Allowed

P R Gopalakrishna Reddy v. Shri Veerbhadraiah

Karnataka HC20 Jul 2021RFA/309/2012

Case brief

AI extract

What is this about?

Appeal by defendant No.4 against a decree of specific performance of an agreement of sale. The court held the plaintiff failed to prove readiness and willingness, that the unregistered extension agreement was surrounded by suspicious circumstances and the plaintiff had not approached the court with clean hands, and set aside the decree.

What did the court decide?

Appeal allowed; the judgment and decree in O.S. No.239/2007 set aside and the plaintiff's suit for specific performance dismissed. No order as to costs.

P R Gopalakrishna Reddy Vs Shri Veerbhadraiah — Specific Performance | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 20^TH DAY OF JULY, 2021

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PRESENT

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THE HON’BLE MRS. JUSTICE S. SUJATHA

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AND

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THE HON’BLE MR. JUSTICE E.S. INDIRESH

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REGULAR FIRST APPEAL NO.309 OF 2012

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BETWEEN

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P R Gopalakrishna Reddy Since deceased by his LRs

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1(a). Shri P Shravan Kumar

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S/o P Harshavardhan Reddy Aged about 33 years

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1(b). Smt. P Sundari Reddy W/o late P R Gopala Krishna Reddy Aged about 87 years

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1(c). Shri P Harshavardhan Reddy S/o late P R Gopala Krishna Reddy Aged about 61 years

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All are residing at No.8-2-674/B/3/2 Plot No.1700, Road No.12 Banjara Hills Hyderabad-34.

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1(d). Smt. G N Sandhya Reddy D/o late P R Gopala Krishna Reddy Aged about 63 years

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R/at 2371, N, 2^nd Avenue Upland, CA-91784.

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...Appellants

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(By Shri Uday Shankar R M, Advocate)

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AND

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Shri Veerabhadraiah Aged about 58 years S/o late Papaiah Hosa Anandur Village Belagola Hobli Srirangapatna Taluk Mandya District-571 401.

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Smt. Manchamma Aged about 84 years w/o late Siddaiah

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Shri Boraiah Aged about 39 years S/o late Siddaiah

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Smt. Sumithra Aged about 34 years W/o Boraiah

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Respondent Nos. 2 to 4 are R/at Basthipura Village Belagola Hobli Srirangapatna Taluk Mandya District-571 401.

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….Respondents

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(By Shri Virupakshaiah, Advocate for R1; R2 to 4 are served)

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This Regular First Appeal is filed under Section 96 of Civil Procedure Code, against the judgment and decree dated 08.12.2011 passed in OS.No.239 of 2007 on the file of the Principal Civil Judge (Sr. Dn) and JMFC, Srirangapatna, decreeing the suit for the specific performance.

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In this appeal arguments being heard, judgment reserved, coming on for pronouncement of orders, this day, INDIRESH J., delivered the following:

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J U D G M E N T

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This appeal is filed by the defendant No.4, challenging the judgment and decree dated 08^th December, 2011 passed in OS No.239 of 2007 by the Principal Civil Judge (Sr. Dn.) and JMFC, Srirangapatna, decreeing the suit of the plaintiff for specific performance.

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For the sake of convenience, the parties in this appeal are referred to with their status and rank before the trial Court.

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It is the case of the plaintiff that the defendants 1 to 3 are the absolute owners in possession of the suit schedule property and they have entered into an agreement of sale dated 01^st January, 2007 with the plaintiff, agreeing to sell the suit schedule property for valuable consideration of Rs.22,50,000/and in pursuance of the agreement of sale, defendants 1 to 3

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had received an advance of Rs.1,00,000/- from the plaintiff. It is also agreed in the aforementioned agreement that the balance sale consideration shall be paid by the plaintiff at the time of registration of the sale deed and the time stipulated was six months from the date of execution of the agreement of sale. It is also averred in the plaint that the plaintiff paid Rs.4,00,000/to the defendants 1 to 3, on 15^th March, 2007 through a cheque drawn on Kannikaparameshwari Co-operative Bank Limited, Mysore. It is also averred in the plaint that there was an extension of six months time to execute the registered sale deed in respect of the suit schedule property from 15^th March, 2007 and during the said period, the parties have stipulated in the agreement that the defendants No.1 to 3 shall provide all necessary documents including survey sketch to the plaintiff to enable him to execute the registered sale deed. However, the defendants No.1 to 3 postponed the execution of the sale deed on one or the other pretext and during this interregnum, the plaintiff came to know that the defendants 1 to 3 had executed registered sale deed in favour of defendant No.4 in respect of the suit schedule property through two sale deeds on 30^th June,

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2007 for total sale consideration of Rs.14,00,000/-. It is the case of the plaintiff that the execution of the sale deed in favour the defendant No.4 by the defendants 1 to 3 in respect of the suit schedule property is illegal, as the agreement of sale dated 01^st January, 2007 between himself and the defendants 1 to 3 was in force. Thereafter, the plaintiff caused legal notice dated 11^th July, 2007 to the defendants 1 to 4, calling upon the defendants 1 to 3 to perform their obligation as per the agreement of sale dated 01^st January, 2007. In view of nonperformance of their contract as stipulated in the agreement of sale dated 01^st January, 2007, the plaintiff was constrained to file Original Suit No.239 of 2007 on the file of the trial Court, seeking relief of specific performance.

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On service of notice, defendants entered appearance and filed detailed written statement denying the averments made in the plaint.

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It is the defence of the defendants 1 to 3 that they have entered into an agreement of sale dated 01^st January, 2007 with the plaintiff and admits the receipt of advance of

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Rs.1,00,000/- from the plaintiff. It is the specific contention of the defendants 1 to 3 that the time stipulated for concluding the execution of the registered sale deed was three months only and not six months as averred by the plaintiff. The defendants 1 to 3 admitted in the written statement relating to receipt of Rs.4,00,000/- by way of cheque, however, denied the execution of extension agreement dated 15^th March, 2007 as contended by the plaintiff. The defendants 1 to 3 have also contended that they have furnished the entire documents of title relating to the suit schedule property to the plaintiff on 01^st January, 2007 and expressed their willingness to execute the registered sale deed on or before the expiry of three months, as per the agreement of sale dated 01^st January, 2007. During the said period of three months, the plaintiff failed to pay the balance sale consideration and as such, the defendants 1 to 3 were in need of money and as such, constrained to execute the registered sale deed in favour of the defendant No.4. It is specifically averred in the written statement that defendants 1 to 3 had to provide three months time to the plaintiff to get the registered sale deed executed and thereafter waited till 30^th June, 2007 and

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thereafter, as the plaintiff had intimated to the defendants 1 to 3 regarding inability to complete the sale transaction, and on the instructions of the plaintiff, the defendants 1 to 3 had executed registered sale deed in favour of the defendant No.4. Pursuant to the execution of the registered sale deed dated 30^th June, 2007, defendants 1 to 3 handed over the possession of the property in favour of defendant No.4. It is also stated in the written statement that the sale transaction made by defendants 1 to 3 in favour of defendant No.4 was well within the knowledge of the plaintiff and with the consent of the plaintiff himself, registered sale deed was executed in favour of defendant No.4 and accordingly, sought for dismissal of the suit.

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Defendant No.4 has filed separate written statement denying the averments made in the plaint. It is the case of the defendant No.4 that he is a permanent resident of Hyderabad, Andhra Pradesh and he would like to invest in the land surrounding Mysore City and as such he had a contact with the plaintiff and purchased portion of the land from the plaintiff by way of registered sale deed dated 21^st May, 2005. Thereafter,

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the plaintiff demanded additional sale consideration from the defendant No.4 and same was rejected by the defendant No.4. It is also the defence of the defendant No.4 that the plaintiff was aware about the negotiations held among the defendants 1 to 3 and the defendant No.4 in respect of the suit schedule property and in order to harass the defendant No.4 for not complying with his unlawful demands, has instituted the suit. It is also stated in the written statement that defendant No.4 is a bonafide purchaser for valuable consideration and the sale deed dated 30^th June, 2007 was accepted by defendants 1 to 3 and he is in possession of the suit schedule property from the date of execution of the sale deed and accordingly, sought for dismissal of the suit.

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The Trial Court, after considering the pleadings on record, formulated the following issues for its consideration:

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“1) Whether plaintiff proves that, the defendant Nos. 1 to 3 agreeing to sell the suit property to plaintiff for Rs.22,50,000/have executed

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agreement of sale by receiving earnest money of Rs.1,00,000/- on 01.01.2007?

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1. Whether the plaintiff proves that, 6 months time was fixed for execution of sale deed?

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1. Whether plaintiff further proves that, that on 15.03.2007 defendant Nos. 1 to 3 have collected Rs.4,00,000/- from plaintiff through cheque and executed extension agreement by extending the time by another six months on 15.03.2007?

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1. Whether the plaintiff proves that he is ever ready and willing to perform his part of contract?

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1. Whether plaintiff prove that during subsistence of agreements defendant Nos. 1 to 3 in collusion with defendant No.4 have created and concocted sale deeds dated 30.06.2007?

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1. Whether the defendant No.4 proves that, he is bonafide purchaser of suit property for valuable consideration and without notice?

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Whether the plaintiff is entitled for decree of specific performance of contract against the defendant Nos 1 to 4 as sought for?

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8). What order or decree?”

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The plaintiff, in order to prove his case, got examined himself as PW1 and examined two more witnesses as PW2 and PW3 and produced sixteen documents and same were marked as Exhibits P1 to P16. On the other hand, defendant No.4 examined his power of attorney holder as DW1 and got marked documents as Exhibits D1 and D2. The trial Court, after considering the material on record, by its judgment and decree dated 08^th December, 2011 decreed the suit of the plaintiff and directed the plaintiff to deposit the balance sale consideration of Rs.17,50,000/- within one month from the date of the judgment and decree and had to intimate the defendants 1 to 3 about the said deposit. The trial Court further directed the defendants 1 to 3 to execute the sale deed in favour of the plaintiff within three months from the date of receipt of the said intimation. Defendants No.1 to 3 were directed to deliver the vacant

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possession of the suit schedule property to the plaintiff immediately on execution of the sale deed, failing which liberty was given to the plaintiff to get the sale deed executed through process of Court. Being aggrieved by the judgment and decree passed by the trial Court, defendant No.4 has filed this appeal.

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We have heard Sri Uday Shankar R.M., learned counsel appearing for the appellant/defendant No.4 and Shri Virupakshaiah, learned counsel appearing for the respondent No.1/plaintiff. Respondents 2 to 4 served unrepresented.

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Sri Uday Shankar R.M., learned counsel appearing for the appellant, though urged several grounds in the memorandum of appeal, however, confined his arguments to the effect that the finding recorded by the trial Court decreeing the suit on the ground that the defendant No.4 was not a bonafide purchaser, is contrary to records. He further submitted that the plaintiff has not signed the disputed agreement to sell dated 01^st January, 2007 and disputed the existence of extension agreement dated 15^th March, 2007. He also referred to the testimony of PW1 and submitted that the learned trial Judge has

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committed a grave error in coming to the conclusion that the plaintiff has proved the readiness and willingness to perform the contract. Referring to agreement to sale-Exhibits P1 and P2, learned counsel for the appellant contended that these documents are unregistered documents and the defendant Nos.1 to 3, in their written statement, disputed the execution of Exhibit.P2 and have contended that the plaintiff has created a concocted document and the said version of the defendants 1 to 3 was ignored by the learned trial Judge. Referring to the time stipulated in the sale agreement vide Exhibit.P1, Sri Uday Shankar, learned counsel argued that the time fixed in the agreement to sale - Exhibit.P1 dated 01^st January, 2007 expires on 01^st April, 2007 and the right of the plaintiff under the said document substantiate the fact that the plaintiff has no right to claim specific performance of the agreement and therefore, decreeing the suit by the learned trial Judge is bad in law. He further contended that there is material alteration in the agreement to sale, which was ignored by the trial Court, while decreeing the suit of the plaintiff. He further contended that the deposition of DW1, was not properly appreciated by the trial

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Court as the defendant No.4 had purchased the portion of the land belonging to the plaintiff and pursuant to the execution of the sale deed, plaintiff has raised dispute with the defendant No.4 illegally, demanding higher value on the schedule property therein and this aspect of the matter was ignored by the trial Court. He further contended that the plaintiff has not challenged the execution of the sale deed dated 30.06.2007 made by the defendant 1 to 3 in favour of defendant No.4 and therefore, the relief sought for by the plaintiff should have been rejected by the trial Court.

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Learned counsel for the appellant further argued that the trial Court has not properly appreciated the testimony of PW2-Scribe, particularly emphasizing on the cross-examination. He further contended that the relief sought for by the plaintiff is a equitable and discretionary relief and the trial Court ought to have applied the said principle of law while decreeing the suit of the plaintiff and therefore, he submitted that the impugned judgment and decree passed by the trial Court requires to be set aside.

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Per contra, Sri Virupakshaiah, learned counsel appearing for the respondent sought to justify the impugned judgment and decree and argued that the finding recorded by the trial Court is just and proper which do not call for any interference in this appeal. It is contended that, after the execution of the agreement of sale dated 01^st January, 2007, the defendants 1 to 3 and the plaintiff have further extended the period for six months from 15^th March, 2007 and therefore, the alleged sale deed dated 30^th June, 2007 between the defendants 1 to 3 and defendant No.4 is illegal. He further contended that the trial Court after appreciating the evidence of PW1 and PW2, who is not a witness to the said document and was a scribe to the same, has rightly decreed the suit. He further contended that there was no necessity to examine the DW1, Power of attorney holder of defendant No.4 and the power of attorney holder cannot depose about the readiness and willingness of the plaintiff. In this regard, he referred to the judgment of the Hon’ble Supreme Court in the case of MAN KAUR V. HARTAR SINGH SANGH reported in (2010)10 SCC 512. In reply to the arguments of the learned counsel for the appellant with regard

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to not affixing the signature by the plaintiff on the agreement of sale (Exhibit.P1), Sri.Virupakshaiah, learned counsel placed reliance on the judgment of the Hon’ble Supreme Court in the case of ALKA BOSE VS PARMATMA DEVI AND OTHERS reported in 2009 (2) SCC 582 and submitted that the agreement signed only by the vendor is sufficient and signature of the purchaser is optional. He further placed reliance on the judgment of the Apex Court in the case of LALA DURGA PRASAD AND ANOTHER v. LALA DEEP CHAND AND OTHERS reported in AIR 1954 SC 75, and argued that the submission made by the learned counsel for the appellant/defendant No.4 is required to be rejected on the ground that the original agreement holder need not challenge the subsequent sale deed during the subsistence of the agreement of sale. He also refers to the judgment rendered by the Apex Court in the case of R.K. MOHAMMED UBADIDULLAH AND OTHERS v. HAJEE c. ABDUL WAHAB (D) BY LRs AND OTHERS reported in (2000)6 SCC 402, and in the case of M.M.S. INVESTMENTS, MADURAI AND OTHERS v. V. VEERAPPAN AND OTHERS reported in (2007)9 SCC 660 on the proposition of the readiness and willingness. Placing reliance on the judgment of

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the Hon’ble Supreme Court in the case of A.KANTHAMANI v. NASREEN AHMED reported in (2017)4 SCC 654, he argued that the preliminary objections raised by the learned counsel appearing for the appellant insofar as not challenging/cancellation of the sale deed is not correct and accordingly, submitted that the impugned judgment and decree passed by the trial court is just and proper which do not call for any interference and therefore, sought for dismissal of the appeal.

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In the light of the submission made by the learned counsel for the parties, the point for determination are:

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1. Whether the trial Court is justified in ignoring agreement of sale dated 01.01.2007 (Exhibit.P2)?

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1. Whether the impugned judgment and decree passed by the trial Court requires interference?

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1. What order?

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Having heard the learned counsel appearing for the

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parties, we have carefully scrutinised the original records and

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evaluated the finding recorded by the trial Court. Perusal of the record would indicate that the plaintiff has entered into an agreement of sale dated 01^st January, 2007 with the defendants No.1 to 3, agreeing to sell the suit schedule property for sum of Rs.22,50,000/- and thereby the plaintiff paid Rs.1,00,000/- as advance. It is reflected in agreement of sale that date Rs.1,00,000/- is paid by way of cash. Exhibit P1 was the agreement of sale dated 01^st January, 2007. Recital to Exhibit P1 indicate that the plaintiff bought the stamp paper on 30^th December, 2006 and undisputably Exhibit P1 is the unregistered document. The second paragraph of the agreement of sale (Exhibit P1) reads as under:

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£ÀA. 2/94-95, 94-95 ), ªÀÄAZÀªÀÄä£ÀªÀgÀ ºÉ¸Àj£À°è SÁvÉ ªÀUÉÊgÉ ªÀiÁr¹ £ÁªÀÅ RjÃ¢UÉ PÉÆqÀ®Ä M¦àgÀÄvÉÛÃªÉ. £ÁªÉÃ ¸ÀéAvÀ ¸ÁUÀÄªÀ½ ªÀiÁqÀÄvÀÛ £ÀªÀÄä ¸Áé¢üÃ£Á£ÀÄ¨sÀªÀzÀ°è EgÀÄvÀÛzÉ. F ¢ªÀ¸À £Á£ÀÄ ªÀÄ£ÉAiÀÄ£ÀÄß PÀlÖ°PÉÌ ºÁUÀÆ ¨ÉÃgÉ PÀqÉ d«ÄÃ£ÀÄ RjÃ¢¸ÀÄªÀÅzÀPÉÌ ¸ÀºÀ µÉqÀÆå¯ï RÄ¶Ì d«ÄÃ£À£ÀÄß F ¢ªÀ¸À ¤ªÀÄUÉ £ÁªÀÅ ( 22,55,000 -E¥ÀàvÉÛgÀqÀÄ ®PÀëzÀ LªÀvÀÄÛ ¸Á«gÀ) gÀÆ¥Á¬ÄUÀ½UÉ PÀæAiÀÄPÉÌ PÉÆqÀ®Ä PÀæAiÀÄ ¤PÁë¹ð¹ F ¢ªÀ¸À F PÉ¼ÀPÀAqÀ ¸ÁQëUÀ¼À gÀÆ§ÄgÀÆ§Ä ¤«ÄäAzÀ UËgÀßªÉÄAmï £ÀUÀzÀÄ

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gÀÆ¥Á¬ÄUÀ¼À£ÀÄß ¥ÀqÉzÀÄPÉÆ¼ÀÄîvÉÛÃªÉ."

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(emphasis supplied by us)

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It is the case of the plaintiff that the defendants 1 to 3 have executed supplementary agreement/extension agreement dated 01^st January, 2007 (Exhibit P2). It appears from Exhibit P2 that the stamp paper was purchased on 15^th March, 2007. Admittedly, Exhibit P2 is also an unregistered document. Perusal of Exhibit P2 indicates that the plaintiff has paid Rs.4,00,000/through Cheque dated 15^th March, 2007 in the name of one of the vendors (defendant No.2). In the said document the period fixed was six months for execution of the registered sale deed. In fact, the defendants 1 to 3 have filed written statement, disputing the execution of the extension agreement-Exhibit P2.

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However, the defendants 1 to 3 have not contested the case and not stepped into witness box. At paragraph 4 of the written statement, defendants 1 to 3 stated that the extension agreement (Exhibit P2) is fabricated and invented for the purpose of the suit. It is the case of the defendants 1 to 3 that since the plaintiff failed to take steps to execute the registered sale deed within three months as per Exhibit P1, the defendants 1 to 3 had executed the registered sale deed in favour of defendant No.4 at the instance of plaintiff itself. Examination of the documents Exhibit P1 and P2 would indicate that there is material alteration of extension of six months in Exhibit P2, strangely for the reasons best known to the plaintiff and it relates back to 01^st January, 2007, the date on which the Exhibit P1 was executed. We have carefully appreciated the evidence on record, particularly, PW1 and PW2 with regard to veracity of Exhibit P2. Since the defendants 1 to 3 had taken a plea in the written statement that the said document is concocted and prepared behind their back, we have given our anxious consideration to the conduct of the parties. It is also the case of the defendant No.4 that no such document like Exhibit P1 is

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existing on the date of the execution of the registered sale deed by defendants No.1 to 3 in favour of the defendant No.4. Defendant No.4 has pleaded at paragraph 9 of the written statement that he is a bona fide purchaser for value and without any notice, as both Exhibits P1 and P2 are unregistered documents, and on the other hand, it was pleaded by the defendant No.4 in the written statement at paragraph 7 that there was a transaction between the plaintiff and defendant No.4 and defendant No.4 had purchased certain immovable properties by way of registered sale deed dated 21^st May, 2005 (Exhibit D4) and in pursuance of the same, there was enmity between plaintiff and the defendant No.4. It is also narrated in the written statement by the defendant No.4 that the plaintiff, being not satisfied with the sale transaction with the defendant No.4, has resorted to unlawful demand against the defendant No.4 and such demand made by the plaintiff was rejected by the defendant No.4. These facts would raise a cloud in the mind of the court as the plaintiff has not approached the Court with clean hands. It is also settled principle of law that the relief sought for in the suit is for a specific performance and is a discretionary

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relief to be granted by the Court, taking into consideration the equitable circumstances. Perusal of testimony of PW2-scribe to both the Exhibit P1 and P2, would create a suspicion in the mind of the Court with regard to preparation/execution of the said document, particularly Exhibit P2. No witnesses were examined by the plaintiff to prove the execution of the Exhibit P2. It is not forthcoming from the deposition of PW1 with regard to reason for showing the date as 01^st January, 2007 in Exhibit P2, though the said extension document appears to have been signed by the parties on 15^th March, 2007 as per the version of PW1 and PW2. No cogent reasons were reflected in the evidence of PW1 and PW2. In that view of the matter, we are of the considered view that the plaintiff has not approached the court with clean hands and therefore disentitle from granting equitable relief of specific performance.

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Yet another ground for interfering with the finding recorded by the trial Court that the trial Court, while decreeing the suit in the operative portion of the judgment, ordered as follows:

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“ The Plaintiff herein is directed to deposit the balance sale consideration of Rs.17,50,000/- as per the covenants of sale agreements Ex.P1 and P2, within one month from the date of this order and had to intimate the defendants 1 to 3 about the said deposit. ”

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(underlining by us)

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It is the contention raised by the learned counsel appearing for the appellant that the plaintiff has failed to deposit the balance consideration of Rs.17,50,000/- before the trial Court and not abide by the direction of the trial Court and therefore, the plea of readiness and willingness, as urged by the plaintiff in the plaint, is without any basis and therefore, he contended that the trial Court committed illegality in decreeing the suit. In the background of this contention, we have directed the plaintiff to produce the document to substantiate the compliance of the impugned judgment. In this regard, the plaintiff filed a memo dated 25^th June, 2021 and produced Xerox copies of two cheques bearing No.980849 and 980850 dated 02^nd January, 2012, for sum of Rs.9,00,000/- and Rs.8,50,000/respectively drawn on Canara Bank, Srirangapatna Branch drawn in favour of Principal Civil Judge (Sr. Dn.), S.R. Patna. However,

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the plaintiff has not produced any document that the same was intimated to defendants 1 to 3, particularly, not produced the acknowledgement for having sent the information relating to deposit of the cheques to defendants 1 to 3. Therefore, the contentions raised by the learned counsel appearing for appellant is to be accepted that the plaintiff failed to intimate the defendants 1 to 3 about the deposit of balance sale consideration amount in the Court.

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In the backdrop of these facts and findings, it is relevant to refer the law declared by the Hon'ble Supreme Court in the case of PUSHPARANI S. SUNDARAM AND ORS. VS PAULINE MANOMANI JAMES reported in (2002)9 SCC 582, wherein it is held thus:

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“So far these are being a plea that they were ready and willing to perform their part of the contract is there in the pleading. we have no hesitation to conclude, that this by itself is not sufficient to hold that the appellants were ready and willing in terms of section 16(c) of the specific relief act. this requires not only such plea but also proof of the same. now examining first of the two circumstances, how could mere filing of this suit,

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after exemption was granted could be a circumstance about willingness or readiness of the plaintiff. this at the most could be the desire of the plaintiff to have this property. it may be for such a desire this suit was filed raising such a plea. but section 16(c) of the said act makes it clear that mere plea is not sufficient, it has to be proved.”

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The said dictum was reiterated in the case of MANJUNATH ANANDAPPA URF. v. TAMMANASA & OTHERS reported in (2003)10 SCC 390 and in the case of PUKHRAJ D. JAIN & ORS v. G. GOPALAKRISHNA r eported in (2004)7 SCC 251. Recently, the Hon'ble Supreme Court, in the case of C.S. VENKATESH v. A.S.C. MURTHY reported in (2020)3 SCC 280, reiterating the principles laid down in the aforementioned cases with regard to “ready and willingness” and conduct of the parties to perform the contract, held that the pleadings plays an important role in the suit of specific performance. It is held that, parties to the contract, right from the date of execution of the contract till the date of decree must prove with cogent evidence that they were ready and willing to perform their part of contract in entirety and it is the duty of the trial Court to infer from the

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facts and circumstances of each case on merits. In this regard, it is relevant to extract the observation made at paragraphs 14 and 16 of the judgment, which read as under:

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“ 14. It is settled that the real character of the transaction has to be ascertained from the provisions of the documents view in the light of surrounding circumstances. …

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*** *** ***

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16. The words “ready and willing” imply that the plaintiff was prepared to carry out those parts of the contract to their logical end so far as they depend upon his performance. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of performance. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of contract, the court must take into consideration the conduct of the plaintiff prior, and subsequent to the filing of the suit along with other attending circumstances. The amount which he has to pay the defendant must be of necessity to be proved to be available. Right from the date of the execution of the contract till the date of decree, he must prove that he is ready and willing to perform his part of the contract. The court may infer from the facts and circumstances whether the plaintiff was ready and was already ready to perform his contact. ”

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We have also examined the evidence of PW1 and PW2 in consonance with Exhibit P2, whereunder there is no evidence of any kind produced by the plaintiff to establish this particular document-Exhibit P2 and the essential term of the contract seeking extension of time for further period of six month from 15^th March, 2007 is an after thought. That apart, pleadings of the defendants No.1 to 3 and the defendant No.4 would indicate that the Exhibit P2 is a concocted and created by the plaintiff for the purpose of the suit and in this regard, no explanation found in the evidence of PW1 and PW2. Independent of this aspect, we have carefully considered the entire facts on record in which the conduct of the plaintiff was suspicious in nature and therefore, the plaintiff is not entitled for discretionary and equitable relief of specific performance. We have also gathered from the records that the defendant No.4 took a plea, both in the written statement and evidence, that the plaintiff and defendants 1 to 3 have colluded with each other and this aspect of elucidated in the evidence of DW1 and undisputably, defendants 1 to 3, though have made allegation and taken a serious plea against

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the plaintiff, however, did not contest the case on merits as required under Section 101, 106 and 145 of the Evidence Act. It is the settled principle of law that where a party to the suit does not appear in witness box and state his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise against him (see (2010)10 SCC 512). That apart, agreement of sale i.e. Exhibits P1 and P2 are the unregistered documents, particularly, Exhibit P2 was produced with suspicious circumstances by the plaintiff and in such cases, the trial Court ought to have dismissed the suit. It is settled principle of law that the trial Court shall give cogent reasons on appreciation of evidence on record, including appreciating the documents. If the material on record or relevant evidence not considered or when findings arrived at by relying on inadmissible evidence by the trial Court, it is the duty of the first Appellate Court exercising power under Order XLI Rule 31 of the Code of Civil Procedure, to interfere with the findings recorded by the trial Court. In this regard, it is pertinent to refer to the judgment of the Hon'ble Supreme Court the case of SANTHOSH HAZARI v. PURUSHOTTAM TIWARI reported in AIR 2001 SC 965,

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wherein at paragraph 14 of the judgment the Hon'ble Supreme Court has observed as under:

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“14. A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be substantial, a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, in so far as the rights of the parties before it are concerned. To be a question of law involving in the case there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis.”

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Recently, Hon'ble Supreme Court in the case of MALLURU MALLAPPA (DEAD) THROUGH LRs v. KURUVATHAPPA

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AND OTHERS reported in (2020)4 SCC 313, had an occasion to interpret Order XLI Rule 31 of Code of Civil Procedure at paragraphs 13 to 18 held thus:

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“13. It is a settled position of law that an appeal is a continuation of the proceedings of the original court. Ordinarily, the appellate jurisdiction involves a re-hearing on law as well as on fact and is invoked by an aggrieved person. The first appeal is a valuable right of the appellant and therein all questions of fact and law decided by the trial court are open for re-consideration. Therefore, the first appellate court is required to address itself to all the issues and decide the case by giving reasons. The court of first appeal must record its findings only after dealing with all issues of law as well as fact and with the evidence, oral as well as documentary, led by the parties. The judgment of the first appellate court must display conscious application of mind and record findings supported by reasons on all issues and contentions [see: Santosh Hazari v. Purushottam Tiwari (Deceased) By Lrs., Madhukar and others v. Sangram and Others, B. M. Narayana Gowda v. Shanthamma (Dead) By Lrs. and Another, H. K. N. Swami v. Irshad Basith (Dead) By Lrs. and M/s. Sri Raja Lakshmi Dyeing Works v. Rangaswamy Chettiar]. (2001) 3 SCC 179 (2001) 4 SCC 756 (2011) 15 SCC 476 (2005) 10 SCC 243 (1980) 4 SCC 259.

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14. A first appeal under Section 96 of the CPC is entirely different from a second appeal under Section 100. Section 100 expressly bars second appeal unless a question of law is involved in a case and the question of law so involved is substantial in nature.

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15. Order XLI Rule 31 of the CPC provides the guidelines for the appellate court to decide the matter. For ready reference Order XLI Rule 31 of the CPC is as under: -

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“31. Contents, date and signature of judgment.- The judgment of the Appellate Court shall be in writing and shall state—

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(a) the points for determination;

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(b) the decision thereon;

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(c) the reasons for the decision; and

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(d) where the decree appealed from is reversed or varied, the relief to which the appellant is entitled;

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and shall at the time it is pronounced be signed and dated by the Judge or by the Judges concurring therein.”

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16. In Vinod Kumar v. Gangadhar this Court has reiterated the principles to be borne in mind while disposing of a first appeal, as under:-

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“15. Again in B.V. Nagesh v. H.V. Sreenivasa Murthy [(2010) 13 SCC 530 : (2010) 4 SCC (Civ)

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808], this Court taking note of all the earlier judgments of this Court reiterated the aforementioned principle with these words:

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“3. How the regular first appeal is to be disposed of by the appellate court/High Court has been considered by this Court in various decisions. Order 41 CPC deals with appeals from original decrees. Among the various rules, Rule 31 mandates that the judgment of the appellate court shall state:

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(a) the points for determination;

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(b) the decision thereon;

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(c) the reasons for the decision; and

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(d) where the decree appealed from is reversed or varied, the relief to which the appellant is entitled.

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4. The appellate court has jurisdiction to reverse or affirm the findings of the trial court. The first appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. The judgment of the appellate court must, therefore, reflect its conscious application of mind and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate court. Sitting as a court of first appeal, it was the duty of the High Court to deal with all the issues and the evidence led by the parties before recording its findings. The first appeal is a valuable right and the parties have a right to be heard

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both on questions of law and on facts and the judgment in the first appeal must address itself to all the issues of law and fact and decide it by giving reasons in support of the findings. (vide Santosh Hazari v. Purushottam Tiwari [(2001) 3 SCC 179 : (2001) 1 SCR 948]; and Madhukar v. Sangram [(2001) 4 SCC 756]”

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17. In Shasidhar and Ors. v. Ashwani Uma Mathad and Anr., it was held as under:-

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“21. Being the first appellate court, it was, therefore, the duty of the High Court to decide the first appeal keeping in view the scope and powers conferred on it under Section 96 read with Order 41 Rule 31 of the Code mentioned above. It was unfortunately not done, thereby, causing prejudice to the appellants whose valuable right to prosecute the first appeal on facts and law was adversely affected which, in turn, deprived them of a hearing in the appeal in accordance with law.”

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18. It is clear from the above provisions and the decisions of this Court that the judgment of the first appellate court has to set out points for determination, record the decision thereon and give its own reasons. Even when the first appellate court affirms the judgment of the trial court, it is required to comply (2015) 11 SCC 269 with the requirement of Order XLI Rule 31 and nonobservance of this requirement leads to infirmity in the judgment of the first appellate court. No doubt, when the appellate court agrees with the views of the trial court on evidence, it need not restate effect of evidence or

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reiterate reasons given by trial court. Expression of a general agreement with the reasons given by the trial court would ordinarily suffice.”

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Keeping in mind the principles laid down by the Hon'ble Supreme Court stated supra, we have carefully reappreciated the evidence on record, particularly PW1, in the light of Exhibits P1 and P2 and on careful examination, there is discrepancy in the period specified in the document i.e. Exhibit P1, and later, same was improved and rectified in Exhibit P2, extending for a further period of six months for execution of the registered sale deed from 15^th March, 2007. However, the date of the document stated in the recital was, 01^st January, 2007. In these facts on record, the defendants No.1 to 3 have pleaded in the written statement that Exhibit P2 is a concocted document and same was reiterated by defendant No.4 in his pleading and evidence. PW1 fails to provide cogent reasons regarding execution of Exhibit P2. For these reasons, we are of the view that the conduct of the plaintiff is questionable with regard to grant of equitable relief.

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The Division Bench of this Court in the case of SRI PUNNY AKAT PHILIP RAJU SINCE DEAD BY HIS LRs v. SRI DINESH REDDY reported in ILR 2016 KAR 2252 at paragraph 32, 33 and 34, observed thus:

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“32. The proof of readiness necessarily means demonstration of financial ability or capacity to pay the balance sale consideration and take the sale deed. When a person on oath states in the witness box that he is ready with the requisite funds, he must produce some evidence to prove his possession of the required funds. The explanation makes it clear that the proof of requisite funds does not mean he should produce the currency before the Court or he should deposit the money in Court. But at the same time, mere statement on oath in the witness box that he is possessed of the requisite funds would also do not prove possession of funds. The said proof has to be necessarily by way of documentary evidence. The reason being, if, the payment is to be made in case i.e., by handing over currency, currency is a documentary evidence. The explanation makes it clear that to prove readiness, the plaintiff need not produce the currency before the Court. If the balance consideration is to be deposited in the Court such a deposit is also evidenced by documentary evidence, which is also not necessary by virtue of the explanation.

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33. Money does not exist in vacuum. Money has to be necessarily in the form of physical object. It is in the nature of document. Money is deposited in banks. Money is in the nature of securities. Money is capable of being raised from borrowing. Money could be raised by sale of properties movable or immovable. When a person claims that he is possessed of sufficient funds, he has to produce some documentary evidence, which proves his capacity to raise the funds or he possess the funds. What are the documents which, the plaintiff can produce to prove his capacity' It may be a passbook issued by a Bank where he has kept the balance sale consideration ready for payment. If he has invested his money by way of securities, he has to produce those securities before Court to show that any time he can encash the same and pay the balance consideration. Similarly, if he has kept the money in Fixed Deposit, in a Bank, that deposit receipt is the proof of his ability to raise the balance sale consideration. If he intends to borrow money from a Nationalized Bank or from his employer or from any other financial institution, it has to be demonstrated by producing a request for such financial assistance in writing, sanctioning of the said loan which has to be necessarily in writing. These instances are only illustrative. There may be several other modes by which the requisite funds are raised. But all of these instances are evidenced by documentary evidence.

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34. Therefore, mere stepping into the witness box and saying on oath that he is ready with the balance sale consideration or that he is going to borrow money from any financial institution or that he has got sufficient funds in his Bank accounts or that he has kept money in Fixed Deposit, without that oral evidence being supported by documentary evidence will not prove the plaintiff’s readiness to pay the balance sale consideration. It is material whether such oral evidence is challenged in cross-examination or not. The plaintiff has to prove to the satisfaction of the Court that he possessed the requisite funds. He has to produce such documentary evidence, which would enable the Court to come to the conclusion that plaintiff is ready with the requisite balance sale consideration to complete the sale transaction. If no evidence is adduced in this regard by way of documentary evidence, no prudent man would come to the conclusion that the person has proved the possession of funds. In the absence of any such documentary evidence being produced, it is a case of plaintiff’s case being not proved. Plaintiff cannot expect the Court to pass a decree for specific performance of a contract of sale when the plaintiff has not proved his readiness to perform his part of the contract.”

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The Hon'ble Supreme Court in the case of RAVI SETIA

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v. MADANLAL AND OTHERS reported in (2019)9 SCC 381

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wherein at paragraph 9 and 10 of the judgment, has observed thus:

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“9. There can be no straight jacket formula with regard to readiness and willingness. It will have to be construed in the facts and circumstances of each case in the light of all attending facts and circumstances. We are of the considered opinion, that in the facts and circumstances of the present case, the failure of the plaintiff to offer any explanation why the balance consideration was not deposited within the time granted, the filing of the application for extension of time after expiry of the prescribed period coupled with the frivolousness of the grounds taken in the application for extension that the money would lie in the bank without earning interest, are all but evidence of incapacity on part of the plaintiff to perform his obligations under the agreement and reflective of lack of readiness and willingness. He preferred to wait and abide by the gamble of a favourable decision in the first appeal.

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10. The grant of relief for specific performance under Section 16 (1)(c) of the Act is a discretionary and equitable relief. Under Section 16 (1)(c), the plaintiff has to demonstrate readiness and willingness throughout to perform his obligations under the contract. The plea that the amount would lie in the bank without interest is unfounded and contrary to normal banking practice. To our mind, this is sufficient evidence of the incapacity or

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lack of readiness and willingness on part of the plaintiff to perform his obligations. Undoubtedly, the time for deposit could be extended under Section 28 of the Act. But the mere extension of time for deposit does not absolve the plaintiff of his obligation to demonstrate readiness and willingness coupled with special circumstances beyond his control to seek such extension. The plaintiff did not aver in the application that he was ready and willing to perform his obligations and was prevented from any special circumstances from doing so. The pendency of an appeal by the defendant did not preclude the plaintiff from depositing the amount in proof of his readiness and willingness. Readiness has been interpreted as capacity for discharge of obligations with regard to payment. The High Court has rightly observed that there was no stay by the Appellate Court of the decree under appeal to justify non-deposit during the pendency of the appeal. The grant of extension of time cannot ipso facto be construed as otherwise demonstrating readiness and willingness on part of the plaintiff. The plaintiff was required to plead sufficient, substantial and cogent grounds to seek extension of time for deposit because otherwise it becomes a question of his conduct along with all other attendant surrounding circumstances in the facts of the case. We therefore find no infirmity in the order of the High Court concluding that the plaintiff in the facts and circumstances was not ready and willing to perform his obligations.”

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It is also useful to refer to the judgment of the Hon'ble Supreme Court in the case of RITU SAXENA v. J.S. GROVER AND OTHER reported in (2019) 9 SCC 132 wherein at paragraphs 14 and 15 of the judgment, it is held thus:

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“ 14) We do not find any merit in the present appeals. The judgment in A. Kanthamani was in an appeal filed by the defendant against the concurrent finding of fact recorded by the courts below granting decree of specific performance of the Agreement. This Court has not interfered with the findings of fact recorded even after re-appreciation of evidence.

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15) Coming to the facts of the present case, the sole document relied upon by the appellant to prove her readiness and willingness is the approval of loan on July 30, 2004 by the ICICI. Such approval was subject to two conditions, viz., furnishing of income tax documents of the appellant and the property documents. M/s. ICICI has sent an Email on May 12, 2005 to the husband of the appellant requiring an Agreement to Sell on a stamp paper of Rs.50/- to be executed between the parties, as per the legal opinion sought from the empaneled lawyer, without which ICICI will not be able to disburse the loan. Admittedly, no agreement was executed on stamp paper,

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therefore, the appellant could not avail loan of Rs.50 lakh from ICICI. Independent of such loan, there is mere statement that appellant and her husband have income of Rs.80 lakhs per annum unsupported by any documentary evidence. Such statement will be in the nature of ipsi dixit of the appellant and/or her husband and is without any corroborating evidence. Such self- serving statements without any proof of financial resources cannot be relied upon to return a finding that the appellant was ready and willing to perform her part of the contract. The appellant has not produced any income tax record or the bank statement in support of her plea of financial capacity so as to be ready and willing to perform the contract. Therefore, mere fact that the bank has assessed the financial capacity of the appellant while granting loan earlier in respect of another property is not sufficient to discharge of proof of financial capacity in the facts of the present case to hold that the appellant was ready and willing to perform her part of the contract. Such is the finding recorded by both the courts below as well. ”

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Perusal of the record would further indicate that the defendant No.4 has purchased the suit schedule property on 30^th June, 2007 as per Exhibit P10. The agreement of sale Exhibits P1 and P2 relied upon by the plaintiff is an unregistered document, undisputably. In the circumstances of the case, the

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hardship caused to the defendant No.4 has to be borne in mind in the peculiar circumstances of the case on hand. It cannot be ruled out that both the plaintiff and defendants 1 to 3 are from the same village and defendant No.4 is an outsider. In that view of the matter, is useful to refer to the judgment of the Hon'ble Supreme Court in the case of PRAKASH CHANDRA v. NARAYAN reported in (2012)5 SCC 403, wherein the Hon'ble Supreme Court had an occasion to deal with decree of specific performance in case of hardship.

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Though the learned counsel appearing for the respondent/plaintiff contended that the defendant No.4, in person, has not stepped into the witness box to prove the averments made in the written statement, however it is settled principle of law that the weakness of the defendant’s case cannot be a basis for decreeing in the suit. This view of ours is fortified by the law declared by the judgment of the Hon'ble Supreme Court in the case of RATNAGIRI NAGAR PARISHAD v. GANGARAM NARAYAN AMBEKAR AND OTHERS reported in (2020)7 SCC 275, wherein it is held that the weakness in the

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defence cannot be the basis to grant relief to the plaintiffs and to shift the burden on the defendants, as the case may be and in the light of the above dictum, the judgment referred to by the learned counsel for the plaintiff cannot be accepted.

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Apart from this it is settled principles of law that the discretionary relief has to be granted, considering the nature of the relief sought for in the suit as well as on evaluation of the conduct of the parties, Courts must weigh the hardship to be caused to the either of the parties. In the instant case, admittedly the conduct of the plaintiff, has to be judged in the light of the Exhibit P2. As stated supra, execution of the Exhibit P2 itself is doubtful in nature and the plaintiff has not proved the same with cogent evidence and therefore, the trial Court ought to have rejected the relief sought for in this suit. Grant of decree for specific performance is at the discretion of the Court and exercise of discretion is subject to justice, equity and good conscience. It is the duty of the Court not to decree the suit for specific performance by exercising its discretion when it gives an unfair advantage over the defendant and also performance of

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the contract would involve some hardship on the defendant which he did not foresee. In the factual aspects of the case, undisputably Exhibits P1 and P2 were executed on unregistered stamp paper with suspicious circumstances fixing the date of performance and as such, there was no concluded contract. In the light of the foregoing reasons, we are of the considered view that the appeal requires to be allowed, setting aside the judgment and decree passed by the trial Court, consequently dismiss the suit of the plaintiff. The trial Court has not appreciated the evidence of the parties as required under law and the impugned judgment and decree passed by the trial Court is contrary to the law declared by this Court and Apex Court stated above and the trial Court decreed the suit without evaluating the evidence in the right perspective, accordingly, the appeal deserves to be allowed. Hence, the following:

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O R D E R

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