Bombay High Court
Shrikrishna Ganuji Sonone vs Vitthal on 20 November, 2013
Bench: S.B. Shukre
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR
SECOND APPEAL No.75 OF 1998
Shrikrishna Ganuji Sonone,
Aged about 46 years,
Agriculturist,
R/o. Matargaon (Bk.), Tal. Shegaon,
District Buldhana. : APPELLANT
(Ori.Plaintiff)
ig ...VERSUS...
Vitthal s/o. Shankar Bajre,
Aged about 51 years,
Cultivator,
R/o. Matargaon (Bk.), Tal. Shegaon,
District Buldhana. : RESPONDENT
(Ori.Defendant)
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Mr. Anjan De, Advocate for the Appellant.
Mr. G.G. Mishra, Advocate for the Respondent.
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CORAM : S.B. SHUKRE, J.
th
DATE : 20
NOVEMBER, 2013.
ORAL JUDGMENT :
1. This appeal arises out of the judgment and decree
passed by the District Judge, Khamgaon in Regular Civil Appeal
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No.68 of 1988 on 14.10.1997 thereby partly allowing the
appeal and setting aside the decree of specific performance
granted in favour of appellant in Regular Civil Suit No.86 of
1987, decided on 22.4.1988.
2. This appeal is being heard afresh on merits after the
Hon'ble Supreme Court allowed the appeal filed by the
respondent bearing Civil Appeal No.10537-538 of 2011
(arising out of SLP (C) Nos.28597-28598 of 2010) filed against
the judgment of this Court in this appeal delivered on
17.12.2009. By this judgment, this Court had allowed the
present appeal and decreed the suit as ordered by the trial
Court. The Hon'ble Apex Court, however, for the reasons
stated in the order dated 2nd December, 2011 passed in
aforestated Civil Appeal, set aside the said judgment and
remitted the matter to the High Court for fresh disposal on
merits.
3. It was the case of the appellant/original plaintiff that
the respondent/original defendant was in need of money to
pay all the debts in respect of the agricultural field and to meet
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household expenses. The respondent, therefore, agreed to sell
to the appellant agricultural field bearing Gat No.36
admeasuring 1.20 hectare Situated at village Bramhanwada,
Taluka Shegaon, District Buldhana (suit field) for a
consideration of Rs.17,000/-. The appellant contended that it
was agreed between him and the respondent that amount of
Rs.5,000/- would be paid to the respondent as an earnest
money and it was accordingly paid to the respondent. The
respondent had also then agreed that he would clear all the
debts and encumbrances on the land and would deliver
unencumbered title in respect of the suit field and its
possession to the appellant on or before 31.3.1987. Agreement
to sell on these terms was executed between the appellant and
the respondent on 13.1.1987. The appellant further submitted
that since the respondent gave no indication that he would be
acting upon the terms of agreement to sell, he issued him a
notice on 24.3.1987 calling upon him to execute the sale-deed,
as agreed, on 31.3.1987. The appellant further submitted that
accordingly he presented himself before the Sub-Registrar,
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Shegaon on 31.3.1987. But, the respondent did not turn up
there and resultantly, sale-deed could not be executed. He
submitted that in order to show his presence at the office of the
Sub-Registrar on 31.3.1987 he purchased a stamp-paper of
Rs.1/-. He further submitted that the respondent avoided to
pay the loan of Vivid Karyakari Sahakari Society, Matargaon
and the loan amount, which was then due against the
respondent was of Rs.11,620/-. The appellant submitted that
the respondent gave a false reply to the notice of the appellant
on 2.4.1987 and, therefore, appellant sent a counter-reply on
27.4.1987 to the respondent. By the counter-reply, the
appellant called upon the respondent to execute the sale-deed,
but in vain. Since the appellant was always ready and willing
to perform his part of contract and there had been a breach of
obligations committed by the respondent, the appellant filed a
suit against the respondent for specific performance of contract
in which he alternatively claimed refund of earnest amount of
Rs.5,000/- together with damages of Rs.10,000/-.
4. The respondent resisted the suit by filing his written
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statement. While he admitted his ownership of the suit field,
he denied that the agreement dated on 13.1.1987 was an
agreement to sell the suit field. He submitted that this
agreement was basically in the nature of a money lending
transaction and that it was executed to secure repayment of
amount of Rs.2,000/- borrowed by him from the appellant.
The respondent submitted that he was assured by the appellant
that the agreement executed on 13.1.1987 though ostensibly
about sale of the suit field, would not be acted upon or
enforced by the appellant. He further submitted that the
appellant also told him that he would mention amount of Rs.
5,000/- as an earnest money only nominally, just to secure
repayment of the amount of Rs.2,000/- lent by him to the
respondent. He further submitted that it was agreed between
them that in lieu of an amount of Rs.2,000/- borrowed by him
from the appellant, he would repay an amount of Rs.3,000/-.
He also submitted that the agreement of sale dated 13.1.1987
was thus a sham and nominal document. He further submitted
that even the purchase price of the suit field mentioned in the
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agreement did not represent the true market value of the field,
which was about Rs.34,000-35,000/- at the time of transaction.
He also took an exception to the enforcement of agreement to
sell on a legal ground. Thus, he urged that the suit of the
appellant deserves to be dismissed.
5. On these pleadings, learned Judge of the trial Court
framed 11 issues and finding that the appellant had proved his
case of execution of a valid agreement to sell on 13.1.1987 in
respect of the suit field and the respondent had failed to prove
his case that the agreement to sell was only nominal, he
granted a decree of specific performance of contract on
condition of clearance of all the encumbrances on the suit filed
by his judgment and order passed on 22nd April, 1988.
6. The respondent preferred an appeal against this
judgment and decree of the trial Court, which was registered as
a Regular Civil Appeal No.68 of 1988. After hearing both
sides, learned Additional District Judge, Khamgaon partly
allowed the appeal by his judgment and order passed on
14.10.1997. By the said judgment and order, the learned
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Additional District Judge, Khamgaon set aside the decree of
specific performance of contract passed by the trial Court and
granted alternative relief regarding refund of earnest amount
with interest and also granted other consequential reliefs.
7. Dis-satisfied with the judgment and order passed by
the learned Additional District Judge, Khamgaon, Distt.
Buldhana, the appellant came in second appeal before this
Court. In pursuance of the order of the Hon'ble Supreme Court
dated 2nd December, 2011 passed in Civil Appeal
No.10537-538 of 2011 this Court, heard the parties and upon
noting that substantial questions of law were involved, it
admitted the appeal on three substantial questions of law, by
its order dated 6th August, 2012. The substantial questions of
law that come up for consideration in this appeal are as under :
"(i) Whether the lower appellate court,
having held that transaction was one of sale and
that agreement was properly executed, could carve
out a new case and raise hypothetical grounds for
not granting the specific performance and could the
court assume that the possession ought to have been
taken immediately ?
(ii) Whether the grounds I to VI given by
the lower appellate court in para 17 of the
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judgment constitute valid and legal grounds for
refusing to exercise a jurisdiction for granting
specific performance of the contract which has
already been proved ?
(iii) Whether the discretion exercised by
the lower appellate court is sound and judicious in
the circumstances of the case ?"
8. I have heard Mr.Anjan Dey, learned counsel for the
appellant and Mr. G.G. Mishra, learned counsel for the
respondent. I have also carefully gone through the judgment
of both the Courts below and paper book of this appeal.
9. Learned counsel for the appellant has submitted that
the first appellate Court, after agreeing with the findings of the
trial Court on such important issues as execution of agreement
to sell of suit field for a consideration of Rs.17,000/-, receiving
of an earnest amount of Rs.5,000/- by the respondent at the
time of execution of the agreement of sale on 13.1.1987 and
the appellant being always ready and willing to perform his
part of contract, surprisingly found that the discretion
exercised by the trial Court in granting a decree for specific
performance of contract was not judicious and accordingly it
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set aside the decree of specific performance of contract and
directed refund of earnest money with interest to the appellant.
He submits that the first appellate Court has carved out a
hypothetical case not pleaded by the respondent in coming to
the conclusion that exercise of discretion on the part of the trial
Court was injudicious. He further submits that the first
appellate Court has given six grounds as mentioned in
paragraph 17 of the impugned judgment and order for holding
that the appellant would get an unfair advantage over the
respondent and that the respondent would also be put to
hardship which he did not foresee if specific performance was
granted. He submits that none of these grounds is covered by
Section 20(2) of the Specific Relief Act, 1963. He, therefore
urges that the impugned judgment and order are absolutely
illegal and deserve to be set aside.
10. Learned counsel for the respondent submits that in
fact this appeal does not give rise to any substantial question of
law and on this ground alone the appeal deserves to be
dismissed. He submits that all the grounds mentioned in the
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impugned judgment and order by the learned Additional
District Judge would constitute sufficient grounds in law to
refuse the discretionary relief of specific performance of
contract. He further submits that evidence adduced by the
respondent would show that he had proved his case that the
underlying transaction of agreement to sell dated 13.1.1987
was of money lending and, therefore, no specific performance
could have been granted by the trial Court. He alternatively
submits that the transaction in any case being very old, that is
to say, about 26 years old, it would not be equitable to allow
the appellant to have for himself the entire benefit of
substantial rise in the market value of the land. He, therefore,
submits that, in case, this Court is inclined to allow the appeal,
it may be allowed conditionally by granting some portion of
the increased price of the suit land to the respondent.
11. In this case, it is noticed that there have been
concurrent findings of facts by both the Courts below on
material aspects of the case. In order to properly deal with
rival arguments, it would be necessary to refer to relevant
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issues and points and also the findings given in respect of each
of them by the both the Courts below. They are re-produced as
under :-
Trial Court - Relevant issues and findings :
Sr. Issues Findi
No
ngs
1. Does plaintiff prove that defendant Yes
ig entered into an agreement to sell
the suit field to him for Rs.
17,000/- free from encumbrances ?
2. Does he prove that on 13.1.1987 Yes
defendant received earnest amount
of Rs.5,000/- from him and
executed an agreement of sale of
suit field ?
3. Does he prove that sale deed of the Yes
suit field was to be executed on or
before 31.3.1987 at his costs ?
4. Does he prove that he was and is Yes
ready and willing to perform the
part of his contract ?
5. Does the defendant prove that suit No
transaction is money lending one ?
What effect ?
9. Is plaintiff entitled for the relief of Yes
specific performance of contract
and possession of suit field ?
sa75.98.odt 12/27
First Appellate Court - Relevant points and findings :
Sr. Points Findi
No
ngs
1. Did the plaintiff prove that the Yes
defendant agreed to sell him the
suit field for Rs.17,000/- ?
2. Did he prove that the defendant Yes
executed an agreement of sale on
ig 13.1.1987 on receiving Rs.5,000/-
as an earnest money ?
3. Did he prove that he was ready Yes
and willing to perform his part of
the contract ?
5. Did he prove that the suit No
transaction was that of a loan ?
6. Whether the court below has No
exercised the discretion judiciously
while making an impugned
decree ?
12. It is clear from the above referred findings recorded
by both the Courts below that they are in agreement that the
respondent had indeed agreed to sell the suit field to the
appellant for a consideration of Rs.17,000/- and had received
an amount of Rs.5,000/- as an earnest money on 13.1.1987 on
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which day respondent had executed a agreement of sale in
favour of the appellant. This agreement to sell has been duly
proved by the appellant vide Exhibit-20. The first appellate
Court also endorses the finding of the trial Court, on the basis
of evidence available on record, that the appellant was always
ready and willing to perform his part of contract. Once such
findings are recorded by the first appellate Court, as law of the
land goes, one would expect ordinarily grant of specific
performance would follow the finding. But, that has not
happened in this case. The first appellate Court has found
exercise of discretion in granting decree of specific
performance as injudicious on the grounds mentioned in
paragraphs 17 of the judgment. The legality of these grounds,
as rightly urged by the learned counsel for the appellant, would
have to be examined. Besides, it will also have to be seen
whether these grounds had any foundation in the defence
taken by the respondent in the suit that was brought against
him. Before we do that, it would be necessary to briefly
consider the law governing the discretion of the Courts as to
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decreeing the specific performance.
13. It is well settled law that ordinarily specific
performance of contract, once the ingredients necessary for
granting it are fulfilled, is to be granted, unless circumstances
of the case are such or conduct of the parties is such that it may
not be reasonable for the Court to grant it. Under Section
20(1) of the Specific Relief Act, 1963, the jurisdiction to decree
specific performance has been declared to be discretionary in
nature and it is laid down that the Court is not bound to grant
such relief merely because it is lawful to do so. Section 20(1)
makes it clear that the discretion of the Court must be
exercised within bounds of law and certainly not in an
arbitrary manner. It must be sound and reasonable, guided by
the judicial principles and capable of correction by a court of
appeal. Sub-section 2 of Section 20 delineates instances in
which the Court may properly refuse to grant decree of specific
performance. These instances are : when the contract, though
not voidable gives the plaintiff an unfair advantage over the
defendant or when the performance of contract would involve
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some hardship on the defendant, which he did not foresee and
whereas non performance would not result in any such
hardship on the plaintiff or when the circumstances in which
the contract was entered into show that it would be inequitable
to enforce specific performance. Explanation 1 to sub-section
(2) clarifies that mere inadequacy of consideration or the fact
that the contract is onerous to the defendant would be no valid
ground to hold that the contract gives the plaintiff an unfair
advantage over the defendant. Explanation 2 further clarifies
that the question of hardship would have to be determined
with reference to the circumstances existing at the time of
contract, except in cases where the hardship is seen to be
resulting from any act of the plaintiff subsequent to the
contract. The question of unfair advantage under sub-section
(2) is required to be determined by considering the terms of
the contract, the conduct of the parties at the time of
transaction and also other circumstances, if any, attending the
execution of the contract.
14. Now, let us examine whether or not the grounds
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mentioned by the first appellate Court in its impugned
judgment and order for finding that the trial Court should not
have granted specific performance accord with the law as
discussed above.
15. Six grounds taken by the first appellate Court, as
appearing in paragraph 17 of the impugned judgment and
order, are re-produced as under :
ig "(i) The plaintiff himself has alleged that
the defendant was in need of money to meet the
household expenses and to pay off the debts of the
suit field. In that event, he himself could have
agreed to clear those dues or could have led the
defendant to make the payment out of the earnest
money. He, however, allowed the defendant to
spend the amount of Rs.5,000/- for his own need.
In other words, the plaintiff made no attempt to see
that the defendant had applied the amount for
good.
(ii) It is not the case of the plaintiff that
the execution of the sale deed was postponed for
wants of funds. If the plaintiff really wanted to
purchase the suit field being convenient as abutting
to is field, then he himself could have insisted the
defendant to execute the sale deed on the very day.
(iii) The plaintiff had agreed to purchase
the suit field for the consideration of Rs.17,000/-
without having made any enquiry, the extent of
debts or encumbrances outstanding against the suit
field. The amount of consideration thus has not
been determined after bona fide inquiry.
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(iv) The suit field was undisputedly
mortgaged with Vividh Karyakari Society
Matargaon. The plaintiff should not agree to
purchase suit field when it was encumbered in such
a fashion.
(v) A possession of a field is a prime
object of a purchaser. No prudent purchaser would
allow his vendor to remain in the possession of the
suit field even after having paid good amount as an
earnest money. The plaintiff could have insisted for
putting him in the possession of the suit field at
once when he had parted with Rs.5,000/- as an
earnest money.
ig (vi) Had the real transaction between
the parties was that of a sale and purchase, then
the defendant could not have hesitated in executing
the sale deed in favour of the plaintiff. His such
hesitation speaks in volumes leading to a possibility
of some other nature of transaction between the
parties."
16. A bare perusal of pleadings of parties and evidence
on record is enough to give an impression that these grounds
are the products of the imagination of the first appellate Court.
It was not at all the case of the respondent that the appellant
ought to have ensured that the amount of Rs.5,000/- paid by
him to the respondent was properly applied by the respondent
towards re-payment of loan. The respondent had never taken
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a defence that the circumstances existing at the time of
transaction were such or the conduct of the parties was such
that the contract gave unfair advantage to the appellant over
the respondent. The respondent had never pleaded that if
specific performance was granted, it would involve some
hardship on him and that non-performance would not involve
any hardship on the appellant. The respondent had also not
come out with any case showing that there were circumstances
attending the execution of the agreement which made specific
performance of contract inequitable. The respondent never
claimed that the appellant ought to have insisted upon him to
execute the sale-deed in respect of the suit field on the date of
agreement to sell i.e. 13.1.1987 or that amount of
consideration was not determined by the appellant after bona
fide enquiry or that the appellant, having learnt about
mortgage of the land with Vivid Karyakari Sahakari Society,
Matargaon as a security for repayment of loan, should not have
agreed in the first place to purchase the suit field or the
appellant ought to have insisted upon delivery of possession of
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the suit field on 13.1.1987 itself or that the hesitation of the
respondent in executing the sale-deed as promised by him itself
indicated that the real transaction between the parties was
possibly different. Yet, the first appellate Court imagined these
circumstances and held that the trial Court had exercised
discretion in decreeing the suit for specific performance in an
unreasonable and unsound manner. These grounds, were
absolutely hypothetical, as they were not at all pleaded or put-
forth in evidence by the respondent.
17. No doubt, a duty has been cast upon the Court to
exercise discretion regarding grant of specific performance or
otherwise in a sound and reasonable manner and to do so it
would be open to the Court to examine all the facts and
circumstances of the case. Some of the grounds, in a given
case may also not be specifically pleaded by the parties, but at
the same time Court is duty bound to ensure that they are seen
to be taking birth from the circumstances of the case and not
from the mind of a judge. Exercise of discretion on grounds
rooted, not in the facts and circumstances of the case, but in
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the imaginary powers of a Judge, is arbitrary, not
countenanced by Section 20(1).
18. In the instant case, neither the terms of the contract
nor the conduct of the parties nor any other circumstances
ascertained from the record give rise to what has been termed
by the first appellate Court as the grounds leading to granting
the appellant an unfair advantage over the respondent and also
causing of hardship to the respondent which he did not
foresee. At the most these grounds could be seen as
constituting own views of the court, unguided and uncanalised
as they are by any judicial principles, about how ideally parties
should conduct themselves in such matters and upon what
terms should they enter into contracts. These grounds have no
legal basis and if at all they have any moral basis, one can say,
such basis has no approval of law. They do not fall anywhere
in the cases enumerated in sub-section (2) of Section 20 of the
Specific Relief Act, 1963. The Court cannot cast a duty upon
the plaintiff to ensure that the amount of earnest money given
by him to the defendant is properly applied by the defendant in
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paying the debt on the land. Court can also not question the
conduct of the plaintiff whose field is abutting the field agreed
to be purchased by him in not insisting upon execution of the
sale-deed on the very day of execution of agreement to sell.
Since mere inadequacy of consideration is not a valid ground
for constituting an unfair advantage within the meaning of
clause (a) or hardship within the meaning of clause (b) of
sub-section (2) of Section 20, no duty is cast upon the plaintiff
to conduct an enquiry to ascertain as to whether the
consideration fixed under the agreement to sell is proper and
reasonable. It is very strange for a Court of law to say that the
plaintiff, upon learning that the suit property is under a
mortgage, should not agree to purchase the suit field in as
much as such an agreement can in law be always made
conditional to clearance of the encumbrance on the property.
Similarly, courts can also not draw any adverse inference
against the plaintiff that the underlying transaction might be of
a nature other than sale of the property for the only reason of
his not insisting upon delivery of possession after payment of
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about 1/3rd part of total consideration. It is also illogical to say
that the defendant, who is hesitant in executing the sale-deed,
reasonably indicates that he does not intend and had never
intended to transfer title of the property to the plaintiff. All
these grounds taken by first appellate Court as constituting
something which would put the appellant in a position of
unfair advantage over the respondent and would also cause
hardship to the respondent which he did not foresee, do not
have any valid basis in law. Any use of such grounds for
exercising discretion to not decree specific performance of
contract would amount to arbitrary exercise of jurisdiction
under Section 20 of the Specific Relief Act, 1963. But, these
grounds have been used in the instant case by the first
appellate Court in refusing decree of specific performance to
the appellant. The whole approach adopted by the first
appellate Court is perverse and, therefore, it cannot be said
that this appeal does not give rise to any question of law. The
contentions raised on behalf of the respondent in this behalf
are, therefore, rejected.
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19. Second contention of the respondent is that evidence
on record amply shows that the agreement to sell was really in
the nature of a money lending transaction. However, I beg to
differ from him. It has been concurrently held by both the
Courts below on the facts of the case that the appellant failed
to prove that suit transaction was that of a loan. The findings
are based upon evidence on record and I do not see any
perversity in them nor any has been shown to me by the
learned counsel for the respondent. It is well settled law that
while exercising jurisdiction under Section 100 of CPC, High
Court cannot interfere with the concurrent findings of the
Courts below by re-appreciating evidence and arriving at a
different view, merely because another view is possible. In the
case of Navaneethammal vs. Arjuna Chetty, reported in
(1996) 6 SCC 166, the Hon'ble Apex has held that High Court
in exercise of power under Section 100 C.P.C. is not expected
to reappriciate evidence, though another view is possible,
unless the view taken by the Courts below is based on no
material. In the case of Pakeerappa Rai vs. Seethamma
sa75.98.odt 24/27
Hengsu (dead) by L.Rs. and others, reported in (2001) 9
SCC 521, Hon'ble Supreme Court, in para 2, has observed that
under Section 100 C.P.C., the High Court cannot interfere with
the erroneous findings of fact, howsoever, gross the error
might be. I, therefore, find no merit in the said contention
raised on behalf of the respondent.
20. Third contention of the respondent is that due to
passage of considerable period of time, price of the suit land
has got increased and, therefore, some portion of the benefit be
also passed over to the respondent, if at all this Court allows
this appeal in favour of the appellant. In support of the same,
he has referred to me the case of Nirmala Anand vs. Advent
Corporation Pvt. Ltd. and others, reported in 2003 (1)
Mh.L.J. 468. This case, reported as AIR 2002 SC 2290, has
also been referred to me by the learned counsel for the
appellant to substantiate his point that ordinarily the plaintiff is
not to be denied the relief of specific performance only on
account of phenomenal increase of price during the pendency
of litigation.
sa75.98.odt 25/27
21. In the instant case, there is absolutely no material
available on record or has been brought to the notice of this
Court by rival parties giving an indication about the present
market value of the suit land. There are also no factors
brought on record of the case on the basis of which, rise in
price of the suit land could be calculated on percentage basis.
Therefore, it is not possible for this Court to fix the present
market value of the suit land at any reasonable point and,
therefore, it would also not be possible to give any direction
regarding payment of additional consideration amount by
appellant to respondent. Doing so would only amount to
indulging in an exercise based upon surmises and
imaginations, not permissible under the law. That apart, in the
said case of Nirmala Anand (supra), while determining as to
how much of benefit of increase in the value of the property
should be given to the other side, the Hon'ble Apex Court has
laid down that while balancing the equities, one of the
considerations to be kept in view is as to who is the defaulting
party. In this case, I find that there was nothing on record
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which should have made the respondent to refuse execution of
sale-deed in favour of appellant and from this view point, I am
of the opinion that the respondent is a defaulting party not
deserving to his credit any equitable benefit in the nature of
share in the supposed rise in price of the suit land.
22. In view of the above discussion, I find that the first
appellate Court, having held that transaction was one of sale
and that agreement was properly executed, could not have
carved out a new case on hypothetical grounds for not granting
specific performance and could not have assumed that
possession ought to have been taken immediately. I further
find that ground Nos.1 to 6 given by the first appellate Court in
paragraph 17 of the impugned judgment and order do not
constitute valid and legal grounds for refusing decree of
specific performance to the appellant. The discretion so
exercised by the first appellate Court in denying the specific
performance of contract to the appellant was unsound and
injudicious in the circumstances of the case. All the three
substantial questions of law are answered accordingly. Appeal,
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therefore, deserves to be allowed.
23. Appeal stands allowed.
24. The suit is decreed as ordered by the trial Court and
the judgment and order of the trial Court passed in Regular
Civil Suit No.86 of 1987 on 22.4.1988 and decree drawn
therein are hereby confirmed.
25. Respondent to pay costs throughout.
26. Decree be drawn up accordingly.
JUDGE
DWW
