Second Appeal under Section 100 CPC challenging a decree for specific performance. The appellants claimed the sale agreement was security for a loan. The High Court found no perversity in the lower courts' findings that the loan transaction was not proved and dismissed the appeal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
SA.No.915 of 2009
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 17.11.2023
PRONOUNCED ON : 11 . 01.2024
CORAM
THE HON'BLE Mr.JUSTICE C.KUMARAPPAN
S.A.No.915 of 2009
and
MP.No.1 of 2009
deceased 1st appellant vide order dated 03.08.2010 made in MP.1/2015
... Appellants/Defendant
vide order dated 15.09.2016 made in CMP.No.14868/2016)
... Respondents/Plaintiffs
Second Appeal is filed under Section 100 of the Civil Procedure Code against the judgment and decree of the I Additional District Court at Coimbatore dated 31.03.2009 in A.S.No.6 of 2007, confirming the judgment
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and decree of the Subordinate Judge's Court at Tirupur dated 2.9.2006 in O.S.No.537 of 2000.
For Appellants : Mr.S.Mukunth Senior counsel for M/s.Sarvabhauman Associates For Respondents : Mr.N.Manokaran for R1 to R4 *****
JUDGMENT
The instant Second Appeal has been filed at the instance of the
defendants and their legal representatives. The respondents herein are the plaintiff and her legal representatives.
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paid as an advance. The time for performance was fixed as two years and the balance sale consideration to be paid is Rs.25,000/-. According to the plaintiff, since June 2000, the plaintiff has been requesting the defendants to execute the sale deed. However, for one reason or the other, the defendants were evading to execute the sale deed. In the meanwhile, the defendants were attempting to alienate the suit property. Hence, the plaintiffs have come forward with the suit for specific performance and also for other reliefs.
4.(a) The said suit was resisted by the first defendant by contending that he is the small time vendor who sells Muruku in the old bus stand of Tiruppur for the past 20 years. He also stated that the alleged sale agreement dated 15.07.1999 is not at all a sale agreement and the same was executed only as a security for loan transaction. This defendant also disputes the ready and willingness of the plaintiff. It was further contended by the defendants that the plaintiff is a local financier and that he approached the plaintiff for a loan of Rs.30,000/-. In order to advance loan, the plaintiff demanded a sale agreement in their favour. Therefore, as per the demand made by the plaintiff, on 15.07.1999, a sale agreement was executed by the defendant as a security.
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(b) It was the further contention of the 2nd defendant that she being an illiterate woman, she did not know the contents of the sale agreement. It was the specific contention of the defendants that, on the date of the execution of the sale agreement, dated 15.07.1999, one Mr.Dhandapani, son of Mr.Ramasamy Udayar and another son Mr.Periasamy were present at the time of the execution of the sale agreement and also while borrowing the loan. This defendant further submits that on executing the sale agreement, the plaintiff has given a sum of Rs.27,000/- after deducting one month interest of Rs.3,000/-. It was further stated that the defendants approached the plaintiff on 15.08.1999 with a request to reduce the rate of interest from Rs.10/- per month for Rs.100/, to Rs.3/- per month for Rs.100/-. However, the plaintiff refused to reduce the rate of interest, but intimidated the defendants either to pay the loan amount or to execute the sale deed after receipt of the balance amount of Rs.25,000/-. Thereafter, the plaintiff has kept quiet for some time, and latter came forward with a false suit for specific performance. It is the submission of the defendants that when the plaintiff has allegedly paid a substantial amount, fixing two years period to pay the remaining paltry sum of Rs.25,000/- would emphatically establish the loan transaction. Hence, prayed to dismiss the suit.
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Evidence, Documents and Finding of the both the Court below:-
and PW2, and marked 7 documents as Exs.A1 to A7. On behalf of the defendants, 3 witnesses were examined as DW1 to DW3 and 3 documents have been marked as Exs.B1 to B3.
7.Not satisfied with the above order, the defendants preferred an appeal before the First Appellate Court. However, the First Appellate Court concurred with the finding rendered by the Trial Court and ultimately, dismissed the appeal, confirming the decree and judgment of the Trial Court.
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8.Aggrieved with the said order, the defendants and their legal
representatives are before this Court by way of this Second Appeal.
Substantial Question of Law:-
“a) When the probabilities of the case in the light of Exs.A5 & A6 (Salary Certificates) shows that the transaction between the appellants and respondents is a loan transaction, are the Courts below correct in misappreciating the evidence and decreeing the suit for specific performance overlooking the very averment in the plaint which shows a meager amount is left as balance consideration to be complied after a longer duration?”
Submission of either side counsel:-
10.The learned Senior Counsel for the defendants/appellants would contend that the very nature of the sale agreement (Ex.A1) would exemplify the existence of the loan transaction. The learned Senior Counsel would also contend that for proving the loan transaction, it is sufficient to establish some significant factor so as to prove such transaction, and that such proof is not beyond reasonable doubt but only based up on the preponderance of
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probability. The learned Senior Counsel would also invite the attention of this
name of the defendants, and by relying the same would contend that, only because of the existence of loan transaction, the plaintiff obtained the Salary Certificates from the defendants. The learned Senior Counsel would further contend that the long duration of two years to pay remaining sale consideration of the paltry sum of Rs.25,000/- would also prove the case pleaded by the defendants. Thus, the learned Senior Counsel would submit that in spite of availability of abundant evidence to prove the loan transaction, both the Courts below have erred, and wrongly found that the Sale Agreement was true and binding between the parties. In support of the appellants' contention, the learned Senior Counsel relied upon the following judgments:-
2. Mrs.Pappammal @ T.Pappa Vs. Mr.P.Ramasamy reported in 20124-L.W.435.
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2. D.Ananda Moorthy Vs. P.Chandrakala reported in (2010) 5 MLJ 899;
3. T.G.Pongiannan Vs.K.M.Natarajan and another reported in 2009 (6) CTC 301;
4. M.Ramalingam (died) and others Vs. V.Subramanyam (died) and others reported in (2003) 1 M.L.J 694;
5. Sughar Singh Vs. Hari Singh (Dead) through L.Rs and Ors., reported in AIR 2021 SC 5581; and
6. Madhukar Nivrutti Jagtap and Others Vs. Pramilabai Chandulal Parandekar (Dead) through Legal Representatives and others reported in (2020) 15 SCC 731.
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Analysis of the submissions:-
of a sale agreement under Ex.A1. However, their contention is that Ex.A1-Sale Agreement was executed only by way of a security. In this regard, it is appropriate to discuss the precedents submitted by the learned Senior Counsel appearing for the appellants. The learned Senior Counsel by relying upon Tejram 's case [cited supra] would contend that issuance of notice seeking specific performance after the period of 3 years would exemplify the existence of a loan transaction. But on a close reading of the reported judgment, there was finding that the agreement holder was money lender. Further, in the said judgment, in spite of stipulation to pay the remaining sale consideration within a period of one year, he took three years. Only in that context, the Hon'ble Supreme Court held that issuance of notice demanding specific performance just a day before the completion of 3 years would be a factor to prove the existence of a loan transaction. But in the case on hand the fact remains otherwise and the plaintiff acted with in the stipulated time. Therefore, the above ruling is not applicable to the present facts of this case.
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15.The learned Senior Counsel has also relied upon the judgment of the
Hon'ble Supreme Court in Smt.Gangabai Vs. Smt.Chhabubai reported in (1982) I SCC 4 , in respect of the applicability of Section 92 of The Indian Evidence Act. This Court absolutely has no grievance over the principles enunciated in the above precedents. Here, what is essential is that, though the defendants can set up a different transaction, while admitting the execution of some document, whether he discharged the burden to prove such a different transaction. Here, in the case on hand, both the Courts below have found that
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the defendants has not proved the existence of a different transaction qua the loan transaction.
“25. Section 20 of the Specific Relief Act (pre-amendment), which confers discretion on the court to exercise jurisdiction to decree of specific performance, states that this exercise should not be arbitrary, but guided by sound and reasonable judicial principles. Interpreting and elucidating on Section 20 of the Specific Relief Act (pre-amendment) and factors to be considered, this Court in Kamal Kumar v. Premlata Joshi [Kamal Kumar v. Premlata Joshi, (2019) 3 SCC 704 : (2019) 2 SCC (Civ) 405] has also referred to Sections 16(c), 22, 23 and 24 of the Specific Relief Act and Forms 47/48 of Appendix A to C of the Civil Procedure Code, 1908, to summarise : (SCC pp. 705706, paras 7-8)
“7. It is a settled principle of law that the grant of relief of specific performance is a discretionary and equitable relief. The material questions, which are required to be gone into for grant of the relief of specific performance are:
7.1. First, whether there exists a valid and concluded
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contract between the parties for sale/purchase of the suit property.
7.2. Second, whether the plaintiff has been ready and willing to perform his part of contract and whether he is still ready and willing to perform his part as mentioned in the contract.
7.3. Third, whether the plaintiff has, in fact, performed his part of the contract and, if so, how and to what extent and in what manner he has performed and whether such performance was in conformity with the terms of the contract.
7.4. Fourth, whether it will be equitable to grant the relief of specific performance to the plaintiff against the defendant in relation to suit property or it will cause any kind of hardship to the defendant and, if so, how and in what manner and the extent if such relief is eventually granted to the plaintiff.
7.5. Lastly, whether the plaintiff is entitled for grant of any other alternative relief, namely, refund of earnest money, etc. and, if so, on what grounds.
8. In our opinion, the aforementioned questions are part of the statutory requirements [see Sections 16(c), 20, 21, 22, 23 of the Specific Relief Act, 1963 and Forms 47/48 of Appendix A to C of the Code of Civil Procedure]. These requirements have to be properly pleaded by the parties in their respective pleadings and proved with the aid of evidence in accordance with law. It is only then the Court is entitled to exercise its discretion and accordingly grant or refuse the relief of specific performance depending upon the case made out by the parties on facts.
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26. Sub-section (2) to Section 20 of the Specific Relief Act (preamendment) lists some of the principles that the court should take into consideration while exercising discretion. The factors to be considered while exercising discretion include hardship to the defendant seller which he did not foresee, hardship to the plaintiff purchaser in case of non-performance, or whether the contract, even when not void, was entered under the circumstances that make the enforcement of specific performance inequitable, or whether the plaintiff has done substantial acts or suffered losses as a consequence of the contract, and the conduct of the parties, including that of the defendant seller and other circumstances under which the contract was entered are such that they give an unfair advantage over the defendant seller.”
Moorthy 's case [cited supra], the relevant paragraph is paragraph 43 and the same reads as follows:-
“ 43 . In the instant case the specific stand of the plaintiff is that Ex.A1 is a sale agreement. But the specific stand of the defendant is that Ex.A1 has come into existence as a security for the loan alleged to have been received by him from the husband of the plaintiff. Since the specific stand of the defendant is that Ex.A1 is not a sale agreement and the same has come into existence only as a security for the loan alleged to have been received by him from the husband of the plaintiff, the bar created under Sections 91 and 92 of the Indian Evidence Act is not applicable to the facts and circumstances of the present case.”
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this Court in Ramalingam's case [cited supra], wherein it has been held that whenever a loan transaction is being pleaded, there is a bounden duty on the part of the parties to prove such factum before the Court.
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contravention to the written of the defendants. According to the written statement, the said Dhandapani was present while executing Ex.A1-sale agreement and he knew the nature of agreement and as to why such agreement
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came in to existence. But he pleaded ignorance of sale agreement and he stated
that he do not know as to the execution of the said agreement. Therefore, this Court is of the firm view that there are no evidence to prove that the Ex.A1-sale agreement was executed as security for loan transaction.
23.As a matter of fact, before filing the suit for specific performance, the plaintiff has issued legal notice under Ex.A2, which appears to have returned with an endorsement as “not claimed” and the returned covers have been marked as Exs.A3 and A4. However, the first defendant in all fairness, has admitted that he has received such notice. The relevant admission is as under:-
“2000y; tf;fPy; mwptpg;g[ te;jJ vdf;F bjhpa[k;/ tf;fPy; mwptpg;g[ te;jij th';fpf;bfhz;nld;/ mjw;F gjpy; mwptpg;g[ mDg;gpndd;/ ”
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after a period of two years. But, the plaintiff, by examining PW2, who was attestor to Ex.A1-Sale Agreement, has proved the due execution of the sale agreement.
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perverse and such finding is without any evidence . In this regard, it is useful to refer the judgment of the Hon'ble Supreme Court in Hero Vinoth(Minor)Vs-Seshammal, reported in (2006)5 Supreme Court Cases 545.
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order as to costs. Consequently, connected MP is also closed.
11.01.2024
kmi Index : Yes Speaking Order : Yes NCC : Yes/No To
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C.KUMARAPPAN,J
kmi
S.A.No.915 of 2009
11.01.2024
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2 issues framed by the court
Whether the trial court and first appellate court erred in failing to appreciate evidence suggesting the sale agreement was security for a loan.
Whether the defendants successfully discharged the burden to prove the loan transaction underlying the sale agreement.
Colour shows how this judgement treated each authority
Tejram Vs. PatirambhauDistinguished¶13
(1997) 9 SCC 634 · Who else cites this
Mrs.Pappammal @ T.Pappa Vs. Mr.P.RamasamyDistinguished¶14
20124-L.W.435
Smt.Gangabai Vs. Smt.ChhabubaiReferred¶15
(1982) I SCC 4 · Who else cites this
P.Daivasigamani Vs. S.SambandanRelied on¶16
(2022) 14 SCC 793 · Who else cites this
D.Ananda Moorthy Vs. P.ChandrakalaReferred¶17
(2010) 5 MLJ 899
M.Ramalingam (died) and others Vs. V.Subramanyam (died) and othersReferred¶18
(2003) 1 M.L.J 694
Sughar Singh Vs. Hari Singh (Dead) through L.Rs and Ors.Referred¶19
AIR 2021 SC 5581 · Who else cites this
Hero Vinoth(Minor)Vs-SeshammalReferred¶25
(2006) 5 Supreme Court Cases 545
3 provisions across 3 enactments
V.Subramaniam (Deceased), S.Saraswathi, D.Krishnaveni, S.Sabarieswaran
T.Needhimani, Minor N.Vignesh Needhi, Minor N.Mowleeshwar Needhi, Minor N.Narmadha Needhi
C.Kumarappan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
