Partly allowed

Mr G Madanlal v. Mr v Keshavamurthy

Karnataka HC23 Feb 2024RFA/1145/2021

Case brief

AI extract

What is this about?

The High Court examined a fresh appeal against the dismissal of a suit for specific performance of an Agreement to Sell. The Court found the transaction to be a loan secured by an agreement for joint development rather than a pure sale. Consequently, specific performance was not granted, but the plaintiff was awarded a refund of money with interest.

What did the court decide?

The appeal was allowed in part. Specific performance was denied, but the plaintiff was awarded a decree for refund of Rs. 93,92,500 with interest at 18% per annum.

Mr G Madanlal Vs Mr v Keshavamurthy — Specific Performance | Karnataka HC (2024)

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RFA 1145/2021

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 23^RD DAY OF FEBRUARY, 2024

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PRESENT

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THE HON’BLE MR.P.S.DINESH KUMAR, CHIEF JUSTICE

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AND

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THE HON’BLE MR. JUSTICE T.G.SHIVASHANKARE GOWDA

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RFA NO.1145 OF 2021 (SP)

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BETWEEN:

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MR. G. MADANLAL AGED ABOUT 72 YEARS S/O LATE M.GHERARCHAND R/AT GROVER'S COTTAGE GOODSHED ROAD, OOTY - 643 001 …APPELLANT

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(BY SRI.RAVISHANKAR JANDHYALA, SR. ADV. FOR SRI.VENKATESH R.BHAGAT, ADV.)

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AND:

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MR.V.KESHAVAMURTHY S/O LATE VENUGOPAL NAIDU

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MR. V. VENKATAPATHY S/O LATE VENUGOPAL NAIDU

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LATE V.RUKMINI DEVI SINCE DECEASED BY HER LR

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SMT. PREMA VANI I. AGED ABOUT 43 YEARS W/O SRI.RAJASHEKAR

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MRS.V.SHAKUNTALA DEVI D/O LATE VENUGOPAL NAIDU

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MRS.V. PARIMALA DEVI D/O LATE VENUGOPAL NAIDU

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RFA 1145/2021

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MRS. V. SULOCHANA DEVI D/O LATE VENUGOPAL NAIDU

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MR. MANOHAR S/O ALTE VENUGOPAL NAIDU

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RESPONDENT NOS. 1 TO 7 ARE R/AT NO.54, BENSON CROSS ROAD BENSON TOWN, BENGALURU - 560 046

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MR. JOHN MOSES AGED ABOUT 45 YEARS S/O MR. JOHN P. DEVAMANI R/AT NO.67/3, ST.JOHNS ROAD BENGALURU - 560 042 … RESPONDENTS

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(BY SRI. ASHOK B. PATIL, ADV. FOR R1, R3(a), R5 & R6; SRI. SUNIL KUMAR H. N., ADV. FOR C/R2 & R4; SRI. B. K. ARUN, ADV. FOR R7; VIDE ORDER DATED 30.01.2023 SERVICE OF NOTICE TO R8 IS HELD SUFFICIENT)

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THIS RFA IS FILED UNDER SECTION 96 ORDER 41 RULE 1 READ WITH SECTION 96 OF CPC AGAINST THE JUDGMENT AND DECREE DATED 30.07.2021 PASSED IN OS.NO.9334/2013 ON THE FILE OF THE VII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, DISMISSING THE SUIT FOR SPECIFIC PERFORMANCE.

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THIS RFA HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 03.01.2024 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY, T.G.SHIVASHANKARE GOWDA J. , DELIVERED THE FOLLOWING:

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J U D G M E N T

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This appeal by plaintiff is directed against the judgment and decree dated July 30, 2021 in O.S. No.9334/2013 passed by the VII Addl. City Civil & Sessions Judge, Bangalore (CCH-19), dismissing the

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RFA 1145/2021

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suit for specific performance of agreement dated 15.04.2004.

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For the sake of convenience, parties shall

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be referred as per their status before the Trial Court.

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Brief facts of plaintiff’s case are, one late Smt.K.J.V.Jayalakshmi (Jayalakshmi), wife of Venugopal Naidu is the original owner of property bearing No.54 measuring North to South on Eastern side 218 feet and on Western side 193 feet, East to West on Northern side 217 feet and on Southern side 210 feet with P.T.Serial No.1059 of B.B.M.P. with CTS No.568 measuring 3995.6 sq.meters situated at Benson Town, Benson Cross Road, Bangalore-560 046 (hereinafter referred to as 'the suit schedule property'). Defendant Nos.1 to 7 are her legal heirs. Plaintiff through a real estate agent learnt about Jayalakshmi’s intention to sell the suit property. On 08.12.2003, plaintiff and Jayalakshmi entered into an Memorandum of Understanding (for short 'MOU') and agreed to sell the suit property free

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from all encumbrances for a total consideration of Rs.5,00,00,000/-. It was mentioned in the MOU that the suit property was subject matter of litigation in O.S.No.1949/1980¹ challenging her absolute right over the suit property. The said suit was dismissed and several appeals in R.F.A.Nos.611/2002 c/w R.F.A.Nos.612/2002, 613/2002, 710/2002, 711/2002, 712/2002 and 504/2002 were filed before this Court. It was also declared in the MOU that Jayalakshmi had three sons and four daughters (defendants No. 1 to 7), and they were to receive Rs.20,00,000/- each, however defendant No.7 did not opt to receive advance.

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Plaintiff and Jayalakshmi entered into an Agreement to Sell dated 20.12.2003 for Rs.5,00,00,000/and received a sum of Rs.10,00,000/- to which her six children are confirming witnesses. Thereafter, on 15.04.2004, plaintiff and Jayalakshmi entered into another

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1 Originally numbered as O.S. No. 22/1977

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Agreement to Sell confirming the terms of earlier agreement. On 25.04.2005, a supplemental agreement was executed between Jayalakshmi and plaintiff, wherein it was agreed that the Agreement to Sell dated 15.04.2004 would not be binding on the parties.

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During the pendency of appeals mentioned above, Jayalakshmi died on 13.05.2007, leaving behind defendants as her Class-I heirs. On 01.03.2013, the RFAs pending before this Court were disposed of. After the disposal of appeals, plaintiff issued a notice dated 04.09.2013 calling upon defendants to complete the sale transaction. Defendants did not reply to the said notice. Hence, plaintiff has brought the instant suit for specific performance.

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Defendant Nos.1, 2, 3, 5 and 6 resisted the suit by filing a common written statement, contenting inter alia that Jayalakshmi never intended to sell the suit property. Jayalakshmi had borrowed

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loans from third parties in order to defend the litigation for a period of 25 years, also to pay the property tax and to perform marriage of her children. The transaction between Jayalakshmi and plaintiff was merely a loan transaction. To secure the loan transaction with plaintiff, Jayalakshmi had entered into formal MOU dated 08.12.2003. The parties never intended to act on MOU; that there was no concluded contract between them. The Agreement to Sell dated 15.04.2004 was executed as a security to the money advanced by plaintiff. The agreement to sell was not intended to be enforced.

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6.1. Defendant No.7 after learning that plaintiff is taking undue advantage, did not sign any of the documents. Jayalakshmi and other defendants were not aware of the contents of the agreements dated 20.12.2003 and 15.04.2004. Jayalakshmi and defendants never intended to act upon the contract

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for sale of the suit schedule property. There is no concluded contract between plaintiff and defendants.

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6.2. Although plaintiff was helping Jayalakshmi

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and defendants by giving amount as and when required, by way of loan, said amounts were utilized towards the education of the children, marriage, payment of legal fees and other miscellaneous expenses. In order to evict the tenants, who are in occupation of major portion of the property, Jayalakshmi and defendants have spent almost 40 years in trying to defend their ownership right over the suit schedule property.

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6.3. Defendant No.8/John Moses, who is a land

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mafia and anti-social element, filed a suit and also an impleading application in R.F.A.No.504/2002 claiming that his ancestors were the original owners of the suit schedule property and that he had acquired the property by virtue of gift deed in the year 2011 from his father. He also filed H.R.C.No.62/2012 against the defendants claiming

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that they are his tenants. All his claims have been rejected by the courts.

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6.4. After dismissal of the appeals plaintiff insisted with defendants to return the money paid by him with interest. Plaintiff introduced several builders to defendants for sale of suit property stating that they were interested to develop the property, if all litigations were resolved. In their presence, plaintiff has agreed to take refund of his loan with interest @ 18% as full and final settlement for which defendants expressed their willingness.

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6.5. Defendant No.1 was working as driver in the Co-operative Audit Department of Government of Karnataka. He retired in the year 1996. He was unable to lead life only on his pension and he required money towards treatment of his wife, son and performing the marriage of daughters and also his own treatment he received amounts from plaintiff.

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6.6. Defendant No.2 met with a major accident and he was constrained to borrow loans. Defendant No.3’s husband died in the year 1991. She was in need of money to bear the expenses of education of her two children. Her son met with an accident in the year 2007. He was also suffering from T.B. Under such circumstances, financial aid was taken from plaintiff.

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6.7. Defendant No.5’s husband is working in

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Indian Army, her son died on 18.08.2013 in an accident, she had to take care of the educational expenses of her daughter and she also received loan of Rs.6,45,000/- from the plaintiff in installments.

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6.8. The husband of defendant No.6 was employed in NGEF; due to closure of the factory, he became unemployed in the year 2001. She received in all Rs.3,10,000/- from the plaintiff on various dates, as loan and not as a part consideration of the agreement. She utilized the money towards

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education expenses of the children. Execution of the sale deed for a meager sum lesser than the market value, would put them to great hardship. They are willing to refund the amount with interest. Plaintiff is a professional money-lender, since he has agreed to receive the principal loan amount with interest @ 18% per annum, the suit for specific performance did not merit consideration.

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Defendant No.7 resisted the suit by filing a separate written statement, contenting inter alia that suit property is not the absolute property of Jayalakshmi. He has 1/7^th share in the suit property. He had filed O.S.No.2678/2004 for partition. At no point of time, defendant No.7 entered into any kind of agreement with plaintiff nor he had authorized Jayalakshmi, his mother to enter into any agreement.

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Based on the pleadings, the learned Trial Court

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has framed following issues:

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“1. Whether plaintiff proves that deceased Mrs. K.J.V.Jayalakshmi executed agreement of sale dtd 20.12.2003 agreeing to sell suit property for a total sale consideration of Rs.5 Crores and received earnest money?

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2. Whether plaintiff proves that deceased Mrs. K.V. Jayalakshmi entered into registered supplementary agreement dated 15.4.2004 confirming the terms and conditions of earlier agreement dated 20.12.2003?

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3 Whether plaintiff proves that deceased Mrs K.V. Jayalakshmi and defendants No 1 to 6 have received in all Rs.93,92,500 as part of sale consideration amount?

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4. Whether defendants No 1 to 6 prove that the suit of the plaintiff is barred by limitation?

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5. Whether defendants No. 1 to 6 prove that valuation made and court fee paid on plaint is insufficient?

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6. Whether defendant No. 7 proves that he is neither a necessary nor proper party to this suit?

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7. Whether plaintiff proves that he was and is ready and willing to perform his part of contract?

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8. Whether plaintiff proves that he is entitled for the relief of specific performance of contract as sought?

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9. What decree or order?”

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On behalf of the plaintiff, plaintiff's Power of Attorney Holder was examined as PW-1, plaintiff got himself examined as PW-2 and one witness as PW-3 and marked as Exs.P1 to P96. On behalf of the defendants, two witnesses were examined as DWs-1 and 2 and marked as Exs.D1 to D12. Answering issue Nos.1, 2, 3 and 5 in the negative and issue Nos.4 and 6 in the affirmative and holding that issue No.7 did not survive for consideration, the Trial Court has dismissed the suit.

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Heard Sri.Ravishankar Jandhyala, learned

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Senior Advocate for the plaintiff; Sri. Ashok B. Patil, learned Advocate for defendants No.1, 3(a), 5 and 6; Sri.Sunil Kumar N, learned Advocate for defendants No.2 and 4; and Sri. B.K.Arun, learned Advocate for respondent No.7.

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Sri.Jandhyala, learned Senior Counsel praying to allow the appeal, mainly submitted that:

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the Trial Court has not properly considered D.W.1 & D.W.2’ s admissions;

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the Trial Court has erred in holding that there is no concluded contract and that there is lack of consensus ad idem , whereas D.W.2 in the cross examination, has admitted the Sale Agreement;

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� the Trial Court has erred in not considering Ex.P19 which is a Declaration dated 10.12.2010 executed by Defendant No.1, wherein he has confirmed the Agreements dated 20.12.2003, 15.04.2004 and Supplementary Agreement dated 25.04.2005. This clearly establishes that there is a concluded contract and the Agreement to Sell is binding on defendants. Further, there is no oral or documentary evidence produced by

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defendants to disbelieve the evidence on record;

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D.W.2 has admitted that defendants have received a sum of Rs.93,92,500/from plaintiff;

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the Trial Court has misconstrued the cause of action. Thus, there is error apparent on the face of the impugned judgment;

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there is no iota of evidence furnished by the defendants to prove that the transaction between Jayalakshmi and plaintiff is a loan transaction;

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plaintiff had performed his part of performance and is willing to perform his remaining part of the contract in paying the balance sale consideration. In spite of furnishing the proof of the availability of balance Sale Consideration of

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Rs.4,06,07,500/-, the learned Trial Judge has dismissed the suit;

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� though there were appeals pending, plaintiff had paid substantial sale consideration of Rs.93,92,500/from 2003 onwards. The learned Trial Judge has failed to note that defendants have received huge advance sale consideration and incorrectly refused the prayer for specific performance.

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11.1. In support of his contentions,

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Sri. Jandhyala, has mainly placed reliance on following authorities:

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i. V. Pechimuthu Vs. Gowrammal² ;

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ii. Salapuriah Properties Private Limited Vs. M.S.Ramaiah³ ;

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iii. Kamal Kumar V/s Premalatha Joshi⁴ .

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2 (2001) 7 SCC 617

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3 2005 SCC online 410

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4 2019(3) SCC 704

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Opposing the appeal, Sri. Ashok B. Patil, for defendants No. 1, 3(a), 5 and 6, mainly submitted that:

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the transaction is a loan transaction and not a sale transaction. Plaintiff is a Money Lender. Jayalakshmi was in need of money to conduct the case O.S.No.1949/1980 filed by her;

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plaintiff has admitted that the amounts paid to Jayalakshmi and her children were not forthcoming in the statement of books maintained by him;

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in respect of same transaction, 4 documents have come into existence. Ex.P2, 3, 5 and 6 are sham documents;

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Jayalakshmi died in the year 2007, all the appeals pending before this Court were disposed of in the year 2013;

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Jayalakshmi had 7 children. Though 6 children have attested the agreements as consenting parties, defendant No.7 is not a consenting party to any of the documents.

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defendant No.7 has already filed a suit for partition against Jayalakshmi and other children in O.S.No.2678/2004, wherein the plaintiff was arrayed as defendant No.9;

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Jayalakshmi and the defendants have no means to pay back the loan due to litigations;

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Defendants had an option to elect for joint development in the ratio of 40 (defendants) : 60 (plaintiff) upon clearing the cloud over title. In the absence of such election, the transaction stood as loan transaction which was not discharged till now;

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the Agreements are not enforceable. There was no concluded contract as the MOU and other agreements envisage execution of agreements on future dates. Therefore, these are not executable in nature;

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defendants have pleaded hardship as contemplated under Section 20(2) of Specific Relief Act, 1963. There is no crossexamination of defendants and their witnesses on this aspect. Thus, plaintiff has accepted defendants’ hardship;

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more than two decades have elapsed between from date of MOU and the present appeal, therefore, it would be wholly inequitable to grant specific performance at this juncture;

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the market value of the suit property would not be less than Rupees Eighty Crore. Plaintiff has paid Rs.93,42,500/- which is

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less than even 1/5^th of the sale

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consideration mentioned by the plaintiff;

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defendants are ready to refund the amount with interest at 12% per annum from the date of MOU till today;

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the Trial Court has rightly held that the suit is barred by law of limitation.

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He has placed reliance on the follwing passage in S. Chattanatha Karayalar -Vs.- Central Bank of India Ltd. and Others⁵ :

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"Where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to this case as if they were one deed. Each is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole."

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5 AIR 1965 SC 1856 (para 3)

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Opposing the appeal, Sri. B.K. Arun, for defendant No.7 submitted that:

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defendant No. 7 is not a party to any of the documents executed between Jayalakshmi, defendants No. 1 to 6 and plaintiff. Therefore, there is no cause of action against defendant No. 7.

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the suit property is a joint family property. Defendant No. 7 has 1/7^th share in the suit property. Therefore, Jayalakshmi and other defendants could not have entered into any transaction as to bind or effect his share;

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plaintiff has admitted that defendant No. 7 had executed an Agreement to Sell in favour of one Salman Shariff. He is a necessary party. The fact that he is not arrayed as a party, the suit is bad for non-joinder of necessary parties and liable to be dismissed;

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plaintiff has indulged in a speculative litigation;

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plaintiff has not demanded delivery of possession. plaintiff has failed to produce his IT returns for the year 2003-04 onwards to prove the payments made by him;

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there is no evidence placed by plaintiff to demonstrate that the amounts were paid as advance sale consideration;

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Section 22(b) of the Specific Relief Act, 1963 deals with refund of earnest money. Plaintiff has not sought for refund either in the suit or in this appeal.

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We have given our anxious consideration to

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the arguments addressed on behalf of both parties and perused the records.

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In the light of the rival contentions urged on both parties, points that arise for our consideration are:

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(i) Whether the transactions between the parties was ‘an agreement to sell’ OR a ‘loan transaction’?

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(ii) Whether the plaintiff is entitled for the relief of specific performance?

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(iii) Whether refund of money with interest can be ordered in favour of the plaintiff?

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(iv) Whether the impugned judgment calls for interference?

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Reg. Point No.(i):

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Undisputed facts of the case are, K.J.V.Jayalakshmi is the mother of defendant Nos.1 to

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In the year 1971, Jayalakshmi’s mother, Rani Putttamma Nagathi entered into a compromise with her husband K.J.Venkatachalapathy Naidu and got the suit schedule property. After her mother’s death, Jayalakshmi became the absolute owner.

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Plaintiff’s specific case is that Jayalakshmi had offered to sell and plaintiff had agreed to purchase the suit property.

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Defendants’ specific case is that, plaintiff was a professional licenced money lender. Jayalakshmi was involved in the litigation in O.S.No.1949/1980 and borrowed money from him. The alledged MOU and Agreements were executed as security documents. After Jayalakshmi’s death in the year 2007, defendants No.1 to 6 have also received certain amounts from plaintiff.

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The first document that has come into existence is Ex.P2/MOU dated 08.12.2003. The second document is Ex.P5 dated 20.12.2003 executed by Jayalakshmi. The third document is Ex.P3 dated 15.04.2004, an agreement to sell executed by Jayalakshmi. To this document, defendant Nos.1 to 6 are the consenting witnesses. Subsequently, a Ex.P6,

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the supplemental agreement dated 25.04.2005 has been executed.

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Jayalakshmi died on 13.05.2007. Defendant

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Nos.1 to 7 being the legal representatives have contested the appeals. Jayalakshmi’s title has been confirmed by this Court on 01.03.2013. On 04.09.2013, plaintiff issued notices to the legal representatives of Jayalakshmi and one Salman Sheriff, with whom defendant No.7 had some transcation.

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Plaintiff’s specific case is that he has paid Rs.93,92,500/- as part sale consideration and Ex.P6 is the agreement. Jayalakshmi’s title has been confirmed by this Court dated 01.03.2013. Defendant Nos.1 to 7 is prepared to receive the balance sale consideration.

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As per the terms of the MOU, the parties have agreed for joint development in the ratio of 60:40 between plaintiff and Jayalakshmi. Plaintiff has paid Rs.1 Lakh for the purpose of funeral and obsequies of

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Jayalakshmi and also gave money to defendant Nos.1 to 6 as and when they were in need. The said payments are not made as per terms of the agreement.

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Defendant No.7 is not a consenting party to Ex.P6 nor has he received any money from the plaintiff. According to him, the MOU and agreements are not binding on him.

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Admittedly, Jayalakshmi was entangled with multiple litigations as she has to contest the suit challenging her title. She had forced to generate funds for litigation. The material on record clearly shows that a sum of Rs.93,42,500/- was paid under various documents and on different dates and not in lumpsum.

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According to the plaintiff, he has entered into agreement with the owener and title holder Jayalakshmi of the suit property. Defendant Nos. 1 to 6 are consenting witness. Plaintiff has admittedly paid money in piece meal to Jayalakshmi and Defendant

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Nos. 1 to 6. It is not in dispute that as on the date of the MOU in the year 2003 and the agreement to sell in the year 2003-04 and supplemental agreement in the year 2005, Jayalakshmi did not have an absolute title. Yet, plaintiff has paid about Rs. 93 lakhs, which is not even equivalent to 1/5^th of Rs. 5 Crore, the sale consideration according to the plaintiff.

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Evidence also discloses that after Jayalakshmi’s death, plaintiff has given money for her funeral and obsequies expenses. He has also given money to defendant Nos. 1 to 6 for them to tide over the financial difficulties from time to time.

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A plain reading of the MOU makes it clear that it is a contingent document. Only upon Jayalakshmi getting clearing title, plaintiff would get an option to purchase the property. It is not in dispute that between 2003 till 2013, Jayalakshmi did not have clear title.

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Ex.P5 which is a registered agreement. Clause-17 of the said document makes it clear that in case of the agreement being frustrated due to unavoidable circumstances or the appeals not being terminated in favour of Jayalakshmi, she would refund the advance sale consideration along with interest at 12% per annum. Defendant No.2/DW-2 in his crossexamination has asserted that defendants are willing to return the money paid by the plaintiff with interest @ 12% per annum.

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It is interesting to note that there exists a clause of joint development of the property between plaintiff and Jayalakshmi, if the title of Jayalakshmi is cleared. This fortifies the contention urged by defendants that the transaction was not purely one of sale.

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The contention of Sri. Patil is that if the transaction is one of sale, there was no need for the parties to enter into multiple documents. The conduct of the parties makes it clear that the parties never

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intended to treat the transaction as an agreement to sell.

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After the death of Jayalakshmi, her legal representatives are also entangled with several litigations as explained in Exs.D1 to D12. Due to the pending litigations, defendant Nos.1 to 6 were forced to take money from plaintiff as and when required.

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Ex.P19 is one of the documents titled as declaration executed by defendant No.1 on 10.12.2010 and also as 'on demand Promissory Note' on 09.07.2004 for having received Rs.3,15,000/- from the plaintiff. As per Ex.P19, the total amount paid as on 10.12.2010 was Rs.20,65,000/- being the share of defendant No.1. Exs.P8 to P89 are the acknowledgements and also Bank Transfer receipts showing money paid to Jayalakshmi and defendant Nos.1 to 6, which varies from Rs.10,000/to Rs.4,80,000/-. This clearly goes to show that from the day one till the last payment, money was paid in bit

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and pieces as loan. If the intention of parties was to transfer the suit property for a consideration, there was no occasion for Jayalakshmi and her children to collect money in installments. This stands in support of the argument canvassed on behalf of defendants that money so received by defendants in Rs.93,92,500/- was never intended to be the part consideration under the agreements (Exs.P2, P3, P5 and P6). Thus, the intention of the parties was to secure money from plaintiff in order to contest the multiple litigations. The real intention between the parties was the loan and in order to secure the loan, plaintiff being the professional money-lender entered into an MOU and the agreements.

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In S. Chattanatha Karayalar's case (supra),

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the Hon'ble Apex Court referring to the judgment of Manks -Vs.- Whiteley⁶ , has held that:

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"Where several deeds form part of one transaction and are contemporaneously executed they have the same effect for all purposes such as are relevant to

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this case as if they were one deed. Each is executed on the faith of all the others being executed also and is intended to speak only as part of the one transaction, and if one is seeking to make equities apply to the parties they must be equities arising out of the transaction as a whole."

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Thus, the intention of the parties has to be gathered

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from the totality of the recitals in the documents to draw inference about the nature of transaction.

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Post-clearance of cloud on the title in the year 2013 and after death of Jayalakshmi in the year 2002 the terms of the agreement contemplates joint development for which the plaintiff was required to give an offer to the defendants to elect joint development or to execute the sale deed by receiving the balance sale consideration. The material on record does not disclose any such option given by plaintiff.

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In V. Pechimuthu -Vs.- Gowrammal , the Hon'ble Apex Court referring to a case of this nature regarding option available to the defendants not being made available by plaintiff, has held as follows:

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12. The conclusion of the High Court is unsustainable in law and contrary to the facts. The learned Judge erred in holding that it is a general principle of law that every agreement of sale by which the original owner agrees to buy back the property is a privilege or concession granted to such owner. A privilege has been defined as a particular and peculiar benefit or advantage enjoyed by a person, and a concession as a form of privilege. An option to purchase or repurchase has been held to be such a privilege or concession. [See: Shanmugham Pillai v. Annalakshmi: AIR 1950 FC 38; K. Simarathmull v. Nanjalingaiah Gowder : AIR 1963 SC 1182.] This is because an option by its very nature is dependent entirely on the volition of the person granted the option. He may or may not exercise it. Its exercise cannot be compelled by the person granting the option. It is because of this one sidedness or unilatcrality, as it were, that the right is strictly construed and an option for the renewal of a lease, or for the purchase or repurchase of property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse (Halsburys Laws of England, 3rd Edn. Vol.3 Art. 281, p. 165).

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13. An agreement for sale and purchase simpliciter , on the other hand, is a reciprocal arrangement imposing obligations and benefits on both parties and is enforceable at the instance of

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either. The interpretation of such a contract would be governed by the laws of contract relating to the performance of reciprocal promises.

¶222

14. Whether an agreement is an option to purchase or an ordinary agreement would depend on the interpretation of its provisions. Sometimes the option is expressly and in terms granted. In others the right may be implicit. Thus when an agreement provides that the right to obtain a sale is subject to the fulfillment of certain conditions by the purchaser, the agreement would in effect be an option to purchase, as the right to purchase would only accrue upon the voluntary performance of the conditions specified by the owner. The vendor cannot compel the performance of the conditions by the purchaser and then ask for the contract to be specifically performed."

¶223

(Emphasis supplied)

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In the case on hand, the transaction is ambiguous in nature. It includes both sale and option for joint development. It also shows that money is not paid in one lumpsum. Therefore, in our view as held in V. Pechimuthu , plaintiff cannot compel the defendants for specific performance.

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The contention of plaintiff is that this is a fit case for application of "Ubi Jus, ibi remedium : where there is a right, there is a remedy". This maxim can only be offered where the plaintiff demonstrates before the Court that the transaction between the plaintiff and the defendant is a pure sale transaction. In view of our finding that the transaction does not appear to be a case of agreement to sell, the maxim urged by plaintiff does not plead his case any further. In substance, we are persuaded to accept the evidence which is in favour of the defendants. We are therefore of the opinion that the transaction between the parties was a loan transaction and accordingly, answer point No.(i).

¶228

Reg.Point No.(ii):

¶229

We have re-appreciated the evidence and the contentions raised by both parties, and it is clear that plaintiff has lent money and in order to secure the money, he has entered into an MOU and several agreements. There is a clause for joint development of

¶230

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the property with plaintiff having 60% and defendants having 40% and no such joint development came into existence. When the transaction is monetary, after the death of Jayalakshmi since defendant No.7 who has not joined the MOU and the agreements, he acquired independent right over the property.

¶233

In Speech and Software Technologies (India) Private Limited -vs- Neos Interactive Limited⁷ , it is held that an agreement to enter into another agreement is not enforceable in nature. Defendant No.7 has already filed a suit for partition in O.S.No.2678/2004 in which the plaintiff is defendant No.9. In substance, there is no specific unambiguous agreement between the parties. Therefore, plaintiff is not entitled for specific performance. Accordingly, we answer point No.(ii) in the negative .

7 (2009) 1 SCC 475

RFA 1145/2021

Reg. Point No.(iii):

¶238

This point arises for consideration for the reasons recorded in points No.(i) and (ii). We have accepted the contention of the defendants that the transaction between plaintiff and defendants was a monetary transaction. Material on record discloses that plaintiff has paid a sum of Rs. 90 lakhs during Jayalakshmi’s lifetime and after her death, remaining amount was paid to defendants No.1 to 6 under various documents referred in Exs.P2 to 6 and 8 to 89. During the course of cross-examination, the witness examined on behalf of defendants No.1 to 6 have admitted this aspect. The contention of learned counsel for the defendants is that in the absence of prayer for refund, defendants cannot be directed to refund the advance sale consideration. This argument is contrary to the stand taken by the defendants No.1 to 6 in their written statement. It is their specific stand that they are ready to refund the money to the plaintiff along with 12% interest. Though plaintiff has

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not sought for any relief, defendants have agreed to refund the money. In the circumstances, in our view, it is just and equitable to direct the defendants no. 1 to 6 to refund the money with interest. Accordingly, we answer point No.(iii) in the affirmative.

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Reg.Point No.(iv):

¶243

We have carefully perused the impugned judgment. Though the judgment is very cryptic, the learned Trial Judge has given sound reasoning that the intention of the parties was not to sell the property, but it is a monetary transaction. We are persuaded by the pleadings and evidence on record that it is a case for refund of money and not specific performance. Therefore, the finding recorded by the Trial Court to the extent that the claim is barred by time has to be interfered with, by awarding refund of money to the plaintiff. For the rest of the findings recorded by the Trial Court, we do not find any ground to interfere. We answer point No.(iv) accordingly.

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In the light of the above discussion, we pass

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the following:

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ORDER

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(i) The appeal is allowed-in-part ;

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(ii) The order of the Trial Court refusing to grant relief of specific performance is hereby confirmed;

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(iii) The plaintiff is entitled to recover Rs.93,92,500/- with interest @ 18% per annum from the date of actual payment in bit and pieces as referred in Exs.P2, P3, P5, P6, P8 to P89;

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(iv) Decree shall be drawn accordingly;

¶253

(v) Parties shall bear their respective costs in this appeal.

Sd/-

CHIEF JUSTICE

Sd/JUDGE

KNM / PA

Mr G Madanlal v. Mr v Keshavamurthy

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Mr G Madanlal v. Mr v Keshavamurthy

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