Karnataka High Court
Sri Shantilal Mutha vs B R Vasuki on 20 December, 2023
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RFA No.849/2007
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF DECEMBER 2023
PRESENT
THE HON'BLE MRS JUSTICE K.S.MUDAGAL
AND
THE HON'BLE MR JUSTICE C M JOSHI
REGULAR FIRST APPEAL No.849/2007 (SP)
BETWEEN:
1. SRI SHANTILAL MUTHA
SINCE DECEASED REP. BY
LEGAL HEIRS:
1(a) RAJI BAI
W/O LATE SHANTILAL MUTHA
AGED ABOUT 68 YEARS
1(b) BHAVAR LAL MUTHA
S/O SHANTILAL MUTHA
AGED ABOUT 49 YEARS
1(c) DINESH MUTHA
S/O SHANTILAL MUTHA
AGED ABOUT 45 YEARS
1(d) HITESH MUTHA
S/O SHANTILAL MUTHA
AGED ABOUT 43 YEARS
1(e) ASHA JAJU
D/O SHANTILAL MUTHA
AGED ABOUT 42 YEARS
1(f) ANJU BHANSALI
D/O SHANTILAL MUTHA
AGED ABOUT 40 YEARS
ALL ARE R/AT NO.74, NARAYAN NIVAS
CHURCH ROAD, SHANTINAGAR
BENGALURU - 560 027 ...APPELLANTS
(BY SRI DHANANJAY JOSHI, SENIOR COUNSEL FOR
MS.LAKSHA KALAPPA B, ADVOCATE)
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RFA No.849/2007
AND:
B R VASUKI
S/O B N RANGANATHAN
AGED ABOUT 65 YEARS
R/AT NO.103, 3RD MAIN
INDUSTRIAL TOWN, RAJAJINAGAR
BANGALORE - 560 010 ...RESPONDENT
(BY SRI V.SRINIVASA RAGHAVAN, SENIOR COUNSEL FOR
SRI ABHINAY V, ADVOCATE FOR R1;
SRI VASANTHAPPA, ADVOCATE FOR PROPOSED
IMPLEADING APPLICANTS IN IA NOS.2 TO 7 OF 2011;
SRI K.M.JAGANATH, ADVOCATE FOR IMPLEADING
APPLICANTS IN IA.NO.1/2012;
SRI.SHYAM KOUNDINYA A.S., ADVOCATE FOR IMPLEADING
APPLICANTS IN IA.NO.2/2012;
SRI S SHAKER SHETTY, ADVOCATE FOR IMPLEADING
APPLICANTS IN IA.NO.3/2012)
THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION 96
OF CPC PRAYING TO SET ASIDE THE JUDGMENT AND DECREE
DATED 15.03.2007 PASSED BY I ADDITIONAL CIVIL JUDGE
(SR.DN.) BANGALORE RURAL DISTRICT, BANGALORE IN
O.S.NO.333/2005 PARTLY DECREEING THE SUIT FOR SPECIFIC
PERFORMANCE OF AGREEMENT OF SALE AND PERMANENT
INJUNCTION.
THIS REGULAR FIRST APPEAL HAVING BEEN HEARD AND
RESERVED ON 18.12.2023 COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, K.S.MUDAGAL J., DELIVERED THE
FOLLOWING:
JUDGMENT & ORDERS ON I.A.Nos.2 TO 8 OF 2011,
I.A.Nos. 1 TO 3 OF 2012 AND I.A.No.3 OF 2023
Challenging the decree for specific performance of
agreement of sale passed against him, the defendant in
O.S.No.333/2005 on the file of I Additional Civil Judge
(Senior Division), Bangalore Rural District, Bangalore has
preferred this appeal.
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RFA No.849/2007
2. Pending this appeal, the original
defendant/appellant died. His legal representatives as
appellant Nos.1 (a) to (f) are prosecuting the matter. For the
purpose of convenience the parties are referred to henceforth
according to their ranks before the trial Court.
3. The plaintiff filed O.S.No.333/2005 against the
defendant seeking specific performance of agreement of sale
dated 12.12.2003 and for permanent injunction, in the
alternative for refund of the advance consideration of
Rs.1,08,000/- with interest at Rs.18,330/- on the same and
damages of Rs.43,31,250/-.
4. The subject matter of the suit was agricultural
land bearing Survey No.53, Seegehalli village,
Yeshwanthapura Hobli, Bangalore North Taluk, Bangalore
measuring 3 acres 34 guntas.
5. The case of the plaintiff in brief is as follows:
(i) The defendant entered into agreement of sale
deed dated 12.12.2003 with the plaintiff and agreed to sell
the suit property. The sale consideration agreed was
Rs.11,25,000/- per acre.
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RFA No.849/2007
(ii) The defendant received advance consideration of
Rs.1,08,000/- and executed agreement of sale. On behalf of
the plaintiff Shri Udaya Prasad participated in the execution
of agreement of sale as his representative. As per the
agreement, the defendant was required to convey
unencumbered marketable title and execute the sale deed
within three months from the date of agreement. The plaintiff
was always ready and willing to perform his part of the
contract. The defendant did not furnish the relevant records
to complete the sale transactions within the stipulated time.
(iii) The plaintiff on enquiry found that 3 acres 34
guntas of land was in joint name of the defendant and one
Jayanthilal and partition effected between them on
09.12.2003 as represented by the defendant was not
reflected in the revenue records.
(iv) Despite the plaintiff reminding the defendant to
complete the transaction of execution of sale deed, the
defendant did not comply his requisition. The plaintiff had
mobilized/arranged the funds and was waiting for execution
of the sale deed.
(v) Since the defendant did not come forward, the
plaintiff got issued notice on 14.09.2004 (erroneously the
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RFA No.849/2007
notice was dated as 14.07.2004) calling upon the defendant
to receive balance consideration and to execute the sale
deed. For that the defendant sent untenable reply dated
27.09.2004 enclosing cheque of Rs.1,08,000/- towards
refund of the advance amount and claiming that the contract
is terminated.
(vi) The plaintiff issued rejoinder dated 12.10.2004 to
the said notice, returning cheque for Rs.1,08,000/-. The
plaintiff was always ready and willing to perform his part of
contract. The alleged repudiation of the contract by the
defendant is untenable. Therefore he seeks decree for specific
performance etc.
6. The defendant on appearance filed the written
statement. His defence in the written statement is as follows:
(i) There was no concluded contract and privity of
contract between him and the plaintiff. The terms of the
agreement were unclear, indefinite and ambiguous. The
agreement was fraught with uncertainty.
(ii) Time was the essence of the contract. The
agreement of sale stood automatically rescinded and
cancelled due to inaction and breach of contract on the part
of the plaintiff. Therefore the plaintiff is not entitled to relief
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RFA No.849/2007
of specific performance. Due to escalation of the prices of the
lands in the vicinity of the suit property, it would be
inequitable to grant specific performance of the contract and
that causes hardship to him. The defendant had sold
substantial portion of the suit schedule property to several
persons prior to the suit. Therefore specific performance of
agreement cannot be granted. Thus he sought dismissal of
the suit.
7. Based on the pleading of the parties, the trial
Court framed the following issues:
(i) Whether the plaintiff proves that the defendant
has executed an agreement of sale with respect
to the suit schedule property and received cheque
of Rs.1,08,000/- on 12.12.2003?
(ii) Whether the plaintiff proves that he is always
ready and willing to perform his part of contract?
(iii) Whether the plaintiff proves that the defendant is
attempting to alienate the suit schedule
properties?
(iv) Whether the plaintiff proves that he is entitled for
specific performance of the contract?
(v) In the alternative, whether the plaintiff proves
that he is entitled for refund of Rs.1,08,000/-
along with interest as claimed?
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RFA No.849/2007
(vi) Whether the plaintiff proves that he is entitled for
damages of Rs.43,31,250/- as paid?
(vii) What Decree or Order?
8. In support of the case of the plaintiff, PWs.1 to 3
were examined and Exs.P1 to P38 were marked. The
defendant got himself examined as DW.1 and got marked
Exs.D1 to D22. The trial Court on hearing the parties rejected
the contention of the defendant that the terms of the
agreement were uncertain and there was no privity of
contract between him and the plaintiff etc. The execution of
the agreement of sale was held proved. The trial Court
rejected the contention of the defendant regarding hardship.
However, the trial Court held that the defendant has sold 13
sites in all measuring 16,000 square feet prior to the suit,
therefore the specific performance with regard to those sites
cannot be awarded, deducting the same granted decree for
specific performance in respect of 1,47,350 square feet in the
land in Survey No.53. The defendant has challenged the said
decree in this appeal.
9. In this appeal, appellant filed I.A.No.8/2011 to
adduce additional evidence, third parties have filed I.A.Nos.2
to 7 of 2011 and I.A.Nos.1 to 3 of 2012 seeking to implead
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RFA No.849/2007
them in the appeal on the ground that they have purchased
some sites in the suit land regarding which the decree is
granted. I.A.No.3/2023 is filed by the applicants in
I.A.No.1/2012 seeking to produce the documents. All the
applications are opposed by the plaintiff-respondent.
10. Submissions of Sri Dhananjay Joshi, learned Senior
Counsel appearing for Ms.Laksha Kalappa.B., learned
Counsel on record for the defendants/appellants:
(i) As per Ex.P1 the agreement of sale the plaintiff
had to pay the balance sale consideration and get the sale
deed executed within three months from 12.12.2003.
Admittedly he did not do the same. Therefore, the defendant
was entitled to terminate agreement of sale under the notice
Ex.P6 and admittedly he had returned the advance
consideration by way of cheque.
(ii) The plaintiff much after stipulated period of three
months issued notice Ex.P2 on 14.09.2004 calling upon the
defendant to execute the sale deed. The defendant under
the agreement had the right to terminate the contract.
On termination of the agreement, the same became
non-existent. No decree could have been passed for specific
performance of a non-existent agreement unless the plaintiff
sought declaration that such termination is illegal.
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RFA No.849/2007
(iii) Despite the defendant's contention in that regard
the trial Court did not frame the issue on that. That has led to
miscarriage of justice. Under Section 13(1)(d) of the Specific
Relief Act, 1963 ('the SR Act' for short), the defendant was
entitled to terminate the agreement, even in the absence of a
clause enabling the party to terminate the contract in the
event of happening of the specific event, in commercial
transaction the same could be terminated without any
reason.
(iv) The suit for specific performance without seeking
declaration regarding termination of the agreement was not
maintainable. The very fact of the plaintiff not seeking
specific performance till he issued notice, much after the
expiry of the stipulated three months period goes to show
that he was not ready and willing to perform his part of the
contract. The plaintiff was required not only to plead, but
prove that all along he was ready and willing to perform his
part of the contract and the particulars of his readiness and
willingness in terms of required funds. The documents
produced by the plaintiff to prove his financial capacity or
availability of the funds were not his bank account records.
They pertained to the bank accounts of his wife and his
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RFA No.849/2007
company and partnership firm. The plaintiff was not entitled
to use the funds of his company or partnership firm. He did
not produce anything to show that his wife had agreed to
lend her funds to him for payment to the defendant. The
plaintiff did not produce any records to show that he had the
required funds between 12.12.2003 and 11.04.2004 within
which he was required to pay balance consideration and the
costs of registration and stamp duty to get the sale deed.
Ex.P31 the partnership deed of Navele Rayons shows that the
plaintiff was the Managing Director of the said company.
Ex.P18 to 21/plaintiff's bank account pass books did not show
that the plaintiff had the required balance sale consideration
in those accounts.
(v) Though the trial Court accepted that the
defendant had sold some sites out of the suit property,
committed error in granting decree for specific performance
of land measuring 1,47,350/-sq ft excluding 16000 sq ft sold
to various purchasers. In doing that exercise the trial Court
did not even identify the properties so sold. By such order
the trial Court has rewritten the contract between the parties.
In the absence of identification of the sites sold and the area
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RFA No.849/2007
required to be sold to the plaintiff, the decree is incapable of
execution thereby vitiated.
(vi) In passing such order the trial Court failed to note
that purchasers were not parties to the suit. The suit is bad
for non-joinder of those purchasers and decree is hit by
Section 48 of the Transfer of Property Act, 1963 (for short
'the TP Act'). The trial Court rejected the contention of other
purchasers only on the ground that such sales were hit by
principle of lis pendens. Though transferees were not before
the trial Court, the trial Court without any pleading of the
plaintiff directed them to join in the execution of the sale
deed which is incorrect. The trial Court failed to note that
the execution of the sale deed or specific performance decree
causes greater hardship to the defendant. The conduct of the
parties and the other evidence show that there was no privity
of contract between the plaintiff and the defendant as the
advance money was paid by the GPA holder and not by the
plaintiff.
11. In support of his contentions, he relies on the
following judgments:
(i) G.T.Girish v. Y.Subba Raju1
(ii) Bacha F. Guzdar v. Commissioner of Income Tax2
1
(2022) 12 SCC 321
2
AIR 1955 SC 74
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RFA No.849/2007
(iii) Dr.A.Lakshmanaswami Mudaliar v. Life
Insurance Corporation3
(iv) Man Kaur v. Hartar Singh Sangha4
(v) Maharashtra State Electricity Distribution Co.
Ltd. v. Maharashtra ERC5
(vi) Thomson Press (India) Ltd. v. Nanak Builders &
Investors (P) Ltd.6
(vii) U.N.Krishnamurthy v. A.M.Krishnamurthy7
(viii) Jamal v. Naresh Kumar8
(ix) Bachhaj Nahar v. Nilima Mandal9
(x) Biraji v. Surya Pratap10
(xi) Rajasthan Breweries Limited v. The Stroh
Brewery Company11
(xii) Mohinder Kaur v. Sant Paul Singh12
(xiii) K.Lubna v Beevi13
(xiv) Addanki Narayanappa v. Bhaskara Krishtappa14
(xv) I.S.Sikandar v. K.Subramani15
12. Submissions of Sri Vasanthappa, Sri K.M.Jagannath,
Sri Shyam Koundinya A.S., Sri S.Shaker Shetty, learned
counsel for third party applicants:
The applicants are bonafide purchasers for the valuable
consideration without notice of the pending suit. The
3
AIR 1963 SC 1185
4
(2010) 10 SCC 512
5
(2022) 4 SCC 657
6
(2013) 5 SCC 397
7
2022 SCC online SC 840
8
2023(1) Civil CC (P & H)
9
(2008) 17 SCC 491
10
(2020) 10 SCC 729
11
2000 (55) DRJ (DB)
12
(2019) 9 SCC 358
13
(2020) 2 SCC 524
14
1966 SCC Online SC 6
15
(2013) 15 SCC 27
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RFA No.849/2007
applicants in I.A.No.1/2012 are purchasers of the sites in the
suit property. Though the trial Court said that suit is decreed
excluding the area sold to the purchasers, the decree is
drawn for the entire 3 acre 34 guntas which is erroneous.
The impleading applicants being the purchasers need to be
heard in the matter. Therefore, their applications be allowed
and the matter be remanded to give an opportunity to them
and dispose of the matter afresh. The applicants be
permitted to produce the documents submitted under
I.A.No.3/2023.
13. Submissions of Sri Srinivasa Raghavan.V, learned
senior Counsel appearing for Sri Abhinay.V., learned
Counsel on record for the respondent/plaintiff:
(i) The defendant did not dispute the execution of
agreement of sale Ex.P1 and receipt of advance
consideration. The agreement of sale stood in the name of
the plaintiff. Having received such amount, it is not open to
the plaintiff to claim that there was no privity of contract.
The cheque sent by the defendant along with his termination
notice was returned to the defendant by the plaintiff with the
reply to the notice. The defendant neither sent back the said
money nor deposited before the Court for all these years.
That conduct of the defendant also shows that there was
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RFA No.849/2007
privity of contract between him and the plaintiff. That
conduct also shows that defendant to make wrongful gain
blows hot and cold together.
(ii) The evidence on record shows that the suit
property was allotted to the share of defendant 3 days prior
to the agreement and he had to get the khatha of the
property changed in his name. But he did not do that. As
per the agreement he had to convey the unencumbered
property. There was no evidence to show that he got the
khatha changed till the notice was issued by the plaintiff.
(iii) Whereas the plaintiff went on requesting the
defendant to get the khatha changed to enable him to
execute the sale deed which the defendant did not oblige.
When the defendant started making attempts to alienate the
property, on sensing that plaintiff issued notice to defendant
on 14.09.2004. Soon after the issuance of such notice the
defendant without performing his part of the contract with
malafide intention terminated the contract. Even in the
termination notice there was no whisper about the sale of the
sites by him. Before the Trial Court despite plaintiff's
application and Court's order to produce such sale deeds, the
same were not produced.
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RFA No.849/2007
(iv) The trial Court had granted temporary injunction
against the defendant against alienation of the suit
properties. Ex.P35 shows that the defendant had undertaken
that he will not seek equity in respect of alleged agreement of
sale and he executed the sale deeds in favour of those parties
out of his adjacent land. Under such circumstances, the
impleading applications are liable to be dismissed.
(v) Though the impleading applicants claim that they
have purchased the property out of the suit schedule
property prior to and pending the suit, those applications are
filed belatedly and apparently the applicants were set up by
the defendant. Moreover there is nothing to show that those
sites were within the suit schedule property. Without any
plea before Trial Court regarding the maintainability of the
suit for want of prayer for declaration regarding termination
of the contract, new case is being introduced at the appellate
stage for the first time. In the written statement the financial
affordability of the plaintiff to pay the balance sale
consideration or availability of funds with him is not disputed.
The plea of bonafide purchasers is not available to the
impleading applicants in view of Section 52 of the TP Act.
The trial Court on sound appreciation of the evidence on
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RFA No.849/2007
record held that the appeal is liable to be dismissed with
heavy costs.
14. In support of his contentions, he relies on the
following judgments:
(i) Bhupinder Kumar v. Angrej Singh16
(ii) Kumar Dhirendra Mullick v Tivoli Park
Apartments (P) Ltd.,17
(iii) Surinder Pal Soni v. Sohan Lal18
(iv) Brahm Dutt v. Sarabjit Singh19
(v) Corporation of the city of Bangalore v.
M.Papaiah20
(vi) A Kanthamani v. Nasreen Ahmed21
(vii) P.Daivasigamani v. S.Sambandan22
(viii) B Santoshamma v. D Sarala23
(ix) Surinder Singh v. Kapoor Singh24
(x) Guruswamy Nadar v. P Lakshmi Ammal25
(xi) Har Narain v. Mam Chand26
(xii) Gabriel Bhaskarappa Kuri v. The United Basel
Mission Church in India Trust Association27
(xiii) Union of India v. Ibrahim Uddin28
(xiv) Kirpa Ram v. Surendra Deo Gaur29
16
(2009) 8 SCC 766
17
(2005) 9 SCC 262
18
(2020) 15 SCC 771
19
2017 SCC Online P & H 5489
20
(1989) 3 SCC 612
21
(2017) 4 SCC 654
22
2022 SCC Online SC 1391
23
(2020) 19 SCC 80
24
(2005) 5 SCC 142
25
(2008) 5 SCC 796
26
(2010) 13 SCC 128
27
ILR 2007 KAR 773
28
(2012) 8 SCC 148
29
(2021) 13 SCC 57
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RFA No.849/2007
15. On considering the submissions of the counsel for
all the parties and on examining the records the points that
arise for determination of the Court are:
(i) Whether the finding of the trial Court that the
defendant duly executed Ex.P1 agreeing to sell the suit
schedule property to the plaintiff is sustainable?
(ii) Whether the finding of the trial Court that the
plaintiff has proved that he was always ready and willing to
perform his part of the contract is sustainable?
(iii) Whether judgment and decree of the trial Court
granting specific performance of agreement of sale of
1,47,350 Sq. feet in the suit land with proportion reduction of
the sale consideration is sustainable?
(iv) Whether I.A.No.8/2011 filed by the appellant and
I.A.No.3/2023 filed by the impleading applicants to adduce
additional evidence deserve to be allowed?
(v) Whether I.A.Nos.2 to 7 of 2011 and 1 to 3 of
2012 filed by the third party/applicants to implead them as
co-respondents deserve to be allowed?
Analysis
Reg. Point No.1 Execution of agreement of sale:
16. Subject matter of the suit is land bearing
Sy.No.53 of Seegehalli village, Yeshwantapura Hobli,
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RFA No.849/2007
Bengaluru Taluk measuring 3 acre 34 guntas. The boundaries
of the land shown in Ex.P1 the agreement of sale are not in
dispute. The plaintiff's case is that the defendant claiming
that he had acquired the said property under the partition
with his brother Jayanthilal and the absolute owner of the
property agreed to sell the said property for consideration of
Rs.11,25,000/-. Plaintiff further claims that the defendant
receiving Rs.1,08,000/- as advance sale consideration
executed Ex.P1 the agreement of sale agreeing to the terms
mentioned therein. He further claimed that on his behalf his
representative M.C.Udayaprasad (PW.2) participated in the
execution of Ex.P1. Though the defendant admitted his
signatures on Ex.P1 and receipt of advance consideration of
Rs.1,08,000/- under the same, contended that there is no
privity of contract between him and plaintiff and the
agreement is inconclusive for uncertainty etc.,
17. To prove the execution of Ex.P1, the plaintiff got
himself examined as PW.1, his representative
M.C.Udayaprasad as PW.2 and H.V. Srinivas the attestor of
Ex.P1 as PW.3. All of them spoke about the defendant with
full understanding of Ex.P1 executing the said document on
receiving advance consideration of Rs.1,08,000/-. The
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RFA No.849/2007
evidence of PWs.1 and 2 shows that as on the date of Ex.P1
the plaintiff's son was critically ill and was being treated in
the hospital. The evidence on record further shows that
plaintiff's son ultimately died on 19.02.2004. Their evidence
further shows that under such circumstance on the request of
the plaintiff, PW.2 who is the cousin brother of PW.1
participated in the execution of agreement of sale on behalf
of the plaintiff. In the cross-examination of PWs.1 and 2 their
interse relationship was not disputed. The evidence of PW.2
that himself and PW.1 are partners in Navele Rayons is also
not disputed. If at all anybody has to dispute the authority of
PW.2 to participate, it was for PW.1 to do the same. If really,
the defendant had any objection for the participation of PW.2
as a proxy for PW.1, he should have questioned the same at
the time of execution of Ex.P1. Even in his notice Ex.P6 he
claims that PW.1 and 2 approached him for purchasing the
suit schedule property. Therefore it is not open to him to
deny Privity of Contract.
18. The second ground of the defendant to question
the Privity of Contract is that Rs.1,08,000/- the advance
consideration was not paid by the plaintiff but that was paid
under the cheque of one Shell Apparels Pvt. Ltd. According to
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the plaintiff, Shell Apparels the drawer of the cheque is the
private limited company of which he is a Managing Director.
PW.1 also deposed that himself and his wife are the only
sharers of the said company, therefore the amount paid
under the cheque is his money.
19. It is material to note that the defendant received
the said cheque, encashed the same and retained the same
without any demur till the plaintiff got issued a notice Ex.P2.
Admittedly, in reply to Ex.P2 the defendant sent notice Ex.P6
terminating the contract and sent cheque for Rs.1,08,000/-
drawn on Vijay Bank to the plaintiff. If Shell Apparels had
nothing to do with the plaintiff, then the defendant should
have returned the cheque to Shell Apparels instead of the
plaintiff. By such conduct he indirectly admitted the cheque
for advance consideration issued by Shell Apparels was on
behalf of the plaintiff.
20. Further in reply to Ex.P6 the plaintiff got issued
notice Ex.P7 calling upon the defendant to execute the sale
deed and along with the said notice he returned the cheque
sent by the defendant. The defendant retained the said
cheque. Neither he repaid the said sum to Shell Apparels nor
deposited the same in the Court for all these years.
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Considering all these factors, the trial Court rightly rejected
the contention of lack of Privity of Contract.
21. The defendants though admit Ex.P1 claim that the
plaintiff obtained the same representing that the said
document is required for the purpose of obtaining the bank
loan, one space in Ex.P1 was left blank, therefore, the
agreement was incomplete, uncertain and void. Ex.P1 is
specific about the property, sale consideration under the
agreement, the advance consideration paid, the names of the
parties, the time under which the sale deed has to be
executed and the obligations on the part of the vendor and
the purchaser. So far as some blank space in para 41 in
Ex.P1 both PWs.1 and 2 stated, that to endorse that error in
the agreement, both the defendant and PW.2 subscribed their
initials on the same and nothing was to be added there.
Since the said error is initialled by both the parties, it cannot
be said that the contract was inconclusive or uncertain.
22. So far as the defendant signing Ex.P1 on
misrepresentation of the document being taken for the loan,
the trial Court rightly examined the expertise of defendant in
commercial transactions. The evidence of DW.1 shows that
he was diligent and seasoned businessman. He had by that
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RFA No.849/2007
time formed layouts in different lands and sold nearly 450
sites. He admitted in the cross examination that he
personally negotiated and settled all such sale transactions.
He admitted that he is not in the habit of signing incomplete
documents or without reading the documents. PW.3 the
attestor to the document also spoke about the defendant
executing Ex.P1. The defendant tried to say that he signed
the document at the instance of PW.2 in good faith as he was
in a hurry to go to Udaipur. As rightly pointed out by the trial
Court he did not prove his intended visit to Udaipur or signing
the papers in a hurry. If the document was not intended to
be acted upon, he could not have received the advance sale
consideration of Rs.1,08,000/-. Therefore, the trial Court
rightly rejected the contention regarding the document being
inconclusive, nominal, uncertain or not intended to be acted
upon. The finding of the trial Court regarding execution of
Ex.P1 is sound and sustainable.
Reg. Point No.2: Readiness and willingness:
23. The first contention of the defendant is that as
per the terms of Ex.P1, the plaintiff had to pay the balance
consideration and get the sale deed executed within three
months from the date of the said document namely,
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12.12.2003 and the plaintiff did not perform his part of the
contract within the said period. It was contended that first of
all notice Ex.P2 dated 14.09.2004 was issued beyond three
months and even as on that date or subsequently till the
decree was passed, the balance consideration was not
tendered, that goes to show that the plaintiff had no funds.
Whereas the plaintiff contends that the defendant had to get
the mutation entry of the suit property changed to his name
from the name of his brother Jayanthilal and convey the
property free of all encumbrance. Since defendant did not
comply with that condition, the plaintiff himself initiated
notice under the proceedings and the evidence on record
shows that the plaintiff had required funds and was ready and
willing to perform his part of the contract all along.
24. No doubt para VI Clause 5 of Ex.P1 states that
sale shall be completed within a period of three months from
the date of the agreement. At the same time, the obligations
of both the parties were enumerated in other paragraphs of
the agreement. In para III of the agreement, the defendant
himself admitted that he acquired the property in the
partition dated 26.10.1994 between himself and his brother
Jayanthilal. In para VI Clause 3 of Ex.P1 the defendant
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RFA No.849/2007
himself has stated that loan is borrowed on the security of
the said land and he has to discharge the loan and convey
clear, marketable and encumbrance free title. Para VI Clause
4 (d) states that the defendant shall produce the required
documents to satisfy the plaintiff about his title and sale shall
be subject to the defendant making out clear and marketable
title. Para VI Clause 12 of Ex.P.1 states that both parties
shall fulfil their part of the contract failing which the vendor is
liable to refund the advance amount with 10% interest and
the purchaser is liable to pay interest at 10% on the balance
consideration. Moreover Para VI Clause 5 does not impute the
responsibility either to the vendor or to the purchaser
specifically, but it only says that sales shall be completed
within three months from the date of Ex.P.1. That goes to
show that the stipulation regarding three months' period was
applicable to both the parties in discharging their obligations.
25. Under the aforesaid circumstances, it was for the
defendant to show that he had cleared the loan and got the
khata changed to his name within three months and delivered
the documents to the plaintiff. The readiness and willingness
on the part of the plaintiff to perform his part of the contract
depends upon the fact whether the defendant by complying
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RFA No.849/2007
all conditions enabled the plaintiff to perform his part of the
contract. There is no dispute that the plaintiff had pleaded his
readiness and willingness to perform his part of the contract.
It was the plaintiff who issued Ex.P2 on 14.09.2004 alleging
that the defendant has not got the khata changed to his
name and did not deliver required documents. Though the
defendant in his reply Ex.P6 alleged that the plaintiff himself
is evasive in doing the needful, he neither asserted that the
khata was changed and the loan was discharged, nor sent
required documents with the said notice. Going a step ahead
in that notice he claims that the document was not intended
to be acted upon and was only a make believe transaction
etc. Immediately thereafter the plaintiff got issued notice
dated 12.10.2004 denying evasion on his part and calling
upon the defendant to receive the balance consideration and
execute the sale deed.
26. It is no doubt true that the initial burden of
establishing the readiness and willingness and his capacity to
pay the consideration was on the part of the plaintiff. But the
defendant's conduct also matters in weighing the evidence.
Defendant in his written statement did not dispute the
financial affordability of the plaintiff. As against that, Ex.P1
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RFA No.849/2007
shows that the defendant was in need of the funds and he
was already indebted. He also admitted advance
consideration of Rs.1,08,000/-. His contention that there was
no privity of contract and the amount of Rs.1,08,000/- did
not belong to the plaintiff is already rejected. Out of the total
sale consideration of Rs.11,25,000/-, Rs.1,08,000/- was
already paid, therefore the balance consideration to be paid
was Rs.10,17,000/-.
27. To prove that he was capable of paying
Rs.10,17,000/-, the plaintiff relied on Exs.P17 to P23 the
letters of State Bank of Mysore, Passbooks and Accounts
statements. Ex.P17 is the letter of State Bank of Mysore
sanctioning credit facility of Rs.10,00,000/- to M/s.Navele
Rayons against the hypothecation of goods. Ex.P21 the
plaintiff's bank account pass book shows that between
01.02.2004 and 30.04.2004 he had the balance of
Rs.62,329.02/-. Exs.P19 and P20 the plaintiff's PPF accounts
pass books show that during that period he had balance of
Rs.2,81,755/- and Rs.2,84,016/-. Apart from that, Ex.P18 his
wife's bank account passbook showed the balance of
Rs.3,51,632/- as on 12.03.2004. The above documents show
the availability of funds with the plaintiff. It was contended
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RFA No.849/2007
that the plaintiff did not examine his wife to show that she
was ready to lend loan. The entries in Ex.P18 show that on
15.12.2003 the plaintiff had withdrawn Rs.1,00,000/- from
the account of his wife.
28. It was contended that nobody from Navele
Rayons, Shell Apparels Pvt. Ltd. or Denim Kraft were
examined to show that they had balance in those
companies/firms, the plaintiff could utilize the funds shown in
the document Exs.P17 to 23, 28 and 29.The defendant did
not dispute that the plaintiff was Director/Partner in the
aforesaid companies/firms. It was not even suggested to
him that Public Provident Funds Scheme had no provision for
withdrawal of the accrued amount for any reasons or
company/partnership firms were not ready to permit him to
withdraw his share of profit. Therefore, there is no merit in
the contention that the financial capacity of the plaintiff was
not established.
29. Suffice it to say that the judgments in Bacha
F.Guzdar, Dr.A.Lakshmanaswami Mudaliar, Addanki
Narayanappa, U.N.Krishnamurthy and Jamal cases referred
to supra cannot be justifiably applied to the facts of the
present case. Whereas in A.Kanthamani and
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RFA No.849/2007
P.Daivasigamani cases, the Hon'ble Supreme Court held that
the plaintiff need not constantly reveal his source of funds to
show his readiness and willingness. The above facts and
circumstances show that the plaintiff proved his readiness
and willingness to perform his part of the contract and the
defendant himself is guilty of breach of contract.
30. So far as the contention that the time was the
essence of the contract, as rightly observed by the trial Court
in case of contract relating to immovable property, time is
not the essence of the contract. Further, the defendant
himself is guilty of non-performance of his part of contract.
Even otherwise, as already noted, the obligation on the part
of the plaintiff to pay the balance consideration would start
on the defendant clearing the khata issues, the loan and
delivering the documents to the plaintiff. That was not done
even after pre-suit notices of the plaintiff.
31. Further the agreement of sale Ex.P1 contained
the clause for imposition of penal interest at 10%p.a. on the
defaulting party on the advance amount or the balance
consideration due, if they fail to perform their part of the
contract. In the similar circumstances, the Hon'ble Supreme
Court in para 8 of the judgment in Hind Construction Contrs.
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RFA No.849/2007
v. State of Maharashtra30 case referring to page 1179
Volume IV, IV Edition of Halsbury's Laws of England, held as
follows:
"8. It will be clear from the aforesaid statement
of law that even where the parties have expressly
provided that time is the essence of the contract such
a stipulation will have to be read along with
other provisions of the contract and such other
provisions may, on construction of the contract,
exclude the inference that the completion of the work
by a particular date was intended to be fundamental,
for instance, if the contract were to include clauses
providing for extension of time in certain
contingencies or for payment of fine or penalty for
every day or week the work undertaken remains
unfinished on the expiry of the time provided in the
contract such clauses would be construed as rendering
ineffective the express provision relating to the time
being of the essence of contract. .............................."
(Emphasis supplied)
32. Under the aforesaid facts and circumstances and
the position of law, the trial Court was justified in holding that
the plaintiff has proved his readiness and willingness to prove
his part of the contract.
Reg. Point Nos.(iii) to (v):
33. Since these points overlap each other, to avoid
repetition they are taken up together for consideration. The
30
(1979) 2 SCC 70
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RFA No.849/2007
findings of the trial Court that the execution of Ex.P1 the
agreement of sale and the readiness and willingness on the
part of the plaintiff to perform his part of contract are found
to be sustainable in law. Then the next question is whether
the plaintiff was entitled to the decree for specific
performance. Section 20 of the SR Act which governs the
exercise of discretion as it stood before amendment is
applicable to the case on hand. As per Section 20(1) of the
SR Act, the discretion should be exercised in sound and
reasonable manner, guided by the judicial principles and
capable of correction by the Court of appeal. The discretion
shall not be exercised arbitrarily. According to Section 20(2)
of SR Act the discretion shall not be exercised in the following
circumstances:
(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.
(b) Where the performance of the contract would
involve some hardship on the defendant which
he did not foresee, whereas its non-performance
would involve no such hardship on the plaintiff; or
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RFA No.849/2007
(c) Where the defendant entered into the contract
under the circumstances which though not
rendering the contract voidable, makes its
inequitable to enforce specific performance.
34. The hardship pleaded by the defendant is that the
property value is escalated and the consideration received,
therefore becomes inadequate. Explanation I to Section 20(2)
of the SR Act clearly states that mere inadequacy of
consideration or that the contract is onerous to the defendant
do not constitute an unfair advantage or hardship within the
meaning of Clause (a) & (b) of Section 20 of the SR Act.
Therefore those two contentions were rightly rejected by the
trial Court. It is also material to note that the hardship
alleged by the defendant must not have been foreseen at the
time of he entering into agreement of sale. In the case on
hand, the defendant was shrewd businessman. By that time,
he had formed layouts and sold several sites to several
persons. It is not his contention that he could not foresee the
alleged hardship at the time of agreement of sale. Therefore
the contentions of the defendant that in course of time there
is an escalation in the prices and that causes him hardship or
gives the plaintiff unfair advantage are not worth of
acceptance.
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RFA No.849/2007
35. The other contention raised by the defendant was
that he had formed layouts and sold several sites in the suit
properties to the third parties, therefore he will not be able to
execute the sale deed. But he had not produced any such
sale deeds before the trial Court. Admittedly the plaintiff filed
I.A.No.4 before the trial Court under Order XI Rule 14 CPC
calling upon the defendant to produce the details of the
alienations made by him in the suit property namely Survey
No.53 measuring 3 acres 34 guntas. Despite the directions of
the trial Court and giving sufficient opportunity, the
defendant did not produce the sale deeds or particulars of the
sale. Ultimately, he filed a memo furnishing only the site
numbers allegedly sold by him, date of the alleged sales and
the names of the alleged purchasers. Thereafter the plaintiff
filed I.A.No.6 seeking direction to the defendant to furnish
the following details with regard to the transactions
mentioned in the memo:
(a) Area/extent of the portion of the suit schedule
property alienated to each purchaser.
(b) Consideration received from each of such
purchasers.
(c) Document number and date of registration of
such sale deed in the Sub Registrar Office
(d) Name and full address of the purchasers.
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RFA No.849/2007
36. When the defendant claims that he had effected
sale, it was his bounden duty to produce atleast certified
copies of such sale deeds. Even on the directions on I.A.No.6,
the defendant produced only the encumbrance certificates
Exs.D8 to D22. As rightly pointed out by the trial Court, those
documents mention only about the site numbers formed
randomly in Survey Nos.52, 53, 56 to 59 of Seegehalli
village. In Ex.P1 the agreement of sale the defendant himself
has admitted that himself and his brother owned the lands in
Survey Nos.52, 53 and 56 to 59 of Seegehalli village, in all
measuring 40 acres. Exs.D8 to D22 actually did not specify
in which Survey number out of 52, 53 and 56 to 59 the sites
mentioned therein situated. Since the sale deeds were not
produced, the said sites were not identifiable with reference
to survey numbers or their locations in a particular survey
number. Still the trial Court excluded 13 sites measuring 30
x 40 feet mentioned in Exs.D8 to D22 in granting specific
performance. The trial Court calculated the area of those sites
at 16,000 square feet, though the actual calculation comes to
(30 x 40 x 13) 15,600 square feet. The suit property
measured 3 acres 34 guntas which measures in all 154
guntas. 1 gunta approximately measures 1089 square feet.
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RFA No.849/2007
The trial Court assessed the approximate area of 154 guntas
at 1,63,350 square feet, though the same actually comes to
(154 x 1089) 1,67,706 square feet and granted specific
performance for 1,47,350 with proportional deduction of the
sale consideration. In doing so, the trial Court relied on
Section 12(2) & (3) of the SR Act.
37. The applicants in I.A.Nos.2 to 7 of 2011,
I.A.Nos.1 to 3 of 2012 and I.A.No.1/2023 claim through the
defendant. Without producing the sale deeds before the trial
Court as per the directions of the trial Court, after about four
years of filing of this appeal, the defendant filed
I.A.No.8/2011 to produce the Xerox copies of the alleged
certified copies of 25 sale deeds said to be executed by him
in favour of the third parties between 1994 and 2005. First of
all those documents are not primary evidence and not
admissible in evidence. Secondly, absolutely there is no
whisper in his affidavit why he did not produce those
documents before the trial Court in the suit. He himself in
para 5 of the affidavit says that he has formed the layouts in
40 acres in six different survey numbers. He himself says in
para 5 of the affidavit that he could not identify those sites
with reference to the suit schedule property. Therefore the
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RFA No.849/2007
said application by no stretch of imagination is compliant of
the requirements of Order XLI Rule 27 of CPC.
38. Under I.A.No.3/2023 the alleged purchasers i.e.
the applicants in I.A.No.1/2012 produced six certified copies
of the sale deeds of the sites allegedly purchased by them
from 17.08.1994 to 23.03.1998. The documents at Sl.Nos.1
to 3, 5 and 6 in I.A.No.3/2023 were already sought to be
produced at documents at Sl.No.12, 3, 4, 6 and 7
respectively in I.A.No.8/2011. Though the applicants therein
claim to be the purchasers of the property, they did not
produce the original sale deeds. The documents are highly
illegible and unreadable. Even those documents do not
indicate that the sites mentioned therein lie in the suit
property i.e. survey No.53 measuring 3 acres and 34 guntas.
It is also to be noted that they filed impleading application
I.A.No.1/2012 in the year 2012 and produced the documents
in the year 2023. That application is not even accompanied
by the affidavit of any of the said applicants. Their advocate
files memorandum of facts to support the application.
Absolutely, there is no whisper to justify such long delay in
production of documents. Therefore I.A.No.3/2023 also
deserves no merit.
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RFA No.849/2007
39. So far as the impleading applications at I.A.No.2
to 7 of 2011 and I.A.Nos.1 to 3 of 2012 having regard to the
fact that despite the trial Court's direction, the defendant did
not produce the sale deeds or furnish the particulars of the
pre-suit purchasers beyond 13 in numbers, their applications
cannot be considered at this belated stage.
40. Two applicants in I.A.No.3/2012 and all the
applicants in I.A.Nos.2 to 7 of 2011 are purchasers pending
lis. Therefore, sales in their favour were hit by Section 52 of
the TP Act and their rights are subservient to the rights of the
plaintiff. Whatever decree is passed either in favour or
against the defendant binds them. Therefore they are not
necessary parties to the suit.
41. Having regard to the conduct of the defendant all
along in the matter, there is much force in the submission of
the plaintiff's counsel that the impleading applicants are set
up by the defendant only to delay the proceedings and harass
the plaintiff. Even otherwise the trial Court has saved 13 pre-
suit purchasers. Except them if there are any other
purchasers their remedy is only against the defendant by way
of damages or alternate sites in his properties. Therefore
- 37 -
RFA No.849/2007
I.A.Nos.2 to 8 of 2011, I.A.Nos.1 to 3 of 2012 and
I.A.No.3/2023 are liable to be dismissed.
42. Much was argued claiming that the defendant
under Ex.P6 terminated the contract and without seeking
declaration about the validity of said termination, the trial
Court could not have granted a decree for specific
performance in a non existent contract. The above discussion
and the judgment of the Hon'ble Supreme Court in Hind
Construction Contrs.'s case referred to supra show that
though the defendant himself was the defaulter, unilaterally
terminated the contract. Moreover the plea of maintainability
of the suit on such ground was not taken in the written
statement of the defendant and the same is urged before this
Court for the first time. Further though no specific relief was
sought in the plaint regarding legality of the termination, the
plaintiff contended that such termination was illegal. The
parties went to the trial understanding their contention
regarding validity of the termination. In the similar
circumstances the Hon'ble Supreme Court in para 5 of the
judgment in M.Papaiah's case referred to supra held that the
suit cannot be dismissed on such ground.
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RFA No.849/2007
43. In Para Nos.30, 30.1 to 30.3 of the judgment in
A.Kanthamani's case the Hon'ble Supreme Court held that
without raising the plea regarding maintainability of the suit
in the written statement, such plea cannot be raised at the
hearing of the matter for the first time.
44. So far as the contention that by granting decree
for specific performance, for part of the agreement schedule
property, the trial Court has re-written the contract etc. the
Hon'ble Supreme Court in paras 87 and 88 of the judgment in
B.Santoshamma's case referred to supra held as follows:
" 87. Section 12 of the SRA is to be construed and
interpreted in a purposive and meaningful manner to
empower the Court to direct specific performance by
the defaulting party, of so much of the contract, as can
be performed, in a case like this. To hold otherwise
would permit a party to a contract for sale of land, to
deliberately frustrate the entire contract by
transferring a part of the suit property and creating
third-party interests over the same.
88. Section 12 has to be construed in a liberal,
purposive manner that is fair and promotes justice. A
contractee who frustrates a contract deliberately by his
own wrongful acts cannot be permitted to escape scot-
free."
(Emphasis supplied)
45. In the light of the above ratio laid down by the
Hon'ble Supreme Court, the trial Court was justified in
- 39 -
RFA No.849/2007
granting specific performance excluding part of the property.
Therefore there is no merit in the contention that the contract
was re-written by the trial Court and the same was
impermissble etc.
46. So far as the contention that the trial Court
without impleading the purchasers pending lis should not
have directed them to join in the execution of the sale deed
during execution proceedings, the Hon'ble Supreme Court in
Bhupinder Kumar, Kumar Dhirendra Mullick and Surinder
Pal Singh cases referred to supra held that the specific
performance decree is in the nature of preliminary decree and
for implementation of the preliminary decree, the Court can
take required steps in the final decree proceedings. Since the
purchasers pending lis have no independent right, the decree
holder can implead them in the final decree/execution
proceedings as judgment debtors for completion of the
execution of the sale deed.
47. Though the learned Counsel for the appellant
relied on several judgments, suffice it to say that those
judgments cannot be justifiably applied to the facts of the
present case. For the aforesaid reasons, the appeal and the
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RFA No.849/2007
applications are liable to be dismissed with heavy costs.
Hence the following:
ORDER
The appeal and I.A.No.8/2011 are dismissed with costs
of Rs.1,00,000/- payable by the appellant to the respondent.
I.A.Nos.2 to 7 of 2011, I.A.Nos.1 to 3 of 2012 and
I.A.No.3/2023 are hereby dismissed with costs.
The impugned judgment and decree dated 15.03.2007
in O.S.No.333/2005 passed by the I Additional Civil Judge
(Senior Division), Bangalore Rural District, Bangalore is
hereby confirmed.
Sd/-
JUDGE
Sd/-
JUDGE
KSR/AKC
