Bombay High Court
Lonkaran Kishorilal Paliwal vs Bhaskar Rambhau Ghive And Anr. on 3 March, 1992
Equivalent citations: 1992(3)BOMCR211, (1992)94BOMLR511
JUDGMENT B.U. Wahane, J.
1. This is an appeal against the judgment dated 31st July, 1982 passed by the Civil Judge, Senior Division, Buldana-Khamgaon in Special Civil Suit No. 10 of 1980, passing a decree against the original defendant Lonkaran Kishorilal Paliwal.
2. The facts giving rise to the present appeal are as under:-
The original plaintiffs (present respondents) Bhaskar Rambhau Ghive and his brother Dinkar Rambhau Ghive had instituted Special Civil Suit No. 10 of 1980 against the defendant (present appellant) Lonkaran Kishorilal Paliwal, for specific performance of contract in respect of the suit property situated at Mouza Tamgaon, taluq Jalgaon-Jamod, district Buldana, bearing survey No. 178, admeasuring 5 hectors 52 R, i.e. 13 acres 26 gunthas, containing 6 lemon trees, hut and a well. According to the plaintiffs, the suit property described in plaint para 1 is owned by the defendant/appellant, who had agreed to sell the said land to the plaintiffs/respondents under registered agreement of sale dated 30th May, 1979. On that day, an earnest amount of Rs. 10,000/- was paid before the Sub-Registrar. It was agreed between the parties that the sale-deed will be executed for the total consideration of Rs. 30,000/- in favour of the plaintiffs on or before 15th March, 1980. The defendant/appellant also agreed to sell the suit land to the plaintiffs/respondents free from all encumbrances. According to the plaintiffs/respondents, they were ever ready and willing to perform their part of the contract and they are still ready and willing to purchase the suit land by making the payment of balance amount of consideration. The plaintiffs/respondents asked the defendant to execute and register the document of sale in respect of the suit land, but the defendant avoided to do so on some pretext or the other. Consequently, the plaintiffs/respondents served the defendant/appellant with a notice dated 5th March, 1980, through their advocate asking the defendant/appellant to remain present in the office of the Sub-Registrar Khamgaon, on 15th March, 1980 at about 11 A.M. for executing the sale-deed. The notice issued by the plaintiffs/respondents, was duly served upon the defendant/appellant on 8th March, 1980 and the same was replied by him on 10th March, 1980.
3. The plaintiffs/respondents contended that they are purely agriculturists and they own about 15 acres of land. Prior to the agreement of sale, the plaintiffs/respondents had sold about 25 to 30 acres of land and as the suit land being adjacent to the land owned by the plaintiffs/respondents and being convenient, the plaintiffs/respondents were interested in purchasing the suit land from the defendant/appellant. The plaintiffs sold some of their property and raised the amount to purchase the land in suit. It is also contended that the defendant/appellant besides having the suit land, deals in sale and purchase of cotton and food-grains. He also gets income from house, property by way of rent. The plaintiffs/respondents denied the contention raised in reply to the notice, being false. According to the plaintiffs/respondents, they remained present in the office of the sub-Registrar, Tangaon on 15th March, 1980, with the balance amount of consideration and waited for the defendant/appellant till 5 P.M. The defendant/appellant did not turn up to execute the sale-deed and, therefore, the plaintiffs/respondents are constrained to institute the civil suit for specific performance of contract, in the alternative the plaintiffs/ respondents have claimed a decree for refund of earnest money along with damages sustained to the plaintiffs/respondents on account of breach of contract by the defendant/appellant.
4. The defendant/appellant denied the claim of the plaintiffs/respondents except the description of the suit property in para 1 of the plaint. It is submitted by the defendant/appellant that there are 20 lemon trees and permanent godown with piller constructed in cement concrete ad-measuring 12' X 36' with the roof of wooden poles and the country tiles. The well is permanently constructed and fitted with electric motor pump. It was contended that the defendant/appellant is not the sole owner of the suit property. It is joint family property and as such his minor sons Omprakash, Ganesh and his wife Gangabai are also the co-owners. The defendant/appellant denied that he agreed to sell the suit property to the plaintiffs/respondents. However, execution of the deed of agreement dated 30th May, 1979, is admitted. Similarly, he specifically contended that the suit agreement was nominal and was not to be acted upon. The document was got executed by the plaintiffs/respondents from the defendant/appellant as a security of loan. It is denied that the amount of Rs. 10,000/- was paid in presence of the Sub-Registrar. According to him, the amount of Rs. 5,000/- was received by him. But, he was made to admit the payment of Rs. 10,000/- towards the earnest money before the Sub-Registrar. He denied that he had agreed to sell the suit property to the plaintiffs/respondents for the consideration of Rs. 30,000/- and also agreed to execute the sale deed on or before 15th March, 1980. As there was no real contract as he did not intend to alienate his property, the question of readyness and willingness to perform his part of the contract, does not arise. The defendant/appellant specifically contended that the allegations levelled in the reply notice dated 10th March, 1980, are correct. It is specifically submitted by the defendant/ appellant that the plaintiffs/respondents with the help of Mahadeo Pundlik Gawande, a money-lender, paid the money to the defendant/appellant, but got executed the deed of agreement in the name of the plaintiffs/respondents. According to the defendant/appellant, the land in suit being the only land to earn his bread as well as of other members of his family and as he has no source of earning, he never expressed to sell the land in suit. He also denied that he deals in sale and purchase of cotton and food-grains.
5. The defendant/appellant admitted that prior to 1974, he had a small grocery shop for about 5 to 6 years, but he had to close it down because of the financial difficulties. He specifically contended that the suit land is the only source of income for the purpose of maintenance of his family. According to the defendant/appellant, as he was in need of a sum of Rs. 5,000/-, he approached the plaintiffs/respondents and then approached Mahadeo Gawande through the Plaintiffs/respondents for grant of loan. The plaintiffs/respondents and said Mahadeo however, put the condition that the defendant/appellant would have to execute the nominal document of agreement of sale in respect of the suit property in the name of the plaintiffs/respondents as the said Mahadeo Gawande owns land in excess of ceiling area. The defendant/appellant had to agreed to the said terms as he was in need of loan. He was assured by the Plaintiffs/respondents and Mahadeo Gawnade that the document would be only nominal and was obtained by way of security for the loan and they also agreed to return the said document on repayment of the loan with interest. He further contended that he had purchased of the suit land for Rs. 7,000/- in the year 1967 and at that time it was a dry crop land. He had spent lot of amount for bringing the land into effective cultivation. He constructed a well at the cost of Rs. 10,000/-, obtaining a loan of Rs. 4,000/- from Buldana District Land Development Bank. He did not satisfy the entire loan amount by 30th May, 1979. The hut costs Rs. 5,000/-. Thus, according to the defendant/appellant, the property in the suit was worth more than 1 lac. Therefore, according to him, the transaction in the suit was unconscionable and unjust. It was simply a money-lending transaction. It was agreed that the defendant/appellant should repay the amount with interest at 11/2 times i.e. Rs. 7,500/- till 15th March, 1980. He further contended that he along with Abdul Rahim son of Abdul Gani, approached the plaintiffs/respondents and Mahadeo Gawande, with Rs. 7,500/-, but they refused to accept the amount and demanded Rs. 10,000/-. At that time, he had no sufficient amount to meet the demand. However, he showed his willingness to repay even Rs. 10,000/- by reply to the notice. The defendant/appellant also contended that he had earlier transaction of money-lending with the plaintiffs/respondents in the year 1975. At that time, he had taken the loan of Rs. 2,000/- and had executed the souda chithi in respect of the property in suit and after the repayment of the loan, the souda chithi was destroyed. The suit property was encumbant with the co-operative society and hence a decree of specific performance of contract cannot be granted under the Maharashtra Co-operative Societies Act. On the basis of these submissions, he prayed for dismissal of the suit.
6. To substantiate the rival claims, the plaintiff/respondents Dinkar examined himself as P.W.I. and also examined Mahadeo Gawande. The defendant/appellant Lonkaran examined himself as D.W. 1 and also examined Abdul Rahim as D.W. 2 and Pandurang as D.W. 3 Smt. Naik, the learned Counsel for the appellant/defendant and Shri Bhide, the learned Counsel for the respondents/plaintiffs, took me through the evidence led by the parties and documents placed on the record.
7. According to Mrs. Naik, the learned Counsel for the appellant, it was a simple loan transaction between the appellant and the respondents and the deed of agreement was only a nominal document obtained by way of security for loan and thereby it was not to be acted upon. Further it is submitted that besides the agricultural land in suit, the appellant had no other source of income for maintenance of his family. Considering the fertility of the land, the pucca well fitted with the electric pump, a permanent structure, the suit land was worth more than 1 lac rupees and, therefore, the appellant cannot agree, by any stretch of imagination, to sell the same for Rs. 30,000/-. Thus, the transaction in suit is an unconscionable contract. The learned trial Court has not considered the facts and circumstances in true and correct perspective and erred in using his discretion against the defendant/appellant by passing a decree for specific performance of contract.
8. Shri Bhide, the learned Counsel for the respondents, submitted that to grant and not to grant the specific relief is a discretionary power of the Court under section 20 of the Specific Relief Act. The terms of the contract and the conduct of the parties at the relevant time for entering into the contract with other circumstances under which the contract was entered into, are to be considered for the proper adjudication. The respondents agreed to purchase the land disposing of his earlier lands, the land in suit being more suitable as it is situated between the lands of two brothers. It is further submitted that no document has been placed on record to substantiate the fact that the loan of the co-operative bank was outstanding. The appellant has admitted in an unequivocal term that he received Rs. 10,000/- and this admission is before the Sub-Registrar. The notice was issued to the appellant directing him to attend the office of the Sub-Registrar on 15-3-1980. But, he failed to comply with the notice. Besides this, the respondents have sold their fields vide Exhs. 27, 28 and 45, and thereby collected the amount to enable them to purchase the field in suit. It is also submitted that the appellant has other a vocation of life than the field in suit, he being the money-lender. All these circumstances indicate that the respondents entered into an agreement of sale, the land being convenient for them being situated between the fields of two brothers. As the respondents had already sold their fields, they will have to face more hardships than the appellant. It is also specifically submitted that the respondents have agreed to purchase the land at the prevalent market rate. The consideration was not inadequate at all. Even assuming that there is inadequacy of consideration, it will not come in the way of the respondents to get the relief of specific performance of contract. Shri Bhide, the learned Counsel for the respondents further submitted that mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b). Further it is submitted that considering the facts and circumstances mentioned above, the Court has rightly exercised its discretion passing a decree of specific performance in favour of the respondents and it need not be interfered with. A reliance has been placed on a case of Prakash Chandra v. Angadlal and others, , wherein Their Lordships observed:
"The ordinary rule is that specific performance should be granted. It ought to be denied only when equitable considerations point to its refusal and the circumstances show that damages would constitute an adequate relief."
Shri Bhinde, the learned Counsel for the respondents, further relied on a case of Ram Sundar Saha and others v. Kali Narain Sen Choudhury and others , and submitted that mere hardship of the result of the contract will not affect court's discretion to grant specific relief. Similarly, the specific performance cannot be refused to a purchaser merely on a ground that another purchaser offered a higher price after the contract was concluded.
In a case of Rangasami Gounder v. Periamuthu Gounder and others , it is observed that inadequacy of consideration is not a ground for refusal of relief of specific performance. Further it is observed that even in cases where the price is grossly inadequate courts require an additional dose of proof that by reason for such a design on the part of avaricious purchaser the vendor has been victimised.
A reliance has been placed on a case of Dodku v. Jafar Mohd., 1970 Mah.L.J. (Note)9. In that case it is observed "Defendant's sister had a share in the house and would suffer hardship and that the defendant had no other house are irrelevant and not sufficient to refuse specific performance. Hardship must be of defendant and unforeseen."
9. The defendant Lonkaran specifically deposed that the agriculture is the only source of his income. He is original resident of Rajasthan. In 1979 also he had no other source of income. He did not intend to sell the suit land in 1979. He agreed to the execution of the deed of agreement dated 30th May, 1979, but it was a nominal and not to be acted upon. He was in need of Rs. 5,000/- for the purposes of cultivation. He had previous transaction with Mahadeo when the loan of Rs. 2,000/- was advanced to him. After the repayment, the deed of agreement was cancelled. Shri Mahadeo is a money-lender. He approached the plaintiffs as they had thick relations with Mahadeo and requested them for the loan of Rs. 5,000/-. Mahadeo told them that he will not advance the loan and entered into the agreement of sale of land, as he had land in excess. He suggested to execute the agreement of sale in favour of the plaintiffs. In fact, he received only Rs. 5,000/- but in the deed of agreement consideration was mentioned as Rs. 10,000/-. It was agreed between the parties that the defendant would return the amount 11/2 times more than Rs. 5,000/-. 4-5 months thereafter, he went to the plaintiffs with money i.e. Rs. 7,500/- along with Abdul Rahim. However, the plaintiffs demanded Rs. 10,000/-. At that time, he had only Rs. 7,500/- but, he agreed to pay even Rs. 10,000/- after some times.
He further deposed that he had constructed a well at the cost of Rs. 10,000/- in bricks and cement. He had incurred loan from Bhuvikas Bank for the said purpose. He installed electric pump on the well. He had a pucca cattle shed in this suit field. At the time of the alleged agreement of sale, the price of the suit land was Rs. 10,000/- per acre, its soil being good and adjacent to the village. He further deposed that the land of a similar quality of the plaintiffs, sold to Namdeo Bhopale on 22/1/1979, area 0.12 R fetched Rs. 5,000/-. It means Rs. 25,000/- would have come approximately for 1 hector.
10. To substantiate the fact that the appellant had taken a loan from the Land Development Bank and he was indebted in the year 1979, he placed on record Exh. 33, the receipt dated 6-2-1980 regarding the payment of instalments. Exh. 35 is the receipt dated 3-3-1980 to show that he sold cotton to Chandak Brothers. The land was irrigated one and he was paying irrigation tax and to that effect he filed a tax receipt Exh. 36. Exh. 38 is the receipt for the land revenue paid in 1980. According to the defendant, he raised the loan from Sangrampur Gram Sewa Sahakari Sanstha and in the year 1977-78 the balance of Rs. 3132/- was against him. To this effect, the certificate Exh. 39 is placed on record. Exhs. 40, 41 and 42 are the land revenue receipts. Exh. 44 is the certified copy of the extract of 7/12 register issued on 8-8-1980.
11. A reliance has been placed on the various sale-deeds to show that at the relevant time of alleged agreement of sale, the prices of the lands were much more than the one incorporated in the deed of agreement. Exh. 27 is the copy of the index. According to this document, the plaintiff No. 2 Dinkar sold his land survey No. 3/1-A, measuring O H. 11 R. for Rs. 5,000/- on 22-1-1979. Exh. 28 is also the sale index which shows that the plaintiff No. 2 Dinkar sold his land survey No. 73/0 of gut. No. 191, measuring 1.89 hector (4.37 acres) for Rs. 5,000/- in favour of his own brother Manohar Rambhau Ghive on 27-4-1979. Exh. 54 is the another sale-deed by which the plaintiff Dinkar sold his land survey No. 72/1, admeasuring zero hector 95 R (2 acres 14 gunthas) for Rs. 3,000/- on 2nd March, 1979 to Padmakar Damodhar Ghive, his cousin.
12. It is the case of the plaintiffs as deposed by plaintiff No. 2 Dinkar Rambhau Ghive, that the defendant had come to his house 15 days before the execution of the agreement of sale with a proposal to sell the suit land. In examination-in chief, Shri Dinkar deposed that he sold his other agricultural lands to enable him to purchase the suit land and he produced the documents vide Exhs. 25, 27, 28 and 29. Exh. 27 is the index of sale dated 22-1-1979. Exh. 28 is another sale index dated 27-4-1979 and Exh. 54 is the sale-deed dated 2-3-1979. It is thus crystal clear that none of the above sale-deeds are within the period of 15 days from the date of alleged deed of agreement i.e. dated 30-5-1979. Therefore, no reliance can be placed on the testimony of the plaintiff Dinkar in this regard.
13. Smt. Naik, the learned Counsel for the appellant, rightly submitted that respondents sold their measuring 0.12 R for Rs. 5,000/- which shows that it fetched the price at Rs. 20,000/- per hector. Therefore, according to her, the land in suit which measures 5 hector 52R, would naturally fetch more than a lac rupees. The other sales vide Exh. 28 dated 27-4-1979 and vide Exh. 54 dated 2-3-1979 are in between the blood relations and, therefore, it is rightly said that these are sham and bogus sales which cannot be taken into consideration to determine the prevalent market value in the month of May, 1979.
14. The defendant examined Shri Pandurang son of Bhagwan as witness No. 3, who was attesting witness to Exh. 50, the sale- deed of which Exh, 50-A is the zerox copy. He deposed that Tanabai and Radhabai had sold the field to Murlidhar vide sale-deed dated 2-3-1978 for Rs. 15,000/-, which was admeasuring 0 hector 95-R means about 2 acres 14 gunthas. If a field less than a hector could fetch Rs. 15,000/- in the year 1978, after a year, how the suit field measuring 5 hectors 52R could be sold for Rs. 30,000/-, having a well fitted with electric pump and a pucca structure for tethering the cattles. It, therefore, indicates that it is an unconscionable contract.
15. In support of the above contentions, a reliance has been placed upon a case, Sukumar Bysack v. Sushil Kanta Banerjee, (DB). Their Lordship observed that the discretion of the Court to enforce specific performance in cases where the bargain in question has been established by evidence to be hard and unconscionable, cannot be exercised arbitrarily and must be exercised judicially in the circumstances of each case. It is further observed:
"Where in a suit for specific performance of an agreement for sale, the bargain was found to be not merely improvident or for inadequate consideration but definitely unconscionable, it would be inequitable to enforce performance of contract, and at best the plaintiff could be entitled to a refund of earnest money with stipulated interest."
16. The appellant/defendant Lonkaran has specifically deposed that in 1979, he had no other source of income than the land in suit. This has not been controverted by the respondents/plaintiffs. However, this fact has been admitted by the respondent No. 2 Dinkar in his evidence. In para 2 of the cross-examination, he deposed that in the year 1957-58, the defendant run cloth shop and thereafter he closed it. He further deposed that the defendant closed grocery shop in the year 1965. At present, he does not run any shop. The suit land is the only land owned by the defendant. The defendant purchased this land in 1968. He also deposed that the defendant dug and constructed a well. The defendant had fixed electric motor pump on the said well. The hut was constructed by the defendant. Lemon trees have been planted by the defendant. He further deposed that the defendant had no need to sell the suit land. The defendant himself was cultivating the suit land. The defendant owned a pair of bullocks. The defendant used to produce irrigated crops to some extent.
In para 3 of his deposition, the plaintiff Dinkar stated that the suit field is nearer to village. From these admissions, it is crystal clear that the defendant had no other land than the suit land and he had no need to sell the suit land as he was himself cultivating the same. From these admissions of the respondent No. 2, I have no hesitation to hold that the sale transaction as a loan transaction and the deed of agreement was executed by way of security to the loan amount.
17. In a case of Dodku v. Jafar Mohd., 1970 Maharashtra Law Journal (Note)9, the Lordship observed :
"Though the grant of specific performance is discretionary the discretion has to be judicially exercised and the reasons given by courts below are capable of being examined by the appellate Court and where necessary the use of the discretion is to be corrected."
Similarly, grant or refusal of the specific performance of contract to sell, the principles governing the determination of hardship have been enumerated in a case of Smt. Ranganayakamma v. N. Govinda Narayan, . Their Lordships observed "It is a well established doctrine that the Court will not enforce specific performance of a contract, the result of which would be to impose great hardship on either of the parties to it. Section 20 provides that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such a relief merely because it is lawful to do so. The discretion of the Court, however, should be exercised on reasonable principles capable of correction by a Court of appeal. When the section states that "the jurisdiction to decree specific performance is discretionary" to it, it only means that the mere existence of a legal right is not sufficient to attract the remedy. An agreement may be valid in law and there may not be sufficient grounds for its cancellation; yet upon a fair and just consideration of the attendant circumstances, the Court may abstain from its enforcement.
The illustrations given under sub-sections (2) and (3) of section 20 in which a Court could refuse specific performance are not exhaustive and there may be a broad band of different cases in which also the Court may deny relief to the plaintiff. The relief may vary with the circumstances of individual cases judged by the familiar legal standard of the reasonable man. The legislature in the first place has given the discretion to Courts; and secondly, it was emphasised that the discretion is required to be exercised on sound and reasonable basis guided by judicial principles. Thirdly, it was provided that the decision should be capable of correction by a Court of appeal. The latter two aspects are always implied and need not be stated when the power is conferred upon courts. The purpose of stating these principles was to discourage a tendency to subject a case to "legal straitjackets", and to ensure that Judges are not led into the trap of legalism on the validity of the agreement. Judges cannot approach the matter with a mind sentimental to the rights of the parties, but must take into account the relative hardships in granting or refusing the relief prayed for.
The hardship contemplated under C1. (b) of sub-section (2) of section 20 may be hardship or oppression arising from the terms of the agreement itself or from circumstances existing at the time of entering into it. This has been so clarified by Explanation (2) thereunder. The mere loss or inconvenience resulting from the enforcement of a lawful bargain however, onerous should not be regarded as hardship in this context. Inadequancy of price is not also a ground to be considered, unless the purchaser stands in a fiduciary position to the vendor or fraud entered into the agreement. Lack of knowledge of the real value of the property to be sold on the part of the vendor is not also aground for refusal.
On the facts of the case it was held that the hardship on the defendant would be more than the hardship caused to the plaintiff, by enforcing specific performance of the Contract. It was refused."
18. Considering the evidence on record together with the other circumstances discussed in the preceeding paras, I am of the opinion that the findings of the learned lower Court are unsound and unreasonable as he has not considered the evidence and specific admissions in true and correct perspective. There is specific admissions of Dinkar that the appellant was not in need to dispose of his property as well as he had no other land than the land in suit. The appellant has admitted that he was in need of money because of loss of crops and, therefore, he approached the plaintiff No. 1 who took him to Mahadeo, a money lender. From the facts it is crystal clear that the appellant was in need of money to the tune of Rs. 5,000/- and he executed a deed of agreement as a security for the loan amount. He being in need of money, he had to succumb to the desire of the respondents and Mahadeo, to execute a deed of a agreement for Rs. 10,000/-. It is also in the evidence that the appellant had been to the plaintiff No. 1 with an amount of Rs. 7,500/-. i.e. Rs. 5,000/- as the principal amount and Rs. 2,500/- as an interest as agreed upon, but the plaintiff refused to accept the amount and demanded Rs. 10,000/-. To this also the appellant agreed and sought time. But, the respondents issued notice directing him to attend the office of the Sub-Registrar to execute the sale deed in respect of the suit filed. As the appellant was and is ready to pay Rs. 10,000/- to the respondents, he is directed to pay Rs. 10,000/- to the respondents alongwith interest @ 9% p.a. from the date of the judgement and order of the lower Court dated 31st July, 1982 till its realisation. In the result the appeal is allowed and the judgement and order passed by the learned lower Court on 31-7-1982 is set aside. No order as to costs.
Appeal allowed.