Laxman Tatyaba Kankate & Anr vs Taramati Harishchandra Dhatrak

Laxman Tatyaba Kankate & Anr. ...Appellants

Versus

Smt. Taramati Harishchandra Dhatrak ...Respondent

JUDGMENT

Swatanter Kumar, J.

1. Civil Judge, Senior Division, Shrirampur, District

Ahmednagar (for short `the Trial Court'), in a suit for specific

performance and in the alternative for recovery of Rs.

10,000/-, vide his judgment and decree dated 25th July, 1995

partially decreed the suit of the plaintiff (respondent herein),

dismissing her claim for specific performance, ordered

refund of earnest money with interest at the rate of 6% per

annum pendente lite and future, with proportionate cost.

1

1. Against this decree, the respondent filed an appeal before

the District Judge, Ahmednagar (hereinafter referred to as

`the First Appellate Court'), who, vide his judgment and

decree, dated 28th November, 2000, decreed the suit in its

entirety. The Court granted decree for specific performance

in respect of the land in question and upon grant of

permission by the competent authority, as contemplated

under Section 12 (c) of the Maharashtra Re-settlement of

Project Displaced Persons Act, 1976, (hereinafter referred to

as `the Re-settlement Act') and also by the Society, as

contemplated under Section 47(2) of the Maharashtra

Cooperative Societies Act, 1960, (for short `the Societies

Act'), the appellants were entitled to specific performance

upon payment of the balance sale consideration of Rs.

30,000/-. It also directed the appellants to submit an

application seeking permission from the competent authority

and execute a registered sale deed in favour of the

respondent herein.

1. The legality and correctness of the aforesaid decree was

challenged by the appellants before the High Court of

2 Judicature at Bombay at its Aurangabad Bench in Second

Appeal No. 96 of 2001 which came to be dismissed vide

judgment dated 17th July, 2001. Aggrieved from the

aforesaid concurrent decrees passed by the Courts, the

present appeal under Article 136 of the Constitution of India

has been preferred by the appellants.

1. The necessary facts are that, according to the respondent,

an agreement to sell dated 08.01.1991 was entered into

between the parties in terms whereof the appellants had

agreed to sell the land admeasuring 1H. 60 R. in Village

Pimpri Lokai, Taluka Shrirampur, District Ahmednagar in

Block No. 220, the boundaries of which were stated in the

plaint. A sum of Rs. 10,000/- was paid at that time and it

was agreed that upon obtaining the permission from the

competent authority, the demarcation of the land would be

effected and the possession of the suit land would be given.

The appellants were expected to execute the sale deed in

favour of the respondent, as the respondent was always

ready and willing to perform her part of the contract. Though

the appellants assured that they would execute the sale

3 deed in favour of the respondent, they failed to do so. A

notice dated 05.06.1992 was served upon the appellants but

no sale deed was executed.

1. Thereafter, according to the respondent, the appellants also

started causing obstruction in the peaceful possession of the

respondent and one of such incidents occurred on

11.07.1992, which compelled the respondent to file the suit

for specific performance, and in the alternative, for the

refund of earnest money along with damages. One Vitthal

Laxman Kankate also applied to the Court, vide Exh. 23, to

be impleaded as a party, as he claimed right and interest in

the said land. This application was allowed.

1. The suit was contested by the appellants who took various

legal objections including, that the suit was bad for non-

joinder of the necessary parties and, thus, was not

maintainable. On merits, it was stated that no agreement,

as alleged, was executed between the parties and the entire

case, as pleaded by the respondent, was false. It was also

averred that defendant No. 2 in the suit (appellant No. 2 in

4 the present appeal) had also filed a suit wherein injunction

was granted in favour of the said party.

1. A plea was also taken that the agreement to sell was not a

registered document, as such, the same could not be acted

upon. The appellants also took the stand that there was

rapid increase in the market value of the land and, therefore,

they could not have agreed to sell the property at the price

indicated in the agreement. However, it was really not in

dispute that the plaintiff and the defendants were acquainted

to each other. The learned Trial Court, on the basis of the

record before it, noticed that the appellants claimed that they

wanted to obtain a loan for a sum of Rs. 2,000/- from the

respondent and had agreed to sign certain papers by way of

security, that the respondent, on the pretext, got certain

blank papers signed from the appellant as well as his son

and that there was no intention to sell the property in

question.

1. On the pleadings of the parties, the Trial Court framed the

5 following issues and gave findings thereon :

" Issues Findings

1 Does the plaintiff prove that the Proved defendant agreed to sell the field for Rs. 40,000/-?

2 Does the plaintiff prove that the amount Proved Rs. 10,000/- was paid as earnest money?

3 Does the plaintiff prove that amount of Proved Rs. 30,000/- was agreed to be paid at the time of execution of sale deed?

4 Does the plaintiff prove that the sale deed Proved was to be executed within 1 month from the permission of the Competent Authority?

5 Does the defendant prove that the Not proved plaintiff paid Rs. 2,000/- only as loan and the signature were obtained on blank stamp paper by way of security?

6 Does the plaintiff prove that she was Proved ready and willing to perform her part of contract?

7 Whether the plaintiff is entitled for a Not proved decree of Specific Performance?

8 Whether the suit is bad for non-joinder of Does not necessary party? survive

9 What relief and order? as per final order

Additional issues

6 1 Whether the agreement is binding on Yes the defendant No. 2.

2 Does plaintiff prove that by way of Yes alternate relief, she is entitled to refund of earnest money with damages?"

1. The learned Trial Court decided all the material issues in

favour of the respondent and, while upholding the

agreement in favour of the respondent, it also returned a

finding in favour of the respondent that she was always

ready and willing to perform her part of the contract and had

paid a sum of Rs. 10,000/- as earnest money. It may

be noticed, that the stand taken by the appellants, that the

signatures were obtained on blank papers, was answered by

the Court in the negative. Despite these facts, the learned

Trial Court, as already noticed, partially decreed the suit and

directed the appellants to pay a sum of Rs. 10,000/- with

interest at the rate of 6% per annum and without any

additional amount of damages, as prayed by the

respondent. The learned First Appellate Court, while setting

aside the decree passed by the Trial Court only for payment

of money, passed the decree for specific performance while

7 otherwise affirming the conclusions arrived at by the Trial

Court. The First Appellate Court returned the findings in

favour of the respondent and held as under :

"Therefore, the sale is permissible with the prior permission of the government. Admittedly, the respondent No. 1 has agreed to obtain permission from the government prior to sale transaction. Therefore, there would not be legal bar while granting a relief of specific performance. The authority cited by the learned counsel for appellant is directly in point. The facts of the said authority and the facts of the present case are identical one. Hence, the reasons on account of which the learned trial court was not pleased to grant a relief of specific performance cannot be accepted. After having come to conclusion that there is no bar of section 12 of the Re-settlement Act, the another reason on account of which the learned trial court was not pleased to grant the said relief, is proper or not is to be considered. The learned trial court has observed that in view of provisions of the Section 48(e) of the Societies Act, the agreement for sale is void one, and hence it can't be enforced. According to learned trial court there was charge on the suit land in favour of the society i.e. since the respondent no. 1 has taken the loan amount. The learned trial court has relief on the entry in the record of rights, while coming to conclusion that there was charge of the society of the suit land in view of the loan transaction, and the appellant was aware of it in view of her admission that she had seen the entry. Consequently, the learned trial court has come to conclusion that there is a bar while granting relief of specific performance u/s 48

(e) of the Co.op. societies Act. In my opinion, in view of the authority reported in the case of Narayan vs. Macchindra, 1994 Mh. L.J.558 it can't

8 be said that there would be any legal bar while enforcing the agreement Exh.45. .................

x x x x x x x x x x

.................. Therefore, there would not be any legal impediment while granting a relief of specific performance subject to certain conditions i.e. prior permission of the state government and permission from the society of village Pimprilokai, taluka Newasa. There are no reasons on record so as to prevent the appellant from claiming a relief of specific performance. The respondents were not able to show as to why discretion should not be grant a relief of specific performance. Since the agreement for sale, Exh. 45, is lawful one, it can be safely enforced. Consequently, the finding in respect of point No. 2 is answered in the affirmative.

In view of the findings in respect of point Nos. 1 and 2, it logically follows that the judgment and decree of the learned trial court have to be set aside, and suit filed by appellant is decreed, which is for a relief of specific performance however subject to certain conditions i.e. regarding prior permission of the state government of society of village Pimprilokai. Incase, both authorities are not pleased to grant permission then appellant would be entitled to claim refund of the earnest amount from respondents which is to the tune of Rs. 10,000/-."

1. The findings and the conclusions of fact and law arrived at

by the Courts were affirmed by the High Court which

sustained the decree passed by the First Appellate Court.

The learned counsel appearing for the appellants

9 vehemently argued that the decree for specific performance

could not have been passed by the Courts against the

appellants, as the property was mortgaged to the

cooperative society, and the property being under the

charge of the society, no title could be passed in favour of

the respondent. Secondly, it was contended that the Courts

have failed to appreciate the evidence in its correct

perspective and the judgment under appeal is liable to be

set aside. Lastly, it was contended that during the pendency

of the proceedings, the value of the land has increased

tremendously and it would be unjust and unfair to pass a

decree for specific performance in favour of the respondent.

1. At the very outset, we may notice that all the three Courts

have returned all the findings of fact in favour of the present

respondent. Such findings are based upon proper

appreciation of evidence and no legal infirmity can be traced

in them. It is hardly permissible for this Court to go into such

questions of facts alone, in exercise of its jurisdiction under

Article 136 of the Constitution of India.

10

1. From the judgment of the learned Trial Court, it is apparent

that the appellants had not placed any such argument or

specific plea before that Court. In fact, as is evident from

the afore reproduced issues, no such issue was either

claimed or framed, in this regard. It is rightly contended by

the learned counsel appearing for the respondent that the

appellants had not adduced any evidence that the property

in question had been mortgaged or was under the charge of

the society. Be that as it may, the provisions of clause (d) of

Section 48 of the Societies Act, places a restriction upon

alienation of the whole or any part of the land or interest in

the property unless and until the whole amount borrowed by

the member of the society has been repaid with interest. In

other words, the restriction is conditional and once the loan

of the society has been cleared, the society obviously

cannot have any objection to transfer the said property. No

effort was made by the appellants to bring on record any

evidence to show as to what was the extent of money

currently due to the society, if at all, and for what amount the

property had been mortgaged in favour of the society. In the

11 absence of any specific evidence in that regard, the Court

will have to draw an adverse inference against the

appellants for not producing before the Court the best

available evidence. In any case, the appellants cannot take

advantage of their own wrong. Coming to the other

submission, that the land could not be transferred in favour

of the respondent in view of the restriction contained in

Section 12 (1) (c) and Section 12 (2) of the Re-settlement

Act, the bare reading of these provisions show that the

Government can grant permission for transfer of the

property, subject to such conditions, as it may deem fit

and proper.

1. In the present case, the appellants have neither claimed any

issue nor led any evidence before the Court to substantiate

even this plea. Furthermore, the learned First Appellate

Court while relying upon the judgment of this Court in the

case of Nathulal v. Phoolchand [AIR 1970 SC 546], had

dealt with both these contentions rightly and in accordance

with the law. We see no reason as to how a presumption

can be raised against the respondent on face of the fact that

12 the appellants chose not to lead any evidence on either of

these aspects. These contentions raised on behalf of the

appellants are, therefore, without any substance. The

learned counsel appearing for the appellants drew our

attention to Section 13 (1) (c) of the Specific Relief Act, 1963

(for short `the Act'), which clearly postulates that where a

person contracts to sell immovable property with an

imperfect title and the property is encumbered for an amount

not exceeding the purchase money, the purchaser has the

right to compel the seller to redeem the mortgage and obtain

a valid discharge and then specifically perform the contract

in its favour. Even from this point of view, the right of the

present respondent is fully protected.

1. It will also be useful to refer to the provisions of Section 20

of the Act which vests the Court with a wide discretion either

to decree the suit for specific performance or to decline the

same. Reference in this regard can also be made to the

case of Bal Krishna v. Bhagwan Das [(2008) 12 SCC 145],

where this Court held as under :

13

"13. ........The compliance with the requirement of Section 16(c) is mandatory and in the absence of proof of the same that the plaintiff has been ready and willing to perform his part of the contract suit cannot succeed. The first requirement is that he must aver in plaint and thereafter prove those averments made in the plaint. The plaintiff's readiness and willingness must be in accordance with the terms of the agreement. The readiness and willingness of the plaintiff to perform the essential part of the contract would be required to be demonstrated by him from the institution of the suit till it is culminated into decree of the court.

14. It is also settled by various decisions of this Court that by virtue of Section 20 of the Act, the relief for specific performance lies in the discretion of the court and the court is not bound to grant such relief merely because it is lawful to do so. The exercise of the discretion to order specific performance would require the court to satisfy itself that the circumstances are such that it is equitable to grant decree for specific performance of the contract. While exercising the discretion, the court would take into consideration the circumstances of the case, the conduct of parties, and their respective interests under the contract. No specific performance of a contract, though it is not vitiated by fraud or misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee. In other words, the court's discretion to grant specific performance is not exercised if the contract is not equal and fair, although the contract is not void."

Similar view was taken by this Court in the case of

Mohammadia Cooperative Building Society Ltd. v. Lakshmi

Srinivasa Cooperative Building Society Ltd. & Ors. [(2008) 7

SCC 310], where the Court reiterated the principle that

14 jurisdiction of the Court to grant specific performance is

discretionary and role of the plaintiff is one of the most

important factor to be taken into consideration. We may also

notice that in the case of P.V. Joseph's son Mathew v. N.

Kuruvila's Son [AIR 1987 SC 2328], this Court further

cautioned that while exercising discretionary jurisdiction in

terms of Section 20 of the Act, the Court should meticulously

consider all facts and circumstances of the case. The Court is

expected to take care to see that the process of the Court is

not used as an instrument of oppression giving an unfair

advantage to the plaintiff as opposed to the defendant in the

suit.

1. The discretion of the Court has to be exercised as per the

settled judicial principles. All the aforesaid principles are

squarely satisfied in the present case and it is the appellants

before us who have taken advantage of the pendency of the

proceedings. They have used the sum of Rs. 10,000/-,

which was given as earnest money for all this period, as well

as, have enjoyed the fruits of the property. The present case

15 does not fall within the ambit of any of the aforesaid cases

specified under Section 20 (2) of the Act. In the present

case, it is not only lawful but even equity and facts of the

case demand that a decree for specific performance should

be granted in favour of the respondent. Besides all this, the

respondent before us has agreed to pay much higher

consideration than what was payable in terms of the

agreement to sell between the parties.

1. The onus to prove that the respondent had obtained

signatures of the appellants on blank papers on the pretext

of advancing a loan of Rs. 2,000/- was entirely upon the

appellants. No evidence, much less cogent documentary or

oral evidence, was led by the appellants to discharge this

onus. The averment has rightly been disbelieved and the

plea was rightly rejected by the concerned Courts in the

judgment under appeal. The appellants led no evidence and

nothing was brought to our notice, even during the course of

the hearing, to show that this plea could be accepted. It is a

settled principle of law that before the First Appellate Court,

the party may be able to support the decree but cannot

16 challenge the findings without filing the cross objections. As

it appears from the record, the present appellants have

neither filed cross objections nor their appeal challenging the

findings recorded by the learned Trial Court. In fact, the

entire conduct of the present appellants shows that they

have not only failed to prove their claim before the Courts of

competent jurisdiction but have even not raised proper pleas

in their pleadings.

1. It was contended on behalf of the appellants that there has

been considerable increase in the price of the land in

question. Though that may be true, it cannot be a ground

for denying the decree of specific performance to the

respondent. The learned First Appellate Court, by a well

reasoned judgment, has granted the relief of specific

performance instead of only granting refund of money, as

given by the Trial Court. The judgment of the First Appellate

Court has been upheld by the High Court and we see no

reason whatsoever to interfere with the concurrent findings

of facts and law as stated in the judgment under appeal.

However, the learned counsel appearing for the respondent

17 volunteered and after taking instructions stated that they

would be willing to pay a sum of Rs. 1,50,000/- instead of

Rs. 40,000/- as the total sale consideration. We find this

offer of the respondent to be very fair.

1. We have already held that the defence taken up by the

appellants in the suit was totally unbelievable. There is no

reason or ground as to why the relief of specific performance

should be declined to the respondent. She satisfied all the

requirements of Section 20 of the Act. Even then, if we

examine this case purely from the point of view of equity, the

offer now made by the respondent substantially balances

the equities between the parties and the very argument

raised on behalf of the appellants that there has been

increase in the price of the land in question loses its

significance. Now, no prejudice will be caused to the

appellants in any manner whatsoever.

1. For the reasons afore recorded, we see no legal or other

infirmity in the judgment under appeal. While dismissing the

present appeal, we direct that the respondent will abide by

18 her offer and would pay a total sale consideration of Rs.

1,50,000/- and upon payment of Rs. 1,50,000/- - Rs.

10,000/- = Rs. 1,40,000/- and complying with the

conditions stated in the judgment dated 28th November,

2000 of the First Appellate Court, the sale deed shall be

registered in favour of the respondent in terms of the decree

passed by the First Appellate Court subject to the above

modifications.

1. However, in the facts and circumstances of the case, we

leave the parties to bear their own costs.

................................J. [ DR. B.S. CHAUHAN ]

..............................J. [ SWATANTER KUMAR ] New Delhi July 8, 2010.

19