First Appeal No.179 of 2003,Civil Application No.65 of 2010

5th August, 2010

Petitioner Counsel: Mr. BOMI ZAIWALLA,Mr. A. F. DENIZ, Mr. AMEY KAKODKAR , Mr. VIKRAM
Respondent Counsel: Mr. M. S. KHANDEPARKAR,Mr. P. A. KHOLKAR,Mr. M. S. USGAONKAR,Mr. I. AGHA,Mr. S. G. DESSAI,Mr. PANITHIAN

Cases Cited:
Surinder Singh Vs. Kapoor Singh, 2005(5) ALL MR 816 (S.C.)=(2005)5 SCC 142 [Para 14]
Akshay Kumar Pal Vs. Nandalal Das, ILR 1946(1) Calcutta 432 [Para 44]
Hewson Vs. Shelly, 1914(2) Ch. 13 [Para 44]
Crystal Developers Vs. Asha Lata Ghosh, 2005(5) ALL MR 64 (S.C.)=(2005)9 SCC 375 [Para 44]
Rukmani Devi Vs. Narendra Lal, AIR 1984 SC 1866 [Para 46]
Debendra Nath Dutt Vs. Administrator General of Bengal, Vol.XXXV IA 109 [Para 46]
Sailaja Prosad Vs. Jadu Nath, 1914 Vol.21 Calcutta Law Journal 88 [Para 46]
Surinder Kumar Vs. V. Gian Chand, AIR 1957 SC 875 [Para 46]
Jayaram Mudaliar Vs. Ayyaswami, (1972)2 SCC 200 [Para 57]
Krishnaji Pandharinath Vs. Anusayabai, AIR 1959 Bombay 475 [Para 84]
Asutosh Roy Vs. Ananta Ram Bhattacharjee, AIR 1919 Cal. 40 [Para 89]
Samarendra Nath Sinha Vs. Krishna Kumar Nag, 1967(2) SCR 18 [Para 91]
Fernando Colaco Vs. State of Goa, (1991)2 Goa Law Times 11 [Para 95]
Karu Mian Vs. Tejo Mian, AIR 1918 Patna 139 [Para 96]
Shri. Victor de Graca Pinto Vs. Smt. Lourdes de Graca Pinto @ Nazareth, (1999)1 Goa Law Times 167 [Para 96]
Ashwini Kumar Manilal Shah Vs. Chhotabhai Jethabhai Patel, AIR 2001 Guj. 90 [Para 121]
Krishnaji Pandharinath Vs. Anusayabai, AIR 1959 Bombay 475 [Para 136]

JUDGMENT

S. J. VAZIFDAR, J.:- This is an Appeal against the order and judgment of the learned Civil Judge, Senior Division at Margao, Goa, dated 31st December, 2001, partly decreeing the Appellant's suit against Respondent Nos.1 to 8 and dismissing the same against Respondent No.9. Respondent Nos.1 to 6 have been directed to pay the Appellant a sum of Rs.50,000/- with interest at twenty one percent per annum from the date of the suit till payment and Respondent Nos.1 to 8 have been ordered and decreed to pay the Appellant a sum of Rs.17,00,000/- with interest at six per cent per annum from 12th May, 1993 till payment. The Appellant's claim for specific performance was rejected.

Thereafter on the application of Respondent Nos.1 to 6, the trial court by an order dated 23rd April, 2002, reduced the rate of interest payable on the sum of Rs.50,000/- from twenty-one per cent per annum to six per cent per annum. By the impugned order and judgment, the learned Judge also disposed of Regular Civil Suit No.746/2000 (Special Civil Suit No.105/87/A) filed by Defendant Nos.7 and 8.

2. The Appellant and the Respondents are arrayed as they were in the suit. The Appellant is the Plaintiff and Respondent Nos.1 to 9 are Defendant Nos.1 to 9. Original Defendant No.1 having expired, his heirs were brought on record as Defendant Nos.1-a and 1-b. Original Defendant No.3 having expired, his heirs were brought on record as Defendant Nos.3-a and 3-b.

Respondent Nos.1, 3 and 5 are brothers and Respondent No.7 is their sister. Respondent Nos.1, 3 and 5 are the husbands of Respondent Nos.2, 4 and 6 respectively. Respondent No.8 is the husband of Respondent No.7. Respondent No.9 is Syscon Consultants Private Limited.

3. I will refer to the facts from the record in Special Civil Suit No.88/87/A, filed by the Appellant.

THE PLAINT :

4. The Appellant filed the suit for specific performance of a contract dated 4th September, 1985 entered into between Respondent Nos.1 to 6 and the Appellant, and for consequential reliefs, a decree in the sum of Rs.12,29,038/- as compensation for breach of the contract in addition to the specific performance and a permanent injunction, restraining the Respondents from selling, transferring and/or creating any encumbrances, interest, charge, restriction etc. on the suit property in favour of any person, other than the Appellant. The Appellant also sought a declaration that an order dated 30th January, 1991, passed in the inventory proceedings between Respondent Nos.1 to 8 is vitiated by fraud and illegality to the extent of the allotment of the suit property to Respondent Nos.7 and 8 and for setting aside the same. In the alternative to the specific performance, the Appellant claimed a decree in the sum of Rs.2,68,29,038.80. The Appellant further sought a declaration that a sale deed in respect of the suit property dated 14th November, 1995 executed by the Respondent Nos.7 and 8 on the one hand as vendors in favour of the Respondent No.9, as the purchaser, is null and void and for the cancellation thereof.

5. The Appellant's case in the plaint is this. The said agreement dated 4th September, 1985, was executed by the Appellant and Respondent Nos.1 to 6 whereby Respondent Nos.1 to 6 agreed to sell to the Appellant landed property being an island - "CONCO", Palolem, Goa, for a consideration of Rs.6,50,000/-. Clauses 3, 4, 8 and 9 of the agreement are as under :-

"3. The Vendor hereby declares that the said land agreed to be sold is free from any encumbrances, attachment, charge or other claims, rights and demands and is not effected by any notice or scheme of acquisition or requisition and that the Vendors have among themselves the full power and absolute authority to sell and deal with the said land. The Vendor shall at his own expense effectually indemnify and keep indemnified the Purchasers from and against all claims, demands, losses, damages, costs and expenses, if any and whatsoever, sustained, incurred or suffered by the Purchaser, on account of any defect in the title of the Vendor or any change or encumbrance or any scheme of acquisition or requisition effecting the land hereby contracted to be sold.

4. The Purchaser has this day paid to the Vendor the sum of Rs.50,000/- (Rupees fifty thousand only) as and by way of earnest money (the payment and receipt whereof the Vendor does hereby admit and acknowledge and the balance of the purchase money amounting to Rs.6 lacs (Rupees six lacs only) shall be paid at the time of the completion of the sale. Simultaneously with the execution of this agreement the Vendor shall at his own cost furnish to the Purchasers an abstract of all title deeds and other papers and writings including copies or extracts from records of the Talati or Circle Inspector relating to the said land. The sale shall be completed within one month from the date of establishment of a good and marketable title of the Vendor.

...............

8. If a good and marketable title is not made out or the said land is found to be subject to any encumbrances charges or attachments or other claims rights or demands the Purchaser shall be at liberty to rescind this Agreement and the Vendor shall in the event forthwith refund the said earnest money with interest at 21% per annum.

9. If the Vendor fails and or neglects to complete the sale after the title being made out as aforesaid or otherwise to carry out any one or more of the obligations on his part as herein contained or enjoined upon by any law for the time being in force the Purchaser shall be at liberty to enforce specific performance of this Agreement or recover the earnest money with interest at 21% per annum."

6. Prior to executing the agreement, the Appellant inspected the relevant documents relating to the title to the suit property, including survey records and a deed of declaration and succession made by Respondent Nos.1, 3 and 5 dated 3rd November, 1981, which I will refer to shortly. Based on these documents, the Appellant believed that the Respondent Nos.1, 3 and 5 had clear title to the suit property.

After the agreement was entered into, the concerned Respondents informed the Appellant that the property was mortgaged to the Madgaon Urban Co-operative Bank Limited as security for the repayment of a loan taken by them. They, however, assured the Appellant that there were no other encumbrances and that they would, within a period of one month, get the property cleared of the said encumbrance and complete the sale. Despite repeated requests, the concerned Respondents failed to complete the sale as per the agreement.

7(A). The Appellant, by a letter dated 7th December, 1985, called upon Respondent Nos.1 to 6 to complete the sale. The Appellant also forwarded a draft of the conveyance deed on 3rd May, 1986.

(B). Respondent No.1, by his letter dated 3rd April, 1987, informed the Appellant that he was helpless in the matter and could not complete the sale due to the claim raised by his sister Respondent No.7. He, therefore, enclosed therewith a bank draft in the sum of Rs.20,000/- towards refund of a part of the initial deposit of Rs.50,000/- and promised to remit the balance as early as possible. The Appellant, by his advocate's notices dated 8th April, 1987/15th April, 1987, once again demanded specific performance and returned the demand draft. The Appellant called upon the Respondent Nos.1 to 6 to finalize the draft conveyance and to complete the sale.

(C). Respondent No.1, by a letter dated 20th April, 1987, stated that the execution of the sale deed was "obstructed by certain genuine difficulties" of which the appellant had been apprised. He further stated :- "However, we are thinking how to go ahead with the execution of the sale-deed". He stated that he would send a detailed reply in about a fortnight. He, however, did not do so.

8(A). Originally, the said bank was impleaded as Respondent No.7. By an amendment, the present Respondent No.7 i.e. the sister of Respondent Nos.1, 3 and 5 was impleaded. By the said amendment, her husband was impleaded as Respondent No.8. Respondent No.9, Syscon Consultants Private Limited was also impleaded by an amendment as Respondent No.7 and 8 had purported to transfer the suit property to Respondent No.9. The suit was amended extensively to implead Respondent Nos.7, 8 and 9 and seek various reliefs against them.

(B). The Appellant's case in this regard is that Respondent Nos.1, 3 and 5 in collusion with each other commenced inventory proceedings of the family property in the court of Civil Judge, Senior Division being inventory proceedings No.55/90/A and collusively arranged to accept the bid of Respondent No.7 for the suit property at a private auction held on 1st December, 1990. By an order dated 30th January, 1991, passed in the inventory proceedings, the suit property was allotted to Respondent No.7. Based on this, Respondent Nos.1 to 6 contended that the suit agreement could no longer be performed as the property no longer belonged to them, but vested in Respondent No.7.

(C). The Appellant, therefore, filed Special Civil Suit No.329 of 1992 in the same court on 27th October, 1992 for a declaration that the said order dated 30th January, 1991 in the inventory proceedings was vitiated by fraud and illegality to the extent that it allotted the suit property to Respondent No.7 and praying that the said allotment be set aside.

The amendment to the suit in which the impugned order was passed encompasses the reliefs claimed in Special Civil Suit No.329 of 1992. This judgment will, therefore, conclude Special Civil Suit No.329 of 1992 as well.

9(A). The Appellant had issued a public notice with respect to the suit agreement. In response thereto, the said bank disclosed the facts regarding the said mortgage viz. that it had obtained an award in respect of the said loan and that the liability thereunder was of about Rs.17,00,000/-.

(B). The bank sought to have the property auctioned through the executing authority namely Assistant Registrar, Co-operative Societies, South Zone, Margao.

(C). The Appellant filed proceedings to stay the execution. It is not necessary to refer to those proceedings. Not having obtained any interim reliefs, the Appellant, to protect the property, sought to deposit the amount in the executing court. This application was opposed by Respondent Nos.7 and 8. The Appellant deposited the sum of Rs.17,00,000/- on 12th May, 1993. The Assistant Registrar, by an order dated 19th January, 1994, ordered the adjustment of the said amount against the bank's claim and further ordered the release of the lien on the property on account of the mortgage/attachment. Respondent No.7 and 8 challenged the order by filing Writ Petition No.277 of 1994. The High Court, by an order and judgment dated 10th October, 1994, maintained the said order and Respondent Nos.7 and 8 were held to be at liberty to pursue their rights in accordance with law.

10. The Appellant filed the suit on 16th May, 1987.

11. On 4th February, 1994, the Appellant registered notice of lis pendens No.30 of 1994 in the office of the Sub-Registrar at Canacona mentioning the pendency of Special Civil Suit No.329 of 1992. On 8th February, 1994, the Appellant issued a notice to Respondents No.1 to 8 about the said lis pendens.

12(A). On 19th September, 1994, the Appellant applied for a certified copy of the survey record in Form Nos.I to XIV in respect of the suit property. On receiving the same, the Appellant noted that the name of Respondent No.1 was deleted from the occupant's column and the names of Respondent Nos.7 and 8 were added as occupants, presumably on the basis of the order passed in the inventory proceedings.

(B). The Appellant thereafter, on 2nd December, 1997, obtained a certified copy of the survey records to ascertain whether the lis pendens was recorded. The Appellant found that the name of Respondent Nos.7 and 8 were put in brackets and the name of the Respondent No.9 was registered in the occupant's column. According to the Appellant, the Respondent Nos.7 and 8 had illegally and fraudulently and in collusion with Respondent Nos.1 to 6 sold the property to Respondent No.9 by a sale deed dated 14th November, 1985 for a consideration of Rs.34,00,000/-. The said sale deed was registered on 16th November, 1995 at the office of the Sub-Registrar of Canacona. According to the Appellant, Respondent No.9 was aware of all the facts regarding its rights as claimed in this suit and otherwise. This, in fact, is admitted by the Respondent No.9. On a visit to the property on 12th April, 1998, the Appellant found some huts having been erected, meant for the construction labour.

13. The Appellant filed Civil Application No.65 of 2010 in the present Appeal seeking an amendment by adding paragraph 18-A to the plaint. The Appellant submitted that without prejudice and in the alternative and in the event of this court holding that the Plaintiff is not entitled specific performance of the entire suit property, Respondent Nos.1 to 6 be ordered and directed to specifically perform the said contract dated 4th September, 1985 to the extent of their shares in the suit property as provided in section 12(3) of the Specific Relief Act, 1953. The Appellant stated that it is ready and willing to pay the consideration of the whole contract without any abatement and to relinquish all claims to the performance of the remaining part of the contract and all rights to compensation, either for deficiency or for loss or damage sustained by it due to the default of Respondent Nos.1 to 6 or any of them. The Appellant also sought to add prayers claiming reliefs accordingly. Mr. Zaiwala stated that the Appellant did not wish to lead any further evidence in support of this plea. Nor did the Respondents seek to adduce any evidence in this regard.

14. The amendment ought to be allowed. Firstly, as noted above, no further evidence is sought to be led by any of the parties. Indeed, no further evidence is required. If the amendment is allowed, the Respondents will not be prejudiced in any manner whatsoever. It is a concession made by the Appellant under section 12(3) of the Specific Relief Act. Mr. Zaiwala rightly submitted that mere delay in filing such an amendment would make no difference. Mr. Zaiwala's reliance upon the judgment of the Supreme Court in the case of Surinder Singh Vs. Kapoor Singh, (2005)5 SCC 142 : [2005(5) ALL MR 816 (S.C.)] is well founded. A bench of three learned Judges of the Supreme Court held as follows :-

"8. Section 12(3) of the Act is a beneficial provision so far as the purchasers are concerned. In the instant case, in view of the findings of fact arrived at by the High Court, the decree for specific performance of contract in respect of the entire suit land could not have been granted as the appellant therein was not authorised by his sister to enter into the agreement for sale. The relinquishment of claim as contemplated under Section 12(3)(ii) of the Act as regards performance of the remaining part of the contract and all rights to compensation need not specifically be pleaded and can be made at any stage of the litigation. Such a plea can also be raised at the appellate stage. Delay by itself, it is trite, may not stand in the way of the plaintiff claiming the relief unless the defendant establishes prejudice.

...............................

12. Kartar Singh was rendered in the fact situation obtaining therein. The observations therein to the effect that the provision of Section 12 was not applicable came to be made in view of the finding that the sister of the respondent had not entered into any contract at all. In this case, however, the appellant herein had entered into the aforementioned agreement for sale on the premise that he had the requisite authority to do so on behalf of his sister as also on his own behalf. The sister of the appellant denied or disputed such authority and in that view of the matter, it is beyond any pale of doubt that the agreement for sale was entered into in respect of the entire suit land and having regard to the fact that the sister of the appellant did not authorise him to enter into the said agreement, sub-section (3) of Section 12 of the Act would clearly be attracted. Kartar Singh should not be held to lay down a law to the effect that even in a case where a part of the contract is held to be invalid, Section 12 will have no application.

13. The question which deserves consideration now is as to whether the application for amendment of the plaint filed by the plaintiff-respondents should be allowed. Sub-section (3) of Section 12 does not lay down any limitation for filing such an application. Such an application can be filed at any stage of the proceedings and in that view of the matter an application even before this Court would be maintainable.

14. In Kalyanpur Lime Works Ltd. Vs. State of Bihar this Court has held : (SCR p.974)

"The last portion of the application, however, leaves no doubt whatever that all claims to further performance were relinquished and compensation prior to 1-4-1948, was also given up. The plaintiff's learned counsel has asked for that relief in the course of his arguments and he has made it clear that he insists on no further performance, nor does he claim any compensation for any period prior to the execution of the leases. Relinquishment of the claim to further performance can be made at any stage of the litigation"."

15. A Division Bench of the Patna High Court in Girdhar Das Anandji Vs. Jivaraj Madhavji Patel in an identical situation, referring to the decision of this Court in Kalyanpur Lime Works Ltd. held : (Pat LJR p.84, para 27)

"I have already stated that learned Advocate General while opening the case of his client specifically stated that he was giving up the cross-objection and that he was relinquishing claim for further performance and for compensation, etc. as required under Section 15 of the Specific Relief Act, 1877. The relinquishment as required by law, having been made in this Court the plaintiff-respondent could not be non-suited on this ground."

16. In view of the legal position and also in view of the statement made across the Bar including the application for amendment of the plaint filed on behalf of the plaintiff-respondents in this Court, there cannot be any doubt that this Court can uphold the decree passed by the Division Bench of the High Court relying on or on the basis of such statement as also upon allowing the application for amendment of the plaint. It may be true that in the application for amendment, there is no specific averment as contained in clause (ii) of sub-section (3) of Section 12 of the Act but the entire application, in our opinion, has to be read as a whole. The plaintiff-respondents have referred to the prayers made in the plaint and have sought to substitute the same by a prayer as noticed hereinbefore and, thus, by necessary implication, the relief for obtaining compensation must be held to have been given up. In any event, such a statement was made at the Bar and we accept the same."

15. In the circumstances, the application for amendment is allowed. None of the Respondents made an application to file any further pleadings.

WRITTEN STATEMENT OF RESPONDENT NOS.1 TO 6 :

16. These Respondents have admitted the execution of the suit agreement. They also admit having represented to the Appellant that the property was free from encumbrances, except the said mortgage. They contended that the representations were in good faith as they did not anticipate any positive obstruction or challenge to their title from their sister - Respondent No.7. They, however, contended that the Appellant was aware of the mortgage. According to them, in view of Clause 7 in the event of there being any defect in their title beyond their control, the agreement should ipso facto turn rescindable. They contended that the Plaintiffs never bothered to take steps towards completion of the purchase despite repeated reminders, including a letter dated 30th April, 1986. The correspondence is not denied. According to these Respondents, as a result of the delay in completion of the sale on the Appellant's part, the liability towards the bank kept increasing. The reason for the said Respondents not having taken any action after the Appellant's letter dated 7th December, 1985, is that in November, 1985, Respondent No.1 had fallen ill and as such, could not take any action till 13th March, 1986, when Respondent No.1 wrote a letter to the Appellant.

17. These Respondents stated that in February, 1987, Respondent No.7 and her husband set up a claim to the ancestral property, including the suit property. It is for this reason that they addressed the said letter dated 3rd April, 1987 and forwarded the bank draft in the sum of Rs.20,000/-. The reason for not having sent a detailed reply as stated in the letter dated 20th April, 1987 is that there was an attempt on their side to close the issue with the Respondent No.7 and her husband to enable them to complete the sale. According to them, unfortunately, however, Respondent Nos.7 and 8 did not settle the issue and filed a Civil Suit in the court of Civil Judge, Senior Division, Margao, being Special Civil Suit No.105/87/A. The suit was also disposed off by the impugned judgment.

18. It is important to note that in paragraph 17 of the Written Statement, these Respondents stated that they were unable to complete the sale and complete the title "due to the claims set up by Respondent Nos.7 and 8". In other words, Respondent Nos.1 to 6 claim that they had no objection themselves to completing the transaction. These Respondents also denied the various allegations in the plaint.

ADDITIONAL WRITTEN STATEMENT OF RESPONDENT NOS.1 TO 6 :

19. The additional written statement of Respondent Nos.1 to 6 was filed on 23rd February, 1999 in reply to the amendments to the plaint. Referring to the inventory proceedings, these Respondents contended that they had no role in instituting the same. They denied having colluded with Respondent No.7. It was, in fact, contended that they objected to the inventory proceedings on the ground that Respondent No.7 had relinquished her right to the ancestral property, but that the court over-ruled the objection. They cannot, therefore, be held responsible for the same. Respondent No.7, being the highest bidder at the auction, the suit property was allotted to her as per the provisions of the personal law which governs the parties.

20. It is contended that Special Civil Suit No.329 of 1992 filed by the Appellant is infructuous as the subject matter thereof is the same as that of the present suit.

21. They contended that the payment of Rs.17,00,000/- by the Appellant to the said bank was not necessary and, therefore, these Respondents are not responsible for the loss, if any, caused to the Appellant on account thereof. There is a general denial in respect of the Appellant's claim for damages. As regards the mutation in the revenue records, the same was pursuant to the order in the inventory proceedings.

WRITTEN STATEMENT OF RESPONDENT NOS.7 AND 8 :-

22. Respondent No.8 is the husband of Respondent No.7. Respondent No.7, admittedly, would normally be entitled to a share in the suit property as a legatee of the estate. Under the law governing the parties, her husband is accordingly entitled to a moiety therein.

These Respondents contend that the suit is not maintainable insofar as it questions the orders passed in the inventory proceedings. The issues pertaining thereto could only be raised in the inventory proceedings. It is contended that the suit is infructuous as by virtue of the order/auction in the inventory proceedings, the suit property vested in Respondent Nos.7 and 8 and thereafter in Respondent No.9 by virtue of these Respondents having sold the same to Respondent No.9.

23. These Respondents contended that the suit agreement was entered into behind their back; that Respondent Nos.1 to 6 had no legal right to enter into the agreement without the consent of Respondent No.7 as she admittedly had a share in the ancestral property as well as a right of pre-emption in terms of the Portuguese personal law by which the parties are governed. The suit agreement is, accordingly, null and void not merely against these Respondents, but even otherwise. They denied, for want of knowledge, the averments in paragraphs 5 to 13 of the plaint. As soon as they came to know about the suit transaction, they challenged the same by addressing a notice dated 19th February, 1987 and filing the said Special Civil Suit No.105/87/A. The suit property, it is contended, had been acquired by Respondent No.7 in exercise of her right of pre-emption and under the orders of the inventory court pursuant to the said auction. They denied knowledge of the circumstances under which the Appellant deposited the amount of Rs.17,00,000/- with the said bank. It is, in fact, contended that the property was released by the bank in favour of these Respondents. The basis on which this averment is made is, however, not clear. There is a general denial of all the claims made in the plaint.

WRITTEN STATEMENT OF RESPONDENT NO.9 :-

24. Respondent No.9, Syscon Consultants Private Limited alleges to have purchased the said property from Respondent No.7. Understandably, Respondent No.9 has denied the various averments and submissions in the plaint for want of knowledge. Respondent No.9 has also reiterated and adopted the various defences raised by the other Respondents. Accordingly, it is contended that the deed of declaration and succession dated 3rd November, 1981 is of no effect as against any of the Respondents. Respondent No.9 denied knowledge of the lis pendens. It further stated that a nil encumbrance certificate dated 14th September, 1995 was obtained by it from the Sub-Registrar of Canacona prior to the execution of the deed of sale by Respondent Nos.7 and 8 in its favour which did not disclose any encumbrance or charge against the suit property. There are general denials of all the averments and submissions in the plaint.

It is important to note that in paragraph 22 of the plaint, Respondent No.9 expressly stated that it had obtained legal opinion on whether the Appellant's claim in respect of the suit property was sustainable in law and on being advised that the Appellant's claim was misconceived, untenable and legally unsustainable, it decided to purchase the suit property. In other words, it is not only established, but admitted by Respondent No.9 that it had knowledge of the present suit and the Appellant's claim to the suit property. Respondent No.9, therefore cannot, under any circumstances, claim to be a bona fide purchaser without notice. The rights of Respondent No.9 would, herefore, be subject to the result as against the other Respondents.

25. The learned Judge framed the following Issues on 24th July, 2000,and decided the same as under :-

“ISSUES		FINDINGS
(1) Whether the plaintiff proves that the plaintiff is entitled for specific performance of contract dated 4.9.85 ?		Negative.
(2) Whether the plaintiff proves that order in Inventory Proceeding No.55/90/A is liable to be vitiated as obtained by fraud and also illegal to the extent of allotment of the suit property to the defendant No.7 ?		Negative.
(3) Whether the plaintiff proves that the defendants No.7 and 8 lost right of pre-emption, even if they had the said right under law ?		Negative.
(4) Whether the plaintiff proves that the defendants No.1 to 6 are liable to pay to the plaintiff a sum of Rs.12,29,030.80 as compensation for breach of contract in addition to the specific performance ?		Negative.
(5) Whether the plaintiff proves that the defendants No.1 to 6 are also liable to pay to the plaintiff compensation of Rs.2,68,29,038.80 in lieu of such specific performance ?		Partly in affirmative.
(6) Whether the defendants No.7 and 8 prove that they have right of pre-emption in respect of the suit property and that the agreement dated 4.9.85 entered between the plaintiff and the defendant nos.1 to 6 is null and void ?		Affirmative.
(7) Whether the defendants No.7 and 8 are justified in selling the suit property to the defendant No.9 within their own rights ?		Affirmative.
(8) What relief ? What order ?		As per law.”

WITNESSES :-

26. The Appellant examined two witnesses viz. its Manager one Ashok Tandalle (PW-1) and one Shaikripurem Aiyer Balram (PW-2). The Respondent did not examine any witnesses.

The main witness was PW-1. The evidence of PW-2 was not even read before us. I will, therefore, refer to the evidence of PW-1.

The witness stated that he was aware of the facts and had signed and verified the plaint. He stated that he knew Respondent Nos.1, 3 and 5 who are brothers and whose wives are Respondent Nos.2, 4 and 6 respectively. The deposition in the examination-in-chief covers the various averments and submissions in the plaint. He stated that Respondent No.1 had furnished the documents such as the deed of declaration of succession dated 3rd November, 1981 and the title report dated 4th December, 1982 prepared by an advocate prior to the execution of the suit agreement. Thereafter, he met some of the Respondents along with another of the Appellant's officers one V. B. Bhatnagar. After the draft of the sale deed was forwarded, there were meetings with the said bank as the Appellant had been informed about the said mortgage subsequently. He referred to the discussions with the bank, the newspaper publication about the suit agreement and the correspondence between the parties. He produced various documents.

27. He then referred to Special Civil Suit No.105/87/A filed by Respondent Nos.7 and 8, the application for temporary injunction which was rejected by the trial court and against which Respondent Nos.7 and 8 filed an Appeal before this court and the same was disposed of by the said order dated 19th April, 1990.

28. The witness also referred in some detail to what transpired in this suit and in the inventory proceedings. I will refer to the same subsequently.

29. The witness has also referred to the manner in which and the circumstances that led to the Appellant having satisfied the entire claim of the said bank against the concerned Respondents. It is not necessary to refer to these details. Suffice it to state that there is no dispute about the fact that the Appellant satisfied the entire claim of the bank and as a result thereof, the mortgage was released. Had the above not been paid, the property would have been auctioned by the Co-operative Court as all the applications moved by the Appellant to stay the sale of the mortgaged property at the instance of the bank had failed. The same would have jeopardized the rights and interests of the Appellant, if any, under and in respect of the suit agreement. As noted earlier, the Assistant Registrar permitted the Appellant to deposit the amount of Rs.17,00,000/-. Curiously, Respondent Nos.7 and 8 challenged this order by filing a Writ Petition before this court. The same was dismissed. Thereafter, the Appellant amended the plaint claiming the said amount of Rs.12,29,030.80 after adjusting the balance consideration of Rs.6,00,000/- payable by it.

30. In support of the claim for damages, the witness deposed that the Appellant had planned to put up a hotel on the suit property in association with Eastern International Hotel Limited; that the Appellant expected an income of about Rs.11,00,00,000/- per annum, five years after establishing the business and that it had informed Eastern International Hotel Limited about the legal proceedings. The claim for damages in lieu of the specific performance was based on an alleged loss of hotel-cum-resort business as well as damages on account of the difference in price between the agreed rate and the rate on the date of the breach of the agreement. The plaint was also amended to include the reliefs claimed in Special Civil Suit No.329 of 1992. The witness also produced the documents obtained from the authorities pertaining to the revenue records.

THE CROSS-EXAMINATION :-

31. Only a few aspects regarding the cross-examination may be noted.

32. The witness stated that the negotiations went on for about four to five years prior to the execution of the agreement. He stated that he had personally attended one meeting in Mumbai and two to three meetings in Goa. During the negotiations, public notices inviting objections in respect of the suit property were not issued. About two months after signing the agreement, Respondent No.1 informed the Appellant about the loan from the said bank and the mortgage in respect of the suit property. Thereafter, public notices inviting objections were issued. Only the bank responded to the same. The Appellant has a sister/associate concern Christen Hooden (India) Private Limited, operating in Goa. The case put to the witness on behalf of Respondent Nos.1 to 6 was that the Appellant was informed about the bank loan and the mortgage "at the time of signature of the agreement". It is thus the case of Respondent Nos.1 to 6 themselves that the Appellant was not informed about the bank loan and the mortgage during the negotiations. The witness maintained his stand that the Appellant was informed about the same only about two months after the agreement was entered into. He understandably refused to offer an opinion regarding the legal consequences as to the rights of Respondent Nos.7 and 8. The Appellant came to know about the inventory proceedings only from the reply to the restoration application made by the Appellant which we will refer to later. He denied the suggestion that the suit property came to be allotted to Respondent No.7 in the inventory proceedings by the order of the court and not due to collusion. His evidence, of course on this aspect is not conclusive. He admitted that around the period when the agreement was entered into, he was the Manager of the Appellant's sister concern Christen Hooden (India) Private Limited as well as of the Appellant. The Appellant and its sister concern did have common staff, including in the legal department. The Appellant's officers were also concerned with the sister-concern and there is considerable cross-examination about the involvement of the Appellant's officers in various litigations, including in Special Civil Suit No.329 of 1992. During the hearing, the counsel for the Respondents, however, did not base any submission in respect thereof.

33. I will refer to the cross-examination of the witness as regards the proposed hotel project while dealing with the issue of damages.

34. In the cross-examination of the witness on behalf of Respondent Nos.7 and 8, he stated that the Appellant was not aware whether Respondent Nos.1, 3 and 5 had a sister and stated that the said Respondents did not disclose this fact to the Appellant. They disclosed the same only around March-April, 1987. To the question whether the Appellant filed an intervention application in the inventory proceedings, the witness stated that the Appellant came to know of the same only from the reply to its restoration application in the present proceedings. By that time, the inventory proceedings were already finalized. Therefore, the question of filing such an application did not arise. Respondent Nos.7 to 8 were impleaded as parties in the present suit pursuant to the order of the court dated 3rd September, 1998. During the course of cross-examination, the witness stated that Respondent No.1 had informed him that Respondent No.7 had no right of pre-emption nor any right in the ancestral property as she had already been given her share at the time of her marriage.

35. The cross-examination of the witness on behalf of Respondent No.9 was understandably limited. The witness denied the suggestion that the Appellant is not entitled to specific performance as Respondent No.7 was not a party to the agreement; that Respondent No.9 purchased the suit property because they were advised that the suit agreement was not capable of specific performance and that he had deposed falsely. The cross-examination on behalf of Respondent No.9 is of no assistance whatsoever.

RE : ISSUE NO.1.

(1) Whether the plaintiff proves that the plaintiff is entitled for specific performance of contract dated 4.9.85. ?

36. I have come to the conclusion that the Appellant is entitled to specific performance of the said agreement against Respondent Nos.1 to 6 and not against Respondent Nos.7 and 8.

37. Mr. Zaiwala submitted that in view of the deed of declaration dated 3rd November, 1981, Respondent Nos.7 and 8 are not entitled to challenge the title of Respondent Nos.1 to 6 in respect of the entire suit property. He further submitted that even if the deed of declaration is set aside, any act or acts done thereto are not void and are, therefore, binding on all the parties, including Respondent Nos.7 and 8. Respondent Nos.7 and 8 were not parties to the deed of declaration.

In support of these submissions Mr. Zaiwala relied upon the provisions of the Portuguese Law which, admittedly, governs the Appellant and Respondent Nos.1 to 8. I have not dealt with the manner in which the provisions of the Portuguese Law referred to in the judgment are made applicable to the parties. I have proceeded, as we were invited to by all the counsel, on the basis that the provisions referred to herein apply to the parties.

38. Before referring to these provisions, it is necessary to refer to the deed of declaration. The deed of declaration states that it is in the judicial division at Margao and in the notarial office of the Municipal Council building before the notary ex-officio in the judicial division that the deed of declaration is purported to be entered into between Respondent Nos.1 to 6. They have declared themselves to be the only heirs of Vishwanath, their deceased father.

The deed of declaration contains several interpolations and cancellations which are in a different handwriting and ink. Indeed, at the end of the document also, there are several sentences added in a different handwriting and ink. A substantial portion of the last page even thereafter is blank. It is only at the end of the document that the signatures of the parties appear. On the reverse are seven notarial stamps and the signature of a notary. The document itself inspires little confidence, although it has been admitted in evidence. It states the value of the property to be Rs.50,000/-. The deed recites that it is made in the presence of the said notary and before suitable witnesses named therein. The notary certified the identity of the first witness as knowing him personally. The deed traces the rights of the Respondent Nos.1 to 6. It refers to one Vitol who died on 10th March, 1928; that his brother one Vishwanath Purshottam Sinai Gaitonde succeeded to his estate; that the said Vishwanath expired on 26th October, 1968 and that he died intestate, leaving as his only heirs, his three children viz. Respondent Nos.1, 3 and 5 and that there does not exist any person who, according to the law, may have a preferential right over them. The witnesses appear to have confirmed that Respondent Nos.1, 3 and 5 are the only living heirs. Based on such witnesses' statement the notary purported to accept and confirm the statements on oath made by the witnesses and purported to declare them as successors. He further declared the value of the property at Rs.50,000/- and that, therefore, the extract of the deed of declaration is not subject for publication "under No.376". The deed of declaration is stated to be executed as per section 165 of the Notarial Law, 1935 and section 175 of Law No.2059 dated 6th August, 1951. The deed of declaration is signed by Respondent Nos.1, 3 and 5.

39. Mr. Zaiwala submitted that the deed of declaration is a judgment in rem and is, therefore, binding even on Respondent Nos.7 and 8, though they are not parties thereto. He relied upon section 41 of the Evidence Act in support of this submission. Section 41 reads as under :-

"41. Relevancy of certain judgments in probate, etc., jurisdiction.- A final judgment, order or decree of a competent Court, in the exercise of probate, matrimonial, admiralty or insolvency jurisdiction, which confers upon or takes away from any person any legal character, or which declares any person to be entitled to any such character, or to be entitled to any specific thing, not as against any specified person but absolutely, is relevant when the existence of any such legal character, or the title of any such person to any such thing, is relevant.

Such judgment, order or decree is conclusive proof -

that any legal character which it confers accrued at the time when such judgment, order or decree came into operation;

that any legal character, to which it declares any such person to be entitled, accrued to that person at the time when such judgment, order or decree declares it to have accrued to that person;

that any legal character which it takes away from any person ceased at the time from which such judgment, order or decree declared that it had ceased or should cease;

and that anything to which it declares any person to be so entitled was the property of that person at the time from which such judgment, order or decree declares that it had been or should be his property."

40. Mr. Zaiwala submitted that the deed of declaration is a final judgment of a competent court in exercise of probate jurisdiction. In support of his contention that the deed of declaration is a judicial act, he relied upon the following provision of the Portuguese Law :

“APPENDIX II

ORDER NO.14157

The Government of the Portuguese Republic, through its Overseas Ministry and in terms of Clause 2 of Article 91 of the Law applicable to the Overseas Territories directs that the publication be made in the Overseas Territories, to have force therein, of the sole paragraph of Article 92 of the Code of Judicial Costs approved by Decree Law No.30688 dated 26-8-1940, Article 165 of the Notarial Code with the wording given to it by the Decree No.32033 dated 22nd May, 1942, Article 179 of the Law No.2049 dated 6th August 1951, and Article 80 of the Law No.2030 dated 22nd June, 1948, with the following modifications.

1. The limit fixed in Clause 5 of Article 165 of the Notarial Court is increased to 50.000$00 and the Clause 7 of the said Article is deleted.

2. The limit referred to in the body of Section 179 of the Law No. 2049 is deemed as 50.000$00.

3. Clause 1 of Article 80 of Law No.2030 is applicable only to the contracts regarding buildings, and the repeal referred to in Clause 2 of the same Article is deemed as referred to Article 4 of Decree No.36909 dated 11th June, 1948.

Overseas Ministry dated 14th November, 1952 Overseas Minister, Sd/- Manuel Maria Sarmenta Rodrigues

To be published in the Official Gazette of all Overseas Territories.

DECREE LAW NO.32033

Article 1 : Article 165 of Decree Law No.26118 dated the 27th November, 1935 shall be worded as follows :

Article 165 : Once any inheritance is opened, and when there is no room to have partition proceedings under orphan’s jurisdiction the status of the heirs can be proved, for the purpose indicated in this Article by way of deed of qualification of heir done before the Notary. Such deed of qualification of heir shall be made by the declaration made in public deed, by three persons whom the Notary considers creditworthy, to the effect that the interested party or parties are heirs and there is no other person who excludes them or who has rights equal to them.

1. The declarants shall submit the following documents :

i) Death Certificate of the deceased;

ii) Will, or deed of gift mortis causa, when the succession is founded on either of those deeds;

iii) Documents to prove that the interested party is a relative of the spouse of the deceased in other cases.

2. The person who, as per the law, cannot be admitted as witness for the act nor the successors of the presumed heirs shall be admitted as declarants.

3. In case there is only one heir, the interested party shall intervene in the deed of declaration and he shall enlist all the movable assets of the inheritance.

4. If there is more than one heir, the declaration shall be made before the partition deed or in the same deed prior to the partition except if there exists declaration of heir judicially done.

5. The qualification of heir before the Notary is sufficient for all the registrations and annotations in the Land Property Register; for the purpose of transfer of the shares; for the purpose of receipts of withdrawal of monies or other movables when its value does not exceed 20,000$00 for each heir or in respect of each debtor or depositor. If there are more than one heir, the partition deed shall be necessary, except if such partition has not taken place, and in this event all the interested parties shall intervene in the acts referred to in this clause.

6. The cases for which other form of qualification of heir is required by the law are saved.

7. The stamp referred to in Article 68 of the Schedule in force is due in respect of each inheritance opened whatever may be the number of the heirs who are declared as heirs.

To be published and implemented Government of the Republic, dated 22nd May, 1942

Sd/- LAW NO.2049

Article 179 : The qualification of heir before the Notary, regulated in Article 165 of the Notarial Code, with the wording given by Decree Law No.3203, dated 22nd May, 1942, when it relates to value exceeding the limit fixed in Clause 9 of the Article 1 of the Schedule, shall have juridical effect only if, after having been duly published, it is not contested by the excluded heir, in terms of Clause 2 of this Article.

1. The Notary, who records the deed of qualification of heir, shall publish within 10 days, in the Government Gazette, at the expense of the party, one extract of the declaration, with the name of the deceased and the names of the heirs and other identifications.

2. The excluded heir who intends to contest the qualification of heir shall produce in the competent Court an application to declare him as a heir, in terms of Article 1117 of the Code of Civil Procedure requesting the Court that the communication be sent immediately to the respective Notary Office to the effect that his application is pending.

3. The Notary shall issue certificate of any declaration of heir only after 30 days from the date of the publication of the notice, and if they have not received any communication as mentioned in the preceding clause.

4. The Notary is entitled to demand an advance for the expenses towards the publication of the notice.

To be published and implemented Government of the Republic, dated 6th August, 1951.

Sd/-”

41. The above provision do not establish that the deed of declaration is a judgment. In any event the provisions do not constitute it to be a judgment in rem.

42. Article 165 merely states that the status of the heirs may be proved for the purposes indicated therein by way of a deed of qualification of heir done before the notary. It is thus only a mode of proof. It is not conclusive proof. If the declarations contained in the deed are established to be incorrect, it cannot bind third parties who are affected thereby. In the present case, it is admitted by all the parties, including the Appellant that Respondent No.7, being a sister of Respondent Nos.1, 3 and 5 was also an heir entitled to the estate of her father.

43. Further, Article 165 clause 5 was amended by substituting the figure of 20000$00 with 50000$00. This, it is admitted, is a reference to the Portuguese currency. The deed of declaration states the value to be "Rs.50,000/-." There is nothing to indicate the rupee equivalent of the 50000$00. Article 179 provides that the qualification of an heir before the notary regulated in Article 165, when it relates to a value exceeding the said limit, shall have juridical effect only if having been duly published it is not contested by the excluded heir. There is no evidence of any publication. There is no evidence as to whether the value exceeded the limit fixed. Thus, in any event, the deed of declaration can have no juridical effect. I hasten to add that the juridical effect, in any event, would only be to the extent of the deed of declaration being a mode of proof, but not conclusive proof.

44. Mr. Zaiwala relied upon various judgments in support of his contention that even if the deed of declaration is set aside subsequently, so long as it was validly made and constituted a judgment in rem, acts done thereunder before it was declared invalid, would be binding on all persons. In other words, according to him if the deed of declaration is made as per law and constitutes a judgment in rem then even if it is set aside, it would not invalidate acts done pursuant thereto. In this regard, he relied upon the judgments in the case of Akshay Kumar Pal Vs. Nandalal Das, ILR 1946(1) Calcutta 432; Hewson Vs. Shelly, 1914(2) Ch. 13 at page 27; and Crystal Developers Vs. Asha Lata Ghosh, (2005)9 SCC 375 : [2005(5) ALL MR 64 (S.C.)].

45. These judgments are of no assistance to the Appellant's case as we have not accepted Mr. Zaiwala's contention that the deed of declaration constitutes a judgment in rem. Indeed, it is not even a judgment of a court of law.

46. Nor do I find Mr. Zaiwala's reliance upon the judgments rendered under the Indian Succession Act to be of any assistance. In support of the proposition that a court cannot go behind a probate, he relied upon the judgments in the case of Rukmani Devi Vs. Narendra Lal, AIR 1984 SC 1866; Debendra Nath Dutt Vs. Administrator General of Bengal, Vol.XXXV IA 109; Sailaja Prosad Vs. Jadu Nath in 1914 Vol.21 Calcutta Law Journal 88; and Surinder Kumar & ors. Vs. V. Gian Chand, AIR 1957 SC 875.

47. For the same reason, these judgments can be of no assistance to the Appellant. These judgments deal with probates issued under the Indian Succession Act. Section 273 of the Indian Succession Act is a statutory recognition, inter alia, of a probate being a judgment in rem. Once it is held that a deed of declaration is not a judgment in rem, decisions under the Indian Succession Act regarding probates cannot be of any assistance to the Appellant.

48. In the circumstances, the rights of Respondent Nos.7 and 8 in the suit property are not affected by the suit agreement.

49. In the cross-objections filed on behalf of Respondent Nos.7 and 8, it is contended that the impugned judgment wrongly, in the operative part, decrees the suit albeit in part, for money even against them although in the body of the judgment, the learned Judge observed that Respondent Nos.7 and 8 cannot be held to be liable in any respect.

50. The submission is well founded. Having come to the conclusion that Respondent Nos.7 and 8 are not bound by the suit agreement and that no agreement or understanding was arrived at between the Appellant and the Respondent Nos.7 and 8, the only parties that can be made liable are Respondent Nos.1 to 6 and not Respondent Nos.7 to 9. The cross-objections to this extent are allowed.

51. Mr. Khandeparkar, the learned counsel appearing on behalf of Respondent Nos.1 to 6, however, made a statement that they had, at the time of admission, deposited the entire amount decreed in court and that they would, in any event, not claim any contribution from Respondent Nos.7, 8 or 9 or any of them. The statement is accepted. The grievance of Respondent Nos.7 to 9 in this regard is, therefore, in any event, redressed. Moreover, considering the order that we have passed viz. a decree for specific performance of the agreement against Respondent Nos.1 to 6 and the above observation the grievances of Respondent Nos.7 to 9 stand redressed anyway.

52. The question now is, whether the Appellant is entitled to specific performance of the suit agreement as against Respondent Nos.1 to 6 to the extent of their rights therein. I have come to the conclusion that the suit agreement is binding upon Respondent Nos.1 to 6 and enforceable against them to the extent of their right in the suit property. I have also come to the conclusion that in the facts of the present case, the Appellant is entitled to specific performance of the agreement as against Respondent Nos.1 to 6 and to the extent of their undivided share in the suit property.

53. Mr. Usgaonkar, the learned senior counsel appearing on behalf of Respondent Nos.7 and 8 submitted that upon the death of Vishwanath, his widow Anandibai and his children viz. Respondent Nos.1, 3, 5 and 7 inherited, inter alia, the suit property. Anandibai also expired intestate on 25th June, 1976. Thus Respondent Nos.1, 3, 5 and 7 succeeded to the suit property. In other words, Respondent No.7 was a co-owner of the suit property along with Respondent Nos.1, 3 and 5. Relying upon Article 1566, Mr. Usgaonkar contended that Respondent Nos.7 and 8 had a right of pre-emption which is not affected by the suit agreement. Article 1566 reads as under :-

"ARTICLE 1566 :

(Right of preference of co-proprietors)

The co-proprietors of indivisible or undivided thing are not entitled to sell their respective part to strangers, if the joinder wishes to have it for as much.

1st The co-proprietor,who is not informed of the sale, shall be entitled to have for himself the part sold to strangers, provided he applies for it within six months reckoned from the date when he has knowledge of the sale, by depositing, before the delivery is effected, the price which, according to the conditions of contract, was paid or has fallen due.

2nd There being more than one joinder, what is provided in 4th and 5th article 2309 shall be observed; but, if the lots are unequal and the major joinder wishes to exercise the preference, the respective right shall be awarded to him, independently of licitation.

3rd The right of preference, in any cases, is not compromised by the annulment of the respective contract, whether done extra judicially, or through admission or consent proceedings in the court.

4th The time limit to which 1st of this article refers, applies to all the other cases of preference."

54. There is no doubt that upon the death of Vishwanath, Respondent Nos.1, 3, 5 and 7 were entitled to equal shares each in his estate, including in respect of the suit property. The mere fact that Respondent No.1, 3 and 5 executed the agreement did not and could never have affected the right of pre-emption conferred by Article 1566 upon Respondent No.7.

55. In the facts of the present case, however, Article 1566 is of no assistance to Respondent Nos.7 and 8 for more than one reason.

56. The right of pre-emption is conferred upon "co-proprietors of indivisible or undivided things". Article 1566 further provides that the right cannot subsist once a co-proprietor/"joinder" has alienated his or her right in the property. Upon such alienation, the co-proprietor/joinder ceases to be a co-proprietor/joinder of the thing/property.

In the present case, Respondent Nos.7 and 8 have admittedly sold their interest in the suit property to Respondent No.9. It is not their case that they retained any interest in the suit property. They have, therefore, ceased to be co-proprietors/joinders within the meaning of those expressions in Article 1566. They thereby ceased to have any right of pre-emption. In other words, they cannot be considered to be "joinders" who wish to have the divisible or undivided right of the other co-proprietors viz. Respondent Nos.1 to 6.

57. In this view of the matter, Mr. Zaiwala's reliance upon the judgment of the Supreme Court in Jayaram Mudaliar Vs. Ayyaswami, (1972)2 SCC 200 is well founded. The Supreme Court held in paragraph 37 as under :

"37. Learned Counsel for the appellant had also relied on Bishan Singh Vs. Khazan Singh, 1959 SCR 878. That was a case in which, before the deposit of money by the pre-emptors in a suit to enforce their rights to pre-emption, the vendee had sold his rights to the appellant who had an equal right of pre-emption. It was held there that the claim for pre-emption could be defeated by such a device which fell outside the purview of the principle of lis pendens. We think that this decision turns upon its own facts and on the nature of the right of pre-emption which, as was observed there, is a weak right. This Court had held that this weak right could be defeated by a sale which a vendee is compelled to make for the purpose of defeating the right, provided the purchaser's superior or equal right to pre-emption had not been barred by limitation. On the question considered there, the view of the East Punjab High Court in Wazir Ali Khan Vs. Zahir Ahmad Khan, AIR 1949 East Punj 193 was preferred to the view of the Allahabad High Court in Kundan Lal Vs. Amar Singh, AIR 1927 All 664. The observations made by this Court with regard to the doctrine of lis pendens when a plaintiff is enforcing a right of pre-emption must, we think, be confined to cases of sales which could defeat pre-emptors' claims. It has to be remembered that a technical rule of the law of pre-emption is that the pre-emptor, to succeed in his suit, must continue to possess the right to pre-empt until the decree for possession is passed in his favour."

58. In view of what is stated above, Respondent Nos.7 and 8 do not continue to possess the right to pre-emption. They admittedly never exercised the right of pre-emption at any stage and certainly not before they divested themselves of all right, title and interest in the suit property by selling the same to Respondent No.9. Although the purported sale by them of the entire property to Respondent No.9 cannot and does not affect the Appellant's right to the extent of the share of Respondent Nos.1 to 6 therein, the fact remains that Respondent Nos.7 and 8 purported to sell the entire property which included their right therein which has not been affected by the suit agreement. In the circumstances, there exists no right of pre-emption in Respondent Nos.7 and 8 qua the share of Respondent Nos.1 to 6 in the suit property.

59. Mr. Usgaonkar conceded that the purchase at the auction in the inventory proceedings was not in exercise of the rights under Article 1566. This is, in fact, so. The nature of the proceedings before the inventory court establish quite clearly that the purchase was in exercise of the powers of an heir in such proceedings pursuant to an auction. It has nothing to do with exercising a right of pre-emption. Moreover, admittedly, the purported purchase by Respondent No.7 in the inventory proceedings was not in exercise of the right of pre-emption qua the suit agreement or any other sale.

60. In this view of the matter, while I agree with Mr. Usgaonkar and Mr. Dessai that the right of pre-emption which Respondent No.7 had could not have been defeated by the suit agreement alone, the question is really academic today as Respondent Nos.7 and 8 did not exercise the right of pre-emption and are today not entitled to any such right in view of their having sold their right in the property to Respondent No.9. They are, therefore, no longer co-proprietors/joinders and are, therefore, not entitled to the benefits of Article 1566.

61. Mr. Usgaonkar then submitted that a person who has succeeded to property along with others in the estate of a deceased only has a right to an undivided share therein and cannot deal with the same until and unless there is a final partition of the estate by a court of competent jurisdiction in inventory proceedings. In the present case, Respondent Nos.1 to 6 dealt with their admitted shares in the suit property prior to the crystallization of their rights in the inventory proceedings instituted by Respondent No.7. They were not entitled to do so and, therefore, the suit agreement is void. Mr. Usgaonkar relied upon Articles 2015 and 2016 of the Family Laws in support of his submission.

62. Under the Transfer of Property Act, there is no bar to an heir disposing of his undivided share in the estate of a deceased. Section 6 of the Transfer of Property Act reads as under :-

"6. What may be transferred.- Property of any kind may be transferred, except as otherwise provided by this Act or by any other law for the time being in force.

(a) The chance of an heir-apparent succeeding to an estate, the chance of a relation obtaining a legacy on the death of a kinsman or any other mere possibility of a like nature, cannot be transferred.

(b) A mere right of re-entry for breach of a condition subsequent cannot be transferred to any one except the owner of the property affected thereby.

(c) An easement cannot be transferred apart from the dominant heritage.

(d) An interest in property restricted in its enjoyment to the owner personally cannot be transferred by him.

(dd) A right to future maintenance, in whatsoever manner arising, secured or determined, cannot be transferred.

(e) A mere right to sue cannot be transferred.

(f) A public officer cannot be transferred, nor can the salary of a public officer, whether before or after it has become payable.

(g) Stipends allowed to military, naval, air-force and civil pensioners of the Government and political pensions cannot be transferred.

(h) No transfer can be made (1) insofar as it is opposed to the nature of the interest affected thereby, or (2) [for an unlawful object, or consideration within the meaning of Section 23 of the Indian Contract Act, 1872 (IX of 1872)], or (3) to a person legally disqualified to be transferee.

(i) Nothing in this section shall be deemed to authorize a tenant having an untransferable right of occupancy, the farmer of an estate in respect of which default has been made in paying revenue, or the lessee of an estate under the management of a Court of Wards, to assign his interest as such tenant, farmer or lessee."

Our attention has not been invited to any provision in the Transfer of Property Act or any other law which prohibits the transfer by an heir of his undivided share in the estate of the deceased.

63. On behalf of the Respondents, however, it was submitted that Articles 2015 and 2016 prohibited the same. Articles 2015 and 2016 read as under :-

"ARTICLE 2015

(Indivisibility of the inheritance prior to partition)

Where many persons are entitled simultaneously to the same inheritance, their right shall be indivisible both in respect of possession as well as ownership, as long as the partition has not been effected.

ARTICLE 2016

(Right of petition of inheritance in totality)

Each of the co-heirs may demand the totality of the estate, to which he along with others is entitled, without the person demanded against being able to raise objection that the estate does not entirely belong to him."

Articles 2015 and 2016 falls under Chapter IV which deals with : "PROVISIONS COMMON TO TESTAMENTARY SUCCESSION AND LEGAL SUCCESSION, DIVISION I OF THE OPENING AND TRANSMISSION OF INHERITANCES". Article 2015 does not contain any such prohibition. It merely provides that the interest of persons entitled simultaneously to the same inheritance is indivisible. Nor is there any such prohibition in Article 2016. Article 2016 does not even deal with this aspect.

64. In fact, Article 1376 of the Code of Civil Procedure indicates the contrary. Article 1376 reads as under :

"ARTICLE 1376

(Exercise of the right of pre-emption)

Where any of the heirs has made transfer of his share to a stranger, without giving preference to the co-heirs, the latter may exercise the right of pre-emption in the inventory proceedings, when the transferee makes an application to be brought on record in that capacity.

In the event there is more than one heir to exercise the right of pre-emption, the provision of the sole paragraph of Article 1514 shall be observed."

Article 1376, therefore, recognizes the transfer by a co-heir of his share to a stranger and provides for the consequence thereof qua the other co-heirs viz. that they may exercise the right of pre-emption in the inventory proceedings. I have already held that in the present case, there is no question of Respondent No.7 exercising such right now and that Respondent No.7, in fact, did not exercise the right of pre-emption at the relevant time. Had Respondent Nos.1 to 8 brought the Appellant on record in the inventory proceedings and exercised the right of pre-emption, matters may well have been different. It is neither fair to the Appellant nor open to us to speculate on what turn the matter may have taken at that stage in such circumstances. There are too many imponderables. For instance, would Respondent Nos.7 and 8 have exercised the right despite the mortgage which would have been disclosed if the Appellant had been impleaded in the inventory proceedings ? If they wanted to, did they have the resources to do so ? If not, would they have been able to obtain the resources from others ? The fact of the matter is that the right had not been exercised. We are too far removed in time to speculate. In fact, we are not entitled to do so. To do so would put a premium on the inexcusable conduct of Respondent Nos.1 to 8 in not impleading the Appellant in the inventory proceedings and suppressing the fact from the court dealing with the inventory proceedings.

In the circumstances, it must be held that the transfer by Respondent Nos.1 to 6 of their right in the suit property by the said agreement is not void and is binding on them.

65. The learned counsel on behalf of the Respondents submitted that the Appellant was aware of the right of Respondent No.7 in the suit property even before the suit was filed. Mr. Zaiwala, apart from denying knowledge of the right of Respondent No.7 per se, contended that the Appellant's justifiably relied upon the representation of Respondent No.1 that no other person had any right, title or interest in the suit property in view of the deed of declaration and the title report. I will, for the present, presume that the Appellant was aware of the right of Respondent No.7 before the suit was filed especially in view of the letter dated 5th March, 1987, in which Respondent No.1 stated that Respondent No.7 had made a claim. It would, however, not make any difference. The agreement, I have held, does not affect the rights of the Respondent Nos.7 and 8 in the suit property. At the highest, the Appellant could be faulted for not having impleaded Respondent Nos.7 and 8 when the suit was filed. They did so subsequently. If the Appellant has a right against Respondent Nos.1 to 6 in respect of the suit property, the same cannot be defeated merely because Respondent Nos.7 and 8 were not impleaded earlier.

66. Mr. Dessai, the learned senior counsel appearing on behalf of Respondent No.9 submitted that the Appellant was not entitled to specific performance of the agreement as the suit property had admittedly been mortgaged to the said bank. He submitted that it was an English mortgage and, therefore, constituted a sale in favour of the bank. The court ought not, therefore, to exercise discretion by granting specific performance in favour of the Appellant.

67. I am, with respect, unable to appreciate this submission. I must, in fairness to Mr. Khandeparkar and Mr. Usgaonkar, note that they did not support this submission. The creation of the English mortgage in favour of the said bank has no relevance whatsoever to the exercise of discretion by a court under the provisions of the Specific Relief Act. Indeed, the conduct of the Appellant is entirely in its favour and against the Respondents. The Appellant, as noted earlier, paid the bank and as a result thereof, the mortgage was released. The Appellant did so in order to protect its rights under the said agreement. In fact, the Appellant would be entitled to recover the amounts in excess of their liability under the suit agreement from Respondent Nos.1 to 8. Mr. Zaiwala, however, made a statement that in the event of specific performance being granted, the Appellant would not demand the said amount. That, however, is only a concession.

68. Mr. Dessai submitted that the existence of the mortgage in favour of the bank rendered the suit agreement immoral and violative of section 23 of the Indian Contract as it had the effect of injuring a third party viz. the bank.

69. Mr. Khandeparkar and Mr. Usgaonkar did not support this submission. The submission is not well founded either. At the highest, the rights acquired by the Appellant under the agreement were subject to the rights of the bank. The bank had been paid the entire amount and the mortgage was thereby released. The submission is rejected.

70. Mr. Dessai then submitted that the property was not unencumbered when the suit agreement was entered into inasmuch as there existed, at that time, the said mortgage as well as the right of pre-emption in respect of Respondent Nos.7 and 8. Specific performance, he submitted, cannot be granted in respect of property which is encumbered at the time of the agreement.

71. There is nothing in law which prohibits parties from alienating their right in property subject to any encumbrances on the property. That the vendee/purchaser would acquire the rights in the property subject to such encumbrances is another matter altogether.

72. Mr. Dessai's reliance on section 48 of the Transfer of Property Act is of no assistance to Respondent No.9. He relied upon section 48 to indicate that the bank had a prior right. The bank indeed had a right under the mortgage which could not have been affected by the suit agreement. But that right was exhausted upon the payment of the mortgage money by the Appellant.

Section 48 is, in fact, a complete answer to the question of priorities between the Appellant and Respondent No.9 as admittedly Respondent No.9 entered into the agreement in respect of the said property with Respondent Nos.7 and 8, much after and with the full knowledge of the suit agreement in favour of the Appellant. Section 48 of the Transfer of Property Act reads as under :-

"48. Priority of rights created by transfer.- Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall, in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created."

73. On the other hand, I find little substance in Mr. Zaiwala's contention regarding Respondent Nos.1 to 6 having allegedly suppressed the fact of the English mortgage from the Appellant when the agreement was entered into. Respondent Nos.1 to 6 had, of course, contended as we noted while dealing with the evidence, that they had informed the Appellant of the mortgage before the agreement was signed. Even assuming that Respondent Nos.1 to 6 had not done so, that by itself could not create any rights in favour of the Appellant. The Appellant would, at the highest, in that event, be entitled to recover the amounts paid by it to the bank for releasing the mortgage. The suppression of this fact would not be relevant in determining the existence or validity of the suit agreement or the effect thereof on the rights of Respondent Nos.7 and 8.

74. It was contended on behalf of the Respondents that in view of the inventory proceedings and the orders passed therein, especially in respect of the auction leading to Respondent No.7 being declared to be the purchaser of the suit property, the Appellant is not entitled to specific performance.

75. Mr. Zaiwala met this submission by contending that the decree in the inventory proceedings is of no effect as it has not been registered; that the orders in the inventory proceedings cannot affect the Appellant as they were not parties thereto; that the entire proceedings leading to the auction of the suit property in favour of Respondent No.7 were a fraud against the Appellant with a view to frustrating the Appellant's rights under the suit agreement and that the orders in the inventory proceedings are hit by the principles of lis pendens.

76. Before dealing with Mr. Zaiwala's submission, it is necessary to note a few important dates.

On 18th May, 1987, the Appellant filed the present suit being Suit No.88 of 1987. The suit was filed only against Respondent Nos.1 to 6 and the bank as Defendant No.7. Later, the bank was dropped and the present Respondent Nos.7 to 9 were impleaded.

On 8th June, 1987, Respondent No.7 filed Suit No.105 of 1987 against Respondent Nos.1 to 6 and the Appellant as Defendant No.7 therein.

On 12th December, 1988, Respondent No.7 filed the inventory proceedings in which she applied for Respondent No.3 to be appointed as the Cabesa de Casal (head of family).

On 10th January, 1990, an injunction was granted by the trial court in CMA 184/1987 filed by the Appellant in its suit restraining the Respondent from selling or transferring the suit property to any person during the pendency of the suit.

An application for interim relief taken out by Respondent Nos.7 and 8 in their suit was rejected. They challenged the same in this court by filing AO No.54 of 1989. A learned single Judge disposed of the AO by an order dated 19th April, 1990. The learned Judge noted the details of the suit filed by Respondent Nos.7 and 8 and the suit filed by the Appellant. The AO was filed against the order of the trial court dismissing the application for temporary injunction. It is not necessary to refer to the various observations of the learned Judge for although they support the Appellant in respect of the amended claim in the alternative restricting their claim to specific performance to the share of Respondent Nos.1 to 6, the observations are not binding on us. Moreover, the observations were in interlocutory proceedings. The learned Judge, however, observed that the rights of the parties cannot be decided unless all the concerned parties are before the court, not only in the suit filed by Respondent Nos.7 and 8, but also in the Appellant's suit. The learned Judge directed the trial Court hearing the Appellant's suit to pass an order impleading Respondent Nos.7 and 8 as Defendants by exercise of powers under Order 1, Rule 10 of the Code of Civil Procedure. The learned Judge also ordered both the suits which were disposed of by the impugned order to be tried together; directed the trial court to give notices to all the parties concerned and to pass an order making Respondent Nos.7 and 8 as Defendants in the Appellant's suit; stated that there would be no necessity of service of summons upon them; issued directions for filing of a written statement etc and observed that the trial court should see that the scope of the dispute is narrowed down as far as possible.

On 11th September, 1990, Respondent No.3 filed a statement in the inventory proceedings contending that Respondent Nos.7 and 8 had no right in the entire estate, including the suit property as they had relinquished their rights. It may only be noted at this stage that despite the statement, no application was made by Respondent No.7 that Respondent No.3 ought not to be appointed as the Cabesa de Casal. Indeed, the dispute in this regard had already arisen even before the inventory proceeding were instituted as Respondent No.7 was aware even at that time that Respondent Nos.1 to 6 had purported to deal with the property to her prejudice.

On 18th September, 1990, the Appellant's Suit was dismissed for default.

On 29th October, 1990, the learned Judge rejected the contention of Respondent No.3 regarding the maintainability of the inventory proceedings on the ground that Respondent No.3 had not produced any document evidencing the relinquishment by Respondent Nos.7 and 8 of her right in the estate of their deceased father.

On 12th November, 1990, the Appellant filed an application for restoration of its suit. It may be only noted that on 11th June, 1991, Respondent No.3 filed a reply to this restoration application stating inter alia that the said property was allotted to Respondent No.7 by an order dated 30th January, 1991 in the inventory proceedings.

On 27th November, 1990, Respondent No.3 filed a statement in the inventory proceedings contending that the suit property ought to be reserved for the auction separately.

On 1st December, 1990, all the properties were auctioned separately. Respondent No.7 was declared to be the successful auction purchaser of the suit property, she having bid a sum of Rs.7,98,000/-.

On 25th January, 1991, Respondent Nos.1 to 6 were served with the restoration application filed by the Appellant on 12th November, 1990.

On 30th January, 1991, the inventory proceedings were finally decreed, inter alia, by ordering and decreeing that the properties described at Exhibit-15 to the proceedings were allotted to the respective heirs as shown in the Schedule to the Partition in Exhibit-21. The suit property was allotted to Respondent No.7. Despite their contention regarding Respondent No.7 having relinquished her right in the estate, there appears to have been no contest to the decree.

As stated above, on 11th June, 1991, Respondent No.3 filed a reply to the restoration application stating inter alia that the said property was allotted to Respondent No.7 by the order dated 30th January, 1991 in the inventory proceedings.

On 21st November, 1991, the Appellant's application for restoration was also dismissed for default.

On 22nd June, 1992, the Appellant filed an application for restoration of the earlier application for restoration which was taken out on 12th November, 1990.

On 12th May, 1993, the Appellant deposited the sum of Rs.17,00,000/- with the bank pursuant to the order of the Co-operative Court in proceedings filed by the bank.

On 27th October, 1993, the Appellant's second application for restoration was dismissed.

On 14th January, 1994, the Appellants appeal against the order dated 27th October, 1994 was allowed.

By an order dated 5th February, 1994, the first application for restoration which was taken out on 12th November, 1990 was allowed by the trial court. In the result, the Appellant's suit was restored to file.

In March, 1994, the Appellant filed an application for amendment of the plaint and impleading Respondent Nos.7 and 8 as Defendants as directed by the order dated 19th April, 1994, passed by this court.

On 14th November, 1995, Respondent Nos.7 and 8 entered into an agreement by which they purported to sell the entire property to Respondent No.9 for a sum of Rs.34,00,000/-. Respondent No.9 was admittedly fully aware of the suit agreement and the proceedings filed by the Appellant.

On 2nd May, 1998, the Appellant filed another application for amendment to implead Respondent No.9 and seek reliefs in respect of the agreement dated 14th November, 1995.

By orders dated 3rd September, 1998, the trial court allowed the Appellant's applications for amendment. Accordingly, Respondent Nos.7, 8 and 9 were impleaded in the Suit.

77. Mr. Zaiwala's submission that the orders passed in the inventory proceedings cannot and do not affect the Appellant's rights is well founded for more than just one reason. Firstly, admittedly, not merely Respondent Nos.1 to 6, but even Respondent Nos.7 and 8 were aware of the suit agreement, the Appellant's claim in respect thereof and the present proceedings filed by the Appellant. Despite the same, they did not implead the Respondents in the inventory proceedings. They did not even inform the Appellant about the same.

78. To this, it was contended on behalf of the Respondents that there was no question of informing the Appellant about the inventory proceedings in view of the fact that the Appellant's suit had been dismissed and the Respondents had been served with the restoration application only on 25th January, 1991.

79. This is incorrect as the Appellant's suit had been dismissed for default only on 18th September, 1990. The inventory proceedings had been filed on 12th December, 1988. Even thereafter, and till the Appellant's Suit was dismissed i.e. for almost two years, none of the Respondents had informed the Appellant about the inventory proceedings. The reason is only too obvious. It was an attempt to mislead the inventory court by suppressing the suit agreement and thereby obtaining orders behind the Appellant's back.

80. The Appellant, being a stranger to the inventory proceedings, cannot be bound by any orders passed therein. Having come to the conclusion that the Appellant has a valid, subsisting and binding agreement against Respondent Nos.1 to 6, the orders passed in the inventory proceedings cannot and do not affect the same as the Appellant was not a party thereto.

81. Mr. Zaiwala also submitted that the purported purchase by Respondent Nos.7/8 of the suit property in the inventory proceedings is not binding on the Appellant in view of section 52 of the Transfer of Property Act which embodies the principle of lis pendens. Section 52 of the Transfer of Property Act reads as under :-

"52. Transfer of property pending suit relating thereto.- During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under the decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose.

Explanation.- For the purposes of this section, the pendency of a suit or proceeding shall be deemed to commence from the date of the presentation of the plaint or the institution of the proceeding in a court of competent jurisdiction, and to continue until the suit or proceeding has been disposed of by a final decree or order and complete satisfaction or discharge of such decree or order has been obtained, or has become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force."

82. According to Mr. Zaiwala, the proceedings viz. the suit filed by the Appellant must be held to have been pending from the date it was filed viz. 11th May, 1987 and upto the date of the impugned judgment and, of course, thereafter as the Appeal is only a continuation thereof. The relevant dates, however, are 1st December, 1990, the date of the auction of the suit property in the inventory proceedings and the date of the decree in the inventory proceedings i.e. 30th January, 1991. In other words, if the Appellants suit is deemed to have been pending on the date of the auction and on the date on which the inventory proceedings were decreed, the purported purchase by Respondent No.7 of the suit property would be affected by the provisions of section 52 and/or the principles of lis pendens analogous thereto.

83. The Appellant's suit, however, was dismissed on 18th September, 1990 and was ultimately restored only on 5th February, 1994. It is during this period that the auction was held in the inventory proceedings and the inventory suit was decreed. Can it then be said that the auction is affected by lis pendens ?

I would answer the question in the Appellant's favour but not on the basis argued by Mr. Zaiwala.

84. Mr. Zaiwala relied upon a judgment of a learned single Judge of this court in the case of Krishnaji Pandharinath Vs. Anusayabai & another, AIR 1959 Bombay 475, and in particular, paragraph 4 thereof, which reads as under :-

"4. It is true that in the present case the sale effected by Sidram was after the dismissal of the suit filed by the plaintiff Anusayabai and before th suit was restored, but the alienation having been made before the final decree or order was passed and complete satisfaction or discharge of the decree was obtained, it must still be regarded as 'pendente lite'. In section 52 of the Transfer of Property Act, as it stood before it was amended by Act XX of 1929, the expression "active prosecution of any suit of proceeding" was used. That expression has now been omitted, and the Explanation makes it abundantly clear that the 'lis' continues so long as a final decree or order has not been obtained and complete satisfaction thereof has not been rendered. At page 228 in Sir Dinshaw Mulla's "Transfer of Property Act", 4th Edition, after referring to several authorities, the law is stated thus :

"Even after the dismissal of a suit a purchaser is subject to 'lis pendens' if an appeal is afterwards filed."

If after the dismissal of a suit and before an appeal is presented, the 'lis' continues so as to prevent the defendant from transferring the property to the prejudice of the plaintiff, I fail to see any reason for holding that between the date of dismissal of the suit under Order 9, Rule 2, of the Civil Procedure Code and the date of its restoration, the 'lis' does not continue."

85. I am, with respect, unable to agree with the learned Judge insofar as he holds that the doctrine of lis pendens would apply to sales after a suit is dismissed and before it is restored. The learned Judge stated that he failed to see any reason for holding that between the date of dismissal of the suit under Order 9, Rule 2 of the Code of Civil Procedure and the date of its restoration, the lis pendens did not continue. The reasons for holding to the contrary do not appear to have been before or furnished to the learned Judge. I apprehend that if this proposition is accepted, it could cause enormous difficulties and injustice to innocent third parties. Worse still, it would, as I will demonstrate, leave the title to properties uncertain in perpetuity. It would arm the unscrupulous with a weapon of oppression of a permanent and indestructible nature.

86. Firstly, it is necessary to distinguish between a dismissal of a suit on merits and the filing of an appeal therefrom, from a dismissal of a suit for default and the restoration thereof pursuant to an application for the same after the period prescribed for such an application. An appeal is a continuation of the suit. The Appellant has a statutory right of appeal if it is filed within the prescribed period. I do not wish to make any observation about cases where the appeal is filed after the period of limitation and the delay is condoned by the court. Such cases are entirely different from cases where the court has to consider the effect of lis pendens on transactions which occur between the date of the dismissal of the suit for default and the date of presentation of an application for restoration especially when made after the period prescribed for such an application. Once an application for restoration is made, different considerations would apply which I will deal with shortly. But, between the period of the dismissal of a suit and an application for restoration, the provisions of section 52 and principles analogous thereto cannot apply.

87. During this period, there is no suit at all. There is no proceeding in existence. The language of section 52 indicates that it must be during the pendency of the proceedings. That a suit is deemed to have been pending throughout upon its being restored on an application is irrelevant. That is to avoid consequences such as of limitation and court fees.

This view would affect the rights of third parties for no fault of theirs. Indeed, such a view would leave a clog on the title of the suit property permanently, forever. It is possible for a plaintiff to apply for restoration even after years. Indeed, our records are full of such cases where courts have, albeit for good reason, restored cases after many years. When then does the clog on title disappear ? Theoretically, never. This is irrespective of the merits of the suit or proceeding for once it is filed and dismissed, the title to the subject matter of the suit can never be clear, it is always under a cloud for an application for restoration can be made at any time. To expect innocent third parties to then adopt proceedings challenging orders of restoration is only to invite a multiplicity of proceedings.

88. Such a view would keep the doors to fraud open permanently by the simple expedient of a person filing a suit in respect of the Defendant's property, having the same dismissed for default and then sitting back doing nothing till the plaintiff chooses to make an application for restoration. For if it is restored even after many years, all transactions between the date of its dismissal and the date even of an application for restoration, would be affected by the doctrine of lis pendens. I am, therefore, with great respect, unable to agree with the observations of the learned Judge in Krishnaji Pandharinath's case.

89. However, in the present case, the provisions of section 52 would affect orders in the inventory proceedings, including the auction in favour of Respondent No.7 for the same took place after the Appellant's application for restoration which was filed on 12th November, 1990. The auction was held on 1st December, 1990 and the inventory proceedings were decreed on 30th January, 1991.

In Asutosh Roy Vs. Ananta Ram Bhattacharjee & ors., AIR 1919 Cal. 40, a Division Bench of the Calcutta High Court observed as under :-

"14. So far as the first contention of the appellant is concerned, we do not think that there is any substance in this. It appears that on the 23rd April, 1907 the suit was dismissed for default, neither party being present. But on the 24th April, 1907, that is to say, prior to the second sale of the 25h April, 1907 an application was put in for restoration of the suit, and on the 4th May, 1907 the suit was restored. Under these circumstances it does not seem to us that it really can be contended that there was no lis pendens at the time of the two sales in question. On the 4th March, 1907, the date of the first sale, the lis was certainly pendens and on the 25th April, 1907, although the suit was dismissed for default on the 23rd the application of the 24th April which was granted on the 14th May following would, it seems to up, have the effect of restoring the suit as from the date the application was made, that is, the 24th April. There is nothing in the first contention raised on behalf of the appellant."

I am in respectful agreement with the observation of the Division Bench of the Calcutta High Court. Once an application for restoration is on file, the proceedings must be considered to be pending. Indeed, in the application for restoration itself, interim reliefs can be made and often are granted depending on the facts of the case. In the present case, as noted above, the orders of the inventory court recognising the auction in favour of Respondent No.7 was passed while the Appellant's application for restoration of the suit was pending. The order is, therefore, clearly affected by the provisions of section 52 and/or principles analogous thereto.

90. Faced with this, it was contended on behalf of the Respondents that the provisions of section 52 do not apply as there was no agreement or sale between Respondent Nos.1 to 8 inter se. Respondent No.7 was declared by the inventory court to be the auction purchaser.

91. This submission is not well founded. Mr. Zaiwala's reliance upon two judgments of the Supreme Court are a complete answer to this submission. In Samarendra Nath Sinha Vs. Krishna Kumar Nag, 1967(2) SCR 18 in paragraph 16, it was held as under:-

"16. What then is the position of the respondent once it is held that the final decree for foreclosure was validly passed by the trial court ? Could he challenge that decree in an appeal against it in the High Court on the basis that he was entitled to redeem the said mortgage? Section 91 of the Transfer of Property Act provides that besides the mortgagor any person other than the mortgagee who has any interest in or charge upon the property mortgaged or in or upon the right to redeem the same may redeem or institute a suit for redemption of such mortgaged property. An execution purchaser therefore of the whole or part of the equity of redemption has the right to redeem the mortgaged property. Such a right is based on the principle that he steps in the shoes of his predecessor-in-title and has therefore the same rights which his predecessor-in-title had before the purchase. Under Section 59-A of the Act also all persons who derive title from the mortgagor are included in the term "mortgagor" and therefore entitled to redeem. But under Section 52 which incorporates the doctrine of lis pendens, during the pendency of a suit in which any right to an immovable property is directly and specifically in question such a property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under any decree or order which may be made therein except under the authority of the court and on such terms as it may impose. Under the Explanation to that section the pendency of such a suit commences from the date of its institution and continues until it is disposed of by a final decree or order and complete satisfaction or discharge of such a decree or order has been obtained. The purchaser pendente lite under this doctrine is bound by the result of the litigation on the principle that since the result must bind the party to it so must it bind the person deriving his right, title and interest from or through him. This principle is well illustrated in Radhamadhub Holdar Vs. Monohar, 15 IA 97 where the facts were almost similar to those in the instant case. It is true that Section 52 strictly speaking does not apply to involuntary alienations such as court sales but it is well-established that the principle of lis pendens applies to such alienations. (See Nilkant Vs. Suresh Chandra, 12 IA 171 and Motilal Vs. Karrabuldin, 24 IA 170). It follows that the respondent having purchased from the said Hazra while the appeal by the said Hazra against the said preliminary decree was pending in the High Court, the doctrine of lis pendens must apply to his purchase and as aforesaid he was bound by the result of that suit. In the view we have taken that the final foreclosure decree was competently passed by the trial court, his right to equity of redemption was extinguished by that decree and he had therefore no longer any right to redeem the said mortgage. His appeal against the said final decree was mis-conceived and the High Court was in error in allowing it and in passing the said order of remand directing the trial court to reopen the question of redemption and to allow the respondent to participate in proceedings to amend the said preliminary decree."

In Kedar Nath Lal Vs. Ganesh Ram, (1969)2 SCC 787, in paragraph 17 it was held as under:-

"17. Lastly it was contended that the sale was by Court auction and the doctrine of lis pendens would not apply to such a sale. This point was considered in Samarendra Nath Sinha Vs. Krishna Kumar Nag, 1967(2) SCR 18 by one of us (Shelat J.) and it was observed as follows :

"... The purchaser pendente lite under this doctrine is bound by the result of the litigation on the principle that since the result must bind the party to it so must it bind the person deriving his right, title and interest from or through him. This principle is well illustrated in Radhamadhub Holdar Vs. Monohar, 15 IA 97, where the facts were almost similar to those in the instant case. It is true that Section 52 strictly speaking does not apply to involuntary alienations such as court sales but it is well-established that the principle of lis pendens applies to such alienations. (See Nilkant Vs. Suresh Chandra, 12 IA 171 and Motilal Vs. Karrab-ul-Din, 24 IA 170)."

This ground also has no validity."

92. Mr. Zaiwala then submitted that the inventory proceedings were a fraud upon the Appellant. He submitted that the entire proceedings before the inventory court in respect of the suit property were only with a view to defeat the suit agreement. In support of his contention he relied upon several facts, including the fact that Respondent No.7 applied for Respondent No.3 to be appointed as the Cabesa de Casal; the fact that no serious attempt was made by the Respondent Nos.1 to 6 to oppose the maintainability of the inventory proceedings on the ground that Respondent No.7 had relinquished her right, title and interest in the estate, apart from merely stating the same; the fact that even after Respondent No.3 made such a statement, Respondent No.7 did not withdraw the application for his being appointed as the Cabesa de Casal and that there was no challenge by Respondent Nos.1 to 6 to the decree passed by the inventory court.

93. It is difficult to reject these submissions. The manner in which the proceedings were conducted support the submission. Added to this is the fact that none of the Respondents entered into the witness box. This justifies an adverse inference against them that had they examined themselves, the Appellant would have established its submissions. As held earlier, the failure to inform the Appellant about the proceeding was with a view to suppressing from the inventory court the fact regarding the Appellants claim and these proceedings. I will deal in greater detail with this aspect while considering Issue No.2.

94. Mr. Zaiwala then submitted that the orders, including the final decree of the inventory court regarding the purchase of the suit property by Respondent No.7 in the auction not having been registered, the same can have no effect on the suit property. He submitted that the purported purchase of the suit property by Respondent No.7 in the auction held in the inventory court required registration under section 17 of the Registration Act, 1908.

95. There is no dispute that a sale deed in respect of the suit property would normally require registration. The question is whether the orders passed by the inventory court require registration even assuming that they create a right, title or interest to or in the suit property. In support of his contention, Mr. Zaiwala relied upon a judgment of a Division Bench of this court in Fernando Colaco Vs. State of Goa, (1991)2 Goa Law Times 11. Mr. Zaiwala relied upon the following observations of the Division Bench :-

"19. We have already mentioned that when any property is not susceptible to partition for whatever reasons and the same is taken in auction as whole, there is no division by metes and bounds and the persons who are not successful at the auction held in effect relinquished their rights and at the same time transfer their rights in favour of the successful bidder. This will amount to transfer for consideration which they receive by way of owelty paid by the successful bidder. Needless to say therefore, that it will be a conveyance within the meaning of Article 23 of Schedule IA of the same Act and stamp duty is leviable at the rate of 6% in terms of that Article. In our view there is no scope for saying that there is merely a transformation as contended by Dr. Colaco. Inasmuch as the property is not partitioned by metes and bounds, it is not possible to hold that there is no conveyance or exchange or transfer of interest based on antecedent title.

..................

21. The argument of Dr. Colaco therefore that when 6% stamp duty is charged on owelty and the final judgment as instrument of partition is required to be charged at 1% and therefore attracts double duty, cannot be accepted. The stamp duty chargeable on owelty is on a consideration which is required to be paid when the highest bidder takes the property in court auction. The final judgment which amounts to an instrument of partition is chargeable under Article 45 of the Schedule because that document is required to be registered. Secondly the stages at which two types of duties are paid are also different and thirdly it is not a case of an instrument coming within two or more descriptions."

96. In the last, but one sentence in paragraph 21, it is observed that the final judgment is required to be registered. It was submitted on behalf of the Respondents that the question as to whether such a judgment requires registration never arose before the Division Bench and the observation must, therefore, be considered to be only orbiter dicta and, therefore, not binding on this court.

(A) It is true that the Division Bench framed three questions for decision none of which pertains to registration. The three questions are :-

"(1) at what stage the Court should insist, if at all, for making the parties pay stamp duty at the rate of 6% on owelty money;

(2) whether under the Stamp Act the parties are required to pay duty at the rate of 6% on owelty amount; and

(3) whether the final order is an instrument or partition and therefore should bear stamp in terms of Article 45 of Schedule IA of the Stamp Act, 1899."

While dealing with these questions, the Division Bench considered the provisions of the Indian Stamp Act which were brought into force in the territory of Goa with effect from 1st April, 1964. The Division Bench analyzed the nature of the inventory proceedings. In paragraph 14, the Division Bench rejected the submission that when a successful bidder takes the property in a court auction, there is no transfer/conveyance whatsoever in favour of that auction purchaser and all that happens is only a transformation and that such transformation cannot be taxed. The Division Bench considered the nature of an order passed in inventory proceedings and held the same to fall within Article 23(b) of the Indian Stamp Act and, therefore, liable for stamp duty. The Division Bench held that in the case of an auction purchase, there is no partition of the property as such. The question of registration was neither raised nor decided. The observation was thus merely casual.

(B) Mr. Usgaonkar, submitted that even assuming that the question was decided, the judgment is per incuriam as it did not take into consideration the provisions of section 17(2)(iv) of the Registration Act which reads as under :-

"17. Documents of which registration is compulsory.- (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act XVI of 1864, or the Indian Registration Act, 1866 (20 of 1866), or the Indian Registration Act, 1871 (8 of 1871), or the Indian Registration Act, 1877 (3 of 1877), or this Act came or comes into force, namely

(a) instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and up-wards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit, or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and up-wards, to or in immovable property:

Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.

(2) Nothing in clauses (b) and (c) of sub-section (1) applies to

(vi) any decree or order of a Court [except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject-matter of the suit or proceeding];"

Section 17(2)(iv) has not been referred to anywhere in the judgment. This is for the obvious reason that the question of registration was not raised before the Division Bench. If indeed the judgment is considered to have dealt with the question of registration, it would for this reason be per incuriam. Mr. Usgaonkar's reliance upon the judgment of a Division Bench of the Patna High Court in the case of Karu Mian Vs. Tejo Mian & ors., AIR 1918 Patna 139 is well founded. The Division Bench observed at page 141 as follows :

"The object of the Registration Act requiring that a document should be registered is merely for the purpose of ensuring publicity of record in order to facilitate proof of execution and to prevent fraud. These objects are certainly secured where a proceeding between the parties is one that takes place in the publicity of a Judicial Court and given effect to by a decree which it would be impracticable to force or fabricate. It is, I understand, on this principle and no other that a decree which is an order of the Court has been exempted from registration. The question of Court-fee or Stamp does not appear to me to be relevant in the case. If the document requires a stamp, the omission to stamp it does not necessarily defeat the suit. The stamp can be recovered in the course of litigation. No question of Court-fees arises in the present case and this is an indication that the considerations of Court-fees are quite irrelevant in the present connection. The amount of Court-fee payable would not have been greater if the suit had been one for partition."

I am in respectful agreement with these observations.

(C) A learned single Judge of this court in Shri. Victor de Graca Pinto Vs. Smt. Lourdes de Graca Pinto @ Nazareth & anr., (1999)1 Goa Law Times 167 observed in paragraph 8 that the Division Bench in Fernando George Colaco Vs. State of Goa had held that a final order in inventory amounts to an instrument of partition which is chargeable under Article 45 of the Stamp Act because that document is to be registered. Here again, the question of registration did not arise and was neither raised nor considered.

97. The decree of the inventory court, therefore, did not require registration.

RE : THE IMPUGNED JUDGMENT :

98. Dealing with Issue No.1, the learned Judge appears to have refused specific performance essentially on the ground that there was a delay on the part of the Appellant in impleading Respondent Nos.7, 8 and 9. The reasoning starts in paragraph 26 of the judgment. It is observed that the Appellant deliberately did not make Respondent Nos.7 and 8 parties to the suit although it was aware that the sister had raised a dispute regarding her right in the suit property with her brothers Respondent Nos.1, 3 and 5. The same was communicated to the Appellant by a letter dated 5th March, 1987, addressed by Respondent No.1. The learned Judge is right to the extent that the Appellant did not, in the first instance, implead Respondent Nos.7 and 8. They, however, did so on the basis that Respondent Nos.7 and 8 had relinquished their rights in the estate. They relied upon the deed of declaration and the search report.

99. This, however, does not affect the suit in any manner, especially in view of the fact that ultimately Respondent Nos.7 and 8 as well as Respondent No.9 were impleaded. Their rights have not been jeopardized in any manner whatsoever as a result of their not having not been impleaded initially. Indeed, they defended the suit successful. They also defended this Appeal successfully in respect of their original right in the suit property.

100. I am also unable to accept the subsequent observations and findings of the learned Judge regarding Respondent Nos.7 and 8 having been impleaded belatedly thereafter. The learned Judge himself noted the fact that the suit had been dismissed. It is true that the learned single Judge of this court by the said order and judgment dated 19th January, 1990 directed that Respondent Nos.7 and 8 be impleaded in the suit. There was no delay on the Appellant's part in doing so thereafter. It must be recalled that by virtue of the order of this court dated 19th January, 1990, the suit was not restored. The suit was restored only by virtue of the order dated 5th February, 1994. On 4th March, 1994, the Appellant filed an application to implead Respondent Nos.7 and 8. This application was allowed on 31st September, 1998. The Appellant, therefore, was not guilty of any delay in impleading Respondent Nos.7 and 8 after the order dated 19th April, 1994.

101. The learned Judge observed : "This explanation given by P.W.1 that delay caused in adding the Defendant Nos.7 and 8 as parties to the suit, due to the dismissal of the suit and pending of restoration application is not justified and proper". I am, with respect, unable to endorse this view. There was no delay in impleading Respondent Nos.7 and 8 after the order passed by the learned single Judge of this court for, as noted earlier, they could not have been pleaded till the suit was restored. In any event, assuming that there was any delay even at this juncture, it would not justify the dismissal of a suit for specific performance or even a refusal of the relief of specific performance.

102. The finding that Respondent Nos.1, 3 and 5 having executed the suit agreement cannot affect the right of the Respondent No.7 are in order, and we endorse the same. The learned Judge has also rightly held that it was not necessary for Respondent No.7 or 8 to challenge the deed of declaration. They were entitled to raise the contention in this suit that they were not bound by the same.

103. I also agree with the learned Judge that the Appellant cannot establish its claim to specific performance merely by virtue of having deposited the amount of Rs.17,00,000/- with the bank and having obtained a discharge of the mortgage. However, this conduct certainly establishes the readiness and willingness of the Appellant to perform its part of the agreement. Indeed, nothing remained to be done by the Appellant thereafter for it had paid far more than it was liable to. If, however, the Appellant had no right under the suit agreement, the mere payment of the said amount would not confer upon it a contractual right.

104. In the circumstances, the learned Judge appears to have decided Issue No.1 against the Appellant only on the ground of the Appellant having impleaded Respondent Nos.7 and 8 in the suit, belatedly. The finding is set aside.

105. As held by the learned Judge, the payment of Rs.17,00,000/- by the Appellant to the bank to release the mortgage does not reflect upon the validity of the suit agreement or the right of pre-emption that Respondent No.7 once had. Nor is it relevant on the question whether Respondent Nos.7 and 8 are bound by the suit agreement. It is, however, relevant and of considerable importance while considering the exercise of discretion by the court on the question of whether specific performance ought to be granted or not.

106. As noted by the learned Judge himself, none of the Respondents had offered to pay the amount of Rs.17,00,000/- to save the property from being auctioned by the bank. The Appellant did so. It was, in fact, entitled to do so to protect its rights in respect of the suit agreement. Had it not paid the said amount, the property would have been auctioned and thereby would have been lost nor merely to Respondent Nos.1 to 8, but to the Appellant as well. There is no doubt that the Appellant was always ready and willing to perform its obligations under the contract. In fact, with the payment of the said amount of Rs.17,00,000/-, there remained really nothing for the Appellant to be done till Respondent Nos.1 to 6 performed their part of the agreement. The Appellant had paid far more than it was bound to under the suit agreement. The Appellant has, therefore, at all times been actively pursuing its rights under the agreement. The Appellant really could have done no more than to establish its readiness and willingness to perform the suit agreement. I consider this to be an aspect of vital importance while considering the exercise of discretion whether to grant specific performance or not.

107. Added to this are several other factors which strengthens the argument on behalf of the Appellant that specific performance ought to be granted and that the Appellant ought not to be relegated to a claim in damages.

Firstly, Respondent Nos.1 to 6 never objected per se to perform the agreement. They, to put it mildly, expressed their inability to perform even their part of the agreement on the ground that Respondent No.7 had raised a claim as regards her one-fourth share in the property. Their bona fides are, therefore, put to the test when the Appellant submitted that it was willing to accept at least or even the share of the Respondent Nos.1 to 6 in the suit property without claiming any reduction in the price. Surely, Respondent Nos.1 to 6 then cannot have any objection whatsoever to a decree to the extent of their share in the suit property.

108. Secondly, Respondent Nos.7 and 8 themselves never intended keeping or enjoying the property. They did not use or enjoy the property from the date of the purported auction in the inventory proceedings to the date on which they purportedly sold the property to Respondent No.9. The fact that they sold the property establishes that they had no interest in the property.

109. Thirdly, this is a property which by its very nature warrants a decree for specific performance of the suit. It is a small island close to the main land bounded on all sides by the Arabian sea. Understandably, the Respondents did not even contend that a similar property would easily be available.

110. Lastly, Respondent No.9 bought the property with full knowledge of the Appellant's rights. This is admitted. There are, therefore, no equities in favour of Respondent No.9.

111. Issue No.1 is, therefore, answered in the affirmative, in favour of the Appellant to the extent of the share of Respondent Nos.1 to 6.

RE : ISSUE NO.2 :-

(2) Whether the plaintiff proves that order in Inventory Proceeding No.55/90/A is liable to be vitiated as obtained by fraud and also illegal to the extent of allotment of the suit property to the defendant No.7 ?

112. The learned Judge answered Issue No.2 in the negative.

The manner in which the inventory proceedings were conducted establishes an attempt on the part of Respondent Nos.1 to 8 to defeat the Appellant's rights. The only purported attempt at opposing the claim of Respondent No.7 was a statement that she had relinquished her rights in the estate. Respondent No.3 sought and was granted ten days to produce a list of documents to establish that Respondent Nos.7 and 8 had relinquished their rights in the estate. Respondent No.3 did not produce the same. The objection was, therefore, rejected by the inventory court on this ground. After the same was rejected for want of any documents, no attempt was made to challenge the finding. No attempt was made to establish the same by oral evidence. The inventory court was not informed about the deed of declaration or about the suit agreement. The inventory court was not informed about the mortgage.

113. It is reasonable to presume that had the learned Judge been informed about Appellant's claim and the mortgage in the inventory proceedings he may well have passed suitable orders to protect the Appellant's rights in the suit property. Further, in that event, the Appellant may also have had an opportunity of bidding on behalf of the Respondent Nos.1 to 6 against Respondent Nos.7 and 8, paying the amount and claiming the same from Respondent Nos.1 to 6. By having suppressed these facts, the Appellant was deprived of such opportunities.

114. None of the parties to the inventory proceedings informed the Appellant about the same. None of the Respondents examined themselves. This justifies an adverse inference against them on various aspects.

Firstly, it is reasonable to infer that they did not examine themselves for had they done so, it would have been established that they deliberately kept the Appellant in the dark about the inventory proceedings with a view to defeating the Appellant's rights in the suit property. They could have been cross-examined on a variety of issues.

115. It is reasonable to infer that the Respondents did not examine themselves for had they done so, it would have been established that the property would have fetched a far higher price than Rs.7,80,000/- bid by the Respondent No.7. It is reasonable to infer that the Respondents did not examine themselves for fear that it may have been established in cross-examination that they deliberately did not give notice of the inventory proceedings to the Appellant for apart from everything else, the Appellant could have made an application for protecting its rights in respect of the suit property. Respondent No.7 had only a one-fourth interest in the suit property which could easily have been secured by the Appellant. It was to avoid the same that they were not given notice of the inventory proceedings. Even assuming that the Appellant could not have participated in the auction, they could have acquired-purchased the rights of Respondent No.7 on behalf of the Respondent Nos.1 to 6.

116. It is significant to note that in the inventory proceedings, Respondent No.3 in his examination-in-chief stated that Respondent Nos.7 and 8 had relinquished their rights in the ancestral properties by conduct and that, therefore, they had no locus standi to file the inventory proceedings. What is important is that he also requested the court to grant him ten days' time to produce the list of assets and documents, if any, to prove that Respondent Nos.7 and 8 had relinquished their rights to the ancestral properties by conduct. The court, accordingly, granted him ten days time to produce the list of assets.

From the record before us no further documents appear to have been produced by Respondent No.3. The Respondents not having examined themselves could not be asked about the list of assets and documents that Respondent No.3 intended producing in the inventory proceedings. It was stated on their behalf that there were no other documents. As they chose not to examine themselves, it is not possible to accept that statement across the bar. That statement ought to have been made in their deposition before the trial court. They did not subject themselves to cross-examination. I see no reason to presume in their favour that there were no other documents. For this reason, an adverse inference at least against Respondent Nos.1 to 6 to the effect that had they examined themselves, the Appellant would have been able to establish that there were documents to prove that Respondent Nos.7 and 8 had relinquished their right to their ancestral properties by conduct would be justified.

117. The finding of the learned Judge, therefore, that there was no need to inform the court in the inventory proceedings about the bank's claim is not warranted and is set aside. It is indeed true that the Appellant deposited the said amount of its own volition. I fail to see how that can be a ground for holding that it was not necessary for the Respondents to inform the inventory court of this very important and crucial fact. I am unable to appreciate the finding that the Appellant took a risk by depositing Rs.17,00,000/-. They may well have done so to the extent of the share of Respondent Nos.7 and 8, but not otherwise.

118. In any event, even assuming that the inventory proceedings were not conducted fraudulently, the orders passed therein cannot affect or bind the Appellant as it was not a party thereto.

119. In the circumstances, the finding of the learned Judge is set aside. Issue No.2 is answered in the affirmative, in favour of the Appellant.

RE : ISSUE NOS.3 AND 6 :-

(3) Whether the plaintiff proves that the defendants No.7 and 8 lost right of pre-emption, even if they had the said right under law ?

(6) Whether the defendants No.7 and 8 prove that they have right of pre-emption in respect of the suit property and that the agreement dated 4.9.85 entered between the plaintiff and the defendant nos.1 to 6 is null and void ?

120. The finding of the learned Judge in respect of Issue Nos.3 and 6 are upheld only to the extent that Respondent No.7 had a right in the estate. This right could not be defeated by the suit agreement. I have while dealing with Issue No.1 dealt with the right of Respondent No.7 of pre-emption. Upon succeeding to the property, she had the right of pre-emption. Respondent No.7, however, never exercised that right. It was conceded by the Respondents that the purchase in the auction was not in exercise of the right of pre-emption. I have also held that the purchase in the auction was not an exercise of the right of pre-emption. Respondent No.7 purportedly acquired the property as the highest bidder in the auction which had nothing to do with the exercise of a right of pre-emption.

121. The reference to the judgment of the Hon'ble Gujarat High Court in Ashwini Kumar Manilal Shah & ors. Vs. Chhotabhai Jethabhai Patel & ors., AIR 2001 Guj. 90 is not relevant. In the present case, there is no question of the court declining to exercise its discretion in favour of the grant of specific performance on the ground of a co-owner having a share in the property for the obvious reason that Respondent Nos.7 and 8 have now admittedly parted with even their rights in the suit property. I hasten to add that even if they had not, the Appellant would have been entitled to specific performance to the extent of the rights of Respondent Nos.1 to 6.

122. The findings of the learned Judge, except to the limited extent stated above, are set aside.

123. Issue Nos.3 is answered in the affirmative. Issue No.6 is answered in the negative.

RE : ISSUE NO.4 :-

(4) Whether the plaintiff proves that the defendants No.1 to 6 are liable to pay to the plaintiff a sum of Rs.12,29,030.80 as compensation for breach of contract in addition to the specific performance ?

124. The Appellant would, undoubtedly, be entitled to a decree in the sum of Rs.12,00,000/- at least as compensation for breach of contract in addition to specific performance. In fact, the learned Judge has also granted the same, but in a slightly different manner. The learned Judge answered Issue No.4 in the negative probably because of the wording of the issue and his having come to the conclusion that the Appellant was not entitled to specific performance. He, therefore, granted a decree in the sum of Rs.17,00,000/- and Rs.50,000/- in the ultimate analysis. As noted earlier, the Appellant understandably and justifiably paid the sum of Rs.17,00,000/- to the said bank to protect the property from being auctioned. Under the agreement, the Appellant was liable to pay only a sum of Rs.6,50,000/-. The Appellant had already paid a sum of Rs.50,000/- on the execution of the suit agreement. Thus, the Appellant was entitled to recover the sum of Rs.17,00,000/- less the balance consideration of Rs.6,00,000/-. In the result, the Appellant would have been entitled to a decree in the sum of Rs.12,00,000/- in addition to specific performance.

125. Mr. Zaiwala, however, made a statement that in the event of the court granting a decree for specific performance, the Appellant would not insist on a decree for Rs.12,00,000/-. It is only in view of that statement that we refrain from granting a decree in the sum of Rs.12,00,000/-.

126. Issue No.4 is, therefore, answered in the affirmative to the extent of Rs.12,00,000/-. However, in view of Mr. Zaiwala's statement, there shall be no decree for this amount.

RE : ISSUE NO.5 :

(5) Whether the plaintiff proves that the defendants No.1 to 6 are also liable to pay to the plaintiff compensation of Rs.2,68,29,038.80 in lieu of such specific performance ?

127. It is not necessary to consider this issue in view of the conclusion that the Appellant is entitled to specific performance as against Respondent Nos.1 to 6.

128. However, I would, in any event, answer the Issue in the negative for I find that the claim for damages has not been substantiated by the Appellant's witnesses.

129. Further even assuming that the Appellant had adduced proof of the alleged damages, it would not have been entitled to the same. Firstly, I have held that only Respondent Nos.1 to 6 are bound by the suit agreement. I have held that Respondent Nos.7 and 8 are not bound by the suit agreement. Thus, the hotel project could never have been implemented without the consent of Respondent Nos.7 and 8 as Respondent Nos.7 and 8 had an undivided share in respect of the suit property. Indeed, without a decree for partition, the Appellants would not have been entitled to utilize the property to the exclusion or without the consent of Respondent Nos.7 and 8. In the circumstances, there can be no question of granting damages on account of loss of profit from the proposed hotel venture.

130. The witness admitted that he was not aware whether the Appellant had obtained permission from the authorities for setting up a project on the suit property. He was unable to say on what basis the amounts were mentioned as regards the hotel project referred to in the plaint. He stated that he was unaware whether the property comes under the CRZ. He did not know the life of the project intended to be set up by the Appellant. Nor was he aware of the details thereof, including the extent of construction, the number of rooms, the mode of finance, source of finance, the expected losses in the first year and the profits which would accrue after the first ten years from the date of commencement of construction. He only had a vague idea about the proposed construction such as a swimming pool, a bridge connecting the said property to the main land and other recreational amenities. However, it is difficult to appreciate the basis on which the witness stated the same especially in view of the fact that he was unaware of the various aspects we have referred to. He was unaware of the names of the parties from whom the Appellant intended purchasing property on the main land for the purpose of constructing the bridge.

131. In view of the above circumstances and in view of our having granted specific performance of the agreement, albeit to the extent only of the share of Respondent Nos.1 to 6, it is not necessary to decide the question of damages on the basis of the difference between the contract price and the market price, either on the date of the breach or on the date of the decree.

132. I find it difficult even to speculate in this regard for I must deal with only a three quarter undivided right in a rather unique property.

133. Issue No.5 is, therefore, answered accordingly as regards the claim for damages of Rs.50,00,000/- on the basis of difference in the market price upon breach. As regards the rest of the claim for damages, Issue No.5 is answered in the negative.

RE : ISSUE NO.7 :

(7) Whether the defendants No.7 and 8 are justified in selling the suit property to the defendant No.9 within their own rights ?

134. In view of what I have held above, it follows that Respondent Nos.7 and 8 were entitled to sell only their one quarter interest in the suit property and not the three quarter interest of Respondent Nos.1 to 6 therein.

135. Issue No.7 is, accordingly, answered in the affirmative only to the extent of the one quarter right of Respondent Nos.7 and 8 in the suit property and in the negative as regards the remaining portion thereof.

RE : ISSUE NO.8 :

(8) What relief ? What order ?

135. In the circumstances, the Appeal is disposed off as follows :-

(i) The suit is decreed in terms of prayers (a), (aa), (c) and (d) to the extent of the share of Appellant Nos.1 to 6 in the suit property.

(ii) A decree in terms of prayer (b) in the sum of Rs.12,00,00/- is not granted only in view of Mr. Zaiwala's statement.

(iii) Respondent Nos.1 to 6 shall pay the costs of the Appellant throughout as per Rules.

(iv) Special Civil Suit No.105/87/A is disposed off in the above terms,but with no order as to costs.

(v) Respondent Nos.1 to 6 shall be entitled to withdraw the amount deposited in court upon the above decree being fully satisfied. Till then, the office is directed to invest the amounts in fixed deposits of a Nationalized bank, initially for a period of one year and thereafter for like periods of one year each.

U. D. SALVI, J.:- 136. I agree with the conclusion arrived at by my brother S. J. Vazifdar, J. and would dispose off the Appeal in the same terms he has. I also agree with the entire judgment except his view concerning the applicability of the doctrine of lis pendens as expressed in the judgment delivered by the learned Single Judge of this court in the case of Krishnaji Pandharinath Vs. Anusayabai and another, AIR 1959 Bombay 475. Material exposition of law in the case of Krishnaji Pandharinath has been reproduced in paragraph 84 of this judgment and therefore need not be reiterated.

137. Respectfully, I may state that what weighed in the mind of Mr. Justice Vazifdar more is the effect of 'lis pendens' on the transaction which occurs between the date of dismissal of the suit for default and the date of presentation of an application for restoration than the legal mechanism for restoration of the suit provided under Order 9, Rule 4 of the Code of Civil Procedure, 1908. The Code of Civil Procedure, 1908, has provided corrective mechanism under Order 9, Rule 4 for restoration of the suit dismissed for default and for that purpose has envisaged full-fledged judicial enquiry to understand the circumstances in which the suit was dismissed for default and then to come to a conclusion regarding the material question as to whether such circumstances warranted the dismissal of the suit or not. In short, the judicial enquiry envisaged under the said provision is for examination of the legitimacy of the dismissal of the suit for the alleged default. Once the court comes to a conclusion either way the question of legitimacy of 'dismissal of the suit for default' is clearly answered. If it is found that the circumstances did not warrant the dismissal of the suit for default, such dismissal is no longer legitimate and has no existence in law. It is only in such circumstances, the suit stands restored.

138. Restoration of the suit, therefore, brings about restoration of status-quo ante which existed on the date of the dismissal of the suit for default. In my considered opinion, the 'lis' therefore, continues between the period of dismissal of a suit and its restoration upon an application made under Order 9, Rule 4 of the Code of Civil Procedure, 1908.

139. This difference in view in fact provides further reason to concur with the aforesaid judgment, which hereby I do.

140. I would, however, dispose off the Appeal and the Civil Application in the Appeal in the same terms as S. J. Vazifdar, J.

: O R D E R :

141. The Appeal and the Miscellaneous Civil Application are disposed off as per the judgment of S. J. Vazifdar, J..

142. The decree shall not be executed upto and including 31st October, 2010, to enable the Respondents to challenge this judgment. However, pending the execution of the decree, the Respondents are restrained from dealing with, disposing of, encumbering, alienating, parting with possession of or creating any third party right, title and/or interest in, to, upon or in respect of the suit property.

Ordered accordingly.