Gujarat High Court
Bharatbhai Parshotambhai Gohel vs Niravkumar Jitendrabhai Jethva on 18 June, 2018
Equivalent citations: AIRONLINE 2018 GUJ 146
Author: J.B. Pardiwala
Bench: J.B.Pardiwala
C/FA/1856/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1856 of 2018
With
CIVIL APPLICATION NO. 1 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the
judgment ? YES
2 To be referred to the Reporter or not ?
YES
3 Whether their Lordships wish to see the fair copy of the
judgment ? NO
4 Whether this case involves a substantial question of law as to
the interpretation of the Constitution of India or any order made
NO
thereunder ?
CIRCULATE THIS JUDGEMENT IN THE SUBORDINATE
JUDICIARY.
==========================================================
BHARATBHAI PARSHOTAMBHAI GOHEL.... Appellant
Versus
NIRAVKUMAR JITENDRABHAI JETHVA & 1... Respondents
==========================================================
Appearance:
MR SAVAN N PANDYA(5600) for the PETITIONER(s) No. 1
NISHIDHKUMAR M PATEL(8335) for the PETITIONER(s) No. 1
MR. JAY M THAKKAR(6677) for the RESPONDENT(s) No. 1
NOTICE NOT RECD BACK(3) for the RESPONDENT(s) No. 2
==========================================================
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 18/06/2018
ORAL JUDGMENT
1 This First appeal under Section 96 of the Code of Civil Procedure, Page 1 of 34 C/FA/1856/2018 JUDGMENT 1908 is at the instance of the original defendant No.1 and is directed against the judgment and decree dated 19th March 2018 passed by the 5th Additional Senior Civil Judge, Anand in Special Civil Suit No.23 of 2013 filed by the respondent No.1 herein - original plaintiff for specific performance of contract based on a registered agreement of sale.
2 The appellant herein is the original defendant No.1 (subsequent purchaser). The respondent No.1 herein is the original plaintiff and the respondent No.2 herein is the original defendant No.2 (owner of the property, who executed a registered agreement of sale).
3 According to the case of the plaintiff, the defendant No.2 executed a registered agreement of sale dated 22nd December 2011 with respect to the suit property. The suit property is a three storied house situated in Anand, Taluka and District : Anand bearing survey No.937. The total sale consideration fixed was Rs.15 Lac. On the date of execution of the agreement of sale, the plaintiff paid Rs.11 Lac in cash to the defendant No.2. According to the terms of the agreement, the balance amount of Rs.4 Lac was to be paid to the defendant No.1 by the plaintiff within six months from the date of the agreement of sale and on payment of the balance amount of Rs.4 Lac, the sale deed was to be executed by the defendant No.2 in favour of the plaintiff.
4 It appears that before the expiry of the period of six months, the defendant No.2 transferred the property in favour of the appellant herein - original defendant No.1 by way of a registered sale deed dated 22nd December 2011. The plaintiff came to know about the transfer of the suit property by the defendant No.2 in favour of the defendant No.1, and in such circumstances, was left with no other option, but to file a suit for specific performance of contract and injunction based on a Page 2 of 34 C/FA/1856/2018 JUDGMENT registered agreement of sale.
5 In the plaint, the plaintiff prayed for the following reliefs:
"(A) Be pleased to pass decree for execution of contract and transaction as mentioned in the suit so that defendant no. 2 or defendant no. 1 and 2 or concerned defendants/defendant may execute sale deed in favour of the plaintiff in respect of pukka house having area of 102 sq.m. (as per Agreement to sale no. 10335/11) or built up area of 27.44 sq.m. (as per sale deed no. 4779) constructed on the plot no. 40 having area of 38.30 sq.m. on the nonagricultural land bearing survey no. 937 and admeasuring hectare 0.50.60 are situated on the outskirt of mouje village Anand, Taluka and District Anand mentioned in the suit para (1). Be pleased to pass order for execution of decree by way of appointment of commissioner by the Court if they do not execute sale deed.
(B) Considering the relief specified in para(1), be pleased to cancel the sale deed of suit property executed by defendant no. 1 in favour of respondent no. 2, which was registered vide sale deed no. 4779/12 on 22/05/2012 as the same is against the interest and in violation of right of the plaintiff and illegal. Be pleased to pass order and decree to cancel aforesaid sale deed holding that defendant does not acquire any kind of ownership or possession right by way of said sale deed.
(C) Be pleased to pass permanent injunction order restraining defendants/defendant from transferring suit property to other person by way of sale, gift or any other way or from creating encumbrance on the property by taking loan or mortgaging the same till decree is not executed.
(D) Be pleased to pass any other relief as the Court may deem just and proper in favour of the plaintiff.Page 3 of 34
C/FA/1856/2018 JUDGMENT
(E) Be pleased to pass order as to costs from defendants."
6 The summons issued by the Trial Court was served upon both the
defendants. However, the defendant No.2 i.e. the owner of the property after filing the written statement did not appear before the Civil Court.
The suit was not opposed in any manner by the defendant No.2. The defendant No.1 appeared and filed his written statement. The Trial Court, in its judgment and order, has recorded the gist of the written statement filed by the appellant herein - the original defendant No.1 vide Exhibit : 17. The same is extracted hereunder:
"As summons of the plaint was served upon the Respondents, they appeared through their Advocate. Respondent No. 1 has filed joint reply to the plaint and injunction application, vide Exhibit17. If it is taken into consideration, it appears that Respondent No. 1 has denied the facts of the plaint of the plaintiff and stated the true fact that as the titles of the property in suit are clear and marketable, Respondent No. 1 has purchased the said property through registered sale deed by paying full amount of consideration to Respondent No. 2. The competent authority has validated the sale and entered the name of Respondent No. 1 in the Revenue Records. The plaintiff and Respondent No. 2, in collusion with each other, have filed this false suit in order to deprive the Respondent No. 1 of his lawful rights and to get financial benefit from Respondent No. 1. There is no prima facie case of the Plaintiff. The balance of convenience is also not in favour of the Plaintiff. Moreover, the Plaintiff is not likely to suffer any type of loss, therefore, he has prayed to reject the plaint and injunction application of the plaintiff and to award the Respondent No. 1 the compensatory cost of Rs. 25,000/."
7 Thus, the stance of the appellant herein before the Trial Court Page 4 of 34 C/FA/1856/2018 JUDGMENT was that he is a bona fide purchaser of the suit property for value without notice. According to him, he paid an amount of Rs.4 Lac to the defendant No.2 towards the sale consideration of the suit property and got a registered sale deed executed in his favour. According to the appellant, he being a bona fide purchaser of the property for value without notice, the the Trial Court ought not to have granted the decree of specific performance in favour of the plaintiff having regard to Section 19(b) of the Specific Relief Act, 1963.
8 The Trial Court framed the following issues vide Exhibit : 25:
"1) Whether the plaintiff proves that the defendant No.2 executed an agreement to sale with respect to the suit property and got it registered with the office of the Sub Registrar on 22/12/2011 vide registration No.10335 and also obtained an amount of Rupees Eleven Lakhs towards the earnest money?
2) Whether the plaintiff proves that the defendant No.2 has illegally sold the disputed property to the defendant No.1?
3) Whether the plaintiff is entitled to obtain the relief as claimed for?
4) What order and decree?"
9 The issues referred to above came to be answered by the Trial Court as under:
"1) In affirmation.
2) In affirmation.
3) In partial affirmation.
4) As per final order."
10 The Trial Court allowed the suit and passed a decree of specific Page 5 of 34 C/FA/1856/2018 JUDGMENT performance in favour of the plaintiff. The final order passed by the Trial Court is as under:
"1) That, the suit of the plaintiff is partly allowed. The reliefs prayed for by the plaintiff in from para 8(A) and 8(K) are allowed and the relief prayed for in para 8(B) is partly allowed. No further order is passed as per the relief prayed for in para 8(D) and the relief prayed for by the plaintiff in para 9(E) is allowed.
2) That, as per the provision of the C.P.C. Order 20, Rule 12A, the plaintiff is ordered to deposit the amount of Rs.4,00,000/ (in words Rupees Four Lakhs Only) towards the remaining consideration amount as per the sale earnest money deed without possession produced vide Exhibit 38 before the Court within a period of 30 days from the date of the order and on depositing the said amount, the respondent Nos.1 and 2 be informed through the Registered Post Ad. The respondent No.2 shall be entitled to receive this amount on his execution of the sale deed regarding the suit property stated in para 1 of the suit property in favour of the plaintiff.
3) That the respondents are ordered that the respondent nos.1 and 2 are ordered to execute the sale deed as a confirming party and the seller respectively in favour of the plaintiff in respect of the suit property as stated in para No.1 of the suit application within a period of 30 days from the date they come to know the fact regarding deposit of the amount by the plaintiff. In case of failure on the part of any respondent, the plaintiff shall be entitled to get the sale deed in respect of the suit land executed by getting the Court Commissioner appointed on behalf of the default respondent.
4) That is is held that the sale deed bearing serial No.4779/2012,
Page 6 of 34
C/FA/1856/2018 JUDGMENT
dated 22/05/2012 registered in the office of the Sub Registrar, Anand regarding the suit property being executed by the respondent No.2 in favour of he respondent No.1 is illegal and against the right of the plaintiff and by way of this sale deed, the respondent No.1 does not get the rights of ownership and occupancy in the suit property.
5) That the respondent Nos.1 and 2 are ordered not to sale, mortgage, gift or transfer the suit property or not to get the same done to any person until the sale deed in respect of the suit property is executed in favour of the plaintiff as per the above order and also not obtain any loan or create encumbrance thereon or not to get the same done.
6) That the respondents are ordered to pay the cost of the suit to the plaintiff jointly and severally and also to bear their own cost.
7) Decree to be drawn accordingly."
11 Being dissatisfied with the judgment and decree passed by the Trial Court, the original defendant No.1 is here before this Court with the present First Appeal.
12 The learned counsel appearing for the appellant vehemently submitted that the Trial Court committed a serious error in passing the judgment and decree in favour of the plaintiff. According to the learned counsel, the appellant herein is a bona fide purchaser of the suit property for value without notice. The appellant had no idea or knowledge about the agreement of sale executed by the defendant No.2 in favour of the plaintiff. According to the learned counsel, the Court below failed to consider the provisions of Section 19(b) of the Act, 1963.
13 The learned counsel would submit that although at the time of the
Page 7 of 34
C/FA/1856/2018 JUDGMENT
execution of the agreement of sale, an amount of Rs.11 Lac came to be paid by the plaintiff to the defendant No.2, yet thereafter there is nothing to indicate that the plaintiff was ready and willing to pay the balance amount of Rs.4 Lac to the defendant No.2 and get the sale deed executed in his favour. In other words, according to the learned counsel, the plaintiff was not ready and willing to perform his part of the contract.
14 The learned counsel would submit that the Trial Court failed to consider the hardship that is going to be caused to the appellant herein on account of the decree of specific performance in favour of the plaintiff. The learned counsel would submit that the relief of specific performance is within the discretion of the Court and it is not always necessary to grant specific performance simply for the reason that it is lawful to do so. According to the learned counsel, even if an agreement of sale is a registered document, yet the same by itself would not confer any right, title or interest over the suit property. On the other hand, the appellant has a valid sale deed in his favour. Today, he is the owner of the suit property and in such circumstances, the Trial Court ought not to have granted the relief on specific performance.
15 In such circumstances referred to above, the learned counsel appearing for the appellant prays that there being merit in this First Appeal, the same may be admitted.
16 On the other hand, this First Appeal has been vehemently opposed by Mr. Jay Thakkar, the learned counsel appearing for the respondent No.1 - original plaintiff. Mr. Thakkar, the learned counsel has appeared on behalf of the respondent No.1 - original plaintiff pursuant to the notice issued by this Court.
Page 8 of 34C/FA/1856/2018 JUDGMENT 17 Mr. Thakkar submitted that no error, not to speak of any error of
law could be said to have been committed by the Trial Court in granting the decree of specific performance. According to Mr. Thakkar, the transfer of the suit property by the defendant No.2 in favour of the appellant herein is nothing, but outright fraud. The entire transaction was fraudulent only with a view to deprive the plaintiff of getting the sale deed executed in his favour. According to Mr. Thakkar, the defence of the appellant that he is a bona fide purchaser of the property for value without notice is dishonest and the Trial Court very rightly rejected such a plea. According to Mr. Thakkar, the agreement of sale is a registered document and once the document is registered, the appellant herein is deemed to have noticed of the same. In such circumstances, he could not have got the sale deed executed in his favour.
18 In such circumstances referred to above, Mr. Thakkar submitted that there being no merit in this First Appeal, the same may be dismissed in limine.
19 The learned counsel appearing for the appellant in rejoinder to the submissions of Mr. Thakkar contended that it is not permissible for the plaintiff to take the plea of Section 3 of the Transfer of Property Act. According to the learned counsel appearing for the appellant, Explanation I to Section 3 of the Transfer of Property Act makes it very clear that it is only if any transaction relation to immovable property is required by law to be and has been effected by a registered instrument, any person acquiring such property or any part thereof, or share or interest any, such property shall be deemed to have noticed of such instrument as from the date of registration. The learned counsel would submit that although in the present case, the agreement of sale is Page 9 of 34 C/FA/1856/2018 JUDGMENT registered, yet an agreement of sale of a immovable property does not require compulsory registration. Explanation I to Section 3 of the Transfer of Property Act talks about a document, which is required by law to be registered. In such circumstances, according to the learned counsel, the appellant cannot be deemed to have notice of such agreement to sale registered with the office of the Sub Registrar. The deeming fiction of knowledge, according to the learned counsel appearing for the plaintiff, would be applicable provided the document requires compulsory registration. It is submitted that an agreement to sale of an immovable property without possession does not create any right, title or interest, and therefore, in such circumstances, it does not require compulsory registration. The learned counsel, in support of his submissions, has placed reliance on a Division Bench decision of the Bombay High Court in the case of Hirachand Himatlal Marvari vs. Kashinath Thakurji Jadhav [AIR (29) 1942 Bombay 339], in which the subjectmatter was an agreement for a mortgage and the issue of deemed notice under Section 3 of the Transfer of Property Act fell for the consideration of the Division Bench. The Court observed:
"The next contention of appellant - defendant 3 is that his rights are protected by the fact that he had no notice of the plaintiff's agreement for a mortgage. Admittedly he did not receive actual notice. But the plaint mentioned the fact of the plaintiff's agreement having been registered as one ground of constructive notice having been given to defendant 3; and it was also alleged that he had constructive notice by the fact that the plaintiff got possession of the property under his other agreement of 1st June 1937. The plaintiff's possession, besides being inconspicuous, would not in this case give constructive notice to defendant 3 within the meaning of S. 3, T.P. Act because admittedly it came to an end before defendant 3's lease was executed. As to the fact of its being registered giving defendant 3 constructive notice (and admittedly it was registered with all necessary formalities), the answer to the question would depend, according to the definition in S. 3, T.P. Act, upon whether the plaintiff's agreement for a mortgage was or was not compulsorily registrable. If it was compulsorily registrable and was in fact properly registered, then defendant 3, must be deemed to have received constructive notice; otherwise not. Ultimately the Page 10 of 34 C/FA/1856/2018 JUDGMENT question depends upon whether the plaintiff's agreement creates a charge upon the property. If it creates a charge, then it would have to be registered. But I may point out that no question of priority arises at all, unless the plaintiff has a charge over the property by reason of his agreement. If it gives him no charge, then it is merely a document giving him a right to receive another document, and obviously cannot give him priority over defendant 3's registered lease of the property.
An issue was framed by the trial Court dealing with the question of charge, and the formal finding is that the agreement for a mortgage gave the plaintiff a charge over the property. But in the judgment the only passage is support of the finding appears to be one in which the learned Judge says that the agreement gave the plaintiff an equitable mortgage because the money had, already been advanced. Herein he seems to be clearly wrong. It is true that in 30 Bomb. L.R. 305 the Privy Council described an agreement for a mortgage as being a valid agreement charging the property. But the question of charge was not before their Lordships and the reason for granting specific performance of the agreement was that it was a valid agreement, not that it created a charge. In 29 Bom. L.R. 253 at p. 263 the question of an agreement for a mortgage giving a charge over the property was considered, thought not definitely decided; and the remark to be found in the judgment on the point indicate that, whatever may be the position in English Law, such an agreement does not under Indian Law give rise to a charge. That it does not ordinarily give rise either to an equitable mortgage or to a charge was definitely stated in 40 Bom. L.R. 545 at p. 547. Indeed, outside the presidency town even deposit of title deeds will not give rise to an equitable mortgage : see 28 Mad. 54. Prima facie, therefore, the plaintiff does not obtain a charge over the property and in consequence priority over defendant 3 by reason of his agreement for a mortgage.
20 Having heard the learned counsel appearing for the parties and having considered the materials on record, the following points fall for my determination:
[1] Whether the plaintiff is entitled to seek enforcement of specific performance of Exhibit : 38 registered agreement to sale?
[2] Whether the appellant herein - original defendant No.1 is a bona fide purchaser of the suit property having paid his sale consideration in good faith and without notice of the original Page 11 of 34 C/FA/1856/2018 JUDGMENT defendant?
[3] Whether the Trial Court committed any substantial error in exercising its discretion in favour of the plaintiff for grant of specific performance of Exhibit : 38 registered agreement of sale?
21 The following facts are not in dispute:
[1] The original defendant No.2, who did not deem fit to appear and oppose the suit filed by the plaintiff, executed a registered agreement of sale dated 22nd December 2011.
[2] The total sale consideration fixed was Rs.15 Lac.
[3] On the date of execution of the agreement of sale Exhibit :
38, the defendant No.2 received an amount of Rs.11 Lac from the plaintiff.
[4] The balance amount of Rs.4 Lac was to be paid within six months from the date of agreement of sale. On payment of the balance amount of Rs.4 Lac, the defendant No.2 was to execute the sale deed in favour of the plaintiff.
[5] Before the expiry of the period of six months, as indicated in the agreement to sale, the defendant No.2 fraudulently transferred the suit property in favour of the appellant herein by way of a sale deed dated 22nd May 2012.
22 I propose to first deal with the submission as regards Section 3 of the Transfer of Property Act. It is necessary to look into Section 3 of the Transfer of Property Act because the case of the appellant is that he is a Page 12 of 34 C/FA/1856/2018 JUDGMENT bona fide purchaser of the property in good faith for value without notice. Whereas, according to the plaintiff, the appellant cannot be termed as a bona fide purchaser of the property in good faith for value without notice because hew could be said to have knowledge of the registration of the agreement of sale. Once the appellant is deemed to have knowledge of the prior agreement of sale, then later, if he purchases the suit property, he cannot take the defence of being a bona fide purchaser relying on Section 19(b) of the Act, 1963.
23 The case of the appellant of he being a bona fide purchaser of the suit property for value without notice deserves to be rejected outright.
24 Section 19 of the Specific Relief Act, 1963, to the extent it is relevant, reads:
"19. Relief against parties and persons claiming under them by subsequent title. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against
(a) either party thereto;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;
(c) to (e) . . . . . . . . . . . . . . . . .
As can be seen from Section 19 (a) and (b) extracted above specific performance of a contract can be enforced against (a) either party thereto and (b) any person claiming under him by a title arising subsequent to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. Section 19(b) protects the bona fide purchaser in good faith for value without notice of the original contract. This protection is in the nature of exception to the general rule. Hence the onus of proof of good faith is on Page 13 of 34 C/FA/1856/2018 JUDGMENT the purchaser who takes the plea that he is an innocent purchaser. Good faith is a question of fact to be considered and decided on the facts of each case. Section 52 of the Penal Code emphasizes due care and attention in relation to the good faith. In the General Clauses Act emphasis is laid on honesty.
25 Notice is defined in Section 3 of the Transfer of Property Act. It may be actual where the party has actual knowledge of the fact or constructive. "A person is said to have notice" of a fact when he actually knows that fact, or when, but for willful abstention from an inquiry or search which he ought to have made, or gross negligence, he would have known it. Explanation II of said Section 3 reads:
"Explanation II Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof."
Section 3 was amended by the Amendment Act of 1929 in relation to the definition of 'notice'. The definition has been amended and supplemented by three explanations, which settle the law in several matters of great importance.
26 The agreement of sale Exhibit : 38 is a registered document. There is no dispute in this regard. In view of Section 19(b) of the 1963 Act and definition of "notice" contained under Section 3 of the 1882, it could not be said that the appellant herein (subsequent purchaser) is a bona fide purchaser in good faith for value without notice of the original contract. It was obligatory on the part of the appellant herein to make necessary inquiry as to the nature of the possession or title of further interest, if Page 14 of 34 C/FA/1856/2018 JUDGMENT any, of the other party over the suit property at the time when he entered into sale transaction. By merely looking into revenue records, it cannot be said that there was a due inquiry at the end of the appellant herein. In such circumstances, the appellant cannot take the benefit of the provisions of Section 19(b) of the 1963 Act.
27 Burden of proving the fact that one is a bona fide purchaser for value without notice would lie on the person who asserts the same. [See: Zorawar Singh vs. Sarwan Singh (2002) 4 SCC 460].
28 I do agree with the submission of the learned counsel appearing for the appellant that Section 3 of the Transfer of Property Act would come into play only if the document is required to be compulsorily registered in law. However, an agreement of sale of an immovable property with or without possession in the State of Gujarat has got to be registered compulsorily.
29 By the Registration (Gujarat Amendment) Act, 1982, the Registration Act, 1908 is amended and now such documents are required to be registered. By inserting Clause (aa) in subsec. (1) after clause (a) of S. 17, such documents are required to be registered. Clause (aa) reads as under :
"(aa) Instruments which purport or operate to effect any contract for transfer of immovable property."
The said amendment was given retrospective effect by insertion of subsection (1A) after subsection (1) of Section 17. Subsection 1A reads as under :
Page 15 of 34C/FA/1856/2018 JUDGMENT "Provisions of Section 23 shall apply to the instrument referred to in clause (aa) of subsection (1) and executed before the commencement of the Registration (Gujarat Amendment) Act, 1982 as if in that section, for the words, from the date of its execution" the words, figure; and letters from 1st March, 1982" had been substituted".
By the Gujarat Amendment Act, 1982, explanation contained in subsection (2) of S. 17 was deleted.
30 Thus, in view of the amendment of Section 17 of the Registration Act by the Registration (Gujarat Amendment) Act, 1982, an 'agreement to sale' is required to been registered. Not only that, by insertion of sub section (1A), under the proviso to Section 23, the documents, which were executed prior to the Amendment, were given 4 months time starting from 1st March, 1982 to get registered.
31 From the plain reading of Section 3 of the Act along with ExplanationI, it comes out that the person is said to have notice of a fact when he actually knows that fact, or when but for wilful abstention from making such enquiry which a person normally ought to have made he would have known it. In such cases the persons can also be deemed to have notice. According to ExplanationI, where law requires a transaction to be recorded or to be entered in, completed by registered deed then in respect of such transactions which satisfy two conditions i.e. a requirement of law that transaction is to be entered into by registered instrument only and the same has been completed by registered document, then persons shall be deemed to have knowledge of that instrument from the date of registration. The registration of the document has (sic) taken to complete notice to world at large. The agreement of sale of immovable property of value of more than Rupees One Hundred, under the Transfer of Property Act, is required to be entered into by a registered document.
Page 16 of 34C/FA/1856/2018 JUDGMENT 32 The appellant herein - original defendant No.1 shall be deemed to
have notice of the transaction of the agreement of sale dated 22nd December 2011. The appellant herein, thus, having deemed knowledge in law, cannot be said to be a bona fide purchaser for value without notice of the transaction dated 22nd December 2011. Thus, I find that there is nothing wrong or illegal in the findings of the Court below on this question of sale.
33 In the aforesaid context, I may refer to and rely upon a three Judge Bench decision of the Bombay High Court in the case of Bhup Narain Singh vs. Gokhul Chanda Mahton [(1934) 36 BOMLR 421]. In the said case, the Bombay High Court was dealing with a matter arising under the Specific Relief Act, 1877. The Court had the occasion to consider Section 27(b) of the Specific Relief Act, 1877 (old Act) now Section 19(b) of the 1963 Act. I may quote the relevant observations:
"11. It will be convenient to state the material portions of the section, which are as follows:
"27. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against
(a) either party thereto;
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract."
12. In their Lordships' opinion, the section lays down a general rule that the original contract may be specifically enforced against a subsequent transferee, but allows an exception to that general rule, not to the transferor, but to the transferee, and, in their Lordships' opinion, it is clearly for the transferee to establish the circumstances which will allow him to retain the benefit of a transfer which, prima facie, he had no right to get. Further, the subsequent transferee is the person within whose Page 17 of 34 C/FA/1856/2018 JUDGMENT knowledge the facts as to whether he has paid and whether he had notice of the original contract lie, and the provisions of Sections 103 and 106 of the Indian Evidence Act, 1872, have a bearing on the question. The plaintiff does not necessarily have knowledge of either matter. In a case in 1862 before this Board, Varden Seth Sam v. Luckpathy Royjee Lallah (1862) 2 M.I.A. 303, an equitable lien by deposit of titledeeds was enforced against a subsequent transferee of the property. In delivering the judgment of this Board, Lord Kingsdown stated (p. 319):
Though both the third and the last Defendants pleaded, in effect, that they were bona fide purchasers for value, without notice, yet they did not prove that defence, though the Plaintiff charged notice and collusion with the first Defendant.
13. And, later (p. 322):
The question to be considered is, whether the third and sixth Defendants respectively possessed the land free from that lien, whatever its nature. As one who owns property subject to a charge can, in general, convey no title higher or more free than his own, it lies always on a succeeding owner to make out a case to defeat such prior charge. Let it be conceded that a purchaser for value, bona fide, and without notice of this charge, whether legal or equitable, would have had in these Courts an equity superior to that of the Plaintiff, still such innocent purchase must be, not merely asserted, but proved in the cause, and this case furnishes no such proof.
14. Although under Section 54 of the Transfer of Property Act, 1882, the appellant's agreement for sale does not of itself create any interest in or charge on the property, their Lordships are of opinion that the rule of procedure stated by Lord Kingsdown is applicable to the present case under Section 27(b) of the Specific Relief Act. This view under the Specific Relief Act has been taken in a number of cases in India, of which it is sufficient to refer to Himatlal v. Vasudev Ganesh (1912) I.L.R. 36 Bom. 446 S.C. :
14 Bom. L.R. 634, Baburam Bag v. Madhb Chandra Pollay (1913) I.L.R. 40 Cal. 565, Tiruvenkatachariar v. Venkatachariar, Naubat Rai v. Dhaunkal Singh (1916) I.L.R. 38 All. 184 and Muhammad Sadik Khan v. Masihan Bibi (1930) I.L.R. 9 Pat. 417.
15. Their Lordships' attention was drawn to only one decision to a contrary effect, viz.,Peerkha v. Bapu, but their Lordships prefer the earlier Bombay decision in Himatlal's case.
16. Counsel for defendant No. 4 prayed in aid certain decisions on the somewhat analogous provisions of the insolvency statutes. The first of these was Official Assignee v. Khoo Saw Cheow [1931] A.C. 67, a case Page 18 of 34 C/FA/1856/2018 JUDGMENT under Section 50(1) of the Bankruptcy Ordinance of the Straits Settlements, which, so far as material, provides:
Any settlement of property, not being...a settlement made in favour of a purchaser. in good faith and for valuable consideration,...shall, if the settlor becomes bankrupt within two years after the date of the settlement, be absolutely void as against the official assignee.
17. It was held by this Board, upon construction of the section, that the onus is upon the Official Assignee to prove that a conveyance which he is seeking to set aside thereunder was not made in good faith and for valuable consideration. In their Lordships' opinion, that section is not in pari casu with the section of the Specific Relief Act in several respects. In the first place, the structure of that section is different, in that it does not provide a general rule with a permitted exception, but defines the area of voidance, and the prior settlements that are outside that area are expressly excluded from invalidation by Section 52 of the Ordinance. In the second place, the operation of the section is the opposite of the operation of Section 27 of the Specific Relief Act, in that it renders void an earlier right in favour of a later one. That decision was followed in Official Receiver vs. P.L.K.M.R.M. Chettyar Firm (1930) L.R. 58 I.A. 115 S.C. : 33 Bom. L.R. 867, which arose under Section 53 of the Provincial Insolvency Act, 1920, and in Pope v. Official Assignee (1933) L/R. 60 I.A. 362 S.C. : 36 Bom. L.R. 137, which arose under Section 55 of the Presidencytowns Insolvency Act, 1909. The provisions of these two Acts are similar to those of the Straits Settlements Ordinance. It may further be observed that, before deciding to file a suit, the Official Assignee or receiver has available any information to be obtained from the insolvent, and, in the case of the Straits Settlements Ordinance (Section 31) and of the Presidencytowns Insolvency Act (Section 36), he has the power, through the Court, of obtaining full information.
18. Their Lordships accordingly agree with the view of the Subordinate Judge that the onus is upon defendant No. 4 to bring himself within the exception in Section 27 of the Specific Relief Act, and, as already indicated, their Lordships agree with the learned Judges of the High Court that there is no sufficient evidence either on the question of payment or on the question of notice. The appellant is, therefore, entitled to the relief sought by him."
34 Let me also refer to and rely upon a decision of this Court in the case of Ghanshyambhai Dhirubhai Barvaliya vs. Rasikbhai Dhirubhai Ambaliya [Appeal from Order No.457 of 2016 decided on 10th January Page 19 of 34 C/FA/1856/2018 JUDGMENT 2017]. The relevant observations are as under:
"14. Now, this takes the Court to decide whether one of the subsequent purchasers i.e. the appellant herein is a bona fide purchaser of the subject land or not. In order to examine this aspect, it is necessary to consider the conduct of the subsequent purchasers before execution of sale deed dated 03.09.2014. It is settled principle of law under Section 19(b) of the Specific Relief Act that specific performance of contract may be enforced against any other person claiming under him by a title arising subsequently to the contract. If a person, as an owner of the property, has entered into an agreement to sale, he cannot, thereafter, convey the same property to any other person, as after prior agreement to sale, he cannot be said to be free owner of the property. If the owner alienates the property, he can alienate it only subject to the rights created under the prior agreement to sale. It is the case of the appellant i.e. subsequent purchaser that he has no knowledge about execution of sale agreement inter se between plaintiff and defendant No.1 and, therefore, they have bona fidely entered into the registered sale deed dated 03.09.2014 without notice of prior sale agreements and paid full value in good faith. Upon reappreciation of the events, which occurred before and after registered sale deed dated 03.09.2014, it shows that the defendants with unusual haste, carried out the sale deed. The obvious reason is such that the sale deed executed and registered on 03.09.2014 discloses that the appellant was aware of pending proceedings being Special Civil Suit No.405 of 2008 between defendant No.1 and his predecessor in title. Admittedly, the dispute came to be resolved between the parties to the said suit on 12.09.2014 and prior to it, the sale deed was executed and registered. The said sale deed indicates that the appellant and respondent No.3 herein have paid amount of consideration by way of various cheques of the date 01.09.2014 to 04.09.2014. Admittedly, the amounts of cheques were withdrawn by defendant No.1 on 16.09.2014 and 17.09.2014 as per the statement of account annexed with the affidavit produced before this Court during the course of hearing. It is a matter of fact that though the dispute has been resolved on 12.09.2014, the suit was disposed of only on 02.10.2014. Normally, there is no reason to consider about withdrawal of the amounts on the part of the original owner defendant No.1 but, in view of the peculiar facts of this case, conduct of the defendants goes to suggest that before the issue is resolved in a pending suit between defendant No.1 and his predecessor in title, the sale deed was executed and registered and meanwhile, the amounts of consideration were withdrawn in cash by the original owner i.e. defendant No.1 and thereafter, the Court has passed the order of disposal of the suit on 02.10.2014. This speaks a lot about conduct of the defendants, who in collusion, joined hands to frustrate the sale agreements in question. It requires to be considered here that the defendants with unusual haste, carried out the sale deed, where such Page 20 of 34 C/FA/1856/2018 JUDGMENT transactions, as a rule, are carried out with appropriate inquiry and, more particularly, after obtaining title clearance certificate and also by publishing notice in newspaper before purchase. Admittedly, no such steps have been taken by the subsequent purchasers i.e. the appellant and respondent No.3 herein. Not only that, they have not bothered to inquire about the whereabouts of the original title deeds. One more significant aspect of the case required to be considered is such that defendant No.1 agreed to sale the subject land to the plaintiff for consideration of Rs.51 lacs which was fixed in the year 2008 whereas, the defendants inter se fixed the sale price of the subject land of Rs.17,50,000/ in the year 2014. Meaning thereby, from 2008 to 2014, price of the subject land has been reduced to about 66% which can never be believed by any prudent man dealing in the transaction of the immovable property and further, the Court cannot overlook or ignore the existing scenario in the market about the prices of the land during the period in question.
15. The plain language of SubSection (b) of Section 19 of the Specific Relief Act shows that subsequent transferee can retain the benefit of transfer by purchase, which prima facie, he had right to get, only after satisfying two conditions i.e. (1) he must have paid the full value for which, he purchased the property and; (2) he must have paid it in good faith and without notice of prior contract. The burden of proof is upon the subsequent purchaser to establish existence of these two conditions in order to see that his right prevails over the prior agreement of sale. In the case on hand, the conduct of the defendants themselves indicates that the appellant herein is not a bona fide purchaser because, the sale deed came to be executed and registered with unusual rapidity. Normal procedure for sale/purchase of immovable property as a rule is not such which is adopted in the present case. Hence, required ingredients of Section 19(b) of the Specific Relief Act are missing in this case and hence, protection of Section 19(b) is not available to the subsequent purchaser i.e. appellant herein."
35 In the aforesaid context, let me refer to and rely upon a decision of the Supreme Court in the case of Ram Niwas (dead) Lrs. vs. Bano (smt) and others [(2000) 6 SCC 685]. In the said case before the Supreme Court, the scope of Section 19(b) of the Specific Relief Act read with explanation II to Section 3 of the Transfer of Property Act and the provisions of Section 20(2) of the Specific Relief Act, 1963 fell for consideration. I may quote few relevant observations made in the Page 21 of 34 C/FA/1856/2018 JUDGMENT judgment:
"3 Section 19 provides the categories of persons against whom specific performance of a contract may be enforced. Among them is included, under clause (b), any transferee claiming under the vendor by a title arising subsequently to the contract of which, specific performance is sought. However, a transferee for value, who has paid his money in good faith and without notice of the original contract, is excluded from the purview of the said clause. To fall within the excluded class, a transferee must show that :
(a) he has purchased for value the property (which is the subjectmatter of the suit for specific performance of the contract);
(b) he has paid his money to the vendor in good faith; and
(c) he had no notice of the earlier contract for sale (specific performance of which is sought to be enforced against him).
4 The said provision is based on the principle of English law which fixes priority between a legal right and an equitable right. If A purchases any property from B and thereafter B sells the same to C, the sale in favour of A, being prior in time, prevails over the sale in favour of C as both A and C acquired legal rights. But where one is a legal right and the other is an equitable right "a bona fide purchaser for valuable consideration who obtains a legal estate at the time of his purchase without notice of a prior equitable right is entitled to priority in equity as well as at law. [Snells Equity Thirtieth Edition p.48].
This principle is embodied in Section 19(b) of the Specific Relief Act.
5 It may be noted here that notice may be (i) actual, (ii) constructive or (iii) imputed.
6 Section 3 of the Transfer of Property Act defines, inter alia, "a person is said to have notice of a fact when he actually knows that fact, or when but for wilful abstention from an enquiry or search which he ought to have made, or gross negligence, he would have known it."
Page 22 of 34C/FA/1856/2018 JUDGMENT And Explanation II appended to this definition clause says :
"Any person acquiring any immovable property or any share or interest in any such property shall be deemed to have notice of the title, if any, of any person who is for the time being in actual possession thereof."
7 Thus, it is seen that a statutory presumption of notice arises against any person who acquires any immovable property or any share or interest therein of the title, if any, of the person who is for the time being in actual possession thereof.
8 The principle of constructive notice of any title which a tenant in actual possession may have, was laid down by Lord Eldon in Daniels Vs. Davison [(1809) 16 Ves. 249 at P.254]. The learned law Lord observed, "Upon one point in this cause there is considerable authority for the opinion I hold; that, where there is a tenant in possession under a lease or an agreement, a person, purchasing part of the estate, must be bound to inquire, on what terms that person is in possession."
"18 Both the learned Single Judge as well as the learned Judges of the Division Bench of the High Court dealt with the question whether the purchasers had actual knowledge of Ext.1, the earlier contract, and on evidence found that the purchasers did not have any knowledge of it. But they failed to notice the provisions of Explanation II to Section 3 of the Transfer of Property Act which is germane on the point of notice. Indeed, issue No.10 was not properly framed. The word notice should have been used in issue No.10 instead of knowledge because Section 19(b) uses the word notice. From the definition of the expression, a person is said to have notice in Section 3 of the Transfer of Property Act, it is plain that the word notice is of wider import than the word knowledge. A person may not have actual knowledge of a fact but he may have notice of it having regard to the aforementioned definition and Explanation II thereto. If the purchasers have relied upon the assertion of the vendor or on their own knowledge and abstained from making enquiry into the real nature of the possession of the tenant, they cannot escape from the consequences of the deemed notice under Explanation II to Section 3 of the Transfer of Property Act. On this point, in the light of the above discussion, we hold that the purchasers will be deemed to have notice of Ext.1, should it be found to be true and valid."Page 23 of 34
C/FA/1856/2018 JUDGMENT 36 The mere fact that the appellant paid Rs.4 Lac to the defendant
No.2 towards the sale consideration would be neither here nor there. By merely purporting to pay the amount towards the sale consideration, the appellant cannot say that equities are more in his favour. Again, a person claiming equities must come with clean hands. In the instant case, the appellant has not only tried to steal a march over the plaintiff by securing this sale in the circumstances, which I have discussed at considerable length, but he has gone to the length of raising false defences in the suit. In such circumstances, no question of equities in favour of the appellant could arise and I am in complete agreement with the findings of the Trial Court.
37 I shall now look into the question whether the Trial Court committed any error in granting the relief of specific performance.
38 Section 20 of the Specific Relief Act, 1963, provides as follows :
"20. Discretion as to decreeing specific performance (1) The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so;
but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal.
(2) The following are cases in which the Court may properly exercise discretion not to decree specific performance
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage, over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff;
Page 24 of 34C/FA/1856/2018 JUDGMENT
(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1. 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).
Explanation 2. The question whether the performance of a contract would involve hardship on the defendant within the meaning of Clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract. (3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party."
39 The relief of specific performance having its roots in equity, the Specific Relief Act, 1963, has preserved the discretion of the Court not to grant the relief even though the agreement is specifically performable in law. The only fetters imposed by the statute on the exercise of the discretion are that the discretion must not be exercised arbitrarily but soundly and reasonably and guided by judicial principles. The phrase "capable of correction by a Court of appeals" has been inserted possibly to indicate the necessity for the trial Court to state the reasons for exercising its discretion in a particular way. The circumstances when specific performance mentioned in the Clauses (a), (b) and (c) of Sub section (2) of Section 20 cannot be granted are not expressly exhaustive. They indicate the situations in which the Court may properly exercise discretion not to decree specific performance. However, certain Page 25 of 34 C/FA/1856/2018 JUDGMENT considerations have been excluded as relevant factors. These are contained in Explanations 1 and 2 to the Section as well as in Section 20(4). It is to be noticed that each of these exclusions are preceded by the word "mere". The word "mere" in the context means "sole". In other words, any one of those factors by itself would not justify the exercise of discretion against granting specific performance. The factors cumulatively or with other factors may form the basis of a decision not to grant specific performance.
40 Hardship of the defendant may be one of the grounds which may be taken into consideration for exercising its discretion by the Court in refusing to grant a decree for specific performance of contract.
41 Section 20 of the Specific Relief Act embodies a Common law that is grant of a decree for specific performance of a contract is a discretionary one. The Court may, in a given situation, take into consideration the subsequent events.
42 Long years have been passed by in the case on hand and the trial Judge does not seem to have taken this fact into consideration while granting the decree for specific performance.
43 In Spry on Equitable Remedies, it is stated: "On principle, indeed, Courts of equity must take account of all the circumstances known to exist at the time when an order is sought as well as of circumstances likely to occur subsequently, when they are called upon to decide whether the effect of ordering specific performance will be to cause such great hardship as to account to an injustice. There is no sufficient reason why a cause of hardship should be ignored merely because it did not exist at the time when the material contract was entered into. Certainly the fact that it has occurred subsequently may be a matter of weight, and if it appears that the parties contemplated that events might Page 26 of 34 C/FA/1856/2018 JUDGMENT occur such as have in fact occurred the alleged causes of hardship will usually be of little importance indeed. But this is not to say that they are irrelevant or that sometimes they may not be decisive so as to incline the balance of justice against the grant of relief.
Fortunately, however, this matter does not depend solely on principle, for there may be " found various decisions where events occurring after the date of entry into the agreement in question have been treated as relevant. Furthermore, it will subsequently be seen that any hardship of the defendant, if specific performance were ordered, must be weighed against the inconvenience or hardship which would be caused to the plaintiff if specific performance were refused. And in determining how great any such hardship or inconvenience to the plaintiff will be once again events and probable events as known at the date of the hearing are taken into account and there is no arbitrary restriction or limitation to events taking place at the time of entry into the material agreement.
It must not be forgotten that as soon as it is shown that damages and other legal remedies arc inadequate an applicant will be held prima facie entitled to specific performance of a valid and enforceable agreement. Specific performance will not be refused merely because inconvenience or even hardship to the defendant would be caused thereby. But if the hardship suffered by the defendant, if specific enforcement took place, would be so much greater than the detriment which would be suffered by the plaintiff if he were confined to his remedy at law that it would be unreasonable and oppressive to grant relief, specific enforcement will be denied."
44 In S.G. Banerjee's Specific Relief Act, 10th Edn. At page 357, it is stated : "It is almost universally recognised that specific performance of a contract should not be granted, if in the circumstances of a case, it is inequitable to do so. The clause follows and gives statutory recognition to the universal rule. It enacts that where the defendant enters into the Contract under circumstances, which, though they do not render the contract voidable, yet make it inequitable to enforce specific performance, the Court may properly exercise discretion not to decree specific performance. What would or would not be inequitable would depend upon the facts and circumstances of the each case."
45 In Om Prakash v. Amarjit Singh, reported in 1988 Supp. SCC
Page 27 of 34
C/FA/1856/2018 JUDGMENT
780, the law is stated in the following terms:
"This is a suit for specific performance on an agreement to sell. The grant of relief is discretionary. The Court after consideration of all relevant circumstances must be persuaded to exercise its equitable and discretionary jurisdiction in favour of specific enforcement. The jurisdiction is subject to all the conditions to which all discretionary jurisdictions are subject. There are certain personal bars to relief. Respondent 1, who was the plaintiff in the suit, did not enter the box and tender evidence. The subjectmatter of the suit is a small piece of property of 68 sq. yds. And is said to be the only worldly goods of the appellant."
46 It is a settled principles of law that the provisions of Section 20 of the Specific Relief Act is not exhaustive. The same has to be considered and read with the Section 14 thereof. It is further well settled that the plaintiff does not have an absolute right to obtain a decree for specific performance of contract.
47 In Yohannan and another v. Harikrishnan Nair and others, reported in AIR 1992 Ker 49, it is stated :
"The cases in which the Court may properly exercise discretion not to decree specific performance has been enumerated in Subsection (2). They are (a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not avoidable, gives the plaintiff an unfair advantage over the defendant, or
(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff, (c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance."
48 The discretion of the Court in the matter, thus, is not confined within the four corners of Section 20 of the Act.
Page 28 of 34C/FA/1856/2018 JUDGMENT 49 In Dr. S.C. Banerjee's Specific Relief Act, 10th Edn. At page 326, the law is stated in the following terms:
"The discretion is guided by judicial principles. The expression means that discretion is not to be arbitrarily exercised, but must be based on sound, reasonable and judicial principles, that is, the discretion must not be dependent upon the mere pleasure of the Judge but must be sound and reasonably guided by judicial principles. The Court must grant or withhold relief according to the circumstances of each particular case, when the general rules and principles do not furnish an exact measure of justice between the parties."
50 In granting or withholding the relief, the Court should take the following circumstances, conditions and incidents into consideration :
"(1) The contract must be certain, unambiguous and upon a valuable consideration;
(2) The contract must be perfectly fair in all its parts; (3) The contract must be free from any fraud misrepresentation, imposition or mistake;
(4) The contract must not impose an unconscionable or hard bargain; (5) The performance of the contract must not impose any hardship on the defendant, such as he could not foresee;
(6) The contract must be capable, of specific execution through a decree of the Court,"
51 The appeal Court should not interfere with the judgment of the trial Court only because it is not right but when it is clearly wrong. Even in regular suits, the appeal courts are loathe to interfere with the findings of fact arrived at by the trial Court on the basis of oral evidence. (See Ratanlal Nahata v. Nandita Bose reported in 1997(1) CHN 392).
Page 29 of 34C/FA/1856/2018 JUDGMENT 52 There is no dispute that an order of specific performance is a
discretionary one. In an appeal against such an order, the appellate Court generally does not interfere with the discretion exercised by the trial Judge unless it appears that while exercising such discretion the trial Judge has wrongly applied the principles for grant of such discretion or unless it is established that such discretion has been unreasonably or capriciously used. In this connection reference may be made to the decision of Supreme Court in Uttar Pradesh Cooperative Federation Ltd. v. Sunder Bros. Of Delhi, reported in AIR 1967 249. In that decision the Supreme Court was dealing with an appeal against an order granting stay in exercise of power under Section 34 of the Arbitration Act, which is undoubtedly a discretionary power. While discussing the scope of the said appeal the Apex Court held that where the discretion vested in the. Court has been exercised by the lower court, the appellate Court would be slow to interfere with the exercise of its discretion. In dealing with the matter raised before it at the appellate stage, the appellate Court would not be justified in interfering with the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it might have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial, manner the fact that the appellate Court could have taken a different view may not justify such interference with the trial Court's exercise of discretion. If it appears to the appellate Court that in exercise of its discretion the trial Court had acted unreasonably or capriciously or has ignored the relevant fact, then it would be open to the appellate Court to interfere with the trial Court's exercise of discretion.
53 Having regard to the evidence on record, it cannot be said, by any stretch of imagination that in exercise of its discretion, the Trial Court Page 30 of 34 C/FA/1856/2018 JUDGMENT acted unreasonably or capriciously or has ignored the relevant facts or any relevant piece of evidence.
54 Let me now deal with the last contention canvassed on behalf of the appellant. According to the learned counsel appearing for the appellant, the plaintiff was not ready and willing to perform his part of the contract. In other words, although it is not in dispute that the plaintiff paid Rs.11 Lac to the defendant No.2 out of the total amount of sale consideration of Rs.15 Lac, yet there is nothing on record to indicate that the plaintiff was ready and willing to pay the balance amount of Rs.4 Lac and get the sale sale deed executed. According to the learned counsel appearing for the appellant, the plaintiff seeking a decree of specific performance needs to show his readiness and willingness all through out. To this contention of the learned counsel appearing for the appellant, the reply of the learned counsel respondent No.1 - original plaintiff is that a subsequent purchaser cannot take the plea that the plaintiff is not ready and willing to perform his part of contract, more particularly, when the defendant No.2 did not deem fit to appear and oppose the suit of the plaintiff.
55 So far as the position of law in this regard is concerned, Mr. Thakkar, the learned counsel appearing for the plaintiff is wrong.
56 In M.M.S. Investments, Madurai and Others vs. V. Veerappan and Others [(2007) 9 SCC 660], while stating the background facts, the learned Judges referred to a suit for specific performance which resulted in a decree passed by the trial Court. After the decree was passed, the defendants through their Power of Attorney sold a large extent of properties, including the subjectmatter of the suit, in favour of Page 31 of 34 C/FA/1856/2018 JUDGMENT certain other persons, who happened to be the appellants before the Supreme Court. In that case, the High Court had held that there would be no bar for the appellant to raise any issue on merits of the appeal on the facts of that case except the defence of readiness and willingness as provided under Section 16(c) of the Specific Relief Act.
57 The Supreme Court went on to distinguish a threeJudge Bench judgment in Ram Awadh (dead) by Lrs. And Others vs. Achhaibar Dubey and another [(2000) 2 SCC 428] and held as follows:
"6. Questioning the plea of readiness and willingness is a concept relatable to an agreement. After conveyance the question of readiness and willingness is really not relevant. Therefore, the provision of the Specific Relief Act, 1963 (in short "the Act") is not applicable. It is to be noted that the decision in Ram Awadh case relates to a case where there was only an agreement. After the conveyance, the only question to be adjudicated is whether the purchaser was a bona fide purchaser for value without notice. In the present case the only issue that can be adjudicated is whether the appellants were bona fide purchasers for value without notice. The question whether the appellants were ready and willing is really of no consequence. In Ram Awadh case the question of the effect of a completed sale was not there. Therefore, that decision cannot have any application so far as the present case is concerned. Once there is a conveyance the concept would be different and the primary relief could be only cancellation."
58 Ram Awadh (supra) is a judgment by three Judges of the Supreme Court overruling Jugraj Singh vs. Labh Singh [(1995) 2 SCC 31], in which it was held that the plea that the plaintiff is not ready and willing to perform the contract is personal only to the sellerdefendant. Subsequent purchasers cannot take this plea. This was stated to be an erroneous view of the law by the three Judge Bench, and the judgment in Jugrag Singh was set aside as follows:
"6. The obligation imposed by Section 16 is upon the Court not to grant specific performance to a plaintiff who has not met the requirements of clauses (a),(b) and (c) thereof. A court may not, therefore, grant to a Page 32 of 34 C/FA/1856/2018 JUDGMENT plaintiff who has failed to aver and to prove that he has performed or has always been ready and willing to perform his part of the agreement the specific performance whereof he seeks. There is, therefore, no question of the plea being available to one defendant and not to another. It is open to any defendant to contend and establish that the mandatory requirement of Section 16(c) has not been complied with and it is for the Court to determine whether it has or has not been complied with and, depending upon its conclusion, decree or decline to decree the suit. We are of the view that the decision in Jugraj Singh Case is erroneous."
59 However, on facts, I am at one with Mr. Thakkar that there is nothing in the evidence led by the appellant herein to indicate that the plaintiff was not ready and willing to perform his part of the contract. Having paid almost 90% of the sale consideration, there was no good reason thereafter for the plaintiff not to pay the balance amount of Rs.4 Lac and get the sale deed executed in his favour.
60 In such circumstances, the contention as regards readiness and willingness on the part of the plaintiff to perform his part of the contract, as raised by the appellant, should fail.
61 In the overall view of the matter, I have reached to the conclusion that I should not disturb the judgment and decree passed by the Trial Court. In my view, once the Trial Court, on the basis of the materials on record, has thought fit to exercise the discretion in favour of the plaintiff for grant of specific performance, then this Court sitting in appeal should be loath to interfere with such a discretionary relief and, more particularly, when the appellant has failed to prove that he is a bona fide purchaser in good faith of the suit property for value without notice.
62 If the appellant herein is of the view that he has been cheated by the defendant No.2, then he should initiate appropriate legal proceedings before the appropriate forum in accordance with law including one for the recovery of the sale consideration paid by him to Page 33 of 34 C/FA/1856/2018 JUDGMENT the defendant No.2.
63 In view of the aforesaid discussion, this First Appeal fails and is hereby dismissed.
64 In view of the disposal of the main matter, the connected civil application would not survive and the same is also disposed of.
(J.B. PARDIWALA, J.) CHANDRESH Page 34 of 34