Dismissed

K.G.Balasubramaniam v. M.Elanchezhian

Agreement for Sale of Property – Suit for Specific Performance

Madras HC13 Nov 2019SA/336/2014

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What is this about?

In a second appeal for specific performance, the appellant challenged the first appellate court's dismissal of the suit. The lower court found the relationship was creditor-debtor with the agreement serving as loan security. The High Court rejected the reversal, holding the factual findings of the first appellate court were not perverse and the appellant failed to make out grounds for interference

What did the court decide?

The second appeal was dismissed, and the judgment and decree of the first appellate court were affirmed with no order as to costs.

K.G.Balasubramaniam Vs M.Elanchezhian — Specific Performance | Madras HC (2019)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 13.11.2019

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CORAM:

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THE HON'BLE MR.JUSTICE R.SUBRAMANIAN

S.A.No.336 of 2014

and

MP.No.1 of 2014

K.G.Balasubramaniyam

..Appellant/Plaintiff

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Vs.

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M.Elanchezhian

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..Respondent/Defendant

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PRAYER: Second Appeal filed under Section 100 of C.P.C., to set aside the decree passed in A.S.No.74 of 2013 dated 13.11.2013 on the file of the Principal District Judge, Erode modifying the judgment and decree passed in O.S.No.282 of 2008 dated 16.03.2012 on the file of the I Additional Subordinate Judge, Erode.

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For Appellant : Mr.V.S.Kesavan For Respondent : No appearance

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J U D G M E N T

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The plaintiff in O.S.No.282 of 2008, whose suit for specific performance was decreed by the trial court, upon its reversal by the lower appellate court has come up with this Second Appeal.

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According to the plaintiff, the suit property belonged to the defendant under a settlement deed dated 15.10.1976. The defendant agreed to sell the property to the plaintiff for a consideration of Rs.2,10,000/- on 11.09.2006. An advance of Rs.2,00,000/- was paid and a period of two years was fixed for payment of balance of Rs.10,000/- and have the sale deed executed. The agreement was reduced to writing and registered on 11.09.2006 itself.

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According to the plaintiff, since the defendant did not come forward to execute the sale deed despite several demands, he was forced to issue notice on 17.06.2008. Though, the notice was received by the defendant on 17.06.2008, the defendant neither complied with the demand nor issued reply. Hence, the plaintiff had filed a suit seeking specific performance.

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The suit was resisted by the defendant contending that the agreement dated 11.09.2006 was not intended to be an agreement of sale, it was executed as a security for the borrowings. The defendant would also rely upon certain other transactions between the plaintiff and himself to buttress his contention that he has only borrowed Rs.2,00,000/- from the plaintiff on 11.09.2006 and the very suit agreement was executed as a security to the said borrowing.

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The fact that unduly long period of 2 years was prescribed for payment of the balance of Rs.10,000/- which does not even amount to 10% of the total sale consideration itself shows that the agreement was not intended to be for sale of the suit property. On the above contentions the defendant sought for dismissal of the suit.

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The trial court, upon consideration of the evidence, rejected the defence viz., the contention that the agreement was not intended to be acted upon and was executed only as a security for a loan transaction as barred under Section 92 of the Evidence Act. Further the trial court concluded that the defendant has not proved that the agreement was not intended to be a security for the loan transaction. The trial court found that in the absence of any evidence to justify the defence, the terms of written instrument should be given precedence. On the conclusions stated above, the trial court decreed the suit. Aggrieved, the defendant preferred an appeal in A.S.No.74 of 2013.

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The lower appellate court upon re-consideration of the evidence, particularly, the evidence of the plaintiff as PW1 concluded that the case of the defendant is more probable and a decree for specific performance would work undue hardship on the defendant. Upon the said conclusion, the lower appellate court allowed the appeal and dismissed the suit. Aggrieved the plaintiff has come forward with this Second Appeal.

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The following questions of law were framed for consideration:

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When the defendant has admitted the execution of sale agreement and also the receipt of Rs.2,00,000/- from the plaintiff, for execution of the registered sale agreement dated 11.09.2006 of Ex.A2, without there being any evidence on the side of the defendant that the sale agreement was entered as a security for a loan

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transaction, can the appellate court disbelieve the claim for specific performance, particularly when the trial court has accepted the case of the plaintiff?

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When the defendant has executed the sale agreement Ex.A2 on receipt of Rs.2,00,000/- from the plaintiff for selling his property, whether it is incumbent upon the defendant to discharge the burden of proof that the sale agreement was not intended for sale of the property?

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Whether the decree passed by the first appellate court reversing the judgment and decree passed by the trial court and granting decree for a specific performance is not perverse, since it is restricted only for return of the sale amount to the plaintiff/ appellant?

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The execution of the agreement is admitted. The receipt of advance amount of Rs.2,00,000/- is also admitted. All that the defendant would contend is that he had borrowed monies from the plaintiff and only with a view to secure the said payment, the plaintiff got the sale agreement executed and registered.

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The defendant would also highlight the fact that unduly long time of two years was fixed for payment of balance of Rs.10,000/- and for execution of the sale deed. Though, the appellant/ plaintiff had let in evidence to the effect that unduly long time of 2 years was fixed for performance of the contract, in view of the fact that there were tenants in the property, the lower appellate court has found that this evidence viz., presence of tenant was not backed by the pleadings.

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The lower appellate court also found that the notice issued by the plaintiff on 11.06.2008 does not whisper anything about the existence of the tenants. The lower appellate court particularly relied upon the oral evidence of the plaintiff as PW1, wherein, he had deposed as follows:-

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////// jhth brhj;jpy; cs;s filia thliff;F tpl;L me;j thlifia gpujpthjp bgw;W tUfpwhh; vd;why; rhpjhd;/ me;j filapy; xU eluh$d; vd;gth; n$hjplk; ghh;f;Fk; bjhHpy; bra;fpwhh; vd;why; mJ vdf;F bjhpahJ/ ehd; jhth brhj;ij brd;W ghh;j;jjpy;iy/ gpjpthjpia vdf;F 2002k; Mz;L Kjy; mtUila mg;gh K:ykhf bjhpa[k;/ Vw;fdnt. gpujpthjpf;Fk; vdf;Fk; bfhLf;fy; th';fy; fld; ele;Js;sjh vd;why; ele;Js;sJ//////

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The lower appellate court found that an ordinary prudent human being is not expected to enter into an agreement of sale without even seeing the property. Though, a contention is raised by Mr.V.S.Kesavan, learned counsel appearing for the appellant that the plaintiff was aware of the property even earlier, but, such a statement is conspicuously absent either in the pleading or in the evidence.

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The lower appellate court has also concluded that the conduct of the parties would show that the relationship has been that of a creditor and debtor and not agreement vendor and vendee. Both the courts below have concluded that while it is open to the defendant in a suit for specific performance to raise a defence that the suit agreement was not intended to be acted upon as an agreement of sale, it was only executed as a security for the loan transaction they have differed on the factual conclusion.

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I have gone through the evidence on record. The evidence of PW1, as rightly pointed out by the lower appellate court does not inspire the confidence of the court. PW1 has deposed that he has not seen the property and he does not know whether it was occupied by the tenants. After all a civil litigation has to be decided on the preponderance of probabilities. One cannot expect direct evidence for a plea that the agreement was not intended to be acted upon as an agreement of sale, but, it was executed as a security for the loan transaction. The court has to necessarily go by prevailing circumstances and decide in accordance with preponderance of probability.

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It is the settled law that it is open to the defendant in a suit for specific performance to raise a plea which would invalidate the agreement. One such plea is that the agreement is not intended to be a sale agreement, but, was executed as a security for loan transaction. The lower appellate court had assessed the evidence and has come to the conclusion that the case of the defendant is more probable based on the evidence of PW1 himself.

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The contradiction between the evidence of PW1 and his father who was examined as PW2 were also pointed out by the lower appellate court in order to buttress the conclusion on the effect of the agreement. I do not find that the conclusions of the lower appellate court could be said to be perverse. The lower appellate court as a final court of fact, has exercised its discretion and held that the decree for specific performance if granted would work more hardship to the defendant than the plaintiff.

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I am therefore of the considered opinion that no ground has been made out to interfere with the said factual findings of the lower appellate court. In view of the above, the first question of law is answered to the effect that the lower appellate court as a final court of fact is duty bound to assess the evidence and come to its own conclusion. Therefore, it cannot be said that the lower appellate court cannot disbelieve the claim for specific performance based on a registered instrument.

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The question of burden of proof is nebulous term. The Hon'ble Supreme court as well as this court had time and again reiterated that once the entire maze of evidence is before the court, the burden of proof or principle of onus takes a back seat. Considering the evidence of PW1 and that of DW1, the lower appellate court has arrived at a certain factual conclusion. Therefore, I do not think that the same could be tinkered with in a Second Appeal. Hence, the second question of law is also answered against the appellant.

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I have already recorded my reasons for concluding that the findings of the lower appellate court cannot be said to perverse. The third question of law is answered to the effect that the conclusion of the lower appellate court cannot be termed as perverse, particularly in the light of the evidence that has been placed on record.

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Hence, I do not find any ground to interfere with the judgment and decree of the lower appellate court. The appeal therefore fails and it is dismissed. However, there shall be no order as to costs. Consequently, the connected miscellaneous petition is also closed.

-s/d-

Assistant Registrar

True Copy

Sub-Assistant Registrar

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dsa To

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The learned Principal District Judge, Erode.

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The learned I Additional Subordinate Judge, Erode.

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https://hcservices.ecourts.gov.in/hcservices/

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The Section Officer, V.R. Section, High Court of Madras, Chennai 600 104.

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+1 CC to Mr.S. Kesavan, Advocate sr 94014.

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S.A.No.336 of 2014

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SR(CO)
SP(08/09/2020)

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https://hcservices.ecourts.gov.in/hcservices/

K.G.Balasubramaniam v. M.Elanchezhian

Case brief

What is this about?

What did the court decide?

K.G.Balasubramaniam v. M.Elanchezhian

Case brief

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