Judgment:
J.H. Bhatia, J.
1. The original defendant Nos. 1 to 4 have preferred this Appeal challenging the Judgment and decree for specific performance of contract in Special Civil Suit No. 595 of 1986 passed by the Civil Judge, Senior Division, Pune, in favour of the original plaintiff, who is respondent No. 1 in the present Appeal.
2. To state in brief, the plaintiff is a Co-operative Housing Society and it filed the suit for specific performance of contract against the defendants. The suit pertains to two properties shown as property A and property B in the plaint. Property A is 2 acres and 10 gunthas land from southern side out of Survey No. 30/2 admeasuring 13 acres and 15 gunthas belonging to defendant No. 3 Arviind Shankar Potnis. Property B is 2 acres and 2 gunthas land from southern side of Survey No. 29/2 admeasuring 1 Hectare and 91 Ares and it belongs to the defendant No. 2 - Raghunath Shankarrao Potnis.
3. According to the plaintiff, it had purchased certain lands and constructed certain houses for its members. However, even after accommodating about 30 members, there were large number of persons, who were on waiting list, aspired to have their own houses in the Society. Therefore, the plaintiff-society was interested in purchase of some land, particularly adjoining or near its existing land. The defendant Nos. 1 to 4 had assumed the possession of the lands survey Nos. 29, 30 and 31 in the year 1970 from their tenants. While defendant Nos. 1 to 4 were residing at Gwalior, defendant No. 5 was managing their property and claimed to be their agent. He used to act as per the advice of one Vasant Karhalkar Advocate of Kopargaon, who is the maternal uncle of defendant Nos. 1 to 4. The plaintiff approached defendant No. 5 for purchase of the suit property and he assured to see that the suit property was sold by defendant Nos. 1 to 4 to the plaintiff. In the year 1972, the plaintiff paid amount of Rs. 9,000/-to defendant No. 5 for and on behalf of defendant Nos. 1 to 4. Defendant No. 5 gave that amount to Vasant Karhalkar Advocate, towards part of consideration of the land. As per the oral agreement, the rate of the land would be Rs. 1,30,000/-per acre and the actual price would be determined only after measurement of the land. It was also agreed that the suit land marked A would either be directly sold in favour of the plaintiff or the defendant No. 5 would get the sale deed in his favour and then he would transfer the property to the plaintiff. Even though defendant No. 5 assured all the co-operation, he was avoiding the measurement of the land by giving one or the other reason from time to time. In the year 1976, Urban Land Ceiling Act came into force and, therefore, the property could not be sold. The defendants refused to sell the suit property by giving one or the other reasons and finally, the defendants denied that there was any agreement for sale.
4. In view of these circumstances, in 1982, the plaintiff had to involve a third person, namely, Shrikant Murlidhar Chandratre to get this property from the defendants. As per the agreement between the plaintiff and said Shrikant Chandratre, said Shrikant Chandratre was to get an agreement for sale executed from the defendants. Accodingly, Shrikant entered into an agreement with defendant Nos. 2 and 3 to purchase suit land marked A at the rate of Rs. 1,30,000/-per acre and defendant No. 2 as power of attorney holder for defendant No. 3 executed the agreement for sale on 7.11.1982. An amount of Rs. 1,50,000/-was paid to the defendants by a demand draft as earnest money and that money was paid by the plaintiff. The defendants were aware that Shrikant Chandratre was entering into contract with them for and on behalf of the plaintiff. Shikant Chandratre, in turn executed similar agreement for sale in favour of the plaintiff. Similarly, on 7.11.1982, defendant No. 2 executed an agreement for sale of suit land marked B in favour of defendant No. 5, who had in fact entered in the agreement for and on behalf of the plaintiff. Even though defendant No. 5 had assured to give co-operation, he in fact did not co-operate except putting signature on the statement to be submitted to the Competent Authority under the Urban Land Ceiling Act. He did not execute any other document. On 28.9.1984, the plaintiff issued a notice to the defendant Nos. 1 to 4 to execute sale deed. However, they did not respond which made it clear that they were not inclined to perform their part of the contract. In such circumstances, the plaintiff filed the suit for specific performance of contract. According to them, by virtue of the agreements dated 7.11.1982 executed in favour of Shrikant Chandratre and defendant No. 5and signing of the statement by defendant No. 5 on 1.8.1983, the earlier oral agreement of 1972 was only confirmed. Therefore the suit is within limitation. According to the plaintiff, it has been ready and willing to perform its part of the contract and to pay the balance amount of consideration and to get sale deed executed.
5. Defendants Nos. 1 and 4,who were the formal parties, and defendant No. 5 did not file any written statement. Defendant No. 2 and the legal representatives of deceased defendant No. 3 contested the suit by filing written statement, exhibit 34. They denied that defendant No. 5 was their agent at any time and that he was authorised to enter into any contract for sale of their property. They also denied that defendant No. 5 had ever entered into any agreement with the plaintiff for and on behalf of the defendant Nos. 2 and 3 to sell the land. They also denied that they had received any amount as part of the consideration. They also denied that defendant No. 5 or one Vasant Kolhalkar were their power of attorney holders with authority to sell their property. They also denied that Shri Vasant Korhalkar had received any amount on behalf of the defendants from the plaintiff in the year 1972 or so. They admitted that defendant No. 3 had entered into an agreement for sale of the suit property marked A in favour of Shrikant Chandratre and that defendant No. 2 had executed an agreement for sale in respect of the suit property marked B in favour of defendant No. 5 but according to them, the plaintiff had no concern with the said transactions between defendant Nos. 2 and 3 on one hand and defendant No. 5 and said Shrikant Chandratre on the other. They denied that Shrikant Chandratre and defendant No. 5 had any right to enter into any transaction with the plaintiff-Society. They also denied that they had received amount of Rs. 1,50,000/-or any other amount from the plaintiff through Shrikant Chandratre in the year 1982. According to them, they did not reply to the notice issued by the plaintiff in 1984 because they had no concern with the plaintiff. According to them, the plaintiff was trying to take undue advantage of the agreement executed by defendant Nos. 2 and 3 in favour of defendant No. 5 and Shrikant Chandratre. They also contended that that suit was barred by limitation. Several other technical pleas were taken and, according to them, the suit was liable to be dismissed.
6. Several issues were framed by the trial Court at Exhibit 31. On behalf of the plaintiff, its Secretary, PW.1 Bhagwan Mainkar and P.W.2 Vilas Kulkarni were examined. Besides this, no oral evidence was led by any of the parties. The parties totally relied upon the documentary evidence. After hearing the evidence led by the parties, the trial Court held that the suit was within limitation, that defendant No. 5 was working as Manager for defendant Nos. 1 to 4, that the plaintiff had entered into agreement for sale of the suit lands with the defendants through defendant No. 5 in 1972 and that the plaintiff had paid amount of Rs. 9,000/-to the defendant No. 5 for and on behalf of the defendant Nos. 1 to 4 as part of the consideration amount. The trial Court also held that the agreements dated 7.11.1982 executed by the defendants Nos. 2 and 3 in favour of defendant No. 5 and Shrikant Chandratre were for the benefit of the plaintiff-society and the said agreement confirmed the original agreement of 1972. In the result, the suit came to be decreed for specific performance of the contract.
7. Heard the learned Counsel for the parties. Perused the oral and documentary evidence as well as the impugned judgment passed by the trial Court.
8. Following points arise for my determination and I record my findings against them for the reasons given below:
POINTS FINDINGS
(i) Whether the plaintiff prove sthat the No defendant No. 5 was authorised by the defendants Nos. 1 to 4 to enter into any transaction for sale of the suit land on their behalf in the year 1972 or thereafter?
(ii) Whether the plaintiff proves that in the year No 1972, defendant No. 5 had entered into an agreement for sale of the suit land on behalf of the defendants Nos. 1 to 4 and in favour of the plaintiff?
(iii) Whether the agreements dated 7.11.1982 No only confirmed the agreement for sale of 1972 in favour of the plaintiff?
(iv) Whether the agreement for sale dated 7.11.82 No executed by defendant No. 2 in favour of defendant No. 5 Ratnakar Chandorkar was for the benefit of the plaintiff-society ?
(v) Whether the agreement for sale executed No by defendant No. 3 in favour of Shrikant Chandratre on 7.11.1982 was for the benefit of the plaintiff-society?
(vi) Whether the plaintiff, being a principal of No Shrikant Chandratre, is entitled to enforce agreement for sale in respect of the suit property A against the defendant No. 3 ?
(vii) Whether the plaintiff is entitled to get decree No for specific performance of contract for sale of the suit land ?
(viii) What order As per final order.
REASONS
9. There is no dispute about the title of defendant Nos. 2 and 3 on the suit land marked B and A respectively. Defendants Nos. 1 and 4 are brothers of defendants Nos. 2 and 3 and they were impleaded only formal parties just to avoid any future complications and they do not have any direct concern with the property or with the suit transactions. Voluminous documentary evidence was produced by the plaintiff before the trial Court to establish that the defendant No. 5 was the local manager of the suit property on behalf of defendants Nos. 1 to 4 and he represented himself as Manager or agent of the defendants Nos. 1 to 4. According to the plaintiff, the first agreement took place in May 1972 between the plaintiff and the defendant No. 5 whereby defendant No. 5 agreed, on behalf of defendants Nos. 1 to 4, to sell or to get the suit land sold in favour of the plaintiff at the price of Rs. 1,30,000/-per acre. The actual consideration was to be determined only after the measurement of the land. According to the plaintiff, amount of Rs. 9,000/-was paid to defendant No. 5 Ratnakar Chandorkar in 1972 and he had deposited that amount with Vasant Korhalkar, Advocate, who is the maternal uncle of defendants Nos. 1 to 4. On behalf of the plaintiff, PW-1 Bhagwan Mainkar deposed about these facts and in the cross-examination, suggestions were given to him that that evidence is false. It is true that the defendant No. 5 Chandorkar did not enter into witness box. It is material to note that about the alleged agreement of May 1972, there is no written document either to show the agreement or to show that any amount was paid by the plaintiff to the defendants Nos. 1 to 4 through defendant No. 5 or through Vasant Korhalkar, Advocate. It was contended on behalf of the plaintiff that they had learnt that the said amount of Rs. 9,000/-was also shown by said Vasant Korhalkar in his income-tax returns as a deposit received from the plaintiff on behalf of the defendants Nos. 1 to 4. The recored reveals that on the request of the plaintiff, information was called from the Income-tax Officer C Ward, Ahmednagar by the trial Court and the copy of the assessment order, Exhibit 66 for the assessment year 1973-74 in respect of Shri Vishveshwar M. Korhalkar of Kopergaon was submitted by the I.T.O. to the trial Court. It is said that Vishweshwar Korhalkar is also known as Vasant Korhalkar. Mr. Sawant, the learned Counsel for the defendants/appellants pointed out from para 2 of the assessment order that the assessee Vishweshwar Korhalkar had stated before the Income-tax Authorities that he along with others was a promoter of the Co-op. Housig Society and that he had received amount of Rs. 9,000/-from Ratnakar Chandorkar defendant No. 5 who was also a member of the said Society. Thus, the statement of Vishweshwar before the Income-tax Officer during the year 1973-74 only indicated that the said amount was lying with him as a deposit received from Ratnakar Chandorkar as a member of the Housing Society of which Vishweshwar Korhalkar was himself a promoter. It is not the case of the plaintiff-Society that said Vishweshwar, or Vasant Korhalkar was ever a promoter or member of the plaintiff-society or that defendant No. 5 Ratnakar Chandorkar was a member of the plaintiff-society at any time. The learned trial Court held that amount of Rs. 9,000/-was found lying as a deposit with Vasant Korhalkar Advocate and therefore, the contention of the plaintiff should be believed that the said amount was paid by the plaintiff to defendant No. 5 and Vasant Korhalkar for and on behalf of the defendants Nos. 1 to 4. In fact, the assessment order, Exhibit 66, nowhere indicates that the said amount was received as a deposit by Korhalkar Advocate for and on behalf of the defendants Nos. 1 to 4 or any of them or from the plaintiff-society. The learned trial Court clearly erred in holding that this document provides corroboration to the plaintiff in respect of advance payment of Rs. 9,000/-to the defendants Nos. 1 to 4.
10. The pleadings of the plaintiff as well as the oral and documentary evidence led by the plaintiff only go to show that defendant No. 5 Ratnakar Chandorkar was working as a local manager of the property of the defendants Nos. 1 to 4 as they themselves used to reside at Gwalior. They have also pleaded that defendant No. 5 himself claimed and represented to be a manager and agent for the defendants Nos. 1 to 4. In view of the documentary evidence on record pertaining to different litigations, etc., it can be believed that the defendant No. 5 was working as local manager for the defendants Nos. 1 to 4 to look after their property. However, there is no document to show that he was holding any power of attorney to enter into any transaction for sale of the property on behalf of defendants Nos. 1 to 4. No such evidence was produced by the plaintiff. It is material to note that the plaintiff produced a copy of the power of attorney dated 12.3.1979 Exhibit 70 which was executed by defendant No. 2 Raghunath Shankarrao Potnis in favour of defendant No. 5 Ratnakar Chandorkar and one Bhalchandra Korhalkar, who is said to be the brother of Vasant @ Vishweshwar Korhalkar. There is no evidence to show that there was any power of attorney executed by any of the defendants Nos. 1 to 4 in favour of defendant No. 5 or said Bhalchandra Korhalkar prior to 12.3.1979. On perusal of the power of attorney, Exhibit 70, also it appears that Ratnakar Chandorkar and Bhalchandra were only authorised to look after the general maintenance and upkeep of the lands belonging to the defendant No. 2 Raghunath and they were also authorised to file cases against the Municipal Corporation or against any other persons who might be trying to encroach upon the land, to sign the plaint/complaint, to engage an advocate and to take all other necessary action and also to represent him before the Competent Authority (Urban Land Ceiling), Pune. The power of attorney specifically provides thus: the aforesaid power of attorney will not be entitled to transfer my aforesaid land by way of sale, mortgage, lease, gift or otherwise and/or enter into an agreement to that effect. From this, it is clear that the said power of attorney executed by defendant No. 2 only empowers defendant No. 5 and Bhalchandra Korhalkar to look after the general maintenance and upkeep and protection of the property of the defendant No. 2 and for this purpose, they could sign any documents and file or defend any suits or cases. They could also represent the defendant No. 2 before the Competent Authority (Urban Land Ceiling), Pune. Naturally, all this authority was to protect the property, but this document did not give any authority or power to any of them to sell, mortgage, lease, gift or to enter into any agreement for that purpose on behalf of the defendant No. 2. In view of this document executed in 1979, it can be held without any difficulty that even though the defendant No. 5 Ratnakar Chandorkar was a manager or the agent for and on behalf of the defendants Nos. 1 to 4 to look after their property, he had no authority to enter into any agreement for sale on their behalf and if he entered into any agreement for and on behalf of the defendants Nos. 1 to 4, that could not be valid and binding on defendants 1 to 4.
11. There is no dispute that defendant No. 2 Raghunath Potnis executed an agreement Exhibit 69 dated 7.11.1982 in favour of defendant No. 5 Ratnakar Chandorkar. As per that agreement, defendant No. 2 agreed to sell the suit land marked B to defendant No. 5 at the rate of Rs. 50,000/-per acre. The agreement shows that amount of Rs. 10,000/-was received earlier from him and amount of Rs. 60,000/-was paid at the time of execution of the agreement Exhibit 69. The balance amount was to be paid at the time of execution of sale deed and the possession was also to be given only at the time of execution and registration of sale deed. It is material to note that in terms of the agreement, it is specifically mentioned that because defendant No. 5 was a relative of the defendant No. 2 and because he had taken care of their property for long period, defendant No. 2 had agreed to sell the property at concessional rate of Rs. 50,000/-per acre. Admittedly, it was a concessional rate because on the same day, defendant No. 3 Arvind Shankar Potnis had executed a sale deed Exhibit 67 of the suit land marked A in favour of Shrikant Chandratre at the rate of Rs. 1,30,000/-per acre. Not only this, according to the plaintiff, even in 1972, they had entered into an agreement with defendant No. 5 to purchase the suit land at the rate of Rs. 1,30,000/-per acre. From these circumstances and the specific statement in the agreement for sale, Exhibit 69, it is clear that the defendant No. 2 had agreed to sell the suit land marked B at a very concessional rate of Rs. 50,000/-per acre, taking into consideration close relationship with and the services rendered by defendant No. 5 for maintenance and management of the properties of the defendants for long.
12. Mr. Anturkar, the learned Counsel for the plaintiff/respondent No. 1 vehemently contended that the defendant No. 5 Ratnakar Chandorkar and Shrikant Chandratre both were agents of the plaintiff and the plaintiff, being a principal of both of them, is entitled to enforce the agreements for sale by virtue of the provisions of Section 15 of the Specific Relief Act. Whether that section can be applied to the agreement between Shrikant Chandratre and defendant No. 3 will be looked into at the appropriate stage. However, it is material to note that it was never the case of the plaintiff that defendant No. 5 Ratnakar Chandorkar was their agent in this transaction. Before the trial Court, they had produced voluminous documentary evidence, which need not be discussed here, to establish that the defendant No. 5 was manager and agent of the defendants Nos. 1 to 4 and in that capacity, he had entered into an agreement with the plaintiff. It appears that during the arguments before this Court, a completely different stand is tried to be taken by the learned Counsel for the plaintiff and for the first time, an attempt was made to show that defendant No. 5 was in fact an agent of the plaintiff and that the plaintiff was his principal. There is no material to support this stand. It needs to be noted that in the plaint, the plaintiff has specifically pleaded that in 1972, there was an agreement under which the plaintiff was to purchase the property for consideration of Rs. 1,30,000/-per acre. However, the defendants had refused to perform that contract and in fact they had denied that there was any such agreement. In such circumstances, having denied the agreement of 1972 and having refused to perform that agreement under which the defendants Nos. 2 and 3 were to get price of Rs. 1,30,000/-per acre, it is impossible to believe that the defendant No. 2 would execute the agreement apparently in favour of the defendant No. 5 but in reality for the benefit of the plaintiff, whereby the plaintiff could purchase the suit land at the rate of Rs. 50,000/-per acre. It is also material to note that on or after 7.11.1982, the defendant No. 5 had never executed any document or agreement in favour of the plaintiff which would indicate that the defendant No. 5 had agreed to purchase the land from defendant No. 2 only to sell or transfer the same to the plaintiff. There is no document to show that the defendant No. 5 had agreed to act as agent or representative of the plaintiff in this transaction. The stand taken by the learned Counsel for the plaintiff during the arguments before this Court is without any basis or foundation nor it is supported by any documentary evidence and, therefore, it is liable to be rejected.
13. There is no evidence that in 1972, the defendant No. 5 had entered into an agreement for sale of the suit land on behalf of the defendants Nos. 1 to 4 in favour of the plaintiff. Even if for the sake of arguments it is assumed that there was any such agreement, that agreement was specifically refuted and denied by the defendant Nos. 1 to 4 even prior to 1982 and they had refused to perform that agreement. Therefore, the suit filed in 1986 for specific performance of that agreement would be clearly barred by limitation. It is impossible to hold that the agreements dated 7.11.1982 were only to confirm the earlier agreement of 1972 as held by the trial Court. Taking into consideration the pleadings of the plaintiff and other material on record, Mr. Anturkar, learned Counsel for the plaintiff/respondent No. 1 had to concede that it was factually right that the agreement of 1972 was abandoned and in 1982, the plaintiff tried to purchase this property through Shrikant Chandratre. The alleged agreement of 1972 was abandoned even according to the pleadings of the plaintiff and there is no document to show that in 1982 or thereafter, the plaintiff had entered into any agreement for sale of the suit land marked B with defendant No. 5 or with defendant Nos. 1 to 4 through defendant No. 5. It is material to note that the notice, Exhibit 72, issued by the plaintiff to the defendants Nos. 1 to 4 on 28.9.84, for enforcement of the agreement for sale, refers only to the agreement with Shrikant Chandratre in respect of the suit land marked A. In that notice, there was no reference to any agreement pertaining suit land marked B. It shows that when this notice Exhibit 72 was issued on 28.9.1984, the plaintiff was aware that there was no agreement for sale in respect of the suit land marked B. Had there been any such agreement, the plaintiff would not have failed to make a mention of that agreement and property also in the notice. Admittedly, no separate notice was issued by the plaintiff to the defendants Nos. 1 to 4 or to the defendant No. 5 in respect of the suit land marked B. The contention that there was an agreement for sale in respect of the suit property marked B with defendant No. 5 or through defendant No. 5 for the benefit of the plaintiff, is an after-thought story and this story appears to have been created at the time of filing the suit in 1986. Taking into consideration all these facts and circumstances, it can be safely held that there was no agreement for sale in favour of the plaintiff in respect of the suit land marked B and, therefore, to that extent the suit is liable to be dismissed.
14. As far as the suit land marked A is concerned, it is admitted by the defendants that the defendant No. 3 Arvind Potnis had executed agreement for sale, Exhibit 67, in favour of Shrikant Chandratre on 7.11.1982. That document was executed by defendant No. 2 Raghunath as power of attorney holder for the defendant No. 3. The price of the land was fixed at Rs. 1,30,000/-per acre. Amount of Rs. 1,50,000/-was to be paid as earnest money within 8 days from the date of execution of this document and the balance amount was to be paid at the time of execution of sale deed. The document shows that the said agreement was also signed by defendant No. 5 Ratnakar Chandorkar giving consent to the transaction on behalf of the defendant No. 3 and also as witness of the transaction. A handwritten note below this document shows that defendant No. 5 Ratnakar Chandorkar received a demand draft of Rs. 1,50,000/-issued by United Western Bank Ltd., Lokmanya Nagar, Pune Branch payable at their Branch at Gwalior. That Demand Draft was received by him on behalf of the defendant No. 3 Arvind Potnis from Shrikant Chandratre The receipt of earnest money from Shrikant Chandratre by that Demand Draft is not disputed by the defendant No. 3. As per this agreement, the land was to be sold by defendant No. 3 to Shrikant Chandratre as agricultural land and it was for Shrikant Chandratre to obtain necessary permission for sale of the land under Urban Land Ceiling Act. If he would fail to obtain necessary permission or if having obtained permission he would fail to get sale deed executed for one or the other reason, amount of Rs. 50,000/-out f the earnest money would be forfeited and balance amount of Rs. 1 lakh would be paid back to him without any interest. Shrikant Chandratre was to bear all the expenses for the purpose of obtaining permission under the Urban Land Ceiling Act and it was his exclusive responsibility to secure the permission. It is material to note that Shrikant Chandratre never got sale deed executed on the basis of this agreement nor he filed any suit for specific performance of the contract as per this agreement against defendant No. 3. There is nothing on record to show whether he had succeeded or not in obtaining necessary permission under the Urban Land Ceiling Act and therefore it cannot be said whether the terms and conditions of the said agreement were fulfilled or not. It is not possible to know whether Shrikant Chandratre would be in a position to enforce that agreement and to get specific performance of the agreement for sale. It is also material to note that Shrikant Chandratre was not impleaded in the suit filed by the plaintiff-society either as a co-plaintiff or as one of the defendants and thus he was not party to the litigation between the plaintiffs and the defendants.
15. It is the plea of the plaintiff and it is proved by P.W.2 Bhagwan Mainkar, Secretary of the plaintiff-society that Shrikant Chandratre had entered into an agreement with the plaintiff-society as per Exhibit 68 in the month of December 1982. As per contents of that agreement, on the request of the plaintiff-society, Shrikant Chandratre had a talk with the owners of the suit land marked A and they had executed an agreement for sale in favour of Shrikant Chandratre. The contents of the agreement revealed that Shrikant Chandratre had entered into an agreement with defendant No. 3 Arvind Potnis to purchase the land for and on behalf of the plaintiff-society. The plaintiff-society had issued a cheque of Rs. 1 lakh against Pune District Central Co-operative Bank on 11.11.1982 in favour of Shrikant Chandratre. It also shows that the plaintiff-society had agreed to pay Rs. 22,000/-as remuneration to Shrikant Chandratre for doing this work. It further shows that under this agreement, the plaintiff-society had taken responsibility of obtaining necessary permission under the Urban Land Ceiling Act for sale of suit land marked A. In view of this agreement, it can be held that Shrikant Chandratre was acting as an agent for the plaintiff and as their agent, he had entered into an agreement for sale with the defendants Nos. 2 and 3.
16. Mr. Anturkar, learned Counsel for the plaintiff vehemently contended that in view of the provisions of Section 15(b) of the Specific Relief Act, 1963, the plaintiff, being the principal of Shrikant Chandratre, is entitled to enforce the specific performance of the contract against the defendant No. 3 in respect of the suit land marked A Section 15(b) reads as follows:
15. Who may obtain specific performance Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by
(a) ...
(b) the representative in interest or the principal, of any party thereto;
Provided that where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party;
From this, it is clear that except as otherwise provided, the specific performance of the contract maybe obtained by the representative in interest or the principal of any party thereto. However, such representative in interest or the principal of the party shall not be entitled to specific performance of the contract if the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract. This part of the proviso is not applicable to the present dispute. The proviso also shows that such representative in interest or the principal shall not be entitled to specific performance of the contract where the contract provides that its interest shall not be assigned.
17. Mr. Anturkar, learned Counsel for the plaintiff vehemently contended that in the agreement, Exhibit 67, executed by defendant Nos. 2 and 3 in favour of Shrikant Chandratre, there is no mention that he could not assign his interest and, therefore, in view of the provisions of Section 15(b), the plaintiff being the principal or a representative in interest of Shrikant Chandratre, can enforce specific performance of the contract for sale of the land against defendants Nos. 2 and 3. He also contended that as far as the sale of the land is concerned, right to purchase was not personal to Shrikant Chandratre and, therefore, that right was assignable. He relied upon certain authorities in support of this contention. In T.M. Balakrishna Mudaliar v. M. Satyanarayana Rao and Ors. : AIR 1993 SC 2449, there was a question as to whether the assignee of the right to repurchase was competent to enforce the contract by filing a suit. In para 9, Their Lordships observed as follows:
9. The Privy Council in Sakalaguna v. Munnuswami AIR 1928 PC 174, has held that the benefit of a contract of repurchase which did not show that it was intended only for the benefit of the parties contracting, could be assigned and such contract is enforceable. Beaumont C.J. in Vishweshwar v. Durgappa : AIR 1940 Bom 339 held that both under the common law as well as under
Section 23(b) of the Specific Relief Act, 1877, an option given to repurchase the property sold would prima facie be assignable, though it might also be so worded as to show that it was to be personal to the grantee and not assignable. On the particular facts of that case, it was held that the contract was assignable. In Sirmakaruppa v. Karuppuswami AIR 1965 Mad 506 it was held (at p. 508):In our view, generally speaking, the benefits of a contract of repurchase must be assignable, unless the terms of the contract are such as to show that the right of repurchase is personal to the vendor. In the latter case it will be for the person who pleads that the contract is not enforceable, to show that the intention of the parties thereto was that it was to be enforced only by the persons named therein and not by the assignee.
With these observations and in view of the terms and conditions of the contract, it was held that the right to repurchase was not personal and the assignee could enforce the specific performance of he same.
18. In Shyam Singh v Daryao Singh (Dead) by L.Rs. and Ors. : (2003) 12 SCC 160, the Supreme Court held that under Section 15(b) of the Specific Relief Act, the terms any party thereto or their representative-in-interest include the transferee and assignee from the contracting party. Their Lordships observed as follows in paras 10, 13 and 16:
10. As is to be seen from the provisions of Section 15(b) of the Specific Relief Act, 1963, specific performance of the contract may be obtained by any party thereto or their representative-in-interest. This expression clearly includes the transferees and assignees from the contracting party in whose favour the right exists. Such right of seeking specific performance would, however, be not available in terms of the proviso below Clause (b) where, the contract provides that the interest shall not be assigned.
13. In our considered opinion, in the absence of any words or expressions in the documents indicating prohibition on assignment or transfer of right of repurchase and in the face of clear provisions of Section 15(b) of the Specific Relief Act, 1963, an implied prohibition cannot be read into the terms of the documents. Merely because in the documents, there is mention of heirs of the contracting parties but not their assignees or transferees, the legal right of assignment available to the benefit of original contracting party under Section 15(b) of the Act cannot be denied to it.
16. From the statement of law as has been approved and followed by this Court in two decisions in Habiba Khatoon and T.M. Balakrishna Mudaliar, unless the contents of the document in question and evidence in relation thereto are so clear to infer a prohibition against assignment or transfer, the right of repurchase has to be held to be assignable or transferable and cannot be treated as personal to the contracting parties.
19. Mr. Sawant, learned Counsel for the appellant vehemently contended that there was no privity of contract between the plaintiff and defendant Nos. 2 and 3. According to him, Shrikant Chandratre had an independent contract with the defendants Nos. 2 and 3 and thereafter he appears to have entered into a separate agreement with the plaintiff and, therefore, these are two independent contracts. As Shrikant Chandratre did not seek the specific performance of the contract, the plaintiff cannot file a suit against defendant Nos. 2 and 3, but they could file a suit only against Shrikant Chandratre and naturally they could succeed only if Shrikant would have become owner of the property after enforcing the contract against defendants Nos. 2 and 3. However, taking into consideration the terms of the contract between Shrikant Chandratre and the plaintiff, it becomes clear that he was acting as agent for the plaintiff and even if no agreement was executed by defendant Nos. 2 and 3 in favour of plaintiff, it appears that he was not purchasing the property for himself, but for the plaintiff.
20. Mr. Sawant, learned Counsel for the defendant/appellant contended that the plaintiff-society was well aware that the defendants Nos. 1 to 4 were not willing to sell their property to the plaintiff and therefore if the plaintiff would have approached the defendants, directly or through any agent, the defendants would have never agreed to sell the property to the plaintiff. If the defendants would be aware that Shrikant Chandratre was acting as agent for the plaintiff and was entering into agreement for sale with them to eventually transfer property to plaintiff, they would have never entered into contract with him. He contended that the plaintiff being fully aware about this situation, had actually entered into conspiracy with Shrikant Chandratre and thus played a fraud upon the defendants. According to him, if any agreement is based on such a fraud, it is against the public policy and is void under Section 23 of the Contract Act. Section 23 of the Contract Act reads as follows:
23. What considerations and objects are lawful, and what not The consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
21. Mr. Sawant, learned Counsel for the appellant/defendant contended that in the present case, the consideration or object of the agreement is unlawful because it was fraudulent in the sense that Shrikant Chandratre entered into agreement with the defendants Nos. 2 and 3 to purchase property without disclosing that he was acting as an agent for the plaintiff-society. In my considered opinion, the transaction could not be void ab initio under Section 23 because if the defendants Nos. 2 and 3 would have no objection to the further transfer of the property in favour of the plaintiff, the contract could be perfectly valid. However, it is to be seen whether the agreement could be voidable in the peculiar circumstances of the present case.
22. Section 19 of the Contract Act reads as follows:
19. Voidability of agreements without free consent When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.
Exception If such consent was caused by misrepresentation or by silence or fraud within the meaning of Section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
Explanation A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practised, or to whom such misrepresentation was made, does not render a contract voidable.
In view of this, when the consent to an agreement is caused by fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
23. Section 10 of the Contract Act provides that all the agreements are contract if they are made by free consent of the parties competent to contract. Section 14 reads as follows:
14. Free consent defined Consent is said to be free when it is not caused by
(1) coercion, as defined in Section 15, or
(2) undue influence, as defined in Section 16, or
(3) fraud, as defined in Section 17, or
(4) misrepresentation, as defined in Section 18, or
(5) mistake, subject to the provisions of Sections 20, 21 and 22.
Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake. Section 17 defines fraud as follows:
17. Fraud defined -Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, i itself, equivalent to speech.
In view of this definition of fraud, if a party or an agent with an intention to deceive another party thereto or to induce him to enter into a contract, makes the active concealment of a fact by one having knowledge or belief of the fact or does any other act to deceive is said to have committed fraud under Section 17.
24. Section 18 defines misrepresentation as follows:
18. Misrepresentation defined -Misrepresentation means and includes
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice or to the prejudice of any one claiming under him.
(3) causing however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
Representation by Shrikant Chandratre, that he wanted to purchase the property, which he himself did not believe to be true, would amount to misrepresentation and knowing that the defendant would not enter into an agreement for sale of the property with the plaintiff, he deceived them by representing that he wanted to purchase the property for himself by active concealment that in fact he had already entered into an agreement with the plaintiff that after purchasing the property from the defendants he would sell the same to the plaintiff-society amounts to fraud. In para 6 of the plaint, it is specifically pleaded by the plaintiff that the defendants had refused to perform the contract of 1972 and they had taken a stand that no such agreement had taken place. The record reveals that certain litigations were going on between the plaintiff and the defendants Nos. 1 to 4. In view of this, the plaintiff was aware that the defendants Nos. 1 to 4 would not sell their property to the plaintiff. In para 6 of the plaint, after having mentioned that the defendants had not only refused to perform earlier contract, but they had also denied that such a contract had taken place, it was pleaded that the plaintiff had to involve a third person, namely, Shrikant Chandratre to get the agreement for sale executed in 1982. In the cross- examination, P.W.1 Bhagwan Mainkar, Secretary of the plaintiff-society admitted that the defendants were not agreeable to execute agreement with the society and so the society entered into the contract through Chandratre. In para 25 he admitted that Chandratre acted in this matter only to take commission as mentioned in the agreement Ex.68 and the society was the real beneficiary. From this itself, it is very clear that the defendants would have never agreed to enter in to contract to sell the suit land to the plaintiff-society and therefore, the plaintiff society engaged Shrikant Chandratre to enter into contract with the plaintiff. In the agreement between the society and Shrikant Chandratre, it is clearly mentioned that he had entered into agreement with the defendants only on behalf of the plaintiff-society for which he was to receive remuneration of Rs. 22,000/-. From this, it is clear that Shrikant was fully aware that he was not purchasing the property and that the property was to be purchased for and on behalf of the plaintiff-society. He never believed that he would enter into the contract with the defendants Nos. 2 and 3 for himself, but he did not disclose this fact to the defendants Nos. 2 and 3 while getting the agreement Ex.67 executed. Thus, he suppressed and concealed the facts from defendant Nos. 2 and 3. In view of this, it can be held that he obtained the consent of the defendants Nos. 2 and 3 to enter into the contract with him by fraud and by making misrepresentation and therefore it was not a free consent given by defendants Nos. 2 and 3. Therefore, in view of he facts and circumstances of the present case and legal position under Section 19 of Contract Act, the contract was voidable at the instance of the defendants Nos. 2 and 3 and particularly the defendant No. 3.
25. Section 231 of the Contract Act is relevant. It reads as follows:
231. Rights of parties to a contract made by agent not disclosed If an agent makes a contract with a person who neither knows, nor has reason to suspect, that he is an agent, his principal may require the performance of the contract, but the other contracting party has, as against the principal, the same rights as he would have had as against the agent if the agent had been principal.
If the principal discloses himself before the contract is completed, the other contracting party may refuse to fulfil the contract, if he can show that, if he had known who was the principal in the contract, or if he had known that the agent was not a principal, he would not have entered into the contract.
From part 2 of Section 231, it is clear that if the principal discloses himself before the contract is completed, the other contracting party may refuse to fulfill the contract if such a party can show that if he had known who was the principal of the contract or if he had known that the agent was not a principal, he would not have entered into the contract. The facts of the present case squarely fall in part 2 of Section 231. The plaintiff disclosed by the notice dated 28.9.1984 to defendant No. 2 for specific performance of the contract that the plaintiff was the real principal in the agreement entered into between the defendants Nos. 2 and 3 on one hand and Shrikant Chandatre on the other hand. By that notice, it was disclosed that Shrikant was in fact an agent for the plaintiff-society. Even though the defendants did not enter into witness box, the learned Counsel for the defendants/appellants has successfully pointed out from the pleadings of the plaintiff and oral and documentary evidence led by the plaintiff that the defendants Nos. 2 and 3 would have never entered into agreement for sale of the land to the plaintiff and that if the defendants would be aware that Shrikant was only an agent and the plaintiff was the principal for whom land was to be purchased, defendant Nos. 2 and 3 would not have entered into contract for sale with Shrikant. Therefore, under Section 19 of the Contract Act, the contract was voidable and under Section 231 part 2, the defendants Nos. 2 and 3 could refuse to fulfill the contract in favour of the present plaintiff.
26. None of the above circumstances were properly analysed and considered by the trial Court before granting decree in favour of the plaintiff. In view of the facts and circumstances noted above, it is clear that after the alleged agreement of 1972 which was abandoned, there was no agreement between the plaintiff and the defendant No. 5 for sale of the suit land marked B. In respect of the suit land marked A, however, if Shrikant would have disclosed to the defendants Nos. 2 and 3 that he was only an agent of the plaintiff and if inspite of that knowledge, the defendants Nos. 2 and 3 would have entered into an agreement with Shrikant, the plaintiff could enfoce the contract under Section 15(b) of the Specific Relief Act. The agreement between Shrikant Chandratre on one hand and defendants Nos. 2 and 3 on the other is voidable at the instance of the defendants Nos. 2 and 3 as their consent was obtained by playing fraud and by making misrepresentation. Not only this, under Section 231 part 2, in given circumstances, the defendants Nos. 2 and 3 could refuse to fulfill the contract in favour of the plaintiff. In view of this legal position and facts, inspite of the provisions of Section 15(b) of the Specific Relief Act, the plaintiff could not enforce the contract against the defendants Nos. 2 and 3. In view of this, the plaintiff cannot succeed in getting a decree for specific performance even in respect of the suit land marked A. In view of these facts and circumstances and the legal position, it must be held that the trial Court committed serious error in granting decree for specific performance. Therefore, the impugned judgment and decree are liable to be set aside.
27. for the aforesaid reasons, the Appeal is allowed. The impugned judgment and decree are hereby set aside. The suit filed by the plaintiff stands dismissed. The plaintiff/respondent No. 1 shall bear its costs as well as pay costs of the defendants Nos. 1 to 4 in the Suit as well as the Appeal.
28. As the Appeal itself is disposed of, the C.A. Nos. 641/2005, 2350/2006, 3706/2006 & C.P. No. 290/2006 do not survive and stand disposed of accordingly.