Allowed

Smt. P. Mallika v. Sri. N.J. Ganesh

Karnataka HC23 Aug 2021RSA/1392/2016

Case brief

AI extract

What is this about?

The Court allowed the second appeal, holding that the plaintiff failed to prove readiness and willingness to complete the sale transaction within the stipulated time because the balance consideration was deposited only after the suit was filed at the first instance, in violation of Section 16(c) of the Specific Relief Act.

What did the court decide?

Set aside the judgment and decree of courts below; dismiss the suit for specific performance.

Smt. P. Mallika Vs Sri. N.J. Ganesh — Specific Performance | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 23^RD DAY OF AUGUST, 2021

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BEFORE

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THE HON’BLE MR. JUSTICE E.S. INDIRESH

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REGULAR SECOND APPEAL NO.1392 OF 2016

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BETWEEN:

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Smt. P Mallika Aged about 64 years W/o Sri Prabha @ Prabhakar

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Smt. Rathna Aged about 41 years W/o Sri Babu

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Sri P Bhaskar Aged about 39 years S/o Sri Prabha @ Prabhakar

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All are residing at No.195 New No.202/B, “Anugraha Nilaya” 5^th Main Road, 6^th Cross RPC Layout Bengaluru-560 040.

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…Appellants

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(by Sri Y K Narayana Sharma, Advocate)

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AND:

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Sri N J Ganesh Aged about 56 years S/o Sri Jagannathan Chettiyar R/at Flat No.7, III Floor Building No.7, Kalidasa Circle Bengaluru-560 009.

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…Respondent

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(by Sri Sharath Kumar Shetty, Advocate)

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This Regular Second Appeal is filed under Section 100 Read with order XLII Rule 1 of Code of Civil Procedure against the judgment and decree dated 15.04.2016 passed in Regular Appeal No.52 of 2011 on the file of the Senior Civil Judge and CJM, Chamarajanagar, dismissing the appeal and filed against the judgment and decree dated 02.11.2011 passed in OS No.120 of 2008 on the file of the Principal Civil Judge and JMFC, Chamarajanagar.

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This Appeal coming on for Admission, this day, the Court delivered the following:

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JUDGMENT

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This appeal is filed by the defendant challenging the judgment and decree dated 15^th April, 2016 passed in Regular Appeal No.52 of 2011 on the file of Senior Civil Judge and CJM, Chamarajanagar, confirming the judgment and decree dated 02^nd November, 2011 passed in OS No.120 of 2008 on the file the Principal Civil Judge and JMFC, Chamarajanagar, decreeing the suit of the plaintiff.

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

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It is the case of the plaintiff that defendant No.1 is the absolute owner of the schedule property and the defendants have agreed to sell the suit schedule property for a total consideration of Rs.3,60,000/- and out of the said amount, the

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defendants have received Rs.60,000/- for the purpose of legal necessities. It is further averred in the plaint that on 06^th May, 2007, defendants have received further amount of Rs.1,20,000/through cheque in respect of the subject matter of agreement of sale. It is further stated in the plaint that the defendants have received total amount of Rs.1,80,000/- and agreed to receive balance sale consideration of Rs.1,80,000/- and to execute the registered sale deed in favour of the plaintiff within fifteen days from the date of order of the Government for registration of the document. It is further stated in the plaint that the plaintiff was ready and willing to perform his part of the contract, however, the defendants failed to complete the sale transaction and as such, the plaintiff has issued legal notice dated 17^th March, 2008 calling upon the defendants to execute the registered sale deed and pursuant to the same, the defendants have made a evasive reply and thereafter, the plaintiff has caused another notice dated 31^st March, 2008 to the defendants. It is further averred in the plaint that the defendant No.1 has executed registered gift deed in favour of defendant No.2 to avoid the completion of the registered sale deed in favour of the plaintiff and therefore, the plaintiff has filed OS No.120 of 2008 on the file of the trial Court,

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seeking relief of specific performance of the contract dated 06^th May, 2007.

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After service of notice, defendants entered appearance and filed written statement denying the averments made in the plaint. It is the defence of the defendants that fifteen days time was granted for execution of registered sale deed, however, the plaintiff did not mobilize funds to complete the registration of sale deed and as such, the defendants pleaded that the plaintiff fails to prove readiness and willingness to perform his part of the contract. It is also the case of the defendants that there is discrepancy in the execution of the agreement of sale and therefore, denied the execution of the sale agreement and accordingly, sought for dismissal of the suit. The trial Court, based on the pleadings on record has formulated the following issues for its consideration:

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“ 1. Whether the plaintiff proves that the defendants have entered into an agreement of sale on 06.05.2007 regarding suit schedule property by agreeing to sell the same for valuable consideration of Rs.3,60,000/-?

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2. Whether the plaintiff proves that the defendants have received a total sum of Rs.1,80,000/- towards advanced by sale consideration?

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3. Whether the plaintiff proves that he was always ready and willing to perform his part of the contract?

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4. Whether the defendant prove that the gift deed executed by 1^st defendant on 10.03.2008 in favour of 2^nd defendant is bonafide?

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5. Whether the defendants prove that 2^nd defendant has no other property except the suit schedule property and hence it is required for her bonafide use?

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6. Whether the plaintiff is entitled for the relief of specific performance?

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What Order or Decree? ”

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In order to prove their case, plaintiffs have examined

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three witnesses as PWs.1 to 3 and produced 30 documents and same were marked as exhibits P1 to P30. Defendant No.3 was examined as DW1 and produced 7 document sand same were marked as Exhibits D1 to D7. The trial Court after considering the material on record, by its judgment and decree dated 2^nd

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November, 2011, decreed the suit of the plaintiff and as such, directed the defendants 1 to 3 to execute the register sale deed in favour of the plaintiff. Being aggrieved by the judgment and decree passed by the trial Court, defendants have preferred Regular Appeal No.52 of 2011 on the file of the First Appellate Court and same was resisted by the plaintiff. The First Appellate Court, after re-appreciating the material on record, by its judgment and decree dated 15^th April, 2016 dismissed the appeal and as such confirmed the judgment and decree passed by the trial Court. Being aggrieved by the same, the defendants have preferred this Regular Second Appeal.

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I have heard Sri Y.K. Narayana Sharma, learned counsel appearing for the appellant and Sri Sharath Kumar Shetty Learned counsel appearing for the respondents.

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Sri Y.K. Narayan Sharma, learned counsel appearing for the appellant contended that both the courts below have not considered the fact that the defendants have disputed the execution of the agreement of sale dated 06^th May, 2007 and the finding recorded by both the courts below is contrary to Section 16(c) of Specific Performance Act. He further contended that the plaintiff was working as a Chief Manger in the Bank and was well

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acquainted with the transaction, however, the defendant No.1 is a widow and, both the courts below, have not considered the hardship so caused to the defendants if the suit for specific performance is decreed in favour of the plaintiff. In this regard, he places reliance on the judgments of the Apex Court in SUKHWINDEDR SING JAGROOP SINGH reported in AIR 2020 SC 4865 ; in A.C. ARULAPPAN v. SMT. AHALYA NAIK reported in AIR 2001 SC 2783; in BAL KRISHNA AND ANOTHER v. BHAGWAN DAS BY LRs AND OTHERS reported in AIR 2008 SC 1786; in SHAMSER SINGH AND OTHERS v. RAJINDER KUMAR AND OTHERS reported in AIR 2014 SC 2253 and contended that the finding recorded by both the courts below is contrary to the law declared by the Apex Court in the aforementioned cases.

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Per contra, Sri Sharath Kumar Shetty, Learned counsel appearing for the respondent submitted that both the courts below, on facts, have concurrently held against the appellant and same cannot be disturbed in this appeal. He further contended that the perusal of the bank statement referred to in Exhibits P10 and P11 would clearly establish the fact that the plaintiff had requisite source of income to complete the entire transaction on terms of the agreement to sale and therefore, the finding

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recorded by both the courts below are just and proper and no interference is called for in this appeal.

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Having heard the learned counsel appearing of the parties, I have carefully considered the finding recorded by the both the courts below and perused the records. In the light of the submission made by the learned counsel appearing for the parties, the following substantial question of law would arise for consideration in this appeal:

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Whether the plaintiff is entitled for relief of specific performance of contract dated 06^th May, 2007?

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Whether the judgment and decree passed by the courts below are sustainable under law?

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It is the case of the plaintiff that he has entered into an agreement of sale dated 06^th May, 2007 with the defendant No.1, being a owner of the suit schedule property. However, the said agreement of sale dated 06^th May, 2007, is an unregistered document. It is the case of the defendant that there were certain loan transactions between the plaintiff and defendants and in this regard, the defendants have given certain documents and signed blank sheets, as a security to the said loan. In the

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background of the aforementioned contention, perusal of Exhibit P1 would indicate that fifteen days time was granted to the defendants to execute the registered sale deed after the commencement of registration by the Government. The plaintiff has paid Rs.1,80,000/- out of total sale consideration of Rs.3,60,000/-, and had agreed to pay the balance on the date of execution of registered sale deed. In this regard, it is apt to refer that page 2 of the agreement of sale was struck off by the parties, which do not contain any signature and same was disputed by the defendants. Though the agreement to sale Exhibit P1 was executed on 06^th May, 2007, it is the case of the defendant that there was no impediment for execution of registered sale deed by the plaintiff. In order to disprove that the plaintiff has no sufficient balance to meet the total consideration amount, the defendants placed reliance on Exhibits P12 and P13, which were the absolute sale deeds executed on 16^th August, 2003, and same was denied by the plaintiff. In this connection, it is relevant to extract paragraph 4 of the legal notice dated 17^th March, 2008 Exhibit P2. The same reads as under:

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“My client was always ready and willing to perform his part of the contract and he was ready and willing to make payment of balance of sale consideration of sum ofRs.1,80,000/- and to get the sale deed registered in favour of my client at the cost of my client.”

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In reply to the said notice Exhibit P4, at paragraph 4 of the reply notice dated 28^th March, 2008, the defendants have contended that the plaintiff, got postponed the execution of sale deed on the ground of insufficiency of funds to meet the balance sale consideration. In response to the reply notice (Exhibit P4), plaintiff has issued rejoinder dated 31^st March, 2008 (Exhibit P5), wherein paragraph 4 reads as under:

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“My client was always ready and willing to perform his part of the Contract and my client was always ready and willing to pay the balance of sale consideration due under the Agreement of Sale dated 06.05.2007 to your client and only your client and only your clients kept on postponing the execution of the sale deed in favour of my client.”

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In order to ascertain whether the plaintiff has proved that he was always ready and willing to complete the sale transaction, I have noticed the Exhibit P10-Statement of Account of Ashoknagar Co-operative Bank Limited from 09^th January, 2007 to 31^st March, 2008. Undisputably, the plaintiff has no

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sufficient fund of sum of Rs.1,80,000/- to meet the total consideration amount. As on the date of 31^st March, 2008, the bank balance was Rs.280.43. I have also noticed Exhibit P11, the statement of State Bank of India from the period 18^th December, 2007 to 11^th April 2008. Perusal of Exhibit P11 would indicate that the plaintiff deposited to Rs.1,80,000/- on 11^th April 2008 in the Bank. Accordingly, as on 11^th April, 2008 he had sufficient funds to meet the sale transaction amount and therefore, perusal of Exhibits P10 and P11 would clearly indicated that the plaintiff has no sufficient amount to meet the sale transaction amount of RS.3,60,000/- till 11^th April, 2008. In this regard, the law declared by the Apex Court in the case of SUKHWINDER SINGH (supra) is relevant. The Hon'ble Supreme Court at paragraphs 9 to 12 of the judgment, has observed thus:

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“ 9. The suit being the one for specific performance

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of the contract on payment of the balance sale consideration, the readiness and willingness was required to be proved by the plaintiff and was to be considered by the Courts below as a basic requirement if a decree for specific performance is to be granted. In the instant case though the defendant No.2 had denied the agreement as also the receipt of the earnest money, the same would not be of consequence as the agreement claimed by the plaintiff is with the defendant No.1 and the contention of

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the defendant No.2 to deny the same is without personal knowledge on that aspect. However, even in the absence of the defence put forth, the plaintiff was required to prove his readiness and willingness and that aspect of the matter was to be considered by the Courts below. In the present case though the plaintiff examined himself as PW1, as also PW2 and PW3, the document writer, and the witness to the agreement who stated with regard to the execution of the agreement, the evidence to prove the readiness and willingness with regard to the resources to pay the balance sale consideration is insufficient. In the absence of denial by the defendant No.1, even if the payment of Rs.69,500/ and the claim by the plaintiff of having gone to the office of Sub-Registrar on 15.06.2004 is accepted, the fact as to whether the plaintiff had notified the defendant No.1 about he being ready with the balance sale consideration and calling upon the plaintiff to appear before the Sub-Registrar and execute the Sale Deed was required to be proved. From among the documents produced and marked as Exhibit P1 to P9 there is no document to that effect, more particularly to indicate the availability of the balance sale consideration as on 15.06.2004 and as on the date of filing the suit. Despite the same, merely based on the oral testimony of PW1, the Courts below have accepted the case put forth by the plaintiff to be ready and willing to complete the transaction.

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10. Instead of arriving at an appropriate conclusion on that aspect, the Trial Court while answering the issues No.1 and 2 has concluded that the amount of sale

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consideration has already been paid and the fact that the Civil Suit has been filed by the plaintiff are sufficient to establish that the plaintiff remained ready and willing to perform his part of the contract. On the other hand, it is noticed that what had been paid as on the date of filing the suit was only the earnest money and the balance amount was deposited only on 03.08.2007 after the suit was decreed at the first instance on 14.06.2007 and not as on the date of filing the suit. Hence the concurrent conclusion reached by all the three Courts is an apparent error, the correction of which is necessary. It is no doubt true that as on the date of decision for the second time after restoration, the amount had been deposited which is not the same as having deposited or paid prior to or at the time of filing the suit. Even if the amount had been deposited as on the date of filing the suit, the readiness and willingness with possession of the sale consideration as on 15.06.2004 was necessary to be proved, which has not been done. Hence, in our opinion the Courts below have not appropriately considered this aspect of the matter.

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11. Further, in a circumstance where the defendant No.2 had contested the suit and had put forth the contention that he was a bonafide purchaser without notice and through his evidence had deposed that he had no knowledge of agreement entered into between the defendant No.1 and defendant No.2, that aspect required appropriate consideration. However, the Courts below have on the contrary concluded that the defendants No.1 and 2 being of the same village, the defendant No.2

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would have knowledge of the agreement entered into by the defendant No.1 in favour of the plaintiff. Such conclusion is only an assumption and there is no evidence with regard to the knowledge of defendant No.2 even if he was from the same village. In addition, the Lower Appellate Court has concluded that since the defendant No.1 has not caused appearance in spite of notice having been issued and he not being examined as a witness it could be gathered that there is connivance amongst the defendants to defeat the rights of the plaintiff. Such assumption is also not justified since the defendant No.2 had purchased the property for a consideration under a registered document and the defendant No.2 was also put in possession of the property. In that circumstance the defendant No.1 who had lost interest in the property, if had not chosen to appear and defend the suit the same cannot be a presumption of connivance in the absence of evidence to that effect.

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12. In the background of the above consideration, the plaintiff in any event was not entitled to a decree for specific performance and possession of the property against the defendant No.1. In the circumstance the declaration of the Sale Deed dated 11.06.2004 executed by the defendant No.1 in favour of the defendant No.2 to term the same as null and void as claimed by the plaintiff also did not arise. Despite the said position what is necessary to be taken note is that the sale in favour of the defendant No.2 was on 11.06.2004 i.e. subsequent to the date of the suit agreement dated 03.01.2004. Despite holding that the defendant No.2 is a bonafide

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purchaser, what cannot be lost sight is that the defendant No.1 had received a sum of Rs.69,500/ from the plaintiff as far back as on 03.01.2004. That apart if the transaction was concluded at that stage the plaintiff would have been entitled to the benefit of the land. Even as per the ground at (Para x) raised by the defendant No.2 in this appeal, it would indicate that there has been considerable appreciation in the market price. Though in the normal circumstance the return of the advance received and the compensation for denial of the property was to be paid by the defendant No.1, as noted, the defendant No.1 having lost interest in the property has not appeared in the instant proceedings nor is there any material to indicate that he has benefited from the appreciation since even as per the contention of the plaintiff he has sold the property for a lesser price. In that situation the plaintiff cannot be left ‘high and dry’. If that be the position the defendant No.2 who has benefited from the property will have to repay the advance and compensate the plaintiff in the peculiar facts of the instant case. In that circumstance the defendant No.2 (the appellant herein) is required to be directed to pay a sum of Rs.3,50,000/ only which is inclusive of the advance amount of Rs.69,500/ to the plaintiff (the respondent No.1 herein) in full quit of all claims. The said amount is also to be directed to be paid by the defendant No.2 to the plaintiff within a period of three months failing which the same should carry interest at 12% per annum till payment. The plaintiff should also be entitled to withdraw the amount of Rs.70,500/ stated to have been deposited by him before the Trial Court.

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In the case of NARINDER KUMAR MALIK (supra), the

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Hon'ble Supreme Court at paragraphs 30 and 31 of the judgment, has observed thus:

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“ 30. The respondent sent the photocopies of three pay orders two of which were for a sum of Rs.1 crore each and the third one for a sum of Rs.1.25 crore. It was neither here nor there as the originals were never tendered to the appellant and only photocoies were sent to make a semblance that respondent has been ready and willing to perform his part of the contract. When MOU had already been arrived at between the parties then mere show of readiness and willingness would not discharge the obligation resting on one of the parties unless it is shown to be real and genuine.

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31. From the conduct, behaviour and attitude of the respondent it is clearly made out that he had not been ready and willing to perform his part of the contract as mentioned in the MOU. ”

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In the case of BAL KRISHNA AND ANOTHER (supra) at

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paragraph 8 of the judgment, it is observed thus:

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“ 8. Section 16 of the Specific Relief Act, 1963 (hereinafter referred to as � the Act � ) corresponds with Section 24 of the old Act of 1877 which lays down that the person seeking specific performance of the contract, must file a suit wherein he must allege and prove that he has performed or has been ready and

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willing to perform the essential terms of the contract, which are to be performed by him. The specific performance of the contract cannot be enforced in favour of the person who fails to aver and prove his readiness and willingness to perform essential terms of the contract. Explanation (ii) to clause (c) of Section 16 further makes it clear that plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction. The compliance of the requirement of Section 16(c) is mandatory and in the absence of proof of the same that the plaintiff has been ready and willing to perform his part of the contract suit cannot succeed. The first requirement is that he must aver in plaint and thereafter prove those averments made in the plaint. The plaintiff � s readiness and willingness must be in accordance with the terms of the agreement. The readiness and willingness of the plaintiff to perform the essential part of the contract would be required to be demonstrated by him from the institution of the suit till it is culminated into decree of the court. It is also settled by various decisions of this Court that by virtue of Section 20 of the Act, the relief for specific performance lies in the discretion of the court and the court is not bound to grant such relief merely because it is lawful to do so. The exercise of the discretion to order specific performance would require the court to satisfy itself that the circumstances are such that it is equitable to grant decree for specific performance of the contract. While exercising the discretion, the court would take into consideration the circumstances of the case, the conduct of parties, and their respective interests under

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the contract. No specific performance of a contract, though it is not vitiated by fraud or misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee. In other words, the court � s discretion to grant specific performance is not exercised if the contract is not equal and fair, although the contract is not void. ”

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Perusal of the aforementioned judgments of the Apex

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court would establish that the plaintiff-intending purchaser, in the agreement of sale, must also be ready and willing to perform his part of the contract and must have shown before the court the availability of balance sale consideration amount as on the date of entry into agreement and on the subsequent date of filing of the suit. Though legal notices Exhibits P3 and P5 establish the fact that the plaintiff was always ready and willing to perform his part of contract, however, the perusal of Exhibits P10 and P11 produced by the plaintiff would substantiate the fact that as on the date of issuance of legal notice dated 17^th March 2008, the plaintiff has no sufficient funds in the bank to prove his readiness and willingness as required under Section 16(c) of the Specific Relief Act. It is not in dispute that the plaintiff is a Manager of the Bank and was fully aware about the

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transactions and also having worldly knowledge on execution of the agreement to sale. Perusal of the aforementioned documents would clearly indicate that the parties are close relatives and plaintiff failed to prove that he was always ready and willing to execute the registered sale deed from the date of execution of agreement sale and in that view of the matter, both the courts below have not considered the scope and ambit of Section 16(c) and 20 of Specific Relief Act and therefore, the consideration made by both the courts below is without any cogent evidence on record and as such both the courts below have committed error in passing decree in favour of the plaintiff and ordered for specific performance of the contract, which is contrary to the law declared by the Apex Court stated above.

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In that view of the matter, both the courts below have committed illegality and therefore, the substantial question of law framed above, favours the defendants as both the courts below have misconstrued the documents produced by the parties and therefore, the appeal deserves to be allowed by setting aside the judgment and decree passed by the courts below. In the result, I pass the following:

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O R D E R

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Appeal is allowed;

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judgment and decree dated 15.04.2016 passed in Regular Appeal No.52 of 2011 on the file of the Senior Civil Judge and CJM, Chamarajanagar, and judgment and decree dated 02.11.2011 passed in OS No.120 of 2008 on the file of the Principal Civil Judge and JMFC, Chamarajanagar, are set aside.

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Suit in OS No.120 of 2008 on the file of the Principal Civil Judge and JMFC, Chamarajanagar is dismissed.

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Sd/JUDGE

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lnn

Smt. P. Mallika v. Sri. N.J. Ganesh

Case brief

What is this about?

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Smt. P. Mallika v. Sri. N.J. Ganesh

Case brief

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What the court decided

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