Madras High Court
E.A. Thirugnanam vs V.P. Rajagopal on 1 February, 2006
Equivalent citations: 2006(1)CTC809
Author: K. Mohan Ram
Bench: K. Mohan Ram
JUDGMENT K. Mohan Ram, J.
1. The defendant in O.S. No. 474 of 1988 on the file of the Sub-Court, Erode, being aggrieved by the judgment and decree dated 08.11.1991 passed therein has filed the above appeal.
2. For the sake of convenience, the parties are referred to as per their ranking in the suit.
3. The Trial Court has granted a decree directing the defendant to receive the balance sale consideration of Rs. 31,000/- and execute the Sale Deed and hand over the possession to him. The brief facts of the case are set out here under:
The plaintiff has pleaded that the defendant as the owner of the house site, which is the suit property, entered into a written agreement dated 15.07.1988 with the plaintiff, agreeing to sell the suit property to him for a sale consideration of Rs. 51,000/- and on the same date, the plaintiff paid a sum of Rs. 20,000/- as advance. The balance amount of Rs. 31,000/- is payable within 15th of Aypasi month of the current Tamil year by the plaintiff and he must get a registered sale deed at his own costs. In the same agreement, it is stated that if the plaintiff commits default, he would forfeit the advance amount and in case if the defendant commits default the plaintiff is entitled to remit the balance amount into Court and seek specific performance of the sale agreement.
4. The other conditions in the sale agreement are that the defendant is bound to convey the schedule properties free of encumbrance and he should deliver possession of the suit property. It is further pleaded that the defendant is heavily indebted to third parties. The defendant's brother one Rajendran informed the plaintiff that the defendant had borrowed from him under pro-notes and that unless his debts are discharged, the plaintiff should not purchase the schedule property. Though the plaintiff had already gathered the balance amount payable under the sale agreement deed, it is now made clear that the defendant will not be able to sell away the suit property to the plaintiff free of encumbrance. Even if the defendant executes such a sale deed in favour of the plaintiff, on sufficient enquiry, the plaintiff is able to now ascertain and affirm that the creditors will take sufficient steps through the Civil Court of Law to set-aside such sale. Under such circumstances, when the defendant is not in a position to convey an unassailable title to the plaintiff, the defendant is not entitled to receive the balance amount and execute the sale deed. The said facts were informed by the plaintiff under Registered Notice dated 24.10.1988 for which the defendant sent a reply expressing his un-willingness to comply with the demand for refund of the advance amount.
5. On these pleadings, the plaintiff prayed for refund of the advance amount of Rs. 20,000/-. Subsequently, the plaintiff filed I.A. No. 53 of 1991, i.e. after a period of three years from the date of filing of the suit seeking to amend the plaint to incorporate the prayer for directing the defendant to receive a sum of Rs. 31,000/- being the balance amount from the plaintiff and execute a registered sale deed conveying the schedule property to the defendant free of all encumbrances, at the cost of the plaintiff on or before the date to be fixed by the Court. To claim that relief, he wanted the plaint to be amended to include paragraph No. 6-a. The said I.A. was allowed by the Trial Court and against that no revision has been filed by the defendant and hence the order had become final.
6. In the amended plaint, in paragraph 6-a, the plaintiff has stated as follows:-
The plaintiff had always been ready and willing to pay the balance amount of Rs. 31,000/- to the defendant and obtain the sale deed from him with delivery of possession of the suit properties. The plaintiff even now remains ready and willing to deposit the balance amount of Rs. 31,000/- into Court as and when so directed by this Honourable Court.
The plaintiff has also stated that he learns that Rajendran, the elder brother of the defendant had already filed a suit under pronote against the defendant in O.S. No. 603 of 1988 before the Sub-Court Erode and he had also obtained an order of attachment before judgment attaching the schedule properties in I.A. No. 681 of 1988 on the file of the First Additional Sub-Court, Erode. In the amended plaint, the prayer is for specific performance of the agreement of sale and in the alternative, the plaintiff prayed for the refund of the advance amount.
7. The suit was contested by the defendant by filing a detailed written statement. In the written statement, defendant admitted the execution of the sale agreement; the receipt of advance of Rs. 20,000/- and the period fixed for completion of the sale. But the defendant denied the allegation that he is heavily indebted to third parties and he also denied the allegation that he had borrowed amounts from his brother and executed promissory notes. The defendant specifically took up a defence that there is enmity between him and his brother and therefore his brother has set up the plaintiff to file this vexatious suit. The defendant also has specifically stated that there is absolutely no impediment for executing the sale deed. The defendant further stated that he can execute the sale deed free of all encumbrances and convey a clear title. He also pleaded that so far no creditor has taken any action, as apprehended by the plaintiff.
8. The defendant has further stated that for the notice dated 24.10.1988 issued by the plaintiff, he had sent a reply through his counsel on 28.10.1988 calling upon the plaintiff to take a sale deed on or before 30.10.1988. Again on 29.10.1988, the defendant issued a telegram to the plaintiff calling upon him to take the sale deed and he was always ready and willing to execute the sale deed. But the plaintiff failed to take the sale deed as per the agreement. Since, the plaintiff had defaulted to take the sale deed, the plaintiff is not entitled for the refund of the advance amount paid by him. After the plaint was amended, the defendant has filed an additional written statement with the following averments:
It is false to allege that the plaintiff had always been ready and willing to pay the balance of Rs. 31,000/- and obtain the sale deed from this defendant and take delivery of possession. The plaintiff has not expressed his readiness and willingness to take the sale deed. This defendant was always ready and willing to execute the sale deed. The plaintiff was not ready to take the sale deed. The plaintiff was making false and untenable allegations and did not take the sale deed and he has filed this suit for refund of the advance amount on baseless grounds. Therefore, the plaintiff is not entitled to seek the relief of specific performance of the agreement and that he is not entitled to seek refund of the advance amount paid by him. The plaintiff has given up his right to enforce the agreement for specific performance, by filing a suit for refund of the advance amount paid by him. On the above said pleadings the defendant prayed for the dismissal of the suit.
9. The Trial Court framed the following issues, namely:
i) Whether the plaintiff is entitled to get refund of the advance amount?
ii) What are the other reliefs to which he is entitled to?
The following additional issue was also framed:-
i) Whether the plaintiff is entitled to get the relief of specific performance?
On the above said issues, the parties went for Trial and the plaintiff got himself examined as P.W.1 and marked Exs.A-1 to A-12. The defendant got himself examined as D.W.1 and marked Exs.B-1 to B-4. The Trial Court on a consideration of all the oral and documentary evidence adduced in the case, accepted the case of the plaintiff and decreed the suit for specific performance. Aggrieved by that the defendant has filed the above appeal.
10. I heard Mr. A.K.Kumaraswamy, learned counsel for the appellant and Mr. R.Gandhi, learned Senior Counsel appearing for the respondent.
11. The learned counsel for the appellant submits that there was absolutely no evidence to show that the suit property was encumbered and no suit filed by the defendant's brother was pending on the date when the plaintiff filed the present suit and subsequently the suit filed by the defendant's brother in O.S. No. 603 of 1988 was also dismissed on 22.08.1991. There was no averment in the original plaint stating that the plaintiff is always ready and willing to perform his part of the contract. The plaintiff filed I.A. No. 53 of 1991 after the expiry of three years from the date of filing of the suit for amending the plaint to incorporate the prayer for specific performance. The learned counsel invited my attention to the averments in paragraph No. 2 of the affidavit filed in support of I.A. No. 53 of 1991. In paragraph No. 2, it is stated as follows:
I am advised that by way of abundant caution, it is just and necessary that I must pray for the main relief of specific performance of sale and alternative relief, the relief of refund of the advance amount.
Referring to the said averment, the learned counsel submitted that the prayer for specific performance has been added only as a matter of abundant caution as advised by the counsel for the plaintiff which itself will show that the plaintiff was not really serious in seeking the relief of specific performance and he was not really ready and willing to perform his part of the contract. The learned counsel further submitted that once the plaintiff has filed a suit seeking refund of the advance amount, it will amount to abandaning his right to seek specific performance of the agreement of sale and hence the plaintiff is not entitled to seek specific performance of the agreement and this vital aspect has not at all been considered by the Trial Court:
12. The learned counsel relied upon the following rulings:
i) Volume 96 Law Weekly 88.
ii)
iii) 1997 (2) Law Weekly 820
iv) .
The learned counsel also further submitted that the Trial Court has not framed proper issues and has not considered the question of readiness and willingness on the part of the plaintiff as per the law laid down by this Court and the Apex Court. The learned counsel further submitted that the property is situated in Perundurai Town and there was rise in prices of the suit property and that was the reason why the plaintiff after the expiry of three years from the date of filing of the suit got the plaint amended to include the prayer for specific performance of the sale agreement. The learned counsel submitted that the Court should take judicial notice of the fact that there is alround increase in the land cost in urban areas.
13. Per contra, Mr. R.Gandhi, learned Senior Counsel appearing for the respondent submits that the suit has to be decided on the basis of the amended plaint and not on the basis of the original plaint. In the amended plaint, the plaintiff has specifically avered that he was always ready and willing to perform his part of the contract. The Senior Counsel further submitted that it is not suggested to P.W.1 in his cross examination that he was not always ready and willing to perform his part of the contract. The senior counsel further submitted that the fact that the brother of the defendant filed the suit and got attachment before judgment of the suit property will show that the defendant was indebted and he was not in a position to execute the sale deed conveying clear title to the plaintiff. The plaintiff was justified in filing the suit for refund of the advance money and after coming to know that the defendant can convey clear title, he filed an application to amend the plaint to include the prayer for specific performance of the sale agreement. The filing of the suit for refund of the advance amount will not amount to abandonment of the right of the plaintiff to seek specific performance of the agreement of sale.
14. I have carefully considered the rival submissions made by the learned counsel. It is unfortunate that the Trial Court has not framed the issue regarding readiness and willingness on the part of the plaintiff in performing his part of the contract. The Trial Court has also not considered the legal effect of the plaintiff initially filing the suit for refund of the advance amount. The Trial Court has only considered the readiness on the part of the plaintiff i.e. the means possessed by the plaintiff to perform his part of the contract, but erred in not considering the vital aspect of willingness on the part of the plaintiff to perform his part of the contract.
15. The reasoning stated by the plaintiff in the plaint for not getting the sale deed executed and for seeking refund of the advance amount is that the defendant is heavily indebted to third parties, that the defendant's brother one Rajendran informed him that the defendant had borrowed money from him and unless the debt is discharged the plaintiff should not purchase the schedule property from the defendant. It is pertinent to point out that in the un-amended plaint, the plaintiff has stated in paragraph No. 5 as follows:
Though the plaintiff had already gathered the balance amount payable under the agreement deed, it is now made clear that the defendant will not be able to sell away the suit property to the plaintiff free of encumbrance.
The plaintiff has not stated that he was always ready and willing to perform his part of the contract, anywhere int he unamended plaint. In the amended plaint, the plaintiff in paragraph No. 6 (a) has stated as follows:
The plaintiff had always been ready and willing to pay the balance amount of Rs. 31,000/- to the defendant and obtain the sale deed from him with delivery of possession of the suit properties. The plaintiff even now remains ready and willing to deposit the balance amount of Rs. 31,000/- into Court as and when so directed by this Honourable Court.
If we consider the above said averments in the unamended plaint and the averment in the amended plaint, it is crystal clear that the averments, that the plaintiff has always been ready and willing to pay the balance amount of Rs. 31,000/- to the defendant and obtain the sale deed, cannot be true. When it is the specific case of the plaintiff that since the suit property was encumbered and the defendant could not convey clear title as he was indebted to several persons and that was stated as the reason for seeking refund of the advance amount, I am unable to understand how he could have been always ready and willing to perform his part of the contract.
16. As pointed out above in the affidavit filed in support of I.A. No. 53 of 1991 seeking to amend the plaint, it is stated as follows:
I am advised that by way of abundant caution, it is just and necessary that I must pray for the main relief of specific performance of sale, and alternative relief, the relief of refund of the advance amount.
The above said averment will make it clear that the plaintiff was seeking amendment of the plaint, only as a matter of abundant caution, but not with an intention to get the sale deed executed. This particular averment in the affidavit itself will make it clear that the plaintiff was not and could not have been always ready and willing to perform his part of the contract. This vital aspect has not at all been considered by the Trial Court.
17. The Trial Court considering the oral evidence of P.W.1, Ex.A-6, Bank Pass Book standing in the name of the plaintiff which shows the availability of more than Rs. 33,010/- and from the fact that under Exs.A-7 to 10, the plaintiff had purchased other immovable properties in 1988, came to the conclusion that the plaintiff had the means to pay the balance sale consideration and also was willing to get the sale deed executed.
18. The Trial Court has further come to the conclusion that the plaintiff was ready and willing to get the sale deed executed as per the sale agreement. The Trial Court has also stated that under Ex.A-2 notice, the plaintiff had informed the defendant that he is keeping the money ready and he is willing to complete the sale transaction. The above said conclusions reached by the Trial Court is against the averments in Ex.A-2 notice and contrary to the legal principles. As far as the finding of the Trial Court that the plaintiff was having sufficient means and funds to pay the balance sale consideration is concerned it is no doubt correct. But the further finding that the plaintiff was willing to get the sale deed executed is not supported by any evidence. The observation of the Trial Court that under Ex.A-2, notice the plaintiff had informed the defendant that he was keeping the funds ready and he is agreeing to complete the sale transaction is against the averments in Ex.A-2 notice. This finding of the Trial Court is totally perverse and no where in Ex.A-2, the plaintiff had expressed his willingness to get the sale deed executed. The further finding of the Trail Court that since the plaintiff had filed the suit before 31.10.1988, i.e. before the time fixed in the Ex.A-1 agreement and since the plaintiff was always been ready and willing to perform his part of the contract, the plaintiff is entitled to get a decree for specific performance is not only erroneous, but it is perverse. The Trial Court has not at all considered whether the plaintiff was always ready and willing to perform his part of the contract. The very fact that the plaintiff had issued Ex.A-2, notice, demanding the refund of the advance amount and he had filed the suit seeking a decree for refund of the advance amount paid by him clearly establishes that the plaintiff was not and could not have always been ready and willing to perform his part of the contract. Therefore, the finding of the Trial Court is liable to be set-aside.
19. The plaintiff has filed Ex.A-11, Encumbrance Certificate, which did not disclose any encumbrance on the suit property. The plaintiff in his oral evidence has also not stated that there was any encumbrance on the suit property. The defendant also has produced Ex.B-4, Encumbrance Certificate, which also did not reveal any encumbrance on the suit property. The defendant as D.W.1, has stated that there is no encumbrance on the suit property. Hence, the contention of the plaintiff that the defendant will not be in a position to execute the sale deed and put him in possession and will not be able to give a clear title to the plaintiff could not be accepted. Simply because, the brother of the defendant had subsequent to the filing of O.S. No. 474 of 1988, filed a suit in O.S. No. 603 of 1988 and got attachment before judgment of the suit property, that does not mean that on the date when Ex.A-2 notice was issued and the suit was filed, there was any impediment for the defendant to execute the sale deed. The defendant had sent a reply under Ex.B-1 and two telegrams Exs.B-2 and B-3 expressing his willingness to execute the sale deed and denying the allegation that he is indebted to others. These facts will show that the plaintiff only wanted to avoid the execution of the sale deed by the defendant. These facts clearly establishes that the plaintiff was not willing to get the sale deed executed by the defendant.
20. In this respect, it is useful to refer to the judgments relied upon by the counsel for the appellant. The learned counsel for the appellant relies upon the judgment of a Division Bench of this Court, reported in 1996 Law Weekly 1988 Krishna Reddy, H.G. v. M.M. Thimmiah. In paragraph 26 (Page 101), the Honourable Division Bench has held as follows:
Section 16(c) of the Specific Relief Act, 1963 is prohibitory and a duty is cast on courts by a public statute that specific performance of a contract cannot be granted in favour of a person unless he avers and proves his readiness and willingness to perform his part of the contract. That being the nature of the statute, it would be the duty of the Court to see whether the person who seeks to enforce the contract satisfies the mandatory provisions of Section 16 of the Specific Relief Act, 1963. The Privy Council and the Supreme Court have interpreted the section to mean that if the conditions are not satisfied, the Court is bound to dismiss the suit.
21. The learned counsel for the appellant also relies upon the judgment Amirtham v. Subbian. In that judgment, a learned single Judge of this Court, has laid down that the factum of readiness and willingness to perform the plaintiff's part of the contract has to be judged with reference to the conduct of the parties and attendant circumstances. The Learned Judge has also referred to a judgment of the Apex Court Lourdu Mari David v. Louis Chinnaya Arogiaswamy, wherein the Apex Court has held as follows:
It is settled law that the party who seeks to avail of the equitable jurisdiction of a Court and specific performance being equitable relief, must come to the Court with clean hands. In other words, the party who makes false allegations does not come with clear hands and is not entitled to the equitable relief.
22. The learned counsel further relied on a judgment of the Supreme Court K.S. Vidyanadam v. Vairavan. In paragraph 13 of the judgment at page 1756, the Apex Court has held as follows:
Further, the delay is coupled with substantial rise in prices - according to the defendants, three times - between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff.
23. The learned counsel also relied upon a judgment of this Court reported in 1997 (2) L.W. 820 Vasantha and 3 Ors. v. M. Senguttuvan. Paragraph 15 at page 825 of the judgment reads as follows:
15. In A.I.R. 1967 - II - S.C.W.R. page 147 Gomathinayagam Pillai and Ors. v. Palani swami Nadar, the Supreme Court held that in a suit for specific performance, plaintiff must prove readiness and willingness. The relevant portion of the said decisions reads thus:
The respondent has claimed a decree for specific performance and it is for him to establish that he was, since the date of the contract, continuously ready and willing to perform his part of the contract. If he fails to do so, his claim for specific performance must fail. AS observed by the Judicial Committee of the Privy Council in Ardeshir Mama v. Flora Sassoon: "In a suit for specific performance, on the other hand, he treated and was required by the Court to treat the contract as still subsisting. He had in that suit to allege, and if the fact was traversed, he was required to prove a continuous readiness and willingness from the date of the contract to the time of the staring, to perform the contract on his part. Failure to make good that averment brought with it the inevitable dismissal of his suit. The respondent must in a suit for specific performance of an agreement plead and prove that he was ready and willing to perform his part of the contract continuously between the date of the contract and the date of hearing of the suit.
Even if for a single day, plaintiff-agreement holder is not ready to take the sale deed, the equitable remedy should not be granted. Readiness and willingness must be there continuously from the date of agreement up to the date of hearing. In this case, the concurrent finding is that the appellant was not ready to take the sale deed and that is proved by Ex.A-3.
24. The learned counsel for the appellant submits that admittedly the suit property is situated in Perundurai town which is a fast developing urban centre and P.W.1 in his cross examination has admitted that the value of the suit property has increased and D.W.1 has stated in his evidence that the value of the suit property has increased by three times and that is why the plaintiff, who sought for refund of the advance amount filed an amendment petition to amend the plaint to incorporate the prayer for a decree for specific performance.
25. This submission of the learned counsel merits consideration. Even though the plea of rise in cost of the land has not been pleaded in the written statement or in the additional written statement, such a plea, in the light of the facts and circumstances of this case, cannot be brushed aside. The court can take judicial notice of the fact that the cost of urban lands are increasing day by day. It is an admitted fact that Perundurai is a fast developing urban centre and it is no doubt that price would have increased manifold.
26. In my considered view, the law laid down in cited supra squarely applies to the facts of this case. In that judgment paragraph No. 13, reads as follows:
In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 2 1/2 years in clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices - according to the defendants, three times - between the date of agreement and the date of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff.
In the case on hand also, the plaintiff as per the agreement had to purchase the stamp papers, pay the balance sale consideration and get the sale deed executed within a period of five months. The plaintiff not only did not perform his part of the contract, but issued Ex.A-2, notice demanding refund of the advance amount and also filed the suit on the date of expiry of the the time specified in the agreement, seeking a decree for refund of the advance amount. Only after the expiry of more than three years from the date of filing of the suit, the plaintiff filed an application in I.A. No. 53 of 1991 seeking to amend the plaint to include the prayer for specific performance. The plaintiff had not given acceptable reasons as to why after the delay of three years he is seeking the relief of specific performance. In this context, the contention of the learned counsel for the appellant that there is three fold rise in the cost of the suit property merits consideration and acceptance. I am of the view that in this case, since there was rise in the cost of the suit property, the plaintiff had filed an application to amend the plaint to incorporate the prayer for specific performance. The delay is long and the delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff. This aspect of the matter has not at all been considered by the Trial Court and hence the decree of the Trial Court is liable to be set-aside.
27. In 1997(2) L.W. 820 Vasantha and 3 Ors. v. M. Senguttuvan, it has been held that even if for a single day, plaintiff/agreement holder is not ready to take the sale deed, the equitable remedy should not be granted. The contention of the Learned Senior Counsel Mr. R.Gandhi taht the suit has to be decided on the basis of the averments in the amended plaint and not on the basis of the averments in the unamended plaint is unsustainable. By the amendment a new paragraph 6(a) containing averments relating to readiness and willingness has been incorporated. When the averments in the unamended plaint continue to be there how then such averments can be eschewed from consideration. If the contention of the Learned Senior Counsel is considered, in the light of the legal principles laid down in the above noted decisions, it is liable to be rejected. Readiness and willingness must be there continuously from the date of agreement up to the date of bearing. But in this case the plaintiffs from the date of Ex.A-2 to the date of filing I.A. No. 53 of 1991, was not ready and willing to perform his part of the contract. Hence the submissions of the Learned Senior Counsel are not acceptable. Readiness and willingness must be there continuously from the date of agreement up to the date of hearing. In the foregoing paragraphs, I have held that the plaintiff was not always ready and willing to perform his part of the contract. Hence in the light of the above said legal principles laid down in the above cited judgments, the plaintiff is not entitled to the equitable remedy of specific performance.
28. Now I have to consider the effect of filing the suit by the plaintiff seeking refund of the advance amount paid by him and whether it will amount to abandoning his right in the agreement of sale to seek specific performance of the agreement. As stated above, the plaintiff had filed the suit in O.S. No. 474 of 1988 for refund of the advance amount on untenable grounds and he had not accepted the offer of the defendant to execute the sale deed. This in my considered view, will amount to abandoning the right of the plaintiff under the agreement to seek specific performance of the same. In this aspect, my view is fortified by the ruling of a Division Bench of this Court. In the judgment reported in 1983 (1) M.L.J. 467, Krishna Reddy and Co. v. Thimmiah the effect of acceptance of refund of advance of sale price received without prejudice is considered. In that case, the agreement holder while acknowledging the cheque for Rs. 13,000/- being the refund of the advance amount, stated as follows:
I have received the same without prejudice to my right in the agreement to sell by your client Door No. 5, Ganesan Chetty Street, G.T., Madras-1 in my favour.
It has been held that, the mere conditional acceptance by the use of the words 'without prejudice' to his rights under the contract for sale cannot in any manner derogate from the fact that he had acquiesced in the breach of the contract committed by the second respondent. As the purchaser has received the money back and the fact of it cannot be taken away by the words 'without prejudice', the Bench has held that this will amount to the purchaser waiving his right to enforce the contract. The above said decision squarely applies to the facts of this case.
29. The facts of the case in 1983 (1) M.L.J. 467 shows that the purchaser received the money 'without prejudice'. In this case, the plaintiff had filed the suit seeking refund of the advance amount, 'without reserving his right to seek specific performance of the agreement'. In spite of the fact that the defendant had expressed his willingness to execute the sale deed under Exs.B-1 to B-3 and when encumbrance certificates Exs.A-11 and B-4 did not disclose any encumbrances on the property, the plaintiff had not accepted the sale deed, but only wanted refund of the advance amount. This conduct of the plaintiff will clearly amount to abandoning his right to enforce the contract. The plaintiff is however entitled to get the refund of the advance amount of Rs. 20,000/- as the appellant has not established that he had suffered any loss or damages. The plaintiff is also entitlted for interest at 6% per annum, as the defendant/appellant had the benefit of using the advance amount.
30. In the light of the above discussions and the conclusions arrived at by me, the judgment and decree of the Trial Court is liable to be set-aside and accordingly the same is set-aside and the appeal is allowed with costs throughout. Consequently, the connected CMP is also closed.