[Cites 16, Cited by 0]
Madras High Court
Murugan vs Mohanraj … on 17 February, 2026
S.A. No. 668 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 19.11.2025
Pronounced on 17.02.2026
CORAM
THE HONOURABLE MRS. JUSTICE K. GOVINDARAJAN
THILAKAVADI
S.A.No.668 of 2023 and
C.M.P. No.21248 of 2024
1. Murugan
2. Vishnupriya ...Appellants
Vs.
Mohanraj ….Respondent
Prayer: Second Appeal filed under Section 100 CPC, 1908 to set aside the
decree and judgment dated 13.06.2023 passed in A.S. No.22 of 2020, on the
file of the Principal District Court, Villupuram, reversing the Judgment and
decree dated 26.07.2019 passed in O.S. No.95 of 2015, on the file of the II
Additional Subordinate Court, Villupuram.
For Appellants : Mr.S. Natarajan
For Respondent: Mr. A.P. Neelamegavannan
JUDGMENT
This Second Appeal is preferred as against the decree and judgment
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dated 13.06.2023 passed in A.S. No.22 of 2020, on the file of the Principal
District Court, Villupuram, reversing the Judgment and decree dated
26.07.2019 passed in O.S. No.95 of 2015, on the file of the II Additional
Subordinate Court, Villupuram.
2. The unsuccessful defendants before the first appellate Court have
preferred the present Second Appeal. The respondent as plaintiff filed the
above suit in O.S. No.95/2015 on the file of the II Additional Sub Court,
Villupuram, against the defendant Murugan, for the relief of specific
performance of the sale agreement dated 01.03.2012 marked as Ex.A1, which
has been notarized on 03.03.2012. The 2nd defendant is the subsequent
purchaser, while the appeal was pending. The trial court, partly decreed the
suit directing the 1st defendant to repay a sum of Rs.1,00,000/- with interest
and dismissed the specific performance relief and the counter claim of
returning certain document was allowed, against which, the plaintiff preferred
the appeal suit in A.S. No.22/2020 on the file of Principal District Judge,
Villupuram. The first appellate court allowed the appeal and dismissed the
counter claim. Aggrieved by this, the present Second appeal is preferred.
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3. At the time of admission the following substantial questions of
law have been framed.
(a) Whether the first appellate court was justified in
allowing the first appeal, without deciding maintainability of
first appeal, when the first appellant have filed counter claim
for Mandatory injunction to direct the respondent to hand over
the original title documents relating to the suit properties and
decree was passed in his favour, and the respondent allowed
the said decree attain as final and no separate appeal was filed
against the counterclaim decree as mandated under Order XX,
Rule 19(2) of CPC?
(b) Whether the first appellate court was justified in
allowing the appeal, deciding that Specific Relief Amendment
Act, 2017 has retrospective effect, without considering the
judgment of Hon’ble Supreme Court, reported in Smt. Katta
Sujatha Reddy & another Vs- Siddamsetty Infra Projects Pvt
Ltd, & others, 2022 Livelaw, (SC) 712, deciding as follows:-
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“Specific Relief Act, 1963; Section 10 2018
amendment to the Specific Relief Act is prospective
and cannot apply to those transactions that took place
prior to its coming into force”.
(c) Whether the first appellate court was justified in deciding
that the appellant has proved his ready and willingness, when
as per recitals of Ex.A.1 sale agreement dated 01.03.2012 the
period of completion of contract was fixed to one year, and
the period was expired on 28.02.2013, but the respondent has
issued suit notice on 09.04.2013, long after the said period and
it itself is sufficient to decide that the respondent not proved
his ready and willingness?”
4. Mr. S. Natarajan, the learned counsel for the appellants / defendants
submits that the 1st defendant had borrowed a sum of Rs.1,00,000/- on
01.03.2013 from the plaintiff as loan. At that time, the plaintiff obtained
signed blank papers from the 1st defendant and the same is fabricated as suit
agreement. The 1st defendant never entered into a sale agreement with the
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plaintiff for a consideration of Rs.2,95,000/- and received a sum of
Rs.2,50,000/- as advance and agreed to receive the balance of Rs.45,000/-
within a period of one year as alleged by the plaintiff. The 1 st defendant never
intended to sell his property to the plaintiff. The further contention of the
learned counsel is that, the plaintiff has taken away the original documents
from the 1st defendant's house. The learned counsel would further contend
that, the first appellate court erroneously dismissed the counter claim of the
1st defendant, though the plaintiff has not filed any appeal against the
judgment rendered by the trial court in respect of the counter claim. He
would submit that, the law is well settled that even if erroneous, an inter-
party judgment binds the party if the court of competent jurisdiction has
decided the lis. He would further submit that, the counter claim will have the
same effect as a cross suit, so as to enable the court to pronounce a final
judgment in the same suit, both on the original claim and on the counter
claim. The counter claim has to be proceeded independently. Any order
passed in the counter claim is considered to be a decree against which an
independent appeal can be filed under Section 96 CPC. The principle of Res
Judicata also applies as between two stages in the same litigation to the
extent that a court, whether the trial court or a higher court having at an
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earlier stage decided a matter in one way will not allow the parties to re-
agitate the matter again at a subsequent stage of the same proceedings,
because, at an earlier stage of the litigation, a court has decided an
interlocutory matter in one way and no appeal has been taken there from or
no appeal did lie, a higher court cannot, at a later stage of the same litigation,
consider the matter again. His further contention is that, unless the executant
is known to the notary personally, the notary must insist on written
identification of an executant by an advocate in order to minimize the
possibility of cheating by personification. To support his contentions, he has
relied upon the following judgments:
1. Prataprai Trumbaklal Mehta vs. Jayant Nemchand Shah and
another reported in 1991 SCC OnLine Bom 205.
2. Satyadhyan Ghosal and others vs. Deorajin Debi (smt) and
another reported in 1960 SCC OnLine SC 15
3. A.V. Murugan vs. K. Maheswari and others reported in 2019
SCC OnLine Mad 39139
4. S. Ramachandra Rao vs. S. Nagabhushana Rao and others
reported in 2022 SCC OnLine SC 1460.
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5.On the other hand, Mr. A.P. Neelamegavannan, the learned counsel
for the respondent / plaintiff submits that Ex.A1 sale agreement was
notarized on 03.03.2012. The said notary public was examined as P.W.2. He
had produced the notary ledger in which, the above sale agreement is entered.
P.W.2 also deposed about the receipt of Rs.2,50,000/- by the 1st defendant at
the time of executing the sale agreement. Since the 1 st defendant failed to
perform his part of contract, the plaintiff was constrained to file the above
suit for the relief of specific performance. During pendency of the appeal
suit, the 1st defendant sold the property to the 2nd defendant and since the
same is barred as lis pendens, the 2nd defendant cannot claim any right over
the suit property. In the case of a document executed by a Notary, it must be
presumed that the document is a valid one. His further contention is that, the
possession of original title deeds and revenue records by the plaintiff
corroborates genuine transaction and payment of consideration. The
subsequent possession by others is unauthorized. The attesting witness
confirmed the execution. Merely because in the sale agreement the purpose
of sale of the property was stated to be for business expenses, the documents
which otherwise can be said to be an agreement to sell, will not become a
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loan agreement or security document. Once execution of agreement to sell
for sale consideration has been believed and it has been found that plaintiff
was always ready and willing to perform his part under the agreement, the
suit for specific performance has to be decreed. He would also contend that,
in a suit for specific performance, sale agreement between the parties need
not be registered and that the relief of specific performance is no longer a
discretionary relief. Though it not to be applicable retrospectively after the
amendment act, still can be a guide to courts. To support his contentions he
relied upon the following judgments:
1. Sughar Singh Vs. Hari Singh (dead) through LRs & others
reported in 2021 SCC Online SC 1006.
2. Kirpal Kaur and another vs. Ritesh and others reported in
2022 SAR Online (SC) 281.
3. C. Ramya vs. C. Ganambal and others reported in 2020 (2)
MWN (Civil) 614.
4. Shyam Kumar Inani vs. Vinod Agrawal & others reported in
2024 SAR Online (SC) 860.
Hence, it is contended that the first appellate court rightly allowed the appeal
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suit in favour of the plaintiff, which warrants any interference by this court.
6.Heard on both sides. Records perused.
7. The plaintiff claims that there was a sale agreement on 01.03.2012
for the suit property and the same was notarized on 03.03.2012, with a sale
price of Rs.2,95,000/-. The plaintiff paid Rs.2,50,000/- as advance and
agreed to pay the remaining Rs.45,000/- within a year. The plaintiff alleges
that he was ready and willing to perform his part of the contract, but the 1 st
defendant delayed the sale and sold the property to the 2 nd defendant during
pendency of the appeal suit. The 1 st defendant denies the execution of sale
agreement and claims that he borrowed Rs.1,00,000/- from the plaintiff for
his business, purchasing and reselling old cars. At that time, he provided
some documents as security. He never intended to sell the suit property to the
plaintiff. The trial court partly decreed the suit in favour of the plaintiff
directing the defendant to pay Rs.1,00,000/- with interest and also directed
the plaintiff to return the title deed to the defendant based on a counter claim.
The plaintiff preferred the appeal suit. The first appellate court found the sale
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agreement as valid and enforceable and also held that the plaintiff had shown
readiness and willingness to perform his obligation and viewed that when
readiness and willingness to perform the contract is no longer discretionary
when the necessary conditions are fulfilled.
8. Specific Performance before the 2018 amendment was an equitable
remedy particularly, when a sale agreement was executed for loan
transactions. The courts will not enforce a contract not intended to sell the
property. If evidence indicates that the agreement was executed as security
for a loan, specific performance is refused, and only refund of the advance
can be granted. Courts look beyond the documents title, i.e., 'agreement to
sell' to determine if it was intended as a loan security, relying on factors like
transaction value versus market value, possession of property and source of
funds. The courts can refuse specific performance, ruling that the registered
sale agreement was merely a security for a loan transaction, not intended to
sell the property. Under Section 20 of the Specific Relief Act, 1963, the court
has the discretion to deny specific performance, particularly if the agreement
is unconscionable or not a true sale. In such cases, the court often decrees
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refund of the advance amount with interest rather than transferring the
property. Section 92 of the Evidence Act pertains to the admissibility of
similar evidence and provides exceptions to the hearsay rules, particularly
allowing evidence to contradict statements made under certain conditions.
9. The 1st defendant's contention is that he had received only
Rs.1,00,000/- as loan from the plaintiff and handed over the original deeds
to the plaintiff. However, the 1 st defendant admits the signature in Ex.A1
sale agreement. His contention is that, the plaintiff has fabricated the signed
blank paper, tendered by him at the time of the said borrowal. It is not in
dispute that, the said sale agreement was notarized. The said notary was
examined as P.W.2 on the side of the plaintiff. He had categorically admitted
that he had no direct knowledge about the transaction between the parties.
As rightly pointed out by the learned counsel for the 1 st defendant, it is the
responsibility of a notary to satisfy himself that the original document
intended to be executed before him was executed for the purpose recited in
the document. It is equally responsible for him to satisfy himself about the
identity of the original document by making all reasonable enquiries
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including insistence of identification of a member of the public by a legal
practioner known to the Notary. Unless the executant is known to the Notary
personally, the Notary must insist on written identification of the executant
by an Advocate in order to minimize the possibility of cheating by
personification. In the present case, P.W.2 failed to depose about satisfying
himself the above conditions. Since P.W.2 was not aware of the transaction
itself, mere notarizing the sale agreement will not establish the fact that the
sale agreement was executed for selling the property. Moreover, it is the case
of the plaintiff that the 1st defendant received Rs.2,50,000/- as advance on
the date of execution of sale agreement, i.e., on 01.03.2012. Whereas, P.W.3,
deposed that on 03.03.2012, when the sale agreement was notarized, the
plaintiff has tendered Rs.2,50,000/- as advance to the 1st defendant. Again he
deposed that, at the time of notarizing the sale agreement, he was standing
downstairs in the office of the Notary Public. Hence, the plaintiff failed to
prove the tendering of Rs.2,50,000/- to the 1st defendant, which supports the
case of the defendants. However, the 1st defendant has categorically admitted
in his written statement and during his examination about receiving
Rs.1,00,000/- from the plaintiff as loan for his business. His evidence is
corroborated by D.W.2, Sub Inspector of Police. She had deposed that during
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her enquiry, plaintiff has accepted about tendering Rs.1,00,000/- to the 1 st
defendant and about the custody of the title deeds with him. There is
nothing on record to discredit the evidence of D.W.2. Further, the sale
agreement is dated 01.03.2012. The plaintiff has approached the defendant
for performance of contract only on 15.02.2013. He had sent the legal notice
only on 09.04.2013 and filed the suit on 03.03.2015. According to the
plaintiff, the balance sale consideration is only Rs.45,000/-. The plaintiff has
waited for 23 months for paying the meagre amount of Rs.45,000/- and get
the sale executed. No valid explanation tendered by the plaintiff for the
enormous delay in calling upon the 1st defendant to perform his part of
contract. It only goes to show that the said sale agreement is only for a loan
transaction.
9.1. Furthermore, the alleged sale agreement is dated 01.03.2012. The
Hon'ble Supreme Court in Smt. Katta Sujatha Reddy and another vs.
Siddamsetty Infra Projects Pvt. Ltd., & others reported in 2022
LiveLaw(SC) 712 has held as under:
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“Specific Relief Act, 1963; Section 10 of 2018 amendment to the
Specific Relief Act is prospective and cannot apply to those
transactions that took place prior to its coming into force”.
While so, the first appellate court erred in holding that the Specific Relief
Amendment Act, 2018 has retrospective effect. Moreover, without any
appeal preferred by the plaintiff as against the judgment and decree in the
counter claim, as mandated under Order XX, Rule 19(2) of CPC, the first
appellate court erred in dismissing the counter claim preferred by the
defendants. Since the plaintiff failed to prove that he had paid Rs.2,50,000/-
as advance to the 1st defendant, the trial court rightly directed the first
defendant to pay the admitted sum of Rs.1,00,000/- with interest at the rate of
12% per annum from 01.03.2013 till the date of decree and 6% interest till
the date of realization. Further, the first appellate court was not justified in
deciding that the plaintiff has proved his readiness and willingness, without
deciding whether the suit agreement was executed with an intend to sell the
property. Hence, the judgment and decree passed by the first appellate court
is liable to be set aside and the judgment and decree passed by the trial court
is restored. All the substantial questions of law are answered in favour of the
appellants.
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10. In the result,
i. The Second Appeal is allowed. No costs. Consequently connected
miscellaneous petition is closed.
ii. The decree and judgment dated 13.06.2023 passed in A.S. No.22 of
2020, on the file of the Principal District Court, Villupuram, is set
aside.
iii. The Judgment and decree dated 26.07.2019 passed in O.S.
No.95 of 2015, on the file of the II Additional Subordinate Court,
Villupuram, is restored.
17.02.2026
Index: Yes/No
Internet: Yes/No
Speaking/Non-Speaking order
bga
To
1. The Principal District Court, Villupuram.
2. The II Additional Subordinate Court, Villupuram.
3. The Section Officer, VR Section, High Court, Madras.
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K.GOVINDARAJAN THILAKAVADI,J.
bga
Pre delivery judgment in
S.A.No.668 of 2023 and
17.02.2026
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