Chamansan Mamadusab Ganajur vs Smt Rudravva

Plaintiff is before this Court in this regular second appeal assailing the judgment and decree in R.A.

No.91/2006 dated 20.12.2008 on the file of the Civil Judge (Sr.Dn.), Haveri (hereinafter referred to as the 'First Appellate Court' for short) reversing the judgment and decree in O.S. No.145/1993 dated 27.07.2006 on the file of the Addl. Civil Judge (Jr.Dn.) & JMFC., Haveri (hereinafter referred to as the 'trial Court', for short) whereby, the First Appellate Court dismissed the suit seeking relief of specific performance of contract and directed refund of earnest money by the defendants to the plaintiff.

2. Brief facts of the case are that:

Suit property is bearing R.S. No.296/1 measuring 7 acres 6 guntas (hereinafter referred to as the 'suit property' for the sake of convenience). The original defendant/Channabasayya agreed to sell the suit property in favour of the plaintiff for a sum of Rs.22,000/- and

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executed an agreement of sale in favour of the plaintiff putting the plaintiff in possession of the suit property. That one Shivayogappa Shivappa Havanagi had purchased truck availing loan from the Karnataka Bank, Haveri (i.e., defendant No.2). The said truck met with an accident and as Shivayogappa could not repay the loan availed from defendant No.2, defendant No.2 instituted a suit against Shivayogappa, defendant No.1 and another. That defendant No.2/Bank filed O.S. No.64/1989 came to be decreed and execution was levied in Execution Petition No.4/1991, plaintiff is not a party in the suit as well as in the execution petition and the decree in O.S. No.64/1989 is not binding on the plaintiff. Further the case of the plaintiff is that when the plaintiff requested the original defendant to execute the sale deed, he mentioned that after clearing the charge over the suit property, he will execute the sale deed and accordingly, defendant No.1 has executed the additional endorsement on 18.04.1988.

Inspite of agreeing to execute the sale deed by defendant No.1 in favour of the plaintiff, defendant No.1 having not

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come forward, the plaintiff issued a notice on 29.05.1991 calling upon defendant No.1 to execute the sale deed, and as defendant No.1 did not come forward to execute the sale deed, hence, present suit for specific performance of contract.

3. During the pendency of the suit, the original defendant died and his legal representatives were brought on record as defendant Nos.1(A and B) and the legal representatives of defendant No.1 filed the statement of objections inter alia contending that the suit property is attached property in O.S. No.64/1989 and that the Execution Petition No.4/1991 is pending. Further that the sale agreement is alleged to have been executed in the year 1983 and the plaintiff has filed a suit in the year 1993, after the lapse of 10 years and that the suit of the plaintiff is barred by limitation. The legal representatives of defendant No.1 contented that defendant No.1 had borrowed a sum of ₹2,000/- from the plaintiff for the family necessity and the agreement entered was towards the security of loan transaction and that the husband of

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the defendant No.1(A) never agreed to sell the suit property in favor of the plaintiff nor put the plaintiff in possession of the suit property.

4. On the basis of the pleadings, the trial Court framed the following issues:

(1) Whether the plaintiff proves that the

propositus of deft.No.1(a) and (b) i.e.,

original deft.No.1 agreed to sell the suit

property to the plaintiff and executed sale

agreement on 23/4/1983 on receiving part

consideration amount of Rs.21,000/-?

(2) Whether the plaintiff proves that after

executing the sale agreement, deft.No.1 put

the plaintiff into possession of suit property

on 23/4/1983?

(3) Whether the plaintiff proves that he is ready

and willing to perform his part of contract

from the day of sale agreement till this date?

(4) Whether the plaintiff proves that the decree

passed in O.S. No.64/89 is not binding on the

plaintiff?

(5) Whether the deft.No.1(a) proves that the suit

is barred by limitation?

(6) Whether the plaintiff is entitled for the reliefs

claimed in the suit?

(7) What order or decree?

5. In order to substantiate their claim, the plaintiff No.1 examined himself as PW1 and two witnesses as PW2

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to PW5 and marked documents at Exs.P1 to P15(a). On the other hand, the defendant No.1(A) examined himself as DW1 also examined two witnesses as DW2 and DW3 and marked documents at Exs.D1 to D5.

6. The trial Court based on the pleadings oral and documentary evidence arrived at a conclusion that; i) The plaintiff proves that the defendant No.1 agreed to sell the suit property to the plaintiff and had executed an agreement dated 23.04.1983 on receiving the part consideration of ₹21,000/- ii) That the plaintiff proves after executing of the sale agreement, defendant No.1 has put the plaintiff in possession of the suit property. iii) The plaintiff has proved his readiness and willingness to perform his part of contract from the date of agreement.

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iv) The plaintiff has proved that the decree passed in O.S. No.64/1989 is not binding on the plaintiff. v) The defendant No.1(A) failed to prove that the suit is barred by limitation and by the judgment and decree.

7. The trial Court decreed the suit and held that the plaintiff shall pay the market price of the suit property as on the date of the filing of the suit as notified to the Sub-Registrar, Haveri, by the Government by deducting the earnest money of ₹21,000/- and defendant Nos.1(A and B) shall execute the sale deed after receiving the amount within 60 days, failure to execute the sale deed, the plaintiff is at liberty to get the sale deed in his favour in respect of the suit property in accordance with law.

Aggrieved, the defendants preferred an appeal before the First Appellate Court. The First Appellate Court reversed the judgment and decree of the trial Court and arrived at a conclusion that without clearing of the loan and without discharging the charge created over the property, the suit

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property cannot be sold in the favor of plaintiff and the prior rights vests on the defendant No.2/Bank and the plaintiff is not entitled to seek the relief of specific performance and reversed the judgment and decree of the trial Court, directed refund of earnest money. Aggrieved, the plaintiff is before this Court in this regular second appeal.

8. This Court on 25.02.2009 while admitting the appeal has framed the following substantial questions of law:

i) Whether the Lower Appellate Court

was justified in reversing the judgment and

decree passed by the trial Court and refusing

the decree of specific performance by taking

note of the judgment and decree passed in

O.S. No.64/1989?

ii) Whether the Lower Appellate Court

was justified in holding that the trial Court was

not justified in granting the decree when the

appellant herein was not a party to the

transactions said to have been entered into by

the proposed vendor and when it would not

bind the appellant herein?

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9. Heard the learned counsel appearing for the appellant and the learned counsel appearing for the respondents on the substantial questions of law framed by this Court.

10. Learned counsel for the appellant submits that the First Appellate Court has totally lost sight of the fact that the agreement entered into between the plaintiff and defendant No.1 is not disputed and there is no charge on the defendant No.1 or any of his properties. The suit in O.S. No.64/1989 was ultimately compromised between the parties therein and there is no decree whether conclusive or could be binding on the appellant herein, as the plaintiff is not a party in O.S. No.64/1989. Moreover, the First Appellate Court failed in totally considering that the suit in O.S. No.64/1989 was preferred against one Shivayogappa and defendant No.1 was arrayed as defendant No.2 in the said suit as he was a surety towards the loan transaction taken by Shivayogappa for his business purpose. Learned counsel submits that the Execution Petition No.4/1991 has

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been dismissed for non-taking steps on 25.02.1994 itself, that the First Appellate Court proceeded to assume that the charge on the suit schedule property is successful and therefore, it cannot be sold. That the substantial question of law framed by this Court needs to be answered in favor of the appellant.

11. Per Contra, learned counsel appearing for the respondents justified the judgment and decree of the First Appellate Court and submits that the First Appellate Court has rightly arrived at a conclusion that the plaintiff is not entitle for specific performance of contract and refund of the earnest money has been rightly ordered, the discretion exercised by First Appellate Court under Section 20 does not warrant any interference by this Court and the substantial question of law needs to be answered against the appellant.

12. This Court has carefully considered the rival contentions urged by the learned counsel for the parties and perused the materials available on record.

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13. O.S. No.64/1989 is filed by defendant No.2 against one Shivayogappa and defendant No.1. The said suit in O.S. No.64/1989 was towards the recovery of a loan availed by Shivayogappa from defendant No.2. The First Appellate Court on the pretext that in O.S.

No.64/1989, the suit property has been attached, that the Bank has charged over the said suit property for clearing of the loan and without discharging the charge created over the suit property, the property cannot be sold in favor of the plaintiff is the reasoning assigned by the First Appellate Court in dismissing the suit of the plaintiff for relief of specific performance. The reasoning assigned by the First Appellate Court is totally erroneous and unacceptable for the sole reason that the First Appellate Court has gone beyond the scope of pleadings and also the ingredients that are necessary to prove in a suit for relief of specific performance of a sale agreement.

14. The specific performance is a relief granted by the Court to impose contractual obligations between the

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parties. It is a remedy in performance as opposed to the plain sounding in damages for the breach of contract where pecuniary compensation is granted as a relief for failure to carry out terms of contract. The well settled criteria and principles for granting or denying specific performance are as under; i) Readiness and willingness ii) Conduct unblemished iii) Readiness must be shown throughout, up to the date of degree. iv) It is not necessary that the plaintiff was rendered tender of the money due under the contract. Although, one of the factors showing the readiness and willingness may be the ability of the plaintiff to make payment that cannot be a factor by itself to disentitle the plaintiff the grant of relief. v) The plaintiff must seek relief appropriately.

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vi) Necessary parties to a suit for specific performance. vii) The proper form of a degree. viii) The limitation for action. ix) The Court passing the decree retains purport over the decree even after the decree is passed.

15. The criteria set out for grant or denying of specific relief of specific performance is stated supra. The readiness and willingness is the primary concern of the Court while granting or denying the specific performance.

The Apex Court in the case of Mehboob-Ur-Rehman (Dead) through LRs Vs. Ahsanul Ghani1 has held that notwithstanding substitution of Section 20 of the Act, the position of law on all material aspects, such as essential elements of readiness and willingness and other aspects under un-amended Section 16 remains the same and it is observed that, even following the amendment, the law 1

(2019) SCC 206

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was to the effect that specific performance of a contract could not be granted or enforced in favor of the person who fails to prove that he has already performed or has always been ready and willing to perform the essential terms of contract which are to be performed by him, in terms of which, the performance has been prevented or waived by the other party. Bearing in mind the proposition of law that the readiness and willingness has to be proved by the plaintiff in the suit for specific performance, the records are perused.

16. Issue No.3 was framed by the trial Court which reads as under;

"Whether the plaintiff proves that he is ready

and willing to perform his part of contract from the day of sale agreement till this date?"

17. The plaintiff averred that he was ready and willing to perform his part of contract from the date of sale agreement till the date of filing suit. To show his readiness and willingness to perform the part of contract, Ex.P.3 is

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produced by the plaintiff. Ex.P.3 is the permission granted by the Assistant Commissioner to the plaintiff to purchase the suit property as he was an agriculture labour at the time and the permission was granted on 27.04.1984. The plaintiff's case is that he requested the defendant No.1 to come forward for execution of the sale deed. The defendant delayed the execution of the sale deed on the pretext of saying that the charge over the suit property is being created. The defendant No.1 has executed an additional endorsement on 18.04.1988 in addition to Ex.P.1 - agreement of sale, the defendant stated that there was a charge by the defendant No.2/Bank and as such, he would execute the sale deed after clearing of the encumbrance over the suit property. Ex.P.9 discloses that the plaintiff and the defendant would bear the half expenses each of the registration and the plaintiff and defendants are acted together to complete the execution of the sale deed. The sale consideration under Ex.P.1 was ₹22,000/- and the amount of ₹21,000/- is already paid under the agreement of sale. The signature on the

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agreement of sale by defendant No.1 is not disputed, what is disputed according to them is that the agreement was executed towards the loan transaction of ₹2,000/-.

18. There are no materials forthcoming in evidence that any loan taken by the defendants to an extent of ₹2,000/- and the signature of defendant No.1 was obtained on the blank paper by fraud and misrepresentation. The plaintiff having established that he was ready and willing to perform his part of contract, which is evidenced at Ex.P.3 and Ex.P.1(g). The trial Court arrived at a conclusion that the readiness and willingness has been proved. The First Appellate Court reversed the discretion exercised by the trial Court on the sole ground that, there is a charge in respect of the suit property in O.S. No.64/1989 and refused to grant the relief of specific performance of contract and to grant or to refuse the specific relief of performance, the Court should apply its mind judicially and should not refuse specific performance

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or grant specific performance only because it is entitled to do so, or that there is another view possible.

19. The exercise of discretion under Section 20 of the Specific Relief Act, 1963 (hereinafter referred to as 'the Act' for short) gives the trial Court significant authority in determining whether to grant or deny specific performance of a contract. However, this discretion is not unlimited and must exercise judiciously, keeping in mind the principles of justice, equity and good conscience. The general rule is that appellate Court will not reverse the trial Court's decision, unless the discretion has been exercised in an arbitrary, capricious or unjust manner. The interference with the trial Court's exercise of discretion is only when there is any manifest error of law or fact. The trial Court has ignored relevant consideration and taken irrelevant factors into account and when the exercise is so unreasonable or unjust that it results in miscarriage of justice. The exercise of discretion under Section 20 of the Act is not to be lightly interfered with by the appellate

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Court and the appellate Court should not substitute its own view for that of the trial Court, unless there is manifest injustice or clear error in the exercise of discretion. The law is well settled that the trial Court has wide discretion under Section 20 of the Act to decide whether grant or not to grant the specific performance and this discretion subject to judicial review, but should only be interfered with where there has been an abuse of discretion or misapplication of law. The failure to exercise discretion by trial Court properly would justify interference by the appellate Court. The trial Court must exercise discretion in granting specific performance by balancing the equities and considering whether specific performance of the contract is just and fair in the circumstances and the appellate Court should not substitute their judgment for that of the trial Court, unless there has been manifest injustice or error in law. From the proposition of law, this Court can safely arrive at a conclusion that the exercise of discretion by the trial Court under Section 20 of the Act is wide, but not unlimited. While appellate Court generally do

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not interfere with trial Court's discretion, they may do so in cases where the discretion is unreasonable or manifestly unjust manner and the discretion should be exercised judiciously, considering the equities and ensuring that the remedy of specific performance is appropriate based on facts.

20. The First Appellate Court has totally misled itself with facts that O.S. No.64/1989 was filed by the Bank for recovery of its dues of the loan advanced to one Shivayogeppa Havangi, who had obtained loan for the purpose of purchasing a Truck for which, defendant No.1 was a surety, creating a charge on the property of the defendant No.1 is only assumption by the First Appellate Court and decree in O.S. No.64/1989 makes it clear that it was the Truck which is hypothecated and amount in O.S.

No.64/1989 is otherwise recovered and E.P. No.4/1991 is closed. The reasoning assigned by the First Appellate Court in refusing the specific performance of contract is totally erroneous without there being any finding to the

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effect that the exercise of discretion by the trial Court, is unreasonable or manifestly unjust manner. On the other hand, the perusal of the judgment of the trial Court, the First Appellate Court has exercised its discretion in granting specific performance by balancing the equities and granting of specific performance is just and fair. In the said circumstances, the interference by the appellate Court by the reasons indicated in its judgment was unwarranted making this Court to interfere and the substantial question of law framed by this Court is answered in favor of the appellant holding that the First Appellate Court was not justified in reversing the judgment and decree passed by trial Court and refusing the decree of specific performance by taking note of the judgment and decree passed in O.S.

No.64/1989 and the same warrants interference.

Accordingly, this Court pass the following:

ORDER

(i) The Regular Second Appeal is allowed.

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(ii) The judgment and decree of the First

Appellate Court is hereby set aside and

the judgment and decree of the trial Court

stands confirmed.

Sd/-

(JUSTICE K.S.HEMALEKHA)

RH - till para 2;

PJ

CT:PA LIST NO.: 1 SL NO.: 27