Andhra HC (Pre-Telangana)
Sha Peerchand vs Jandhyala Venkata Subramanya Jyosyulu ... on 29 November, 1993
Equivalent citations: 1994(1)ALT140
JUDGMENT A. Gopal Rao, J.
1. Plaintiff is the appellant in this appeal. Defendants 2 and 3 are minors and first defendant is the father of defendants 2 and 3. The suit is filed for specific performance of an agreement to sell, Ex.A-1, dated 19-9-1976. The agreed total consideration was Rs. 40,000/-. The property sought to be purchased is mentioned in plaint 'A' schedule and specified in Ex.A-2, plan, attached to the sale agreement, Ex.A-1. Plaint 'B' schedule property was given as security for due performance of the sale agreement. The suit property consists of two shops with open space the total area being 150 square yards. Under the agreement, an amount of Rs. 1,000/- was paid as advance. Plaintiff lent money to defendants 1 to 3 on different occasions under the promissory notes, viz., Ex.A-3 dated 14-2-1976 for Rs. 22,000/- and Ex.A-4 dated 6-3-1976 for Rs. 10,000/-, repayable with compound interest at 24% per annum. Plaintiff also claims that the agreement, Ex.A-1, was executed in discharge of the amounts due under the two promissory notes, Exs. A-3 and A-4, and the balance, if any, payable by the plaintiff should be paid at the time of registration of the sale deed, and the sale deed should be executed and registered by defendants 1 to 3 in favour of the plaintiff or his nominee whenever the plaintiff requires them to do so. In spite of several demands made by the plaintiff, the defendants 1 to 3 failed to execute the sale deed in terms of the agreement and the plaintiff was always ready and willing to perform his part of the contract. Defendants 4 and 5 entered into an agreement to purchase the very same property from defendants 1 to 3 with notice of prior contract of sale in favour of plaintiff. Plaint 'B' schedule property, which had been given as security under Ex.A-1, was also given as security to defendants 4 and 5, by defendants 1 to 3 for performance of the alleged agreement. Defendants 1 to 3 are making preparations to execute the sale deed in favour of defendants 4 and 5, in pursuance of the subsequent agreement. Coming to know about the same, plaintiff informed defendants 4 and 5, by telegrams Exs.A-5 and A-6,.dated 27-9-1978, about the agreement to sell, dated 19-9-1976, Ex.A-1, and asking them to desist from purchasing the property in question. Eventhough they received the above telegrams, no reply was given. Plaintiff claims that the agreement in favour of D-4 and D-5 will not bind him. Plaintiff also sought for interim injunction restraining defendants 1 to 3 from getting the sale deed executed and registered in favour of defendants 4 and 5.
2. A common written statement is filed on behalf of defendants 1 to 3, alleging that the suit is not maintainable, as the promissory notes relied upon by the plaintiff stand in the name of an unregistered firm; the promissory notes alleged to have been executed by the 1st defendant are not bidning on the minor defendants 2 and 3, and they are not enforceable against them. They also denied the execution of Ex.A-1, agreement of sale in favour of plaintiff. It is stated that the promissory notes, Exs.A-3 and A-4, are typical marwadi transactions and are illegal and opposed to public policy; an amount of Rs. 10,000/- and an amount of Rs. 4,500/- were only paid under the two promissory notes respectively, dated 14-3-1976 and 6-3-1976; the agreement of sale is devoid of consideration; the property is much more valuable than the amount of Rs. 40,000/-, covered by the promissory notes and the agreement of sale is intended only as a security for the payment of the amounts due under the promissory notes, standing in the name of the unregistered firm; the suit transaction is not for the legal necessities of the minor defendants 2 and 3; the interest payable under the promissory notes is usurious; M/s. Chemanji Bhurmal in whose favour the promissory notes were executed, is not a registered firm and the amounts due under the promissory notes are not discharged by plaintiff; the suit is barred by limitation; that after receipt of the telegraphic notices, plaintiff himself started negotiations through one Raghunathmal Poonamchand for payment of the amounts due under the promissory notes; even before the negotiations are concluded in settling the disputes, the present suit is filed by the plaintiff; and that the defendants are agriculturists, entitled to the benefit of scaling down the interest due under the promissory notes.
3. Defendants 4 and 5, in addition to the averments made in the written statement filed by defendants 1 to 3, filed a separate written statement claiming that they are bona fide purchasers for value without the knowledge of the sale agreement, Ex.A-1, executed by defendants 1 to 3 in favour of the plaintiff. They claimed that they are in possession of the property and they have made alterations incurring heavy expenditure. They also claimed that they have deposited the amounts due to the plaintiff from defendants 1 to 3.
4. The first defendant filed an additional written statement, stating that the agreement to sell, Ex.A-1, dated 19-9-1976, violates the provisions of the Andhra Pradesh Weights and Measurements (Enforcement) Act, 1958, and hence ab initio viod. It is stated that the plaintiff, with an evil intention has inserted 125-142 in a space that was left blank in the 'A' schedule of the agreement of sale, Ex.A-1, subsequent to the execution of the agreement unilaterally without reference to the defendants and hence it is a material alteration, which itself warrants dismissal of the suit for specific performance.
5.The plaintiff filed a rejoinder, denying the allegations made in the additional written statement, referred to above.
6. On the basis of the above pleadings, the lower Court framed appropriate issues, and after due trial, decreed the suit of the plaintiff for the alternative relief of damages of Rs. 40,000/- against the defendants.
7. The issues framed were:
1. Whether the plaintiff is entitled to specific performance of the agreement of sale dated 19-9-1976 against defendants 1 to 5?
2. Whether the plaintiff-firm is a registered one?
3. Whether the suit is liable to be dismissed.
4.. Whether the agreement of sale is devoid of consideration and unenforceable as prayed by defendants 1 to 3?
5. Whether defendants 4 and 5 are bona fide purchasers without notice of the alleged earlier contract of sale in favour of the plaintiff?
6. To what Relief?
The following additional issue was framed by the lower Court on 18-4-1981:
1. Whether there is any alteration in the agreement and if so whether it affects the agreement?
8. The lower Court did not record a finding on issue No. 2, holding that it is not material to the maintenance of the suit. Issue 4 and additional issue No. 1 were held in favour of the plaintiff. Issue No. 5 was held against the plaintiff and in favour of defendants 4 and 5. On issue No. 1, the lower Court held that the plaintiff is entitled to the alternative relief of damages from the defendants, for Rs. 40,000/-. On issues 3 and 6, it was held that the plaintiff is entitled to a decree for the alternative relief of damages for Rs. 40,000/- with costs.
9. Smt. Jayasree Saradhi, learned Counsel for the appellant contended that the lower Court having held material issues in favour of the appellant, ought to have granted a decree for specific performance instead of granting the alternative relief of damages for Rs. 40,000/-. She further contended that defendants 4 and 5 are not bona fide purchasers for value.
10. Smt. A. Vyjayanti, learned Counsel for the respondents 4 and 5, however, contended that the suit agreement Ex.A-1 is not intended to be acted upon and it was brought into existence to secure payment of the amounts due under the promissory notes, Exs.A-3 and A-4 and therefore, the lower Court is right in granting the alternative relief of damages for Rs. 40,000/-.
11. In view of the rival contentions mentioned above, the points that arise for determination in this appeal are:
1. Whether defendants 4 and 5 are bona fide purchasers for value? and
2. Whether the lower Court is right in denying the relief of a decree for specific performance?
12. Point No. 1:- The execution of Ex.A-1. suit agreement and the promissory notes, Exs.A-3 and A-4, is admitted by the defendants. The suit agreement, Ex.A-1 is dated 19-9-1976 and the promissory notes Exs.A-3 and A-4 are dated 14-2-1976 and 6-3-1976 respectively. The contract of sale under Ex.A-1 is with respect to two sheds with open space in total extent of 150 square yards mentioned in 'A' schedule and the property mentioned in 'B' schedule is given as security. Ex.A-2 is the plan attached to Ex.A-1. The total consideration under the agreement is Rs. 40,000, out of which Rs. 1,000/- was paid as advance at the time of agreement. On the date of execution of sale deed in terms of the agreement Ex.A-1, the amount due under the two promissory notes Exs.A-3 and A-4 has to be taken into account towards consideration and the balance, if any, shall be paid by the plaintiff to defendants 1 to 3, at the time of registration of the sale deed. On the date of the suit, both the promissory notes, Exs.A-3 and A-4 are not barred by limitation. Coming to know that defendants 1 to 3 are intending to sell the property covered by Ex.A-1 along with the rest of the property adjacent to the two sheds covered by Ex.A-1 to defendants 4 and 5, plaintiff gave telegraphic notices, Exs.A-5 and A-6 dated 27-9-1978 to the 4th defendant and 1st defendant respectively asking them not to alienate the property covered by Ex.A-1. Ex.A-5 telegram issued by the advocate for the plaintiff to the 4th defendant, is in the following terms:
"My client Peerchand entered into agreement of sale dated 19-9-1976 with J.V.S. Josyulu for the purchase of terraced shops mentioned therein in Ramachandrapura Agraharam, Guntur, you intend purchasing the same from J.V.S. Josyulu with notice of my client's agreement. It does not bind my client. It is not valid. Do not pay consideration and do not get the same registered. Otherwise legal action follows."
The telegram Ex. A-6 issued by the Advocate for the plaintiff to the 1st defendant is in following terms:
"You entered into agreement of sale dated 19-9-1976 with my client Peerchand for the sale of your terraced shops mentioned therein in Ramachandrapura Agraharam, Guntur, your are intending to sell the same to S. Hassan Siraj & Co., Guntur. It is not valid. Does not bind my client. Do not receive consideration and register the sale deed. Execute sale deed in my client's favour immediately. Otherwise legal action follows."
Defendants 4 and 5 entered into an agreement, Ex.B-5 dated 25-11-1978 with Defendants 1 to 3 for purchasing the entire house property, including the two shops, subject-matter of Ex.A-1, for Rs. 2,90,000/- and took possession of the entire property covered by Ex.B-5. Plaintiff obtained injunction restraining defendants 1 to 3 from executing the sale deed in favour of defendants 4 and 5. Plaintiff has categorically stated in the plaint that he issued telegram notices to defendants 1 and 4 to desist from selling the property covered by Ex.A-1. The 1st defendant in his written statement has admitted, in paragraph 7, that he received the telegram notices issued by the plaintiff, staring-"it is true that the plaintiff has served telegram notice to these defendants". In the written statement filed by defendants 4 and 5, no reference is made regarding the telegram notice, Ex.A-5.
13. In order to establish that defendants 4 and 5 are bona fide purchasers for value without notice of the agreement, Ex.A-1 in favour of the plaintiff, the burden heavily rests on defendants 4 and 5. It can be seen that the plaintiff issued telegram notices Exs.A-5 and A-6 to the 4th and first defendants respectively within six months from the date of agreement Ex.B-5 in favour of defendants 4 and 5. All the payments made by defendants 4 and 5 towards discharge of the debts due by defendants 1 to 3 to third parties are subsequent to the receipt of the telegram notice Ex.A-5 dated 27-9-1978. The plaintiff, as P.W.1 has stated that defendnats 4 and 5 knew about the execution of Ex.A-1 agreement by defendants 1 to 3 in favour of plaintiff. He categorically stated that he is not aware of the contract of sale in favour of defendants 4 and 5 and that he consented for the same. In the cross-examination, he denied the suggestion the notice was issued by him as security for the promissory notes and asserted that it was given for securing the sale deed, pursuant to the agreement of sale. Though it is suggested to P.W.1 that he agreed to take Rs. 40,000/- through mediator Poonamchand, it was denied. It must be noted that there was no reply in the written statements filed by the defendants that the plaintiff agreed to take Rs. 40,000/- by giving up his rights under the suit agreement, Ex.A-1. The first defendant, as D.W.1, admitted that subsequent to Ex.A-1 he executed fresh agreement for sale of the building to defendants 4 and 5 for Rs. 2,90,000/-, including the building covered by Ex.A-1. He also admitted that he agreed to calculate interest on promissory notes, Exs.A-3 and A-4 upto the date of registration and deduct it from the sale consideration under Ex.A-1. He further stated that "I executed Ex.A-1. It mentions that it is an agreement of sale for Rs. 40,000/-. I do not know the contents of Ex.A-1 as I signed it without reading it. I came to know about the contents of Ex.A-1 after filing of the suit when my lawyer Kesava Rao read it over to me". The first defendant admitted that he is a graduate and working as Municipal Commissioner. He further admitted that the plaintiff gave telegraphic notice to him before the suit was filed and that he did not give any reply. The 4th defendant examined himself as D.W.1. He stated - after I obtained the agreement of sale, plaintiff gave me a telegram and subsequently came to me and stated that Rs. 40,000/- is due to him from D-1. I offered to pay it. In spite of it plaintiff filed the suit". In cross-examination, D.W.2, however, stated - "plaintiff has not come to me. I came to know about the debt of plaintiff only when I received telegram notice, Ex.A-5. I did not go to plaintiff after receiving Ex.A-5. Plaintiff himself came to me and asked for his money. After receiving Ex.A-5 I was paying the creditors of D-1". He also stated - "except the first eight payments in Ex.B-18 I made all the payments subsequent to the suit. I never thought that I may go into troubles after making payments even after Ex.A-5". In the written statement filed by the 4th defendant, it is stated that a sum of Rs. 40,000/- was deposited into the Court as soon as the suit notices are received.
14. A reading of the above evidence discloses that the 4th defendant is only a subsequent agreement-holder to purchase the property from defendants 1 to 3, including the property, which is the subject-matter of the earlier agreement of sale, Ex.A-1, in favour of the plaintiff. Plaintiff gave telegraphic notices, Exs.A-5 and A-6 to defendants 4 and 1 respectively to desist from executing a sale deed with respect to the property covered by Ex.A-1, as there is already a valid agreement to sell by defendants 1 to 3 in his favour. Admittedly, the 4th defendant made all payments to the creditors of defendant No. 1 subsequent to the receipt of the telegraphic notice. The 4th defendant did not give any reply to the telegraphic notice Ex.A-5 received by him from the plaintiff. There is no evidence on record to indicate that any attempt has been made by defendants 4 and 5 for cancellation of the agreement to sell Ex.A-1, in favour of plaintiff. Except the self-serving evidence of defendants 1 and 2, there is no acceptable evidence that the plaintiff agreed to receive the sum of Rs. 40,000/- due to him under the promissory notes Exs. A-3 and A-4. On the contrary, the plaintiff, as P.W.1, denied that he ever agreed to receive the amount, to give up his rights under the agreement, Ex.A-1.
15. Further, as defendants 4 and 5 are only subsequent agreement-holders from defendants 1 to 3, they (defendants 4 and 5) cannot claim that they are bona fide purchasers for value. It is settled law that, under an agreement of sale, a person will not acquire any rights in the property covered by that agreement. In order to complete the sale transaction, pursuant to the agreement Ex.B-5, the 4th defendant should have taken all precautions and got the matter adjusted with the plaintiff regarding his rights under Ex.A-1. In the circumstances stated above, I have no hesitation to hold that defendants 4 and 5 are not bona fide purchasers for value without notice of Ex.A-1 in favour of plaintiff. Point No. 1 is answered accordingly.
16. Point No. 2:- The ordinary rule is that specific performance should be granted, (vide Prakash Chandra v. Angadlal, . The specific ground on which the suit is resisted is that Ex.A-1 is not intended to be acted upon, but was executed only as a security for payment of the amount due under the promissory notes, Exs.A-3 and A-4, executed by the 1st defendant in favour of plaintiff. It is the specific case of the defendants that it is customary for marwadis to take such agreements of sale from the persons indebted to them under promissory notes, as a safeguard, to secure payment due to them under the promissory notes. In this regard, except the self-serving evidence of D.Ws.1 and 2, there is no other independent and acceptable evidence on record to establish any such prevailing custom. The defendants have not examined any creditor of the marwadi community to establish the existence of such a custom. The defendants produced promissory notes, Exs.B-7 and B-8, dated 29-11-1975 and 1-12-1978 respectively, executed by 1st defendant in favour of one Shah Pratp Perajmal & Co., and the corresponding sale agreement Ex.B-9, dated 4-11-1976 executed by defendants 1 to 3 in favour of Shah Mangilal Jain. They also produced Ex.B-10 receipt dated 24-10-1978 issued by Majgilal Jain to the 5th defendant stating that he has received the entire amount due under the promissory notes executed by the plaintiff. Relying solely on the sale agreement Ex.B-9 dated 4-11-1976 and the receipt Ex.B-10, dated 24-11-1978, it cannot be concluded that there such a custom among the marwadis to obtain sale agreements from their debtors to ensure repayment of amounts due to them under promissory notes. As stated already, there is no independent evidence on record to establish this custom.
17. Admittedly, on the date when the suit was filed by the plaintiff, the promissory notes, Exs.A-3 and A-4 were not time barred, and are very much alive. The amount due under these promissory notes, as on the date of execution of the sale deed, has to be given credit to, towards consideration for Ex. A-1 sale agreement and the balance, if any, should be paid by the plaintiff to defendants 1 to 3. In those circumstances the very fact that the plaintiff has opted to file the suit for specific performance on he basis of Ex. A-1 agreement without insisting for payment of the amount due under the promissory notes, Exs. A-3 and A-4, itself discloses that the plaintiff is interested in purchasing the property covered by Ex. A-1. This conduct of the Plaintiff establishes that Ex. A-1 was not intended to be a mere security for ensuring the recovery of amounts due under the two promissory notes, Exs.A-3 and A-4. The learned Counsel for the defendants/ respondents 3 and 4 contended that the very fact that the suit was filed six months after the notice for specific performance was issued by the plaintiff, indicates that the plaintiff is not keen on enforcing Ex.A-1, but was interested only in getting back the money due to him under the promissory notes, Exs.A-3 and A-4. In K. Sambasivarao v. P. Bangaru Raju, AIR 1985 A.P. 395, this Court held that the delay in filing the suit is not a ground for refusing the relief of specific performance. Same is the view taken by the Supreme Court in Satyanarayana v. Yelloji Rao, . Therefore, the contention that the present suit is filed with a delay of six months after the notice for specific performance was issued; and therefore, specific performance cannot be granted, is irrelevant and cannot be accepted. Merely because the plaintiff has prayed for the alternative relief of damages, in the event of not granting the relief of specific performance, it does not mean that the alternative prayer alone can be granted in order to maintain balance of convenience eventhough the plaintiff had successfully proved that he did not violate any of the conditions of the agreement, Ex.A-1. Granting the relief of specific performance is an ordinary rule, unless there is any compelling reason to deny the same. In this case, the defendants have failed to establish that Ex.A-1 agreement is not intended to be acted upon. I have already held on point No. 1 that defendants 4 and 5 are not bona fide purchasers for value. Admittedly, defendants 4 and 5, subsequent to receipt of telegraphic notices, Exs.A-5 and A-6, took the risk of discharging the debts due to third parties by defendants 1 to 3. The equities, therefore, are in favour of granting specific relief sought for by the plaintiff. The mere fact that defendants 4 and 5 have spent considerable amounts in purchasing the property and in improving the same, is not sufficient to deny the relief of specific performance of the agreement of sale Ex.A-1 in favour of the plaintiff.
18. It is now stated by the defendants that subsequent to the disposal of the suit in the lower Court, defendants 1 to 3 have executed a sale deed in terms of Ex.B-5 sale agreement. In those circumstances, I hold that the plaintiff is entitled for the relief of specific performance in terms of the agreement of sale Ex.A-1, by defendants 1 to 5. Point No. 2 is answered accordingly.
19. After giving credit to the sum of Rs. 1,000/- paid as advance and also the amounts due as on the date of filing of the suit under the two promissory notes Exs.A-3 and A-4, plaintiff shall deposit in the lower Court the balance of the amount of agreed consideration under Ex.A-1 agreement within one month from to-day. Plaintiff shall also deposit the required stamp papers and the registration charges within two months from to-day in the lower Court. On such deposits being made by the plaintiff in the lower Court, defendants 1 to 5 shall execute the sale deed for the property covered by Ex.A-1 in favour of the plaintiff. Defendants 1 to 3 will be entitled to withdraw the amounts, if any, deposited by plaintiff towards sale consideration. Defendants 4 and 5 shall be entitled to withdraw the amount of Rs. 40,000/- deposited by them. The appeal is allowed accordingly with costs.