Sri Shankaranarayana Setty vs Parashurama Welfare Association
2023 Latest Caselaw 3065 Kant

                                         R.F.A No.641/2008


                              1

        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

            DATED THIS THE 9TH DAY OF JUNE 2023

                          PRESENT

         THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR

                            AND

           THE HON'BLE MR. JUSTICE C.M. POONACHA

                   R.F.A NO.641 OF 2008

BETWEEN :

SRI. SHANKARANARAYANA SETTY
S/O LATE K.T. RANGASWAMY SETTY
AGED ABOUT 54 YEARS
RESIDING AT DOOR NO.2801/2
HALLADAKERI, LASHKAR MOHALLA
MYSORE-570 001                                  ... APPELLANT

(BY SHRI. ABHINAV RAMANAND, SENIOR ADVOCATE FOR
    SHRI. M. ALLAH BAKASH, ADVOCATE)

AND :

PARASHURAMA WELFARE ASSOCIATION
®, NO.319/97-98
PARASHURAMA LAYOUT
BANNUR ROAD
BHUGATHAGALLI VILLAGE
MYSORE TALUK
REPTD. BY ITS PRESIDENT
S. SUDHAKARA SHETTY                            ... RESPONDENT

(BY SHRI. G. KRISHNA MURTHY, SENIOR ADVOCATE FOR
    SHRI. GANAPATHI BHAT, ADVOCATE)

     THIS RFA IS FILED U/S 96 AND ORDER XLI RULES 1 OF THE CPC
1908 AGAINST THE JUDGEMENT AND DECREE DT. 17.03.2008
PASSED IN OS NO.935/05 ON THE FILE OF THE I ADDL. CIVIL JUDGE,
                                              R.F.A No.641/2008


                                   2

(SR.DN), MYSORE,       DECREEING       THE   SUIT      FOR   SPECIFIC
PERFORMANCE.

      THIS RFA, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT
ON 30.03.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT,
THIS DAY, P.S.DINESH KUMAR J, PRONOUNCED THE FOLLOWING:-

                              JUDGMENT

This appeal by the defendant is directed against order

dated March 17, 2008 in O.S. No. 935/2005 passed by the

I Additional Civil Judge (SR.DIV), Mysore decreeing the suit

for specific performance.

2. For the sake of convenience, parties shall be

referred as per their status before the Trial Court.

3. Plaintiff's case is:

 plaintiff is a society registered under the

Karnataka Societies Registration Act;

 defendant had entered into an agreement with

one Dakshina Kannada Jilla Sangha

(hereinafter referred to as the 'Sangha') on

November 28, 1997, agreeing to sell lands

bearing Sy. Nos. 110/1, 110/2, 111, 112/4, R.F.A No.641/2008

113, 114/ 114/2, 115, 165, 169, 107 and 108

in all measuring 33 acres 5.5 guntas and lands

bearing Sy.Nos.167, 168, 106, 165 and 180 in

all measuring 18 acres 32 guntas situated at

Bhugathagalli village to the Sangha for a total

consideration of Rs.1,50,00,000/- and the

Sangha had paid a sum of Rs.2,00,000/- as

advance amount to the defendant;

 since, all the members of the Sangha had not

shown their willingness to purchase sites in the

proposed layout, it was decided that a separate

affiliate association shall be formed of those

members who were interested to purchase

sites in the proposed layout. Therefore,

members who were interested in purchasing

sites in the proposed layout became members

of the plaintiff Society;

 on request of the defendant, the agreement

which was entered into between him and the R.F.A No.641/2008

Sangha was revised by an agreement dated

19.12.1997;

 on 31.3.1998, the defendant entered into an

agreement with the plaintiff agreeing to sell

land bearing Sy.Nos.111/1 measuring 1 acre 6

guntas and land bearing Sy.no.110/2

measuring 2 acre 38 guntas for a consideration

of Rs.5,30,000/- each and received an advance

sale consideration of Rs.1,00,000/- each.

Defendant had in all received a sum of

Rs.21,50,000/- from the plaintiff as advance

sale consideration;

 again in November 1998, parties entered into a

revised agreement whereunder:

  i)     plaintiff agreed to pay for and on

         behalf of the defendant, a sum of

         Rs.40,00,000/-            to    Central     Bank   of

         India     and        get         the      mortgaged

         discharged;
                                                R.F.A No.641/2008

ii) to reduce the extent of land by 2 acres

10 guntas in Sy.no.110/1, which was

earlier agreed by the defendant to be

sold under the sale agreement dated

28.11.97 and consequently reduced

the total consideration to

Rs.1,40,02,000/-.

 the defendant had disclosed only about the

mortgage with the Central Bank of India.

Plaintiff subsequently learnt that the land was

also mortgaged to M/s. Vijaya Finance

Corporation and the same was subsisting.

Plaintiff insisted upon the defendant to

discharge the same, so that the plaintiff could

perform its part of the contract and pay the

balance sale consideration to him;

 in the meantime, defendant executed the sale

deeds in respect of all lands which he had

agreed to sell except the schedule property.

R.F.A No.641/2008

 under the terms of the sale agreement,

defendant had agreed to sell the schedule

property free of encumbrances. However,

defendant had failed to discharge the debt

which was due to M/s. Vijaya Finance

Corporation. Therefore, plaintiff could not pay

the balance sale consideration;

 the plaintiff was always ready and willing to

perform its part of the contract and pay the

balance sale consideration and get the sale deed

in respect of the schedule lands registered at its

cost;

 defendant issued legal notices to the plaintiff

purporting to terminate the sale agreement;

 defendant instituted O.S. No. 345/05 for

injunction and the same has been dismissed by

the impugned common judgment and decree.

4. Defendant resisted the suit by filing written

statement contending inter alia that:

R.F.A No.641/2008

 plaintiff had failed to adhere to the terms of the

agreement;

 plaintiff had failed to get sale deed registered in

respect of Sy. No. 110/2;

 plaintiff had discharged the debt towards

Central Bank of India after issuance of notice

under Securitisation Act and the same had

caused mental agony to the defendant;

 plaintiff was liable to pay a sum of Rs.

14,33,325/- towards balance sale consideration

and penalty for delayed payments.

5. Based on the pleadings, the Learned Trial Court

has framed the following issues:

1. Whether the plaintiff proves that the Association was ready and willing to perform the part of the contract in terms of the agreement?

2. Whether the plaintiff proves that the defendant refused to execute the registered sale deed in respect of the suit property by receiving the balance consideration amount?

R.F.A No.641/2008

3. Whether the defendant proves that he has legally terminated the agreement by notice dated 24.5.2003?

4. Whether the defendant proves that the plaintiff has to pay the balance consideration of Rs.9,33,325/- and Rs.5,00,000/-towards penalty as per various agreements?

5 .Whether the defendant proves that he is entitled for counter claim of Rs.12,30,270/- as penalty for the delayed payments?

6. Whether the defendant proves that he was ready and willing to perform his part of the contract as per various agreements of sale?

7. What order?

6. With the above issues, parties went to the trial.

On behalf of the plaintiff, two witnesses were examined as

P.W. 1 and P.W.2 and Exs. P1 to P20 marked. Defendant

No.1 examined one witness as D.W.1 and Exs. D1 to D8

marked. The Trial court answering issues No. 1 in the

affirmative, issues No. 2, 3, 5 and 6 in the negative and

issue No.4 partly in affirmative, has decreed the suit. [[[

7. Suit filed by the defendants against plaintiff in

O.S No. 1577/2006 (Originally O.S. No. 345/2005) seeking R.F.A No.641/2008

relief of permanent injunction has been dismissed by the

impugned order.

8. Shri. Abhinav Ramanand, learned Advocate for

the defendant, assailing the impugned judgment, submitted

that:

 the impugned judgment is contrary to Section

16 and 20 of the Specific Relief Act, 1963;

 the Trial Court has erred in concluding that

defendant was not ready and willing to perform

his part of the contract;

 the Trial Court has erred in decreeing the suit

only on the basis of evidence of P.W.2;

 the Trial Court has erred in holding that time

was not the essence of contract;

 plaintiff has filed the suit two and a half years

after termination of the agreement which shows

that plaintiff was unwilling to perform his part of

the contract.

R.F.A No.641/2008

9. With the above submissions, Shri. Abhinav

Ramanand prayed to allow the appeal.

10. Shri. Krishnamurthy, learned Senior Advocate for

the plaintiff arguing in support of the impugned judgment

submitted that plaintiff has paid the entire consideration

except Rs. 7,50,000/-. Defendant had not disclosed that he

owed money to M/s. Vijaya Finance Corporation and

mortgaged the property. Plaintiff had called upon the

defendant to clear the debt payable to M/s. Vijaya Finance

Corporation and to obtain discharge of mortgage.

11. He submitted that defendant had executed sale

deeds in respect of major portion of lands and the remaining

area is the suit property. Plaintiff is a society and the land

in question was sought to be purchased for the benefit of its

members. Defendant having suppressed the material fact

namely the mortgage of the land with M/s. Vijaya Finance

Corporation, is wholly responsible for not completing the

transaction.

R.F.A No.641/2008

12. With these submissions, he prayed for dismissing

this appeal.

13. We have carefully considered the rival contentions

and perused the records.

14. In the light of pleadings and evidence on record

the point that arises for consideration is:

"i. Whether the judgment and decree passed by the Trial Court needs any interference?"

15. Undisputed facts of the case are, initially plaintiff

and defendant entered into an agreement on 28.11.1997

whereunder plaintiff had agreed to sell:

 land measuring 33 acres 5.5 guntas in Sy. Nos.

110/1, 110/2, 111, 112/4, 113, 114/ 114/2,

115, 165, 169, 107, 108; and

 land measuring 18 acres 32 guntas in Sy. Nos.

167, 168, 106, 165 and 180 of Bhugathagalli

village, Mysore.

R.F.A No.641/2008

16. These lands are not subject matter of the instant

suit.

17. It is averred in para 5 of the plaint that on

31.03.1998, defendant had executed an agreement to sell 1

acre 6 guntas of land in Sy. No. 111/1 and 2 acre 38 guntas

in Sy No. 110/2 which is the subject matter of the instant

suit.

18. Defendant has admitted the above averment in

para 4 of the amended written statement. He has further

averred that plaintiff had failed to get the sale deed

registered in respect to the suit properties and the

defendant had got terminated the said agreement by issuing

legal notice on 25.04.2003 (Ex. D3).

19. Plaintiff has averred in para 7 of the plaint that in

the month of November 1998 a revised agreement was

entered into by the parties whereunder, plaintiff had agreed

to pay Rs. 40,00,000/- to the Central Bank of India on R.F.A No.641/2008

behalf of defendant and get the mortgage discharged within

30 days 05.11.1998.

20. Plaintiff's specific case is that at the time of

execution of agreement defendant had not disclosed

mortgage of properties with M/s. Vijaya Finance Corporation.

According to the plaintiff, defendant had not discharged the

said debt even as on the date of the filing of the suit i.e.,

21.11.2005.

21. Plaintiff's further case is it was always ready and

willing to perform its part of the contract by paying the

balance consideration and obtain the sale deed.

22. In para 6 of the amended written statement,

defendant has admitted execution of revised agreement in

the month of November 1998 (Ex.P4) and receipt of Rs.

21.50 lakhs. According to the defendant, plaintiff was liable

to pay a sum of Rs. 9,33,325/- and a sum of Rs. 5,00,000/-

as penalty towards delayed payments.

R.F.A No.641/2008

23. Thus, Ex.P4, the agreement executed by the

defendant in November 1998 agreeing to sell the suit

properties is not in dispute. The principal defence is that:

 defendant had discharged the debt to M/s.

Vijaya Finance Corporation;

 defendant had terminated the agreement vide

legal notice dated 25.04.2003;

 plaintiff was liable to Rs.14,33,325/-.

24. A perusal of the agreement Ex. P4 discloses that

out of the total consideration of Rs.1,40,02,000/-, defendant

had received Rs.21,50,000/-. Simultaneously with the

execution of agreement plaintiff had tendered another sum

of Rs. 6,00,000/-.

25. It is stated in Ex.P4, that the Central Bank of

India had agreed to receive Rs. 40,00,000/- due from the

defendant in lumpsum and discharge the mortgage subject

to the said amount being paid within 30 days from R.F.A No.641/2008

05.11.1998. It is further stated that plaintiff had agreed to

pay the said amount and treat it as part consideration. If

plaintiff were to delay making the payment, it was required

to pay any additional interest and other charges levied by

the Bank.

26. With regard to the first issue, namely the

readiness and willingness in part of the plaintiff, the learned

Trial Judge has answered the same in the affirmative. He

has rightly recorded that defendant has admitted in para 11

of the examination-in-chief that he had received

Rs.1,32,52,000/-. As per the agreement, Ex. P4 the total

consideration is Rs.1,40,02,000/-. Thus the plaintiff had paid

a very substantial portion of the agreed consideration and

the balance due was only Rs.7,50,000/-.

27. With regard to the second issue, it is to be noted

that Defendant has admitted in his cross-examination that

the sale deeds were executed till 26.09.2001. Defendant has

placed reliance upon notices as per Ex.D3 and Ex.D7. In the R.F.A No.641/2008

legal notice, Ex.D7 dated 09.09.2002, defendant has

referred to the notice issued by the Central Bank of India

under Section 13(2) of the Securitisation and Reconstruction

of Financial Assets and Enforcement of Security Interest Act,

2002 and called upon the plaintiff inter alia to ensure that

plaintiff's obligation to pay to the Central Bank of India does

not affect the defendant and to pay the balance

consideration in full, together with interest at 21%. In his

legal notice as per Ex.D3 dated 25.04.2003, defendant has

stated that he had terminated the agreement of sale and

called upon the plaintiff to settle the balance amount with

interest at 21% and a penalty of Rs.5,00,000/-. The learned

Trial Judge has recorded in para 94 of the judgment that the

defendant had delayed in discharging the debt to M/s. Vijaya

Finance Corporation. We may record that as per Ex.P4,

plaintiff was required to make the payment of

Rs.40,00,000/- to the Central Bank of India on or before

December 1998, but it has been made on 30.03.1999. We

may further record that as per the agreement, plaintiff was R.F.A No.641/2008

under obligation to pay the interest and other charges, if

any, for delayed payment. Suffice to note that defendant

has admitted receipt of Rs.1.32 Crores which included

payment to the Central Bank of India.

28. The learned Trial Judge, in our view has rightly

noticed in paragraphs No. 101 and 102 of the judgment that

the plaintiff had paid a major portion of consideration and

therefore it could be inferred that plaintiff was ready and

willing to perform its part of the contract and further that it

was the defendant who was not ready and willing to perform

his part of the contract.

29. The issue No. 3 is with regard to termination of

agreement. In para 4 of the legal notice, Ex.D3 it is stated

that defendant had terminated the agreement. But strangely

demanded the balance amount with interest at 21% and

damages of Rs.5,00,000/-. In para 6, defendant has again

demanded the balance amount and called upon the plaintiff

to clear the Bank dues. Therefore in our view, there was no R.F.A No.641/2008

termination of agreement by issuance of legal notices Ex. D3

and Ex.D7. Hence we find no perversity in holding issue no.

3 in the negative.

30. The issues No.4 and 5 are with regard to the

balance consideration and the penalty. In view of undisputed

fact that plaintiff is due and liable to pay balance

consideration of Rs. 7,50,000/- and that the mortgage in

favour of M/s. Vijaya Finance Corporation was never

disclosed till filing the written statement, we find no

perversity in the findings returned by the learned Trial Judge

on issues No. 4 and 5.

31. The issue No. 6 is whether defendant was ready

and willing to perform his part of the contract. In view of our

opinion on issue no.2, this issue does not require any

consideration.

32. The first ground raised and argued in this appeal

is that plaintiff was not ready and willing to perform his part

of contract. As noticed hereinabove, plaintiff is a society.

R.F.A No.641/2008

Out of total consideration of Rs.1,40,02,000/- it had already

paid Rs. 1,32,50,000/- and the balance amount was only

Rs.7,50,000/-. DW.1 has admitted in evidence that sale

deeds were being executed till 23.09.2001. There is no

reference about mortgage to M/s. Vijaya Finance

Corporation in Ex.P4. For the first time defendant has

averred in the written statement that he had discharged the

debt to M/s. Vijaya Finance Corporation as per Ex.D5 dated

05.08.1999. Therefore, it is clear that as on 30.06.1999, the

date fixed for plaintiff to pay the entire sale consideration of

Rs.1,40,02,000/-, the property was under mortgage with

M/s. Vijaya Finance Corporation. This fact has been

admittedly suppressed by the defendant.

33. In legal notices Ex.D3 and Ex.D7, defendant has

referred to a debt payable to the Central Bank of India. The

said loan was raised by plaintiff and defendant was only a

guarantor. The suit properties are not subject matter of

possession notices Ex.D1 and Ex.D2 issued by the bank

under SARFAESI Act, 2002. Above all, defendant has taken a R.F.A No.641/2008

specific stand in para 11 of the memorandum of appeal that

at no point of time defendant had refused to perform his

part of the contract. If that be so, the plea with regard to

termination of agreement pales into insignificance.

34. The next ground urged in memo of appeal is that

the learned Trial Judge could not have placed reliance on

oral evidence of PW.2 in the absence of pleading in that

behalf. Even if PW.2's evidence is eschewed, for the reasons

recorded above, the pleadings and evidences on record are

more than sufficient to decree the plaintiff's suit. Hence, the

said ground is also untenable.

35. In view of the above discussion, the principal

contentions urged and argued on behalf of the defendant

extracted in para 23 hereinabove are untenable and do not

merit any consideration. Having re-appreciated the evidence

on record, we find no perversity in the impugned judgment

calling for interference by this Court. Resultantly, this

appeal must fail.

R.F.A No.641/2008

36. The defendant has filed I.A. No.1/2021 under

Order 41 Rule 27(1)(aa)(b) read with Section 151 of Code of

Civil Procedure, 1908 to adduce further evidence. In para 5

of the affidavit filed in support of the I.A. it is stated that

defendant had obtained the balance sheet of plaintiff's

association for the period 2002-2005. According to him, the

bank balance was below Rs. 1,00,000/- which clearly

demonstrates that the plaintiff was not ready and willing to

perform its part of the agreement.

37. In para 6 of the affidavit it is stated that the

president of plaintiff's association and some of its members

had purchased some properties individually.

38. Under Order 41 Rule 27, the Court can permit

any party to furnish additional evidence if the applicant was

unable to produce the documents despite exercise of due

diligence. In para 7 of the affidavit it is stated that

defendant was not aware of the existence of the document.

Admittedly the suit was filed in the year 2005 and decreed in R.F.A No.641/2008

2008. The appeal is filed in the year 2008 and the instant

application is filed in 2021. The averments made in the

affidavit do not satisfactorily demonstrate exercise of due

diligence on part of the defendant. Therefore, we find no

merit in the application.

39. Hence, the following:

ORDER

i) Appeal is dismissed with costs.

ii) I.A. No. 1/2021 filed under Order 41 Rule 27 is dismissed.

Sd/-

JUDGE

Sd/-

JUDGE

SPS