Nadiminti Suryanarayan Murthy(Dead) vs Kothurthi Krishna Bhaskara Rao .

Nadiminti Suryanarayan Murthy(Dead) through LRs. ….Appellant(s)

VERSUS

Kothurthi Krishna Bhaskara Rao & Ors. …Respondent(s)

JUDGMENT

Abhay Manohar Sapre, J.

1. This appeal is filed by original defendant No.6

against the final judgment and order dated

11.07.2003 passed by the High Court of Judicature

of Andhra Pradesh at Hyderabad in L.P.A. No. 121

of 1998 whereby the High Court set aside the

judgment and order dated 02.02.1996 in Appeal No.

2061 of 1989 and upheld the judgment and decree

1 dated 13.09.1989 passed by the subordinate Judge,

Amalapuram in O.S. No.50 of 1983 thereby

decreeing the plaintiff’s (respondent No.1 herein)

suit against defendant No.6 (original appellant

herein) for specific performance of agreement in

relation to the suit house.

2. In order to appreciate the controversy raised in

the appeal, it is necessary to state the relevant facts

hereinbelow.

3. Nadiminti Suryanarayan Murthy-the original

appellant herein (since dead and represented now

by the present appellants as his legal

representatives) was defendant No.6 whereas

respondent No.1 herein is the plaintiff and original

respondent No.2 (defendant No.1), since dead and

represented through legal heirs (defendant Nos.2-3)

whereas Respondent Nos.3-4 are defendant Nos. 4

and 5 in the suit out of which this appeal arises.

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4. One Surya Narayana was the owner of a house

situated in village Amalapuram in Andhra Pradesh

(described in detail in schedule appended to the

plaint - hereinafter referred to as "suit house"). He

died in 1980 leaving behind his wife (defendant

No.1) and daughters (defendant Nos. 2 and 3) and

grand children (defendant Nos. 4 and 5). He left a

will in favour of his wife giving her life interest. She,

therefore, got the suit house. These defendants

claiming to be the co-owners of the suit house then

let out the suit house to defendant No. 6 in 1981 on

monthly rent of Rs.150/-.

5. On 18.01.1983, defendant Nos. 1 to 5 entered

into an agreement with the plaintiff (respondent

No.1) for sale of the suit house in favour of the

plaintiff for a sum of Rs.46,000/-. The plaintiff

accordingly paid Rs.1000/- as advance money to

defendant Nos. 1 to 5 and the balance amount was

3 to be paid by the plaintiff to defendant Nos. 1 to 5 at

the time of the registration of the sale deed, which

was to be executed within six months. The plaintiff

(respondent No. 1) accordingly arranged for the

balance money. However, defendant Nos. 1 to 5, on

the other hand, went on promising the plaintiff to

execute the sale deed in his favour as agreed upon

between them as per agreement dated 18.01.1983

and on the other hand, defendant Nos. 1 to 5,

instead of executing a sale deed in favour of the

plaintiff, executed the sale deed on 09.02.1983 in

favour of defendant No. 6 for Rs.45000/-.

6. This gave rise to filing of the civil suit by the

plaintiff (respondent No. 1) on 14.07.1983 against

all the six defendants in the Court of Subordinate

Judge, Amalapuram out of which this appeal arises.

The suit was for specific performance of agreement

dated 18.01.1983 and in alternate for refund of

4 consideration paid by the plaintiff and also for the

damages sustained by the plaintiff.

7. The plaintiff inter alia averred that he was and

has always been ready and willing to perform his

part of the agreement and, in fact, performed his

part by paying advance amount of Rs.1000/- in

terms of the agreement to defendant Nos. 1 to 5 and

was/is always ready and willing to pay the balance

consideration at the time of registration of sale

deed. It was averred that even before expiry of six

months’ period, which was to expire in July 1983,

defendant Nos. 1 to 5 sold the suit house to

defendant No. 6 on 09.02.1983 itself and thus

committed breach of agreement dated 18.01.1983

by not performing their part of the agreement by

executing the sale deed in plaintiff's favour and

hence the suit to seek specific performance of

agreement dated 18.01.1983 for execution of the

5 sale deed in relation to the suit house and, in

alternative, for refund of money paid to defendant

Nos. 1 to 5 and for damages for the loss suffered.

8. Defendant Nos. 1 to 5 filed their common

written statement whereas defendant No. 6 filed his

written statement. So far as defendant Nos. 1 to 5

are concerned, they came out with a case that they

had first entered into an agreement on 04.01.1983

with defendant No. 6 to sell the suit house for

Rs.45,000/-. However, the plaintiff, on coming to

know of the transaction, approached defendant Nos.

1 to 5 and requested them to sell the suit house to

him and said that he will persuade defendant No. 6

to withdraw from the deal and instead allow him to

purchase the suit house. It was averred that the

plaintiff further assured to defendant Nos. 1 to 5

that in case, if for any reason, he fails to persuade

defendant No. 6 to withdraw from the transaction

6 then he will back out to which defendant Nos. 1 to 5

agreed and accordingly entered into an agreement

with the plaintiff on 18.01.1983. Defendants (1 to 5)

then averred the background as to why they agreed

to sell the suit house to defendant No. 6. According

to them, Late Surayanarayna had borrowed some

money (Rs.1400/- and Rs.1200/-) during his

lifetime from one creditor (Smt. M. Venkatalakshmi)

but before he could repay the loan, he died. The

creditor, therefore, went on pressing defendant Nos.

1 to 5 for its repayment and it is with this

background defendant Nos. 1 to 5 entered into the

sale agreement with defendant No. 6 on 04.01.1983

for sale of suit house to defendant No. 6. The

defendants also gave some more details to justify

the prior agreement with defendant No. 6.

9. So far as defendant No. 6 is concerned, while

denying the plaintiff’s claim more or less reiterated

7 the stand taken by defendant Nos. 1 to 5. He

defended the sale in his favour being made for valid

consideration with bona fide intention. He also

alleged that his agreement being prior in point of

time to the plaintiff’s agreement, the same was legal

and valid.

10. Parties adduced evidence. The Trial Court, by

judgment dated 13.09.1989, decreed the plaintiff's

suit. The Trial Court held that the agreement dated

04.01.1983 with defendant No. 6 for sale of suit

house was not genuine and bona fide agreement. It

was also held that the sale deed dated 09.02.1983

executed pursuant to such agreement was not a

genuine sale deed and no consideration was passed

between defendant Nos. 1 to 5 and defendant No. 6

for sale and purchase of the suit house. It was

further held that the agreement dated 18.01.1983

between the plaintiff and defendant Nos. 1 to 5 was

8 a genuine agreement which was also acted upon

pursuant to which defendant Nos. 1 to 5 had

received part payment from the plaintiff. It was then

held that the plaintiff was willing to perform his part

of the agreement but it were the defendant Nos. 1 to

5, who committed the breach. The Trial Court, with

these findings, decreed the suit against the

defendants and passed the decree for specific

performance in relation to the suit house directing

the defendants to execute the sale deed in plaintiff’s

favour on accepting Rs.45,000/- from the plaintiff.

11. Felt aggrieved, defendant No. 6 filed first

appeal before the High Court. The learned Single

Judge allowed defendant No. 6's appeal and set

aside the judgment/decree of the Trial Court and, in

consequence, dismissed the plaintiff's suit. Felt

aggrieved, the plaintiff filed letters patent appeal

before the Division Bench of the High Court. By

9 impugned order, the Division Bench allowed the

plaintiff's appeal and while setting aside of the

judgment of the Single Judge restored that of the

Trial Court. As a result, the plaintiff's suit stood

decreed against the defendants in relation to the

suit house, which directed performance of the

agreement dated 18.01.1983 in plaintiff’s favour.

Felt aggrieved, defendant No. 6 has filed the present

appeal by way of special leave before this Court.

12. Heard Ms. Manjeet Kirpal, learned counsel for

the appellant and Mr. Sri Harsha Peechara, learned

counsel for the respondents.

13. Having heard the learned counsel for the

parties and on perusal of the record of the case, we

find no merit in the appeal.

14. The main question involved in this case is

which agreement is bona fide and genuine - the one

dated 04.01.1983 between defendant Nos. 1 to 5 10 and defendant No. 6 or the other dated 18.01.1983

between defendant Nos. 1 to 5 and the plaintiff? The

other question is whether the plaintiff was ready

and willing to perform his part of the agreement

dated 18.01.1983 and secondly, whether he was

able to prove the breach committed by defendant

Nos. 1 to 5 in not performing their part of the

agreement? This question would arise only if the

agreement dated 18.01.1983 is held bona fide and

genuine and the other dated 04.01.1983 is held

bogus.

15. In our opinion, the Trial Court and Division

Bench were right in holding that the agreement

dated 18.01.1983 was a genuine and bona fide

agreement with defendant Nos. 1 to 5 whereas the

agreement dated 04.01.1983 set up by defendant

Nos. 1 to 6 claiming to be prior in point of time as

against the plaintiff's agreement a bogus agreement

11 brought into existence only to somehow avoid

execution of the agreement dated 18.01.1983 of the

plaintiff.

16. In our view, the reasoning and the conclusion

arrived at by the Division Bench is proper and

reasonable. It is based on proper appreciation of

evidence and hence does not call for any

interference in our appellate jurisdiction. This we

say for the following reasons.

17. On perusal of the pleadings and the evidence,

it is also evident to us that defendant Nos. 1 to 5, in

clear terms, admitted the execution of the

agreement with the plaintiff which they had entered

into on 18.01.1983. They further admitted its part

performance when they accepted advance money

from the plaintiff. In the light of these material facts,

if they had already entered into an agreement on

04.01.1983 with defendant No. 6 then where was

12 any occasion for them to have entered into another

agreement thereafter much less on 18.01.1983 to

sell the same property to the plaintiff. Indeed, in

such circumstances, they should have simply

expressed their inability to sell the suit house to the

plaintiff telling him about their prior agreement with

defendant No. 6. In other words, in such situation,

they could have simply informed the plaintiff that he

was late in approaching them and it is not possible

for them to sell the suit house to him. They,

however, did not do so.

18. The conduct of defendant Nos. 1 to 5 and 6

was, in our opinion, clear. They somehow wanted to

avoid execution of the plaintiff's agreement and

wanted to sell the suit house to defendant No.6.

This they could achieve only by creating an

agreement which was prior to that of the plaintiff's

agreement.

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19. Both the Courts, on appreciating the evidence,

therefore, rightly concluded that the agreement

dated 04.01.1983 between defendant Nos. 1 to 5

and defendant No. 6 was a bogus agreement and

was created to scuttle the execution of plaintiff’s

agreement dated 18.01.1983. It was rightly held

that they even got the sale deed executed on

09.02.1983 before the expiry of six months’ period

to avoid performance of plaintiff’s agreement dated

18.01.1983.

20. Once we affirm the findings of the Courts

below (Trial Court and Division Bench) that the

agreement dated 18.01.1983 was a bona fide

agreement whereas the agreement dated 04.01.1983

was a bogus agreement, the next question arises for

consideration is whether the plaintiff has proved the

necessary ingredients of Section 16 (C) of the

Specific Reliefs Act so as to enable him to claim

14 specific performance of his agreement. In other

words, the next question is whether the plaintiff was

able to prove that he was ready and willing to

perform his part of the agreement and that he has

always been ready and willing to perform his part of

the agreement and has, in fact, performed his part

and secondly, whether defendant Nos. 1 to 5

committed the breach in not performing their part

and, if so, its effect?

21. On going through the record, we are inclined

to concur with the findings of the two courts (Trial

Court and Division Bench) on these issues as, in

our opinion, both the Courts below were right in

recording the findings in plaintiff’s favour for the

following reasons.

22. It is not in dispute that the plaintiff did

perform his part when he paid advance money of

Rs.1000/- to defendant Nos. 1 to 5 in terms of the

15 agreement dated 18.01.1983. It is also not in

dispute that the sale deed was to be executed within

6 months, i.e., up to July 1983. It is also not in

dispute that defendant Nos. 1 to 5 executed the sale

deed in favour of defendant No. 6 on 09.02.1983. So

the breach on the part of defendant Nos. 1 to 5 was

apparent inasmuch as nothing more was required

to be proved by the plaintiff once these facts became

undisputed. In spite of that, the plaintiff sent a

notice (Ex-A-2) calling upon defendant Nos. 1 to 5 to

execute the sale deed in his favour but it was not

adhered to by the defendants.

23. In our considered opinion, the story set up by

both the sets of defendants in their respective

written statements, as to in what circumstances,

the agreement dated 04.01.1983 came to be

executed between defendant Nos. 1 to 5 and

defendant No. 6 was wholly unrealistic, irrelevant

16 and cooked up one. The two Courts below (Trial

Court and Division Bench), therefore, rightly

disbelieved it and we fully concur with their

reasoning.

24. Indeed, if the main intention of defendant Nos.

1 to 5 was to sell the suit house and to liquidate the

debts of the family and we accept their story to that

extent for the sake of argument, yet, in our view, the

said purpose could have been achieved by the

defendants by sale of suit house to the plaintiff also.

The sale consideration agreed with the plaintiff was

rather more (Rs.46,000/-) as against defendant No.

6, who purchased it for Rs. 45,000/-. In other

words, if the intention of defendant Nos. 1 to 5 was

to liquidate the debt by sale of suit house then such

purpose could be achieved by selling the suit house

to the plaintiff as well and there was no special

reason to sell it only to defendant No. 6. It was

17 rather clear that he was keen to purchase the suit

house at any cost because being a tenant of the suit

house, he was in its occupation.

25. So far as the other story that how and why

Late Surya Narayana took loan and from whom he

took etc. was of no relevance for deciding the

question of specific performance between the parties

for the simple reason that it was an internal matter

of defendant Nos.1-5, Surya Narayana and his

creditor. Both the Courts below (Trial Court and

Division Bench), therefore, rightly rejected this part

of story pleaded by the defendants as being wholly

irrelevant.

26. In the light of foregoing discussion, we are of

the considered opinion that both the Courts below

were right in decreeing the plaintiff's suit for specific

performance of the agreement dated 18.01.1983

against the defendants and we uphold this finding.

18

27. Now coming to another question though not

pressed in service by the parties but, in our view, it

does arise in the case as a result of the plaintiff's

suit being decreed against the defendants by the

Trial Court and affirmed by the Division Bench of

the High Court and lastly by this Court.

28. The question arose before this Court in the

case of Durga Prasad & Anr. Vs. Deep Chand &

Ors., AIR 1954 SC 75 as to what form of decree

should be passed in the case of specific performance

of contract where the suit property is sold by the

defendant, i.e., the owner of the suit property to

another person and later he suffers a decree for

specific performance of contract directing him to

transfer the suit property to the plaintiff in term of

contract.

29. The learned Judge-Vivian Bose, J. examined

this issue and speaking for the Bench in his

19 inimitable style of writing, held as under:

“Where there is a sale of the same property in favour of a prior and subsequent transferee and the subsequent transferee has, under the conveyance outstanding in his favour, paid the purchase-money to the vendor, then in a suit for specific performance brought by the prior transferee, in case he succeeds, the question arises as to the proper form of decree in such a case. The practice of the Courts in India has not been uniform and three distinct lines of thought emerge. According to one point of view, the proper form of decree is to declare the subsequent purchase void as against the prior transferee and direct conveyance by the vendor alone. A second considers that both vendor and vendee should join, while a third would limit execution of the conveyance to the subsequent purchaser alone. According to the Supreme Court, the proper form of decree is to direct specific performance of the contract between the vendor and the prior transferee and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the prior transferee. He does not join in any special covenants made between the prior transferee and his vendor; all he does is to pass on his title to the prior transferee.”

30. The question, in this case, arises this way. The

effect of the decree now is that the plaintiff is

required to pay the balance sale consideration to

20 defendant Nos.1 to 5 in terms of agreement dated

18.01.1983 and, in turn, defendant Nos.1 to 5 have

to execute the sale deed of the suit house in

plaintiff's favour and give possession of the suit

house to the plaintiff. Since, in the meantime,

defendant Nos.1 to 5 have sold the suit house to

defendant No.6, vide sale deed dated 09.02.1983 for

Rs.45,000/- such sale would not bind the plaintiff.

Indeed the sale deed dated 09.02.1983 now has

become bad in law and the transaction of sale

between defendant Nos.1 to 5 and defendant No.6

has failed. In such circumstances, the seller, i.e.,

(defendant Nos.1 to 5) has no right to retain the sale

consideration of Rs.45,000/- which they received

from defendant No.6 or any part thereof, as the case

may be, and has to, therefore, refund the same to

the buyer (defendant No.6). In other words,

whatever amount which defendant Nos.1-5 received

21 from defendant No.6 (whether Rs.45,000/- or any

part thereof), the same has to be refunded by

defendant Nos.1-5 to defendant No.6-(see Section

65 of the Contract Act). Nevertheless, defendant

No.6 would join in execution of sale deed in

plaintiff’s favour along with defendant Nos.1-5 as

held by this Court in Durga Prasad (supra) for

conveying the valid title of the suit house to the

plaintiff.

31. We, therefore, consider it just and proper and

with a view to end this litigation between the parties

which is pending since last more than 3 decades

and to balance the equities amongst the parties to

the suit/appeal, direct that defendant Nos. 1 to 5

would return to defendant No.6 a sum of

Rs.45,000/- or whatever amount which they

(defendant Nos.1-5) received as part of sale

consideration from defendant No.6. This direction

22 we give to the defendants by taking recourse to our

powers under Article 142 of the Constitution of

India to do complete justice because we do not want

another round of litigation to go on for years in

future between the defendants inter se for recovery

of this amount.

32. We may here clarify that in case any dispute

arises between defendant Nos.1-5 and defendant

No.6 in relation to exact amount paid by defendant

No.6 to defendant Nos.1-5 by way of sale

consideration for execution of sale deed dated

09.02.1983, the executing Court will hold limited

enquiry on this question and record its finding after

giving an opportunity to the parties to prove this

fact and then parties will accordingly pay the

decided amount.

33. It was brought to our notice that during the

pendency of this litigation, some more transactions

23 took place in relation to suit house. Suffice it to

say, such transactions are directly hit by the

principle of lis pendence, as contemplated under

Section 52 of the T.P. Act and, therefore, it is of no

consequence so far as this litigation is concerned. In

other words, these transactions are not binding on

the parties to the Lis much less on the plaintiff.

Such parties would be, therefore, at a liberty to now

work out their inter se rights in accordance with law

as a fall out of this judgment.

34. In the light of foregoing discussion and subject

to modification as directed above, the appeal is

accordingly finally disposed of.

35. Let the compliance of this judgment including

execution of decree of the Trial Court be made by

the parties within three months from the date of

receipt of this judgment.

………...................................J. [R.K. AGRAWAL]

24 …...

……..................................J. [ABHAY MANOHAR SAPRE] New Delhi;

October 09, 2017

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