Judgment:
The Second Appeal is listed under the caption “for admission”. However, at the request of both sides, the Second Appeal itself is taken up for disposal.
2. The unsuccessful plaintiffs in both the Courts below i.e., the trial Court as well as the first appellate Court filed this Second Appeal.
3. The appellants herein had filed suit in O.S.No.196 of 2000 on the file of the V Additional Senior Civil Judge, (Fast Track Court), Ranga Reddy District for specific performance of agreement of sale dated 2.10.1997 in respect of the suit schedule property and the same was dismissed on 31.7.2006. Aggrieved thereby the appellants had preferred appeal suit in A.S.No.215 of 2006 on the file of the IV Additional District Judge, Ranga Reddy District, however, the same was dismissed by confirming the judgment of the trial Court on 26.9.2011. Aggrieved by the same, the appellants preferred this Second Appeal contending, inter alia, that both the Courts below had failed to appreciate the evidence and other material on record in proper perspective and thereby misdirected themselves in coming to erroneous decision in dismissing the suit and the appeal suit.
4.For the sake of convenience, the parties are referred to as they arrayed in the O.S. before the trial Court.
5. It is the case of the plaintiffs that they had filed O.S.No.196 of 2000 seeking specific performance of agreement of sale dated 2.10.1997 (Ex.A.1) stating that the defendant No.1 being the absolute owner of the suit schedule property agreed to sell the same to late Sri Chama Narsimha Reddy, the husband of plaintiff No.1 and father of plaintiffs 2 and 3 for a total consideration of Rs.4,00,000/- and entered into agreement of sale on 2.10.1997. The suit schedule property is agricultural land admeasuring Ac.3.37gts in Survey Nos.65 and 66 of Kuntloor Village, Hayathnagar Mandal, Ranga Reddy District. Defendant No.1 received Rs.1,00,000/- towards part of sale consideration. Defendant No.1 assured that sale deed would be executed in favour of the late Sri Chama Narsimha Reddy within one year from the date of recording his name in the revenue records. Defendant No.1 had also permitted late Sri Chama Narsimha Reddy to demarcate the lay out of the suit schedule property by giving possession of the suit schedule property. Defendant No.1 further assured and agreed that he would secure and produce encumbrance certificate for a period of 13 years and also would clear of all taxes, cesses etc payable to various departments. These averments find place in the agreement of sale dated 2.10.1997. However, defendant No.1 failed to comply with the said terms as set out in the said agreement executed by him.
6. That late Sri Chama Narsimha Reddy, husband of plaintiff No.1 and father of plaintiffs 2 and 3 died on 19.4.1999 leaving the plaintiffs as his successors, and the same was to the knowledge of defendant No.1 being his distant relative, that after the demise of Sri Chama Narsimha Reddy, the plaintiffs approached defendant No.1 on several occasions and requested him to execute sale deed by receiving the balance amount of consideration, that he ignored and evaded to do so owing to price hike in the vicinity of the suit schedule property and he also tried to alienate the suit schedule property to third parties at higher price in violation of the agreement of sale and that a legal notice dated 21.1.2000 was issued to defendant No.1 to comply with the terms of the agreement of sale, however, he issued reply notice dated 1.3.2000 admitting execution of agreement of sale and also receipt of part of sale consideration of Rs.1,00,000. However, defendant No.1 falsely contended that the said agreement was cancelled orally, and thus he was trying to avoid the obligations arising out of the said agreement taking advantage of the death of Sri Chama Narsimha Reddy, that Sri Chama Narsimha Reddy was ready and willing to perform his part under the said agreement till his last breath and after his demise, the plaintiffs are also ready and willing to perform their part of obligations in compliance with the terms of the said agreement.
7. Defendant No.1 filed in his written statement denying that late Sri Chama Narsimha Reddy had purchased the agricultural land in Survey Nos.65 and 66 in an extent of Ac.3-37gts situated at Kuntloor, Hayathnagar Mandal, Ranga Reddy District from him under agreement of sale dated 2.10.1997 and that he had agreed to sell the suit schedule property to late Sri Chama Narsimha Reddy for a total sale consideration of Rs.4,00,000/-. Somehow, defendant No.1 had admitted in his written statement that he had executed agreement of sale dated 2.10.1997 in favour of late Sri Chama Narsimha Reddy and also received Rs.1,00,000/- towards advance sale consideration, however, he denied that Sri Chama Narsimha Reddy was entitled to demarcate the lay out in the suit schedule property and that he permitted him to do so. Defendant No.1 also denied having agreed to produce encumbrance certificate for 13 years and also to clear of taxes, cesses etc. Defendant No.1 denied other averments of the legal notice including that plaintiffs 1 to 3 approached him after the death of Sri Chama Narsimha Reddy and requested him to execute the sale deed by accepting the balance amount of sale consideration. Defendant No.1 denied having agreed to sell the property to third parties due to price hike. Defendant No.1 alleged that after the death of Sri Chama Narsimha Reddy, he waited for a period of one year from the date of the expiry of the agreement and that having alienated the suit schedule property in favour of one K.Prabhakar Reddy of his own village, the agreement of sale was terminated.
8. Defendant No.1 stated that Sri Chama Narsimha Reddy was hospitalised and he failed to perform his part of contract by expressing his inability to pay the balance amount of sale consideration, and he orally informed defendant No.1 to cancel Ex.A.1 and gave consent to sell the suit schedule property to third parties and accordingly he had alienated the suit schedule property to third party.
9. After the demise of defendant No.1, his LRs are brought on record as defendants 2 to 5 and they have filed additional written statement stating that they have no knowledge of agreement of sale dated 2.10.1997 executed by their late father (defendant No.1) and that they being the members of their joint family and the suit schedule property being joint family property, their deceased father (defendant No.1) had no right to alienate the said property without their consent.
10. Both sides led oral and documentary evidence.
11. Considering the evidence of PW.1 coupled with Exs.A.1 to A.11 and also considering the evidence of DW.1 coupled with Exs.B.1 toB.3, the trial Court dismissed the suit holding that the plaintiffs are not entitled to claim specific performance of an agreement of sale dated 2.10.1997 and that the said agreement is not binding on defendant Nos. 2 to 5. The unsuccessful plaintiffs, carried the matter in appeal in A.S.No.215/2006 on the file of the Court of IV Additional District Judge, Ranga Reddy District and the said first appellate Court after hearing both sides and after re-appreciating the evidence, answered two points framed by it against the plaintiffs and thereby dismissed the appeal suit. Aggrieved thereby, the plaintiffs filed this Second Appeal as has already been stated hereinabove in Para No.3 supra.
12. It is the contention of the plaintiffs that during the pendency of O.S.No.196 of 2000, they had filed I.A.Nos.471 of 2000 and 472 of 2000. In I.A.No.471 of 2000, they sought a direction from the Court to the defendants from alienating the suit schedule property and in I.A.No.472 of 2000, they sought direction from the Court restraining the defendants from changing the nature of the property pending disposal of the suit. The trial Court had passed a common order in both IAs granting injunction against the defendants and directed the plaintiffs to deposit balance amount of consideration of Rs.3,00,000/- into the Court and accordingly the said amount was deposited into Court by them. However, the trial Court had failed to consider the same, and that without there being any material in support, the trial Court has observed that late Sri Chama Narsimha Reddy, during his life time, had never approached defendant No.1 offering the balance amount of sale consideration in order to obtain sale deed, as such, defendant No.1 had already intimated him that he had cancelled the agreement of sale for non payment of the balance amount of sale consideration. Moreover, it is to be found in the judgment of the trial Court itself that there was nothing in the reply notice of defendant No.1 or written statement filed by him as to the intimating the cancellation of the agreement of sale to late Sri Chama Narsimha Reddy during his life time. Further the observation of the trial Court that since Sri Chama Narsimha Reddy was under the attack of cancer and subsequently died, defendant No.1 and his sons entered into an agreement of sale with one K.Prabhakar Reddy of their village is not sustainable as there was no material on record warranting the trial Court to comment in such a fashion and come to such conclusion, that too no procedure is followed and/or no steps were taken by defendant No.1 in support of his plea that the agreement of sale dated 2.10.1997 was cancelled. The contention of the plaintiffs is that Clause 2 of Ex.A.1- sale agreement reads that the agreement is subject to title of the property being approved by the purchaser whose opinion shall be final, Clause 3 of Ex.A.1 reads that the vendor shall obtain the encumbrance certificate on the said property for the period of 13 years preceding the date of sale at his costs and also pay the property and all other foregoings in respect of the said property tax up to date and shall produce the receipts therefor and Clause 8 of Ex.A.1 reads that the execution and registration of the said deed shall be completed within one year from the date of recording names of the vendors in revenue records. Therefore, it is contended that the observations made by the trial court are absolutely baseless when seen in the light of such Clauses in the agreement of sale. It is contended that the trial Court was also not justified in commenting that by drawing inference from the available documents and the circumstances, it could be said that non-payment of balance of sale consideration within the stipulated time and that due to lack of capacity to comply the conditions, the sale agreement is not acted upon and therefore, the same is cancelled. It is contended that when the terms of Ex.A.1- agreement of sale are crystal clear, defendant No.1 was under obligation to do certain acts under the said agreement and the plaintiffs cannot be said to be not in a position to comply with the conditions of the agreement. Further, there is no material to show that the plaintiffs are lacking in their capacity to comply with the terms of the said agreement and also paying the balance amount of sale consideration. So far as the capacity, readiness and willingness of the plaintiffs is concerned, averments of their plaint, their legal notice coupled with oral demands made prior to the litigation, whereby they called upon defendant No.1 to execute sale deed in their favour accepting the balance amount of consideration of Rs.3,00,000/- would clearly indicate that they have capacity to pay the balance amount of sale consideration and they are ready and willing to perform their part of contract. The defendants denied in the additional written statement that they have any knowledge about the agreement of sale between defendant No.1 and late Sri Chama Narsimha Reddy, DW.1 (defendant No.5) admitted in his cross examination that they had the knowledge of the suit agreement between their deceased father (defendant No.1) and late Sri Chama Narsimha Reddy, husband of plaintiff No.1 and father of plaintiffs 2 and 3. It is elicited in his cross examination that when his father approached late Sri Chama Narsimha Reddy for payment of balance sale consideration, he expressed his inability to do so. Therefore, it is contended that it is not that the defendants have no knowledge of the said transaction between the defendant No.1 and late Sri Chama Narsimha Reddy. The plea of defendant Nos.2 to 5 that they being members of the joint family, the said agreement does not bind on them is incorrect. When they have knowledge of agreement, they are expected to act in a particular fashion in order to protect their interest as members of the joint family, but they did not take any steps in that regard. Therefore, they cannot be permitted to take such a plea. Moreover, the evidence of DW.1 so far as the cancellation of the agreement is concerned, does not throw any light. Therefore, it cannot be said that there was sufficient material before the trial Court coming to the conclusion that the circumstances warranting termination of agreement were present. The plaintiffs would contend that in the circumstances, it can be presumed that when the agreement of sale was not terminated, as required in the common parlance of law, how could a Court decline to grant the relief of specific performance stating that plaintiffs are not entitled to such a relief. Had the trial Court considered all these facts and other material on record, perhaps, it would not have come to such a conclusion. So far as the findings of the first appellate Court is concerned, in view of the facts and circumstances of the case, the first appellate Court is also not justified in commenting that while undergoing treatment, late Chama Narsimha Reddy intimated that he had no money to fulfil his contract and informed defendant No.1 to cancel the agreement of sale and sell the same to third parties, and as late Sri Chama Reddy was not ready and willing to perform his part of contract, the agreement is cancelled and as such the trial Court has rightly dismissed the suit. The said comment of the first appellate Court is erroneous in the light of the plaintiffs’ depositing Rs.3,00,000/-balance amount of sale consideration into Court.Therefore, the contention of the defendants that Ex.A.1 agreement was cancelled orally should have no legs to stand.
13. The further observation of the first appellate Court that due to increase of price of the lands in the surrounding area, the plaintiffs are not entitled to perform agreement of sale is erroneous. He relied on a decision of the Apex Court inGobind Ram v. Gian Chand (2000) 7 SCC 548) wherein it is held that escalation of real estate price was no ground for denying the specific performance relief, when the other side tries to wriggle out of contractual obligations.
14. On the other hand, it is the case of the defendants that as per clause (c) of Section 16 of the Specific Relief Act, 1963(for short ‘the Act’), the party who seeks specific performance of contract is required to raise pleas with proper averments and prove his readiness and willing to perform his part of the contract. The defendants are not disputing the existence of Ex.A.1 -agreement of sale, relationship of the parties and the fact that they are residents of the same village. That as per clause 1 of Ex.A.1 - agreement of sale, the vendee is required to pay the balance amount of consideration to the vendor in four instalments within a period of one year and with a gap of four months in between each of such instalments. Now it is to be seen that whether the said clause has been complied with. As per Clause 5 of Ex.A.1, the vendor had already handed over vacant possession of the suit schedule property and gave lay out permission to the purchaser. Ex.A.1 has not provided for any extension of the time for concluding the contract. It is the contention of the defendants that Clause 8 of Ex.A.1 is with reference to the period of concluding the contract within a period of one year and it, in no way, provides for extension of time for payment of the balance amount of sale consideration. Clauses 1 and 8 are inter-connected.
15. Ex.A.1 is dated 2.10.1997. The one year period, as stipulated in Ex.A.1, came to an end on 2.10.1998. The agreement holder Sri Chama Narsimha Reddy died on 19.4.1999, that after the death of Sri Chama Narsimha Reddy, respondents executed agreement of sale in favour of third party i.e. K.Prabhakar Reddy of their own village on 23.09.1999. O.S.No.196 of 2000 was filed on 11.4.2000 by the plaintiffs after issuing Ex.A.2 – legal notice dated 21.1.2000 and after receiving reply notice Ex.A.5 dated 1.3.2000. The plaintiffs have not added the name of the prospective buyer, K Prabhakar Reddy in the array of defendants in the suit. It is the contention of the defendants that the purchaser Sri Chama Narsimha Reddy during his life time was never expressed his readiness and willingness to perform his part of the contract. No where in Ex.A.2 – legal notice, it is mentioned that Sri Chama Narsimha Reddy, during his life time ever expressed his readiness and willingness to perform his part of the contract. However, the said notice contains the averment to the effect that after the demise of Sri Chama Narsimha Reddy, the plaintiffs had approached defendant No.1 on several occasions demanding execution of sale deed by receiving the balance amount of sale consideration in compliance of the terms in Ex.A.1-agreement of sale. It is also pointed out from Ex.A5 -reply notice that defendant No.1 had denied that either late Sri Chama Narsimha Reddy or his LRs (Plaintiffs) ever approached him for payment of balance sale consideration. The defendants denied the case of the plaintiffs that sale deed shall be completed within one year from the date of recording name of defendant No.1 in the revenue records, and that after the demise of Sri Chama Narsimha Reddy, the plaintiffs approached the defendants on several occasions and sought execution of sale deed by receiving the balance amount of consideration in compliance of the terms of Ex.A.1. They also denied the case of the plaintiffs that they are always ready and willing to perform their part of the contract by paying the balance amount of consideration for getting the sale deed executed by defendant No.1 and that prior thereto late Sri Chama Narsimha Reddy was also ready and willing to perform his part of the contract in compliance with the terms of Ex.A1 agreement. It is the contention of the defendants that neither late Sri Chama Narsimha Reddy, during his life time, nor the plaintiffs ever had the capacity to pay the balance amount of consideration and that they have not brought any documentary evidence on record to show that they have capacity to do so. It is also their contention that Ex.A.1 had come to an end as the terms thereof were not honoured by Sri Chama Narsimha Reddy during his life time, in the absence of extension of the period of one year. It is also their contention that the deposit of balance amount of sale consideration of Rs.3,00,000/- into court as per the orders of the trial court, is inconsequential.
16. It is contended that the plaintiffs are not entitled to the relief of specific performance which is discretionary owing to the conduct of Sri Chama Narsimha Reddy during his life time and the conduct of the plaintiffs thereafter. However, it is the plea of the plaintiffs all along that their final performance depended on the terms of the Ex.A1 particularly Clauses 3 and 8 of Ex.A.1 which are to the effect that the Vendor had to obtain encumbrance certificate for 13 years preceding the date of sale at his costs and also paying property tax etc and to execute sale deed within one year from the date of recording the names of the vendors in revenue records. Defendants submit that it is not known for what reasons and why the term in Ex.A.1 is included that the vendor had to get his name recorded in the revenue records before execution of sale deed, when the contention of the defendants is that the suit schedule property is their ancestral property and their names already recorded in the revenue records.
17. In reply to the contentions of the defendants, the plaintiffs would submit that since in Ex.A5 reply notice, the name of perspective buyer Sri K Prabhakar Reddy was not mentioned, therefore, his name was not included in the array of defendants. That non-mentioning the name of the buyer in Ex.A.5 reply notice as well as the date of the agreement alleged to have been executed in favour of the prospective buyer K.Prabhakar Reddy and mentioning his name for the first time in the written statement creates a doubt about the conduct of the defendants. It is possible that it was a sort of manipulation to see that the rights arsing out of Ex.A.1 are frustrated. DW.1 has admitted in his cross examination that the dates of Exs.B.1 to B.3 (notice from prospective buyer, reply thereto and postal receipt) are not mentioned in the written statement filed by them. Therefore, it is contended that had Exs.B.1 to B.3 were in their possession, they would have disclosed the same in the written statement. These documents appear to have been brought in to existence to frustrate the plaintiffs’ claim. A perusal of Ex.B.1 discloses that it is undated and it does not disclose that through which channel it has reached the defendants either by hand delivery or through postal delivery. DW.1 has admitted in his cross examination that they received Ex.B.1 in the year 2004 and gave reply under Ex.B.1. However, in Ex.B.2, the date is mentioned as 20.12.2000. It appears that the defendants were bent upon manufacturing false documents with aid and help of the prospective buyer in order to frustrate the claim of the plaintiffs. Therefore, it is contended on behalf of the plaintiffs that the conduct of the defendants is at stake. As such, they are not entitled to question the right of the plaintiffs to claim the specific relief which is a discretionary relief in law. So far as the alleged incapacity of the plaintiffs is concerned, the defendants never questioned their capacity in the proceedings before the courts below. It is a fact that they are residents of same village and that too own substantial properties, both landed and otherwise and they have abundant capacity to pay the balance amount of consideration under Ex.A.1. Moreover, their capacity cannot be questioned in view of their depositing the balance consideration of Rs.3,00,000/- into the Court when they were directed to do so by the trial Court. It also goes to show that they were solvent enough to meet the situation. So far as Clauses 3 and 8, as contained in Ex.A1 are concerned, it is for the parties to incorporate such covenants and honour the same. Once they are incorporated they are binding on the parties thereto and the validity thereof cannot be questioned now. The question of time being the essence of the contract is concerned, once it is admitted that agreement was orally cancelled, in the absence of reference to any particular date, it is to be inferred that the time stipulated becomes unconfined, whereupon the onus lies on the defendants to show that they terminated Ex.A.1 lawfully. That it is the case of the plaintiffs through out that they were ready and willing to perform their part of contract and as such, they are protected by the provisions of Section 16 (c) of the Act as well as the explanation thereto. From the above facts and circumstances, what emerge is that both the Courts below appears to have committed error in coming to the conclusion that the plaintiffs are not entitled for specific performance of Ex.A1- agreement of sale.
18. It is seen that Ex.A.1-agreement of sale was executed on 2.10.1997. The one year period for execution of sale deed as stipulated in Ex.A.1 came to end on 2.10.1998. The agreement holder late Sri Chama Narsimha Reddy died on 19.4.1999. Defendants executed agreement of sale on 23.09.1999 in favour of third party K.Prabhakar Reddy in respect of the suit schedule property. The plaintiffs issued Ex.A.2-legal notice on 21.1.2000 and the defendants gave reply under Ex.A.5 on 1.3.2000. Clause 2 of Ex.A.1- sale agreement reads that the agreement is subject to title of the property being approved by the purchaser whose opinion shall be final, Clause 3 of Ex.A.1 reads that the vendor shall obtain the encumbrance certificate on the said property for the period of 13 years preceding the date of sale at his costs and also pay the property and all other foregoings in respect of the said property tax up to date and shall produce the receipts therefore and Clause 8 of Ex.A.1 reads that the execution and registration of the said deed shall be completed within one year from the date of recording names of the vendors in revenue records. The evidence of second plaintiff who was examined as PW.1 is to the effect that after demise of his father they had approached defendant No.1 on several occasions and demanded him to execute sale deed by receiving the balance amount of sale consideration, that even prior thereto, his father was also willing to perform his part of the contract but defendant No.1 had not complied with the terms as set out in Ex.A1- agreement of sale, such as getting encumbrance certificate for 13 years, payment of tax, making entries in the revenue records etc. The contention of the defendants with regard to Clause No.8 is that the name of defendant No.1 is in the revenue records as on the date of Ex.A.1-agreement of sale. But the defendants have not explained properly why that Clause is inserted in Ex.A.1-sale agreement. Further, there is no proof that defendant No.1 obtained encumbrance certificate for the period of 13 years preceding the date of agreement of sale and also paid the property and all other foregoings in respect of the said property tax up to date and produced the receipts therefor. It can be said that the delay in payment of balance sale consideration by the plaintiffs is due to non-compliance of Clause No.8 of Ex.A1- agreement by defendant No.1. Further, the trial Court failed to take note of Rs.3,00,000/- that was deposited into the court by the plaintiffs as per the Court direction.
19. It is the contention of the defendants that their father-defendant No.1 cancelled Ex.A-1 agreement of sale orally. But the same was not corroborated by examining an independent witness. Further, no prescribed procedure is followed and/or steps were taken to cancel Ex.A.1. The defendants no where in the proceedings have stated the date of cancellation of Ex.A.1 by defendant No.1. It appears, the trial Court as well as the first appellate Court considering the relationship between the parties and hospitalisation and death of Sri Chama Narsimha Reddy, believed that the said agreement of sale could be cancelled. The termination of Ex.A.1 is not in accordance with law. The material on record does not disclose that Sri Chama Narsimha Reddy failed to perform his contract and that he had requested to cancel the agreement, except self serving statement of defendant No.1 in reply notice as well as in the written statement. It is more so in the light of nothing being said in Ex.A.5 about the advance payment of sale consideration of Rs.1,00,000 paid to defendant No.1 by deceased Sri Chama Narsimha Reddy under the agreement of sale. It is settled proposition of law that escalation of real estate price is not a ground to deny the specific relief.
20. So far as readiness, willingness and capacity of the plaintiffs are concerned, this Court, having regard to the facts and circumstances of the case, is of the view that the plaintiffs are ever ready and willing to perform their part of contract and that they have capacity to pay the balance sale consideration particularly having regard to the fact that they have deposited balance sale consideration of Rs.3,00,000/- into the Court.
21. The defendants relied on the following decisions of the Supreme Court:
J.P. Builders and another v. A.Ramadas Rao and another (2011) 1 SCC 429), Coromandel Indag Products Private Limited v. Garuda Chit, Trading Company Private Limited and another (2011) 8 SCC 601)and Janak Dulari Devi and another v Kapildeo rai and another (2011) 6 SCC 555) in support of their contention that the plaintiffs are not ready and willing to perform their part of contract. Parakunnan Veetill Joseph’s Son Mathew v. Nedumbara Kuruvila’s Son and others (AIR 1987 SC 2328)wherein it was held while exercising discretion the Court should meticulously consider the facts and circumstances of the case. Dinesh Kumar v. Yusuf Ali (2010) 12 SCC 740) wherein it was held that Second Appeal is maintainable on a substantial question of law and not on facts. Municipal Committee Hoshiarpur v. Punjab State Board and others ((2010) 13 SCC 216)wherein it was held that Second Appeal cannot be decided merely on equitable grounds.
This Court has gone through the above decisions and those decisions are not helpful to the case of the defendants.
22. In view of the above reasons, having regard to the material available on record, the questions raised by the plaintiffs are substantial questions of law and they are proved and that this Court is of the view that the Courts below have committed error in deciding the suit and the first appeal in favour of the defendants. Therefore, the judgment and decree dated 26.09.2011 in A.S.No.215 of 2006 and the judgment and decree dated 31.07.2006 in O.S.No.196 of 2000 of the first appellate Court and the trail Court respectively are set-aside and thereby O.S.No.196 of 2000 stands decreed.
23. Accordingly, the Second Appeal is admitted and the same is allowed. There shall be no order as to costs.