Judgment : The 2nd defendant in O.S.No.5 of 1998 on the file of the District Judge, Krishna District at Machilipatnam is the appellant herein. 2. The suit was one filed for specific performance of contract of sale by the plaintiff alleging that the 1st defendant is the absolute owner of the property and agreed to sell the property @Rs.75,000/- per acre and executed an agreement of sale on 30.01.1995. A sum of Rs.4,00,000/- is said to have been paid and in spite of repeated demands, the 1st defendant postponed the execution of the sale deed and a notice was also given but after the demand made by the plaintiff by virtue of the registered deed dated 01.04.1996 and without giving reply he executed a registered sale deed dated 10.12.1996 in favour of the 2nd defendant, who is his sister and delivered possession to her. It is a fraudulent transaction and, therefore, both the defendants are liable to execute the sale deed or to refund the amount of Rs.4,00,000/- with interest at 12% per annum. 3. The 1st defendant remained ex parte and the 2nd defendant filed a written statement contending that the sale agreement is not true and is a fabricated one. She claims to have purchased the property for a consideration of Rs.2,85,200/- and obtained the sale deed. The possession of the land was also delivered, hence he is a bona fide purchaser for valuable consideration. A suit was filed in O.S.No.11 of 1997 against the plaintiff and after appearance the plaintiff got issued a notice on 19.02.1997 contending that the 1st defendant and his mother executed the pronote for Rs.1,25,000/-on 10.12.1995. On the basis of it, I.P.No.12 of 1997 was filed to declare the 1st defendant as an insolvent contending that the sale deed is a fabricated one. The contract is not enforceable and the plaintiff is not aware of the said contract and I.P.No.12 of 1997 was dismissed on 26.04.2000, in which the sale was challenged and, therefore, the plaintiff cannot further challenge the sale transaction. 4. On the basis of the above pleadings, the following issues have been framed for trial: 1. Whether the plaintiff is entitled for the specific performance of contract of sale dated 30.01.1995 against defendants 1 and 2 and to recover the possession of the property? 2. 4. On the basis of the above pleadings, the following issues have been framed for trial: 1. Whether the plaintiff is entitled for the specific performance of contract of sale dated 30.01.1995 against defendants 1 and 2 and to recover the possession of the property? 2. Whether the second defendant is bona fide purchaser for valuable consideration without notice of the earlier contract of sale? 3. Whether the Court fee paid is proper and correct? 4. Whether the sale deed dated 10.12.1996 in favour of the second defendant is fraudulent transfer to avoid the suit agreement of sale deed? 5. Whether the plaintiff is entitled to alternative relief? and 6. To what relief? Additional Issues: 1. Whether the plaintiff is entitled for refund of Rs.4,00,000/-with interest from the second defendant? And 2. Whether the plaintiff is entitled to raise the plea of fraudulent transaction of the sale deed dated 10.12.1996 in view of the decision in I.P.No.12 of 1997? 5. On behalf of the plaintiff, P.Ws.1 to 5 were examined and marked Exs.A-1 to A-16 and on behalf of the defendants, D.Ws.1 to 4 were examined and Exs.B-1 to B-9 were marked. Ex.X-1 was marked in the evidence of P.W.3. 6. After considering the evidence on record, the learned District Judge held in para 29 that the plaintiff is not entitled for the specific performance of the contract. The learned District Judge in para 22 also referred to the conduct of the plaintiff and he felt that the transaction essentially is a loan transaction. But, however, the learned Judge found that the 2nd defendant is no other than the sister of the 1st defendant and there is a doubt about the capacity of the 2nd defendant to purchase the land and when under the agreement Ex.A-1, it was sold for Rs.71,000/- per acre, the 2nd defendant claims to have purchased it only for Rs.40,000/-per acre and in view of the above circumstances, the transaction under Ex.B-2 cannot be believed. The lower Court held that the burden is on the 2nd defendant to prove that she is a bona fide purchaser for value without notice of the agreement of sale in favour of the plaintiff and the 2nd defendant has failed to prove the same and found that Ex.B-2 is a nominal transaction. The lower Court held that the burden is on the 2nd defendant to prove that she is a bona fide purchaser for value without notice of the agreement of sale in favour of the plaintiff and the 2nd defendant has failed to prove the same and found that Ex.B-2 is a nominal transaction. Consequently, the learned District Judge granted a decree for refund of Rs.4,00,000/- with interest at 12% per annum against both the defendants. The 2nd defendant questions the enforceability of the same. 7. The points that arise for consideration are: 1. Whether the plaintiff is entitled for the specific performance of the contract of sale? 2. Whether the judgment and decree passed by the learned District Judge, Krishna District at Machilipatnam is legal and sustainable? 3. To what relief? POINTS 1 to 3: 8. In order to appreciate the legality of the judgment of the lower Court, Section 19 of the Specific Relief Act, 1963 (for short “the Act”) has to be taken note of. Section 19 (a) and (b) of the Act reads as follows: 19. Relief against parties and persons claiming under them by subsequent title:- Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against- (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract; 9. It is also not in dispute that under Section 22 of the Act, the refund of the earnest money can be granted in case, specific performance is not granted. 10. The learned counsel for the respondent-plaintiff relied on the following decisions: 1. Dalmia Jain & Co. v. Kalyanpur Lime Works(AIR 1963 PATNA 298) 2. Rajendra Kantilal Dalal v. Bombay Builders Co. (P) Ltd. (AIR 2002 BOMBAY 408) In this case, it is to be noted that the enforceability of the contract against the subsequent transferee or purchaser under agreement of sale in the suit of the plaintiff depends upon the equitable relief of specific performance granted in his favour. Evidently, in a suit for specific performance, the Court has to find whether the plaintiff was ready and willing to perform the part of the contract and as to whether it is equitable to grant such a relief. Evidently, in a suit for specific performance, the Court has to find whether the plaintiff was ready and willing to perform the part of the contract and as to whether it is equitable to grant such a relief. The essential requirement is readiness and willingness and also the nature of the transaction between the plaintiff and the owner of the property. The question of the liability of the subsequent purchasers or alienees arises only when the plaintiff is found entitled for a decree of specific performance. When once the Court finds that the relief of specific performance cannot be granted against the defendant No.1 and also opining that the transaction is essentially a loan transaction and there are doubts about the readiness and willingness pleaded by the plaintiff, having rejected the relief of specific performance it is not within the scope of Section 19 of the Act to make the subsequent purchaser to refund the money payable to the plaintiff. The liability of the 2nd defendant arises only when there is a decree for specific performance granted in favour of the plaintiff. In a suit for specific performance, when once the relief of specific performance is rejected, it is beyond the scope of the Court to consider as to whether the sale transaction in favour of the 2nd defendant is a bona fide or not and to further hold that the sale transaction is a nominal one. 12. Evidently, the Insolvency Petition was filed on the same ground of attack of the sale transaction in favour of the defendant No.2 and the said petition had been dismissed. The findings in the said Insolvency Petition about the fraud or intention to defeat or delay the debts can certainly come under the principle of res judicata and the Court cannot ignore the same. In this connection, it is useful to refer to a decision reported in the case of Azhar Sultana v. B.Rajanami ( (2009)17 SCC 27 ), wherein the scope of Section 19 of the Act was considered and it was held that when once the proof of readiness and willingness is not there and consequently the discretionary relief of specific performance cannot be granted, the question as to the nature of transaction with the subsequent purchaser is not relevant. Therefore, in view of the above circumstances, the judgment and decree dated 30.01.2004 passed by the lower Court in so far as it relates to the appellant herein that the 2nd defendant is liable to be set aside and accordingly the points are answered. 13. In the result, the appeal is allowed and the judgment and decree of the lower Court so far it relates to the 2nd defendant is set aside and the suit is dismissed. Each party to bear their own costs.