V.S. Ramakrishnan vs P.M. Muhammed Ali

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 8050­8051 OF 2022

V.S. Ramakrishnan …Appellant(s) Versus P.M. Muhammed Ali …Respondent(s)

JUDGMENT

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned

common judgment and order dated 21.02.2022 passed by

the High Court of Kerala at Ernakulam in Regular First

Appeal Nos. 686/2010 and 766/2010, by which, the High

Court has dismissed RFA No. 766/2010 preferred by the

appellant herein – original plaintiff and has partly allowed

RFA No. 686/2010 preferred by the original defendant with

respect to the proportionate cost, the original plaintiff has Signature Not Verified

preferred the present appeals.

Digitally signed by NIRMALA NEGI Date: 2022.11.09 17:25:05 IST Reason: 1

2. That the respondent herein – original defendant entered

into an agreement to sell with the appellant – original

plaintiff on 13.07.2005 for a consideration of Rs. 52,500/­

per cent with respect to the property ad­measuring 9 acres

47.41 cents in Re­Survey No. 35/2/1 of Karukutty Village.

Under the said agreement to sell a sum of Rs. 1 crore was

paid by the appellant to the defendant towards earnest

money of which Rs. 65 lakhs were paid in cash and Rs. 35

lakhs were in the form of post­dated cheque dated

25.08.2005. As per the terms of the agreement to sell the

last date fixed for payment of the balance sale

consideration was 12.01.2006. The post­dated cheque of

Rs. 35 lakhs deposited by the defendant came to be

dishonoured/returned for the reasons “payment stopped

by attachment order”. At this stage, it is required to be

noted that there was a raid conducted by the Income Tax

Department and the bank account of which the post­dated

cheque of Rs. 35 lakhs, was drawn came to be attached by

the IT Department. The cheque was returned by the bank

vide return memo dated 31.08.2005. The defendant

through his advocate served a notice upon the plaintiff

2 drawing the attention of the plaintiff with respect to the

return/dishonour of the post­dated cheque vide notice

dated 02.09.2005. According to the plaintiff immediately

the same was replied on 20.09.2005 and offered to pay the

amount of Rs. 35 lakhs in cash which according to the

plaintiff the defendant refused to accept the same. The

defendant was also called upon to accept Rs. 35 lakhs in

cash and the plaintiff was prepared to handover cash. That

thereafter vide notice dated 23.09.2005 the defendant

terminated the agreement to sell/contract and forfeited Rs.

10 lakhs and called upon the plaintiff to take back an

amount of Rs. 55 lakhs. That thereafter vide notice dated

18.10.2005 the plaintiff replied to the termination notice

dated 23.09.2005 and called upon the defendant to accept

the balance sale consideration within the agreed period

i.e., on or before 12.01.2006. That thereafter the plaintiff

served a legal notice dated 03.01.2006 and called upon the

defendant to execute the sale deed after accepting balance

sale consideration. The defendant was called upon to

inform the plaintiff the date on which he has to pay the

balance sale consideration and to execute the sale deed. As

3 the defendant failed to act as per the legal notice dated

03.01.2006. The appellant – original plaintiff instituted a

suit before the learned Trial Court for specific performance

of agreement to sell dated 13.07.2005. The defendant filed

the written statement repudiating the contract. The

learned Trial Court framed the following issues: ­ “1. Whether the plaintiff is entitled to a decree of specific performance as sought for?

2. Whether the plaintiff is entitled to return of advance paid and if so its quantum?

3. Reliefs and costs.”

2.1 It was the case on behalf of the defendant that as there

was a default on the part of the plaintiff, not acting as per

the terms and conditions of the agreement to sell as the

balance amount of Rs. 35 lakhs was not paid as the post­

dated cheque dated 25.08.2005 was returned and

therefore, the defendant was justified in terminating the

contract. The defendant also denied receipt of the reply to

the notice dated 23.09.2005. Both, plaintiff as well as the

defendant led the evidence both, documentary as well as

oral. The plaintiff also produced on record the income tax

returns for the relevant periods. The plaintiff also

produced on record the statements of bank accounts (A­

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12) of himself as well as of related persons. That thereafter

the learned Trial Court dismissed the suit qua the relief

sought for specific performance of agreement to sell dated

13.07.2005 by observing that the plaintiff was never in

possession of the balance consideration of about Rs. 3

crores and 9 lakhs and therefore, it can be said that there

was no readiness and willingness on the part of the

plaintiff. However, the learned Trial Court granted a partial

decree of return of the advance i.e., Rs. 65 lakhs with

interest of 6% per annum from 13.07.2005 till realization

and also his proportionate cost of the suit.

2.2 Feeling aggrieved and dissatisfied with the judgment and

order passed by the learned Trial Court refusing to pass

the decree of specific performance of the agreement to sell

dated 13.07.2005, the plaintiff preferred RFA No.

766/2010 before the High Court. The defendant also filed

RFA No. 686/2010 challenging the order of cost imposed

by the learned Trial Court. By the impugned common

judgment and order the High Court has dismissed the

appeal preferred by the appellant – original plaintiff and

has allowed the appeal preferred by the defendant by

5 observing that as the post­dated cheque of Rs. 35 lakhs

which was paid towards part sale consideration was

returned therefore full payment towards part sale

consideration was not made and therefore there was no

concluded contract between the parties for sale of the suit

property. By observing so, thereafter the High Court has

observed once there was no concluded contract between

the parties for sale of the suit property, the question

whether there was readiness and willingness on the part of

the plaintiff to pay the balance sale consideration does not

arise for consideration.

2.3 Feeling aggrieved and dissatisfied with the impugned

common judgment and order passed by the High Court the

plaintiff has preferred the present appeals.

3. We have heard Shri V. Chitambaresh learned Senior

Advocate appearing on behalf of the appellant and Shri

Joseph Kodianthara learned Senior Advocate appearing on

behalf of the defendant. We have also gone through and

considered the findings recorded by the learned Trial Court

as well as the High Court.

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4. The High Court has non­suited the appellant – original

plaintiff on the ground that as the post­dated cheque of

Rs. 35 lakhs was returned which was towards part sale

consideration and tendering the worthless post­dated

cheque cannot be said to be tendering the payment and

therefore, there was no concluded contract between the

parties. By observing so, the High Court has refused to go

into the aspect of the readiness and willingness on the part

of the plaintiff. However, it is required to be noted that at

the time when the post­dated cheque of Rs. 35 lakhs was

tendered the same cannot be said to be worthless cheque.

The post­dated cheque of Rs. 35 lakhs returned by the

bank was with an endorsement i.e., “payment stopped by

attachment order” as there was a raid conducted by the IT

Department and the bank account was attached and

therefore, the post­dated cheque was returned. At this

stage, it is required to be noted that the cheque was not

returned for the reasons of insufficient funds in the bank

account. Therefore, the observation made by the High

Court that the post­dated cheque was worthless cheque

and tendering such worthless cheque cannot be said to be

7 a payment towards part sale consideration cannot be

accepted. We do not approve such observations/reasoning

given by the High Court.

4.1 Now the findings and the reasoning given by the learned

Trial Court refusing to pass a decree for specific

performance is concerned it appears that though there was

no specific issue framed by the learned Trial Court on

readiness and willingness on the part of the plaintiff, the

Trial Court has given the findings on the same and has

non­suited the plaintiff by observing that the plaintiff was

not having sufficient funds to make the full balance

consideration on or before 12.01.2006. Such a finding

could not have been given by the learned Trial Court

without putting the plaintiff to notice and without framing

a specific issue on the readiness and willingness on the

part of the plaintiff. There must be a specific issue framed

on readiness and willingness on the part of the plaintiff in

a suit for specific performance and before giving any

specific finding, the parties must be put to notice. The

object and purpose of framing the issue is so that the

parties to the suit can lead the specific evidence on the

8 same. On the aforesaid ground the judgment and order

passed by the learned Trial Court dismissing the suit and

refusing to pass the decree for specific performance of the

agreement to sell confirmed by the High Court deserves to

be quashed and set aside and the matter is to be

remanded to the learned Trial Court to frame the specific

issue with respect to the readiness and willingness on the

part of the plaintiff. On remand the parties be permitted to

lead the evidence on the readiness and willingness on the

part of the plaintiff to perform his part of the contract,

more particularly, whether the plaintiff was ready and

willing to pay the full consideration and whether the

plaintiff was having sufficient funds and/or could have

managed the balance sale consideration.

5. In view of the above and for the reasons stated above the

present appeals succeed in part. The impugned common

judgment and order passed by the High Court and the

judgment and decree passed by the learned Trial Court

dismissing the suit preferred by the plaintiff for specific

performance of the agreement to sell are hereby quashed

and set aside. The matter is remitted back to the learned

9 Trial Court to decide and dispose of the suit afresh in

accordance with law and on merits. The learned Trial

Court is directed to frame the specific issue on the

readiness and willingness on the part of the plaintiff to

perform his part of the contract and thereafter, the parties

may be permitted to lead the evidence on readiness and

willingness on the part of the plaintiff to perform his part

of the contract and thereafter, the learned Trial Court to

decide and dispose of the suit on merits and on the basis

of the evidence that may be led. The aforesaid exercise be

completed by the learned Trial Court on remand within a

period of twelve months from the date of receipt of the

present order. Both, these appeals are accordingly allowed

to the aforesaid extent. In the facts and circumstance of

the case there shall be no order as to costs.

………………………………….J. [M.R. SHAH]

NEW DELHI; ………………………………….J. NOVEMBER 09, 2022 [M.M. SUNDRESH]

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