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2012 DIGILAW 617 (KER)

Radhamani v. Babu

2012-07-03

HARUN-UL-RASHID

body2012
JUDGMENT : The appeals are directed against the common judgment and decree dated 18.8.2001 in O.S.Nos.303/1992, 523/1995 & 525/1995 on the file of the Sub Court, Palakkad. O.S.Nos.303/1992, 523/1995 & 525/1995 were jointly tried and disposed of by the common judgment dated 18.8.2001. The appellant in all the three appeals is Radhamani. Radhamani is the plaintiff in O.S.Nos.303/1992 and 523/1995. She is the defendant in the third suit, namely, O.S.No.525/1995.O.S.No.303/1992 is the main case. The said suit was filed for specific performance and for setting aside at.B3 assignment deed dated 25.3.1992 which relates to plaint 'B' schedule property executed by the 1st defendant in favour of the 2nd defendant. O.S.No.523/1995 (originally filed as O.S.No.154/1992 before the Munsiff Court, Chittur) was filed by the plaintiff in O.S.No.303/1992 against the very same defendant seeking permanent injunction against trespass. O.S.No.525/1995 (originally filed as O.S.No.202/1992 before the Munsiff Court, Chittur) was filed by the President of the Payyamkode Rubber Production Society against the plaintiff in O.S.No.303/1992 for injunction restraining the defendant therein from making any permanent construction of the building and from committing any waste. The court below decreed O.S.No.303/92 in part. A decree for specific performance is granted regarding 40 cents of plaint 'A' schedule property directing the 1st defendant to execute the sale deed in favour of the plaintiff. The court further ordered that the 1st defendant is liable to return the excess amount of Rs.6,000/- to the plaintiff. O.S.No.523/95 filed by the plaintiff in O.S.No.303/92 was dismissed. The connected suit, namely, O.S.No.525/95 was decreed. The plaintiff therein was granted a permanent injunction restraining the defendant therein (plaintiff in O.S.No.303/92) and their men from interfering with the plaintiff's peaceful possession of the plaint schedule property (20 cents) and also from trespassing into the said property. The above three appeals were filed challenging the decrees and judgments in the three suits to the extent it went against the appellant. O.S.Nos.523/95 and 525/95 were originally filed before the Munsiff Court, Chittur, in 1992 and transferred to the Sub Court,Palakkad for joint trial along with O.S.No.303/1992. The parties hereinafter are referred to as the plaintiff and defendants as arrayed in O.S.No.303/1992. 2. The extent of plaint 'A' schedule property is 60 cents. Plaint 'B' schedule property is 20 cents. Plaint 'B' schedule property is the southern 20 cents of plaint 'A' schedule property. The parties hereinafter are referred to as the plaintiff and defendants as arrayed in O.S.No.303/1992. 2. The extent of plaint 'A' schedule property is 60 cents. Plaint 'B' schedule property is 20 cents. Plaint 'B' schedule property is the southern 20 cents of plaint 'A' schedule property. The 1st defendant Babu is the owner of the said 60 cents of land. As per Ext.B3 dated 25.3.1992, plaint 'B' schedule property was purchased by Payyamkode Rubber Production Society, a registered Society represented by the President. The President is the 2nd defendant in the suit. Defendants 3 & 4 were the two directors of the Society. The plaintiff is claiming relief in respect of plaint 'A' schedule property on the basis of an agreement of sale, marked as Ext.A1 dated 1.8.1991, executed between the 1st defendant Babu and the plaintiff, Radhamani. The plaintiff's case is that plaint 'A' schedule property was agreed to be sold to the plaintiff by the 1st defendant for a centage value of Rs.850/- per cent on 31.8.1991. The 1st defendant Babu received Rs.5,000/- as advance and on 4.10.1991 the 1st defendant received Rs.35,000/- towards balance sale consideration. The receipt of Rs.35,000/- on 4.10.1991 was endorsed on the back page of Ext.A1 agreement and that the period fixed for execution of the sale deed was extended up to 10.4.1992. The said fact was also endorsed on the back page of Ext.A1 on 4.10.1991. The plaintiff further alleges that on payment of Rs.35,000/- on 4.10.1991 to the 1st defendant, the plaintiff was put in possession of plaint 'A' schedule property. It is also alleged that when the 1st defendant attempted to trespass into the plaint schedule property, the plaintiff filed the connected suit O.S.No.154/1992 before the Munsiff Court, Chittur, renumbered as 523/1995 before the Sub Court, Palakkad, for injunction against trespass. It is averred that in violation of the order of temporary injunction granted in the connected suit for injunction, the 1st defendant sold plaint 'B' schedule property (20 cents) on 25.3.1992 to the 2nd defendant Society (plaintiff in O.S.No.525/95) against the terms of agreement executed between the 1st defendant Babu and the plaintiff Radhamani. According to the plaintiff, the 1st defendant has no right to execute the sale deed in respect of portions of plaint 'A' schedule property when the agreement for sale of entire property is in force. 3. According to the plaintiff, the 1st defendant has no right to execute the sale deed in respect of portions of plaint 'A' schedule property when the agreement for sale of entire property is in force. 3. In the written statement filed by the 1st defendant it is contended that plaint 'A' schedule property is owned by the 1st defendant and that he is in possession of the property. He denied the execution of the agreement dated 4.10.1991 and the subsequent transactions between the plaintiff and the 1st defendant. It is stated that the transaction was done by the husband of the plaintiff, namely, P.K.Narayanan, as Vice President of the defendant Society, that the 1st defendant accepted Rs.5,000/- from P.K.Narayanan and that no agreement was executed between the plaintiff and the 1st defendant. According to the 1st defendant, the agreement was executed between himself and the Society and the plaintiff's husband was acting for and on behalf of the Society. It is also stated that the 1st defendant is in possession of plaint 'A' schedule property excluding plaint 'B' schedule property, that plaint 'B' schedule property was agreed to be sold to the defendant Society, that the plaintiff's husband K.Narayanan had mediated the transaction and that he, using his position as the Vice President of the Society, without disclosing the correct state of affairs, manage execute an agreement for sale in the name of his wife instead of executing the agreement in the name of the defendant Society. It is stated that the defendant Society had constructed a shed in plaint 'B' schedule property, that the Society is in possession of plaint 'B' schedule property and that the defendant Society is enjoying the property by virtue of the sale deed in their favour. In the joint written statement filed by defendants 2 to 4 representing the Society, it is inter alia contended that the agreement for sale was executed between the plaintiff and the 1st defendant for the purpose of defeating the rights of the Society and that is not binding on the Society. The allegation of trespass was denied. Originally, the Society has decided to purchase plaint 'A' schedule property and due to paucity of funds, later decided to purchase 20 cents out of plaint 'A' schedule property. The allegation of trespass was denied. Originally, the Society has decided to purchase plaint 'A' schedule property and due to paucity of funds, later decided to purchase 20 cents out of plaint 'A' schedule property. Thus, the Society contended that plaint 'B' schedule property was purchased by paying the entire sale consideration and that from the date of execution of sale deed, the Society is in possession and enjoyment of the property. The Society had constructed a shed in plaint 'B' schedule property and is also transacting certain business in the shed situated in plaint 'B' schedule property. It is also contended that the decision of the Society for the purchase of plaint 'B' schedule property from 1st defendant was known to the husband of the plaintiff and that when the plaintiff tried to trespass into plaint 'B' schedule property, the Society was constrained to file O.S.No.525/95 to restrain the plaintiff from committing trespass. The Society is a bona fide purchaser for value and therefore, there is no reason for setting aside the sale deed in favour of the Society. 4. Plaint 'A' schedule property is 60 cents of property admittedly belonging to the 1st defendant Babu. Plaint 'B' schedule property is a portion of plaint 'A' schedule property having an extent of 20 cents. Plaint 'B' schedule property was purchased by the defendant Society as per Ext.B3 sale deed dated 23.5.1992. The plaintiff is seeking relief of specific performance based on Ext.A1 agreement entered into between the plaintiff and the 1st defendant Babu. As per Ext.A1 agreement the plaint 'A' schedule property was agreed to be sold to the plaintiff by 1st defendant Babu for a centage value of Rs.850/- per cent. He received Rs.5,000/- as advance on the date of agreement i.e., 31.8.1991. It is the case of the plaintiff that thereafter, on 4.10.1991, the 1st defendant received Rs.35,000/- and endorsement was effected on the back of Ext.A1 agreement for sale. According to the plaintiff, the agreement was extended up to 10.4.1992 and she was given possession of the entire property. 5. The 1st defendant was examined as DW1. According to him it was his intention to sell the entire property to defendant Society for which Ext.A1 agreement was executed by PW3, husband of the plaintiff who is the Vice President of the Society. 5. The 1st defendant was examined as DW1. According to him it was his intention to sell the entire property to defendant Society for which Ext.A1 agreement was executed by PW3, husband of the plaintiff who is the Vice President of the Society. As DW1, he testified that there was transaction between him and PW3 regarding the sale of plaint 'A' schedule property to the Society, that husband of the plaintiff obtained signed stamp papers from the 1st defendant and that Ext.A1 agreement was written in the said stamp papers. Therefore, according to the 1st defendant Ext.A1 is not a genuine document executed between the plaintiff and 1st defendant and is vitiated by fraud. According to him, he is not bound to execute a sale deed in respect of 60 cents as claimed in the plaint. It is also contended that he is ready to return Rs.40,000/- received from the husband of the plaintiff. The 1st defendant also testified as DW1 that he had never handed over possession of the plaint schedule property to the plaintiff and that he had sold plaint 'B' schedule property after accepting Rs.40,000/- as consideration and executed Ext.B3 sale deed on 25.3.1992. Plaint 'B' schedule property was put in possession of the transferee, namely, the defendant Society. Defendants 2 to 4 on behalf of the Society contended that the Society entrusted its Vice President, PW3, husband of the plaintiff, to negotiate with the 1st defendant for the purchase of 60 cents. They have produced Ext.B2 minutes book dated 12.2.1990, the entries therein indicate that PW3 was authorized to initiate talks. Later, plaint 'B' schedule property was purchased by the Society for the construction of a building after paying Rs.40,000/- as consideration. According to them, the Society and its directors were not aware of Ext.A1 agreement, that they have paid full consideration for plaint 'B' schedule property, that they are bona fide purchasers for value and therefore, entitled to protection under Section 19(b) of the Specific Relief Act. It is also pointed out that 20 cents was got separated from the rest of the properties and on getting possession from the owner, they have constructed a shed obtained building number from the Panchayath and materials were loaded for the purpose of construction. O.S.No.525/95 was instituted when the plaintiff and her men attempted to trespass into plaint 'B' schedule property. O.S.No.525/95 was instituted when the plaintiff and her men attempted to trespass into plaint 'B' schedule property. The court below after appreciating the oral and documentary evidence believed the version of the plaintiff that the plaintiff paid Rs.40,000/- to the 1st defendant and got endorsement on the back page of Ext.A1. The court believed the oral evidence tendered by PWs 1 & 2. The commissioner inspected the property and filed Ext.C1 report and C1(a) plan. The commissioner reported that in plaint 'B' schedule property there is a shed constructed by the Society and activities of the Society was going on in the premises. The court below on evidence found that the defendant as DW1 admitted the acceptance of Rs.5,000/- on 31.8.1991 from PW3, Narayanan, and subsequent receipt of Rs.35,000/- on 4.10.1991 towards balance sale consideration. The contention of the 1st defendant that Ext.A1 is a manipulated document by plaintiff and her husband, who is the Vice President of the Society and that Ext.A1 was created for the purpose of defeating the rights of the Society was not accepted. The trial court examined the question as to whether Ext.A1 is a properly executed document or not. The trial court noticed that in the written statement filed by the 1st defendant Babu in O.S.No.523/95 the execution of Ext.A1 was admitted by him. The trial court observed that negotiation for the sale of 20 cents was done by PW3 on behalf of the Society with the 1st defendant Babu and Babu had agreed to sell the property to the Society also. The court held on evidence that 1st defendant Babu is a consenting party to the sale of the property in favour of the plaintiff. The court observed that the receipt of advance amount from Narayanan on behalf of the Society is highly improbable and unbelievable and that the case put forward by the plaintiff that she paid Rs.5,000/- on the date of agreement is more believable than the story put forward by the 1st defendant Babu. The court also placed reliance on the endorsement made on the back page of Ext.A1 on 4.10.1991 which is also admitted by Babu. The court also placed reliance on the endorsement made on the back page of Ext.A1 on 4.10.1991 which is also admitted by Babu. After considering the facts, circumstances and resolutions in Ext.B2 minutes book maintained by the Society, the trial court observed that in a case like the present one, considering the fact that Ext.A1 agreement was executed between the plaintiff and the 1st defendant, the further fact that the 1st defendant sold plaint 'B' schedule property to the Society after accepting full consideration and executed Ext.B3 sale deed in favour of the Society and that the Society purchased the property in good faith and full consideration without them knowledge of Ext.A1, the plaintiff is entitled to a decree for specific performance in respect of 40 cents of property out of 60 cents. 6. The decree for specific performance is a discretionary relief. The court below granted the relief of specific performance in respect of 40 cents out of 60 cents. The relief is declined in respect of 20 cents finding that the Society purchased plaint 'B' schedule property in good faith and for proper consideration and therefore, the Society is entitled to protection as envisaged under Section 19(b) of the Specific Relief Act. The court also took into consideration the totality of the circumstances and held that the plaintiff is entitled to specific performance of plaint 'A' schedule property excluding plaint 'B' schedule property. The appellant challenges the denial of relief to her in so far as it relates to plaint 'B' schedule property. Therefore, the short question for consideration is as to whether the denial of relief of specific performance in so far as it relates to plaint 'B' schedule property is just and proper and as to whether the defendants 2 to 4 are bona fide purchasers in good faith and for valuable consideration entitled to protection as envisaged under Section 19(b) of the Specific Relief Act. 7. The learned senior counsel for the appellant contended that the Society had notice regarding the execution of Ext.A1 agreement and that the burden to prove that they are bona fide purchasers for valuable consideration without notice is on the Society and that they have not discharged the burden. 7. The learned senior counsel for the appellant contended that the Society had notice regarding the execution of Ext.A1 agreement and that the burden to prove that they are bona fide purchasers for valuable consideration without notice is on the Society and that they have not discharged the burden. The learned senior counsel drew the attention of this Court on the commentaries in Sohoni's Law of Specific Relief 3rd Edition and contended that the onus to prove that the defendants are bona fide purchasers without notice lies upon them. It is settled principles of law that for invoking protection under Section 19(b) of the Specific Relief Act, the subsequent purchaser should have entered into a bona fide transaction, paid the entire consideration and that he had no notice. These ingredients had to be established by the subsequent purchaser and onus lies on him. 8. The learned counsel appearing on behalf of the Society submits that the Society purchased plaint 'B' schedule property as per Ext.B3 sale deed dated 23.5.1992 without notice of Ext.A1 agreement, in good faith and for proper consideration. Ext.B2 is the minutes book of the Society prepared and kept in the Society showing everyday transactions of the Society. Page 19 of Ext.B2 relates to the executive committee meeting held on 21.7.1991.The Society by resolution dated 21.7.1991 directed PW3, P.K.Narayanan, husband of the plaintiff to negotiate with the 1st defendant Babu for the purchase of plaint 'A' schedule property (60 cents) and to enter into an agreement with Babu and to give advance. The said meeting was presided over by Narayanan, who is the Vice President of the Society. Item No.3 at page 19 of Ext.B2 minutes book deals with the said resolution. Again, the Society, by resolution dated 3.10.1991 (item No.2 at page 21) directed PW3, Narayanan, to take steps to purchase 60 cents of land from the 1st defendant Babu finding that no steps have been taken so far. It is to be noted that long before passing of the resolution dated 3.10.1991, Ext.A1 agreement dated 31.8.1991 was executed between the plaintiff and the 1st defendant. It is clear that at the time of considering the matter and passing resolution dated 3.10.1991 as stated above, the Society has no idea about Ext.A1 agreement. Page 25 of Ext.B2 minutes book contains the details of General Body Meeting held on 20.12.1991. It is clear that at the time of considering the matter and passing resolution dated 3.10.1991 as stated above, the Society has no idea about Ext.A1 agreement. Page 25 of Ext.B2 minutes book contains the details of General Body Meeting held on 20.12.1991. On that day, the General body authorised the Director Board to purchase the property from the 1st defendant. Plaintiff's husband, P.K.Narayanan was present in that meeting also. The said resolution passed on 20.12.1991 also indicates that the Society has no idea or knowledge about execution of Ext.A1 agreement. Page 29 of Ext.B2 minutes book contains the details of executive committee held on 15.3.1992. PW3, Narayanan was also present in the meeting. The executive committee resolved on that day to pay advance to the 1st defendant Babu for the purchase of the property. Thus, all the resolutions dated 21.7.1991, 3.10.1991, 20.12.1991 and 15.3.1992 indicate that the Society had decided to purchase the plaint schedule property from the 1st defendant Babu and directed Narayanan, its vice President, who is the husband of the plaintiff, to negotiate for the purchase of the property. Thereafter, on 25.3.1992, Ext.B3 sale deed was got executed in favour of the Society. The sale is limited to 20 cents. The Society purchased the property after paying Rs.40,000/-. The centage value is Rs.2,000/-. It is pointed out by the Society that due to paucity of funds the purchase is limited to 20 cents. From the facts stated above, it is clear that the Society people should not have agreed to purchase the property if they have knowledge about Ext.A1 agreement between the plaintiff and the 1st defendant. The 1st defendant as DW1 also deposed that he sold the 20 cents after accepting the consideration. He got higher value for the 20 cents of land. That might have prompted him to execute the sale deed in favour of the Society. From the facts, it is seen that the Vice president, instead of negotiating with the 1st defendant for the sale of the property in the name of the Society, negotiated the sale in the name of his wife and executed Ext.A1 agreement on 31.8.1991. Without noticing execution of Ext.A1 agreement, the Society passed resolutions, one after the other directing its Vice President to negotiate the purchase and to give advance to the 1st defendant. Without noticing execution of Ext.A1 agreement, the Society passed resolutions, one after the other directing its Vice President to negotiate the purchase and to give advance to the 1st defendant. When examined the plaintiff as PW1 also did not have a case that the Society purchased plaint 'B' schedule property with the knowledge of Ext.A1. The final decision was taken by the society for the purchase of 20 cents as seen from page No.36 in Ext.B2 minutes book and thereafter by Ext.B3 sale deed 20 cents was purchased without noticing the fact that the Vice president of the Society had already negotiated and entered into an agreement for sale in the name of his wife. The above said facts and circumstances were discussed by the court below in detail. The court below reached the conclusion that Ext.B3 sale deed was executed without noticing the execution of Ext.A1 agreement. 9. In Durga Prasad and another v. Smt.Lilawati and another (AIR 1972 Allahabad 396) the court held as follows: "It is true that the initial burden is always on the vendee to show that he had no knowledge of the agreement. But the vendee has only to discharge this burden by leading a negative evidence. The negative evidence can only consist of his own statement denying the fact that he had knowledge of the of the same. As soon as the vendee denies knowledge of the notice, the burden is discharged and then the burden shifts on the vendor to prove that the vendee had the notice of the earlier agreement". It is more profitable to read the decision reported in Kanshi Ram and another v. Ishwardas and another (AIR 1923 Lahore 108) wherein the court considered the question as to whether it is proved that the defendants were transferees for value who paid money in good faith and without notice of the original contract. The court held that the three essentials therefore, are that payment of full consideration must be proved, good faith must be established and also ignorance of the original contract at the time the sale was effected. Going by the said decision it is for the transferee to show that he purchased the property in ignorance of the previous contract and in good faith. Going by the said decision it is for the transferee to show that he purchased the property in ignorance of the previous contract and in good faith. It was also held that where the consideration is paid in full and the vendee is ignorant of the original contract, good faith must be presumed in the absence of evidence to the contrary. In the light of the legal principles above noticed and in the facts and circumstances of the case, the Society by positive evidence proved the fact that they had no knowledge about the execution of Ext.A1 agreement. It is also proved that they have paid the full consideration for the purchase and that they have acted in good faith. It is proved beyond doubt that the Society is a bona fide purchaser. The relief of specific performance is a discretionary remedy. The discretion should be exercised on sound principles of law. The evidence on record shows that the Society got possession of 20 cents on the date of Ext.B3 sale deed. The evidence further shows that pursuant to the sale in their favour they have put up a shed and started activities of the Society in the property. The court below also considered the facts and circumstances leading to the execution of Ext.B3 sale deed, the possession of the property by the Society, the activities carried on in the property by the Society and concluded that the plaintiff is entitled to discretionary relief of specific performance only for 40 cents out of 60 cents. Considering the totality of the circumstances, the court below found that the plaintiff is entitled to gets a decree for specific performance for plaint 'A' schedule property excluding plaint 'B' schedule property. In the facts and circumstances of the case, the exclusion of 20 cents is justified. Therefore, I confirm the findings of the trial court that the defendant Society is entitled to protection under Section 19(b) of the Specific Relief Act. In the result, the appeals fail and accordingly dismissed. No order as to costs.