Bangalore District Court
Sei Aditi Power Private Limited vs P B Venkatanna on 9 July, 2024
KABC170003692022
IN THE COURT OF LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE,
COMMERCIAL COURT, BENGALURU (CCH-84)
Present: Sri S. Sudindranath, LL.M., M.B.L.,
LXXXIII ADDL. CITY CIVIL & SESSIONS JUDGE
BENGALURU.
COM.AP.No.11/2022
Dated on this 9th day of July 2024
Plaintiff SEI Aditi Power Private Limited,
Being a company incorporated under
the Companies Act, 2013
Having its registered address at:
10th Floor, Menon Eternity,
No.165, St. Mary's Road,
Alwerpet, Chennai-600018.
Represent by its
Authorized Signatory.
(By Sri.Raghuram Chadambi,
Advocate)
// versus //
Defendants 1. Mr. P.B. Venkatanna,
S/o Kuri Ramappa,
Residing at Palavalli village,
Nagalmadike Hobli,
Pavagada Taluk,
Tumkur District.
2. Shri Justice Ashok B Hinchgiri,
Former Judge,
High Court of Karnataka,
Arbitration and Conciliation Centre,
Bengaluru.
(Domestic and Inetrnational)
2
CT 1390_Com.AP.11-2022_Judgment.doc
KABC170003692022
3rd Floor, East Wing, Khanija Bhavan,
Race Course Road, Bengaluru,
Karnataka-560001.
(R1 by Sri.K.N.N, Advocate
R2 - Arbitrator)
Date of Institution of suit : 01/02/2022
Nature of the suit : Distribution and
Licensing Agreements.
Date of commencement of :
recording of the evidence
Date on which the : 09/07/2024
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
02 05 08
JUDGMENT
This is a petition under section 34 of the Arbitration and Conciliation Act, filed by the claimant before the Learned Arbitrator, challenging the arbitral award dated 22-09-2021, passed by the Learned sole arbitrator, namely respondent No. 2, herein in AC 88 of 2019.
2. The respondent No. 1 herein, who was the respondent before the arbitral tribunal, has entered appearance through counsel and filed detailed objections to the present petition. 3
CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 The notice to Learned arbitrator / respondent No. 2 has been dispensed with.
3. Thereafter, I have heard the arguments of Sri. C. K. Nanda Kumar, Learned Senior Counsel for Petitioner and I have also heard the arguments of Learned Counsel for respondent No. 1.
4. I have perused the records of the case.
5. The only point that arises for my consideration is :-
Whether the present petition deserves to be allowed and the arbitral award dated 22-09- 2021, passed by respondent No. 2 herein in AC 88 of 2019, deserves to be set aside?
6. My answer to the above point is in the negative for the following :-
REASONS
7. The facts in brief are that, it is the case of the petitioner / claimant that the claimant is a company engaged in the business of generating solar power. The claimant identified 205 acres of private land situated in Pavagada Taluk, Tumkur district, Karnataka for the purpose of establishing solar power plant and also made requisite 4 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 application under section 109 of Karnataka Land Reforms Act for acquiring the said land. The land of the respondent measuring 11 acres situated in survey No. 378 of Palavalli village, Nagalambadike Hobli, Pavagada Taluk, Tumkur district was part of the said identified land. To purchase the said land measuring 11 acres belonging to the respondent, the petitioner and respondent entered into sale agreement dated 20-7-2015 under which sale consideration was fixed at Rs 3.75 lakhs per acre and petitioner paid advance amount of Rs 10 lakhs to the respondent under the sale agreement. It is the specific case of the petitioner that, in pursuance of the said sale agreement, the petitioner has paid the full sale consideration amount to the respondent and consequently respondent permitted the claimant to construct solar power plant in the land. Thereby it is stated that the claimant has performed its part of the contract since the entire sale consideration amount has already been paid. When things stood thus, the family members of respondent issued legal notice dated 2-01-2016 claiming that respondent is not the absolute owner of Schedule property and therefore incompetent to enter into sale agreement with the claimant. It 5 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 is contended that respondent with a view to extract higher amount from the claimant is delaying execution of the sale deed, although the claimant has been ready and willing to perform its part of the contract and in fact since entire sale consideration is already paid, nothing further remains to be performed by the claimant. Under these circumstances, the claimant issued notice dated 1-3-2016 invoking the dispute resolution clause under the agreement between the parties and called upon respondent to affirm appointment of arbitrator. Since respondent did not come forward to affirm the appointment of arbitrator, the claimant filed petition under section 11 of the Arbitration and Conciliation Act before the Hon'ble High Court of Karnataka and in the said petition, Hon'ble High Court of Karnataka has appointed respondent No. 2 as sole arbitrator to settle the dispute between the parties. On the respondent No. 2 / sole arbitrator entering upon the reference, the claimant filed claim petition before the Learned arbitrator reiterating above facts and seeking the following reliefs;
Direction to respondent to execute sale deed in respect of schedule property in favour of the claimant 6 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 Directing respondent not to interfere with peaceful possession and enjoyment of schedule property by the claimant.
8. The respondent entered appearance before the Learned arbitrator and filed detailed statement of objections. In the said statement of defence, it was contended that the respondent has entered into sale agreement dated 20-7-2015 not with the claimant but with entity known as M/s Land Bank and agreed to sell the land measuring 11 acres to M/s Land Bank or its nominee at sale consideration of Rs. 4,50,000 per acre and has received advance amount of Rs. 10,00,000 under the agreement. It was contended that on the very same day on which respondent entered into agreement with M/s Land Bank, believing the representations of M/s Land Bank, the respondent went to sub-registrar's office with the intention of registering sale agreement entered into with M/s Land Bank and at that time the claimant conspired with M/s Land Bank and has cheated the respondent and got the agreement of sale which is subject matter of the claim petition registered in its favour without knowledge of the respondent and taking advantage of old age and innocence of the 7 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 respondent. The respondent denied having received any consideration amount much less entire sale consideration amount from claimant and contended that respondent has only received Rs. 10,00,000 from M/s Land Bank and not from claimant. Without prejudice to the above contention that the sale agreement is void since it is tainted with fraud, it was contended that the claimant has not performed its obligations under the contract and therefore disentitled from seeking specific performance. Another contention raised was that the claim was barred by limitation.
9. On the basis of the above rival pleadings between the parties, the Learned arbitrator has framed the following issues;
1) Whether the claimant proves that it has performed its part of the obligations, that it has been always ready and willing to perform its part of the obligations as per the agreement of sale dated 20-7-2015 and that therefore it is entitled to the relief of specific performance of the said agreement?
2) Whether the claimant proves that the agreed sale consideration is Rs. 3,75,000 per acre and that it has paid advance sale consideration of Rs. 10,00,000 for 11 acres?
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3) Whether the claimant proves that it is entitled to the relief of direction restraining respondent from interfering in claimant's possession of schedule property?
4) Whether the respondent proves that the claim of the claimant is barred by time?
5) Whether the respondent proves that the said sale agreement was secured by claimant by playing fraud on the respondent and hence it is unenforceable?
10. In the enquiry before the Learned Arbitrator, the representative of claimant was examined as PW1 and representative of M/s Land Bank was examined as PW2 and the claimant got marked Ex. P1 to P13. On behalf of respondent, the respondent was examined as RW1 and got marked Ex. R1 to R8. Amongst the documents produced and got marked by both sides, Ex. P6 is the sale agreement dated 20-7-2015 in favour of claimant and Ex. R6 is agreement of even date executed by respondent in favour of M/s Land Bank.
11. After the closure of evidence of both sides in the enquiry and after hearing the arguments of both sides, the Learned 9 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 Arbitrator has passed the impugned award holding as follows;
i. The claimant is disentitled to the relief of specific performance.
ii. The sale consideration of the schedule property cannot be determined either based on sale agreements or from intentions of the parties. The respondent has received Rs. 10 lakh towards advance sale consideration of the Schedule Property from the claimant's agent, M/s Land Bank.
iii. If the claimant is in settled possession of the Schedule Property, the respondent cannot dispossess the claimant without following the due process of law.
iv. If the claimant gives up its claim regarding possession of Schedule Property, it is entitled to get back Rs. 10 lakhs from the respondent.
v. The claim petition is not barred by limitation. vi. No finding on allegation of fraud is delivered. vii. No order has to cost.
viii. Stamp is paid in accordance with Karnataka Stamp Act.
ix. The award is signed and issued in three originals, one for the record of the centre and the remaining two to each of the parties. 10
CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022
12. Aggrieved by the said arbitral award, the claimant before the arbitral tribunal is before this court in this petition.
13. Shri C.K. Nanda Kumar, Learned senior counsel for Claimant / Petitioner herein, submitted that the arbitral award suffers from uncertainty, rendering it patently illegal on its very face. He highlighted that the award provides hypothetical relief by holding that, in case, the claimant is in settled possession of the property, then the respondent cannot dispossess the claimant without following due process of law and if the claimant gives up its claim regarding possession, then it is entitled to get back Rs. 10 lakhs from the respondent. He submitted that these findings lead to uncertainty. Learned senior counsel then referred to the observations of the arbitral tribunal at paragraph 43 that, if the pleadings, agreement, payment of consideration, etc. are marked by lack of bona fides, then the party would be disentitled to claim the relief even if the transaction is within the framework of law in other respects. He submitted that this observation is patently erroneous since in view of the 2018 amendment of Specific Relief Act, section 20 which conferred discretion on the court to grant relief of specific 11 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 performance has been substituted and therefore, post the amendment, there is no discretion in the court or tribunal in so far as awarding the relief of specific performance is concerned and if the claimant proves the sale agreement and proves readiness and willingness, then there is no element of discretion left to the arbitral tribunal and the arbitral tribunal is bound to grant specific performance. Apart from this, Learned senior counsel argued that the finding of the tribunal that the sale consideration agreed to between the parties cannot be determined is patently erroneous since the sale consideration is fixed at Rs. 3.75 lakhs per acre in the registered sale agreement at Ex. P6 which is admittedly subsequent to the other sale agreement executed in favour of M/s Land Bank wherein the sale consideration is stated as Rs. 4.50 Lakhs per acre. He submitted that Ex. P6 being a registered document and being subsequent to Ex. R6 prevails over Ex. R6 and therefore, in the face of Ex. P6, the Learned Arbitrator has committed patent illegality in holding that the sale consideration agreed to between the parties cannot be determined. He submitted that in any event, the Learned Arbitrator has acted beyond his jurisdiction and gone beyond 12 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 the contract between the parties and thereby gone beyond the reference by creating a new contract holding that once the possession is given up by the claimant then the claimant is entitled to refund of the advance amount of Rs. 10 lakhs. He submitted that in any event, said direction is issued by applying principles of equity and Learned Arbitrator had no jurisdiction to apply equity by going beyond the terms of the contract. He further submitted that the finding of the Learned Arbitrator that claimant has not proved its financial capacity to perform its part of the contract is not based on any material and is contrary to the material on record and hence deserves to be set aside. He further submitted that the impugned award is contrary to the interest of the country since the claimant has set up solar plant which is vital to the country's interest in the property and by the impugned award the operation of the solar plant is put in jeopardy by refusing specific performance to the claimant. Ultimately he submitted that the claimant / petitioner has shown its bona fides by depositing Rs 15 lakhs as per orders of this court in the present petition and the respondent having parted with the land for setting up of solar plant is now trying to 13 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 jeopardize the entire plant by refusing to execute sale deed in favour of the petitioner.
14. Per Contra, Learned Counsel for Respondent No. 1 supported the impugned award. He argued that, claimant has come before the Learned Arbitrator with a false case that entire consideration under the agreement has been paid which claim has come unraveled in the trial since PW1 has admitted that entire sale consideration under the agreement is not paid and it is only part sale consideration of Rs 10 lakhs which has been paid. He further submitted that the Learned Arbitrator came to the correct conclusion in holding that sale consideration agreed to between the parties is not discernible since, on the same day, there are two agreements viz. in one agreement in favour of the claimant at Ex. P6 the sale consideration is mentioned as Rs 3.75 lakhs per acre whereas in the other sale agreement of the same day executed just a few hours earlier at Ex. R6 the sale consideration is stated as Rs 4.50 lakhs per acre and thereby he submitted that it is impossible for any reasonable man to accept that the respondent had agreed to sell the property for Rs 3.75 lakhs per acre and therefore he submitted that Learned Arbitrator 14 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 came to the correct conclusion in refusing specific performance.
15. Having considered the rival contentions, at the outset, it is to be noted that, the law is well settled that relief of specific performance is a discretionary remedy and a party seeking discretionary remedy of specific performance should come to the court / tribunal with clean hands. The contention of the Learned Senior Counsel for Petitioner that, in view of the 2018 Amendment to Specific Relief Act, the element of discretion has been removed and thereby once the agreement and readiness and willingness is proved the tribunal has no right to exercise discretion to refuse specific performance, cannot be accepted for the simple reason that, the Amendment to Specific Relief Act substituting Section 20 which confers discretion in the matter of granting specific performance is of the year 2018 whereas the agreement is of the year 2015 i.e., 20-7-2015. In this regard, the Hon'ble Apex Court has held in the case of Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd., (2023) 1 SCC 355 :
2022 SCC OnLine SC 1079 at page 376, as follows;15
CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022
52. This provision, which remained in the realm of the courts' discretion, was converted into a mandatory provision, prescribing a power the courts had to exercise when the ingredients were fulfilled. This was a significant step in the growth of commercial law as the sanctity of contracts was reinforced with parties having to comply with contracts and thereby reducing efficient breaches.
54. Having come to the conclusion that the 2018 Amendment was not a mere procedural enactment, rather it had substantive principles built into its working, this Court cannot hold that such amendments would apply retrospectively.
58. In the case at hand, the Amendment Act contemplates that the said substituted provisions would come into force on such date as the Central Government may appoint, by notification in the Official Gazette, or different dates may be appointed for different provisions of the Act. It may be noted that 1-10-2018 was the appointed date on which the amended provisions would come into effect.
59. In view of the above discussion, we do not have any hesitation in holding that the 2018 Amendment to the Specific Relief Act is prospective and cannot apply to those transactions that took place prior to its coming into force.
(Emphasis Supplied)
16. In the light of the above law laid down by Hon'ble Apex Court, it is crystal clear that, 2018 Amendment to Specific Relief Act is prospective and cannot apply to transactions that took place prior to coming into force of the Act. The 2018 16 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 Amendment has come into force on 1-10-2018 whereas the transaction in the present case i.e., the sale agreement is dated 20-7-2015. Therefore, the Amendment to Specific Relief Act substituting Section 20 is inapplicable to the present case. Once this conclusion is reached, as already noted, unless the claimant has come to the court / tribunal with clean hands, he cannot seek the discretionary relief of specific performance. In this regard, reference may be made to the law laid down by Hon'ble Apex Court in the case of Lourdu Mari David v. Louis Chinnaya Arogiaswamy, (1996) 5 SCC 589 at page 590, as follows;
2. It is settled law that the party who seeks to avail of the equitable jurisdiction of a court and specific performance being equitable relief, must come to the court with clean hands. In other words the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief. The Division Bench has pointed out in the judgment three grounds which disentitle the plaintiff to the equitable relief as he came with a positive case of incorrect and false facts as set out in paras 4 to 6.
(Emphasis Supplied)
17. In the case on hand, the claimant has admittedly come to the court with a false case. In the claim petition, at paragraph 10, it is stated as follows;
17
CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 "That after having received full sale consideration, the Respondent, permitted the claimant herein to construct the solar power plaint ..."
18. Again, at paragraph 13 of the claim petition, it is stated as follows;
"Since the claimant has already paid the total sale consideration payable to the respondent under the terms of agreement for sale, nothing remains on its part to perform."
19. Therefore, the claimant has come to the tribunal with the specific case that, it has paid the entire sale consideration contemplated under the agreement at Ex. P6 which comes to Rs. 41,25,000 at the rate of Rs. 3.75 lakhs per acre in respect of 11 acres. On the other hand, this contention of the petitioner is shown to be admittedly false in the inquiry, since in the cross-examination of PW1 in answer to question no. 46 whether entire sale consideration under the agreement has been paid, PW1 has answered as follows;
"No, we have not paid entire sale consideration. We have paid only Rs.10 lakhs with respect to Schedule Property."
20. This lack of bona fides on the part of the claimant in coming to the tribunal with false case has been specifically 18 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 noted by the Learned Arbitrator at paragraph 42 (i) of the arbitral award. Therefore, on this ground that, claimant has not come to the tribunal with clean hands, the Learned Arbitrator was perfectly justified in refusing the relief of specific performance.
21. No doubt, Learned Senior Counsel for Petitioner is justified in contending that, the arbitral tribunal committed error in holding that the sale consideration agreed to between the parties is not discernible. This is because the respondent in the Statement of Defence has specifically admitted that he has signed and executed the registered sale agreement in favour of the claimant at Ex. P6. In this regard, the only contention of the respondent is that, his signature to Ex. P6 was obtained by playing fraud on him and he signed it under the impression that, he is signing the agreement containing same terms as the agreement at Ex. R6 which he had executed a little earlier in favour of entity known as M/s Land Bank. This defence taken by the respondent is forthcoming from the averments at paragraph 3 of the Statement of Defence wherein it is stated as follows; 19
CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 "The respondent believed the representations of M/s Land Bank and went to the Sub-Registrar office with the intention of registering the sale agreement that it had entered into with M/s Land Bank. The respondent knew nothing about the claimant and never intended to sell Schedule Property to the claimant. The contents of the alleged agreement of sale dated 20-7-2015 which is allegedly entered into with the claimant was not known to the respondent. The claimant has conspired with M/s Land Bank and has cheated the respondent and got an agreement of sale which is the subject matter of this claim petition registered in its favour without his knowledge and consent, taking advantage of the old age and innocence of respondent."
22. From the above stand taken by respondent in the Statement of Defence, it is crystal clear that, the respondent does not dispute his signature on Ex. P6 or that he went to the Sub-Registrar office and executed and got registered the agreement at Ex. P6. His only contention is that, he did so under the impression that he is getting registered the agreement at Ex. R6 in favour of M/s Land Bank and therefore, in essence, it is the contention of respondent that Ex. P6 is result of fraud and misrepresentation.
23. The Learned Arbitrator has quite correctly refused to go into the question of fraud. This is because the law is well 20 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 settled that question of fraud cannot be gone into by arbitral tribunal and should be gone into only in the course of a regular trial before the courts of law. In this regard, reference may be made to the law laid down by Hon'ble Apex Court in the case of N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72 : (2010) 1 SCC (Civ) 12 : 2009 SCC OnLine SC 1732 at page 77, as follows;
21. In our opinion, the contention of the respondents relating to the jurisdiction of the arbitrator to decide a dispute pertaining to a matter of this proportion should be upheld, in view of the facts and circumstances of the case. The High Court in its impugned judgment has rightly held that since the case relates to allegations of fraud and serious malpractices on the part of the respondents, such a situation can only be settled in court through furtherance of detailed evidence by either parties and such a situation can not be properly gone into by the arbitrator.
(Emphasis Supplied)
24. In this regard, in the award at paragraph 45 as well as at paragraph (vi) of the operative portion of the award, the Learned Arbitrator has specifically held that he has not gone into the question of fraud and no finding on allegation of fraud is delivered.
21
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25. Once it is concluded that respondent admits signing Ex. P6 and getting it registered and his only defence is that it is fraudulent and this defence of fraud is not gone into by the Learned Arbitrator, it follows that Learned Arbitrator was bound to accept Ex. P6 at face value and therefore the Learned Arbitrator ought to have accepted that the consideration agreed to between the parties is Rs 3.75 lakhs as stated in Ex. P6. The fact that there is another agreement of the same date at Ex. R6 wherein the sale consideration is mentioned as Rs 4.50 lakhs is inconsequential because the Learned Arbitrator has himself observed at paragraph 50 as follows;
"Nothing prevents a party from underselling his property. The vending party may enter into a sale transaction to sell his immovable property for a consideration which is lower than the prevailing market value".
26. Therefore, as long as Ex. P6 was not set aside by the Learned Arbitrator on the ground of fraud, which the Learned Arbitrator was prohibited from doing since question of fraud cannot be gone into in arbitration proceedings, the Learned 22 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 Arbitrator was bound to accept sale consideration as mentioned in Ex. P6. To this extent, I find the Learned Arbitrator has committed a serious error in recording the finding that the sale consideration agreed between the parties cannot be ascertained. However, this will not have any bearing on the ultimate result of the proceedings because even accepting that the sale consideration between the parties has been fixed as stated in Ex. P6, as already noted supra, specific performance has to be refused since claimant has approached tribunal with false case that claimant has paid entire consideration amount agreed under the sale agreement.
27. Apart from this, even if claimant coming to the court with false case is overlooked, the Learned Arbitrator has rightly recorded the finding that claimant has failed to prove its readiness and willingness to perform its part of the contract. In this regard, Learned Arbitrator has observed at Paragraph 42 (iv) of the Award that answers of PW1 to questions 93, 94 and 96 are of non-committal nature and PW1 has stated that he is unaware of the financial condition 23 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 of the claimant and is unaware whether claimant company has the money or it has to raise a loan to pay the respondent.
28. Law is settled that, readiness and willingness includes financial capacity to pay the balance sale consideration and the burden is on the plaintiff /claimant to prove its financial capacity to pay the balance sale consideration amount and the financial capacity has to be proved irrespective of whether the same is disputed by the other side and more importantly the financial capacity has to be proved by producing documentary evidence. In this regard reference may be made to the law laid down by Hon'ble High Court of Karnataka in the case of Punny Akat Philip Raju v. Dinesh Reddy, 2016 SCC OnLine Kar 6806 : ILR 2016 Kar 2252 : (2016) 5 Kant LJ 91 : (2016) 3 KCCR 2372 : (2016) 3 AIR Kant R 836 : (2016) 4 ICC 863 : 2016 AIR CC 3225 : (2017) 170 AIC (Sum 6) 3 at page 2279, as follows;
PROOF OF READINESS
32. The proof of readiness necessarily means demonstration of financial ability or capacity to pay the balance sale consideration and take the sale deed. When a person on oath states in the witness box that he is ready with the requisite funds, he must produce 24 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 some evidence to prove his possession of the required funds. The explanation makes it clear that the proof of requisite funds does not mean he should produce the currency before the Court or he should deposit the money in Court. But at the same time, mere statement on oath in the witness box that he is possessed of the requisite funds would also do not prove possession of funds. The said proof has to be necessarily by way of documentary evidence. The reason being, if, the payment is to be made in cash i.e., by handing over currency, currency is a documentary evidence. The explanation makes it clear that to prove readiness, the plaintiff need not produce the currency before the Court. If the balance consideration is to be deposited in the Court such a deposit is also evidenced by documentary evidence, which is also not necessary by virtue of the explanation.
34. Therefore, mere stepping into the witness box and saying on oath that he is ready with the balance sale consideration or that he is going to borrow money from any financial institution or that he has got sufficient funds in his Bank accounts or that he has kept money in Fixed Deposit, without that oral evidence being supported by documentary evidence will not prove the plaintiff's readiness to pay the balance sale consideration. It is immaterial whether such oral evidence is challenged in cross-
examination or not. The plaintiff has to prove to the satisfaction of the Court that he possessed the requisite funds. He has to produce such documentary evidence, which would enable the Court to come to the conclusion that plaintiff is ready with the requisite balance sale consideration to complete the sale transaction. If no evidence is adduced in this regard by way of documentary evidence, no prudent man would come to the conclusion that the person has proved the possession of funds. In the absence of any 25 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 such documentary evidence being produced, it is a case of plaintiff's case being not proved. Plaintiff cannot expect the Court to pass a decree for specific performance of a contract of sale when the plaintiff has not proved his readiness to perform his part of the contract.
(Emphasis Supplied)
29. In the light of the above law, irrespective of whether financial capacity is disputed or not, it was expected of the claimant to produce documentary evidence to prove its financial capacity. In the case on hand, no such documentary evidence is produced and the only bank statement produced at Ex. P-13 is that of M/s Land Bank, which is produced to show payment of advance amount of Rs 10 lakhs to the respondent. In fact, the claimant could not have produced any document to show its financial capacity because the case of the claimant was that entire sale consideration amount has already been paid, which as already noted supra has been falsified by the answers of PW-1 in cross-examination. Therefore, the learned arbitral tribunal came to the correct conclusion in holding that claimant has failed to prove its readiness and willingness to perform its part of the contract and on this ground also the finding of the learned arbitral 26 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 tribunal refusing the relief of specific performance is perfectly in accordance with law and cannot be interfered, much less, in a section 34 petition.
30. Now turning to the other aspect considered by the arbitral tribunal in respect of relief of injunction claimed by the claimant, the learned arbitrator has taken note that, as per the sale agreement at Ex. P-6, which is the claimant's own document, the possession has not been handed over to the claimant and it is agreed that possession will be handed over at the time of execution of the sale deed. Learned arbitrator has appreciated the fact that there is no other document produced by the claimant to show when and under which document respondent handed over the possession of the property to the claimant. The learned arbitral tribunal has also noted that the only document produced in respect of possession are photographs and from the photographs it cannot be ascertained whether the solar plant is put up in the property which is the subject matter of the sale agreement or in any other property. Therefore, learned arbitrator has come to the conclusion at paragraph 57 of the award that, "it is difficult to give acceptance to the assertion of the claimant that 27 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 it is in possession of the Schedule Property." After so holding, instead of refusing outright the relief of injunction, the learned arbitrator has only made a general observation that, in case, claimant is in settled possession, the respondent cannot dispossess the claimant without following due process of law. This is, in fact, not a finding of fact because the earlier finding is that, the claimant has failed to prove its possession. The observation in the Award that, if claimant is in settled possession, the respondent cannot dispossess the claimant otherwise than by due process of law is nothing but a general reiteration of the law that a party in settled possession cannot be dispossessed even by the true owner otherwise than in accordance with law. Therefore, simply because the learned arbitrator has made the said observation at paragraph 58 of the award and also in the operative portion does not mean that the arbitral award suffers from any illegality or uncertainty and therefore even on this ground the arbitral award cannot be set aside.
31. In so far as the finding of the learned arbitral tribunal that in case claimant gives up claim regarding possession, it is entitled to get back Rs. 10 lakhs, advance amount is 28 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 concerned, this is nothing but showing of the largesse by the arbitral tribunal to the claimant and if anybody should have an objection to the same, it is the respondent and certainly not the claimant. It is to be noted that, in the claim petition, the claimant has not sought for alternative relief of refund of advance amount. Section 22 of Specific Relief Act lays down as follows;
22. Power to grant relief for possession, partition, refund of earnest money, etc.--
(1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908 (5 of 1908), any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask for-- (a) possession, or partition and separate possession, of the property, in addition to such performance; or (b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or [made by] him, in case his claim for specific performance is refused. (2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just for including a claim for such relief.
(3) The power of the court to grant relief under clause (b) of sub-section (1) shall be without prejudice to its powers to award compensation under Section 21.
(Emphasis Supplied) 29 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022
32. Therefore, under section 22 of the Specific Relief Act, the alternative relief of refund of advance amount cannot be given to the claimant when the said alternative relief is not specifically prayed for. Therefore, the learned arbitrator, on refusing the relief of specific performance, could not have granted the alternative relief of refund of advance amount, in view of the bar contained in section 22 of the Specific Relief Act. However, only as a largesse, the learned arbitrator has observed that, in case, claimant gives up its claim of possession, then it is entitled to refund of the advance amount of Rs. 10 lakhs. No doubt the said finding of the learned arbitral tribunal, strictly speaking, is contrary to section 22 of the Specific Relief Act, but by making the said finding, the learned arbitrator has in fact granted largesse to the claimant and therefore if any party should have grievance to the same, it is the respondent, but the respondent has not challenged the award on this ground. Anyhow, this finding, even if set aside, will not have any bearing on the ultimate result of the proceedings. Therefore, it is not possible to set aside the award on this ground. Therefore, viewed from any angle, the impugned arbitral award is in accordance with law 30 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 and does not call for interference, under section 34 of the Arbitration and Conciliation Act.
33. Now, let me briefly deal with the grounds raised in the present petition and also the arguments of Learned Senior Counsel and also the other contentions taken in the written arguments filed on behalf of the petitioner. At paragraph 16 of the grounds of the Petition, it is contended that, the impugned arbitral award failed to take note that there is a fully functional project on the property. Even in the written arguments, grounds are raised in this regard that the award is against the interest of the country and against public interest since the award endangers the solar power plant put up on Schedule Property and adjacent lands. However, as already noted supra, the Learned Arbitrator has recorded a finding of fact that petitioner has failed to prove its possession over the Schedule Property. Therefore, these contentions are unacceptable.
34. At paragraph 25 of the grounds of petition, it is contended that while executing the sale agreement, respondent suppressed the fact that the land is ancestral 31 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 land. At paragraph 26, it is contended that it is settled law that Karta can execute sale agreement of HUF Property without the consent of other coparceners as long as sale is for legal necessity or benefit of estate. These grounds raised are irrelevant since the Learned Arbitrator has not proceeded on these grounds and instead refused specific performance entirely on the ground that the claimant has approached the tribunal with unclean hands and also failed to prove readiness and willingness to perform its part of the contract.
35. At paragraph 28 of the grounds, it is contended that the impugned award prevents the claimant from receiving the advance back. This contention is not open to the claimant, in view of bar contained in Section 22 of Specific Relief Act, already discussed supra, when claimant has not sought for the alternative relief of refund of advance amount.
36. Ultimately, at paragraph 29 of the written arguments filed by the petitioner, it is contended that, even today petitioner is ready and willing to pay balance sale consideration and perform its part of the contract and to show its bona fides, petitioner has already deposited Rs. 15 32 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 lakhs in pursuance of orders of this court in the present petition. This contention will not avail the petitioner because the law is settled that readiness and willingness has to be proved from date of agreement till date of decree. In this regard, reference may be made to the law laid down by Hon'ble High Court of Karnataka in the case of Chandrakanthamma v. B. Ramakrishnaiah - 2015 SCC OnLine Kar 6141 : (2016) 1 AIR Kant R 273 : (2016) 1 KCCR 670 : (2016) 4 ICC 251 : 2016 AIR CC 470, as follows;
21. Therefore, it is clear, in order to prove his readiness and willingness, the amount of consideration which the plaintiff has to pay to the defendants, must of necessity be proved to be available right from the date of the execution of the agreement till the date of the decree. He must prove that, he is ready and has always been willing to perform his Part of the contract. The factum of his readiness and willingness to perform his Part of the contract has to be adjudged with reference to the conduct of the Parties and the attendant circumstances.
(Emphasis Supplied)
37. In the light of the above law and when the Learned arbitrator has already rightly concluded that petitioner has not proved its readiness and willingness from the date of 33 CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022 agreement, it follows that depositing Rs. 15 lakhs belatedly in the present petition is of no consequence.
38. All other contentions raised in the petition, written arguments and in the arguments of Learned Senior Counsel for petitioner are already covered and answered in the above discussion. Accordingly, for all the reasons noted supra, I hold that the impugned arbitral award does not call for interference and accordingly answering the point for consideration in the negative, I proceed to pass the following :-
ORDER The petition under Section 34 of the Arbitration and Conciliation Act is hereby dismissed, with cost.
Office to issue soft copy of this judgment to both sides, by email, if furnished.
[Dictated using Dragon Professional Speech Recognition Software Version 15.3, transcript revised, corrected, signed and then pronounced by me in open court on this the 09th day of July, 2024] (Sri. S. Sudindranath) LXXXIII ADDL.CITY CIVIL AND SESSIONS JUDGE, COMMERCIAL COURT; BANGALORE.34
CT 1390_Com.AP.11-2022_Judgment.doc KABC170003692022