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2001 DIGILAW 257 (KER)

Mahadevan v. Chacko

2001-05-27

P.K.BALASUBRAMANYAN

body2001
Judgment :- P.K. Balasubramanyan, J. S.A. 923 of 1989 is filed by the defendant in O.S.431 of 1983. That suit was filed by one Chacko and his wife Annakutty. The defendant in that suit Mahadevan in his turn filed the suit O.S.437 of 1983 against Chacko and Annakutty. Both the suits were tried together. The trial court dismissed the suit filed by Chacko and Annakutty and decreed the suit filed by Mahadevan. On appeals being filed, the appellate court reversed the decrees of the trial court and granted Chacko and Annakutty a decree in O.S.431 of 1983 and dismissed the suit filed by Mahadevan. Feeling aggrieved Mahadevan has filed these Second Appeals. For convenience and for avoiding confusion, I propose to refer to the parties by their names rather than by their ranks in the respective suits. Chacko had an extent of 20 cents. Chacko by a sale deed, dated 4th September, 1982 marked Ext. A2 sold one cent out of it for a price of Rs. 18,000. Thereafter Chacko sold another extent of three cents to Mahadevan by a sale deed, dated 11th July 1983 marked Ext. A3 for a price of Rs. 1000. The suit O.S.431 of 1983 was filed by Chacko and his wife Annakutty seeking to set aside that sale deed Ext. A3 dated 11th July 1983 on the ground that it was vitiated by fraud and was hence null and void and for a prohibitory injunction restraining Mahadevan from entering that property. The averment in the plaint was that Chacko was plied with liquor by Mahadevan and others and the document was got executed. The document was hence void. Mahadevan defended the suit by contending that he was a teetotaler and the averment that Chacko was plied with liquor before he executed the document was untrue. Chacko had borrowed amounts from Mahadevan on a number of occasions and towards the amounts thus due to Mahadevan, Chacko had executed the sale deed Ext. A3 by way of discharging his obligations. Mahadevan thus contended that the suit was liable to be dismissed. Claiming title and possession on the basis of the sale deed Ext. A3 Mahadevan filed O.S.437 of 1983 seeking to restrain Chacko and Annakutty from interfering with his possession of the three cents covered by Ext. A3. A3 by way of discharging his obligations. Mahadevan thus contended that the suit was liable to be dismissed. Claiming title and possession on the basis of the sale deed Ext. A3 Mahadevan filed O.S.437 of 1983 seeking to restrain Chacko and Annakutty from interfering with his possession of the three cents covered by Ext. A3. That suit was defended by Chacko and Annakutty on the ground that the sale was void and did not confer any title or possession on Mahadevan. 2. Before the Trial Court on behalf of Chacko and Annakutty Exts. Al to A3 were marked. In addition to getting themselves examined, Chacko and Annakutty examined three other witnesses as PWs. 3 to 5. Mahadevan marked Exts. BI and B2 on his side and in addition to getting himself examined another witness as DW2. Commission report and sketch were marked as Exts. Cl and Cl(a). The trial court which jointly tried the suits came to the conclusion that Chacko and Annakutty have not proved any vitiating circumstances to enable the Court to invalidate Ext. A3 sale deed executed by Chacko in favour of Mahadevan and consequently title and possession had passed to Mahadevan under Ext. A3. In that view the Trial Court dismissed the suit filed by Chacko and Annakutty and decreed the suit filed by Mahadevan. It is necessary to notice that the Trial Court found that the pleas of Chacko that he was made to sign a document which was really intended to be a hypothecation deed, that Chacko was not aware of what he was doing at the time he executed the deed, and that before executing he was plied with liquor were not proved and thus no vitiating circumstance which would enable the court to set aside the document had been established. 3. Chacko and Annakutty filed appeals before the Appellate Court. The lower appellate court clearly agreed with the Trial Court that Chacko and Annakutty have not established the case of fraud averred in the plaint. Thus, the Appellate Court in agreement with the Trial Court held that the transaction was not vitiated by fraud or undue influence. It also rejected the apparent plea of non estfactum raised by Chacko and Annakutty. Thus the foundation laid in the plaint for getting the transaction declared invalid was found to be non-existent by the lower Appellate Court. Thus, the Appellate Court in agreement with the Trial Court held that the transaction was not vitiated by fraud or undue influence. It also rejected the apparent plea of non estfactum raised by Chacko and Annakutty. Thus the foundation laid in the plaint for getting the transaction declared invalid was found to be non-existent by the lower Appellate Court. The lower Appellate Court thereafter dealt with an argument raised on behalf of Chacko and Annakutty that in the light of Ext. A2 which showed the sale of one cent for a sum of Rs. 18,000, the sale of three cents under the impugned transaction Ext. A3 for a sum of Rs. 1,000 was unconscionable and hence was liable to be set aside solely on the ground that it was unconscionable even though no vitiating circumstance has been established. The lower Appellate Court proceeded to accept this contention and on its finding that going by a comparison of the prices referred to in Ext. A2 and in Ext. A3, the transaction must be held to be unconscionable set aside the same even in the absence of any vitiating circumstance being established on the ground that the court had the right to set aside the transaction solely on the ground of unconscionableness. The Appellate Court brushed aside the fact that the assignee under Ext. A2 was not examined and no evidence was adduced by Chacko and Annakutty regarding the circumstances under which the price stated therein was paid or received and that there was no independent evidence of the market value of the property. The Appellate Court also ignored the fact that the Trial Court had refused to rely on Ext. A2 sale deed in the absence of supporting evidence other than that of Chacko as PW1, to come to the conclusion that the price fetched thereunder could form the foundation for setting aside the impugned transaction on the ground of unconscionableness alone. The lower Appellate Court thus set aside the transaction Ext. A3 and on that basis decreed the suit of Chacko and Annakutty and dismissed the suit of Mahadevan. Mahadevan's suit was dismissed on the ground that he has acquired no title or possession under that transaction. Mahadevan has filed these Second Appeals. 4. The lower Appellate Court thus set aside the transaction Ext. A3 and on that basis decreed the suit of Chacko and Annakutty and dismissed the suit of Mahadevan. Mahadevan's suit was dismissed on the ground that he has acquired no title or possession under that transaction. Mahadevan has filed these Second Appeals. 4. As far as I can see, the decision mainly relied upon by the lower Appellate Court to set aside the transaction on the ground of unconscionableness is the decision of the Supreme Court in Central Inland Water Transport Corporation Ltd. v. Brojo Nath, AIR 1986 SC 1571. The Appellate Court has also relied on a passage from Anson's Law of Contract and the decision of the Madhya Pradesh High Court in Smt. Koze v. Makhan Singh, AIR 1973 MP 252. The decision of the Himachal Pradesh High Court in Smt. Takri Devi v. Smt. Rama Dogra, AIR 1984 HP 11, was also referred to. The question is whether the sale deed executed by a person sui juris could be set aside without any of the conventional vitiating circumstances being established and solely on the ground of what the court considers to be an unconscionable transaction and whether on the facts of this case the lower Appellate Court was justified in relying on Ext. A2 alone without any other evidence, to come to the conclusion that the transaction Ext. A3 was unconscionable. 5. Chacko in his plaint has come forward with the plea that he was induced to execute the sale deed Ext. A3 by it being held out to him that what was being executed was only a deed of security for a sum of Rs. 1,000 that was due from him to Mahadevan. Thereafter Chacko was admitted to hospital for treatment for some mental problems and during that period Mahadevan attempted to enter the property in question. On 11th October 1983 when Chacko and his wife obtained a copy of the deed from the concerned registry office and went through the document, they realised that what has been got executed is a sale deed for 3 cents without properly describing the boundary and measurements of that property. Chacko had sold on 14th September 1982 an extent of 1 cent of land out of the entire property for a consideration of Rs. 18.000/-. Chacko had sold on 14th September 1982 an extent of 1 cent of land out of the entire property for a consideration of Rs. 18.000/-. When he was able to sell an extent of 1 cent of land for Rs. 18,000 the previous year, it was impossible to believe that he sold the land at a price of Rs. 353 per cent as now claimed by Mahadevan. The fact that Mahadevan had to get the property located as claimed by Mahadevan itself showed that the transaction was a fraudulently created one. Chacko had signed the document on the belief that it was only a deed of security and he had been so made to understand by Mahadevan and one Stanley Vijayan who had taken a leading part in bringing about the transaction. The plea of non estfactum and fraud or misrepresentation so raised by Chacko could not be established by him. Both the courts below have found that Chacko has failed to establish such pleas. It is in this context that the Trial Court held that Chackais not entitled to relief merely on the ground that the price indicated for the property sold under Ext. A3 was unconcionably low. That Court also took the view that there was no proper evidence of the fact that an extent of one cent of land was sold for a price of Rs. 18,000 previous year as claimed by Chacko and the mere production of Ext. A2 copy of the sale deed in that behalf was not sufficient to establish the price fetched by that sale and that price as establishing the price of properties in that locality. The oral evidence attempted on the side of Chacko was also considered by the Trial Court to find that the said oral evidence was also not sufficient to establish the market value of the property during the relevant time. The case of Chacko that he was induced into an inabreated condition before he was taken to the registry for registering Ext. A3 sale deed was also founded to be not established by Chacko. As noticed, the Appellate Court has also agreed with the conclusions of the Trial Court that a case of fraud, undue influence or nonest factum has not been established by Chacko. But the Appellate Court has proceeded on the basis of Ext. A3 sale deed was also founded to be not established by Chacko. As noticed, the Appellate Court has also agreed with the conclusions of the Trial Court that a case of fraud, undue influence or nonest factum has not been established by Chacko. But the Appellate Court has proceeded on the basis of Ext. A2 sale deed said to have been executed the previous year conveying one cent of property from out of the total 20 cents and on a comparison of the price referred to in that document with the price referred to in the impugned sale deed Ext. A3 to come to the conclusion that the price fetched was unconscionably low, and on that short ground Chacko could be given relief. 6. Rescission of a contract at the instance of one of the contracting parties is contemplated by S.27 of the Specific Relief Act. On the scheme of the Indian Contract Act a contract could be set aside on the ground of absence of consent, fundamental error or on the ground of coercion, undue influence, fraud, misrepresentation or mistake. But when the contract is followed by a deed of conveyance itself, Mr. Justice Venkatarama Iyer (as he then was) held in the decision in Delhi Gramani v. Ramachandran, (1951) 2 MLJ 611, that the purchaser can claim compensation only if he establishes fraud or if there is a special agreement for making compensation for errors in quantity or if there is a guarantee that the extent conveyed by the sale deed is correct. Apart from such cases the purchaser had no right to compensation. It has also been stated in Mulla on Transfer of Property Act that rescission may be possible on the ground either (a) of fraud or (b) common mistake or (c) incapacity, legally or equitably or (d) coercion or undue influence. O. VIR. 4 of the Code of Civil Procedure also prescribes the rule of pleading when a transaction is challenged on the grounds referred to above. Once these formal grounds available are not established by a plaintiff seeking to set aside a transaction or seeking a declaration that the transaction is void, it appears to me that he can only fall on the principle of restitution based on the principle of unjust enrichment. Once these formal grounds available are not established by a plaintiff seeking to set aside a transaction or seeking a declaration that the transaction is void, it appears to me that he can only fall on the principle of restitution based on the principle of unjust enrichment. As stated in Goff and Jones relying on the observations of Lord Mansfield that the gist of the action for restitution on the ground of unjust enrichment is that the defendant upon the circumstances of the case is obliged by the ties of natural justice and equity to make restitution. The principles gatherable from the decided cases have been summerised by Goff and Jones in the following words: "It pre-suppose three things. First, the defendant must have been enriched by the receipt of a benefit. Secondly, that benefit must have been gained at the plaintiff's expense. Thirdly, it would be unjust to allow the defendant to retain that benefit. These three subordinate principles are closely inter related and cannot be analysed in complete isolation from each other." 7. In the present case Chacko attempted to raise a contention that the parties were not at arms length when they entered into the bargain. On the evidence Chacko could not establish any such case. All that could be established was that Chacko owned some money to Mahadevan. Towards sums thus due document was executed, Chacko believing it to be only a deed of security. The further case of Chacko that he was taken to a bar, plied with liquor and thereafter taken to the registry office in an in abbreviated condition could not also be established by him. In such a situation Chacko could succeed, if at all only on establishing that Mahadevan was unjustly enriched by the transaction so as to trouble the conscience of the Court and enable him to get relief relieving him of the burden of the transaction entered into by him. This is all the more so since on the pleadings it has not been established by Chacko that the parties were not at arms length and the principle of the decision in Central Inland Water Transport Corporation Ltd. v. Brojo Nath, AIR 1986 SC 1571 cannot straightaway be applied as is seen done by the lower appellate Court. 8. Chacko had therefore to first establish that the price recited as paid by Mahadevan in Ext. 8. Chacko had therefore to first establish that the price recited as paid by Mahadevan in Ext. A3 was so grossly inadequate as to shock the conscience of the Court. The trial court found on an appreciation of the evidence in the case that it has not been established that the price is unconscionably low. The trial court refused to rely on the recitals in Ext. A2 in that regard without any corroboration. Chacko did not adduce any acceptance legal evidence to show the market value of the property in the locality at the relevant time. Chacko solely relied on Ext. A2 sale deed said to have been executed by him about an year prior to the impugned transaction in favour of a stranger. Chacko contented himself by producing a registration copy of that sale deed and giving evidence himself to the effect that the property had been sold by him as recited in that document. But no attempt was made by Chacko to examine the assignee thereunder or to examine anyone else connected with that transaction to prove his case regarding the price that was fetched for the property sold thereunder. The trial court thought that in the circumstances of the case especially in the light of the suggestion on behalf of Mahadevan that the price recited in Ext. A2 had no relation to reality, Chacko was obliged to adduce some further evidence in support of his case that he had sold one cent of bare land for a sum of Rs. 18,000 as indicated in Ext. A2. Taking the circumstances as a whole and the nature of the case detailed by Chacko in the plaint it cannot be held that the trial court was in error in adopting that approach. The Lower Appellate Court simply proceeded on the basis of Ext. A2 and took it for granted that the market value of the property was Rs. 18,000 per cent and the price paid under Ext. A3 was unconscionably low compared to that document. Chacko had himself conceded that he owned amounts to Mahadevan and it was in lieu of the amount so owed that he executed the impugned sale deed Ext. A3 though he was under the impression at the relevant time that he was executing only a deed of security. A3 was unconscionably low compared to that document. Chacko had himself conceded that he owned amounts to Mahadevan and it was in lieu of the amount so owed that he executed the impugned sale deed Ext. A3 though he was under the impression at the relevant time that he was executing only a deed of security. In the face of that plea it was necessary for Chacko to establish what was the amount due from him to Mahadevan especially since Chacko could not prove the other vitiating circumstances set up by him in the plaint. I am also of the view that Chacko ought to have adduced clear evidence of the market value of the property in the locality at the relevant time with reference to comparable sale deeds or otherwise so as to enable the court to clearly come to a conclusion that the price fetched under Ext. A3 sale deed is unconscionably low. The question whether any benefit was derived by Mahadevan under the impugned transaction again could depend upon the evidence regarding the market value of the property at the relevant time. I am therefore of the view that even if Chacko were to be found entitled to relief merely on the principle of unjust enrichment of Mahadevan, Chacko has not laid the foundation so as to enable the court to grant him relief on that basis. By merely stating that the transaction is unconscionable the appellate court was not justified in granting relief to Chacko in his suit. By granting a decree to Chacko without its disagreeing with the findings of the trial court regarding the vitiating circumstances and merely based on the recital of consideration in Ext. A2 sale deed executed by Chacko in favour of a stranger, the lower Appellate Court has committed a substantial error of law warranting correction by this Court in Second Appeal. The decree granted to Chacko by the lower Appellate Court therefore calls for interference. 9. The suit of Mahadevan was dismissed by the Appellate Court essentially on the ground that the transaction Ext. A3 was to be found to be not binding on Chacko. The Appellate Court has not considered the claim of Mahadevan for relief in his suit and independent of its conclusion that Ext. A3 sale deed cannot be upheld. 9. The suit of Mahadevan was dismissed by the Appellate Court essentially on the ground that the transaction Ext. A3 was to be found to be not binding on Chacko. The Appellate Court has not considered the claim of Mahadevan for relief in his suit and independent of its conclusion that Ext. A3 sale deed cannot be upheld. I find on the materials that there was no proper identification of the disputed property in the suit filed by Mahadevan and that no attempt was made to have a proper identification by issuance of a commission of the property conveyed by Chacko to Mahadevan. I am therefore of the view that the suit filed by Mahadevan requires to be reconsidered and decided after getting an identification of the property that was conveyed under Ext. BI to Ext. B3. Thus the decree in O.S.437 of 1983 filed by Mahadevan also calls for interference. This is all the more so in view of the plea of Chacko that the property that was conveyed under Ext. B1 or Ext. A3 was indefinite and could not be identified. I therefore allow both these Second Appeals. In S.A. 923 of 1989 I reverse the decree of the lower Appellate Court and dismiss the suit O.S.431 of 1983 thus restoring the decree of the trial court. I allow S.A. 960 of 1989 and setting aside the judgments. and decrees of the Courts below in O.S.437 of 1983 remand that suit to the trial court for a fresh trial and disposal in accordance with law and in the light of the decree in O.S.431 of 1983 and after getting a proper identification of the property included therein by issuing a commission to an experienced advocate. After getting such an identification made, the trial court will decide that suit afresh in accordance with law. The parties will appear in the trial court on 2nd August 1999. Considering the circumstances of the case the parties are directed to suffer their respective costs.