Madras High Court
V.Raveendran vs Capt.S.K.Joshua on 25 April, 2014
Author: R.S.Ramanathan
Bench: R.S.Ramanathan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 25.04.2014 CORAM : THE HONOURABLE MR.JUSTICE R.S.RAMANATHAN A.S.No.26 of 2005 and CMP No.724 of 2013 1.V.Raveendran 2.I.V.Reddy 3.I.Damodara Reddy 4.M.Hymavathi : Appellants/Plaintiffs Vs. 1.Capt.S.K.Joshua 2.T.K.Singaram 3.Jayathilakam : Respondents/Defendants Appeal Suit filed under Section 96 of CPC against the Judgment and decree, dated 26.06.2003 passed in Original Suit No.6689 of 1996 on the file of the III Additional City Civil Court, Chennai. For Appellants : Mr.P.Ranganatha Reddy for M/s.King & Partridge For 3rd Respondent : Mrs.Chitra Sampath Senior Counsel for Mr.T.S.Baskaran For R1 and R2 : No appearance JUDGMENT
The plaintiffs in O.S.No.6689 of 1996 on the file of the III Additional City Civil Court, Chennai, are the appellants.
2.The plaintiffs filed the suit for specific performance of agreement of sale and that suit was dismissed and aggrieved by the same, the Appeal Suit is filed by the plaintiffs/appellants.
3.The case of the plaintiffs/appellants is as follows:-
The plaintiffs 1 and 2 and the husband of the 4th plaintiff are the employees of Indian Bank and on seeing the advertisement in 'THE HINDU' given by the first defendant, offering the suit property for sale at Rs.1.40 lakhs per ground, the plaintiffs approached the first defendant and expressed their willingness to purchase the suit property and the first defendant also informed that he was the owner of the suit property and there was no encumbrance and the plaintiffs informed that they would get loan from the Indian Bank Housing Finance for purchasing the suit property and that was also agreed by the first defendant and the first defendant gave necessary documents for applying loan for the plaintiffs to pay the sale consideration. The sale consideration for the suit property was fixed at Rs.3,10,000/- and Rs.60,000/- was paid as advance and an agreement of sale was entered into between the plaintiffs and the first defendant on 15.06.1988. The first defendant informed that he was the owner of the suit property and he purchased the same under a registered sale deed, dated 06.12.1982 from T.K.Singaram, Ravi Chandrika Badrinath and Jayanthi Prabhakaran and also gave the copy of the sale deed, dated 06.12.1982 in favour of the plaintiffs. He also informed that his vendors had handed over 1654 sq. meters of land to the Director of Land Ceiling Authorities and there was no problem for registering the sale deed and there was no prohibition under the Tamil Nadu Urban Land (Ceiling and Regulation) Act, for conveying the good title. After the agreement was entered into, the plaintiffs applied to the Corporation for sub-division of the suit property and for building permission and they were informed that clearance from the Urban Land Ceiling Authorities were not obtained and one Sri Gabriel Kuriakose purchased adjacent land to an extent of 2 grounds 600 sq. feet from the first defendant and he applied for planning permission and that planning permission was not approved as clearance from the Urban Land Ceiling Authorities was not obtained and therefore, the plaintiffs approached the first defendant to get the clearance from the Urban Land Ceiling Authorities. The first defendant agreed and also made an endorsement in the agreement of sale deed, dated 15.06.1988 stating that the time for completing the contract is extended for a further period of one month from the date of obtaining clearance from the Urban Land Ceiling Authorities and thereafter, no steps were taken and the plaintiffs sent a notice, dated 10.02.1989 requesting the first defendant to get the Clearance Certificate from the Urban Land Ceiling Authorities and at that time, the first defendant sent a reply stating that he never agreed to get clearance from the Urban Land Ceiling Authorities and he agreed to get the clearance from the Urban Land Tax Authorities and that was stated in the endorsement also. The first defendant also informed the plaintiffs that the 2nd defendant, one of the vendors of the first defendant, filed W.P.No.2553 of 1981 claiming exemption from the Urban Land Ceiling Authorities and that writ petition was dismissed, he filed WA No.591 of 1989 and that was pending in the High Court and informed that exemption or clearance certificate would be obtained and also shows the letter issued by the Urban Land Ceiling Authorities addressed to the Assistant Executive Engineer, Corporation of Chennai in that regard. The plaintiffs sent another notice, dated 05.04.1989 to the first defendant requesting him to get clearance certificate from the Urban Land Ceiling Authorities, but the first defendant sent a letter, dated 02.05.1989 cancelling the agreement of sale. Therefore, the plaintiffs filed a suit for specific performance of agreement of sale against the first defendant and also against the 2nd defendant directing the 2nd defendant by way of mandatory injunction to confirm that he surrendered the land declaring as surplus to the Urban Land Ceiling Authorities and to confirm that the suit property was excluded from the Urban Land Ceiling. Later, the plaintiffs came to know that the first defendant sold the suit property to the 3rd defendant. Therefore, the plaint was amended by impleading the 3rd defendant and contended that 3rd defendant was not a bona fide purchaser for value and in collusion with the first defendant, a sale deed has been created, as if the suit property was sold to the 3rd defendant and the sale deed in favour of the 3rd defendant was a sham and nominal one and therefore, directed the 3rd defendant, who claimed to be in possession of the suit property pursuant to the sale deed, to deliver the possession of the suit property.
4.The first defendant filed a statement admitting the agreement of sale, but denied the allegation that the plaintiffs were ready and willing to pay the balance sale consideration within the stipulated period. He also raised a plea that there was no agreement to get the clearance certificate from the Urban Land Ceiling Authorities and even as per the endorsement, he agreed to get exemption from Urban Land Tax Authorities. He sent reply notice, dated 19.02.1989 and 27.03.1989 requesting the plaintiffs to pay the balance sale consideration and get the document registered, but the plaintiffs were not ready and willing and by their letter, dated 05.04.1989, they raised untenable contentions and therefore, he sent a letter, dated 02.05.1989 cancelling the agreement and thereupon, sold the suit property for a sale consideration to the 3rd defendant. He reiterated that he never agreed to get the Urban Land Clearance Certificate and the allegation to that effect raised in the plaint are false and denied. He also denied the allegation that the endorsement was made in the agreement, extending the time by one month after getting the Urban Land Clearance Certificate and there was no provision under the Tamil Nadu Urban Land Ceiling Act, for getting any clearance certificate and he also denied the allegation that the plaintiffs insisted the first defendant to get the clearance certificate from the Urban Land Ceiling Authorities. According to him, the reference to the word 'ULT' in the endorsement made in the agreement of sale would only means the 'Urban Land Tax Clearance' and it did not mean 'Urban Land Tax' as now contended by the plaintiffs and he also stated that there was no consensus between the parties with respect to clearance from the Urban Land Ceiling Authorities and that was also made clear in the reply notice, dated 19.02.1989. He further stated that time was the essence of the contract and the plaintiffs did not come forward to complete the sale, by paying the balance sale consideration within the time stipulated as per the agreement and also as per the endorsement and that would show that they were not ready and willing to perform their part of contract. Therefore, he cancelled the agreement, namely, dated 02.05.1989 and hence, the plaintiffs are not entitled to the relief of specific performance.
5.The 2nd defendant filed a statement stating that there was no privity of contract between the plaintiffs and him and he was not a party to the agreement of sale between the first plaintiff and the first defendant and therefore, there was no cause of action to file a suit against him. He admitted the filing of W.P.No.2553 of 1981 and W.A.No.591 of 1988 to vindicate his right under the provision of Tamil Nadu Urban Land Ceiling Act and the plaintiffs have no locus standi to question the same. He further contended that he conveyed the suit property validly in favour of the first defendant and the plaintiffs cannot question the sale deed executed by him in favour of the first defendant and therefore, the suit is liable to be dismissed as against him.
6.The 3rd defendant filed a statement stating that she was not aware of the agreement of sale entered into between the plaintiffs and the first defendant, dated 15.06.1988 and she was the bona fide purchaser for value and there was no litigation pending between the plaintiffs and the defendants 1 and 2, when she purchased the suit property and only after receiving notice in the impleading application, she made enquiries with the first defendant and she was informed about the earlier agreement of sale and the cancellation of the agreement by the first defendant and as the plaintiffs committed the breach of contract, her sale cannot be challenged. She also contended that prior to her purchase, she verified the encumbrance and ascertained the marketable title of the vendor, namely the first defendant and thereafter, purchased the suit property and she also made enquiries with the Registrar's office regarding the guideline value of the suit property and thereafter purchased the suit property for Rs.1,80,000/- and she purchased the suit property after obtaining the legal opinion with regard to the marketable title. She also stated that she was not aware of the surrender of a part of the suit property by the 2nd defendant to the Urban Land Ceiling Authorities. The plaintiffs were put to strict proof of the same. She also denied various correspondences between the plaintiffs and the first defendant and exchanges of notices between the plaintiffs and the first defendant. She also denied the allegation of collusion between her and the first defendant and she purchased the suit property after knowing the legal consequences arising out of the agreement of sale between the plaintiffs and the first defendant. She also denied the allegation that the sale deed in her favour is a sham and nominal one. She further contended that she invested more than Rs.5,00,000/- to Rs.6,00,000/- and developed the suit property and therefore, she would put to serious hardship, if the suit is decreed in favour of the plaintiffs and the hardship that would be caused to the defendants, would certainly outweigh the benefits that may be accrued to the plaintiffs, if a decree for specific performance is granted in their favour. He, therefore, contended that she is the bona fide purchaser and that sale cannot be challenged by the plaintiffs.
7.On the basis of the pleadings, the following issues were framed by the trial court:-
1.Whether the plaintiffs were entitled to the relief of specific performance?
2.Whether the plaintiffs were ready and willing to act as per the agreement of sale, dated 15.06.1988?
3.Whether the cancellation of agreement by the first defendant is valid and binding on the plaintiffs?
4.Whether the plaintiffs are entitled to the relief of mandatory injunction against the 2nd defendant?
5.To what relief, the plaintiffs are entitled to?
8.The following additional issue was framed:-
(1)Whether the 3rd defendant is the bona fide purchaser for value?
9.On the side of the plaintiffs, the first plaintiff examined himself as PW1 and marked 10 documents and on the side of the defendants, the first defendant and the 3rd defendant were examined themselves as DW1 and DW2 and marked 15 documents.
10.The trial court tried the Issue Nos.2 and 3 and held that the plaintiffs were ready and willing to perform their part of contract and as per the endorsement, Ex.A2, the first defendant failed to get the certificate even under the Urban Land Tax Act and by reason of the non furnishing of the clearance certificate by the first defendant from the Urban Land Tax Authorities, the plaintiffs were not able to proceed with the sale and the plaintiffs also proved their bona fide by depositing the sale consideration into the court and latter, withdrew the same and having regard to the endorsement Ex.A2, by which the time was extended by one month from the date of obtaining clearance from the Urban Land Tax Authorities, the parties made it clear that the time was not the essence of the contract and by reason of the failure of the first defendant in not furnishing the Urban Land Tax Clearance Certificate, the delay was caused and the plaintiffs proved their means and were ready and willing to performance their part of contract and therefore, the cancellation of the agreement by the first defendant was not valid and binding on the plaintiffs and answered the Issues 2 and 3 in favour of the plaintiffs.
11.Additional Issue No.1 was answered in favour of the 3rd defendant holding that the 3rd defendant was the bona fide purchaser for value and merely because, the 3rd defendant had agreed to purchase the suit property for a lesser sale consideration, it cannot be contended that the she is not the bona fide purchaser for value and considering the provisions of the Urban Land Ceiling Act and the cancellation of the agreement and the 3rd defendant also leveled the properties by spending huge amount, there were sufficient reasons for the lesser price and there was no proof that the 3rd defendant was aware of the earlier agreement of sale and therefore, the 3rd defendant was a bona fide purchaser for value and answered the issue in favour of the 3rd defendant.
12.Issue Nos.3 and 4 were answered holding that the relief of mandatory injunction sought for against the 2nd defendant was untenable and the plaintiffs are not entitled to the relief.
13.Issue No.1 was answered holding that while answering Issue Nos.2 and 3, it was held that the plaintiffs were entitled to the relief of specific performance of agreement and the cancellation of the agreement, dated 15.06.1988 was not valid and binding on the plaintiffs, but having regard to the answer given to the Issue No.3 that the 3rd defendant was the bona fide purchaser for value, the plaintiffs are not entitled to the relief of specific performance and they are entitled to get refund of advance of Rs.60,000/- with interest at 18% p.a. from 02.05.1989 and ultimately, the suit was decreed directing the first defendant to pay a sum of Rs.60,000/- with interest at the rate of 18% p.a. from 02.05.1989 to the plaintiffs and the relief of specific performance was denied. Aggrieved by the same, the Appeal Suit is filed by the plaintiffs.
14.Mr.P.Ranganatha Reddy, the learned counsel for the appellants submitted that the trial court having answered the Issue Nos.2 and 3 in favour of the plaintiffs/appellants that the plaintiffs were willing and ready to perform their part of contract and the cancellation of agreement of sale by the first defendant was not valid and not binding on the plaintiffs/appellants, ought to have granted the relief of specific performance and erred in denying the relief holding that the 3rd defendant was the bona fide purchaser for value.
15.He further submitted that the trial court erred in holding that the 3rd defendant was the bona fide purchaser for value, without properly appreciating the pleadings and evidence. He also submitted that admittedly, the first defendant offered to sell the property by issuing advertisement in 'THE HINDU' quoting the price of Rs.1,40,000/- per ground and the suit property is having an extent of 2 grounds and 600 sq. feet and the plaintiffs agreed to purchase the suit property for a sum of Rs.3,10,000/- and entered into an agreement of sale, dated 15.06.1985 and also paid an advance of Rs.60,000/- and after the cancellation of agreement by the first defendant, he sold the suit property for a sum of Rs.1,80,000/- to the 3rd defendant and that would also prove that the sale in favour of the 3rd defendant was a sham and nominal document and in collusion with the 3rd defendant and the sale deed in favour of the 3rd defendant must have been created to defeat the rights of the plaintiffs and these aspects were not properly appreciated by the trial court. He, therefore, submitted that once the property was sold for a lesser price, than the price agreed with the plaintiffs and the 3rd defendant failed to prove that she was not aware of the earlier proceedings, the 3rd defendant cannot claim to be a bona fide purchaser.
16.He also submitted that having regard to the specific averment made in the plaint and in the absence of specific denial in the written statement by the 1st defendant, the 3rd defendant could not claim that she was a bona fide purchaser for value. He also submitted that the 3rd defendant did not come forward to explain the reason for purchasing the suit property for a lesser price and the first defendant also did not come forward to explain for selling the suit property for a lesser price, than agreed with the plaintiffs and in the absence of any explanation given by the defendants, the trial court ought to have held that the 3rd defendant was not the bona fide purchaser for value, but instead of holding the same, the trial court made a specific pleading and justified the sale for a lesser price by giving reasons, which were not pleaded by the defendants 1 to 3. He also submitted that the 3rd defendant also failed to prove that she spent more money to develop the suit property, after the suit was filed. He also submitted that the 3rd defendant claimed that after obtaining legal opinion, she purchased the suit property and she has stated that she obtained the sale from the real owner. He also submitted that the 3rd defendant did not deny the allegation regarding the collusion made in the plaint and the 3rd defendant also admitted in the written statement that she was aware of the earlier agreement of sale, as she was informed by the first defendant in para 10 of the written statement and that would also prove that she was not a bona fide purchaser for value.
17.The learned counsel further submitted that 3rd respondent/3rd defendant is not entitled to challenge the finding given in respect of Issue Nos.2 and 3, as she failed to file the cross appeal or appeal against the finding given by the trial court in respect of the Issue Nos.2 and 3 and contended that the trial court erred in holding that the plaintiffs were ready and willing to perform their part of contract and the cancellation of the agreement by the first defendant was not valid and she is bound by the said finding in the absence of any cross appeal and therefore, submitted that Appeal Suit is liable to be allowed.
18.The learned counsel for the appellants relied upon the following judgments:-
1.(2003)9 SCC 606, in the case of Banarsi and others vs. Ram Phal.
2.2013(1)CTC 409 in the case of Hardevinder Singh Vs. Paramjit Singh.
in support of his contention that the 3rd defendant cannot question the finding given in respect of Issue Nos.2 and 3 in favour of the appellants holding that the appellants were ready and willing perform their part of contract and the cancellation of agreement was not valid, without filing cross appeal or cross objection as per Order 41 Rule 22 CPC.
19.He also contended that the 3rd defendant also cannot take advantage of the Order 41 Rule 33 CPC, in the absence of any cross objection or appeal against the findings given in respect of Issue Nos.2 and 3. He also relied upon the following judgments in support of his contention.
1.AIR 1970 SC 946 in the case of Nathulal vs. Phoolchand.
2.1950 PC 90 in the case of Bank of India vs. Jamsetji A.H. Chinoy and company.
3.2004(4)LW 558 in the case of Archean Granites Pvt. Ltd vs. PRS Benefit Fund Limited.
4.(1973)3 SCC 418 in the case of Dr.Govinddas and another vs. Shrimati Shantibai & others.
in support of his contention that the 3rd defendant cannot be considered as a bona fide purchaser for value, considering the fact that she purchased the property for a lesser price.
20.He also relied upon the judgment reported in (1996)2 MLJ 267 in the case of Ramasami vs Krishnasamy alias Krishnan & others, for the proposition that the sale deed in favour of the 3rd defendant was a sham and nominal document and in the absence of any pleading, no evidence can be let in and for the proposition relied upon the judgment reported in AIR 2009 SC 1103 : 2009(2)LW 485 in the case of Bacchhaj Nahar vs. Nilima Mandal and others and also relied upon the judgment reported in (1990)3 SCC 374 in the case of Othayath Lekshmy Amma and others vs. Nellachinkuniyil Govindan Nair & others, for the proposition that the 3rd defendant was not the bona fide purchaser for value.
21.On the other hand, the learned Senior counsel for the 3rd respondent/3rd defendant, Mrs.Chitra Sampath submitted that as per the provision of Order 41 Rule 22 CPC the 3rd defendant is entitled to canvass all the points. Even as per the judgment of the Hon'ble Supreme Court in the judgment reported in (2003)9 SCC 606, in the case of Banarsi and others vs. Ram Phal, the 3rd defendant is entitled to canvass the correctness of the findings in respect of Issue Nos.2 and 3 as the suit was dismissed and there was no adverse decree against the 3rd defendant and the adverse finding was only given against the defendants 1 and 2 and even a subsequent purchaser is entitled to take the plea that the plaintiffs were not ready and willing to perform their part of the contract. She further submitted that even according to the plaintiffs, the sale could not be completed for want of clearance from the Urban Land Ceiling Authorities and as per the provisions of Urban Land Ceiling Act, when any property was agreed to be conveyed and the said property was found to be an excess land, any agreement to convey the property is void under the Act and therefore, such void agreement cannot be enforced and relied upon the judgment of the Hon'ble Supreme Court reported in 2007(2)CTC 618 in the case of P.Gopirathnam and others vs. Ferrodous Estate (Pvt) Ltd., rep. by its Power of Attorney Holder, Sri M.Haja Nazamudeen and (2011)8 SCC 601 in the case of Coromandel Indag Protects Private Limited vs. Garuda Chit and trading Company Private Limited and another.
22.She further contended that in the written statement filed by the 3rd defendant, she specifically pleaded that she was not aware of any agreement of sale and she was informed about the earlier agreement of sale only when she was sought to be impleaded and thereafter, she made enquiries with the first defendant and earlier to that, she was not informed about the agreement of sale and the initial burden was on the plaintiffs to prove that the subsequent purchaser was having notice and that was not proved by the plaintiffs and therefore, the plaintiffs are not entitled to canvass and contend that the 3rd defendant was not a bona fide purchaser for value. She also submitted that adequacy of consideration and lesser consideration cannot be a ground to hold that the subsequent purchaser was not a purchaser for value and relied upon a judgment reported in 2008(3)CTC 1 in the case of P.Retnaswamy vs. A.Raja and another. She also relied upon the judgment reported in 2007-4-LW 51, in the case of S.Nazeer Ahmed vs. State Bank of Mysore and others, in support of her contention that under Order 41 Rule 33 CPC, even in the absence of any cross appeal or appeal, the court has got power to pass any decree that ought to have been passed by the trial court or granting any further decree as the case may be required.
23.She also relied upon a judgment reported in (2007)1 CTC 449 in the case of Jayalakshmi Ammal and 8 others vs. Chinnasamy Gounder, s/o.Manjini Gounder and another, (2010)6 CTC 652 in the case of Man Kaur (D) by Lrs. vs. Hartar Singh Sangha, 2010(6)CTC 901 in the case of J.P.Builders & Another vs. A.Ramadas Rao & another, 2003(1)CTC 355 in the case of Arunachala Mudaliar vs. Jayalakshmi Ammal and another, 2000(I)CTC 484 in the case of Nalluswamy Reddiar vs. Marammal and 5 others, 2011-1-LW 940 in the case of D.Kamalavathi Vs. P.Balasundaram (deceased) & others and 2011(3)CTC 205 in the case of S.Narayanappa vs. 1.Sampangi Ramayya and two others, in support of her contention that the plaintiffs failed to prove their readiness and willingness to perform their part of contract. She further contended that the fact that the plaintiffs were insisting the clearance from the Urban Land Ceiling Authorities and also prayed for mandatory injunction, directing the 2nd defendant to get clearance by surrendering the excess land, would only prove that the plaintiffs were not willing to purchase the suit property without any clearance certificate and therefore, when the plaintiffs insisted upon the execution of the sale, but subject to certain condition, it cannot be contended that the plaintiffs were ready and willing to perform their part of contract and hence, the trial court finding that the plaintiffs were ready and willing to perform their part of contract was erroneous and the same is liable to be set aside.
24.On the basis of the above submissions, the following points for consideration arise in this Appeal Suit.
1.Whether the 3rd defendant/3rd respondent is entitled to canvass the findings given by the trial court in respect of Issue Nos.2 and 3 holding that the plaintiffs were ready and willing to perform their part of contract and the cancellation by the first defendant was not valid, in the absence of filing any cross appeal or cross objection against the said finding under Order 41 Rule 22 CPC?
2.If answer given to the first point is in favour of the 3rd respondent/3rd defendant, whether the appellants were ready and wiling to perform their part of contract?
3.Whether the 3rd defendant was a bona fide purchaser for value?
25.To appreciate the contention of the learned counsel appearing for the appellants regarding the scope of Order 41 Rule 21 CPC, as per the Amendment Act, 1976, it is better to have a look at the provision of Order 41 Rule 22 CPC prior to 1976 and after 1996 and how the law was interpreted by the courts.
26.Order 41 Rule 22 CPC before 1976 (Amendment) and after 1976 (Amendment) is as follows:-
Order 41 Rule 22 Text as amended by Act 104 or 1976 (w.e.f. 1-2-1977) Text pre-amendment R.22. Upon hearing, respondent way object to decree as If he had preferred a separate appeal. - (1) Any respondent, though he may not have appealed from any part of the decree, may not only support the decree but may also state that , the finding against him in the Court below in respect of any issue ought to have been in his favour; and may also take any cross-objection] to the decree which he could have taken by way of appeal:
Provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice., of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow.
[Explanation. - A respondent aggrieved by a finding of the Court in the judgment on which the decree appealed against is based may, under this rule, file cross-objection in respect of die decree in so far as it is based on that finding, notwithstanding that by reason of the decision of the Court on any other finding which is sufficient for the decision of the suit, the decree, is, wholly or in part, in favour of that respondent.] R.22. Upon hearing, respondent may object to decree as if he had preferred a separate appeal -
(1) Any respondent, though he may not have appealed from any part of the decree, may not only support the decree on any of the grounds decided against him in the Court below, but take any cross-objection to the decree which he could have taken by . way of appeal, provided he has filed such objection in the Appellate Court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow.
(2) XX XX (2) XX XX (3) XX XX (3) XX XX (4) Where, in any case in which any respondent has under this rule filed a memorandum of objection, the original appeal is withdrawn or is dismissed for default, the objection so filled may nevertheless be heard and determined after such notice to the other parties as the Court thinks fit.
(4) Where, in any case in which any respondent has under this rule filed a memorandum of objection, the original appeal is withdrawn or is dismissed for default, the objection so filled may nevertheless be heard and determined after such notice to the other parties as the Court thinks fit.
27.The Full Bench of this court in the judgment reported in AIR 1943 MADRAS 698, [Venkata Rao vs. Satyanarayanamurthy] interpreted Order 41 Rule 22 CPC, as it was prior to the amendment of the year 1976 as follows:-
Whether under O.41 R.22, Civil Procedure Code, it is open to a defendant-respondent who has not taken any cross objections to the partial decree passed against him, to urge in opposition to the appeal of the plaintiff a contention which, if accepted by the trial court, would have necessitated the total dismissal of the suit?
28.Under Order 41 Rule 22 CPC, it is open to a defendant/respondent, who has not filed any cross objection to the partial decree passed against him to urge in opposition to the appeal of the plaintiff, a contention which if accepted by the trial court would have necessitated the total dismissal of the suit.
29.The fact in that reported case are as follows:-
The respondent filed a suit for recovery of Rs.1450.1.3, which they claimed to be due on a pro-note dated 27.01.1937 executed by the appellants. The case of the respondent was that the first appellant borrowed money on a pro-note on 12th December 1934 and borrowed a sum of Rs.3,000/-. On 27th January 1937, a sum of Rs.4359/- was found to be due on that pro-note. On that date, the first appellant repaid in cash Rs.3059/- and in respect of balance of Rs.1,300/-, he executed the suit pro-note and the appellant's two sons have also joined as defendants. The defence taken by the appellant was that the pro-note, dated 12.12.1934 really represented what was due in respect of the loan of Rs.2,000/- advanced in 1925. On 23th October 1929 the first appellant repaid a sum of Rs.1,900/- and by payment of another sum of Rs.3059/- on 27th January 1937, he repaid more than the double of the amount borrowed in the year 1925 and as per the provisions of Madras Agriculturists' Relief Act, nothing was due on him. The trial court held that the pro-note, dated 12.12.1934 represented a new cash transaction and also held that the payment of Rs.3059/- should be appropriated under section 9 of the Agriculturists' Relief Act and held that the plaintiffs/respondents were entitled to Rs.274-11-4 and passed a decree for that amount with interest. The plaintiff appealed to the Subordinate Court and the Subordinate Court reversed the decision of the District Munsif Court with regard to the appropriation of Rs.3059/- and held that the defendant cannot challenge the trial court finding that the pro-note, dated 12.12.1934 represented a new cash transaction, because they had neither appealed nor had they filed a memorandum of cross objection. The result was that the plaintiff's suit was decreed for the full amount of claim. The finding of the Subordinate Court held that the appellant cannot challenge the finding of the trial court that the pro-note, dated 12th December 1934 represented a new cash transaction, as the appellant neither appealed nor filed a cross objection, was challenged before the Full Bench and the following reference was made to the Full Bench.
Whether under Order 41 Rule 22, C.P.C it is open to a defendant-respondent who has not taken any cross objections to the partial decree passed against him, to urge in opposition to the appeal of the plaintiff a contention which, if accepted by the trial court, would have necessitated the total dismissal of the suit?
30.The then Hon'ble Chief Justice held that the defendants/appellants were not really attacking the decree and so far as they are concerned, the decree passed by the trial court must stand and they admit it. What they desired to do, however, was to demonstrate that the plaintiffs were not entitled to more than Rs.274-11-4 by showing that on a proper appreciation of the evidence, they ought not to have got anything at all and there is nothing in Order 41 Rule 22 CPC to prohibit them from doing so. It is open to the defendants to repel the plaintiff's case for an increased decree by showing that they were not really entitled to a decree at all and answered the reference in favour of the appellants. In that case, the Hon'ble Justice Krishnaswami Ayyangar, in his separate judgment, concurring with the Hon'ble Chief Justice, explained the provision of Order 41 Rule 22 CPC by giving an illustration as follows:-
14.Let us take a case where a plaintiff sues for a debt of, say Rs. 1,000, and the suit is contested by the defendant on two grounds, (i) discharge, and (ii) limitation. Let us assume that the trial Court dismisses the suit on the ground of limitation, while negativing the plea of discharge. The plaintiff in an appeal from that decree may be able to satisfy the appellate Court that the decision on the point of limitation is incorrect. In such an eventuality Order 41, Rule 22 enables the defendant to sustain the decree by making good the plea of discharge found against by the Court below. Let us however take a more complex case where the claim and defence are of the same character, as in the last illustration, but the trial Court gives a decree to the plaintiff for Rs. 600 only disallowing the claim for the balance on the ground of limitation. In essence the decree, as already explained, bears a double character. There is a decree for the plaintiff for Rs. 600 and a decree for the defendant in respect of the sum of Rs. 400 disallowed by the Court, because to that extent the decision was in his favour. When the matter is taken before the appellate Court by an appeal by the plaintiff in which, let us say, he asks for a decree for the balance of Rs. 400 disallowed by the Court below it is open to the defendant-respondent--that is what it seems to me the rule says--to support the disallowance of the claim to the extent of Rs. 400 by making good his plea of discharge which will avail him to that extent, and no more. In doing so he is only relying on a ground decided against him in the Court below, and this is precisely, what the rule permits. In other words, where there is a decree for a part only of a claim it means that it is partly in favour of the plaintiff and partly in favour of the defendant, and when the respondent is given liberty by the rule to support the decree it is to enable him to support that part of the decree which is really in his favour. In doing so he is not attacking the decree in so far as it is in favour of the plaintiff nor is he supporting it; for obviously he is not interested in supporting it at all. In fact, he is only attempting to prevent the plaintiff from increasing the burden of the liability beyond the limit fixed by the decree appealed against.
15.The word "decree" in this rule may be taken to mean 'decision as held in Sri Ranga Thathachariar v. Srinivasa Thathachariar AIR 1927 Mad 801 but that does not solve the difficulty. What is necessary to bear in mind is that the principle which is applicable to a simple case where a claim is wholly decreed or wholly dismissed, is equally applicable to a case where the claim is allowed in part and dismissed as regards the rest. In the latter class of cases, namely, where there is a decree for a part only of a larger claim, the decision is to be understood as comprising a decree in favour of the respondent to the extent to which the Court below had disallowed the claim of the appellant. So understanding it, there is no difficulty whatever. It is by an omission to see clearly this double aspect when there is a decree for a part only of a claim that errors are likely to occur.
31.The Full Bench judgment reported in AIR 1943 MADRAS 698 in the case of Gaddem Chinna Venkata Rao and others vs. Koralla Satyanarayanamurthy and another, was approved by the Hon'ble Supreme Court in the judgment reported in AIR 1973 (SC) 2565 in the case of Sri C.P.J.Temple vs. Harikrishna.
32.Under the Amendment Act 1976, Order 41 Rule 22 CPC was also amended and a question arose whether the law after Amendment of Act 1976, is different from the earlier law as laid down in AIR 1943 Madras 698 and approved by the Hon'ble Supreme Court in AIR 1973 SC 2565 and the Hon'ble Supreme Court in the judgment reported in (1999)7 SCC 435 in the case of Ravinder Kumar Sharma vs. State of Assam and another, approved the judgments reported in AIR 1943 MADRAS 698(FB) and AIR 1973 SC 2565 and held as follows:-
15.That means that under Order 41 Rule 22 CPC, before the 1976 Amendment, it was open to the defendant-respondent who had not taken any cross-objection to the partial decree passed against him, to urge, in opposition to the appeal of the plaintiff, a contention which if accepted by the trial court would have resulted in the total dismissal of the suit. This was the legal position under the unamended Order 41 Rule 22 as accepted by the Madras Full Bench in Venkata Rao's case and as accepted by this Court in Chandre Prabhuji's case.
16.The next question is as to whether, the law as stated above has been modified by the 1976 Amendment of Order 41 Rule 22. It will be noticed that the Amendment has firstly deleted the words "on any of the grounds decided against him in the Court below, but take any cross-objections" in the main part of Order 41 Rule 22 CPC and added the words "but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour" in the main part.
17.The main part of Order 41 Rule 22(1) CPC, (after the 1976 Amendment) reads as follows:
Order 41 Rule 22(1): Any respondent, though he may not have appealed from any part of the decree, may not only support the decree but may also state that the finding against him in the Court below in respect of any issue ought to have been in his favour; and may also take any cross-objection to the decree which he could have taken by way of appeal, provided he has filed such objection in the appellate court within one month from the date of service on him or his pleader of notice of the day fixed for hearing the appeal, or within such further time as the Appellate Court may see fit to allow.
18.The 1976 Amendment has also added an Explanation below Order 41 Rule 22, as follows:
Explanation: A respondent aggrieved by a finding of the court in the judgment on which the decree appealed against is based may, under this rule, file cross objection in respect of the decree in so far as it is based on that finding, notwithstanding that by reason of the decision of the Court on any other finding which is sufficient for the decision of the suit, the decree is, wholly or in part, in favour of that respondent.
19.In connection with Order 41 Rule 22, CPC after the 1976 Amendment, we may first refer to the judgment of the Calcutta High Court in Nishambhu Jana v. Sova Guha (1982) 89 CWN 685. In that case, Mookerjee, J. referred to the 54th report of the Law Commission (at p.295) (para 41.70) to the effect that Order 41 Rule 22 gave two distinct rights to the respondent in the appeal. The first was the right to uphold the decree of the court of first instance on any of the grounds which that court decided against him. In that case the finding can be questioned by the respondent without filing cross-objections. The Law Commission had accepted the correctness of the Full Bench of the Madras High Court in Venkata Rao's case. The Commission had also accepted the view of the Calcutta High Court in Nrisingha Prosad Rakshit v. The Commissioners of Bhadreswar Municipality that a cross-objection was wholly unnecessary in case the adverse finding was to be attacked. The Commission observed that the words "support the decree..." appeared to be strange and "what is meant is that he may support it by asserting that the ground decided against him should have been decided in his favour. It is desirable to make this clear". That is why the main part of Order 41 Rule 22 was amended to reflect the principle in Venkata Rao's case as accepted in Chandre Prabhuji's case.
20.So far as the Explanation was concerned, the Law Commission stated (page 298) that it was necessary to "empower" the respondent to file cross-objection against the adverse finding. That would mean that a right to file cross-objections was given but it was not obligatory to file cross-objections. That was why the word 'may' was used. That meant that the provision for filing cross-objections against a finding was only an enabling provision.
21.These recommendations of the Law Commission are reflected in the Statement of Objections and Reasons for the Amendment. They read as follows:
Rule 22(i.e., as it stood before 1976) gives two distinct rights to the respondent in appeal. The first is the right of upholding the decree of the Court of first instance on any of the grounds on which that court decided against him; and the second right is that of taking any cross-objection to the decree which the respondent might have taken by way of appeal. In the first case, the respondent supports the decree and in the second case, he attacks the decree. The language of the rule, however, requires some modifications because a person cannot support a decree on a ground decided against him. What is meant is that he may support the decree by asserting that the matters decided against him should have been decided in his favour. The rule is being amended to make it clear. An Explanation is also being added to Rule 22 empowering the respondent to file cross- objection in respect to a finding adverse to him notwithstanding that the ultimate decision is wholly or partly in his favour.
Mookerjee, J. observed in Nishambhu Jana's case (see p.689) that "the "amended Rule 22 of Order 41 of the Code has not brought any substantial change in the settled principles of law" (i.e., as accepted in Venkata Rao 's case) and clarified (p.691) that "it would be incorrect to hold that the Explanation now inserted by Act 104 of 1976 has made it obligatory to file cross-objections even when the respondent supports the decree by stating that the findings against him in the court below in respect of any issue ought to have been in his favour.
22.A similar view was expressed by U.N. Bachawat, J. in Tej Kumar v. Purshottam AIR1981MP55 that after the 1976 Amendment, it was not obligatory to file cross- objection against an adverse finding. The Explanation merely empowered the respondent to file cross-objections.
23.In our view, the opinion expressed by Mookerjee, J. of the Calcutta High Court on behalf of the Division Bench in Nishambhu Jena's case and the view expressed by U.N. Bachawat, J. in Tej Kumar's case in the Madhya Pradesh High Court reflect the correct legal position after the 1976 Amendment. We hold that the respondent-defendant in an appeal can, without filing cross-objections attack an adverse finding upon which a decree in part has been passed against the respondent, for the purpose sustaining the decree to the extent the lower court had dismissed the suit against the defendants-respondents. The filing of cross-objection, after the 1976 Amendment is purely optional and not mandatory. In other words, the law as stated in Venkata Rao's case by the Madras Full Bench and Chandre Prabhuji's case by this Court is merely clarified by the 1976 Amendment and there is no change in the law after the Amendment.
33.In the judgment reported in (2007)5 MLJ 768(SC) in the case of S.Nazeer Ahmed vs. State Bank of Mysore and others, the same principle was reiterated and held as follows:-
The respondent in an appeal is entitled to support the decree of the trial court even by challenging any of the findings that might have been rendered by the trial court against himself. For supporting the decree passed by the trial court, it is not necessary for a respondent in the appeal, to file a memorandum of cross- objections challenging a particular finding that is rendered by the trial court against him when the ultimate decree itself is in his favour. A memorandum of cross-objections is needed only if the respondent claims any relief which had been negatived to him by the trial court and in addition to what he has already been given by the decree under challenge. We have therefore no hesitation in accepting the submission of the learned Counsel for the appellant that the High Court was in error in proceeding on the basis that the appellant not having filed a memorandum of cross-objections, was not entitled to canvass the correctness of the finding on the bar of Order II Rule 2 rendered by the trial court.
34.In the judgment reported in (2003)9)SCC 606 in the case of Banarsi and ors vs. Ramphal, it has been held as follows:-
9.Any respondent though he may not have filed an appeal from any part of the decree may still support the decree to the extent to which it is already in his favour by laying challenge to a finding recorded in the impugned judgment against him. Where a plaintiff seeks a decree against the defendant on grounds (A) and (B), any one of the two grounds being enough to entitle the plaintiff to a decree and the Court has passed a decree on ground (A) deciding it for the plaintiff while ground (B) has been decided against the plaintiff, in an appeal preferred by the defendant, in spite of the finding on ground (A) being reversed the plaintiff as a respondent can still seek to support the decree by challenging finding on ground (B) and persuade the appellate court to form an opinion that in spite of the finding on ground (A) being reversed to the benefit of defendant-appellant the decree could still be sustained by reversing the finding on ground (B) though the plaintiff-respondent has neither preferred an appeal of his own nor taken any cross objection. A right to file cross objection is the exercise of right to appeal though in a different form. It was observed in Sahadu Gangaram Bhagadev. Special Deputy Collector, Ahmednagar and Anr.-[1971]1SCR146 that the right given to a respondent in an appeal to file cross objection is a right given to the same extent as is a right of appeal to lay challenge to the impugned decree if he can be said be aggrieved thereby. Taking any cross objection is the exercise of right of appeal and takes the place of cross-appeal though the form differs. Thus it is clear that just as an appeal is preferred by a person aggrieved by the decree so also a cross objection is preferred by one who can be said to be aggrieved by the decree. A party who has fully succeeded in the suit can and needs to neither prefer an appeal nor take any cross objection though certain finding may be against him. Appeal and cross-objection - both are filed against decree and not against judgment and certainly not against any finding recorded in a judgment. This was well-settled position of law under the unamended CPC.
10.CPC Amendment of 1976 has not materially or substantially altered the law except for a marginal difference. Even under the amended Order 41 Rule 22 Sub-rule (1) a party in whose favour the decree stands in its entirety is neither entitled nor obliged to prefer any cross objection. However, the insertion made in the text of Sub-rule (1) makes it permissible to file a cross objection against a finding. The difference which has resulted we will shortly stated. A respondent may defined himself without filing any cross objection to the extent to which decree is in his favour, however, if he proposes to attack any part of the decree he must take cross objection. The amendment inserted by 1976 amendment is clarificatory and also enabling and this may be made precise by analysing the provision. There may be three situations:
(i)The impugned decree is partly in favour of the appellant and partly in favour of the respondent;
(ii)The decree is entirely in favour of the respondent though an issue has been decided against the respondent;
(iii)The decree is entirely in favour of the respondent and all the issues have also been answered in favour of the respondent but there is a finding in the judgment which goes against the respondent.
11.In the type of case (i) it was necessary for the respondent to file an appeal or take cross objection against that part of the decree which is against him if he seeks to get rid of the same though that part of the decree which is in his favour he is entitled to support without taking any cross objection. The law remains so post amendment too. In the type of cases (ii) and (iii) pre-amendment CPC did not entitle nor permit the respondent to take any cross objection as he was not the person aggrieved by the decree. Under the amended CPC, read in the light of the explanation, though it is still not necessary for the respondent to take any cross objection laying challenge to any finding adverse to him as the decree is entirely in his favour and he may support the decree without cross objection; the amendment made in the text of Sub-rule (1), read with the explanation newly inserted, gives him a right to take cross objection to a finding recorded against him either while answering an issue or while dealing with an issue. The advantage of preferring such cross objection is spelled out by Sub-rule (4). In spite of the original appeal having been withdrawn or dismissed for default the cross objection taken to any finding by the respondent shall still be available to be adjudicated upon on merits which remedy was not available to the respondent under the unamended CPC. In pre-amendment era, the withdrawal or dismissal for default of the original appeal disabled the respondent to question the correctness or otherwise of any finding recorded against the respondent.
35.The facts of the case in that judgment is as follows:-
The agreement of sale was entered into between the parties on 03.11.1988 and later on novated by an agreement, dated 15.07.1991 and as per the latter agreement, the consideration for the sale was Rs.2,90,000/- out of which Rs.2,40,000/- was acknowledged by the vendor to have been received leaving a balance of Rs.50,000/- to be received at the time of execution and registration of the sale deed. The appellant filed the suit seeking cancellation of the agreement, dated 03.11.1988 denying the plea that the transaction was in the nature of loan and the loan was repaid and the respondents failed to deliver the agreements, dated 03.11.1988 and 15.07.1991. Another suit was filed to enforce the agreement, dated 15.07.1991 and both the suits were consolidated and tried together and by a common judgment and decree, the trial court held that it was just and proper that the appellant returned the amount of Rs.2,40,000/- with interest calculated at the rate of 1% per month with effect from 3.11.1988 on Rs.1,80,000/- and with effect from 15.07.1991 on Rs.60,000/- and on such payment the two oral agreements should be returned and if the appellant failed to deposit the above amount within the stipulated time, the plaintiff vendors by depositing the balance amount Rs.50,000/- in the court, get the sale deed executed in his favour. Aggrieved by the same, the appellant filed two appeals before the High Court, which was latter transferred to the District Court and both the appeals were dismissed. The respondent did not prefer any appeal on his own, neither filed any cross objection. While dismissing the appeals, the first appellate court framed the operative part of the judgment stating that the appeals were liable to be rejected with the modification that the suit of the plaintiff was liable to be decreed for specific performance and the suit filed by the appellant was liable to be rejected. The appellant preferred two second appeals before the High Court and both the appeals were dismissed by the High Court holding that no substantial question of law arose in those appeals. One of the pleas advanced on behalf of the appellants before the High Court was that the first appellate court could not have, in the purported exercise of power under Order 41 Rule 33 CPC, reversed the decree in respect of the refund of money and directed the suit for specific performance to be decreed in favour of the respondent without there-being any appeal or cross-objection preferred by the respondent. The High Court opined that it was open for the respondent not to file an appeal against the trial court's decree on the belief that he would either get his money back within the short time provided under the decree or would have the contract specifically performed. The first appellate court committed no error of law in exercising power under Order 41 Rule 33 CPC and passing a decree for specific performance in favour of the respondent. Against the judgment and decree of the High Court, the appeals were preferred before the Hon'ble Supreme court and the first question that was posed before the Supreme Court was whether without cross objection by the respondent, could the appellate court straight away pass a decree for specific performance of contract. While answering that question, the Hon'ble Supreme court considered the provision of Order 41 Rule 22 CPC prior to 1976 as amended and thereafter and held as stated above. However, having regard to facts of that case, the Hon'ble Supreme Court held as follows:-
.A plaintiff who files a suit for specific performance claiming compensation in lieu of or in addition to the relief of specific performance or any other relief including the refund of any money has a right to file an appeal against the original decree if the relief of specific performance is refused and other relief is granted. The plaintiff would be a person aggrieved by the decree in spite of one of the alternative having been allowed to him because what has been allowed to him is the smaller relief and the larger relief has been denied to him. A defendant against whom a suit for specific performance has been decreed may file an appeal seeking relief of specific performance being denied to the plaintiff and instead a decree of smaller relief such as that of compensation or refund of money or any other relief being granted to the plaintiff for the former is larger relief and the latter is smaller relief. The defendant would be the person aggrieved to that extent. If follows as a necessary corollary from the abovesaid statement of law that in an appeal filed by the defendant laying challenge to the relief of compensation or refund of money or any other relief while decree for specific performance was denied to the plaintiff, the plaintiff as a respondent cannot seek the relief of specific performance of contract or modification of the impugned decree except by filing an appeal of his own or by taking cross objection.
13.We are, therefore, of the opinion that in the absence of cross appeal preferred or cross objection taken by the plaintiff-respondent the First Appellate Court did not have jurisdiction to modify the decree in the manner in which it has done. Within the scope of appeals preferred by the appellants the First Appellate Court could have either allowed the appeals and dismissed the suit filed by the respondent in its entirety or could have deleted the latter part of the decree which granted the decree for specific performance conditional upon failure of the defendant to deposit the money in terms of the decree or could have maintained the decree as it was passed by dismissing the appeals. What the First Appellate Court has done is not to set aside the decree to the extent to which it was in favour of the appellant but also granted an absolute and out and out decree for specific performance of agreement to sell which is to the prejudice of the appellants and to the advantage of the respondent who has neither filed an appeal nor taken any cross objection.
36.In so far the facts of this Appeal Suit are concerned, the answer given by the Hon'ble Supreme court to the first question stated in para 9 to 11 in that judgment, would apply and the law laid down in para 12 and 13 would not be applicable to facts of this case.
37.This was also clarified by the Hon'ble Supreme Court in the judgment reported in (2013)9 SCC 261 in the case of Hardevinder Singh vs. Paramjit Singh and others, wherein the judgment reported in (2003)9 SCC 606 [Banarsi vs. Ram Phal], was followed and held as follows:-
21.After the 1976 amendment of Order 41 Rule 22, the insertion made in Sub-rule (1) makes it permissible to file a cross-objection against a finding. The difference is basically that a Respondent may defend himself without taking recourse to file a cross-objection to the extent the decree stands in his favour, but if he intends to assail any part of the decree, it is obligatory on his part to file the cross-objection. In Banarsi and Ors. v. Ram Phal(supra), it has been observed that the amendment inserted in 1976 is clarificatory and three situations have been adverted to therein. Category No. 1 deals with the impugned decree which is partly in favour of the Appellant and partly in favour of the Respondent. Dealing with such a situation, the Bench observed that in such a case, it is necessary for the Respondent to file an appeal or take cross-objection against that part of the decree which is against him if he seeks to get rid of the same though he is entitled to support that part of the decree which is in his favour without taking any cross-objection. In respect of two other categories which deal with a decree entirely in favour of the Respondent though an issue had been decided against him or a decree entirely in favour of the Respondent where all the issues had been answered in his favour but there is a finding in the judgment which goes against him, in the pre-amendment stage, he could not take any cross-objection as he was not a person aggrieved by the decree. But post-amendment, read in the light of explanation to Sub-rule (1), though it is still not necessary for the Respondent to take any cross-objection laying challenge to any finding adverse to him as the decree is entirely in his favour, yet he may support the decree without cross-objection. It gives him the right to take cross-objection to a finding recorded against him either while answering an issue or while dealing with an issue. It is apt to note that after the amendment in the Code, if the appeal stands withdrawn or dismissed for default, the cross-objection taken to a finding by the Respondent would still be adjudicated upon on merits which remedy was not available to the Respondent under the unamended Code.
38.As held by the Hon'ble Supreme court in the judgment reported in (1999)7 SCC 435 in the case of Ravinder Kumar Sharma vs. State of Assam and others, filing of cross objection, after the 1976 Amendment is purely optional and not mandatory and the pre-amendment law has been merely clarified by the 1976 Amendment and there is no change in the law after the amendment. Having regard to the facts of this case, the suit filed by the appellant was dismissed, though a finding was rendered holding that the appellant was ready and willing to perform his part of contract. Nevertheless, the trial court dismissed the suit holding that the 3rd defendant/3rd respondent was a bona fide purchaser for value and therefore, the appellant cannot claim the relief of specific performance as against the 3rd respondent and dismissed the suit. In the result, the suit filed by the appellant for specific performance was dismissed, though a finding was given in favour of the appellant holding that the appellant was ready and willing to perform his part of contract. In such circumstances, when the appellant challenged the decree denying the relief of specific performance, is it open to the respondents to contend that the finding in respect of readiness and willingness on the part of the appellant, decided against the defendant was erroneous, even though filing cross appeal and the answer is in the affirmative or the appellant as the defendant/respondent is only supporting the decree and at the same time, attacking the finding and he is not attacking the decree.
39.As illustrated by the Hon'ble Supreme Court in the judgment reported in (2003)9 SCC 606 [Banarsi and others vs. Ram Phal], the necessity to file the cross appeal or objection, arises only when the impugned decree is partly in favour of the appellant and partly in favour of the respondents and in other cases, namely when the decree is entirely in favour of the respondent, though an issue has been decided against the respondent or whether when the decree is entirely in favour of the respondents and all the issues are answered in favour of the respondent, but there is a finding against the respondents, there is no need to file cross appeal or objection and only it is an optional, even in the absence of any appeal or cross objection, adverse finding against the respondents can be challenged by the respondents in the appeal filed by the appellant. Hence, I answered the point No.1 in favour of the 3rd respondent and held that even in the absence of cross objection or appeal, the 3rd respondent is entitled to challenge the findings given in Issue Nos.2 and 3 by the trial court that the appellants were ready and willing to perform their part of their contract.
Point No.2:
40.To appreciate the case of the appellants that they were willing and ready to perform their part of contract, we will have to see the pleadings and prayer.
41.As stated supra, it is the specific case of the appellants that after entering into an agreement of sale, dated 15.06.1988 with the first defendant, they applied for planning permission and they were informed that without ULT certificate, planning permission would not be given and therefore, they approached the first defendant and informed the same and requested him to get the clearance from the Urban Land Tax Tribunal and the first defendant also agreed for the same and made an endorsement on 10.09.1980 marked as Ex.A2 and the period of agreement was extended by mutual consent for a further period of one month from the date of obtaining ULT clearance certificate and having regard to the undertaken given by the first defendant he is bound to produce ULT clearance certificate and the time begins to run only from the date of production of the clearance from ULT Tribunal and admittedly, the first defendant did not get any clearance certificate from the tribunal and admittedly, a writ petition filed by the vendor of the first defendant seeking exemption under ULT Act, was dismissed and the appeal filed against the said order was also dismissed and therefore, the time for performing the contract on the part of the plaintiffs did not commence, but nevertheless, having realized that the first defendant cancelled the agreement of sale entered into with them, the suit was filed for specific performance and therefore, there is no delay on the part of the plaintiffs/appellants in seeking the relief of specific performance.
42.It is also contended that the plaintiffs are employees of Indian Bank and they have also made it clear that after obtaining approval from the Bank, they would pay the balance consideration and that was also agreed and the plaintiffs also deposited the entire sale balance consideration immediately on the filing of the suit and therefore, it cannot be contended that the plaintiffs were not having means to pay the balance sale consideration and considering all these aspects, the trial court rightly held that the plaintiffs were ready to perform their part of contract.
43.According to me, the fact that the plaintiffs/appellants insisted upon the clearance certificate to be obtained from the ULT Tribunal and also prayed for mandatory injunction, directing the 2nd defendant to get clearance from the authorities would prove that the plaintiffs were not willing to proceed with the agreement of sale in the absence of any clearance obtained from the ULT authorities. Though, there is some confusion whether the first defendant agreed to get the clearance from the ULT authorities or whether the first defendant agreed to get clearance from the ULT Tribunal before the execution of the sale deed, even assuming that the first defendant agreed to get the clearance from ULT Authorities and the word 'ULT' means Urban Land Tribunal and not Urban Land Tax as contended by the appellants, even then having regard to the pleadings and prayer, it cannot be contended by the plaintiff/appellants that they were willing to perform their part of contract.
44.In the judgment reported in 2010(6)CTC 901 in the case of J.P.Builders & another vs. A.Ramadas Rao & another, the Hon'ble Supreme Court interpreted the word 'readiness and willingness and held that 'readiness' implies financial capacity and 'willingness' implies the conduct of the plaintiff in claiming the relief of specif performance. So far the readiness is concerned, there is no dispute that the plaintiffs were having resources to mobilize the balance sale consideration and admittedly, they were employees of Indian Bank and they also informed that they would get loan from the Indian Bank Housing Finance Company and pay the balance amount and they also deposited the entire balance sale consideration, while filing the suit. Therefore, according me, the appellants proved their readiness and I concur with the findings of the trial court in that regard.
45.However, as regards the willingness of the appellants is concerned, it cannot be contended that the appellants were willing to perform their part of contract and according to me, their willingness was not absolute, but subject to condition. As stated supra, the appellants prayed for grant of specific performance of agreement of sale, dated 15.06.1988 directing the first defendant to comply with the terms and conditions of sale agreement, namely to bring out the suit property from the litigation raised by the 2nd defendant and to establish that the suit property was free from dispute and to obtain and furnish clearance from Urban Land Tribunal or competent authorities under the Urban Land Ceiling Laws to the effect that the suit property was the one declared by the vendors, namely 2nd defendant and also for directing th 2nd defendant by way of mandatory injunction to prove and to confirm that he has surrendered the land retaining a portion declared by the ULT proceedings and to confirm that the suit property was a part of the portion declared. Therefore, the plaintiffs wanted the 1st and 2nd defendant to get the clearance and to give confirmation that the suit property was cleared from the provisions of Urban Land Celling Act. In other words, the plaintiffs were not wiling to get the sale deed executed as per the agreement of sale, but insisted that the sale should be executed by the first defendant, after obtaining the clearance from ULT authorities. Therefore, according to the plaintiffs, the suit property agreed to be sold was subject matter of the Urban Land Ceiling Act and without obtaining the clearance from the ULT authorities, the suit property cannot be sold and therefore, sought for clearance from ULT authorities. Therefore, we will have to see in such circumstances, whether the plaintiffs can enforce the agreement of sale without obtaining the clearance from ULT authorities.
46.As submitted by Mrs.Chitra Sampath, the learned Senior counsel appearing for the 3rd respondent that in the Full Bench Judgment reported in 1999 (II) CTC 181 in the case of P.Gopirathnam and 4 others vs. Ferrodous Estate (Pvt.) Ltd., rep by its Power of Attorney Holder Sri. G.John Arthur, it is held that an agreement holder cannot seek specific performance of agreement of sale, if such an endorsement is prohibited under section 6 of the Tamil Nadu Urban Land (Ceiling and Regulation ) Act, 1978.
47.In that judgment, it has been held that person having vacant land in excess of ceiling allotted, shall not be permitted to execute the sale deed, pursuant to the agreement of sale and when the parties entered into an valid contract and when the enforcement of such contract became unenforceable, such contract cannot be enforced through court of law.
48.The Full Bench held that when the property cannot be sold and when the property is coming within the ceiling limit of the vendor, such contract cannot be specifically enforced. In this case, according to the plaintiffs, the first defendant agreed to get the clearance from the Urban Land Ceiling Tribunal and according to the plaintiffs, the lands were not cleared from the Urban Land Ceiling Authorities, unless the clearance certificate is obtained from the Urban Land Ceiling Authorities, the property cannot be sold and they also insisted upon the production of clearance certificate and for mandatory injunction directing the 2nd respondent to get such clearance and therefore, in the absence of clearance, they cannot enforce the agreement of sale, which is against the provision of section 6 of the Tamil Nadu Urban Land (Ceiling and Regulation) Act, 1978.
49.The Hon'ble Supreme Court had considered such a question in the judgment reported in (2011)8 SCC 601 in the case of Coromandel Indag Products Private Limited vs. Garuda Chit and Trading Company Private Limited and another and that was also a case of the specific performance and as per the agreement of sale, it was agreed that the sale should be completed on or before a particular date or within one week from the date of furnishing the income tax clearance certificate by the vendor and the purchaser demanded clearance from the ULT authorities by the vendor and that was not specified in the agreement of sale and when the purchaser insisted for the clearance certificate from the Urban Land Ceiling Authorities, it was held that the purchaser not only committed breach of agreement, but his conduct also showed that they were not ready and willing to complete their part of agreement by refusing to pay the balance consideration and getting the sale deed registered and the suit was dismissed.
50.Therefore, having regard to the above said two judgments and the fact that the plaintiffs/appellants insisted on the production of ULT certificate and also the prayed for such relief, insisting on the certificate to be produced by the defendants 1 and 2, it cannot be contended that the appellants were willing to perform their part of contract.
51.Though, the appellants complained in the plaint that when they applied for planning permission, after entering into an agreement of sale, the authorities insisted that the land was under the ceiling limit of the vendor of the appellants and without getting clearance certificate, the planning permission would not be given, they filed the suit for specific performance and also expressed their willingness to purchase the suit property, even without any clearance certificate from ULT authorities and that would also prove that the appellants were not willing to perform their part of contract before filing of the suit and latter, having realized their mistake, they expressed their willingness to purchase the suit property by paying the balance sale consideration.
52.Further, as rightly submitted by Mrs.Chitra Sampath the learned Senior Counsel appearing for the 3rd respondent that the 3rd defendant having purchased the suit property applied for planning permission and that was also approved and he got the planning permission as evidenced by Ex.B5 and it would prove that the allegation that Corporation insisted the appellants to get clearance certificate from ULT authorities and without that, they would not grant permission cannot be true. Though Ex.B5 is dated 10.09.1993 and it was obtained after the filing of the suit, the fact that the 3rd defendant was able to get the planning permission without any clearance certificate from ULT authorities would prove that the case of the plaintiffs/appellants that by reason of the unavailability of the clearance certificate from the ULT authorities, they were not able to proceed with the sale cannot be accepted.
53.I had an occasion to consider the right of the plaintiff to claim performance, even after holding that the agreement of sale was found to be true, I held that even though the agreement of sale was found to be true, the plaintiff was not able to get the relief of specific performance, without proving his readiness and willingness to perform his part of contract in the judgment reported in 2011(3)CTC 205 [S.Narayanappa vs. Sampangi Ramayya and two others]. Therefore, without proving the readiness and willingness, even though the agreement was found to be true, there was no need to grant a decree in favour of the plaintiff. In this case, as stated supra, the plaintiffs, both in the pleadings and prayer, made it clear that they were not willing to perform their part of the contract, without the production of the clearance from ULT authorities and their offer was conditional, it was not absolute and hence, the trial court without properly appreciating these aspects erred in holding that the plaintiffs were willing to perform their part of contract and according me, the said finding is perverse and is liable to be set and accordingly, it is set aside.
54.Admittedly, the agreement of sale was unilaterally cancelled by the first defendant by his notice, dated 02.05.1989 and there is no prayer for declaration that the termination of agreement of sale by the first defendant was illegal and in view of the judgment reported in 2014-1-LW 47 (SC) in the case of I.s.Sikandar (d) by LRS vs. K.Subramani & others that in the absence of any prayer that the cancellation of agreement was not valid, a suit for specific performance was not maintainable and on that ground also, the suit for specific performance filed by the plaintiffs is liable to be dismissed.
55.The 3rd defendant though a subsequent purchaser is also entitled to challenge the finding regarding the readiness and willingness, as held in the judgment reported in 2003(2)CTC 355 [Arunachala Mudaliar vs. Jayalakshmi Ammal and another] and also in the judgment reported in (2000)2 SCC 428 [Ram Awadh(dead) by Lrs vs. Achhaibar Dubey].
56.Accordingly, the Point No.2 is answered against the appellants and in favour of the 3rd defendant.
57.Point No.3:-
The trial court held that the 3rd defendant/3rd respondent is a bona fide purchaser for value and the same is challenged in this Appeal Suit. Though, having regard to the answer given to points 1 and 2 against the appellants holding that the appellants were not entitled to the relief of specific performance, having regard to the arguments advanced by the learned counsel for the appellants and the Appeal Suit was filed against the findings of the trial court that the 3rd respondent/3rd defendant was not a bona fide purchaser for value, the said point was also considered in this Appeal Suit.
58.Section 19 of the Specific Relief Act has been interpreted by the Hon'ble Supreme Court in the judgment reported in 2011-1-LW 940 in the case of D.Kamalavathi vs. P.Balasundaram (deceased) and others, which reads as follows:-
11.Section 19 of the Specific Relief Act has been interpreted by the Honourable Supreme Court in the judgment reported in R.K. Mohammed Ubaidullah v. Hajee C. Abdul Wahab (2000)6 SCC 402 = 2000-3-L.W.675, wherein the Honourable Supreme Court held as follows:
14. Section 19 of the Specific Relief Act, 1963, to the extent it is relevant, reads:
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 10 be enforced against -
(a)either party thereto;
(b)any other person claiming under him by atitle 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;
(c) - (e) ****** As can be seen from Sections 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 emphasises due care and attention in relation to 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 not have notice" of a fact when he actually knows that fact, or when, but for wilful 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 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.
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 13 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 the title or interest of the person in actual possession as on the date when the 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 14 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.
12.Therefore, from the above passage, it clear that Section 19(b) of the Specific Relief Act is an exception from the general rule and the onus is on the subsequent purchaser to prove that he purchased the property in good faith and also bona fide purchaser for value.
59.In the judgment reported in (2000(I) CTC 484 [Nalluswamy Reddiar vs. Marammal and 5 others], it has been held that specific performance of agreement of sale cannot be enforced against the subsequent purchaser, unless it is proved that the subsequent purchaser had knowledge of the prior agreement.
60.In the judgment reported in 2008(3) CTC 1 [P.Retnaswamy vs. A.Raja and another], the onus of proving that he had no knowledge about the prior agreement of sale is on the subsequent purchaser. Therefore, we will have to see whether the 3rd defendant/3rd respondent is a bona fide purchaser for value and he was not having knowledge of the prior agreement of sale between the plaintiffs and the first defendant.
61.As stated supra, the 3rd defendant/3rd respondent was impleaded, after the suit was filed against the defendants 1 and 2 for specific performance and the plaint was amended and para 10A was introduced and allegations were made against the 3rd respondent/3rd defendant.
62.In para 10A, it is only stated that the 1st defendant in collusion with the 3rd defendant transferred the property knowing fully aware that there was a subsisting agreement of sale and the 3rd defendant purchased the suit property having full knowledge of the legal consequences. It is also stated that the 3rd defendant was not a bona fide purchaser for value for the reason that she purchased the suit property for a sum of Rs.1,80,000/-. When the plaintiffs agreed to purchase the suit property for Rs.3,10,000/- and no prudent person would sell his property for a price of Rs.1,80,000/-, which was very much below the price agreed earlier and that would also prove the collusion and the 3rd defendant was a sham and nominal purchaser. Therefore, the plaintiffs pleaded that the 3rd defendant in collusion with the 1st defendant knowing of the agreement of sale, purchased the suit property for a lesser price and the fact that she purchased the suit property for a lesser price would also prove collusion and knowledge can be attributed and the document in favour of the 3rd defendant/3rd respondent was a sham and nominal one.
63.The first plaintiff was examined as PW1 and in his chief examination, he has not stated that the 3rd defendant/3rd respondent had knowledge about the agreement of sale with the plaintiffs and nevertheless, purchased the same. He only stated that to defeat the rights of the plaintiffs, 3rd defendant purchased the suit property. Therefore, the sale is not valid. He also admitted in his cross examination that he did not inform the 3rd defendant about the agreement of sale and also admitted that the 3rd defendant, after purchase constructed a compound wall surrounding the suit property. Therefore, from the evidence of PW1, it cannot be inferred that the 3rd defendant/3rd respondent was having knowledge about the agreement of sale and on the other hand, the 3rd respondent has also put up a compound wall after purchase. The 3rd defendant/3rd respondent was examined as DW2 and she has stated clearly that after obtaining the encumbrance certificate and verified the title and also after obtaining legal opinion from the Senior Advocate, she purchased the suit property. She also marked the encumbrance certificate as Ex.B2 serious.
64.It was contended by the learned counsel for the appellants that though the 3rd respondent/3rd defendant contended that after obtaining oral opinion from the leading Senior Advocate, she purchased the suit property, she was not able to name the Senior Advocate and that would also prove that she purchased the suit property knowing fully well about the agreement of sale. Even though, the 3rd respondent was not able to name the Senior Advocate from whom she obtained the legal opinion for purchasing the suit property, that would not prove that she was not a bona fide purchaser for value. She deposed that after making enquires and on obtaining the encumbrance certificate, she purchased the suit property and thereafter, she levelled the suit property, applied to the revenue authorities for patta and also obtained patta in her name and the same was marked as Ex.B4. She also produced the planning permission Ex.B5 issued by the Corporation of Chennai and mutation was effected in her name in the revenue records of Corporation of Chennai. She also stated that after purchase, she planted 24 teakwood trees, 15 coconut trees, 2 Mango Trees, a Lime tree and plantain trees and also dug a bore well for watering the plants and trees. She also made it clear into the written statement filed by her that she was not informed about the agreement of sale and only after the receipt of the notice in the petition filed by the plaintiffs to implead himself as a party to the suit, she enquired with the plaintiffs and came to know about the earlier agreement of sale. The plaintiffs also admitted that there is a compound wall in the suit property and that would also prove that the 3rd defendant spent considerable amount in constructing a compound wall and the plaintiffs were not able to get any favorable answer from the 3rd defendant that she was not a bona fide purchaser for value.
65.The main contention on the side of the plaintiffs/appellants was that the suit property was sold for a sum of Rs.1,80,000/-, when it was agreed to be sold for Rs.3,10,000/- and that would prove that the sale deed in favour of the 3rd defendant was not bona fide transaction. No question was put to DW2/3rd defendant regarding this aspect and admittedly, the suit property was sold for the guideline value and it was not the case of the plaintiffs that the suit property was sold for a price less than the guideline value. The first defendant/vendor was examined as DW1 and he has given explanation for selling the suit property for a lesser price stating that after the agreement of sale with the plaintiffs, the Corporation dumped the suit property with the garbages and therefore, he was forced to sell the suit property for a lesser price and he also did not inform about the earlier agreement of sale to the 3rd defendant and admittedly, no suggestion was put to DW1 to the effect that in collusion with the 3rd defendant, he executed the sale deed in favour of the 3rd defendant to defeat the rights of the plaintiffs and the sale deed in favour of the 3rd defendant was a sham and nominal document and it was only suggested that during the pendency of the agreement of sale with the plaintiffs, the suit property was sold to the 3rd defendant and therefore, the sale was not valid. Though, the burden is on the 3rd defendant to prove that she was a bona fide purchaser for value, she proved through her pleading and evidence that she was a bona fide purchaser for value and made improvements on the suit property and that was also accepted by the plaintiffs and merely because, the suit property was sold for a lesser price, it cannot be stated that the purchase was not a bona fide purchase, when the purchaser was not having any knowledge about the price, for which the plaintiffs agreed to purchase the suit property and when the suit property was sold for guideline value and explanation was given by the first defendant's vendor for selling the suit property for a lesser price, it cannot be contended that purchaser was not a bona fide purchaser. These aspects were properly appreciated by the trial court and the trial court rightly held that the 3rd defendant/3rd respondent was a bona fide purchaser and I do not find any reason to interfere with the said findings of the trial court and I also concur with the said finding. In the result, I hold that the 3rd defendant/3rd respondent was a bona fide purchaser for value and that Point No.3 is answered against the plaintiffs.
66.As per the decree, the first defendant was directed to pay a sum of Rs.60,000/- with interest at the rate of 18% p.a. from 02.05.1989 and it is not known whether the first defendant has paid the amount. According to me, though the 3rd defendant/3rd respondent was a bona fide purchaser for value, she is also liable to pay the said amount paid by the plaintiffs under the agreement of sale, as the plaintiffs are entitled to unpaid vendor's lien on the property agreed to be sold to them. In other words, the appellants are entitled to have a charge for a sum of Rs.60,000/- on the suit property and therefore, the 3rd defendant is also liable to pay the sum. Hence, the decree is modified to the effect holding that the defendants 1 and 3 are jointly and severely liable to pay Rs.60,000/- with interest at the rate of 18% p.a. from 2.05.1989 to the plaintiffs.
67.Having regard to the findings given to point for consideration Nos.1 to 3, I hold that the plaintiffs are not entitled to the relief of specific performance and the 3rd defendant/3rd respondent is a bona fide purchaser for value and the findings of the trial court that the plaintiffs were willing to perform their part of contract was erroneous and the same is set aside.
68.In the result, the Appeal Suit is dismissed with the modification that the defendants 1 and 3 are jointly and severally liable to pay Rs.60,000/- with interest at the rate of 18% p.a. to the plaintiffs from 02.05.1989. Consequently, connected CMP is closed. No costs.
Index:Yes Internet:Yes 25.04.2014 er R.S.RAMANATHAN, J er To, The III Additional City Civil Court, Chennai.
judgment made in A.S.No.26 of 2005 and CMP No.724 of 2013 25.04.2014