Telangana High Court

Smt. Aarti Loya vs Sri Nagavaram Prashanth Rao on 20 January, 2025

Author: P.Sree Sudha

Bench: P.Sree Sudha

 THE HONOURABLE SMT. JUSTICE P.SREE SUDHA

               APPEAL SUIT No.77 of 2024

JUDGMENT:

This appeal is filed against the Judgment and decree

dated 05.01.2024 in O.S.No.157 of 2021 passed by the

learned Senior Civil Judge, Nalgonda.

2. The suit vide O.S.No.157 of 2021 was filed by the

appellants/plaintiffs against respondent/defendant for

Specific Performance of Contract, the trial Court dismissed

the suit with costs. Aggrieved by the said Judgment,

plaintiffs in the suit preferred the present appeal.

3. Heard both sides. Perused the record.

4. For the sake of convenience, the parties herein are

referred to as "plaintiffs" and "defendant" as arrayed in the

trial Court.

5. P.Ws.1 and 2 were examined on behalf of plaintiffs and

got marked Exs.A1 to A5. No oral and documentary evidence

was adduced on behalf of the defendant.

6. The brief facts of the case are that defendant is

Promoter, Managing Director and major shareholder in

M/s.Sharvani Energy Private Limited (SEPL), located at

Tarnaka, Secunderabad. Defendant is the absolute owner

and peaceful possessor of the agricultural lands in Sy.No.4 to

10, 22/1, 468 to 473 and 476 admeasuring Ac.10.00 guntas

situated at Toorpupalli Village Devarakonda Mandal,

Nalgonda District. He is having pattadar passbook and title

deed bearing No.1104 (New passbook No.T28080040736 and

Account No.1104). In 2018, the Company was in process of

developing Dumajohri Small Hydro Electric Project on Kolab

River, near Dumajohri Village above 50 kms., from Jeypore,

Koraput District, Orissa State. The company was in need of

funds for speedy development of the said project and the

defendant had approached the plaintiffs for providing

Mezzanine Investment (Angel Investments) to the tune of

Rs.40,00,000/- which the plaintiffs agreed for the same as

per the terms and conditions as provided under the

agreement-cum-memorandum of understating dated

17.08.2018.

7. Defendant agreed that on the effective date of

agreement he shall transfer the shareholdings worth of

Rs.40,00,000/- in SEPL, at face value in favour of plaintiff

No.2 as per paragraph No.1(A) of the agreement. As per

paragraph No.1(B) of the agreement of sale, the defendant

had entered into an agreement of sale on the same date with

the plaintiffs for the sale of suit schedule property for a total

consideration of Rs.50,00,000/-. Before entering into the

said agreement, plaintiffs have paid Rs.40,00,000/- and it

was duly acknowledged by defendant. Defendant had

handed over the original pattadar passbook

No.T28080040736 bearing Katha No.1104 to the plaintiff

No.2 on the date of execution of the agreement.

8. As per paragraph No.2 of the agreement-cum-MoU, the

investment was supposed to be mandatorily purchased back

by the defendant at a value of double i.e., Rs.80,00,000/-

within 30 months from the date of agreement and the said 30

months were completed on 17.02.2021. In para No.6 of the

agreement, it was agreed that in case of default by the

defendant in payment of exit value under the terms of the

agreement, the parties to the agreement shall proceed with

agreement of sale and balance consideration of

Rs.10,00,000/- would be paid by plaintiffs and the sale deed

shall be executed as per the terms of the agreement of sale.

Plaintiffs have been persuading the defendant to transfer the

shares as promised but the defendant had been evading the

same under one pretext or the other. After February 2021,

the plaintiffs had been persuading with the defendant and

calling upon him to fulfill the terms of agreement, but he

never came forward. Plaintiffs were ready and willing to

perform their part of contract in the agreement and they were

ready with balance sale consideration of Rs.10,00,000/-.

Plaintiffs got issued legal notice to defendant on 14.06.2021

and it was returned with an endorsement 'not claimed'. The

counsel of plaintiffs had also sent a copy of the legal notice

through e-mail on the defendant's official e-mail ID and also

sent through WhatsApp on his phone number on 26.05.2021.

As such, plaintiffs filed the suit and requested the Court to

direct the defendant to handover the possession of suit

schedule property by executing sale deed to an extent of

Ac.10.00. Notice sent to the defendant returned as

'unclaimed' as such plaintiffs filed I.A.No.242 of 2023 for

substitute service of summons by way of paper publication

and the same was allowed directing the plaintiffs to take out

the summons by way of paper publication in Eenadu Telugu

Daily in Hyderabad edition, but the defendant did not turn

up, as such he was set exparte.

9. Plaintiff No.2 filed Ex.A1, agreement-cum-MoU dated

17.08.2018 and Ex.A2, unregistered irrevocable agreement of

sale dated 17.08.2018. One of the attestors was examined as

P.W.2. Ex.A3 is the postal receipt dated 14.06.2021, Ex.A4 is

the returned postal cover with the copy of legal notice. Ex.A5

is the digital pattedar passbook of the defendant. Plaintiffs

asserted that the defendant is the major shareholder and the

agreement entered by the Company for developing the electric

project is also not filed. The resolution of the Board is

required since the company is incorporated under the

Companies Act. There is no evidence to demonstrate that the

defendant is absolute promoter of the company. Pattadar

passbook is not the document or title and modification in the

revenue records will not create title in the property. It is for

the plaintiff to show that the defendant is lawful owner and

title holder of the suit property. No document is filed like sale

deed, gift deed, will deed, relinquishment deed and

accordingly the trial Court dismissed the suit. Aggrieved by

the said judgment, the plaintiffs preferred the present appeal.

10. Plaintiffs stated that regarding the shareholding of the

company of the defendant, its memorandum and articles of

association, certificate of incorporation, resolutions passed by

the board of directors is irrelevant in the context. As per the

certified copies of pahanies, defendant acquired the suit

property by inheritance from his father and his name was

mutated in revenue records. As per Ex.A1 agreement, the

defendant had admitted and acknowledged receipt of part

payment of sale consideration but it was not properly

appreciated. Therefore, requested the Court to set aside the

judgment of the trial Court.

11. During the pendency of the appeal, appellants filed

I.A.No.1 of 2024 for granting temporary injunction restraining

the defendant/respondent from alienating or transferring,

creating any third party interest or changing the nature of the

property and the same was allowed on 15.07.2024. I.A.No.2

of 2024 was filed by defendant to vacate the interim order

dated 13.02.2024 in I.A.No.1 of 2024 and it was dismissed on

15.07.2024.

12. In a counter filed by respondent herein he relied upon

MoU dated 15.04.2019 entered between appellant No.2 and

respondent and his wife. He further stated that the brother

of respondent filed O.S.No.400008 of 2019 on 10.06.2019.

As the property B went into litigation, as a precautionary

measure, appellant No.2 represented by its Karta entered into

two other agreements with respondent herein on 22.11.2019.

The suit for partition is still pending and these facts were not

brought to the notice of the Court. He further stated that

appellants have issued a legal notice dated 05.05.2021

prematurely to the respondent on 14.06.2021 showing their

intention for the first time to pay the sale consideration of

Rs.10,00,000/- towards the purchase of property A under the

agreement of sale dated 17.08.2018. In view of the MoU

dated 15.04.2019 and 22.11.2019, the said agreement of sale

is not in force. He further stated that he never received any

notice and he was set exparte. He also stated that he repaid

a sum of Rs.50,00,000/- to the appellants vide various bank

transactions and nothing remains to be paid by the

defendant as such requested the Court to dismiss the

appeal. Respondent enclosed agreement cum memorandum

of understating dated 15.04.2019 and 22.11.2019 and bank

statements along with counter affidavit.

13. In this case, respondent/defendant did not contest the

suit and in the appeal he simply stated that he has not

received any summons, but as per the trial Court record,

summons sent to the respondent were returned as

'unclaimed' and it is proper service and even paper

publication was also ordered, even then he did not turn up

before the Court. Even in the appeal he did not stated

anything to show that he was not residing in the address in

which the summons were sent. He simply denied the service

of summons. Even after passing of the exparte decree, he

has not filed any application to set aside the exparte order.

14. Appellants relied upon a decision of the Hon'ble Apex

Court in Bhivchandra Shankar More Vs. Balu Gangaram

More and Others, in which it was held as follows:

The scope of Order 9 Rule 13 CPC and Section 96(2) CPC re entirely different In an application filed under Order 9 Rule 13 CPC, the Court has to see whether the summons were duly served or not or whether the defendant was prevented by any "sufficient cause" from appearing when the suit

was called for hearing. If the Court is satisfied that the defendant was not duly served or that he was prevented for "sufficient cause", the court may set aside the ex parte decree and restore the suit to its original position. In terms of Section 96(2) CPC, the appeal lies from an original decree passed ex parte. In the regular appeal filed under Section 96(2) CPC, the appellate court has wide jurisdiction to go into the merits of the decree. The scope of enquiry under two provisions is entirely different. Merely because the defendant pursued the remedy under Order 9 Rule 13 CPC, it does not prohibit the defendant from filing the appeal if his application under Order 9 Rule 13 CPC is dismissed.

15. The respondent herein has not filed any application to

set aside the exparte order and has not preferred any appeal

but contested the present appeal and filed certain documents

along with counter affidavit and he has not even filed

separate application to receive additional documents as

required under CPC. Moreover, the documents were

pertaining to the year 2019 and the suit is filed in the year

2021, he ought to have contested the suit and filed the above

documents in the suit but failed to do so. Plaintiffs stated

that prior to the filing of the suit, defendant got issued legal

notice and also sent email to the defendant and to the

WhatsApp on 14.06.2021 and 26.05.2021 respectively.

Defendant/respondent did not respond to the notice sent

prior to the filing of the suit. Even after filing of the suit, he

remained exparte and only after filing of the appeal, he filed

counter affidavit along with certain documents in I.A.No.1 of

2024. But the Contemporary Bench allowed the I.A.No.1 of

2024 by grating injunction and dismissed the vacate stay

petition. Therefore, the said documents and representation

made by the respondent is not in accordance with law and

cannot be considered.

16. Now it is for the Court to see whether it is simple

money transaction or the plaintiffs are entitled for specific

performance of Contract.

17. No doubt defendant approached the plaintiffs for an

amount of Rs.40 lakhs as per MoU dated 17.08.2018 as they

are in need of funds for speedy development of the project.

Plaintiffs provided Angel investments to the defendant as per

the MoU, but there are certain clauses entered between the

parties. The first clause is that the defendant should pay

double the amount within 30 months and defendant shall

transfer share holding worth of Rs.40 lakhs in SEPL at face

value in favour of plaintiff No.2. The second one is that the

investment will be mandatorily purchased back by the second

party and at the value of double within a period of 30

months. The parties also entered into another agreement on

17.08.2018, in which it was held that Vendee undertakes to

pay the Vendor interest on the due amount of Rs.10 lakhs at

the rate of 30% p.a in failure of the payment and registration

of sale deed. If at all it is the money transaction, the question

of entering agreement of sale does not arise as such it cannot

be said that it is only the money transaction and suit for

specific performance is not maintainable.

18. Plaintiffs themselves stated that defendant is the

absolute owner and possessor of the agricultural land in

Sy.No.4 to 10, 22/1, 468 to 473 and 476, admeasuring

Acs.10-00 gts, situated at Toorpupalli Village, Devarakonda

Mandal, Nalgonda District and they also gave the details of

pattadar passbook and title deed and filed Ex.A5 to

substantiate their version. It is the title document in the

State of Telangana as per RoR Act. Plaintiffs entered into

agreement of sale with the defendant regarding the suit

property, it clearly shows that defendant is the owner of the

suit schedule property. They also filed certified copies of the

pahanies to show that defendant acquired the suit schedule

property by inheritance from his father and his name was

mutated in revenue records. Therefore, the observation of the

trial Court that plaintiffs failed to prove that defendant is the

absolute owner of the property is not tenable.

19. Defendant approached the plaintiffs seeking investment

of Rs.40,00,000/-. Plaintiffs paid the said amount and

accordingly Ex.A1 agreement of sale-cum-MoU was executed.

Defendant acknowledged the receipt of Rs.40,00,000/- and

also agreed to transfer the share holding worth of

Rs.40,00,000/- in SEPL at face value in favour of plaintiff

No.2 from Ch.Narsing Rao shareholding. Defendant also

executed irrevocable agreement of sale in favour of plaintiffs

in respect of the suit property for a total sale consideration of

Rs.50,00,000/-. As the plaintiffs have already paid

Rs.40,00,000/-, they agreed to pay the balance amount of

Rs.10,00,000/- at the time of registration within 30 months.

Defendant had also handed over the original pattadar

passbook to the plaintiff No.2 with an understanding that "if

the defendant failed to pay the exit value and shares are

not transferred the irrevocable agreement of sale/Ex.A2,

shall become final." The agreement of sale is admitted

document and confirms the transfer between the parties in

which the defendant offered to sell the suit schedule property

to the plaintiffs by receiving part sale consideration. As the

defendant failed to execute the sale deed, failed to give reply

and to comply the demand made in the legal notice, plaintiffs

have proved the case as per the exhibits filed by them and

thus they are entitled for decree of specific performance.

20. No doubt, in agreement of sale-cum-MoU it was

mentioned that defendant is the Promoter, Managing Director

and majority share holder in M/s. Sharvani Energy Pvt.Ltd,

(SEPL) located at Tarnaka, Secunderabad. The said

agreement was signed by both the parties. Defendant never

appeared before the Court and disputed that he is not the

party, as such, the finding of the trial Court that it is for the

plaintiff to prove that defendant is the majority share holder

cannot be accepted. Even in the MoU in the investment

paragraph, in the first line it was mentioned that Second

Party acknowledges the receipt of Rs.40 lakhs. So also,

the agreement of sale entered on the same day, it was

mentioned that Vendee has paid an amount of Rs.40 lakhs

as advance to the Vendor and balance amount of Rs.10

lakhs will be paid at the time of registration or within 30

months. This clearly shows that there is no dispute

regarding payment of Rs.40 lakhs and it was well

acknowledged by the defendant, as such plaintiffs need no

proof regarding the payment of Rs.40 lakhs to the defendant.

In the MoU dated 17.08.2018 in Row No.4 of Security, it was

mentioned that the investments are secured by providing a

unregistered agreement of sale dated 17.08.2018 in favour of

plaintiffs for 10 acres of agricultural land mentioned in the

Survey Numbers and the details of pattadar passbook were

also mentioned in detail. In the agreement of sale date

17.08.2018 clause 7 reads as follows:

Time is not the essence of this document. Vendee undertakes to pay the Vendor interest on the due amount of Rs.10,00,000/- at the rate of 30% p.a, in case the payment is not arranged and sale deed is not got registered within the period of 6 months from this day.

21. It is for the Court to read the agreement cum MoU of

agreement of sale dated 17.08.2018 together to arrive to the

conclusion whether plaintiffs are entitled for specific

performance of agreement of sale or not. There is no dispute

regarding the fact that defendant borrowed Rs.40 lakhs from

the plaintiffs. Initially, defendant agreed to transfer the share

holding worth of Rs/40 lakhs in SEPL in the name of plaintiff

No.2. Plaintiff No.1 is none other than wife of plaintiff No.2,

as such the entire suit proceedings were recorded by plaintiff

No.2 and he also deposed before the Court as P.W.1 and he

was never cross-examined. As such, the evidence remains

unchallenged. The original pattadar passbook was handed

over to defendant on the date of agreement. Defendant

agreed to purchase the shares with double price within 30

months. Defendant failed to transfer the shares and thus the

question of purchasing them back does not arise, as such, th

conditions entered between the parties were complied, as

such the plaintiffs filed the suit for specific performance of

sale consideration of Rs.10 lakhs as per agreement of sale

entered between the parties on the same day.

22. The trial Court without appreciating the facts properly

dismissed the suit. Therefore, this Court finds that it is just

and reasonable to set aside the judgment of the trial Court.

Respondent/defendant is directed to receive the balance sale

consideration and to execute the registered sale deed in

favour of plaintiffs within one month from the date of receipt

of a copy of this judgment, failing which plaintiffs are at

liberty to get the registered sale deed by the trial Court by

duly following the procedure.

23. With the above direction, this Appeal Suit is allowed by

setting aside the judgment of the trial Court dated

05.01.2024 passed in O.S.No.157 of 2021. No order as to

costs.

Miscellaneous petitions pending, if any, shall stand

closed.