Kerala High Court
C.R.Viran vs A.Sujaudheen on 31 October, 2008
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
&
THE HONOURABLE MR. JUSTICE P.SOMARAJAN
WEDNESDAY, THE 4TH DAY OF APRIL 2018 / 14TH CHAITHRA, 1940
RFA.No. 17 of 2009
AGAINST THE ORDER/JUDGMENT IN OS 525/2006 of SUB COURT,ERNAKULAM
DATED 31-10-2008
APPELLANT(S)/DEFENDANT IN THE SUIT:
1. C.R.VIRAN,
S/O.LATE RAMASWAMY IYER,
VISHALABHAVAN, CHITTTOOR ROAD, KOCHI-682011.REP., THROUGH
POWER OF ATTORNEY HOLDER,C.V.VENKATESH, ALIAS SURESH,
KRISHNAGEETH APARTMENTS, NO.98,, 2ND MAIN ROAD,
SHESHADRIPURAM, BANGALORE-560020. [DIED]
*ADDL.APPELLANTS IMPLEADED
Addl. 2. NAGALAKSHMI, AGED 79 YEARS,
WIFE OF LATE C.R.VIRUN, 98/6, KRISHNAGEET APARTMENTS, 2ND MAIN
ROAD, SHESHADIRIPURAM, BANGLORE-560020.
Addl. 3. SITA GOPAL, AGED 60 YEARS,
D/O LATE C.R VIRUN, NO.1, BHUVANESWARI NAGAR, PLOT 10,
VELACHERY, CHENNAI-600042.
Addl. 4. RADHA RANGANATHAN, AGED 56 YEARS,
D/O LATE C.R.VIRAN, 3C, GRAND RESIDENCY 137, VELACHERY MAIN
ROAD, VGP SELVA NAGAR, CHENNAI-600042.
Addl. 5. C.V.VENKATESH, AGED 52 YEARS,
S/O LATE C.R VIRAN, 98/6, KRISHNAGEET APARTMENTS, 2ND MAIN
ROAD, SHESHADIRIPURAM, BANGLORE-560020.
Addl. 6. PADMINI ANAND, AGED 52 YEARS,
WIFE OF LATE C.V.ANAND, C.C.27/2752, C2, 1ST FLOOR, EDELWEISS
OF LITTLE FLOWER HOMES, KADAVANTHARA, KOCHI-682020.
Addl. 7. ABIJITH ANAND, AGED 24 YEARS,
SON OF LATE C.V.ANAND, C.C.27/2752, C2, 1ST FLOOR, EDELWEISS OF
LITTLE FLOWER HOMES, KADAVANTHARA, KOCHI-682020.
Addl. 8. ANJU ANAND, AGED 20 YEARS,
D/O LATE C.V.ANAND, C.C.27/2752, C2, 1ST FLOOR, EDELWEISS OF
LITTLE FLOWER HOMES, KADAVANTHARA, KOCHI-682020.
BY ADVS.SRI.R.D.SHENOY (SR.)
SMT.I.SHEELA DEVI
ADDL.A2 TO A8 SRI.S.VINOD BHAT
SRI.LEGITH T. KOTTAKKAL
RFA NO.17/2009 -2-
RESPONDENT(S)/(PLAINTIFF IN THE SUIT):
A.SUJAUDHEEN, S/O.ABBAS GANI, FATHIMA
MANZIL, VENNALA P.O. ARAKKAKADAVU, KOCHI-28.
*ADDL.R2 IMPLEADED:
Addl.2. C.C.RAMASWAMY,
S/O LATE C.R.VIRAN, P.O.BOX 37267, DUBAI, U.A.E.
(*LEGAL HEIRS OF DECEASED SOLE APPELLANT ARE IMPLEADED AS ADDL.A2 TO ADDL.18 AND
ADDL.R2 AS PER ORDER DATED 28.2.2017 IN IA NO.2952/2016)
R1 BY ADV. SRI.S.RAMESH BABU
ADDL.R2 BY ADV. SRI.M.K.THANKAPPAN
THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 15-03-2018,THE
COURT ON 4/4/2018 DELIVERED THE FOLLOWING:
RFA NO.17/2009
APPENDIX
APPELLANT'S EXHIBITS
ANNEXURE A: TRUE COPY OF CHALAN DATED 29.1.2009.
ANNEXURE A1: TRUE COPY OF THE CHALAN DATED 30.1.2009.
//True Copy//
PS to Judge
Rp
A.M. SHAFFIQUE & P.SOMARAJAN, JJ.
==========================
RFA No. 17 of 2009
====================
Dated this, the 4th day of April, 2018
JUDGMENT
Shaffique, J.
This appeal is filed by the defendant in a suit filed for specific performance of a contract for sale of immovable property. The respondent is the plaintiff in the suit. Original appellant died and legal heirs had been impleaded as additional appellants 2 to 8 and additional 2nd respondent.
2. The material allegations in the suit are as under:-
Plaintiff entered into an agreement with the defendant on 29/7/2005 for purchasing an extent of 68.649 cents of property in Poonithura village offering to pay an amount of `3.20 lakhs per cent. A sum of `25 lakhs was paid as advance and plaintiff offered to purchase the property within a period of one year. Though there was no provision in the agreement to pay further advances, on the request of the defendant, plaintiff paid `5 lakhs on 22/8/2005 and a further amount of `5 lakhs on 6/9/2005 to be adjusted towards sale RFA No.17/2009 -:2:- consideration. While so, the defendant by letter dated 25/1/2006 (Ext.A2) informed the plaintiff that he will not be in a position to execute the sale deed and the plaintiff has to take back the advance amount and withdraw from the agreement. Defendant also stated that the property was conveyed in the name of a company and the Directors of the Company are not permitting sale of property. The plaintiff alleges that despite the said disinclination of the defendant to assign the property, when he issued a legal notice dated 26/6/2006 (Ext.A4), defendant had later agreed to comply with the terms of the agreement and the period of agreement was extended upto 25/8/2006.
3. Plaintiff further averred that in the meantime, defendant informed that the title deeds were pledged to the Bank of India towards loan obtained by third parties. According to the plaintiff, he had agreed to make necessary arrangements to meet the dues to the Bank of India and to obtain the original title deeds in his favour. Since the defendant did not comply with the terms of agreement, the suit is filed stating that the plaintiff has always been ready and willing to perform his part of the bargain, that is to pay the balance consideration to the defendant after adjusting RFA No.17/2009 -:3:- the advance amount. Accordingly, the plaintiff sought for specific performance of the agreement dated 29/7/2005 and for consequential reliefs and in the alternative, claims for recovery of the amounts advanced by him.
4. In the written statement defendant took up a contention that he is the Director of M/s.Bagsvig, a public limited company which has its factory and the business place in the plaint schedule property. The property belongs to the company and it is not the personal asset of the defendant. When the plaintiff who is dealing in real estate business approached the defendant offering to purchase the property, the defendant had informed that unless the approval of the members of the Board are obtained, the property could not be sold. It was at the insistence of the plaintiff that he entered into an agreement and `25 lakhs was received as advance on the bonafide belief that the Board will sanction the concurrence. He further contended that the Board of Directors of the company refused to sell the assets as the unit was running very profitably and lot of workers were earning their livelihood out of the employment in the unit. But the plaintiff was ready to face the contingency and he was willing to take the responsibility RFA No.17/2009 -:4:- though knowing that it was impossible for performance. Defendant being made aware of the aforesaid situation started to take law into the hands and intimidated the defendant and members of the Board with dire consequences. Plaintiff himself compelled the defendant to extend the period in order to see that approval of the Board is obtained. Out of fear, defendant co- operated with the extension, but it was not voluntary. The defendant further contended that the plaintiff's readiness and willingness for purchasing the property was not correct and that the plaintiff cannot be ready to purchase the company property from one of its Directors without approval of the Board. It is further contended that the defendant was ready to return the amount received in advance whenever plaintiff conveys his willingness to receive the same and he had even deposited the money .
5. The Trial Court having framed the issue, evidence was taken. Plaintiff was examined as PW1 and he relied upon Exts.A1 to A13. Defendant's son was examined as DW1 and he placed reliance on Exts.B1 to B16(a). Ext.A1 is the agreement for sale of property, Ext.A2 is letter dated 25/1/2006 issued by the RFA No.17/2009 -:5:- defendant to plaintiff wherein he expressed the disinclination to withdraw from the agreement. Ext.A3 is the copy of release deed No.4872/1995 of SRO, Maradu. Ext.A3 indicates that the property is in the name of the defendant and not in the name of the company. Ext.A4 is the lawyer's notice dated 26/6/2006 issued by the plaintiff to defendant seeking specific performance of the agreement. Ext.A5 is letter dated 27/10/2005 issued by Bank of India, Mumbai Branch to M/s Bagsvig High Tech Ltd., a copy of which is marked to the plaintiff wherein they have indicated the outstanding amount due for settling the loan account and releasing the title deed.
6. While giving evidence, PW1 stated that he has issued a cheque dated 21/8/2006 in favour of Bank of India for an amount of `85,10,000/- being the outstanding amount. The cheque was however returned by letter dated 26/8/2006 stating that by the time the account has already been closed. The plaintiff in his evidence has stated that all alone plaintiff was ready and willing to pay the balance consideration and to get the sale deed executed but it was only on account of the breach committed by the defendant that the sale deed could not be executed. He had RFA No.17/2009 -:6:- also stated that at all times he was ready and willing to perform his part of the contract.
7. The defendant's son was examined as DW1. He is the Managing Director of M/s.Bagsvig Hi-tech Ltd., a company registered under the Companies Act. Though execution of the agreement is admitted, his evidence is that the defendant had to execute the agreement on account of the old age and the force exerted by the plaintiff. In the scheduled property, the factory, office and other structures of the company are situated. The plaintiff was informed that without the permission of the Director Board, the property could not be sold. The defendant is under treatment for his old age. In the chief affidavit DW1 says that the agreement was not executed by mutual consent. However, he admits that advance amount was received and they are willing to return the said amount. He had further stated that the plaintiff had offered to purchase the property to derive excessive profit. It is also averred that the property originally belonged to the defendant and one Kerala Varma. They were running a manufacturing unit of heat treatment equipments in a factory situated in the property. Kerala Varma had released his rights in RFA No.17/2009 -:7:- favour of the defendant. Thereafter the factory was run as a partnership. Defendant was one of the partners. The property was transferred to the partnership. The building was constructed by Bagsvig Electronics, the business concern at that time. Ext.B1 is the bill given by Royal Construction Company contractors for constructing the building. The financial statement of the firm for the year 1994-95 is produced as Ext.B2. In the financial statement, among the fixed assets in list no.13, the plaint schedule property is also mentioned. Bagsvig Electronics is a partnership firm which was been registered on 19/1/1964 and the plaint schedule property is shown as the place of business. Ext.B3 is the certificate of registration. Ext.B4 is the certificate issued by the Small Scale Industries Department treating M/s Bagsvig as an SSI Unit. It is further averred that later the partnership was changed to Bagsvig Hi-tech Limited and was functioning in the very same premises. Kerala Varma who was a partner of M/s Bagsvig Electronic had retired from the firm on 22/1/1979 and the retirement deed is Ext.B6. The property was treated as that of a partnership and it was valued accordingly. In the audit report ending with 31/3/1996 of M/s Bagsvig Hi-tech Ltd, the plaint RFA No.17/2009 -:8:- schedule property is shown as an asset of the company. It is stated in the audit report that the fixed assets of the partnership firm was taken over by the company. The company also has Central Excise Registration which is marked as Ext.B9. Certain other documents were also produced like lease deed in favour of Godrej Ltd, property tax receipts, electricity invoice, water bills, etc., to indicate that the property belonged to the company. In the evidence it is further indicated that if this property is sold by the defendant, the company will be put to irreparable loss and injury. In cross examination it is indicated that Ext.B6 was of the year 1979 and it is thereafter that a release deed had been executed with reference to the property as per Ext.A3 in the year 1995. In further cross examination he admits that there is no material to indicate that the property was contributed to the partnership firm.
8. Ext.A1 is the agreement. The agreement recites that the scheduled property having an extent of 68.649 cents is part of document No.4872 of the year 1995. The derivation of title has also been indicated in the document. Though it is contended by the appellant/defendant that the property was contributed to a RFA No.17/2009 -:9:- firm and later on it is in the name of a company, no materials had been produced to prove the said fact. An attempt had been made to prove that the property was contributed to a firm M/s Bagsvig Electronic Industries. But, Ext.B3 has been issued by the Registrar of Firms which indicates that the defendant and one P.Kerala Varma were the partners of the firm. The firm was constitued apparently on 1/11/1964 and this document evidences the change of the firm's name as Bagsvig with effect from 1/03/1971. The firm has been given permanent registration certificate as a small scale unit by the District Industries Centre as evident from Ext.B4. Ext.B5 is an affidavit of the defendant given before the Managing Director, KSIDC wherein it is stated that he is the Director of Bagsvig Hi-Tech Private Ltd., and he does not own or possess any land or property. His affidavit is only a self serving document and has no evidentiary value for the purpose of the case on hand. Ext.B6 is a deed of retirement for dissolving the firm M/s Bagsvig. This document is executed on 22/1/1979. It is inter alia stated in the said document that the property of the partnership business consists of land, building, plant and machinery, furniture, fixtures, fittings, tools and equipments, raw RFA No.17/2009 -:10:- materials, components, trade mark etc,. It is stated that Sri.P.Kerala Varma, one of the partners, has decided to retire from the firm. It is further stated that the continuing partner shall take over all the assets and liabilities together with the goodwill, trademark and monogram 'Bagsvig' of the partnership firm as a going concern. It is also stated that as per agreement dated 22/1/1979 executed between the parties, the retiring partner will have no further claims either in the firm's business or in the properties of the firm otherwise than as provided in the agreement. The continuing partner shall take over all the liabilities of the firm including the loans taken from State Bank of India, the Industries Department of the Government of Kerala or any other public or private corporations. This document also does not indicate as to whether the property has been acquired by the firm or contributed to the firm's business at any point of time. Ext.B7 is the balance sheet of the firm as on 22/1/1979. The schedule to the fixed assets would show that the property is valued at `11,22,000/- and the factory building, machinery, building etc., are seen separately valued, the total would come to `17,80,395/- and after depreciation, the value is fixed at RFA No.17/2009 -:11:- `17,24,924/-. What was the property that is valued is not specifically stated in the said document. Ext.B8 is the auditor's report and balance sheet of Bagsvig Hi-tech Ltd., a company as on 31/3/1996. Schedule 7 is statement of fixed assets as on 31/3/1996 wherein the land has been valued at `2,08,74,000/- and including all other assets, the value would come to `2,35,39,407.88/-.
9. The contention of the defendant is that the aforesaid land had been utilized by the company after the firm was dissolved and therefore, without the consent and approval of the company, the sale agreement should not have been executed. Ext.B10 is a deed of surrender of lease of the company Bagsvig Hi-Tech Ltd., represented by its Director Mrs.Nagalakshmi Viran and the defendant. The document indicates that the company had taken building Nos.30/1172 to 30/1175 and 30/1177 to 30/1179 along with the appurtenant land and all rights therein in respect of land situated in 1.5 acres of land in Sy.Nos.722/1, 2, 3 and 4 to its owner, the defendant herein. This document is produced to prove that surrender of lease is created as per document No.2161/02 dated 17/6/2002. This document would only prove RFA No.17/2009 -:12:- that the defendant had given on lease the property in the schedule annexed which includes building and 1.5 acres of land to the company represented by one of its Directors. Exts.B11 and B11(a) are the lease deed and rent agreement between the company on the one hand and M/s Godrej Sara Lee Ltd., on the other hand and yet another agreement with Bharati Cellular Ltd. All these documents have been produced to indicate that the company was managing or was holding the properties. But the evidence discloses the fact that the partnership firm Bagsvig was utilizing the property for the purpose of running a unit and it has constructed a building thereof. One of the partners retired and thereafter the property came in possession of the defendant as a partner of the firm exclusively. He had permitted the company to use the land and building for the purpose of functioning of the company and the land had been shown as an asset of the company.
10. It is true that for the purpose of contributing an immovable property, as an asset of a partnership firm, though no registered document is required, there has to be evidence to show that the property was actually contributed to the firm. RFA No.17/2009 -:13:-
11. In this case, other than the oral testimony of DW1 and the balance sheet, nothing else had been produced to indicate that the property was contributed to the firm and thereafter it was transferred in the name of the company. Therefore, we have to proceed on the basis that the defendant himself is the owner of the property.
12. Learned counsel for the appellant however raised the following contentions:-
(I) Though the plaintiff had pleaded that he is ready and willing to purchase the property by complying with his part of the contract, there is absolutely no evidence to prove that the plaintiff was in possession of sufficient funds for acquiring the property by paying the balance sale consideration. (II) That the Court below had not properly appreciated the question whether plaintiff's readiness and willingness to comply with the terms of contract was bonafide and factually correct.
(III) Even assuming that the plaintiff was always ready and willing to comply with his obligations under the agreement, the Court below was expected to consider whether a decree RFA No.17/2009 -:14:- should be granted under section 20 of the Specific Relief Act which is not borne out by the judgment.
13. Learned counsel for appellant also placed reliance upon the judgment of the Apex Court in B.K.Sri Harsha v. M/s.Bharath Heavy Electricals Ltd [AIR 2008 SC 1267]. In the said judgment, the Apex Court placed reliance upon an earlier judgment in Rajeshwari v. Puran Indoria [(2005) 7 SCC 60] wherein it was held as under:-
"5. Normally, a suit for specific performance of an agreement for sale of immovable property involves the question whether the plaintiff was ready and willing to perform his part of the contract in terms of Section 16 of the Specific Relief Act, whether it was a case for exercise of discretion by the court to decree specific performance in terms of Section 20 of the Specific Relief Act and whether there were laches on the part of the plaintiff in approaching the court to enforce specific performance of the contract. In some cases, a question of limitation may also arise in the context of Article 54 of the Limitation Act on the terms of the agreement for sale. Other questions like the genuineness of the agreement, abandoning of the right to specific performance, a novation and so on, may also arise in some cases. No doubt, a finding on the three primary aspects indicated earlier would depend upon the appreciation of the pleadings and the evidence in the case in the light of the surrounding circumstances. Could RFA No.17/2009 -:15:- it be appropriate to understand these questions purely as questions of fact in the context of Section 100 of the Code of Civil Procedure, 1908? In Raghunath Prasad Singh v. Dy. Commr. of Partabgarh the Privy Council, though, in the context of Section 110 of the Code of Civil Procedure, negatived the theory that to be a substantial question of law, a question of law has to be of general importance and stated that b