Partly allowed

Sanjeev Yadav v. Smt. Aiaswariy Mandavi

Chhattisgarh HC16 Aug 2019FA/98/2016

Case brief

AI extract

What is this about?

This Court partly allowed an appeal against the dismissal of a suit for specific performance. Holding that requirements for Collector permission do not bar the decree, the Court denied specific performance because the sale was contingent on the release of the property from a mortgage, which was not fulfilled. The plaintiff was however granted a refund with interest.

What did the court decide?

Return of Rs.27,00,000/- to the plaintiff with interest @ 10% per annum from the date of payment.

Sanjeev Yadav Vs Smt. Aiaswariy Mandavi — Specific Performance | Chhattisgarh HC (2019)

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AFR

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HIGH COURT OF CHHATTISGARH, BILASPUR

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F.A. No. 98 of 2016

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Sanjeev Yadav, S/o Shri C.S. Yadav, aged about 38 years.

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Istiyak Rokadiya, S/o Hazi Eqbal Rokadiya, aged about 39 years.

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Both R/o – Amapara, Dhamtari, Tah. & District Dhamtari (C.G.)

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Dr. Shrikant Jaju, S/o Shri Kamal Kishor Jaju, aged about 38 years, R/o Gujrati Colony, Dhamtari, Tah. & District Dhamtari (C.G.)

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---- Appellants/Plaintiffs

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Versus

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Smt. Aiaswariy Mandavi, W/o Manharan Lal Mandavi, aged about 43 years, R/o Banglo No. 28, Mahalaxmi Inclave, Sihava Road, Dhamtari, Tah. & District Dhamtari (C.G.)

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State of Chhattisgarh Through : Collector, District Dhamtari.

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Housing Finance Ltd. Branch – Dhamtari, Through – Branch Manager, Housing Finance Ltd., Dhamtari. Add : Ratnabandha Road, First Flour Allahabad Bank Dhamtari, Tah. & District Dhamtari (C.G.)

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Smt. Salma Gond wife of Mohd. I. Gond, Muslim, resident of Shastri Chowk, Dhamtari (C.G.)

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Smt. Warsha Shah wife of Santosh Shah Gujrati, resident of Baniyapara, Dhamtari (C.G.)

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---- Respondents/Defendants

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For Appellants	: Shri Ravindra Sharma and
	Shri Prateek Sharma, Adv.
For Respondent No.1	: Shri Pallav Mishra, Adv.
For Respondent No.2	: Shri Sanjay Agrawal, G.A.
For Respondent No.3	: Shri Rohitashva Singh, Adv.
For Respondent No.4 & 5	: Shri Somnath Verma, Adv.

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Hon'ble Shri Justice Manindra Mohan Shrivastava & Hon'ble Smt Justice Rajani Dubey

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Order on Board by Manindra Mohan Shrivastava, J

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16/08/2019

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This appeal is directed against the impugned judgment and decree dated 11.09.2015 passed in Civil Suit No.04A/2014 by District Judge, Dhamtari whereby, the appellants suit for grant of decree of specific performance has been dismissed.

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Appellants/plaintiff filed a suit seeking decree of specific performance of contract on the pleadings that the defendant No.1 had entered into an agreement to sell the disputed property on 28.06.2013 (Ex.P/3) for a consideration of Rs.78,00,000/- (Rs. Seventy-Eight Lac only), out of which Rs.21,00,000/- (Rs. Twenty-One Lac only) were paid in advance. Later on, another agreement dated 28.12.2013 (Ex.P/4) was executed, under which, the period within which the balance amount was to be paid, was extended and the plaintiffs paid a further amount of Rs.6,00,000/- (Rs. Six Lac only). Thus, total amount of Rs.27,00,000/- (Rs. Twenty-Seven Lac only) were paid by the plaintiff to the defendant No.1 from time to time at the time of execution of two agreements. Under the agreement, there were specific conditions requiring the defendant to obtain permission from the competent authority for sale of land and also to get the property released

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from encumbrance created by way of mortgage against loan taken from the bank. Though, the plaintiff had paid substantial amount of Rs.27,00,000/- (Rs. Twenty Seven Lac only) and was always ready and willing to perform the part of contract, the defendant failed to perform his part of contract and despite specific notice given by the plaintiff, failed to execute sale deed in favour of the plaintiff. Therefore, the decree of specific performance of contract to be granted in favour of the plaintiff.

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The defendant No.1, owner of the property, however, denied the very existence of the agreements and disputed the claim of the plaintiff. Upon disclosure of the details of loan, the plaintiff sought impleadment of the concerned bank also as one of the defendant and housing finance limited was impleaded as one of the defendant in the suit. The learned trial Court framed as many as three issues, which were as under :-

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¼01½ D;k oknhx.k izfroknh dzekad & 01 ds }kjk fu”ikfnr bdjkjukek fnukad 28-06-2013] 28-12-2013 ds vuqikyu esa oknxzLr Hkwfe edku fLFkr xzke #nzh i-g-ua- 18@24 jk-fu-e/kerjh rglhy o ftyk /kerjh N-x- [kljk uacj 432@2 jdck 0-18 gsDVs;j ftlesa ls dqN Hkkx ij nks eaftyk nqdku o edku ds fcdzh gsrq dysDVj /kerjh ls fof/kor vuqefr ckn fcdzhukek ds iath;u fu”iknu o dCtk ikus dk vf/kdkjh gS \

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vFkok

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¼02½ D;k izfroknh dzekda &01 us dtZ ds ,ot esa oknhx.k ds i{k esa nLrkost fu”ikfnr fd;k Fkk \

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¼03½ D;k oknxzLr edku ,oa nqdku izfroknh dzekad &03 x`g Qk;usUl fyfeVsM ds ikl ca/kd jgh gS rFkk izfroknh dzekad&03

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ca/kd jde 40]00]000@& ¼v{kjh & pkyhl yk[k #i;s½ e; C;kt ds izkIr djus dk vf/kdkjh gS \

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Even though, the learned trial Court found that the parties had entered into an agreement of sale under two agreements dated 28.06.2013 and 28.12.2013, that the plaintiff had paid Rs.27,00,000/- to the defendant and even though the plaintiff was ready and willing to perform his part of contract, dismissed the suit on the ground that the plaintiff could not be granted decree because the sale of property required permission of Collector as the proposed vendor/defendent No.1 was Scheduled Tribe and under the existing laws, sale could not be effected without prior permission. The learned trial Court recorded a finding in favour of the appellants that the defendants failed to prove that the property was duly mortgaged with the bank against the loan taken by defendant No.1 from the concerned bank. It is this decree, which is under challenge in this appeal.

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Learned counsel for the appellants argued that the learned trial Court having clearly held that the parties have entered into an agreement of sale of disputed property and that plaintiff had paid a very heavy amount of Rs.27,00,000/and was always ready and willing to perform his part of contract, ought not to have dismissed the claim of the plaintiff only on the ground that the sale requiring prior permission of Collector, decree for specific performance of contract could not be granted. His argument is that even if such a conditional bar is there under any existing law, it is not an

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impediment in grant of a decree of specific performance of contract.

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Learned counsel appearing for respondent No.1 submits that, even though, the defendant No.1, after filing of written statement, did not lead any evidence, defendant seeks to support judgment and decree because it has been clearly held that unless there is a permission granted by the Collector, which is requirement of law, no decree for specific performance could be granted in favour of the plaintiffs, even if, defendant's stand that it was a sham transaction, is held not proved.

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Learned counsel for the bank/respondent No.3 would submit that the property was mortgaged with the bank and, therefore, a charge was already created and this fact was fully known to the plaintiffs because in the agreement itself, it has been clearly stated that the property has been mortgaged with the bank. He would argue that on account of such encumbrance having been created over the property, which is the first charge on the same, the agreement of sale is not specifically enforceable under the law. The other submission is that it was contingent contract and the defendant's obligation to execute sale deed, as stated in clause 7 of first agreement dated 28.06.2013, was dependent upon happening of an event which was uncertain, no decree of specific performance could be granted.

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Learned counsel appearing for respondent Nos. 4 and 5,

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impleaded as respondents under an order passed by this Court on his application under Order 1 Rule 10 of C.P.C., would argue that prior to entering into agreement of sale in favour of appellants/plaintiff, defendant No.1 had already entered into an agreement of sale of the same property with defendant Nos.4 and 5. Defendant Nos. 4 and 5 were also willing to perform their part of contract but as defendant No.1 did not execute sale deed in their favour, they also filed a suit which is pending. It is argued that in the event, suit filed by defendant Nos. 4 and 5 is decided in their favour, the second agreement between the plaintiff and defendant No.1 in the present case ceases to be enforceable in law. Therefore, the suit filed by the appellants/plaintiff could not proceed until the decision of the first suit and is liable to be stayed.

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After hearing learned counsel for the parties, the following points arise for determination in this appeal, which are as under:-

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(a) Having held that the agreement of sale between the plaintiffs and defendant No.1 under two agreements dated 28.06.2013 and 28.12.2013 proved, plaintiff ready and willing to perform his part of contract, whether the learned trial Court erred in law and on facts holding that decree of specific performance could not be granted for want of permission by the Collector.

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(b) Whether the finding that defendants failed to lead evidence to prove that the property in dispute was mortgaged suffers from patent illegality ?

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(c) Whether the suit for specific performance of contract based on contingent contract, happening of which itself is uncertain, is enforceable under the law ?

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(d) Whether the plaintiffs' suit could not proceed until decision of the suit filed by defendants No. 4 and 5 ?

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As far as the first point for determination is concerned, in our opinion, the said issue is squarely covered by decision of Supreme Court in the matter of Manzoor Ahmed Magray V. Ghulam Hassan Aram And Others1 . That was a case where a prayer for decree of specific performance of contract was opposed on the ground that there was legal provision on alienation of property under Section 3 of Jammu and Kashmir Prohibition on Conservation of Land and Alienation of Orchards Act, 1975 and, therefore, no decree of specific performance could be granted. Repelling said contention, it was held that the prohibition was not an absolute one and the question of obtaining previous permission, as contemplated in Section 3 (1) (a) would arise at the time of execution of sale deed but, on the basis of decree for specific performance. It was held thus:-

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“ 19. Considering the aforesaid section, it is apparent that prohibition on transfer of orchards is not absolute and the question of obtaining previous permission as contemplated under Section 3(1)(a) would arise at the time of execution of the sale deed on the basis of decree for specific performance. Section 3 does not bar the

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1 1999 (7) SCC 703

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maintainability of the suit and permission can be obtained by filing proper application after the decree is passed. Therefore, it cannot be stated that decree for specific performance is not required to be passed. Further, under Section 3 of the J&K Prohibition on Conservation of Land and Alienation of Orchards Act, 1975, prohibition on transfer is limited. Firstly, the proviso makes it clear that alienation of orchards to the extent of four kanals only in favour of one or more persons for residential purposes will not require any permission. Secondly, for more than four kanals of land, previous permission of the Revenue Minister or such officer as may be authorised by him in this behalf is required to be obtained. Dealing with similar contention, this Court in Bai Dosabai v. Mathurdas Govinddas² observed that even if the Act prohibits alienation of land, if the decree is passed in favour of the plaintiff, it is required to be moulded suitably.”

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In the present case, no doubt, the respondent/defendant No.1 being one belonging to Scheduled Tribe, sale of property required prior permission of Collector, but only on that ground the suit was not liable to be dismissed in view of aforesaid judgment of Supreme Court because it is not a case of absolute bar but it is only a conditional bar that without prior permission sale could not be effected.

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This bring us to the second issue. We find that the learned trial Court while deciding the third issue has held that even though the bank/respondent No.3 has led oral evidence that the property was mortgaged, the document in support of

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2 (1980) 3 SCC 545 : (1980)3 SCR 762

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that plea could not be proved as only photocopies were filed before the Court. On this consideration, the third issue was decided by the learned trial Court.

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Whether or not the property was a mortgaged one, is really not an issue of dispute. The agreement itself contained stipulation that the property is mortgaged with the bank against loan advanced to defendant No.1. The plaintiff has filed suit seeking decree of specific performance relying upon two agreements dated 28.06.2013 and 28.12.2013. The pleading, as contained in para 10 of the plaint also show that the plaintiff has not disputed the factual position that the property in dispute was mortgaged with the bank. Notice (Ex.P/8) given by the plaintiffs itself recites that the defendant has failed to execute sale deed in favour of the plaintiff as the defendant neither obtained permission from the Collector nor cleared the debts which he had taken from the bank by getting his property mortgaged. Therefore, the finding of learned trial Court, in this regard, appears to be patently illegal and contrary to admitted position on records.

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Even if we have to accept for the sake of argument that despite the property was a mortgaged one, it would not be an impediment in grant of a decree of specific performance of contract as there is no such bar created under any special law dealing with the loan transaction in the present case or even under the transfer of Property Act. In our opinion, condition No. 7 of the first agreement dated 28.06.2013 non suit the

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plaintiff as the defendants agreed to execute sale deed upon happening of contingency, which is as below :-

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“07;g fd mDr of.kZr Hkwfe Hkou] x`g Qk;usUl fyfeVsM] esa ca/kd gS ftls fodzsrk dtZ Hkkj eqDr djkdj] iw.kZr% ikd&lkQ dj iath;u fy[kk i<h+ djsxkA fy[kki<h+ ds iwoZ i{kdkj dza- 01 mDr Hkwfe Hkou dks ikd lkQ j[ksxkA”

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From the aforesaid clause of the agreement, it is amply clear that the defendant agreed to execute sale deed in favour of plaintiff only after getting the property released from mortgage and encumbrance. Such a condition that the defendant would execute sale deed only after getting the property redeemed from mortgage by repayment of loan liability, is clearly a contingent contract based on happening of a contingency which is uncertain. In such a case, his specific performance of a decree of specific performance of contract could not be granted.

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This Court dealing with a similar issue in F.A.No. 215/1992 ( Rajendra Kumar Jha Vs. Ramesh Kumar Soni and others), vide order dated 22.01.2018, observed in para 12, 13, 14 and 15, which read thus:-

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“12. Thus, from the plaintiff's own pleadings and evidence, it is clear that the agreement between the parties was that the defendant would be executing sale deed in favour of plaintiff after eviction of the tenant. It is also clear from the recital of declaration given by defendant in Ex.P-7, execution of which has not been disputed by the plaintiff. In that document, it has been recited as below:-

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“This is the house occupied by Shri Murli Manohar Verma as a licensee. I have to deliver the possession of the house to the purchaser after evicting Shri Murli Manohar Verma. Suit against Murli Manohar Verma for eviction is pending in Court”

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13. It is thus clear that the execution of sale deed under agreement of sale of the property in dispute was contingent upon the eviction of the tenant. There is no pleading much less any evidence led by the plaintiff to prove that on or before the date of filing of the suit (filed on 5.9.1989) or during the pendency of the suit or at the time of passing decree by the learned trial Court, the tenant was evicted so as to say that agreement of sale between the parties had become enforceable in law. At this juncture, I consider it appropriate to refer to the Supreme Court's decision in the cases of Nandkishore Lalbhai Mehta (supra). That was a case where the agreement of sale between the parties was contingent upon condition that the sale would be subject to the seller being able to settle with its labour and the labour agreeing to the sale. On facts, it was found that labour did not agree to the sale contemplated. In this factual backdrop, their Lordships in the Supreme Court held that the owner of the property in dispute was not bound to sell the property and a decree of specific performance could not be granted in favour of plaintiff. It was held:-

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“ 43. The submission that the appellant has waived the condition regarding taking of consent from the labour for the proposed sale and, therefore, this could not be a ground for cancelling the contract is misconceived. In the agreement dated 19.10.1977, it was

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specifically mentioned that the sale also be subject to your (defendants) being able to settle with your labour and your labour agreeing to the sale contemplated herein and if you are not able to settle with your labour and to get them to agree to the sale herein contemplated you will not be bound to complete the sale. The moment labour do not agree to the sale contemplated, under the terms of the contract, the respondents were not bound to complete the sale. The maximum period of nine (9) months does not mean that once the labour had declined to give their consent for the proposed sale, the contract subsists for a period of nine (9) months and it cannot be terminated before that period. The agreement for sale is a contingent agreement depending upon obtaining permission under Section 22 and Section 27 of the ULC Act, property being converted from industrial zone to residential use and settlement with the labour and the labour agreeing to the sale contemplated therein. If any of the conditions are not fulfilled, the respondents were not bound to complete the sale and the appellant was only entitled for return of the money with interest @ 18% per annum from the date of refusal of any of the permission or consent or agreement mentioned above. As in the present case we find that the Mill Mazdoor Sabha has not given its consent to the proposed sale, agreement for sale could not have been performed and had ceased. The appellant is only entitled to refund of the amount along with interest @ 18% per annum stipulated therein.”

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14. The principle of law propounded by the Supreme Court in the aforesaid decision is apparently in the light of statutory provision contained in Section 32 of the Indian Contract Act, 1872, which reads as under:-

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32. Enforcement of contracts

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contingent on an event happening - Contingent contract to do or not to do anything if any uncertain future event happens, cannot be enforced by law unless and until that event has happened.”

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If the event becomes impossible, such contracts become void.”

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15. The aforesaid conclusion of the Supreme Court on the aspect of enforceability of a contingent contract with the happening of the contingency by itself is sufficient to non-suit the plaintiff and disentitles him to the decree of specific performance of contract.

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Though, learned counsel for the appellants vehemently urged that second agreement dated 28.12.2013 was independent of first agreement dated 28.06.2013, as first agreement had attained its nature demise. This said argument is liable to be rejected in view of clause 4 contained in the second agreement dated 28.12.2013 that the second agreement is supplementary to the first agreement. Therefore, subject to those conditions which were varied under second agreement, the principal agreement under which the plaintiff's case is based, is the first agreement dated 28.06.2013. There are no contrary terms contained in second agreement which has the effect of omitting clause 7 of the

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first agreement dated 28.06.2013.

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In view of the above, there is no escape from the conclusion that plaintiffs suit for grant of decree of specific performance could not be granted.

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The fourth issue framed at the instance of respondent No. 4 and 5 need not to be answered in view of aforesaid consideration.

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This Court had allowed the plaintiff to amend its plaint including an alternative relief of return of the advance amount of Rs.27,00,000/- paid by the plaintiff to the defendant as an advance. Having considered the circumstances of the present case, we are of the view that even though, the plaintiff may not be entitled to specific performance of contract, there is no reason as to why the amount paid by the plaintiffs should not be returned to him and that too with proper interest as the plaintiff was always ready and willing to perform the part of contract and but for legal impediment, he would have been entitled to decree also. Therefore, the appeal of the plaintiffs is partly allowed. Plaintiff is entitled to return of Rs.27,00,000/- with interest @ 10 per cent from the date of payment of the said amount till the date of repayment.

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The appeal is thus partly allowed. Parties to bear their respective costs. Let appellate decree be drawn accordingly.

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Sd/Sd/- (Manindra Mohan Shrivastava) (Rajani Dubey) Judge Judge

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vijay

Sanjeev Yadav v. Smt. Aiaswariy Mandavi

Case brief

What is this about?

What did the court decide?

Sanjeev Yadav v. Smt. Aiaswariy Mandavi

Case brief

What is this about?

What did the court decide?

What the court decided

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