Sri S G Nagaraj Vs Smt. v Keerthi Tripurasree

THIS RFA IS FILED U/S 96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 04.02.2010 PASSED IN OS.2329/2005 ON THE FILE OF THE XXV-ADDL. CITY CIVIL JUDGE, BANGALORE, DECREEING THE SUIT FOR SPECIFIC PERFORMANCE.

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THIS APPEAL, COMING ON FOR FURTHER HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM

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ORAL JUDGMENT

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The captioned appeal is by the unsuccessful plaintiff

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who is assailing the judgment and decree rendered in O.S.No.2329/2005, wherein the trial Court has declined to exercise discretion and grant larger relief of specific performance of contract and has partly decreed the suit granting refund of Rs.3,20,000/- earnest money with interest at the rate of 6% per annum. The said decree is under challenge at the instance of plaintiff.

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For the sake of brevity, the parties are referred to as per their rank before the trial Court.

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The facts leading to the case are as under:

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The plaintiff instituted the suit in O.S.No.2329/2005 seeking the relief of specific performance of contract based

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on an agreement of sale dated 30.06.2004. In the plaint, it is specifically pleaded that the defendant agreed to sell the suit schedule sites bearing Nos.13 and 14 for a total sale consideration of Rs.12,20,000/-. It is averred that at the time of execution of the agreement, the plaintiff paid an advance amount of Rs.70,000/-, and that the balance sale consideration was agreed to be paid at the time of execution and registration of the sale deed.

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At paragraph 3 of the plaint, the plaintiff has unequivocally admitted that the transaction was required to be completed within 60 days, i.e., on or before 30.08.2004. It is further pleaded that the defendant received an additional sum of Rs.4,00,000/- by way of cheque bearing No.274925 drawn on Union Bank of India, Bengaluru, dated 04.07.2004, which cheque was admittedly encashed by the defendant. The suit is instituted contending that the plaintiff was always ready and willing to perform his part of the contract, but the

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defendant failed to conclude the transaction despite repeated requests.

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The defendant, upon service of summons, entered appearance and filed a written statement stoutly denying the plaint averments in toto. The execution of the agreement, the alleged readiness and willingness of the plaintiff, and the entitlement of the plaintiff to the relief of specific performance were all specifically disputed, and dismissal of the suit was sought.

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On the basis of rival pleadings, the Trial Court framed the necessary issues. The plaintiff examined himself as PW.1, examined one independent witness as PW.2, and produced the agreement of sale marked as Ex.P-1. The defendant examined herself as DW.1 and produced a Xerox copy of an agreement pertaining to Site No.9, which was marked as Ex.D-1.

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The Trial Court, upon appreciation of oral and documentary evidence, answered Issue No.1 in the

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affirmative and held that the plaintiff had proved the execution of the agreement of sale. However, while answering Issue No.3, the Trial Court recorded a finding against the plaintiff, holding that he had failed to establish his readiness and willingness to perform his part of the contract. Consequently, the Trial Court declined to grant the discretionary relief of specific performance and partly decreed the suit by directing refund of the earnest money with interest at 6% per annum.

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Learned Senior Counsel appearing for the plaintiff–appellant, reiterating the grounds urged in the appeal memorandum, vehemently contended that the conduct of the defendant was wholly unfair, whereas the plaintiff had approached the Court with clean hands and had substantiated the execution of the agreement. It was argued that the plaintiff had paid a substantial portion of the sale consideration and that the finding of the Trial Court on readiness and willingness is perverse and

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contrary to the evidence on record, thereby warranting interference by this Court.

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In support of the aforesaid submissions,

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reliance was placed on the judgment of the Hon’ble Supreme Court in Silvey and Others vs. Arun Varghese and Another¹ .

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Per contra, learned counsel appearing for the defendant supported the impugned judgment and decree. Placing reliance on crucial admissions elicited in the crossexamination of the plaintiff, it was contended that the plaintiff is a real estate dealer and that the agreement in question was not intended to culminate in a concluded sale but was entered into only to facilitate future transactions by securing prospective purchasers. It was further contended that the recitals in the agreement of sale, read in conjunction with paragraph 3 of the plaint, clearly establish that time was the essence of the contract. It was

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1 (2008) 11 SCC 45

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argued that the defendant had cancelled the agreement after expiry of the stipulated period and that the suit, instituted thereafter, disentitles the plaintiff from seeking the discretionary relief of specific performance.

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Placing reliance on the judgment of the Hon’ble Supreme Court in Sangita Sinha vs. Bhawana Bhardwaj and Others² , learned counsel contended that the plaintiff had deliberately suppressed the fact that the defendant had issued a notice cancelling the agreement on account of failure to pay the balance sale consideration within the stipulated time. It was urged that such suppression disentitles the plaintiff to equitable relief, and that the Trial Court has rightly exercised its discretion in refusing the relief of specific performance.

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Having heard the learned counsel appearing for both parties and having carefully examined the pleadings, the oral and documentary evidence on record, and the

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2 Civil Appeal No.4972 of 2025

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contractual timeline stipulated under the agreement of sale, this Court is of the considered view that the following points arise for determination:

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i) Whether the judgment and decree of the Trial Court in declining to exercise discretion in favour of the plaintiff and in refusing the relief of specific performance suffers from perversity and warrants interference?

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ii) Whether the finding of the Trial Court that the plaintiff failed to establish readiness and willingness is perverse?

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iii) What order?

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Finding on Point Nos.i and ii:

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The plaintiff has instituted the present suit seeking the discretionary relief of specific performance of contract founded on an agreement to sell dated 30.06.2004, which is produced and marked as Ex.P-1. It is trite law that in a suit for specific performance, mere proof of execution of the agreement does not automatically

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entitle the agreement holder to the relief sought. The plaintiff, who seeks enforcement of an equitable and discretionary remedy, is required not only to establish the execution of the agreement but must further demonstrate unwavering readiness and willingness to perform his part of the contract in strict conformity with the terms and timelines stipulated therein, coupled with clean and bona fide conduct throughout the subsistence of the contract.

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In the present case, though the execution of the suit agreement is not seriously in dispute, the pivotal issue that arises for consideration before this Court is whether the plaintiff has made out a case warranting exercise of discretion in his favour. The relief of specific performance being discretionary in nature, the Court is duty-bound to examine the conduct of the plaintiff with greater scrutiny, particularly in the context of compliance with contractual obligations and adherence to the time schedule agreed upon by the parties.

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It is in this backdrop that this Court, before embarking upon an examination of the plaintiff’s entitlement to the larger relief of specific performance, deems it necessary to advert to certain crucial admissions elicited from the plaintiff during his cross-examination, which have a direct bearing on the issue of readiness and willingness. These admissions, when tested against the pleadings and the recitals of the agreement itself, assume significance and are determinative of the equitable jurisdiction of this Court. The relevant portion of the crossexamination of PW.1 is therefore extracted hereinbelow for ready reference:

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"I am doing the business of purchasing the sites under the agreement and to sell the said site in favour of the prospective buyers for a consideration amount. I have not obtained any receipt for having paid an amount of Rs.70,000/- towards part consideration. It is false to suggest that I approached the defendant and insisted the defendant to sell the suit schedule property in my favour. I do

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not know about the pendency of the litigation between the defendant and her husband in relation to the suit schedule property. I was not made as a party as defendant No.2 in the said suit.

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I have not paid the balance consideration amount within the period of 60 days as stipulated in the agreement of sale. I have not issued any notice to the defendant to execute the sale deed in my favour within the above said period of 60 days by showing my readiness for purchase of the said property in terms of the agreement of sale. I have not issued any notice against the defendant prior to filing of the suit. I have not produced any document before the court to show that I was having sufficient funds with me to pay the balance consideration amount as per the terms of the agreement.

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It is true that the defendant had issued a letter addressed to me stating that the agreement of sale was cancelled by the defendant for non payment of the balance consideration amount as stipulated in the agreement of sale."

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(emphasis supplied)

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On a careful reading of the admissions elicited

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from the plaintiff during the course of cross-examination,

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this Court finds that the said admissions strike at the very root of the plaintiff’s case and are clearly fatal to his claim for specific performance. The plaintiff has candidly admitted that he is engaged in the business of purchasing sites under agreements of sale and thereafter facilitating sale of such properties in favour of prospective purchasers for consideration. This admission clearly demonstrates that the plaintiff was not a bona fide purchaser intending to conclude the transaction by obtaining a registered sale deed in his own favour, but was merely securing agreements as a part of his commercial activity.

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The subsequent admission further disentitles

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the plaintiff from seeking the larger relief of specific performance. The plaintiff has unequivocally acknowledged that upon his failure to conclude the transaction within the stipulated period of 60 days, it was the defendant who terminated the agreement by issuing a letter accompanied by a cheque for a sum of Rs.3,20,000/-, towards refund of the advance amount. This admission clearly establishes

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that the agreement stood terminated prior to the

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institution of the suit.

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The witness examined on behalf of the plaintiff has also admitted, without any ambiguity, that the plaintiff is engaged in real estate business. When these two crucial admissions are read conjointly, the fundamental question that arises for consideration is whether the plaintiff has succeeded in establishing his readiness and willingness to perform his part of the contract and whether he has made out a case for grant of discretionary relief of specific performance.

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The evidence on record further discloses that the plaintiff had entered into agreements with the defendant in respect of three sites, namely Site Nos.9, 13 and 14. Though Site No.9 is not the subject matter of the present suit, the defendant, by producing a Xerox copy of the agreement pertaining to Site No.9, which was confronted to the plaintiff and admitted by him and

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marked as Ex.D-1, has successfully demonstrated that

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despite entering into an agreement to purchase Site No.9, the plaintiff did not conclude the transaction and the said site was ultimately sold to a third party. This crucial circumstance further fortifies the inference that the plaintiff was in the habit of securing agreements and thereafter facilitating sale directly through the original owner without completing the transaction by obtaining a registered sale deed.

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On a conjoint reading of Ex.P-1 and paragraph 3 of the plaint, it is evident that the plaintiff himself has acknowledged that a clear and unequivocal timeline was stipulated under the agreement and that the balance sale consideration was required to be paid within 60 days. It is significant to note that the plaintiff approached the Court only after the defendant issued a letter terminating the agreement, accompanied by a cheque for Rs.3,20,000/towards refund of the advance amount.

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What assumes greater significance is the fact

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that the plaintiff has completely suppressed these material facts in the plaint. There is not even a whisper regarding the termination letter or the return of the advance amount. Such deliberate suppression of material facts disentitles the plaintiff to equitable relief, more so when the relief sought is discretionary in nature. The conduct of the plaintiff, therefore, does not inspire confidence and is found to be questionable.

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It is well settled that the relief of specific performance is discretionary and equitable. The plaintiff must demonstrate continuous readiness and willingness throughout the subsistence of the contract. In the present case, there is absolutely no material on record to indicate that the plaintiff made any genuine attempt to conclude the transaction within the stipulated period of 60 days by tendering the balance sale consideration.

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The belated and improvised plea taken during the course of trial, suggesting that the defendant was restrained from alienating the suit property on account of a suit filed by her husband, does not advance the plaintiff’s case. In fact, during cross-examination, the plaintiff has categorically admitted that he was unaware of any inter se litigation between the defendant and her husband and was also not aware of any injunction order restraining alienation of the suit property. This admission clearly demolishes the explanation sought to be projected by the plaintiff for his inaction.

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The cumulative effect of the evidence on record unmistakably establishes that the conduct of the plaintiff is neither fair nor bona fide. There is a clear suppression of the termination of the agreement by the defendant, and the admissions elicited during cross-examination unmistakably demonstrate that the plaintiff, being a real estate businessman, had no genuine intention to conclude

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the transaction by paying the balance sale consideration and obtaining a registered sale deed. Except for bald assertions that he was ever ready and willing to perform his part of the contract, there is absolutely no cogent material placed on record to substantiate such readiness and willingness.

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On the contrary, the plaintiff has admitted that the timeline of 60 days was fixed under the agreement and has further acknowledged that the defendant had intimated him regarding termination of the agreement by issuing a letter accompanied by a cheque for Rs.3,20,000/-. These admissions clearly establish that the agreement stood terminated much prior to the filing of the suit.

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On an overall appreciation of the oral and documentary evidence and the crucial admissions elicited during the cross-examination of the plaintiff, this Court is of the considered view that the balance of equity tilts in

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favour of the defendant rather than the plaintiff. The suppression of material facts and the prior termination of the agreement disentitle the plaintiff from claiming that he was ready and willing to perform his part of the contract. In this backdrop, this Court finds no infirmity in the reasoning adopted by the Trial Court in declining to grant the discretionary relief of specific performance. The Trial Court has rightly balanced the equities and has exercised its discretion judiciously.

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This Court, having independently re-appreciated the pleadings, oral and documentary evidence, particularly the admissions elicited during the cross-examination of the plaintiff, is of the firm view that the present case does not warrant exercise of discretion in favour of the plaintiff. Accordingly, Point Nos.(i) and (ii) are answered in the negative and against the plaintiff.

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