Second Appeal No.218 of 2000

10th September, 2015.

Petitioner Counsel: Shri AMOL MARDIKAR
Respondent Counsel: Shri A.V. BHIDE

Cases Cited:
J.P. Builders & Anr. Vs. A. Ramdas Rao & Anr., 2011(5) ALL MR 899 (S.C.)=(2010)1 SCC 429 [Para 15]
R.C. Chandiok & Anr. Vs. Chuni Lal Sabharwal & Ors., 1970(3) SCC 140 [Para 20]
P.D’souza Vs. Shondrilo Naidu, 2005(5) ALL MR 15 (S.C.)=(2004)6 SCC 649 [Para 20]

JUDGMENT

JUDGMENT :- Heard learned counsel for the rival parties.

2. By this second appeal, the appellant-plaintiff has sought to challenge Judgment and Order dt.4.9.1999 passed by learned District Judge, Yavatmal in Regular Civil Appeal No.112 of 1995 whereby the decree for specific performance of the suit agreement passed in favour of the appellant-plaintiff by Judgment and Order dt.30.6.1995 by learned Civil Judge (Sr.Dn.), Ner, District Yavatmal in Regular Civil Suit No.57 of 1993 was modified by refusing specific performance of the agreement to sell and granting merely refund of the earnest money with interest.

3. The facts of the case stated, are thus :

On 23.2.2004, this Second Appeal was admitted on the following substantial question of law :

Whether the First Appellate Court is wrong in setting aside the findings of the trial Court on the readiness and willingness when the appellant-plaintiff was ready and willing to perform his part of the contract and there was specific pleading in the plaint?

The substantial question of law as stated above must be answered in the affirmative for the following reasons :

4. The dispute between the parties relates to agricultural land bearing Survey No.33, total admeasuring 3H 23 R, situated at village Udapur, Taluka Ner, District Yavatmal. It is the case of the appellant-plaintiff that respondent No.1-defendant and her deceased husband had agreed to sell southern portion of the said land admeasuring 1H 21R to the appellant/plaintiff by an agreement to sell dt.7.4.1991 for valuable consideration of Rs.15,000/-. The appellant-plaintiff had paid substantive part of consideration in the form of earnest money in the sum of Rs.9,000/- to respondents-defendants and balance amount of consideration in the sum of Rs.6,000/- was payable on 18.1.1992 when the parties had agreed to execute the registered sale deed. Thus, agreement to sell was entered into (Exh.45). It is the case of the appellant/plaintiff that he had gone to the Office of the Sub Registrar, Ner, District Yavatmal on 19.1.1992. The appellant-plaintiff had purchased the Stamp Paper (Exh.46) to show his presence in the Office of Sub Registrar, Ner to execute the registered sale deed as agreed between the parties, but the respondents-defendants did not turn up in the Office of Sub Registrar to execute the registered sale deed as agreed.

5. On the next day, the appellant-plaintiff went to the house of respondents-defendants to question them about their absence for execution of the registered sale deed as agreed. At that time, the respondents-defendants assured that they would execute the registered sale deed within 8 to 12 days. The appellant-plaintiff waited and since there was no response from the respondents-defendants, the appellant-plaintiff served notice dt.21.4.1993 (Exh.47) calling upon the respondents-defendants to appear in the Office of the Sub Registrar on 30.4.1993 and to execute the registered sale deed as agreed between the parties.

6. Accordingly, on the date appointed, the appellant-plaintiff though attended the Office of the Sub-Registrar again on 30.4.1993 and also purchased Stamp Paper to show his presence in the Office of the Sub Registrar to get the registered sale deed executed as agreed between the parties, but the respondents-defendants did not turn up even on that extended date. Thus, ultimately, with no other alternative left for the appellant-plaintiff, he was constrained to file the suit for specific performance of contract to insist upon execution of the registered sale deed as agreed or in the alternative, refund of the earnest money along with interest accrued thereupon.

7. Regular Civil Suit No.57 of 1993 was instituted on 1.10.1993 after the respondents-defendants by their reply (Exh.57) dt.31.5.1993, acknowledged on 3.6.1993 by the appellant-plaintiff, refused to execute the registered sale deed as agreed between the parties. Regular Civil Suit No.57 of 1993 instituted in the Court of learned Civil Judge (Jr.Dn.), Ner, District Yavatmal was decided by Judgment and Order, dt.30.6.1995. Learned Judge of the trial Court found that the respondents-defendants had entered into the agreement to sell dt.7.4.1991 in respect of the aforesaid agricultural land admeasuring 1H, 21R out of agricultural land bearing Survey No.33, total admeasuring 3H, 23 R, situated at village Udapur, Taluka Ner, District Yavatmal. Learned Judge of the trial Court further found that the appellant-plaintiff had proved payment of earnest money in the sum of Rs.9,000/- pursuant to the agreement to sell dt.7.4.1991 and that the appellant-plaintiff was ready and willing to perform his part of the contract in the said agreement to execute the registered sale deed.

8. The defence put up by the respondents-defendants was that the suit transaction is in the nature of security for loan and that the appellant-plaintiff does a money lending business and furthermore that the respondents-defendants have the only source of income from the agricultural land. After recording the evidence led by the parties and hearing the parties, findings in favour of the appellant-plaintiff were recorded and the suit was decreed with costs. In the result, the respondents-defendants were directed to execute the registered sale deed of the suit property admeasuring 1H, 21R in favour of the appellant-plaintiff within three months from the date of the decree at the costs of the appellant-plaintiff. The appellant-plaintiff was directed to deposit remaining amount of Rs.6,000/- of consideration agreed within three months from the date of order in the Court and the amount was directed to paid to the respondents-defendants upon execution of the registered sale deed. The trial Court also directed that if the respondents-defendants fail to execute the registered sale deed, the appellant-plaintiff is entitled to get it executed through the Court.

9. Shri Amol Mardikar, learned counsel for the appellant-plaintiff, submits that the unsuccessful respondents-defendants preferred First Appeal before the learned District Judge, Yavatmal being Regular Civil Appeal No.112 of 1995. Learned Appellate Judge too found that the respondents-defendants had agreed to sell the suit property and that the appellant-plaintiff had paid earnest money in the sum of Rs.9,000/- to the respondents-defendants pursuant to agreement to sale dt.7.4.1991. Learned Appellate Judge, however, held that the appellant-plaintiff was not always ready and willing to perform his part of the contract. In the result, therefore, the decree for specific performance of contract granted by the trial Court was set aside and instead, order was made merely for the refund of the earnest money with interest at the rate of 15% per annum by way of damages to the appellant-plaintiff since 7.4.1991 till realization of the entire amount.

10. Learned Counsel for the appellant-plaintiff vehemently submits that learned Appellate Judge failed to exercise judicial discretion in favour of the appellant-plaintiff, though, according to him, the agreement to sell was proved and established by the appellant-plaintiff and also he was and is always ready and willing to perform his part of the contract.

11. Shri Amol Mardikar, learned Counsel for appellant-plaintiff, took me through the evidence led before the trial Court and submits that the appellant-plaintiff in his deposition (Exh.44) deposed about the suit transaction of agreement to sell duly executed by the respondents-defendants. The appellant-plaintiff, pursuant to the agreement to sell had attended the Office of the Sub-Registrar and also purchased Stamp Paper on two occasions as deposed, but despite agreement to sell, the respondents-defendants avoided to execute the registered sale deed in favour of the appellant-plaintiff. The respondents-defendants were called upon by notice dt.21.4.1993 (Exh.47) to execute the registered sale deed in favour of the appellant-plaintiff, but despite their all earlier assurances to execute the registered sale deed in favour of the appellant-plaintiff, they continued to avoid their liability to perform their part of the contract to execute the registered sale deed in favour of the appellant-plaintiff.

12. Shri Amol Mardikar, learned Counsel for the appellant-plaintiff, submits that there was no challenge by the respondents-defendants to the evidence of continuous readiness and willingness to perform his part of the contract by the plaintiff in order to get the registered sale deed executed in respect of the suit property. It is, therefore, submitted that the appellant-plaintiff was entitled to insist upon specific performance of the contract with the respondents-defendants pursuant to which substantial part of consideration as agreed in the sum of Rs.9,000/- was already paid to the respondents-defendants and the balance consideration in the sum of Rs.6,000/- was to be paid on the date when the registered sale deed was to be executed. Shri Mardikar, learned Counsel, criticised the Judgment and Order passed by the learned Appellate Judge on the ground that there was no justification for the learned First Appellate Judge to refuse to exercise judicial discretion in favour of the plaintiff; particularly when the respondents-defendants despite pendency of the appeal had intended to defeat the suit by attempting selling the suit property in favour of one Ramnath Pandharinath Vidhate and others who sought to interevene in the present appeal on the ground that they are claiming under the respondents-defendants alleging that they are subsequent purchasers from the respondents-defendants in respect of the suit property. According to Shri Mardikar, learned Counsel, in view of Section 52 of The Transfer of Property Act, 1882, the intervenors claiming to be subsequent purchasers under the respondents-defendants have no locus standi as such to participate in the hearing of the Second Appeal upon substantial question of law for want of any privity of the contract between the intervenors and the appellant-plaintiff. Shri Mardikar, learned Counsel, submits that the appellant-plaintiff is legally entitled to insist upon execution of the registered sale deed pursuant to the agreement to sell executed from the respondents-defendants. Therefore, substantial question of law ought to be answered in favour of the appellant-plaintiff as it was wrong on the part of the learned Appellate Judge to set aside the findings recorded by learned trial Judge based upon the evidence led by the parties and the provisions of law under the Specific Relief Act, 1963.

13. Shri Mardikar, learned Counsel, also refers to Sections 16(c) and 20 of the Specific Relief Act, 1963 in order to submit that the appellant-plaintiff is entitled to the benefit of judicial discretion to insist upon execution of the registered sale deed from the respondents-defendants pursuant to specific performance of agreement to sell.

14. Shri A.V. Bhide, learned counsel for respondent No.1-defendant, opposes the submissions made by Shri Amol Mardikar, learned Counsel for the appellant-plaintiff. Shri Bhide, learned Counsel, submits that he also appears for the intervenors who sought to intervene on the ground that they are subsequent purchasers from respondents-defendants. According to him, the appellant-plaintiff had failed to establish continuous readiness and willingness to get the sale deed executed from the defendants.

15. Shri Bhide, learned Counsel, has placed reliance on the case of J.P. Builders and another ..vs.. A. Ramdas Rao and another, reported at (2010)1 SCC 429 : [2011(5) ALL MR 899 (S.C.)] in order to submit that the appellant-plaintiff must plead and prove his continuous readiness and willingness as condition precedent to insist upon the specific performance of agreement to sell and failure to aver and prove such continuous readiness and willingness on the part of the appellant-plaintiff must result in the failure of the suit for specific performance of the contract. According to Shri Bhide, learned Counsel, the purchasers pendente lite are not bound by the Judgment and Order by which the learned Appellate Judge had refused to grant specific performance.

16. Having heard the rival submissions and the substantial question of law formulated, Section 52 of The Transfer of Property Act, 1882 cannot be ignored which runs thus :

52. Transfer of property 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 proceedings 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 any 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.

17. Thus, pending disposal of the suit or the proceedings, right to immovable property is directly and specifically in question; the suit property cannot be transferred or disposed of so as to affect the right of the other party under any decree or order. The explanation to Section 52 of the Transfer of Property Act also clarifies that pendency of the suit commences from the date of 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.

18. In my view, the respondents-defendants in the suit cannot be allowed to create a situation whereby right of the appellant-plaintiff in the suit is defeated due to transaction between the alleged subsequent purchasers and the respondents-defendants. The subsequent purchasers claiming under the respondents-defendants may have their remedy as against the respondents-defendants to claim damages for breach of agreement, if any, with the respondents-defendants, but such subsequent purchasers claiming under the respondents-defendants in the absence of privity of contract with the appellant-plaintiff are not entitled to defeat otherwise sustainable decree by seeking to intervene and participate at the hearing of the second appeal. That being so, Civil Application No.2848 of 2004 for grant of permission to add the subsequent purchaser as respondent preferred by the appellant must be rejected with costs.

19. Regarding agreement to sell which is executed and proved between the appellant-plaintiff and the respondents-defendants, in view of Section 16(c) read with Section 20 of the Specific Relief Act, 1963, when the respondents-defendants have denied their liability to execute the sale deed despite legal notice issued from the appellant-plaintiff to them, it was clear that the respondents-defendants were evasive to perform their part of the contract to execute the registered sale deed, though the plaintiff had attended the Office of the Sub Registrar on the appointed date, defendants failed to perform their part of the contract. The appellant-plaintiff had approached them again and the respondents-defendants had assured the appellant-plaintiff to execute the registered sale deed. Since the respondents-defendants had failed to comply with the same, the appellant-plaintiff issued legal notice calling upon the respondents-defendants to execute the registered sale deed, but they avoided by alleging money lending transaction on the part of the appellant-plaintiff without adducing any evidence to prove it. The respondents-defendants dishonestly tried to defeat the suit for specific performance by the appellant-plaintiff. All these facts could not have been ignored by the learned Appellate Judge who refused to confirm the decree for specific performance of the contract in favour of the appellant-plaintiff despite the clear findings recorded by learned trial Judge upon evidence led before it. The decree passed by the trial Court could not have been brushed aside lightly. The legal position cannot be disputed that it is an ordinary rule that the specific performance of contract ought to be granted when the appellant-plaintiff was ready and willing to perform his part of the contract. The appellant-plaintiff had parted with substantial payment of consideration agreed by paying earnest money and was/is ready and willing to perform his part of the suit agreement to sell.

20. In the case of R.C. Chandiok and another ..vs.. Chuni Lal Sabharwal and others, reported at 1970(3) SCC 140, the Hon'ble Apex Court observed that the readiness and willingness cannot be treated as a straight-jacket formula and issue has to be decided keeping in view of the facts and circumstances relevant to the intention and conduct of the party concerned. This view was also reiterated in the ruling of P.D'souza ..vs.. Shondrilo Naidu, reported at (2004)6 SCC 649 : [2005(5) ALL MR 15 (S.C.)]. It is true that continuous readiness and willingness on the part of the appellant-plaintiff is a condition precedent to grant the relief of specific performance. Now, the material and relevant circumstances which are required to be considered by the Court whereby the appellant-plaintiff led evidence about his persistence of readiness and willingness to perform his part of the contract, such evidence showing readiness and willingness to perform his part of the contract cannot be ignored. It was not the case of the respondents-defendants that the appellant-plaintiff was not ready and willing to pay balance amount of consideration which he was required to pay to the respondents-defendants. The respondents-defendants wanted to defeat the suit on the ground that the appellant-plaintiff is money lender but they miserably failed to prove the allegations made against the appellant-plaintiff. The evidence led by the appellant-plaintiff in the facts and circumstances that he attended twice the Office of the Sub Registrar, he had purchased stamp paper, he waited for the respondents-defendants, he had again approached the respondents-defendants on next day, the respondents-defendants had assured the appellant-plaintiff that they would execute the sale deed, but they did not comply the same and furthermore that the appellant-plaintiff was constrained to issue legal notice and despite receipt of such legal notice, the respondents-defendants by their persistent conduct of evasiveness refused to perform their part of the contract was totally ignored by the learned Appellate Judge. It is true that, under Section 20 of the Specific Relief Act, 1963, it is the discretion of the Court to grant decree for specific performance, but such discretion is a judicial discretion. It cannot be arbitrary but must be sound and reasonable guided by judicial principles. There cannot be unreasonable denial of equitable relief.

21. It was the case where the appellant-plaintiff had averred and established his readiness and willingness to perform his part of the contract but the respondents-defendants continued to avoid to execute the registered sale deed on some pretext or the other pursuant to the suit agreement to sell. Therefore, the learned Appellate Judge ought not to have refused remedy of specific performance of agreement to sell, as prayed for by the appellant-plaintiff. The averment of readiness and willingness is not a mathematical formula. There was evidence that the appellant-plaintiff was/is all along ready and willing to abide by his contractual obligation while the respondents-defendants continuously were avoiding to perform their respective part of the contract. In my opinion, the appellant-plaintiff was entitled to insist upon specific performance of the suit agreement to sell. The discretionary relief ought to have been granted in favour of the appellant-plaintiff in the facts and circumstances of the case.

22. Shri A.V. Bhide, learned Counsel, argues that there was a delay on the part of the appellant-plaintiff to approach the Court of learned Civil Judge (Jr.Dn.) within reasonable time. However, it was not the case of the respondents-defendants in the trial Court that time was essence of the contract to execute the registered sale deed as agreed between the parties. The appellant-plaintiff was ready and willing to perform his part of the contract within reasonable time and looking to the circumstances including express terms of the contract and the nature of the suit property, the appellant-plaintiff had approached the Court with clean hands and was/is entitled for the relief of specific performance of the contract.

23. Section 10 the Specific Relief Act reads thus:-

10. Cases in which specific performance of contract enforceable.- Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced-

(a) when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; or

(b) when the act agreed to be done is such that compensation in money for its nonperformance would not afford adequate relief. Explanation.-Unless and until the contrary is proved, the court shall presume-

(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and

24. The provision clearly indicates that when an obligation enforceable by law is created, the party under the obligation cannot be allowed to escape from it on flimsy excuse especially in a transaction wherein a promise is made to transfer valuable immovable property.

25. There must be proof of a proper explanation or justification from the defendant to avoid the agreement or for the delay that has occurred to execute the sale deed in favour of the plaintiff. In the aforesaid manner, the burden lies on both the parties to prove their respective contentions. True it is that, specific performance of a contract is an equitable relief and equity of both the sides has to be weighed. Prices of immovable property do escalate. As a general rule, one cannot say that ordinarily the plaintiff cannot be allowed to have, for him alone, the entire benefit of phenomenal increase of the value of the suit property during the pendency of the litigation. While balancing the equities, one of the consideration to be kept in view is as to who is the defaulting party. It is also to be borne in mind whether any party is trying to take undue advantage over the other party as also the hardship that may be caused to the defendant by directing the relief of specific performance. There may be other circumstances upon which parties may not have any control. Totality of the circumstances in the case is required to be seen. Ordinarily, as of rule, the relief of specific performance ought to be granted and only rarely the relief of specific performance is to be denied. In the present case, the defendants were the defaulting party for delay that has occurred to get the sale deed executed as agreed and the defendant was responsible for escalated cost of the registration, stamp duty and increase to the current ready reckoner price at which the sale deed is expected to be executed. The increased expenses will have to be borne by the plaintiff as it is for the plaintiff to get the sale deed executed at market price as applicable on the date of the sale deed. In my opinion, if at all the remedy of specific performance of contract cannot be availed of, then only, the sum of damages may be considered as an alternative. But it must be ensured that the sum must be sufficient and exemplary enough to discourage rampant breach of obligation under the agreement to sell. In such cases, damages may be awarded by way of grant of higher interest, if for any reason specific relief of performance cannot be granted, then only the trial Judge may grant alternative relief of appropriate damages. I, therefore, reject the argument of the learned Counsel for the defendant-respondent that specific performance cannot be granted and at the most, only damages should be awarded. This was the case where the respondents-defendants tried to raise false defences in order to avoid execution of the registered sale deed and by their conduct, the respondents-defendants attempted to create third party interest intending to defeat the fruits of the decree for appellant-plaintiff even while the proceedings remained pending for final decision before the Court. These facts could not have been ignored by the learned Appellate Judge. The evidence led on record indicates that the appellant-plaintiff was not only ready but also willing to perform his part of the contract in order to get the registered sale deed executed in accordance with law. That being so, the second appeal succeeds.

26. In view of above, the Second Appeal is allowed. The Judgment and Order dt.4.9.1999 passed by learned District Judge, Yavatmal in Regular Civil Appeal No.112 of 1995 is set aside. The Judgment and Order dt.30.6.1995 passed by the learned Civil Judge (Jr.Dn.), Ner, District Yavatmal in Regular Civil Suit No.57 of 1993 is restored accordingly with a direction that registered sale deed shall be executed for consideration at current market ready recknor price of the suit land as applicable on the date of the sale deed. In the event the plaintiff fails to get the sale deed executed accordingly, the alternative prayer shall stand as decreed in terms of refund of earnest money with interest at the rate of Rs.15 % p.a. from the date of the suit till full repayment.

Decree accordingly with costs of the suit.

Appeal allowed.