Dismissed

Kulbir Kaur & Ors. v. Amrik Singh& Ors.

Punjab & Haryana HC24 Apr 2014RSA/5026/2013

Case brief

AI extract

What is this about?

The Punjab and Haryana High Court dismissed a second appeal challenging a decree for specific performance of a sale agreement. The court upheld the lower appellate court's decision, noting that findings regarding the agreement's execution and the plaintiff's readiness and willingness were final and not challenged by the appellants.

What did the court decide?

The appeal was dismissed as without merit, maintaining the decree for specific performance of the agreement to sell.

Kulbir Kaur & Ors. Vs Amrik Singh… — Contract and Commercial Disputes | Punjab & Haryana HC (2014)

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RSA No.5026 of 2013(O&M)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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RSA No.5026 of 2013(O&M) Date of decision: 24.4.2014

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Kulbir Kaur & ors.

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......Appellant(s)

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Versus

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Amrik Singh & ors.

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......Respondent(s)

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CORAM:HON'BLE MR.JUSTICE RAKESH KUMAR GARG

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Present: Mr. Puneet Jindal, Advocate for the appellant(s).

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Rakesh Kumar Garg, J. (Oral)

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This is defendants' second appeal challenging the judgement and decree of the Lower Appellate Court dated 22.8.2013, whereby, the judgement and decree of the trial court granting alternative relief of recovery of earnest money along with interest in favour of the plaintiffrespondents has been modified and a decree for specific performance of the agreement to sell in question has been passed against the defendantappellants.

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The brief facts of the case are that the plaintiff-respondents filed the instant suit for specific performance of the agreement to sell dated 12.9.2001 in respect of suit land measuring 18 Kanals 8 marlas, as detailed in the suit, against defendant-Paramjit Singh. As per the averments, Paramjit Singh, predecessor-in-interest of the appellants, was the owner in possession of the suit property, who agreed to sell the same in favour of the plaintiff-respondents @ Rs. 2,80,000/- per acre and received a sum of Rs.3,65,000/- as earnest money and further executed an agreement to sell in this regard on 12.9.2001. The sale deed of the suit

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RSA No.5026 of 2013(O&M)

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property was to be executed on or before 11.3.2002 on receipt of remaining sale consideration. As per the further averments, the plaintiffs remained ready and willing to perform their part of the agreement but defendant No.1-Paramjit Singh did not pay any heed to the request of the plaintiffs for execution and registration of the sale deed. Rather, he sold some part of the disputed property in favour of Balwant Singh-defendant No.3. It was further averred that defendant No.2-Bank was impleaded as party as disputed land was mortgaged for a sum of Rs.4,50,000/-. Since defendant No.1 failed to perform his part of the agreement on the due date, necessity arose to file the instant suit.

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Upon issuance of summons, defendant No.1-Paramjit Singh appeared and filed written statement raising various preliminary objections. It was further averred that he neither entered into an agreement with the plaintiffs nor received any earnest money from them. The plaintiffs got obtained signatures of defendant No.1 on a blank papers for furnishing surety in some case which have been later on converted into valuable document. Thus, the agreement in question is a result of fraud and misrepresentation and defendant No.1 was not bound with the same. The remaining averments of the plaint were denied and dismissal of the suit was prayed.

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Defendant No.2-Bank in its written statement has not denied the fact that disputed property was mortgaged with it for a loan of Rs.4,50,000/- as collateral security. However, execution of agreement by defendant No.1 in favour of the plaintiffs was denied for want of knowledge.

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Defendant No.3-Balwant Singh in his written statement alleged that defendant No.1 agreed for the sale of land measuring 23 Kanals 18 Marlas in his favour for a sum of Rs.5,10,000/- and received a sum of Rs.3

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RSA No.5026 of 2013(O&M)

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lakhs from him as earnest money on 7.1.2004. Thereafter, defendant No.1 died and his legal heirs failed to execute the sale deed in his favour which resulted into filing of suit for specific performance titled as 'Balwant Singh versus Kulwinder Kaur etc' which is pending. Defendant No.3 claimed that the instant suit was result of collusion between the plaintiffs and defendant No.1 and theplaintiffs were stopped by their own act and conduct from filing the present suit which was bad for non-joinder and mis-joinder of necessary parties. On merits, defendant No.3 denied allegations of the plaint and claimed that the plaintiffs were not entitled to any relief by way of present suit.

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The plaintiffs filed replication denying the allegations of defendant No.1 contained in the written statement and reiterating those as mentioned in the plaint as correct.

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From the pleadings of the parties, the following issues were

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framed:

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“1. Whether defendant Paramjit Singh received

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earnest money and executed the agreement dated 12.9.2001 in favour of plaintiffs to sell the suit land? OPP

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2. Whether the agreement to sell dated 12.9.2001 is result of fraud etc.? OPD

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3. Whether the plaintiffs are ready and willing to perform their part of agreement? OPP

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4. Whether the State Bank of Patiala Shahkot has any rights over suit land and is so its effects?

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OPD

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5. Whether there is any agreement of land

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RSA No.5026 of 2013(O&M)

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measuring 23 Kanals 16 marlas in favour of defendant No.3 Balwant Singh and if so its effect? OPD

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6. Whether plaintiffs are entitled to relief of specific performance? OPP.

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7. Whether plaintiffs are entitled to any alternative or additional relief? OPP

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8. Relief."

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In order to prove their case, plaintiff-Amrik Singh himself stepped into witness box as PW1 (However, while cross examination he was wrongly recorded as PW2). The plaintiffs also examined Harjinder Singh son of Karnail Singh as PW2, Harjinder Singh Kaler son of Lal Singh Klare as PW3 and Surjit Singh as PW4 .

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On the other hand, defendant No.3 Balwant Singh himself stepped into witness box as DW1. Kulbir Kaur, one of the legal heirs of defendant No.1 also appeared as DW6. The defendants also examined Pawan Kumar Sood as DW2, Harbans Singh as DW3, Kulwant Singh as DW4, Garib Singh as DW5 and thereafter, the defendants closed their respective evidence.

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After hearing learned counsel for the parties and appreciating the evidence on record, the trial court decided issues No.1 to 3 in favour of the plaintiffs and against the defendants. Under issue No.4, it was held that defendant No.2 was having preferential rights over the property to the extent of recovery of the loan amount from the property in question, in case defendant No.1 fails to repay the said loan. Issues No.5 and 6 were decided in favour of the defendants and against the plaintiffs whereas issue No.7 was decided in favour of the plaintiffs and ultimately, vide judgement

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RSA No.5026 of 2013(O&M)

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and decree dated 9.9.2010 of the trial court, the suit of the plaintiffs was decreed for the alternative relief in their favour and against the defendants to the extent that the plaintiffs were entitled to recovery of Rs.3,65,000/from defendant No.1 along with pendente lite interest @ 9% per annum and future interest @ 6% per annum. However, the suit of the plaintiffs against defendants No.2 and 3 was ordered to be dismissed.

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At this stage, it may be noticed that the appellants, who are the LRs of defendant No.1, failed to challenge the findings of the trial court on any of the issues by filing an appeal before the Lower Appellate Court. However, the plaintiff-respondents preferred an appeal against the aforesaid judgement and decree of the trial court feeling aggrieved from the denial of relief of specific performance of agreement to sell in question to them. Upon issuance of notice in the appeal, LRs of defendant No.1 appeared through their respective counsels and contested the appeal whereas the respondent-bank was proceeded against ex parte. Appeal filed on behalf of the plaintiff-respondents was accepted by the Lower Appellate Court vide judgement and decree dated 22.8.2013 and findings of the trial court on issue No.6 were reversed and judgement and decree of the trial court dated 9.9.2010 was modified decreeing the suit of the plaintiff-respondents for possession by way of specific performance of agreement to sell dated 12.9.2001 in respect of the suit land. The appellants, who are the legal heirs of defendant No.1, were directed to execute the sale deed in favour of the plaintiff-respondents on payment of balance sale consideration.

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Feeling aggrieved from the aforesaid judgement and decree of the Lower Appellate Court, LRs of defendant No.1 have filed the instant suit framing the following substantial questions of law said to be arising in the

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RSA No.5026 of 2013(O&M)

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instant appeal:

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“(i) Whether in the present fact and circumstances of the case the relief of specific performance could have been granted to plaintiff against the respondent no.1/appellant by the lower appellate court?

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(ii) Whether the judgement of the Ld. Lower Appellate Court without taking into consideration Exh. D3 and D4 read with admission of Deed Writer PW3 produced by the plaintiff himself is sustainable?

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(iii) Whether after the concealment of true facts and for deposing falsely before the Hon'ble Courts below the suit of the plaintiff could have been decreed by the Ld. Appellate court?

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(iv) Whether intention of the parties not to transfer the property, which is duly established on record by the conduct of the parties, could have been ignored by the Ld. Appellate Court?

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(v) Whether discretionary relief of specific performance under section 16 of the specific relief act could have been decreed in the face of admission of fact the plaintiff for having made no enquiries?

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(vi) Whether the relevant evidence has been misread and misinterpreted by the Courts below? (vii) Whether the judgement and decree of the

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RSA No.5026 of 2013(O&M)

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Courts below without considering pleadings and evidence on record is sustainable?”

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However, during the course of hearing and finding that the appellants have failed to challenge the findings of the trial court on all the issues, the learned counsel for the appellants has framed the following substantial questions of law said to be arising in this appeal and has confined his arguments to substantiate the following substantial questions of law:

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“(i) Whether in the present facts and circumstances of the case, the relief of specific performance could have been granted to the plaintiff-respondents against the appellants by the Lower Appellate Court?

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(ii) Whether the discretionary relief of specific performance under section 16 of the Specific Relief Act could have been decreed in the face of the evidence?

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(iii) Whether the exercise of discretion under Section 20 of the Specific Relief Act by the Lower Appellate Court in favour of the plaintiffrespondents is arbitrary and whimsical?

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In support of his case, learned counsel for the appellants has vehemently argued that the agreement to sell in question was not enforceable against the appellants as the plaintiff-respondents had obtained the signatures of their predecessor-in-interest on some blank papers for furnishing the surety for extending loan which they later on converted into an agreement to sell and is a result of fraud. Counsel for the

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RSA No.5026 of 2013(O&M)

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appellants has further argued that the Lower Appellate Court has totally ignored the fact that deceased-Paramjit Singh had earlier taken some loan from the plaintiff-respondents and earlier too agreement to sell as security document was executed between the same parties and was extended too. The above stated fact of existence of earlier agreement to sell which was further extended on 8.5.2001 coupled with the statement of DW-4-Kulwant Singh clearly proves the contention of the appellants. It is the further case of the appellants that Paramjit Singh himself had purchased the suit land @ Rs.4,95,000/- per acre just 8-9 months prior to the alleged agreement to sell in question and so question of selling the said land at a meagre price i.e @ Rs.2,80,000/-per acre does not arise at all and the same clearly establishes the fact that the agreement to sell in question is the result of fraud and misrepresentation. According to the learned counsel for the appellants, plaintiff-Amrik Singh, while appearing as PW1, has admitted that he did not enter into any agreement to sell and thus, all these facts noticed above indicate only one conclusion i.e. the plaintiff-respondents had no intention to purchase the disputed property and in fact the agreement to sell in question was executed to secure a loan transaction between the plaintiffs as well as defendant No.1 and in view of the aforesaid evidence on record, discretion exercised by the Lower Appellate Court granting decree cannot be sustained.

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Counsel for the appellants has relied upon the judgement of this Court in Kala Singh versus Mahinder Singh, 2010(7) RCR (Civil) 3006 to contend that in a suit for specific performance of the agreement to sell in the given facts and circumstances, it is the discretion of the court to grant alternative relief of recovery of amount instead of specific performance of the agreement to sell in case it is found that such a

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RSA No.5026 of 2013(O&M)

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transaction was a loan transaction and the intention of the parties to execute the document as security to such a loan amount.

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Counsel for the appellants has further relied upon a judgement of the Hon'ble Supreme Court in the case of Satya Jain versus Anis Ahmed Rushdie AIR 2013 Supreme Court 434 , to contend that the discretion to direct specific performance of an agreement has to be exercised on sound, reasonable, rational and acceptable principles and the parameters for the exercise of discretion vested under section 20 of the Specific Relief Act, 1963 cannot be entrapped within any precise expression of language and the contours thereof will always depend on the circumstances of each case.

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On the basis of the aforesaid judgement, it has been argued that in the facts and circumstances of the case, the Lower Appellate Court should not have exercised its discretion in favour of the plaintiffs decreeing their suit for specific performance of the agreement to sell in question.

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I have heard learned counsel for the appellants and perused the impugned judgement and decree of the Lower Appellate Court as well as judgement and decree of the trial Court.

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Admittedly, issues No.1 and 2 have been decided by the trial Court in favour of the plaintiff-respondents holding that the defendantParamjit Singh executed the agreement to sell dated 12.9.2001 in favour of the plaintiffs to sell the suit land and also received the earnes money and the appellants have failed to prove that the said agreement to sell was result of fraud. Not only this, under issue No.3, a specific finding was recorded by the trial Court that the plaintiff-respondents remained ready and willing to perform their part of the agreement and was still ready and willing to perform their part of agreement. However, under issues No.6 and

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RSA No.5026 of 2013(O&M)

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7, the trial court held that although the plaintiffs have successfully proved the execution of agreement in question but they did not have intention to purchase the disputed property and thus, the relief specific performance cannot be granted and therefore, the plaintiff was entitled to the alternative relief. It is further not in dispute that the defendants chose not to file any appeal against the aforesaid judgement and decree of the trial Court and thus, the aforesaid findings qua defendant No.1 became final against him. It is also a matter of record that the appellants have filed the instant appeal challenging the judgement and decree of the Lower Appellate Court whereby the findings on issue No.6 were reversed against them holding that the plaintiff-respondents were entitled to the relief of specific performance instead of alternative relief of recovery of the earnest money.

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In view of the aforesaid facts, the appellants have confined their argument only to the extent of challenging the relief of specific performance granted in favour of the plaintiff-respondents by the Lower Appellate Court submitting the arguments, as noticed above, to support their case. So far as the ratio of law as canvassed by the counsel for the appellants on the basis of the judgements sought at the Bar is concerned, this Court has no dispute with the same. However, in the instant case, on the basis of the arguments raised, it cannot be held that the intention of the plaintiff-respondents was not to purchase the suit property and the document in question was executed by the appellants in favour of the plaintiff-respondents as a collateral security for the loan secured, as execution of the agreement to sell in question and receipt of earnest money stand duly proved against the appellants. Even under issue No.3, the trial court has recorded a finding to the effect that the plaintiff- respondents remained ready and willing to perform their part of the agreement. In the

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RSA No.5026 of 2013(O&M)

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absence of any challenge to the aforesaid findings by the appellants and on the basis of evidence as referred to by the counsel for the appellants, it cannot be concluded that the parties had no intention to purchase/sell the property in question and the document was created only for the purpose of collateral security.

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In fact, the argument of the learned counsel for the appellants that there were earlier agreements between the parties and the same were not acted upon will give rise to the presumption that the parties' intention was to create collateral security to secure the loan is liable to be rejected, as it was for the appellants to plead and prove necessary facts on the basis of the entries in the register of scribe (Ex.D3 and D4) stating that earlier also such agreements were executed which were not acted upon and were cancelled on return of loan amount. In fact pleaded case of the appellants is that the plaintiffs obtained the signatures of defendant No.1-Paramjit Singh (predecessor-in-interest of the appellants) on blank papers for furnishing surety in some case and later on converted the same into valuable document i.e. the agreement in question. It is not the case of appellants that defenent No.1 signed the document of collateral security to raise loan. Thus, the argument as raised is contrary to the pleadings. Moreover, the appellants have neither pleaded such facts in their written statement nor has brought on record any evidence to prove the fact that on return of the alleged loan amount against the aforesaid documents, the same were cancelled. In the absence of any such evidence simply because there are entries in the register of scribe (Ex.D3 and D4) that such agreement to sell were executed between the parties earlier also will not give rise to the conclusion that the agreement to sell in question was for the purpose of creating a collateral security to secure the loan and no such

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RSA No.5026 of 2013(O&M)

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inference can be drawn as suggested.

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At this stage, it is useful to observe that the grant of specific performance is a discretionary relief and once the Lower Appellate Court on the basis of findings recorded have exercised its discretion to grant the decree of specific performance in favour of the plaintiff-respondents such a discretion cannot be interfered by this Court unless it can be shown that such discretion was used arbitrarily or whimsically which is not the case in hand. Thus, no fault can be found with the impugned judgment and decree of the Lower Appellate Court.

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Thus, the substantial questions of law, as raised, do not arise

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at all in the instant case.

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The appeal is dismissed being without any merit.

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April 24, 2014 ps

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RAKESH KUMAR GARG) JUDGE

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Kulbir Kaur & Ors. v. Amrik Singh& Ors.

Case brief

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Kulbir Kaur & Ors. v. Amrik Singh& Ors.

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