Prasanna v. Sreedharan — 1995 DIGILAW 257 (KER)

Judgment :- Both the appeals are filed against the judgment rendered in O.S.No. 406 of 1982 on the file of the Court of the Sub Judge, Tellicherry. The first defendant in the suit is the appellant in A.S.No.147 of 1987 and the plaintiffs in the suit are the appellants in A,S.No. 303 of 1987. This common judgment is being passed in both the appeals. 2. The suit was filed for specific performance of contract and in the alternative for recovery of a sum of Rs. 2,10,391/- paid in advance at the time of entering into an agreement of sale of the suit property and for damages. Plaint A and B Schedule properties of the plaint, consisting of a Cinema Theatre known as Prabhat Cinema at Cannanore with all appurtenances, equipments, furniture and other buildings and movables, belong to the defendants. These properties originally belonged to the husband of the first defendant and his brothers. There was a suit for partition of this property. Finally a decree was passed on compromise. Execution Petitions, bearing No. 19 and 27 of 1981, were filed by the brothers of the first defendant's husband for their share. Since the defendants were not able to pay the decree amount, the plaint schedule property was sold for a sum of Rs. 5,44,000/- on 24-6-1982 by the Court. In the meantime, the first defendant's husband died. The defendants, however, wanted to save the property for themselves. Thereafter, the litigation was being conducted by the brother of the first defendant. The first defendant and her brother Premarajan approached the first plaintiff and offered to sell the plaint schedule properties. Although the first plaintiff was initially reluctant, he ultimately agreed to purchase the same at a cost of Rs. 7,44,000/- He paid a sum of Rs. 2,10,391/- as advance. The first defendant for herself and on behalf of her minor son (second defendant) executed and registered Ext. Al agreement dated 21-7-1982, wherein it was stipulated that the plaint schedule properties belonging to both of them in half shares would be transferred for a sum of Rs. 7,44,000/- in favour of the plaintiffs after obtaining necessary permission from the competent court for sale of the share of the minor (2nd defendant). After the deposit of the amount in court, the court sale was set aside. 7,44,000/- in favour of the plaintiffs after obtaining necessary permission from the competent court for sale of the share of the minor (2nd defendant). After the deposit of the amount in court, the court sale was set aside. But the defendants avoided to execute the sale deed, although the plaintiffs were ready and willing to pay the balance amount. The plaintiffs sent a notice on 4-10-1982 calling upon the defendants to execute the sale deed. But, they failed to execute the sale deed as per the agreement Ext. Al. 3. The defendants, in their written statement have contended that the first defendant was persuaded by her brother to sign on the document (Ext. A1) without the contents thereof being explained. She never intended to execute any such agreement. After the death of the husband of the first defendant there was no one to help her and her minor child except her brother, Her brother approached the first plaintiff and intimated the first defendant that he succeeded in getting the-required amount and the same was paid in court by him and got the auction sale set aside. She was made to believe that she was signing a document of security for the money advanced by the first plaintiff. The first defendant came to know about Ext. Al agreement for the first time on receipt of a letter dated 2-9-1982 (Ext. A5) sent by the plaintiffs demanding for execution of the sale deed on receipt of balance consideration. The property in question is worth more than rupees 40 lakhs. The property could not have been agreed to be sold for an inadequate consideration of Rs. 7,44,000/-. Moreover, it is contended that the share belonging to the second defendant, who was then a minor, could not have been transferred by her. The second defendant is not bound by the contract. 4. Learned Sub Judge on a consideration of the oral and documentary evidence on record, held that the first defendant executed Ext. Al agreement by fully knowing its contents and agreed to sell the properties to the plaintiffs. The first defendant has got half share in the properties and no permission was obtained from the court to alienate the share of the minor (second defendant) and as such specific performance cannot be ordered in respect of the minors share. The plaintiffs are entitled to specific performance of Ext. The first defendant has got half share in the properties and no permission was obtained from the court to alienate the share of the minor (second defendant) and as such specific performance cannot be ordered in respect of the minors share. The plaintiffs are entitled to specific performance of Ext. Al contract in respect of the share of the first defendant. No hardship will be caused to the first defendant if specific performance of contract is ordered only in respect of her share. Accordingly, learned Sub Judge decreed the suit with a direction to the first defendant to execute a sale deed in respect of her share in the properties on receiving the balance consideration of Rs. 1,61,690/-. 5. Learned counsel for the appellant/first defendant in A.S.No.147/87 contended that the appellant never intended to sell the properties to a third party. The situation in which she was placed when the money was advanced and Ext. Al agreement was got executed and registered would go to show that the contract gave the plaintiffs an unfair advantage inasmuch as the parties were not placed on equal bargaining positions at the time of contract. The contract, therefore, is unenforceable. 6. Learned counsel for the appellants/ plaintiffs in A.S.No. 303 of 1987 has contended that the finding of the lower court that the contract is void as against the second defendant for want of permission from the District Court at the time of entering into the contract (Ext. A1) or subsequently, is not legally sustainable. The second defendant is bound by the contract. He was also benefitted by the transaction entered into by his mother guardian, the first defendant. 7. In view of the above contentions, the following points arise for consideration: (1) Whether the first defendant executed Ext. Al (agreement of sale ) after knowing and understanding the contents thereof fully'? (2) Whether the first defendant could enter into an agreement on behalf of her minor son (2nd defendant) as his mother guardian to sell his share of live property? (3) Whether the agreement (Ext. A1) has resulted in unfair advantage to the plaintiffs and whether it would be just and proper to direct the defendants to execute a sale deed in favour of the plaintiffs? 8. Point No. 1: There is no dispute that the suit property was sold in court auction in O.S,No. 56/80 in pursuance of an execution petition. A1) has resulted in unfair advantage to the plaintiffs and whether it would be just and proper to direct the defendants to execute a sale deed in favour of the plaintiffs? 8. Point No. 1: There is no dispute that the suit property was sold in court auction in O.S,No. 56/80 in pursuance of an execution petition. The sale could be set aside only by deposit ot'Rs.2,10,391/- on behalf of the defendants. There is also no dispute, at this stage, that the amount deposited in court for setting aside the sale on 21-7-1982 was the money given by the plaintiffs to the defendants. Ext. A7 is a letter dated 18-9-1982 sent by the first defendant to the first plaintiff acknowledging the receipt of the letter dated 2-9-1982 (Ext. A5), while expressing her gratitude for the help given by the plaintiffs to save their theatre from being sold in public auction. The first defendant does not disown the letter nor her signature appearing thereon. There is no dispute that the first plaintiff being a rich person was in a position to give the monetary help. The defendants have contended that Sri. Premarajan, brother of the first defendant, managed to get a loan from the plaintiffs to save the property from confirmation of sale. The first defendant was not informed that the amount was paid by the plaintiffs as advance in pursuance of The agreement for sale of the suit properties. It is also contended by the first defendant that her brother duped her and she never obtained any advance money from the plaintiffs in pursuance of Ext. Al agreement. It is also contended that she was never aware of the contents of Ext. Al document and for the first time she came to know of Ext. Al on receipt of Ext. A5 letter. But, this contention has no force. There is no case of the defendants nor is there any evidence to show that on the date of execution of Ext. Al agreement the first defendant put her signature on a blank paper and that subsequently it was converted into an agreement by the plaintiffs. In this context, it may be stated that the first defendant had no other source of income to raise the money required to get the sale set aside by depositing the said amount. Al agreement the first defendant put her signature on a blank paper and that subsequently it was converted into an agreement by the plaintiffs. In this context, it may be stated that the first defendant had no other source of income to raise the money required to get the sale set aside by depositing the said amount. From the evidence of DW2 (husband of the sister of the 1st defendant), it appears that neither he nor any of the relatives of the defendants were in a position to help them in lending the amount. The first defendant, as DW1, has stated that Sri. Premarajan, her brother, had no independent source of income and lie was not having any avocation. He was doing whatever he was asked to do by her and her father. She has clearly stated in her evidence that she had utmost faith in him and he had never cheated or defrauded her till his death. There is no evidence to show that Sri. Premarajan, brother of the first defendant colluded with the first plaintiff in creating Ext. A1 agreement. No case is made out that he was in a dominant position and the first defendant was signing in all the papers as dictated by him without understanding its contents. The first defendant has admitted her signatures and that of others appearing on Ext. Al. The first defendant has studied upto 10th standard and she admits that she knows well how to read and write. It is evident from the plaint averments and the deposition of PW1 that he was never anxious to purchase the plaint schedule property. He agreed to purchase the same with a view to help the defendants in order to set aside the court sale and to give the benefit of excess amount of rupees two lakhs. It is no where stated by DW1 in her evidence that either the plaintiffs or anybody else had occasion to exercise any undue influence on her to execute the document. There is also no evidence that the plaintiffs were at any time hostile to the defendants or her family. In these circumstances, there is no reason why the evidence of PW1 (first plaintiff), PW2 (the typist who typed the document (Ext. A1) and PW3 (Manager of the plaintiffs' business ) should not be believed. PW. There is also no evidence that the plaintiffs were at any time hostile to the defendants or her family. In these circumstances, there is no reason why the evidence of PW1 (first plaintiff), PW2 (the typist who typed the document (Ext. A1) and PW3 (Manager of the plaintiffs' business ) should not be believed. PW. 1- first plaintiff - states that the first defendant and her brother came to him on the 29th day after the auction. They proposed to sell the property to him if a sum of Rs. two lakhs in excess of the court sale price is paid. He agreed. An agreement was drafted on the next day. The first defendant and her brother came on the next day morning. He along with them came to Advocate Sreedharan and drafted the copy of the agreement. The draft was prepared by the Advocate. Then they went to the typist (PW2). After typing the agreement the first defendant and her brother read it. They signed it at the office of the typist. The first defendant signed it initially and the-n others. In the cross-examination, he also made it clear that the draft agreement was in the handwriting of Advocate Sreedharan, The agreement was read out to the first defendant. PW2, who typed Ext. Al agreement, states that after typing it he gave Ext. Al to the first defendant. She went through it. The first defendant signed the document hi her individual capacity and as guardian of the minor. Thereafter the first plaintiff and his Manager put their signatures. In the cross examination, PW2 also makes it clear that the first defendant came to the office of the Advocate. The witnesses to the agreement signed in his office. The matter was read over to her after making the corrections. PW3 has similarly deposed that he saw the first defendant signing Ext. Al agreement. The first defendant was examined as DW1. She deposed that the signature in Ext. Al is her signature which she signed before the Registrar. She also states that she had admitted the fact of execution of Ext. Al before the Sub Registrar. Of course, she states that she made this admission on the instruction of her brother and further she states that the Sub Registrar did not explain her the contents of the document. Al is her signature which she signed before the Registrar. She also states that she had admitted the fact of execution of Ext. Al before the Sub Registrar. Of course, she states that she made this admission on the instruction of her brother and further she states that the Sub Registrar did not explain her the contents of the document. As has been said above, she never acted on the advice of tier brother. On the contrary, her brother did everything as he was told by her and her father. Once she admits to have consented to the execution of Ext. Al before the Sub Registrar which she had read earlier, there can be no doubt that at the time of presentation of the document for registration, she knew its contents and was conscious of the fact that she executed Ext. Al agreement for sale of the plaint schedule properties on receiving the advance money. On the facts and in the circumstances as stated above, we are of the view (hat she executed Ext. Al agreement after knowing and understanding the contents thereof fully. 9. Point No. 2: There is no dispute that the defendants being Hindus arc governed by the provisions of the Hindu Minority and Guardianship Act, 195 6. Relevant provisions of S.8 of the Act are as follows: "Powers of natural guardian:-(1) The natural guardian of a Hindu minor has power, subject to the provisions of this Section, to do all acts which are necessary or reasonable and proper for the benefit of the minor or for the realisation, protection or benefit of the minor's estate, but the guardian can in no case bind the minor by a personal covenant. (2) The natural guardian shall not, without the previous permission of the court, (a) mortgage or charge, or transfer by sale, gift, exchange or otherwise, any part of the immovable property of the minor, or (b) lease any part of such property for a term exceeding five years or for a term extending more than one year beyond the date on which the minor will attain majority. (3) Any disposal of immovable property by a natural guardian, in contravention of subsection (1) or sub-section (2), is voidable at the instance of the minor or any person claiming under him. (3) Any disposal of immovable property by a natural guardian, in contravention of subsection (1) or sub-section (2), is voidable at the instance of the minor or any person claiming under him. (4) No court shall grant permission to the natural guardian to do any of the acts mentioned in sub-section (2) except in case of necessity or for an evident advantage to the minor. XX XX XX Learned Sub Judge held that the agreement to transfer the half share of the minor defendant is not enforceable and the first defendant cannot bind the minor in contract for sale of his share. Accordingly, he allowed part performance of the contract and held that no sale deed can be executed in respect of the share of the second defendant. The powers of a Hindu guardian to bind a minor in a contract for purchase of immovable property came up for consideration before the Supreme Court in Manik Chand v. Ramchandra (AIR 1981 SC 519). The Supreme Court referred to the Full Bench decision of the Andhra Pradesh High Court in Vadakattu Suryaprakasam v. Ake Gangaraju (AIR 1956 A.P. 33-FB) and observed as follows: "the Andhra Pradesh High Court expressed its view that it had no hesitation to hold that the considered judgment of the Judicial Committee in AIR 1948 PC 95: (ILR (1949) Mad. 141) must be taken as overruling all the previous decisions based on 32 Cal. 232 (PC). (The reference 32 Cal. 332 (PC) appears to be an error for (1912) ILR 39 Cal. 232: (9 All LJ 33) (PC). It also held that there could not be any essential distinction between the contract of sale and contract of purchase. The High Court cited with approval the view taken by Vishwanatha Sastri, J. of the Madras High Court in AIR 1951 Mad. 431: (1950) 2 Mad. Q. 597. It is unnecessary to go into this question any further as after the passing of Hindu Minority, 1956, the guardian of a Hindu minor has power to do all acts which are necessary or reasonable and proper for the benefit of the minor or for realisation, protection or benefit of the minor's estate. This provision makes it clear that, the guardian is entitled to act so as to bind the minor if it is necessary or reasonable and proper for the benefit of the minor. This provision makes it clear that, the guardian is entitled to act so as to bind the minor if it is necessary or reasonable and proper for the benefit of the minor. The power thus conferred by the action is in no way more restricted than What was recognised under the Hindu Law. The submission was that the contract by the guardian which binds the minor to make a payment, would be in the nature of a personal covenant and as such is excluded by S.8. In support of his plea, the learned counsel relied on S.55(5)(b) of the Transfer of Property Act and submitted mat so far as the payment of the purchase price is concerned, there is personal covenant. We arc unable to accept this contention for it cannot be said that the guardian by the contract was binding the minor by his personal covenant. As it is within the competence of the guardian, the contract is entered into effectively on behalf of the minor and the liability to pay the money is the liability of the minor under the Transfer of Property Act. We are unable to accept the plea that in a contract for purchase of property, the guardian Would be binding the minor by his personal covenant. In the result we find that the contract entered into by the guardian on behalf of the minors is enforceable " This Court in Santha v. Cherukutty (1972 KLT 1051) held that a transaction which has been entered into by a person with limited powers, as in S.8 of the Hindu Minority and Guardianship Act, 1956, it is voidable at the instance of another and that other can avoid the transaction or affirm it. It is not a void transaction. The alienation is voidable at the minor's instance. In this case, it is contended by learned counsel for the plaintiffs /appellants, that by the transaction in question, the minor was benefitted atleast to the extent of rupees one lakh, inasmuch as if the court sale had been confirmed, no benefit would have accrued to him at all. It is true that the minor would get some monetary benefit, if the sale is effected at the price as stated in Ext. Al. But, in our opinion, it would not have ensured to the advantage of the minor. It is true that the minor would get some monetary benefit, if the sale is effected at the price as stated in Ext. Al. But, in our opinion, it would not have ensured to the advantage of the minor. It is in evidence that the defendants are left with no other source of income except the income derived from the Cinema hall. By the sale of the property, the minor would have been permanently deprived of the source of his livelihood throughout his life. Even if a one time gain of a sum of rupees two lakhs and odd would yield some income by prudent investment, yet there is no certainty as to whether the guardian would have been able to invest the minor's money wisely so as to ensure a permanent source of income. As against this uncertainty and hypothetical conjectures, the safe course of ensuring minor's livelihood is to continue the-existing business which admittedly yields sufficient income for the comfortable living. In this view of the matter, we hold that it would not be any advantage to the minor, if his share in the suit property is alienated. We are, therefore, of the opinion that on the facts and in the circumstances of the case, the first defendant cannot bind the second defendant in the contract for sale of his share in the suit properties. Point No. 2 is answered in favour of the second defendant. Plaintiffs' appeal (a.s.no. 303/87) has therefore no merit. 10. PointNo.3: Section 20 of the Specific Relief Act, 1963 deals with discretion as to decreeing specific performance. It is as follows: "The jurisdiction to decree specific performance is discretionary, and the court is not-bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. It is as follows: "The jurisdiction to decree specific performance is discretionary, and the court is not-bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. (2) The following are cases in which the court may properly exercise discretion not to decree specific performance (a) where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered in to are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or '(b) where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; (c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance. Explanation 1. Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Explanation 2.- The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract. (3) The court may properly exercise discretion to decrees specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance. (4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party." Learned counsel for the defendant (appellant in A.S.No.147 of 1987) contended that the circumstances under which the agreement was entered into makes it inequitable to enforce specific performance. (4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party." Learned counsel for the defendant (appellant in A.S.No.147 of 1987) contended that the circumstances under which the agreement was entered into makes it inequitable to enforce specific performance. Every contract, including a contract for sale of immovable property, has to be construed with reference to not only the intention of the parties as stated in the contract, but also the circumstances under which the terms and conditions of the contract which were agreed upon by the parties. The doctrine of imputing intention to the parties to a contract which may at times be at variance with the terms of a contract reduced to writing is a doctrine which has found acceptance of late with courts. This doctrine really rests upon the principle of construing an agreement with reference to the real situation or context in which it was entered into and not relying upon the mere wording of the contract as fixing the real intention of the parties. The present case is a typical example for the application of the doctrine of imputing intention to the parties to a contract. In this case, the property of the defendants was sold in execution on 24-6-1982 and to obtain money for depositing in court to get the auction sale set aside the first defendant entered into an agreement with the plaintiffs on 21-7-1982 for sale of the property. The advance which the plaintiffs paid was just necessary to deposit in court. This really means that the first defendant agreed to transfer title to the plaintiffs rather than allow the properties to remain in the hands of the auction purchaser for no benefit to them. It is clearly stated by the plaintiff as PW1 that he never intended to purchase the property and it was due to the persuasion by the first defendant that the reluctantly agreed to purchase the same. The contract covered the entire property of the defendants which is the only source Of their livelihood. Obviously, the irresistible inference is that the defendant did not want to part with the property and did not intend to get the auction sale set aside solely for the benefit of a third party, namely, the plaintiffs. The contract covered the entire property of the defendants which is the only source Of their livelihood. Obviously, the irresistible inference is that the defendant did not want to part with the property and did not intend to get the auction sale set aside solely for the benefit of a third party, namely, the plaintiffs. We are of the view that taking advantage of the situation in which the defendants as judgment-debtors were placed, the plaintiffs tried to secure for themselves the properties, not negotiating for them on equal terms. There can be no dispute that the price obtained at the court auction was not the fair market price of the properties. The valuation of the property for Rs. 26,13,415/- given by DW3, a retired Assistant Executive Engineer, PWD, is of course disputed on the ground that the plaintiffs had no notice when he valued the property; nor was he appointed by the court to do the same. Of course, there is some force in this objection. Nevertheless, the property, according to us, cannot be valued at less than rupees 15 lakhs. It is true that, that by itself is no ground to refuse the enforcement of the contract. But, this has some significance when it is taken along with other factors, namely, the situation in which the defendants were placed, that is to say, unless they could find the necessary money for depositing into court to set aside the auction sale and to conduct the proceeding for this purpose, they had no prospect of regaining title to the properties. The facts of the case in Lakshminarayna v. Singara Vein (AIR 1963 Mad. 24) are almost similar to the facts of this case. It has been observed that taking advantage of the situation in which the judgment debtors (like the defendants in this case) were placed, the plaintiffs secured for themselves the properties, far below the market price, not negotiating for them on equal terms. Thus the plaintiffs obtained a measure of unfair advantage over the judgment-debtors (defendants) by the terms of the contract and therefore specific performance should be refused. We fully concur with the view expressed by the Madras High Court in Lakshminarayana 's case, which is a case of this nature. Hence we hold that it would not be just and proper to direct the defendants to execute the sale deed in pursuance of Ext Al agreement. We fully concur with the view expressed by the Madras High Court in Lakshminarayana 's case, which is a case of this nature. Hence we hold that it would not be just and proper to direct the defendants to execute the sale deed in pursuance of Ext Al agreement. Point No. 3 is, therefore, answered in favour of the defendants. 11. But, however, the plaintiffs would be entitled to claim the alternative relief asked for in the plaint. This consists of the return of Rs. 2,10,391/- given as advance with interest at 6% per annum. Since admittedly the defendants regained the property on payment of the aforesaid amount by the plaintiffs treating the same as advance towards the price of the property agreed to he sold, the defendants are bound to refund the same to the plaintiffs. 12. The appeal tiled by the first defendant - A.S.No.147 of 1987 is allowed and the appeal filed by the plaintiffs in the suit - A.S.No. 303 of 1987 - is dismissed. The decree of the lower court is set aside and instead we grant a decree to the plaintiffs against the defendants for payment of a sum of Rs. 2,10,391/-with interest at 6% per annum from 21-7-1982 till the date of payment. We direct both the parties to bear their costs throughout.