Second Appeal No.706 of 1991

28th August, 2008

Petitioner Counsel: Mr. MADHAV JAMDAR
Respondent Counsel: Mr. V. S. GOKHALE

Cases Cited:
Bhaurao Shamrao Bhalme Vs. Mahadeo Raghu Yelekar, AIR 1979 Bom. 208 [Para 11]
Ardeshir Vs. Flora Sassoon, AIR 1928 PC 208 [Para 11]
Prem Raj Vs. D.L.F. Housing and Construction (Private) Ltd., AIR 1968 SC 1355 [Para 11]
N. P. Thirugnanam Vs. Dr. R. Jagan Mohan Rao, AIR 1996 SC 116 [Para 12]
Indravanthi Vs. Kamala, AIR 2001 Madras 127 [Para 14]
Kailash Prasad Sah Vs. Govind Das Shastri, AIR 1999 Pat. 149 [Para 14]
Motilal Jain Vs. Smt. Ramdasi Devi, 2000(4) ALL MR 285 (S.C.)=AIR 2000 SC 2408 [Para 14]

JUDGMENT

JUDGMENT :- This Second Appeal is filed by the original defendant No.2 challenging the concurrent findings of both the Courts below whereby the plaintiff/respondent No.1 was granted a decree for specific performance of the contract for sale of the suit property.

2. To state in brief, the plaintiff/respondent No.1 filed Regular Civil Suit No.188 of 1981 for specific performance of the contract of sale. According to him, the suit house described in the plaint was in his possession as a tenant of the defendant No.1 since 1968. Admittedly, the defendant No.1, who is the respondent No.2 before this Court, had filed Suit No.265 of 1973 for eviction and possession against the plaintiff. In that suit, a compromise decree was passed on 12.7.1976 and as per the compromise, the plaintiff was to hand over possession of the suit house to the defendant No.1 - landlord by 31.5.1981. It was also agreed that from the date of compromise, the monthly rent of the house would be Rs.50/- per month. The plaintiff had paid amount of Rs.2,750/- to the defendant No.1 as advance rent on 12.7.1976 itself and had obtained receipt Exhibit 76. According to the plaintiff, on 26.12.1976, an agreement took place between himself and the defendant No.1 whereby the defendant no.1 agreed to sell the suit house to the plaintiff for consideration of Rs.10,000/-. Out of this, he had paid an amount of Rs.6,750/- inclusive of the amount of Rs.2,750/- already paid on 12.7.1976, towards part payment of consideration amount. The balance amount of Rs.3,250/- was to be paid at the time of execution of sale deed on or before 31.5.1981. Prior to the execution of sale deed, the plaintiff issued a notice dated 30.3.1981 to the defendant No.1 and called upon the defendant No.1 to execute the sale deed as per the terms of the contract. That notice was received by him on 1.4.1981, but there was no reply nor he executed the sale deed as per the terms of the contract. On 8.7.1981, the plaintiff filed Regular Civil Suit No.188 of 1981 for specific performance of the contract against defendant No.1.

3. During the pendency of the suit, it was revealed that defendant No.1 had executed a sale deed in favour of the defendant No.2 on 4.5.1977 for certain property, including the suit house. Therefore, the plaintiff impleaded the defendant No.2 in the suit.

4. The defendant No.1 contested the suit by filing written statement. According to him, he had approached the plaintiff for a loan because he was in urgent need and accordingly, the plaintiff had advanced an amount of Rs.4,000/- to him as a loan. However, the plaintiff had insisted to execute an agreement for sale. According to him, the said agreement for sale was not to be acted upon. It was not a genuine transaction. He pleaded that the real transaction was of loan. The value of the suit house was much more and he could not have agreed to sell the suit property for consideration of Rs.10,000/- only. The defendant No.2 also contested the suit. According to her, she was a bonafide purchaser of the property for value without notice of any right of the plaintiff or about the said agreement. According to her, under the said sale deed dated 4.5.1977, she had also purchased the rights of the defendant No.1 to take possession of the suit house from the plaintiff in execution of the decree in Suit No.265 of 1973. According to her, when she applied to the Executing Court for execution of that decree, a notice was issued to the plaintiff and then she came to know that the plaintiff was also claiming specific performance of the contract which was allegedly entered into between himself and the defendant No.1. It is contended that she had already got her entered in the City Survey as owner of the property and, therefore, the plaintiff was not entitled to get decree for specific performance of the contract.

5. After hearing the evidence led by all the parties, the trial court rejected the contention of the defendant No.1 that it was a loan transaction and also rejected the contention of the defendant No.2 that she is a bonafide purchaser for value without notice of the transaction between the plaintiff and the defendant No.1. The trial Court held that the defendant No.1 had agreed to sell the suit house to the plaintiff for consideration of Rs.10,000/- and had received the amount of Rs.6,750/- towards earnest money. However, the trial Court came to conclusion that the plaintiff had not proved that he was ready and willing to perform his part of the contract and in view of this finding, the suit for specific performance of the contract was dismissed, but alternative relief for refund of the amount with interest was granted.

6. Being not satisfied with the decree passed in his favour, the plaintiff preferred Regular Civil Appeal No.521 of 1987. The plaintiff was allowed by lower appellate Court to make an amendment in the plaint and by making an amendment in the plaint, he pleaded that he was always ready and willing to perform his part of the contract.

7. After hearing the learned Counsel for all the parties, the appellate Court also came to conclusion that the defendant No.1 had agreed to sell the suit house for consideration of Rs.10,000/- on 26.12.1976 and on the same day, he had also received Rs.6,750/- towards earnest money. The contention of the defendant No.1 that it was a loan transaction was rejected. The appellate Court also came to conclusion that the plaintiff had proved that he was ready and willing to perform his part of the contract. The contention of the defendant No.2 was also rejected. As a result, the appellate Court allowed the appeal and passed the decree for specific performance of the contract in favour of the plaintiff. Being aggrieved by the said decree, only defendant No.2 has preferred the present Appeal. No further appeal is filed by defendant No.1.

8. The Second Appeal was admitted on grounds Nos.1 to 3. The said grounds read as follows :-

"1. Whether the specific performance can be granted in the absence of averment and evidence of readiness and willingness on the part of the Plaintiff from the alleged date of agreement of sale dated 26th December, 1976 till the passing of the decree.

2. Whether the suit for specific performance was maintainable in the absence of compliance with section 16(c) of the Specific Relief Act, 1963.

3. Whether the lower Appellate Court was justified in granting the amendment of the plaint in appeal as regards the Plaintiffs alleged readiness and willingness to perform his part of the contract specially when on the date of the application for amendment of the plaint a fresh suit was barred by limitation."

9. Heard the learned Counsel for the parties and perused the pleadings, oral evidence and the documentary evidence placed before the Court by the parties.

10. Section 16 of the Specific Relief Act reads as under :-

S.16 : "Personal bars to relief : Specific performance of a contract cannot be enforced in favour of a person -

(a) who would not be entitled to recover compensation for its breach; or

(b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or wilfully acts at variance with, or in subversion of, the relation intended to be established by the contract; or

(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.

Explanation - For the purposes of clause (c),-

(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in Court any money except when so directed by the Court;

(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction."

Clauses (a) and (b) are not relevant for the purpose of this Appeal. From the language of Section 16(c), it is clear that it is mandatory for the plaintiff to aver and prove that he has performed or has always been ready and willing to perform his part of the contract and if this part of the contract involves payment of money, it is not necessary for the plaintiff to actually tender to the defendant or to deposit in the Court any money except when so directed by the Court. The averment about performance or about readiness and willingness to perform the contract has to be according to the true construction or interpretation of the agreement between the parties.

11. The learned Counsel for the defendant No.2/appellant vehemently contended that it is settled position of law that the plaintiff has not only to aver that he is ready and willing to perform his part of the contract, but he has also to prove the same. He finds support from the Judgment in the case of Bhaurao Shamrao Bhalme and others Vs. Mahadeo Raghu Yelekar, AIR 1979 Bom. 208 wherein the learned Single Judge of this Court relied upon Ardeshir Vs. Flora Sassoon, AIR 1928 PC 208; Prem Raj Vs. D.L.F. Housing and Construction (Private) Ltd., AIR 1968 SC 1355 and observed as follows :-

"....In my opinion, in view of what has been said by the privy Council in Ardeshir's case and by the Supreme Court in Prem Raj's case, it cannot be gainsaid that such an averment has to be made by the plaintiff in a suit for specific performance of contract and not only that he has to make such an averment, but he has to substantiate it by means of evidence, if that fact is controverted."

12. The learned Counsel for the appellant also contended that the remedy for specific performance is an equitable remedy and is in the discretion of the Court and if it is found that the plaintiff has not averred and proved that he was ready and willing to perform his part of the contract, that itself may be a ground to refuse the decree for specific performance. In support of this contention, he relied upon N. P. Thirugnanam Vs. Dr. R. Jagan Mohan Rao and others, AIR 1996 SC 116 and observed as follows :-

"5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the Court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as adumbrated under S.20 of the Specific Relief Act, 1963 (for short 'the Act'). Under S.20, the court is not bound to grant the relief just because there was valid agreement of sale. Section 16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of contract."

From the above observations, it will be clear that besides the factum of readiness and willingness to perform part of the contract by the plaintiff is to be adjudged with reference to the conduct of the party and the attending circumstances. It may be noted that in that particular matter, the plaintif had agreed to purchase certain property for Rs.2,30,000/-. It appears that he was unable even to pay his loans and the instalments. It was found that the plaintiff was not having sufficient money to pay the price of the property. Though PW-2 had deposed that he was willing to advance amount of Rs.2 lacs, the himself was not having the cash and for that purpose he had to hypothecate certain property. In these circumstances, it was held that plaintiff was not in a position to perform his part of the contract about payment of the contract amount.

13. In the present case, except on the issue of readiness and willingness of the plaintiff to perform his part of the contract, on all other issues there are concurrent findings of facts by both the Courts below. Both the Courts below held that the plaintiff had agreed to purchase suit house for Rs.10,000/- as per the agreement Exhibit 63. The amount of Rs.2,750/-, which was already received by the defendant No.1 towards advance rent at the time of compromise in the earlier suit, was adjusted in the consideration amount. The plaintiff paid further amount of Rs.4,000/- to him and thus, the defendant No.1 had received Rs.6,750/-. The balance amount of Rs.3,250/- was to be paid at the time of execution of the sale deed. It was agreed that the sale deed would be executed on or before 31.5.1981. The plaintiff pleaded in the plaint that before the last date of execution of the sale deed, on 30.3.1981, he had issued a notice to the defendant No.1 and had called upon him to execute sale deed as per the terms of the contract. That notice was received by him on 1.4.1981. It is material to note that in the written statement filed by the defendant No.1, he nowhere denied to have received the notice. In the evidence in examination-in-chief also the plaintiff deposed that on 30.3.1981, he had issued notice to the defendant No.1 and asked him to execute sale deed as per the terms of contract. He also deposed that notice was received though according to him acknowledgment of the receipt of the notice was with his advocate. It is material to note that in the cross-examination on behalf of the defendant No.1, no question was put to the plaintiff about issuance of that notice. From this it is clear that the defendant No.1 does not deny to have received the notice dated 30.3.1981 to execute the sale deed as per the terms of the contract. When the plaintiff asked the defendant to execute sale deed on or before the fixed date as per the terms of the contract, that clearly implies that the plaintiff was ready and willing to pay the balance amount of consideration and to get the sale deed executed and at the same time, he also asked the defendant to receive the balance amount and to execute the sale deed. There was no denial or challenge to this pleading anywhere. It is true that in the plaint, it was not averred in so many words that the plaintiff was always ready and willing to perform his part of the contract, but at the same time, it is to be noted that out of the total consideration amount of Rs.10,000/-, the plaintiff had already paid more than 2/3rd at the time of agreement for sale and the balance amount of Rs.3,250/- was to be paid at the time of execution of the sale deed. The time to pay the balance amount would be the time of execution of the sale deed which was agreed to be 31.5.1981. Even before that date, the plaintiff had issued the notice dated 30.3.1981 and by this conduct he showed his readiness and willingness to pay the balance amount and to get the sale deed executed. It is also material to note that the defendant No.1 did not execute the sale deed as per the terms of the contract within the stipulated period and, therefore, the plaintiff filed suit for specific performance on 8.7.1981 i.e. just about one month after the last date fixed for execution of the sale deed. The prompt action on the part of the plaintiff in filing the suit also goes to show that he was ready and willing to perform his part of the contract. It is well settled that in view of the Explanation to Section 16(c) of the Specific Relief Act, it was not necessary for the plaintiff to actually tender the amount to the defendant or to deposit the amount in the Court immediately, unless he was so directed by the Court. Admittedly, the trial Court had never directed the plaintiff to deposit the balance amount in the Court and therefore he was not required to deposit the amount. It is material to note that before the trial Court passed the judgment on 24.7.1987, the plaintiff had deposited the balance amount of consideration on 4.7.1987 in the Court as per receipt Exhibit 59 and this fact was also noted by the trial court. All these circumstances reveal that the plaintiff was always ready and willing to perform his part of the contract, but he had not averred this fact in so many words in the plaint. In these circumstances, the appellate Court allowed him to amend the plaint and make necessary averment. After noting of the facts and circumstances and the amendment carried out in para 4B to that effect, the appellate Court observed that in such circumstances, the provisions of Section 16(c) of the Specific Relief Act would not come into play, particularly when the appellant had already paid balance amount on 4.7.1987. In my considered opinion, in the peculiar circumstances of the case, the learned appellate Court was justified in allowing the amendment in the plaint.

14. In similar circumstances, where there was no specific pleading about readiness or willingness of the plaintiff to perform his part of the contract, but the trial Court had come to the conclusion that he had proved his readiness and willingness the Madras High Court in Indravanthi Vs. Kamala, AIR 2001 Madras 127, allowed the application for amendment when the appeal was pending in the High Court. In Kailash Prasad Sah and others Vs. Govind Das Shastri and others, AIR 1999 Pat. 149, in almost similar circumstances, where the plaintiff had not pleaded his readiness and willingness, after this defect was pointed out by the defendant, the trial court allowed the amendment of the plaint. The Patna High Court held that in view of the circumstances, prayer for amendment to the plaint to specifically aver that the plaintiff was ready and willing to perform his part of the contract cannot be faulted. It is also material to note that in Motilal Jain Vs. Smt. Ramdasi Devi and others, AIR 2000 SC 2408 : [2000(4) ALL MR 285 (S.C.)], Their Lordships held that if averment in the plaint read as a whole, clearly indicates that the plaintiff was always and is still ready and willing to fulfill his part of the contract it is sufficient compliance. Their Lordships observed as follows :-

"9.....The language in Section 16(c) of the Specific Relief Act, 1963 does not require any specific phraseology but only that the plaintiff must aver that he has performed or has always been and is willing to perform his part of the contract. So the compliance of "readiness and willingness" has to be in spirit and substance and not in letter and form." It is thus clear that an averment of readiness and willingness in the plaint is not a mathematical formula which should only be in specific words. If the averments in the plaint as a whole do clearly indicate the readiness and willingness of the plaintiff to fulfil his part of the obligations under the contract which is subject-matter of the suit, the fact that they are differently worded will not militate against the readiness and willingness of the plaintiff in a suit of specific performance of contract for sale."

Taking into consideration the facts and circumstances of the pleadings of the plaintiff and his conduct, I am satisfied that the appellate Court was justified in holding that the plaintiff was always ready and willing to perform his part of the contract and was also justified in granting permission to amend the plaint to aver that fact.

15. The learned Counsel for the appellant vehemently contended that grant of decree for specific performance is discretionary and the discretion should not be used in favour of the plaintiff because the defendant No.2/appellant is a bonafide purchaser for value and she had purchased the property including the suit house under a registered sale deed dated 4.5.1977 and she is entitled to get possession of the suit house due to assignment of the decree in favour of the defendant No.1 in suit No.265 of 1973. I am not convinced with this contention, particularly when both the courts below have given concurrent finding that the defendant No.2 is not a bonafide purchaser for value without notice of the rights of the plaintiff. It may be noted that as per the admissions on record, PW-2 Prabhakar, who is the husband of defendant no.2 was admittedly holding power of attorney for the defendant No.1. Admittedly, his father was working as guardian for the defendant no.1 during his minority. From the admissions, it appears that even though the defendants and PW-2 are not real brothers. In such circumstances, it is impossible to believe that the defendant No.2 had no knowledge or notice of the contract between the plaintiff and the defendant No.1. During the course of cross-examination of the plaintiff, it was contended that value of the suit property was about Rs.55,000/-. Of course, this was denied by the plaintiff. The fact remains that the defendant No.2 claims to have purchased not only the suit property, but also some more property for consideration of just Rs.5,000/-. The Courts below noted that the property allegedly purchased by defendant No.2 under the sale deed dated 4.5.1977 is almost 3 times the suit property for which she claims to have paid only for Rs.5,000/-. Taking into consideration the meagre amount paid by her for much larger property, including the suit house also, it cannot be held that she is the bonafide purchaser for value. In such circumstances, I find no fault with the appellate Court in granting the decree for specific performance of the contract.

16. The original plaintiff also filed cross-objections contending that the defendant no.1 has already executed the sale deed in favour of the defendant no.2 for the property including the suit property and therefore, the first appellate Court should have directed the defendant no.2 also to join the defendant No.1 in executing the sale deed in favour of the plaintiff. In my considered opinion, taking into consideration the facts stated earlier, it will be in the interest of justice to pass such an order to avoid any further complications. At the same time, even though the original defendant No.1 has not preferred any appeal, I notice that the plaintiff deposited the amount of Rs.3,250/- towards the balance consideration on 4.7.1987. As per the terms of the contract, he was to pay that amount on or before 31.5.1981 i.e. at the time of executing the sale deed. It is true that because of the complications created by the defendant Nos.1 and 2 themselves the execution of the decree has been delayed, but at the same time, the fact remains that though the plaintiff is in possession of suit property, he had not paid that amount for a period of more than five years beyond 31.5.1981. Though for this fault cannot be found with him, to balance the equities, I find that the plaintiff may be directed to pay interest on that amount for the period from 1.6.1981 to 4.7.1987 at the rate of 12% per annum. Mr. Gokhale, the learned Counsel for the plaintiff has no objection to the same.

17. In view of the above findings, I find no merit in the Appeal and the Appeal is liable to be dismissed.

18. In the result, the Appeal stands dismissed. However, the Cross-Objection is allowed. It is hereby directed that the defendant Nos.1 and 2 shall execute the sale deed in favour of the plaintiff in respect of the suit property. The plaintiff shall also deposit interest on the amount of Rs.3,250/- from 1.6.1981 to 4.7.1987 at the rate of 12% per annum before the trial Court within six weeks from this date. The parties shall bear their own costs. Th decree shall stand modified accordingly.

19. Parties to act on an authenticated copy of this Judgment.

Appeal dismissed.