which is sufficient to come to the conclusion that the plaintiff was not ready and willing to perform her part of the contract and her contention in this regard is liable to be rejected.
14.8 In order to establish readiness to pay the balance sale consideration, plaintiff placed reliance upon Exs.P5 and P6 - Bank statements for the month of January 2005; in this regard, it is relevant to state that except showing some amounts available in the account of the plaintiff in the month of January 2005 when the suit was filed, the plaintiff has not placed any legal or acceptable
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 evidence to establish either availability of funds from 01.02.2002 upto December 2004 and also for the period subsequent to January 2005; to put it differently, the plaintiff having failed to establish her continuous readiness and willingness to perform her part of the contract from the date of the Agreement onwards, the trial court clearly committed an error in holding that she was ready and willing to perform her part of the contract andthe said finding being contrary to the material on record, deserves to be set aside.
14.9 A perusal of the impugned judgment and decree will indicate that the trial court has failed to consider and appreciate that the facts and circumstances obtaining in the instant case including the conduct of the plaintiff was sufficient to come to the conclusion that she was not entitled to discretionary and equitable relief of specific performance as contemplated under Section 20 of the Specific Relief Act; as stated supra, apart from the fact that the plaintiff was not ready and willing to perform her part of the contract, the long, unexplained and inordinate delay and latches on her part in not taking any steps from 01.02.2002 till she issued the legal notice on 10.12.2004 to the 1st defendant is sufficient to come to the unmistakable conclusion that she was not entitled to the relief
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 of Specific performance in the instant case and her claim in this regard was liable to be rejected.
14.10 The material on record also discloses that in the first instance, the plaintiff did not implead the 2 nd defendant as a party to the suit and she was impleaded subsequently pursuant to which, the plaintiff amended the plaint and challenged the sale deed dated 06.10.2004 executed by the 1st defendant in favour of 2 nd defendant prior to institution of the suit on 19.01.2005. As stated herein before, I have already come to the conclusion that the plaintiff was not ready and willing to perform her part of the contract and her conduct as well as the long, unexplained and inordinate delay and latches on her part disentitles her from the equitable and discretionary relief of Specific performance. It follows there from that plaintiff also does not have any locus standi to challenge the sale deed dated 06.10.2004 executed by the 1 st defendant in favour of the 2nd defendant in respect of the suit schedule property; in other words, once the claim for Specific performance sought for by the plaintiff is rejected, the question of considering the remaining prayers in relation to challenging the sale deed dated 06.10.2004 by the 1st defendant in favour of 2nd defendant would not arise and the same would also have to consequently rejected. In addition
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 thereto, the bald pleadings and insufficient evidence of the plaintiff in this regard has not been properly considered by the trial court resulting in erroneous conclusion; it cannot be gainsaid that the pleadings of the plaintiff at paragraph-11A of the amended plaint are bereft of necessary and material particulars and without there being any evidence in this regard, the trial court clearly erred in answering additional issue No.1 in favour of the plaintiff. Under these circumstances, I am of the considered opinion that the trial court clearly erred in recording findings based on surmises and conjectures warranting interference in the present appeals.
Point No.1 is answered accordingly in favour of the appellants and the findings recorded by the trial court on issues 1 to 3, issues 6 to 8 and additional issue No.1 are hereby set aside and the claim of the plaintiff stands rejected.
Re-Point No.2:-
15. The appellant in RFA No. 1059/2015 is undisputedly a pre-suit purchaser of the suit schedule property vide the registered sale deed dated 06.10.2004. According to the plaintiff, the said sale deed is a sham and nominal document and 2 nd defendant was aware and had knowledge about the sale Agreement dated
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 22.11.2001 executed in favour of the plaintiff before the sale deed was executed in favour of 2nd defendant; per contra, 2nd defendant contends that she was a bonafide purchaser for value without notice of the earlier agreement. In the impugned judgment and decree, the trial court upheld the claim of the plaintiff and rejected the claim of the 2nd defendant on the sole ground that the brother of 1st defendant examined as DW-2 (Mohammed Ghiase) admitted in his cross-examination that he had informed 2 nd defendant about the sale agreement. In my considered opinion, the said stray / solitary admission in the cross-examination of DW-2 could not have been made the basis to come to the conclusion that the 2 nd defendant was not a bonafide purchaser for value without notice as contemplated under Section 19 of the Specific Relief Act for the following reasons:-
(a) The sale Agreement dated 22.11.2011 is an unregistered agreement, which is not reflected in any public record;
(b) The suit schedule property was a vacant site with there being no indication regarding existence or execution of the sale agreement in favour of the plaintiff;
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015
(c) Undisputedly, the plaintiff was not put in possession or enjoyment of the suit schedule property under the sale agreement and in the absence of the same, knowledge about the sale agreement cannot be imputed or attributed to the 2nd defendant before he purchased the suit schedule property.
(d) The contention of the plaintiff that she put up a compound wall to the suit schedule property is also not substantiated by pleadings and evidence and the findings recorded by the trial Court in this regard is clearly contrary to the material on record.
(e) The name of plaintiff or her connection / relationship with the suit schedule property on the basis of the sale agreement is not forthcoming in any document prior to the sale deed dated 06.10.2004 executed in favour of 2 nd defendant.
(f) The suit schedule property stood in the name of the 1 st defendant in revenue records, khata etc., prior to the sale deed in favour of the 2nd defendant who was handed over
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 custody of the original title deeds, documents etc., in relation to the suit schedule property.
(g) Except for a stray / solitary admission in the cross-
examination of DW-2, no other material is placed by the plaintiff to impute / attribute knowledge of the sale agreement to 2nd defendant prior to her purchasing the suit schedule property on 06.10.2004, much before the suit was instituted on 19.01.2005; on the other hand, the plaintiff did not exercise due diligence in making necessary enquiries nor producing encumbrance certificate along with the plaint which would have clearly disclosed the sale deed in favour of the 2nd defendant which not only demonstrates the mischievous conduct of the plaintiff who was guilty of suppression of material facts.
(h) The cumulative effect of the pleadings and evidence of the parties lead to the sole inference that 2 nd defendant was a bonafide purchaser for value of the suit schedule property without notice of the sale agreement dated 22.11.2001 in favour of plaintiff.
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 15.1 As stated supra, the Trial Court clearly misdirected itself in answering additional issue No.3 against the 2 nd defendant by improper and erroneous appreciation of the material on record warranting interference by this Court in the present appeals.Under these circumstances, I am of the view that the findings recorded by the trial court on additional issue No.3 are perverse and contrary to the material on record and the same deserves to be set aside.
Point No.2 is accordingly answered against the plaintiff and in favour of the 2nd defendant.
Re-Point No.3:-
16. A perusal of the impugned judgment and decree will indicate that additional issue No.2 with regard to limitation has been held in favour of the plaintiff by the Trial Court; in view of the findings recorded by me while dealing with Point Nos.1 and 2 supra, which have been answered against the plaintiff, the issue regarding limitation does not survive for consideration in the present appeals. As stated earlier, the findings recorded by the trial Court on issues 1 to 3, 6 to 8 and additional issues 1 and 3 have been set aside in the present appeals while dealing with Points 1 and 2 supra. Consequently, it has to be held that the plaintiff would
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015 not be entitled to any of the reliefs sought for by her in the suit. To reiterate, the impugned judgment and decree passed by the Trial Court upholding the claim of the plaintiff and rejecting the defence of the defendants is clearly capricious, perverse and contrary to the material on record warranting interference in the present appeals.
16.1 Under these circumstances, upon re-appreciation, re-
evaluation and re-consideration of the material on record, I am of the considered opinion that the impugned judgment and decree passed by the Trial Court deserves to be set aside and the suit of the plaintiff is liable to be dismissed.
Point No.3 is accordingly answered against the plaintiff and in favour of the defendants.
17. In so far as the remaining judgments relied upon by all the parties, in view of the findings recorded by me herein before which arise out of the facts and circumstances of the instant case, the said judgments would not be applicable to the case on hand and the same are not elaborately dealt with in this judgment.
18. In the result, I pass the following: -
ORDER
(i) Both the appeals are hereby allowed.
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NC: 2024:KHC:3178 RFA No. 1059 of 2015 C/W RFA No. 1057 of 2015
(ii) The impugned judgment and decree dated 30.06.2015 passed in O.S.No.594/2005 is hereby set aside.
(iii) The suit of the plaintiff is hereby dismissed.
(Sd/-) JUDGE Srl.