1. These regular first appeals have gained access to this Court under the provisions of Section 96 of the CPC assailing the judgment and decree passed by the learned XII Addl. City Civil Judge, Bangalore, in O.S. No. 2799/1987 by which verdict, the learned Judge has decreed the suit of the first respondent herein by judgment dated 5-3-1998, partly.
2. For the sake of brevity, the parties shall be referred to according to their ranking in the trial Court, in that the Appellant and respondents 2 and 3 are the defendants and first respondent was the plaintiff.
3. The factual matrix manifesting from the records reveals - Subhash Chand Goel instituted a suit under the provisions of Section 26 CPC seeking a decree for specific performance of the contract under two agreements dated 29-10-1979 purporting to be the agreements of sale between him and the first defendant in respect of immovable properties - popularly known as Block Nos. 1 and 2 bearing Municipal Nos. 4, 9/5, 6, 7, 8, 9, 10, 11, 11/2, 12, 12/3, 7/8, 38/158 formed out of Sy.Nos. 27/1 and 29 situate at Mutton Stall Road, Mavalli, Bangalore. In the plaint, it was further averred that the 1st defendant, as the absolute owner of the said properties, transacted with the plaintiff to sell the same at Rs. 200/- per sq.yd. Time stipulated for completion of sale transaction was three months subject to conditions that the parties had to obtain permission from the authorities - (a) as prescribed under the Urban Land (Ceiling and Regulation) Act, 1976; (b) that the 1st defendant had to deliver vacant possession of the entire property; one of the condition in the agreement is, time shall be the essence of the contract; that the first defendant, on that date, received Rs. 5,000/- as advance under each agreement, in all Rs. 10,000/-.
4. The plaintiff further averred that after execution of the agreements, He was waiting patiently and that the defendant, on or about 10-9-1982 received further sum of Rs. 10,000/- from the plaintiff as further advance towards sale consideration agreeing to perform his part of the contract and the plaintiff willingly paid the said amount as part of the total sale consideration of Rs. 4,41,160/- (calculated at Rs. 200/- per sq.yd). Subsequently, the defendant showed indifferent conduct and on enquiry the plaintiff reliably learnt that the defendant was managing to negotiate to sell some portions of the properties to persons from Bombay. Also, it was alleged that in good faith the plaintiff waited ail the years and as there was no response from 1st defendant, in the year 1986, he was compelled to initiate action.
5. In para 11 of the plaint, the plaintiff averred that on or about 11-8-1986 he wrote a polite letter to the 1st defendant to finalise the sale transaction in respect of the properties in question and asked the 1st defendant to give vacant possession of some of at least portions in his occupation, In para 12, the plaintiffs contention was, that on 17-11-1986, defendant wrote a letter stating that he would give vacant possession of all the properties of Blocks 1 and 2 referred to in the agreements.
6. On these set of facts, particularly that 1st defendant, by his own acts, indicated that he was not willing to perform his part of the contract, the plaintiff instituted the suit in which he mentioned that the cause of action arose on 29.10.1979, in the month of September 1962 and subsequently.
7. The suit was resisted by the defendants. The 1st defendant inter-aliascontended that the indentures dated 29-10-1979 described by the plaintiff as 'agreements of sate' were in reality documents to secure some financial transaction and they were not agreements of sale. It was understood clearly that the terms would not bind him to sell the properties and it was not to be acted upon. The basis for the assertion was that the 1st defendant and plaintiff had been doing joint business of steel and during the course of such business, the 1st defendant was depending upon the plaintiff for financial help, To secure the financial assistance, the two documents were executed by him, Also, in the written statement the 1st defendant took up a plea that he is not the absolute owner of the suit schedule properties and that his daughter Miss Sunita and son i.e defendants No. 2 and 3 are entitled to equal share in the properties. Thus, he resisted the suit particularly when decree for specific performance of sale was sought against him, Categorically, in the subsequent para, the 1st defendant had met the assertions of the plaintiff regarding binding nature of agreements and contended that such agreements were actually sham documents and that the plaintiff had not addressed any letter to him much less the letter dated 11-8-1986, He denied that he had replied to the said letter on 17-11-1986 as averred by the plaintiff, and further denied having received further advance of Rs. 10,000/- on 10/09/19B2 or that he executed endorsement dt, 10/09/1982.
8. The learned Civil Judge framed in ail 7 issues besides 3 additional issues which are as hereunder:
1. Whether the plaintiff proves that the defendant agreed to sell the suit properties by two agreements dated 29/10/1979 by receiving Ra. 5000/- for Rs. 4,41,160/- and ha paid Rs. 10,000/- as further advance on 10/9/1982 as alleged?
2. Whether the plaintiff proves that he was always ready and willing to take the sale deed as alleged?
3. Whether the defendant proves that the agreements were never meant to be acted upon and he is not the absolute owner of the suit property as his son and daughter have a share in the same and these agreements were executed in respect of some other transactions as alleged in pare 3 of the written statement?
4. Whether the defendant proves that the suit is barred by time?
5. Whether the defendant proves that the suit has to be dismissed as full court fee is not paid?
6. Is the plaintiff entitled to the relief sought?
7. What decree or order?
Addl. Issues framed on 3/11/1994
Whether the defendant proves chat the suit is bad for misjoinder of causes of action?
Addl. Issues framed on 31/1/1087
1. Whether the defendants 2 and 3 prove they have 2/3 share in the suit schedule properties?
2. Whether defendants 2 and 3 prove that the suit agreement is not binding upon them?
Among the issues framed, issue No. 1 was to cast burden upon the plaintiff to establish whether the 1st defendant had agreed to sell the suit schedule properties by two agreements dated 29.10.1979 after receiving a sum of Rs. 5,000/-under each out of the total consideration of Rs. 4,41,160/-. The second issue was also to cast a burden upon the plaintiff to prove that he was always ready and willing to take the sale deed as alleged, Upon the defendant, the learned Judge placed burden of proving two issues, namely, whether the agreements were never meant to be acted upon and whether he is not the absolute owner of the suit properties and as to whether his son and daughter also have equal share in the properties as averred by him, With regard to limitation, two issues were framed namely, whether the 1st defendant proves that the suit is not maintainable and whether the suit has to be dismissed for non-payment of full Court fee, This issue did not survive for consideration as the plaintiff did pay the requisite Court fee within the time stipulated by the trial court.
9. To establish their contentions, the plaintiff and defendant did lead evidence, Three witnesses, namely, Subhash Chand Goel-P.W-1, Chamanlal Gupta-P.W-2 and R. Sheriff-P.W-3 supported the case of the plaintiff while first defendant was the sole witness, Defendants 2 and 3 did not lead either documentary or oral evidence. The plaintiff has produced in evidence copies and originals of the two agreements of sale marked as Exs.P6 & P7, xerox copy of Receipt Ex.P.3, Copy of letter Ex.P.4, Copy of reply Ex.P.5 and later the originals of these documents were marked as Exs,P6 to P9. To assist the Court, Ex.P11, the sketch was also marked in evidence, The learned Judge, after taking into consideration the evidence documentary and oral on record as also the contentions of the parties, answered issues 1 and 2 in the affirmative, issue 3 partly in the affirmative, issue 4 answered in the negative, issue 6 partly in the affirmative, additional issue No. 1 in the negative and additional issue No. 2 in the affirmative. Based on such a finding, the learned Judge decreed the suit in part directing the 1st defendant to execute deed of sale in respect of his half share in the suit schedule properties after receiving the balance of sale consideration of Rs. 2,20,580/-. The learned trial judge however held that defendant No. 2, daughter was not entitled to any share in the property and rejected her claim.
10. We have heard learned senior counsel Sri Udaya Holla for the appellant in RFA No. 393/98 and Sri Chalapathy representing 1st respondent therein who is also the appellant in Cross Objection Appeal No. 417/98, in supplementation to the material on record.
11. Several grounds and contentions have been raised by both sides against the impugned judgment and decree, As seen from the core of contention of learned Senior Counsel Sri Udaya Holla, the appellant seeks to undo the finding of the trial Court regarding the nature of suit documents Ex.P.6 and P.7 describing it as sham documents not binding upon the 1st defendant in the suit as agreements to sell. Though the findings recorded by the trial Court on issues Nos. 1 and 2 have been supported by learned Senior Counsel Sri. Chalapathy but, the decree directing specific performance under Ex.P.6 and P.7 only to the extent of 50% or half of the schedule property is assailed. It boils down to the following points:
Per appellant:
(1) The documents described at Ex.P.6 and P.7 as agreements to sell in respect of the schedule property are not in reality sale agreements. It was never intended to be acted upon but were intended only to secure financial transaction between the plaintiff and the 1st defendant Defendent No. 1, the executant of Ex.P.6 and P.7 was not the absolute owner of the properties in question as his daughter -defendant No. 2 and son defendant No. 3 had specific share in the subject matter properties and thus, Ex.P.6 and P.7 did not bind them.
(2) The Court below failed to notice that in the very nature of things, the sale consideration stipulated in the agreement at Rs. 200/- per sq.yard was totally inadequate, unrealistic as against the actual value of the property which was more than Rs. 3.97 crores. Therefore, the facts glaringly apparent from the suit documents negated the case of the plaintiff for specific performance but, the decree granting specific performance was wholly inequitous and unjust.
(3) The suit was filed after lapse of 8 years from the date of execution of suit documents Ex.P.6 and P.7 and the suit came for final hearing after 19 years and therefore the decree granting specific performance gave unfair advantage to the plaintiff.
(4) The evidence discloses that the documents sought to be relied upon by the plaintiff Ex.P.8 and P.9 were concocted and fabricated documents and the plaintiff had failed to prove its genuineness. Therefore, placing reliance on such documents to grant decree for specific performance was wholly erroneous and it occasioned severe injury to the right of the appellant -1st defendant resulting in heavy loss. Negating the right of the 2nd defendant to a share in the schedule property grantable to her under the provisions of Amendment Act, 1994 to the Hindu Succession Act was wholly erroneous.
(5) Refusing and ignoring to notice that neither there was any pleading nor proof that the plaintiff had either fulfilled his part of obligation in the contract or that he was ready and willing to fulfill his part of the obligation at any time, Sri Udaya Holla has placed reliance on several decisions of the Apex Court and this Court to sustain his grounds which we shall advert to in the subsequent paragraphs as we deal with contentious issues.
Per respondent No. 1 and cross-objector:
On behalf of the 1st respondent -plaintiff and appellant in the cross objection appeal, the contention of learned Sr. Counsel Sri Chalapathy basically centered on the finding of the trial Court holding that the 3rd defendant, son of 1st defendant, had a share in the schedule properties. In this regard, he has referred to the following:
1. 1st defendant had failed to establish there was any transaction between plaintiff and himself as contended by him and that he had failed to discharge the onus of proof that documents Ex.P.6 and P.7 were not binding upon him or that they did not constitute as agreements to sell.
2. He had failed to establish that Ex.P.6 and P. 7 were not intended to be acted upon and that he had any reason to execute such documents to secure financial transactions.
3. He had failed to establish that he was not the kartha of the Hindu Joint Family and had also failed to establish that his son, 3rd defendant had any defined or definite share in the property.
4. That, events in the family of the appellant/1st defendant showed there were several partitions of the joint family properties and in all those partition, he played a prominent role and was the kartha of the joint family, The agreements executed by him vide Ex.P.6 and P.7 would certainly bind 3rd defendant who was minor under the parental guardianship, Therefore, the agreements of sale did bind the 3rd defendant and the suit ought to have been decreed as prayed for.
5. The evidence tendered by the defendants was vacillating type and therefore they have not established their pleas as urged in the written statement and that defendant Nos. 2 and 3 having failed to appear and tender evidence had deprived the plaintiff from to cross-examine them and therefore, their plea could not have been sustained by the trial Court.
6. Learned Sr. Counsel Sri Chalapathy made reference to agreements of sale -P.6 and P.7 to indicate that though they were executed on 14.10.1979, the appellant -1st defendant had received further sale consideration in the year 1982 and had also communicated that he had agreed to sell the schedule properties after taking vacant possession from the tenants which was mandatory condition and covenant. Therefore, the enforcement of specific performance to sell was subject to delivery of vacant possession and that contingency arose only after 1986 and therefore the suit was in time.
12. Therefore, the following questions arise for determination in these appeals:
1. Whether it is established that the suit documents Ex.P.6 and P.7 are enforceable against the appellant -1st defendant as agreements to sell in respect of the schedule properties?
2. Whether the discretion under Section 20(2) of the Specific Relief Act has been judiciously exercised?
3. Whether the suit was barred by time?
13. We shall now advert to the grounds questioning enforceabilityof suit documents Ex.P.6 and P.7 as agreements to sell and other questions framed.
14. The learned senior counsel on both sides have taken us through the pleadings, issues, the judgment of the trial Court as also the case laws on the point. As could be gathered from the contentions of learned senior counsel Sri Udaya Holla for the appellant/defendant No. 1 has seriously questioned the nature of documents Ex.P.6 and P.7. White the plaintiff asserts these are agree men its to sell, the 1st defendant has been consistently contending that these documents were executed only to secure financial transaction between him and the plaintiff as both were knit in business ventures, In this regard, learned senior counsel Sri Udaya Holla referred to the evidence on record which shows that the 1st defendant and the plaintiff were dealing in steel and had business transaction from Kudremukh. The interest was common and during the course of business, the 1st defendant became dependant to some extent on the plaintiff for financial assistance. In the year 1979, a situation did create compelling the 1st defendant to take financial assistance from the plaintiff. At the instance of the plaintiff, he had to execute two agreements on 29.10,1979 which is the basis for institution of suit by the plaintiff. It is the say of the 1st defendant that he had executed these agreements in good faith. In reality, the agreements were virtually deeds of mortgage in respect of immovable properties in which the 1st defendant had limited share, Our attention was drawn to the recitals of agreements Ex.P.6 and P.7 to show that the sale consideration stipulated under those agreements is only Rs. 200/- per sq.yd. whereas the value of the properties in question at that relevant time was much higher. Admittedly, the subject matter of properties are situate in a prime business area of the Bangalore City having high commercial value and potentiality, The cost of land and properties at the relevant time, modestly, was Rs. 1,000/- per sq.yd. As against the said actual price, agreements Ex.P.6 and P.7 show that the price fixed is only Rs. 200/- per sq.yd. This is cited as one of the circumstance to show that Ex.P.6 and P.7 were not in reality the agreements to sell. They were not intended to be acted upon except to serve a limited purpose of securing financial transaction between the parties. The evidence in this regard is through the plaintiff as also the 1st defendant Very pertinently, the learned senior counsel Sri Udaya Holla pointed out that the plaintiff had in his evidence admitted that there was business transaction between him and the plaintiff. Reference is made to the following statements:
I know the defendant since 1974-75. I came to know him as I was supplying start to him. I did not verify at the time of agreement of sale whether the property was Joint family property or self acquired property of the defendant. Till now I have not verified the said fact.
Similarly, the admission of the plaintiff (P.W-l) in further cross-examination that he knew the 1st defendant from 1973-74 as he was supplying steel to him is reiteration of his earlier stand. The learned trial Judge, despite such evidence on record, has held that defendant No. 1 had failed to show that there was any transaction between the plaintiff and the 1st defendant.
15. Per contra, learned Sr. Counsel Sri Chalapathy contended that mere admission on the part of plaintiff that there was business transaction between him and the 1st defendant will not lead to a conclusion that Ex. P.6 and P.7 were not agreements to sell. The 1st defendant has not discharged the burden of proof that such documents were fraudulent and sham documents.
16. We have examined the reasoning of the learned trial Judge on this aspect. The learned trial Judge has considered these grounds urged while dealing with issue Nos. 1 and 3 and additional issue Nos. 1 and 2 in para 10 of his judgment, At page No. 11, the conclusion of the learned trial Judge is as follows:
In this background, I proceed to access the evidence an Issue No. 3. regarding the execution of the agreements Ex.P.6 and P.7. At the cost of repetition, it can be stated here that defendant No. 1 admits having executed the agreements in his written statement, but under certain circumstance. In examination-in-chief itself he has stated that he executed the agreements of sale. But, he has stated that it was never intended to be acted upon, Once the execution of the document is admitted, then the burden of proof shifts on the defendant to prove that the said agreements went executed under particular circumstances. As far as the execution of Ex.P.6 and P.7 is concerned, P.W.1 has stated that the defendant agreeing to sell the suit schedule properties has executed the said documents and the amounts under the documents were given to the 1st defendant under cheques, During the course of cross examination, defendant No. 1 has admitted that he has encashed the said cheque. Moreover, the evidence rowelsthat both the agreements were drafted by the advocate of defendant No. 1 Sri Hazi Jaffer. This fact is not denied by the defendant. On the contrary, the said assertion of the plaintiff is further confirmed in the cross examination of P.W.1.
By making these observations, the learned trial Judge has shifted the burden of proof on the 1st defendant and then records as follows:
In the evidence, it has come that P.W.1 was supplying steel and iron to the partnership firm in which defendant No. 1 was also a partner. It is the case of the plaintiff that, that Is hew he knew defendant No. 1, Though in the written statement, it is stated that the agreements of sale were executed in respect of a business transaction, the defendant has not chosen to disclose what was the business transaction in respect of which these two documents were executed. For the first time in the evidence he states that himself and plaintiff were supplying steel and Iron to the Kuduremukh Iron Works and with an Intention to raise funds in the said business, these documents came to be executed. First of all, there are no pleadings in this regard. The defendant has not produced any document to show that himself and the plaintiff were having any land of business transaction with Kuduremukh Iron Works.
17. From the above reasoning of the learned trial Judge, it is clear that the learned trial Judge, having noticed that the plaintiff has admitted in unequivocal terms that there was a partnership firm of the plaintiff and the 1st defendant, has for unassigned reasons erroneously held that defendant No. 1 has failed to disclose the nature of business and the nature of business transaction between him and the plaintiff. Consequently, he has rejected the plea put forward by defendant No. 1 that transaction covered under Ex.P.6 and P.7 were to secure financial assistance and were not agreements to sell. Such a conclusion arrived at is against the evidence on record and needs interference.
18. As urged by the learned Counsel for the appellant, we are satisfied that there is sufficient material placed on record by the 1st defendant indicating that the plaintiff and the 1st defendant had business dealings and in the course of such dealings, he became dependant for financial assistance from the plaintiff and to secure such transaction, he might have executed agreements Ex.P.6 and P.7. Secondly, the sale price indicated in the agreements Ex.P.6 and P.7 is Rs. 200/- per sq.yd, The plaintiff does not deny that the price of the properties as in the year 1979 was Rs. 1,000/- per sq.yd. The 1st defendant has lead evidence to prove this aspect and as seen from the evidence of the plaintiff (P.W.1) as also the 1st defendant (D.W.1), there is escalation of price of the properties and real estate during the period 1979 onwards. Up to 1996, the prices kept constantly increasing. The evidence of the parties show that the plaintiff has suggested to the 1st defendant during cross examination that the value of the properties was Rs. 2,000/- per sq.ft. in the year 1997. This suggestion was from the plaintiff to defendant No. 1 as on 15.7,1997. Learned senior counsel Sri Udaya Holla referring to this part of the evidence contends that it is enough proof that the sale price mentioned in Ex.P.7 was artificial and nominal so as to secure financial transaction but not to ensure any sale. Learned Counsel Sri Chalapathy did contend that the value of the schedule properties might have increased from the year 1979 till 1997 is the evidence of the plaintiff on record who was examined in the year 1997. But the fact that in the year 1979, the value of the suit schedule properties was only Rs. 200/- per sq.yd, has not been displaced by acceptable evidence from the 1st defendant. Having considered the evidence on record in its totality and all other surrounding circumstances, we find that the learned trial Judge has dealt with this aspect very casualty and has not given any specific finding regarding inadequacy of sale price of the suit properties in dispute between the parties. However we are satisfied that the evidence on record does show that the value of the schedule properties has been constantly increasing and the properties have high potentiality in the area. Be it as it may, the question is about the nature of the documents Ex.P.6 and P.7. Therefore whether they are agreements to sell the suit properties or merely the documents to secure financial assistance from the plaintiff depends on several factors and the conduct of the parties. Learned senior counsel Sri Udaya Holla had relied on a decision of the Apex Court in the case of P.L. Bapuswami v. N. Pattay Gounder : [1966]2SCR918 wherein it is held that while considering the nature of contract, inadequacy of sale consideration is one of the circumstances to test whether the transaction under consideration is a sale or mortgage. The relevant portion of the observation at para 6 is extracted below:
We consider that in the present case there are several circumstances to Indicate that Ex.B-1 was a transaction of mortgage by conditional sale and not a sale with a condition for retransfer. In the first place, there is the important circumstance that the condition for repurchase is embodied in the same document. In the second place, them is the significant fact that the consideration for Ex.B-1 was Rs. 4,000/-, while the real value of the property was, according to the Munsiff and the Subordinate Judge, Rs. 8,000/-. The High Court has dealt with this question and reached the finding that the value of the property was Rs. 5,50/-, but it is submitted by Mr. Ganapathi Iyer on behalf of the appellant that the question of valuation was one of fact and the High Court was not entitled to go into the question in the second appeal. The criticism of tamed Counsel for the appellant is Justified and we must proceed on the basis that the valuation of the property was Rs. 8,000/- and since the consideration for Ex.B-1 was only Rs. 4,000 it was a strong circumstance suggesting that the transaction was mortgage and not an outright sale. In the third place, there is the circumstance that the patta was not transferred to the 1st defendant after the execution of Ex.B-1 by Palani Moopan. It appears that defendant No. 1 did not apply for the transfer of patta and the patta admittedly continued in the name of Palani Moopan even after the execution of Ex.B-1. Exhibits A-6 and A.7 are certified copies of thandal extract of patta for the years 1945-54 and they prove this fact These exhibits also show that the plaintiff had obtained patta for the land on the bests of Ex.A-2. The registered deed of transfer of patta was executed by the sons of Palani Moopan in favour of the plaintiff. There is also the circumstance that the kist for the land was continued to be paid by Palani Moopan and after his death, by the sons of Paiani Moopan. Lastly, there is the important circumstance that the consideration for reconveyance was Rs. 4,000/-, the same amount as the consideration for Ex.B-1. Having regard to the language of the document Ex.B-1 and examining it in the light of these circumstances we are of the opinion that the transaction under Ex.B-1 was mortgage by conditional sale and the view taken by tine High Court with regard to the legal effect of the transaction must be reversed. It follows, therefore, that the plaintiff is entitled to a preliminary decree for redemption under Order 34 Rule 7 Civil Procedure Code for taking accounts and for declaration of the amounts due to the 1st defendant under Ex.B-1.
Further, the learned Counsel has placed reliance on the decision of K.S. Vidyanadam and Ors. v. Vairavan reported in : AIR1997SC1751 , in support of the proposition of law, if the subject matter of the properties value is increased, delay in approaching the Court are relevant consideration for not to grant a decree for specific performance. The same is extracted below as under:
11. Sri Sivasubramanium cited the decision of the Madras High Court in S.V. Sankaraninga Nadar v. P.T.S Ratnaswamy Nadar : AIR1952Mad389 holding that mere rise in prices is no ground for denying the specific performance. With great respect, we are unable to agree if the said decision is understood an saying that the said factor to not at all to be taken into account white excretingthe discretion vested in the court by law. We cannot be oblivious to the reality - and the reality is constant and continuous rise in the values of urban properties - fuelled by larger -scale migration of people from rural areas to urban centres and by Inflation, Take this vary case. The plaintiff had agreed to pay the balance consideration, purchase the stamp papers and ask for the execution of sale deed and delivery of possession within six months. He did nothing of the sort. The agreement expressly provides that If the plaintiff falls in performing his part of the contract, the defendants are entitled to forfeit the earnest money of Rs. 5,000/- and that if the defendants fail to perform their part of the contract, they are liable to pay double the said amount. Except paying the small amount of Rs. 5000/- (as against the total consideration of Rs. 60,000/- the plaintiff did nothing until he issued the suit notice 21/2 years after the agreement. Indeed, we are inclined to think that the rigor of the rule evolved by Courts that time is not of the essence of the contract in the case of immovable properties - evolved in times when prices and values were a table and inflation was unknown - requires to be relaxed, if not modified, particularly in the case of urban Immovable properties. It to high time, we do so. Learned Counsel for the plaintiff says that when the parties entered into the contract, they knew that prices as rising; hence, he says, rise in prices cannot be a ground for denying specific performance. May be, the parties knew of the said circumstances but they have also specified six months as the period within which the transaction should be completed. The said time-limit may not amount to making time the essence of the contract but it must yet have some meaning. Not for nothing could such time-limit would have been prescribed. Can it be stated as a rule of law or rule of prudence that when time is not made the essence of the contract, ail stipulations of time provided in the contract have no significance or meaning or that they are as good as non-existent? All this only means mat while exercising its discretion, the Court should also bear in mind that when the parties prescribe certain time - limit(s) for taking steps by one or the other party, it must have some significance and that the said time - limit(s) cannot be ignored altogether on the ground that time has not been made the essence of the contract (relating to Immovable properties).
13. In the case before us, it is not mere delay. It is a case of total inaction on the part of the plaintiff for 21/2 years in clear violation of the term of agreement which required him to pay the balance, purchase me stamp papers and then ask for execution of sate deed within six months. Further, the delay is coupled with substantial rise in prices -according to the defendants, three times -between the date of agreement and the date of sure notice. The delay has brought About a situation where it would be Inequitable to give the relief of specific performance to the plaintiff.
19. The dictum of the above decisions is that Courts are required to examine all relevant factors and circumstances to determine the nature of contract and its binding effect upon the parties for either to grant or not to grant relief. In the instant case, the two circumstances viz., that the sale price of the suit schedule properties as brought out through acceptable evidence was much higher than Rs. 200/- per sq.yd. as mentioned in the suit documents and secondly, that as against the total sale price calculated even at Rs. 200/-per sq.yd., the advance amount paid is only Rs. 5,000/- under each agreement which comes only to 2.5%, out of the total sale consideration of Rs. 4,41,160/-. It would be material and necessary to examine the terms and conditions as also the covenants of the agreements Ex.P.6 and P. 7 forming part of the contract to appreciate end record our findings on the points that are formulated by us. The relevant covenants of the agreements are as follows;
1. The sale price hereby reserved and agreed for the schedule property shall be Rs. 200/- (Rupees Two Hundred) per square yard;
2. The sale shall be Subject to the schedule properly being free from all encumbrances;
3. The party of the Second Part has this day paid to the Party of the First Part a sum of Rs. 5,000/0 (Rupees Five Thousand) only by a Cheque No. 025603 dated 99/10/1979 drawn on the State Bank of Patiala, Bangalore, as and by way of earnest money advance, the receipt of which sum of Rs. 5,000/- (Rupees Five Thousand) only, the Party of the First Part hereby acknowledges and acquits and releasesthe Party of the Second Part free from payment of the same;
4. The Party of the Second Part undertakes to pay the balance consideration at the time of registration of the Deed of Sale;
5. The parties hereto agree that all expenses hike stamp duty, registration charges and other incidental charges relating to the sale transaction shall be borne by the Party of the Second part;
6. The Parties hereto shell take all appropriate action, for obtaining sanctions from the Competent Authority - referred to in terms of the Urban Land (Ceiling & Regulation Act), 1976.
7. The sale shall be completed within a period of three months from the day the sanction from Competent Authority referred to in para -6- supra is obtained and the date vacant possession is available & given to the Party of this Second Part;
8. That on receipt of the balance of sale consideration, as mentioned supra, the Party of the First Part shall convey the schedule property under a suitable Deed of Conveyance to and in favour of the Party of the Second Fart or his nominee/s;
9. Time is the essence of the contract;
10. The sale is also subject to clear and marketable title of the party of the First Fart to the schedule property as also the schedule property being free from all acquisition proceedings by any authority whose over and subject to delivery of vacant possession thereof;
11. Vacant possession is a pre-requisite & condition precedent of the sale;
20. Prom the above extracted 11 covenants contained in Ex.P.6 and P.7, it is clear that a sum of Rs. 5,000/- paid under each agreement is towards 'Earnest Money Advance'. No where it is mentioned in the agreement that the said amount is towards part payment of the 'sale consideration'. What impact it has on the contract itself shall be seen in the following paragraphs.
21. Under covenant No. 4, the plaintiff had agreed to pay the balance consideration at the time of registration of the deed of sale. There is no covenant that the plaintiff was obliged to pay any further amount either towards earnest money or towards part payment of sale consideration before the registration of the deed of sale. However, he was required to meet all expenses towards stamp duty, registration charges and incidental charges. The important covenants of the agreements are covenant Nos.6 to 10. Under covenant No. 6, the plaintiff as also the 1st defendant were required to take all appropriate steps for obtaining sanction from the competent authority referred to in terms of Urban Land (Ceiling and Regulation) Act, 1976. Defendant No. 1 was required to complete the sale transaction within a period of 3 months from the date sanction is obtained from the competent authority under the repealed Act of 1976, as referred to in Clause 6 and from the date vacant possession of the schedule properties is available and to be given to the plaintiff. Therefore, two conditions were required to be fulfilled by the parties before the sale transaction could be completed. Further, as per Clause 2, the sale transaction is subject to the schedule properties being free from all encumbrances and as per Clause 10, it is subject to the 1st defendant having clear and marketable title in respect of the schedule properties.
22. The time stipulated under the agreement is three months for specific performance of execution of sale deeds as per law laid down by the Apex Court in catena of cases. Under Clause 9, time is the essence of the contract.
23. The plaintiff has mentioned in the plaint that after execution of Ex. P.6 and P.7, 1st defendant was meeting him occasionally and had never informed him that cases in respect of the suit properties were still pending in High court against the tenants and some of the portions had been vacated by them. There is no mention in the plaint as to what steps the plaintiff had taken along with 1st defendant or by himself to secure sanction from the competent authority under the provisions of Urban Land (Ceiling and Regulation) Act, 1976 which had imposed embargo on the sale of properties without permission is not stated. In this regard, learned Counsel Sri Chalapathy appearing for the plaintiff contends that under the provisions of Urban Land (Ceiling and Regulation) Act, 1976, it is only the 1st defendant who had to take action by applying for sanction and do all such acts necessary to obtain sanction and the plaintiff had no role to play in that regard. Such submission has been opposed by learned Counsel Sri Udaya Holla appearing for the 1st defendant.
24. We have examined the evidence on record with reference to the rival legal contentions to answer the contentious point. The plaintiff has admitted in his cross-examination that he had not applied to the competent authority under the ULC Act for grant of permission for sale of the suit properties nor he had approached the 1st defendant regarding complying his part of the obligation as agreed in the agreements. We have bestowed our attention on this aspect of the case. The provision of Section 27 of the repealed Act which had imposed embargo on sale transaction of urban property comprising building was struck down by the Apex Court vide its judgment dated 13.11.1980. The effective date from which Section 27 became inoperationalwill be the date of judgment rendered by the Apex Court reported in : AIR1981SC234 . But prior to 1900, the parties were obliged to apply for grant of such permission. In the instant case, the subject matter of properties is not only the building but land appurtenant thereto. In such a case, the transferor and the transferee were required to submit a joint application to the competent authority as required under Rule 14 of the Urban Land (Ceiling and Regulation) Act, 1976 which reads thus:
Form of application under Sub-section (2) of Section 27; Every application under Sub-section (2) of Section 27 shall be in Form VIII.
Form VIII requires that sworn statement shall be filed as prescribed by the transferee which shall be appended to the prescribed application. Therefore, it is not only the 1st defendant but the plaintiff was also required to submit the application along with sworn statement in Form No. VIII lest the competent authority would not have considered the application at all. Therefore, from the date of agreements i.e., 29.10.1979 till 19.11.1980, the plaintiff has either by himself or along with 1st defendant taken any steps to seek such a permission which was one of the requirement under the agreements Ex.P.6 and P.7. Of course, after 13.11.1980, since Section 27 of the Act has been struck down by the Apex Court as unconstitutional, such a requirement was not there. This aspect we shall be referring to while considering the question of limitation raised in these appeals. Hence, on admitted facts, as the plaintiff has not taken steps in this regard in fulfillment of his part of the obligation as per the agreements.
25. It is to be seen whether plaintiff was ready and willing to perform his part of the contract to get the sale deeds executed in his favour from the first defendant The learned trial Judge has considered this aspect about the plaintiff's readiness and willingness as required under Section 16(1)(c) of the Specific Relief Act to perform his part of the contract under issue No. 2, The trial Court has merely noticed that as per Ex.P.6 and P.7 the plaintiff was required to pay balance sale price to the first defendant to get the sale deed executed in his favour. The say of the plaintiff that he was willing to perform his part of the obligation has been accepted by the trial Court only on the ground that the 1st defendant had not raised a plea in the written statement that the plaintiff was not willing to perform his part of the contract Since there was no specific denial that the plaintiff was witling to perform his part of the obligation, the trial Court has answered the issue in favour of the plaintiff and against the 1st defendant. While doing so, the learned trial Judge has ignored Clause 6 of the agreements wherein he was required to perform his obligation, as stated in the foregoing paragraphs, to apply for permission from Urban Land Ceiling as per the date of agreement till the provision of Section 27 was struck down or that he had informed 1st defendant he was willing to pay balance sale consideration to complete the sale transaction. Thus, the conclusion arrived by the learned trial Judge that the plaintiff has proved that he was ready and willing to perform his part of the contract is erroneous in law as same is contrary to evidence on record.
26. The other aspect arising for consideration regarding enforceability of Ex.P.6 and P.7 is about the marketable title of the 1st defendant to the suit properties, Under Clause 2 and Clause 10 of Ex.P.6 and P.7, there is specific covenant that the transaction of alleged sale is subject to right title of defendant No. 1 being clear and marketable and the properties being free from all encumbrances. Ex.P.6 and P.7 show that the 1st defendant had disclosed to the plaintiff he had acquired the properties in question under Ex.D1 which is a deed of partition. Ex.D1 evidenced the fact that the properties, which are subject of Ex.P.6 and P.7, are ancestral Hindu Joint Family properties in which 1st defendant had a share. 1st defendant had, in his written statement, specifically contended that his son -Kugashankar was a coparcener with him and his daughter -Sunita Kugashankar, 2nd defendant also became entitled to a share in the schedule properties by virtue of amendment to Section 6A of the Hindu Succession Act (by virtue of Karnataka Amendment Act of 1994). This was opposed by the plaintiff contending that it is only the 1st defendant who was the owner of the schedule properties and that defendant Nos. 2 and 3 had no right, title and interest therein upon the suit properties. The learned trial Judge has considered this aspect while dealing with additional issue Nos. 2 and 3 framed in the suit. He hats, on the basis of admitted facts, held that since defendant No. 3 -Kugashankar is the son of 1st defendant and as the schedule properties are ancestral Hindu joint family properties, he is a co-parcenor and has a share with the 1st defendant But as regards 2nd defendant -Sunita Kugashankar is concerned, he held that even though under the amended provision of Section 6A of the Hindu Succession Act, she would be entitled to a share but the amendment came into effect in the year 1994. The amendment is prospective in nature and therefore, the 2nd defendant does not have a share in the properties in question. The law as stood in the year 1987 the year in which suit was instituted has been applied by the learned trial Judge to negate the claim of the 2nd defendant, Learned Counsel Sri Udaya Holla referred to a decision of the Apex Court reported in : (1991)3SCC647 . The relevant portion of the said decision is as follows:
Hindu Succession Act, 1956 - Section 29-A(iv) & (II) [as Introduced by Hindu Succession (A.P. Amendment) Act 1986] -Partition Suit - Daughter's share in coparcenary property -Whether, on facto, partition took place prior to commencement of tine Amending Act so as to disentitle the daughter under Clause (iv) to claim the share - Held, must be determined on the basis of the date of passing the final partition decree by menu and bounds -Where though the preliminary decree passed prior to commencement of the Amending Act, the final decree passed after such commencement, daughter would be entitled to share in the co-parcenary property under Clause (ii) -Hindu Law - Partition.
27. Learned Counsel Sri Chalapathy fairly conceded the position of law as stated by the Apex Court in the above referred case and in fact has filed an application under the provisions of Order 6 Rule 17 of CPC in the Cross Objection Appeal seeking permission to amend the plaint so as to incorporate the additional prayer in the suit seeking for a decree of partition amongst defendants 1, 2 and 3. We are therefore satisfied that this aspect needs no further discussion and quietus has to be given to this controversy by recording that the properties in question are joint family properties of defendants 1, 2 and 3 and thus each has a defined and distinct share. That, Ex.P.6 and P.7 and any circumstance would not bind defendant No. 2 -Sunita Kugashankar and defendant No. 3 -Kugashankar, the children of defendant No. 1. Therefore, the finding of the learned trial Judge on this aspect and his conclusion rejecting the claim of the 2nd defendant needs to be set aside.
28. Learned Counsel Sri Chalapathy very fairly accepted the legal position but contends that even if it is held that defendant Nos.2 and 3 have a shore in the schedule properties, his clients would be willing to acquire l/3rd share of the 1st defendant. It is urged by him that the entire transaction of sale as contemplated under Ex.P.6 and P.7 will not get frustrated merely by accepting the share of defendant Nos. 2 and 3. It is his contention that decree for specific performance in respect of l/3rd share of the 1st defendant is necessarily to be passed. In this regard, he has placed reliance on the decisions of the Apex Court reported in : AIR2000SC191 : : AIR1990SC854 : : 1994CriLJ2191 and the following decisions:
(1) Sardar Singh v. Smt. Krishnadevi and Ors. : [1994]3SCR717
15: In view of the finding that the appellant had half share in the property contracted to be sold by Kartar Lal, his brother, the agreement of sale does not bind the appellant. The decree for specific performance as against Kartar Lal became final. Admittedly the respondent and her husband are neighbours. The appellant and his brother being coparcenersor co-owners and the appellant after getting the tenant ejected both the brothers started living in the house, As a prudent purchaser Joginder Nath ought to have made enquiries whether Kartar Lal had exclusive title to the property. Evidence of mutation of names in the Municipal Register establishes that the property was mutated in the joint names of the appellant and Kartar Lal and was in Joint possession and enjoyment. The Courts below, therefore, have committed manifest error of law in exercising their discretion directing specific performance of the contract for the entire property. The house being divisible and the appellant being not a consenting party to tine contract, equity and justice demand partial enforcement of the contract, Instead of refusing specific performance in its entirely, which would meet the ends of justice. Accordingly we hold that Joginder Nath having contracted to purchase the property, It must be referable only in respect of half the right, title and interest held by Kartar lal, his vendor. The first respondent being successor in interest, becomes entitled to me enforcement of the contract of the half sham by specific performance. The decree of me trial court is confirmed only to the extent of half share in the aforestated property. The appeal is accordingly allowed and the decree of the High Court is set aside and that of the trial Court is modified to the above extent. The parties are directed to bear their own costs throughout.(2) Nuclear Power Corporation v. Gajaraj Singh and Anr. : AIR1995SC1606 :
23. The aforesaid shows that though what has been recorded was described as 'gentlemen's understanding', according to us, the understanding was such which was meant to be acted upon. We have taken this view because terms and conditions of reconveyance have been dearly mentioned and document was executed by the agent of both the sides. It was, therefore, intended to create legal obligation. In this context Shri Parasaran has brought to out notice a decision of this Court rendered in Commr. of Wealth-tax, Bhopal v. Abdul Hussein Mulla Muhammad Ali, (dead) by LRs. (1988) 3 SCC 562 : AIR 1968 SC 1417, in which after referring to the decision of the House of Lords in the aforesaid case and some other decisions, as well as what has been stated in legal treatise, it was observed in para 24 that the proposition that in addition to the existence of an agreement and the presence of consideration, them is also a third element in the form of intention of parties to create legal relations, is one which has not passed unchallenged. The Bench observed that it is not possible to accept the agreement that an agreement will not, by itself, yield legal obligations unless it is one which can reasonably be regarded as having been made between the parties in contemplation of legal consequences. From the averments made in Ex.P.1 and the legal position being what has been noted in this east, we am satisfied that an enforceable contract had come into existence on the parties executing Ex.P1. Awarding to us, they were ad Idem and the plaintiff was within his rights to seek specific performance of the same.
25. We now come to the main legal submission which is that the relief of specific performance being discretionary, we may not grant the same for two reasons in the main: (1) lapse of about 33 years after filing of the suit during which period price of the property has gone up enormously; and (2) the plaintiffs legal representative having assigned their right of re-purchase, the assignees are the real persons Interested in getting back the property, and we may not allow the same, as what they had purchased was not the property as such, but litigation, which could be said to be aidn to champerty.
Opposing the contentions of learned Counsel Sri Chalapathy, Sri Udaya Holla would contend that the decree to enforce specific performance in respect of a portion of the schedule properties of the first defendant cannot be granted. He relies on the decisions of the Apex Court reported in:
1. K. Narendra v. Riviera Apartments (P) Ltd. : [1999]3SCR777 which we have already extracted in para 18 of this judgment.
2. Dharma Shamrao Agalawe v. Pandurang Miragu Agalawe and Ors. : [1988]2SCR1077
The effect of Section 12 of the Act again came up for consideration before tills Court in Vasant v. Dattu : AIR1987SC398 , in that case, interpreting Clause (c) to the proviso of Section 12 of the Act, Chinnappa Reddy, J who spoke for the Court observed that in a case of this nature where the joint family properties had passed on to the hands of the remaining members of the coparcenery on the death of one of the coparceners no vesting of the property actually took place in the remaining coparceners white their share in the joint family properties might have Increased on the death of one of the coparceners which was bound to decrease on the introduction of one more member into the family either by birth or by adoption. In the above connection, the Court observed thus :
4. We are concerned with proviso (c) to Section 12. The introduction of a member into a joint family, by birth or adoption, may have the effect of decreasing the share of the rest of the members of the joint family, but it certainly does not involve any question of divesting any person of any estate vested in him. The joint family continues to hold the estate, but, with more members than before. There is no fresh vesting or divesting of the estate in anyone.
5. The learned Counsel for the appellants urged that on the death of a member of a Joint family, the property must be considered to have vested in the remaining members by survivorship, It is not possible to agree with this argument. The property, no doubt passes by survivorship, but there is no question of any vesting or divesting in the sense contemplated by Section 12 of the Act. To interpret Section 12 to include cases of devolution by survivorship on the death of a member of the joint family would be to deny any practical effect to the adoption made by the widow of a member of the joint family. We do not think that such a result was in the contemplation of Parliament at all.
3. C. Krishna Prasad v. C.I.T. Bangalore : [1974]97ITR493(SC)
8. The share which a coparcener obtains on partition of ancestral property is ancestral property as regards his male issue. They take an interest in it by birth, whether they are In existence at the time of partition or are bom subsequently. Such share, however, is ancestral property only as regards his male issue. As regards other relations, it is separate property, and if the coparcener dies without leaving male issue, it passes to his heirs by succession (see p.272 of Mulla's Principles of Hindu Law 14th Ed.). A person who for the time being is the sole surviving coparcener is entitled to dispose of the coparcenary property as If It were his separateproperty. He may sell or mortgage the property without legal necessity or he may make a gift of it. If a son is subsequently bom to him or adopted by him, the alienationwhether it is by way of sale, mortgage or gift, will nevertheless stand, for a son cannot object to alienations made by his father before he was bom or begotten (see p.320 ibid). In view of the above it cannot be denied that the appellant at present is the absolute owner of the property which fell to his sham as a result of partition and that he can deal with it as he wishes. There is admittedly no female member in existence who is entitled to maintenance from the above mentioned property or who is capable of adopting a son to a deceased coparcener. Even if the assessee -appellant in future introduces a new member into the family by adoption or otherwise, his present full ownership of the property cannot be affected, Such a new member on becoming a member of the coparcenary would be entitled to such share in the property as would remain undisposed of by the assessee. In order to determine the statue of the assessee for the purpose of income tax, we have to look to the realities as they exist at present and it would not be correct to project into the matter future possibilities which might or might not materialise. This would Indeed amount to speculation and the same is not permissible. Excursions to the realm of speculation may be legitimate and Justified when one is engaged in the study of philosophy and metaphysics; they are wholly unwarranted when one is dealing with the mundane subject of the status of the assessee for the purpose of the income tax assessment. For this purpose, we have to look to facts as they exist and emerge from the record and not to what they may or may not be in future. As things are at present in the instant case, there can, in our view, be hardly any doubt that the assessee is an Individual and not a family.4. M. Veera Raghaviah v. M. China Veeriah and Anr. AIR 1975 Andhra Pradesh 350 [DB]) (Head Note (C)(C) Specific Relief Act (1963), Section 17 - Specific performance of contract - Property belonging to co-parceners - Contract by one of them to sell the whole property not binding on others - Specific performance cannot be granted 99 regards his share.
We have carefully examined the decisions cited above to appreciate the legal submissions with a view to find out as to whether the same would apply to the case of the first defendant. The contentions of learned Sr. Counsel Sri. Chalapathy are undoubtedly legally sustainable pleas but grant of such a relief is dependant upon proof that the plaintiff has acquired right under Ex.P6 and P7 and that such right is enforceable against 1st defendant for sale of the schedule properties. Following aspects would manifest to negate such plea and contention of the plaintiff's counsel:
29. The 1st defendant, as noticed from the defence in the written statement and the evidence tendered by him, has been consistently asserting that Ex.P.6 and P.7 are not agreements to sell the suit properties. The plaintiff, on his part, to negate such assertions and to enforce Ex.P.6 and P.7 against the 1st defendant in respect of the subject matter of properties, has sought to fortify his claim by referring to two more documents. According to the plaintiff, he had pleaded that, after paying Rs. 5,000/- under each agreement -Ex.P.6 and P.7 to defendant No. 1, waited patiently for him to comply with the obligation to sell the properties but, the 1st defendant evaded to perform his part of obligation. We have already referred to the averments in the plaint wherein the plaintiff has mentioned 1st defendant was meeting him only occasionally. It is therefore an admitted fact on record that the plaintiff has not, after execution of the agreements and till filing of the suit, issued any notice of demand calling upon the 1st defendant to comply with his obligation under the said agreements to sell the suit properties to him. He has either averred in the plaint or established in his evidence before the trial Court that he was ever ready and willing either to fulfil his part of the obligation or to pay the balance sale consideration as is mentioned in the clauses to Ex.P.6 and P.7. Learned Counsel Sri Udaya Holla referred to Ex.P.8 and P.9 produced by the plaintiff as the documents supporting transaction of sale. Ex.P.8 dated 10/9/19B2 is described as an endorsement executed by the 1st defendant acknowledging sum of Rs. 10,000/- as further advance and reaffirming his commitment to sell the schedule properties to the plaintiff as per Ex.P.6 and P.7. Ex.P.9 is said to be reply written by the 1st defendant to the plaintiff reaffirming his commitment and assuring him that he would finalize the sale transaction and deliver him vacant possession of the premises. Learned Counsel Sri Chalapathy has also referred to these documents with a view to substantiate that, apart from receiving Rs. 5,000/- under each agreement, the 1st defendant had further received Rs. 10,000/- from the 1st defendant on 10.9.1982. Thus Ex.P.8 dated 10.9.1982 is used by the plaintiff as a document forming part of Ex,P.6 and P.7 by which, the time stipulated for completion of sale transaction is said to have been enlarged up to 1st week of January 1987. Also reliance has been placed by learned Counsel Sri Chalapathy on Ex.P.9 dated 17.1,1987 said to have been written by the 1st defendant to the plaintiff in reply to plaintiff's letter of request dt. 13/1/1967 to sell the schedule properties to him. We shall pause at this juncture to observe that apart from these two documents, the plaintiff has also produced in evidence the original of Ex.P.4 dated 13.1.1987 said to be the letter written by him (plaintiff) to the 1st defendant demanding him to complete the sale transaction vide Ex.P.6 and P.7. Though the plaintiff has, in his ocular testimony, tried to support these documents, learned Counsel Sri Udaya Holla assertively contends that his client totally denies receipt of Ex.P.4, the letter dated 13.1.1987 said to have been written by the plaintiff and the 1st defendant denies having received 8 sum of Rs. 10,000/- on 10.9.1982 and also denies having executed Ex.P.8 in witness thereof. Also it is denied that the 1st defendant had written reply dated 17.1.1987 to the plaintiff. It suffices to say that defendant No. 1 questions the authenticity and genuineness of Ex.P.4, P,B and P,9. According to him, these documents are fabricated and concocted by the plaintiff for the purpose of this case and to overcome his lapses and also bar of limitation upon enforceability of Exs.P6 and P7 are brought.
30. Our attention is drawn to the averments in the plaint. The plaintiff has ho where in the plaint mentioned of his letter dated 13.1.1987 -Ex.P.4 or the reply said to have been sent by the 1st defendant dated 17.1.1987 vide Ex.P.9 to him. The only mention in the plaint about communication between the plaintiff and the 1st defendant after execution of Ex.P.6 and P.7 is referred to in paragraphs 11 and 12 which are extracted as follows:
11. On or about 11th August 1986, the plaintiff wrote a polite letter requesting the Defendant to finalise the sale in respect of the portions that the Defendant could give vacant possession and actual possession including physical possession and finalise at least some of the properties which are vacant as the value has to be calculated in terms of money at Rs. 200/- per square yard as par the agreements.
12. The Defendant sent a reply on or about 17.11.1966 stating that he would give vacant possession of all the properties of Blocks 1 and 2 referred to in the agreement with various municipal numbers of the schedule properties by January 1987 but in vain.
31. From the above extracted portions of the pleadings as averred in the plaint, it is clear that no where in the plaint, as rightly pointed out by the learned Counsel for the appellant, the plaintiff has referred to the letter dated 13.1.1987 -Ex.P.4. The only mention he has made is to a letter dated 11.8.1986 which letter he has failed to produce in evidence. No reasons are assigned even in evidence for non-production of the letter dated 11.8.1986 as mentioned in para 11 of the plaint and no explanation is forthcoming as to why there was no mention of Ex.P.4 dated 13.1.1987 in the plaint. Similarly, 1st defendant is said to have replied to the plaintiff on 17.11.1986 whereas the reply purporting to have been sent by 1st defendant produced in the case vide Ex.P.9 is dated 17.1.1987. The defendant has disputed his signature on Ex.P.9. The plaintiff has made no endeavour to prove this aspect. On comparison also, the signature appear in Ex.P.9 is at variance from the admitted signatures of the 1st defendant at Ex.P.6 and P.7 and other papers available in the original suit record. Besides, Ex.P.4, the alleged letter dated 13.1.1987 said to have been written by the plaintiff to the 1st defendant produced vide Ex.P.4 is unsigned by the plaintiff. If Ex.P.4 was served on the 1st defendant, then the plaintiff has not explained as to how the original letter remained with him. As regards Ex.P.6 is concerned, the 1st defendant is admitting his signature but, denies receipt of Rs. 10,000/- or the contents thereof. According to him, during business transaction with the plaintiff, the plaintiff has been obtaining signatures on blank papers. One such paper has been misused and fabricated by the plaintiff as an endorsement for the purpose of institution of the suit. The plaintiff has not controverted these allegations except denying the same. It is pertinent to note that unlike Ex.P.6 and P.7 whereunder earnest money of Rs. 5,000/- has been paid by cheques, Rs. 10,000/- is said to have been paid in cash under Ex.P.8. Also, unlike Ex.P.6 and P.7, there are no witnesses to Ex.P.8. Merely because the 1st defendant admits signature on Ex.P.8 will not suffice in the circumstances in which these documents have come on record and the plea of the 1st defendant that they are fabricated. The burden lies on the plaintiff to establish its authenticity and genuineness of these documents. Except the say of the plaintiff, no witnesses have been examined to speak about payment of Rs. 10,000/- under Ex.P.8. Proof that defendant No. 1 had executed Ex.P.8 was very vital as the said document is dated 10,9.1982. The agreements -Ex.P.6 and P.7 are dated 29.10.1979. Therefore, if at all period of limitation is to be saved, it could only be on the basis of Ex. P.8.
32. Taking note of the various discrepant statements in the pleadings and the evidence of the plaintiff regarding Ex.P.4, P.8 and P.9 and also for non-production of letters dated 11.8.1986 and 17.11.1986 referred to in paragraphs 11 and 12 of the plaint, we are constrained to accept the contention of the learned Counsel for the appellant/1st defendant that there is a doubt about genuineness of Ex. P.4, P.B and P.9, Consequently, it does not infuse confidence in us to accept those documents as authentic to be acted upon. If we exclude these documents, then there is no proof of any interaction between the plaintiff and 1st defendant after 29.10,1979 till filing of the suit. Besides, the case of the plaintiff is that he had asked the 1st defendant to sell a portion of the schedule properties and not the entire properties vide his letter dated 11.8.1966, Reason as to why the plaintiff did not call upon the 1st defendant to fulfil his part of the contract in Ex.P.6 and P.7 had to be explained. Non-explaining of these circumstances renders the transaction doubtful. We are therefore constrained to discount the contention of the plaintiff that the 1st defendant had voluntarily undertaken to execute Ex.P.6 and P.7 to sell the schedule properties for the price indicated therein. In cases of this nature, conduct of the parties is of paramount importance. We have noticed, as discussed above, the plaintiff has tried to bring in evidence documents, the authenticity of which is in question. If those documents viz., Ex.P.4, P.8 and P.9 are excluded, then the case of the plaintiff rests totally on Ex.P.6 and P.7. Therefore, all attending circumstances indicate inaction on the part of the plaintiff even to enforce right if any he had under Ex.P.6 and P.7 for a period from the year 1979 till 1987, when he filed the suit in this regard, learned Counsel for the 1st defendant has placed reliance on various judgments of the Apex Court. The Apex Court, in the case of K. Narendra v. Riviera Apartments (P) Ltd. : [1999]3SCR777 , has held as under:
35. In our opinion, there has been a default on the part of the respondents in performing their obligations under the contract. The period lost between 25-7-1972 (the date of the agreement) and the yeans 1979 and 1980 when the litigation commenced, cannot be termed a reasonable period for which the appellant could have waited awaiting performance by the respondents though there was not a defined time-limit for performance laid down by the agreement. The agreement contemplated several sanctions and clearances which were certainly not within the power of the parties and both the parties knew it well that they were the respondents who were being depended on for securing such sanctions/clearances, Part of the land forming the subject matter of the agreement was excess land within the meaning of ULCRA and hence could not have been sold., Part of the land has been acquired by the State and to that extent the agreement has been rendered incapable of performance. The feasibility of a multi-storeyed complex as is proposed and planned by the respondents appears to be an impracticality. If the respondents would not be able to construct and deliver to the appellant some of the flats as contemplated by the novated agreement how and in what manner the remaining part of the consideration shall be offered/paid by the respondents to the appellant is a question that defies answer on the material available on record. Added to all this to the factum of astronomical rise in the value of the land which none of the parties would have fore contemplated at the time of entering into the agreement. We are not in the least holding that the consideration agreed upon between the parties was Inadequate on the date of the agreement. We are only noticing the subsequent event. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequently at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents have neither pleaded nor brought material on record to hold that they have acted in such a way as to render inequitable the denial of specific performance and to hold that their would be a case of greater hardship ever the hardship of the appellant Upon an evaluation of the totality of the circumstances, we are of the opinion that the performance of the contract would involve such hardship on the appellant as he did not foresee while the non-performance would not Involve such hardship on the respondents. The contract though valid at the time when it was entered, is engrossed in such circumstances that the performance thereof cannot be secured with precision. The present one is a ease whew the discretionary jurisdiction to decree the specific performance ought not be exercised in favour of the respondents. During the course of hearing the learned Senior Counsel for the respondents time and again emphasized and appealed to the Court that the respondents were builders of repute and in the event of the specific performance being denied, they run a grave risk of losing their reputation as their proposed building plan 'Glmar' would not materialise and they will not be able to show their fact to their prospective flat-buyers, This is hardly a consideration which can weigh against the several circumstances which we have set out hereinabove. If a multi-storiedcomplex cannot come up on the suit property, the respondents' plan are going to fail in any case.
33. In the light of the above observation of the Supreme Court and taking note of all attending circumstances in which Ex.P.6 and P.7 are said to have been executed, it could be held that inadequacy of sale consideration and the conduct of the plaintiff impacts the very nature of transaction. However, even otherwise, if it is to be held that escalation of sale price was subsequent to execution of Ex.P.6 and P.7, even then, it is necessary to examine whether it will be inequitable to grant specific relief sought for. It is settled principle of law that a specific relief may not be grantable, if the 1st defendant is put to undue hardship which he did not foresee at the time of agreement The Courts would desist from granting a decree for specific performance, This position of law is well settled in view of the pronouncement of the Apex Court in the following judgments which are extracted for clarity and for our purpose.
1. A.C. Arulappan v. Smt. Ahalya Naik : AIR2001SC2783
7. The Jurisdiction to decree specific relief is discretionary and the Court can consider various circumstances to decide whether such relief to he granted. Merely because it is lawful to grant specific relief, the Court need not grant the order for specific relief; but this discretion shall not be exercised in an arbitrary or unreasonable manner. Certain circumstances have been mentioned in Section 20(2) of the Specific Relief Act 1963 as to under what circumstances the Court shall exercise such discretion, If under the terms of the contract: the plaintiff gets an unfair advantage over the defendant, the Court may not exercise its discretion in favour of the plaintiff. So also, specific relief may not be granted if the defendant would be put to undue hardship which he did not foresee at the time of agreement. If it is inequitable to grant specific relief, then also the Court would desist from granting a decree to the plaintiff.2. K. Narendra v. Riviera Apartments (P) Ltd. (1990) 5 SCC 77 (para 35) which is extracted at pare 18 of this judgment.
3. Motilal Jain v. Ramdasi Devi (Smt) and Ors. : AIR2000SC2408
6. The first ground which the High Court took none of is the delay in filing the suit. It may be apt to bear in mind the following aspects of delay which are relevant in a case of specific performance of contract for sale of immovable property:
(i) delay running beyond the period prescribed under the Limitation Act;
(ii) delay in cases where though the suit is within the period of limitation, yet;
(a) due to delay the third parties have acquired rights in the subject-matter of the suit;
(b) In the facts and circumstances of the case, delay may give rise to plea of waiver or otherwise it will be Inequitable te grant a discretionary relief.
Here none of the above-mentioned aspects applies. That apart factually also, the High Court proceeded on an Incorrect assumption with regard to cause of action. Ext.2 was executed on 20-2-1977 and under it the sale deed was to be executed on or before 19-7-1977. The last notice was issued on 26-11-1978 and from that date the suit was filed only after nine months and not after more than a year as noted by the High Court. Therefore on the facts of this case the ground of delay cannot be Invoked to deny relief to the plaintiff.
4. 1989 (2) SUPP SCC 409 Head Note
Specific Relief Act, 1877 - Section 22- Grant of discretionary relief under - Agreement to sell leasehold right in plot of land by defendant to plaintiff - Plaintiff only paying earnest money of Rs. 5000 but taking no further steps for getting the conveyance executed and doing nothing further except sending a lawyer's notice to the defendant while the construction work was in progress -Grant of lease by Government being subject to condition of construction of building on the plot by the defendant within two years, defendant commencing construction despite the agreement to sell in order to save forfeiture by Government - Suit for specific performance of the agreement Instituted by plaintiff - Having regard to the greater hardship that would cause if decree for specific performance were to be passed in view of considerable cost involved in the plaintiff, held, this was not a fit case for grant of discretionary relief for specific performance- plaintiff was disentitled by his conduct from claiming specific performance-Equity.5. Smt. Ranganayakamma v. N. Govinda Narayan : AIR1982Kant264
12. It is a wall established doctrine that the court win not enforce specific performance of a contract the result of which would be to Impose great hardship on either of the parties to it. Section 20 of the Specific Relief Act, 1963 provides that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so. The discretion of the Court however, should be exercised on reasonable principles capable of correction by a Court of appeal. When the Section states that 'the jurisdiction to decree specific performance is discretionary' to it only means that the mere existence of a legal right is not sufficient to attract the remedy. An agreement may be valid in law and there may not be sufficient grounds for its cancellation; yet, upon a fair and just consideration of the attendant circumstances, the Court may abstain from its enforcement. Sub-section (2) of Section 20 sets forth the cases. In which the Court may properly exercise such discretion to refuse specific performance. It broadly divides those cases into three categories, namely:
(1) Where -
(i) the terms of the contract, or
(ii) the conduct of the parties at the time of entering into the contract or
(iii) other circumstances, under Which the contract was entered into, are such that the contract gives the plaintiff an unfair advantage over the defendant, or
(2) Where the performance of the contract would -
(i) involve some hardship on the defendant, which he did not foresee; and
(ii) its non-performance would not Involve any such hardship on the plaintiff; or
(3) Where although the contract is not Voidable at the instance of the defendant, yet it is inequitable to enforce specific performance.
6. Kanshi Ram v. Om Prakash Jawal and Ors. : AIR1996SC2150
Having regard to the facts of this case an the arguments addressed by the learned Counsel, the question that arises for consideration, is; whether it would be just, fair and equitable to grant the decree for specific performance? It is true that the rise in prices of the property during the pendency of the suit may not be the sole consideration, for refusing to decree the suit fox specific performance. But it is equally settled law that granting decree for specific performance of a contract of immovable is not automatic. It is one of discretion to be exercised on sound principles. When the Court gets into equity jurisdiction, it would be guided by justice, equity, good conscience and fairness to both the parties. Considered from this perspective, in view of the fact that the respondent himself had claimed alternative relief for damages, we think that the Courts would have been well justified in granting alternative decree for damages, instead of ordering specific performance which would be unrealistic and unfair, Under these circumstances, we hold that the decree for specific performance is inequitable and unjust to the appellant.7. Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi and Ors. : [1978]2SCR839
34. We have carefully gone through the dictum of the verdicts of the Apex Court cited by learned Counsel on either side.
35. Provision of Section 20(2) of the Specific Relief Act enables the Court for grant of decree of specific performance. The rigour of the rule evolved by the Courts and position of law that emanates therefrom undoubtedly mandates that grant of relief of specific performance is not automatic. All relevant attending circumstances governing transaction between the parties should be examined carefully to determine the enforceability of the contract. Wherever the specific performance is sought, it is inevitable that the defendant against whom such a relief is sought may suffer some hardship. But when it is noticed that at the time of entering into such transaction, the transferor would not have foreseen either the escalation in the price or the ultimate hardship resulted to him. The discretion has to be exercised by the Court on the principles of justice, equity and good consciousness. Merely because it would be lawful to do so, a decree for specific performance will not be granted. When it is likely to give unfair advantage to the plaintiff, it will have to be refused. In the instant case, all attending circumstances indicate grant of such a relief was not justified. Thus, the discretion under the provision of Section 20(2) of the Specific Relief Act has not been exercised judiciously by the trial Court and therefore, we have carefully examined this important aspect of the case. Having regard to the evidence on record with regard to execution of Ex.P.6, P.7 and the finding recorded by us holding that Ex.P.4, P.8 end P.9 are fabricated documents and that the plaintiff has not been ready and willing to perform his part of the contract as per the covenants and the market value of the property as on the date of the agreements of sale. On the date of institution of the suit and the judgment and decree passed, we are of the final view that the plaintiff is not at all entitled for the decree of specific performance in respect of suit properties.
36. The last question pertains to determination about the maintainability of the suit with reference to the limitation prescribed for bringing action for grant of decree for specific performance of the contract. In this regard, it is noticed and as has been discussed in the foregoing paragraphs, the documents Ex.P.6 and P.7, the alleged agreements to sell, have been executed inter alia between the parties on 29.10.1979, As per the terms and conditions of the contract, the time stipulated for completion of the said alleged sale transaction is 3 months from the date of grant of permission under the provisions of Section 27 of the Urban Land (Ceiling and Regulation) Act, 1976 and within 3 months from the date the 1st defendant delivers vacant possession of the properties, subject matter of contract.
37. We have already, on facts, held that in view of quashing of Section 27 of the said Act by virtue of the decision rendered by the Apex Court reported in : AIR1981SC234 dated 13.11.1980, the first requirement became redundant The only contingency remained was regarding delivery of vacant possession of the properties in question. The plaintiff, on his own volition, has come before the Court contending that he had given up the right to take vacant possession of the properties in question. Therefore, even that contention did not survive. Consequently, the agreements became enforceable, even if it was lawful, within 3 months from 13.11. 1960. Admittedly, the plaintiff did not seek too enforce his right within 3 years from the said date as is prescribed under the first part of provision of Article 54 of the Limitation Act, As per the provision of Article 54 of the Limitation Act, which is extracted below, the period from which 3 years has to be reckoned, as follows;
a) If data is fixed for performance, then from the date the period so fixed expires.
b) The data fixed for the performance, or, if no such date is fixed, when the plaintiff has notice chat performance is refused.
38. The time therefore to enforce the alleged right would end by operation of law of limitation from 13.10.1983. There is no explanation forthcoming for such inaction. Also, it is pertinent to mention that with a view to save the period of limitation, the plaintiff has introduced in evidence an endorsement dated 10.9.1982 -Ex. P.6 said to have been executed by the 1st defendant, the authenticity of which document has been seriously questioned by the 1st defendant and we have also, on the basis of the evidence on record, held that the plaintiff has failed to establish the genuineness of the said document, The plaintiff has also relied on a letter said to have been written by the 1st defendant on 17.1.1987 purporting to be a reply to his letter dated 13.1.1987 whereby the 1st defendant is said to have renewed his commitment and undertook to execute the sale transaction in the month of January 1987. We have already, on facts, held that the said document is not believable. Consequently the suit is obviously barred having been filed 8 years after 29.10.1979. In similar circumstances, the Apex Court,, in the case of K.S. Vaidyanadam v. Vairavan repotted in : AIR1997SC1751 which came to be rendered following the judgment of the Constitution Bench in the case of Chandrani v. Kamalrani reported in : AIR1993SC1742 , held as follows:
9. Article 54 of the limitation Act prescribes three yean as the period within which a suit for specific performance can be filed. The period of three years is to be calculated from the date specified in the agreement for performance or in the absence of any such stipulation, within three years from the date the performance was refused.
10. It has been consistently held by the Courts in India, following certain early English decisions, that in the case of agreement of sale relating to immovable property, time is not of the essence of the contract unless specifically provided to that effect. The period of limitation prescribed by the Limitation Act for filing a suit is three years. From these two circumstances, It does not follow that any and every suit for specific performance of the agreement (which does not provide specifically that time is the essence of the contract) should be decreed provided it is filed within the period of limitation notwithstanding the time limits stipulated in the agreement for doing one or the other thing by one or the other party. That would amount to saying that the time-limits prescribed by the parties in the agreement have no significance or value that they mean nothing. Would it be reasonable to say that because time is not made the essence of the contract, the time-limit(s) specified in the agreement has no relevance and can be ignored with impunity? It would also mean denying the discretion vested in the Court by both the Sections 10 and 20.
It would also be worth referring to the observation made in the decision with regard to the conduct of the parties, Para-13 of the said Judgment reads thus:
In the case before us, it is not mere delay. It is a case of total Inaction on the part of the plaintiff for 2 % yean in clear violation of the term of agreement which required him to pay the balance, purchase the stamp papers and then ask for execution of sale deed within six months. Further, the delay is coupled with substantial rise in prices -according to the defendants, three times - between the data of agreement and the data of suit notice. The delay has brought about a situation where it would be inequitable to give the relief of specific performance to the plaintiff.
39. On the basis of facts, evidence on record and the position of law as laid down by the Apex Court in the above cases, we have to hold that the suit as brought by the plaintiff was also not within the period of limitation and hence, it was time barred. The teamed trial judge has gravely erred in not examining the case on this question from the above perspective and the finding recorded by him on the contentious issue in the impugned judgment is contrary to the facts, evidence and law on this question and therefore, we have set aside the finding of the trial Judge on this contentious issue and answer the same against the plaintiff.
40. From the above observation, a clear ratio emanates that the party seeking specific performance of the contract needs to establish firstly that he had enforceable right and there was meeting of mind between him and the opponent or that the parties were ad-edem. That right should be shown bo be subsisting and enforceable in law when the suit is filed. That is not so in the instant case. This question is therefore answered against the plaintiff and in favour of the defendants.
41. In the result, we are constrained to set aside the finding of the learned trial Judge on all the issues and allow the appeal filed by the 1st defendant. Though we have held that agreements -Ex.P.6 and P.7 styled as agreements to sell were not Intended to be acted upon as contended by the 1st defendant, we also hold that they did not bind defendants 2 and 3. However, In our view, the plaintiff will be entitled to reimbursement of the amount paid by him under agreements -Ex.P.6 and P.7 in a sum of Rs. 10,000/- with reasonable rate of interest.
42. With the said conclusion, we are constrained to reject the cross objection appeal filed in RFA No. 417/98 and also the application moved by the plaintiff in this appeal under the provisions of Order 6 Rule 17(a) of CPC seeking amendment of the plaint.
43. While we dismiss the suit, we direct the 1st defendant to pay to the plaintiff a sum of Rs. 10,000/- with interest at 12% p.a. Though the plaintiff had prayed for an order to allow him to withdraw the costs which was deposited by the 1st defendant in this appeal, such a prayer will not be grantable in view of allowing the appeal of the 1st defendant.
44. Accordingly, RFA No. 393/98 filed by the 1st defendant is allowed. The judgment and decree dated 5.3.1998 passed by the learned trial Judge is set aside. O.S.No. 2799/87 filed by the plaintiff stands dismissed with costs.
45. The cross objection appeal filed by the plaintiff in RFA No. 417/98 is dismissed. In the circumstances, we restrain our hands in imposing any order with regard to costs and direct the parties to bear their costs.
46. After the judgment was dictated dismissing RFA No. 417/98, submission was made that an order be passed directing the 1st defendant to maintain status quo as on today and not to proceed with construction upon the suit schedule properties at least for a period of three months to enable the 1st defendant/plaintiff to seek further appeal action in this matter,
47. In view of the fact that we have dismissed the suit of the plaintiff by elaborate reasoning, we feel that order of such a nature wilt be unjust. However, it would be appropriate to make an observation that any improvement made or construction carried on by the 1st defendant shall be at his risk and he will not claim any equity in the event of the plaintiff succeeding in any further appeal.