The Karnataka High Court dismissed an appeal filed u/s 100 of CPC., against the judgment and decree dated 02.07.2016 passed by the Principal District and Sessions Judge, dismissing the appeal and confirming the judgment and decree dated 27.3.12 passed in an original suit by the Principal Senior Civil Judge, CJM. The Court observed that Section 19(1)(b) of the Specific Relief Act requires that money should have been paid in good faith and without notice of the contract. If the alienation made by defendant No.1 is after the expiry of the period stipulated under the suit agreement, which is admittedly three months, the mere statement by defendant No.2 that he had no notice of the suit agreement suffice.
Brief Facts:
Plaintiff instituted the suit seeking relief of specific performance of the contract and sought a declaration that the sale deed executed by defendant No.1 in favor of defendant No.2 was null and void. Plaintiff alleged that defendant No.1, who is the owner, offered to sell the suit schedule property and accordingly executed an agreement on 26.01.2005 and received Rs.35,000/- out of the total sale consideration of Rs.2,35,000/-. The plaintiff has filed the present suit alleging that defendant No.1 despite repeated requests to execute the sale deed by receiving balance sale consideration failed to perform his part of the contract.
Though the trial Court answered issue No.1 in the affirmative and held that the suit agreement is proved, however, issue No.2 was answered in the negative and a finding was recorded by the trial Court that the plaintiff has failed to prove his readiness and willingness. Trial Court while answering additional issue No.1 in the affirmative held that defendant No.2 is the bonafide purchaser and he was not aware of the suit agreement between plaintiff and defendant No.1.
Feeling aggrieved by the judgment and decree of the trial Court, the defendants preferred an appeal before the appellate Court. The appellate Court was also of the view that the plaintiff is not entitled to the discretionary relief of specific performance of the contract.
Observations of the Court:
The Court noted that the plaintiff is asserting and claiming specific performance of the contract based on an agreement to sell dated 26.01.2005. The time stipulated under the agreement is three months. The material on record reveals that the plaintiff issued a legal notice on 14.2.2006 and the suit was filed on 7.10.2006. Defendant No.1 sold the suit property in favor of defendant No.2 under the registered sale deed dated 26.12.2005. The alienation made by defendant No.1 in favor of defendant No.2 is after the expiry of the three-month period stipulated under the suit agreement and before the issuance of legal notice and filing of suit by the plaintiff.
The Court observed that if an agreement holder fails to enforce the contract by taking appropriate steps within the stipulated period enumerated under the agreement, the subsequent transferee who has acquired the property under the registered sale deed is entitled to protection where the title is acquired while acting bonafide for value and without notice of plaintiff's agreement.
The Court said that the term 'good faith' indicated under Section 19(1)(b) of the Specific Relief Act differs from the term used in Section 41 of the Transfer of Property Act, which requires the purchaser to take reasonable time to ascertain that the transferor had powers to transfer. Section 19(1)(b) of the Specific Relief Act requires that money should have been paid in good faith and without notice of the contract. If the alienation made by defendant No.1 is after the expiry of the period stipulated under the suit agreement, which is admittedly three months, the mere statement by defendant No.2 that he had no notice of the suit agreement suffice.
The decision of the Court:
The Karnataka High Court, dismissing the appeal, held that this Court is not inclined to grant any relief under Section 100 of CPC.
Case Title: K Chandraiah v. C M Prema & Anr.
Coram: Hon’ble Justice Sachin Shankar Magadum
Case no.: REGULAR SECOND APPEAL NO. 2034 OF 2016 (SP)
Advocate for the Appellant: Mr. B Ramesh
Advocate for the Respondent: Mr. V. Vijayashekar Gowda
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