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2013 DIGILAW 2353 (BOM)

Shrikrishna Ganuji Sonone v. Vitthal

2013-11-20

S.B.SHUKRE

body2013
Judgment : 1. This appeal arises out of the judgment and decree passed by the District Judge, Khamgaon in Regular Civil Appeal No.68 of 1988 on 14.10.1997 thereby partly allowing the appeal and setting aside the decree of specific performance granted in favour of appellant in Regular Civil Suit No.86 of 1987, decided on 22.4.1988. 2. This appeal is being heard afresh on merits after the Hon'ble Supreme Court allowed the appeal filed by the respondent bearing Civil Appeal No.10537538 of 2011 (arising out of SLP (C) Nos.2859728598 of 2010) filed against the judgment of this Court in this appeal delivered on 17.12.2009. By this judgment, this Court had allowed the present appeal and decreed the suit as ordered by the trial Court. The Hon'ble Apex Court, however, for the reasons stated in the order dated 2nd December, 2011 passed in aforestated Civil Appeal, set aside the said judgment and remitted the matter to the High Court for fresh disposal on merits. 3. It was the case of the appellant/original plaintiff that the respondent/original defendant was in need of money to pay all the debts in respect of the agricultural field and to meet household expenses. The respondent, therefore, agreed to sell to the appellant agricultural field bearing Gat No.36 admeasuring 1.20 hectare Situated at village Bramhanwada, Taluka Shegaon, District Buldhana (suit field) for a consideration of Rs.17,000/. The appellant contended that it was agreed between him and the respondent that amount of Rs.5,000/would be paid to the respondent as an earnest money and it was accordingly paid to the respondent. The respondent had also then agreed that he would clear all the debts and encumbrances on the land and would deliver unencumbered title in respect of the suit field and its possession to the appellant on or before 31.3.1987. Agreement to sell on these terms was executed between the appellant and the respondent on 13.1.1987. The appellant further submitted that since the respondent gave no indication that he would be acting upon the terms of agreement to sell, he issued him a notice on 24.3.1987 calling upon him to execute the sale-deed, as agreed, on 31.3.1987. The appellant further submitted that accordingly he presented himself before the Sub-Registrar, Shegaon on 31.3.1987. But, the respondent did not turn up there and resultantly, sale-deed could not be executed. The appellant further submitted that accordingly he presented himself before the Sub-Registrar, Shegaon on 31.3.1987. But, the respondent did not turn up there and resultantly, sale-deed could not be executed. He submitted that in order to show his presence at the office of the Sub-Registrar on 31.3.1987 he purchased a stamp-paper of Rs.1/. He further submitted that the respondent avoided to pay the loan of Vivid Karyakari Sahakari Society, Matargaon and the loan amount, which was then due against the respondent was of Rs.11,620/. The appellant submitted that the respondent gave a false reply to the notice of the appellant on 2.4.1987 and, therefore, appellant sent a counter-reply on 27.4.1987 to the respondent. By the counter-reply, the appellant called upon the respondent to execute the sale-deed, but in vain. Since the appellant was always ready and willing to perform his part of contract and there had been a breach of obligations committed by the respondent, the appellant filed a suit against the respondent for specific performance of contract in which he alternatively claimed refund of earnest amount of Rs.5,000/- together with damages of Rs.10,000/-. 4. The respondent resisted the suit by filing his written statement. While he admitted his ownership of the suit field, he denied that the agreement dated on 13.1.1987 was an agreement to sell the suit field. He submitted that this agreement was basically in the nature of a money lending transaction and that it was executed to secure repayment of amount of Rs.2,000/- borrowed by him from the appellant. The respondent submitted that he was assured by the appellant that the agreement executed on 13.1.1987 though ostensibly about sale of the suit field, would not be acted upon or enforced by the appellant. He further submitted that the appellant also told him that he would mention amount of Rs. 5,000/- as an earnest money only nominally, just to secure repayment of the amount of Rs.2,000/- lent by him to the respondent. He further submitted that it was agreed between them that in lieu of an amount of Rs.2,000/- borrowed by him from the appellant, he would repay an amount of Rs.3,000/. He also submitted that the agreement of sale dated 13.1.1987 was thus a sham and nominal document. He further submitted that it was agreed between them that in lieu of an amount of Rs.2,000/- borrowed by him from the appellant, he would repay an amount of Rs.3,000/. He also submitted that the agreement of sale dated 13.1.1987 was thus a sham and nominal document. He further submitted that even the purchase price of the suit field mentioned in the agreement did not represent the true market value of the field, which was about Rs.34,00035,000/- at the time of transaction. He also took an exception to the enforcement of agreement to sell on a legal ground. Thus, he urged that the suit of the appellant deserves to be dismissed. 5. On these pleadings, learned Judge of the trial Court framed 11 issues and finding that the appellant had proved his case of execution of a valid agreement to sell on 13.1.1987 in respect of the suit field and the respondent had failed to prove his case that the agreement to sell was only nominal, he granted a decree of specific performance of contract on condition of clearance of all the encumbrances on the suit filed by his judgment and order passed on 22nd April, 1988. 6. The respondent preferred an appeal against this judgment and decree of the trial Court, which was registered as a Regular Civil Appeal No.68 of 1988. After hearing both sides, learned Additional District Judge, Khamgaon partly allowed the appeal by his judgment and order passed on 14.10.1997. By the said judgment and order, the learned Additional District Judge, Khamgaon set aside the decree of specific performance of contract passed by the trial Court and granted alternative relief regarding refund of earnest amount with interest and also granted other consequential reliefs. 7. Dissatisfied with the judgment and order passed by the learned Additional District Judge, Khamgaon, Distt. Buldhana, the appellant came in second appeal before this Court. In pursuance of the order of the Hon'ble Supreme Court dated 2nd December, 2011 passed in Civil Appeal No.10537538 of 2011 this Court, heard the parties and upon noting that substantial questions of law were involved, it admitted the appeal on three substantial questions of law, by its order dated 6th August, 2012. In pursuance of the order of the Hon'ble Supreme Court dated 2nd December, 2011 passed in Civil Appeal No.10537538 of 2011 this Court, heard the parties and upon noting that substantial questions of law were involved, it admitted the appeal on three substantial questions of law, by its order dated 6th August, 2012. The substantial questions of law that come up for consideration in this appeal are as under: “(i) Whether the lower appellate court, having held that transaction was one of sale and that agreement was properly executed, could carve out a new case and raise hypothetical grounds for not granting the specific performance and could the court assume that the possession ought to have been taken immediately? (ii) Whether the grounds I to VI given by the lower appellate court in para 17 of the judgment constitute valid and legal grounds for refusing to exercise a jurisdiction for granting specific performance of the contract which has already been proved ? (iii) Whether the discretion exercised by the lower appellate court is sound and judicious in the circumstances of the case?” 8. I have heard Mr. Anjan Dey, learned counsel for the appellant and Mr. G.G. Mishra, learned counsel for the respondent. I have also carefully gone through the judgment of both the Courts below and paper book of this appeal. 9. Learned counsel for the appellant has submitted that the first appellate Court, after agreeing with the findings of the trial Court on such important issues as execution of agreement to sell of suit field for a consideration of Rs.17,000/-, receiving of an earnest amount of Rs.5,000/- by the respondent at the time of execution of the agreement of sale on 13.1.1987 and the appellant being always ready and willing to perform his part of contract, surprisingly found that the discretion exercised by the trial Court in granting a decree for specific performance of contract was not judicious and accordingly it set aside the decree of specific performance of contract and directed refund of earnest money with interest to the appellant. He submits that the first appellate Court has carved out a hypothetical case not pleaded by the respondent in coming to the conclusion that exercise of discretion on the part of the trial Court was injudicious. He submits that the first appellate Court has carved out a hypothetical case not pleaded by the respondent in coming to the conclusion that exercise of discretion on the part of the trial Court was injudicious. He further submits that the first appellate Court has given six grounds as mentioned in paragraph 17 of the impugned judgment and order for holding that the appellant would get an unfair advantage over the respondent and that the respondent would also be put to hardship which he did not foresee if specific performance was granted. He submits that none of these grounds is covered by Section 20(2) of the Specific Relief Act, 1963. He, therefore urges that the impugned judgment and order are absolutely illegal and deserve to be set aside. 10. Learned counsel for the respondent submits that in fact this appeal does not give rise to any substantial question of law and on this ground alone the appeal deserves to be dismissed. He submits that all the grounds mentioned in the impugned judgment and order by the learned Additional District Judge would constitute sufficient grounds in law to refuse the discretionary relief of specific performance of contract. He further submits that evidence adduced by the respondent would show that he had proved his case that the underlying transaction of agreement to sell dated 13.1.1987 was of money lending and, therefore, no specific performance could have been granted by the trial Court. He alternatively submits that the transaction in any case being very old, that is to say, about 26 years old, it would not be equitable to allow the appellant to have for himself the entire benefit of substantial rise in the market value of the land. He, therefore, submits that, in case, this Court is inclined to allow the appeal, it may be allowed conditionally by granting some portion of the increased price of the suit land to the respondent. 11. In this case, it is noticed that there have been concurrent findings of facts by both the Courts below on material aspects of the case. In order to properly deal with rival arguments, it would be necessary to refer to relevant issues and points and also the findings given in respect of each of them by the both the Courts below. They are reproduced as under: Trial Court Relevant issues and findings: Sr. No. Issues Findings 1. In order to properly deal with rival arguments, it would be necessary to refer to relevant issues and points and also the findings given in respect of each of them by the both the Courts below. They are reproduced as under: Trial Court Relevant issues and findings: Sr. No. Issues Findings 1. Does plaintiff prove that defendant entered into an agreement to sell the suit field to him for Rs. 17,000/- free from encumbrances? Yes 2. Does he prove that on 13.1.1987 defendant received earnest amount of Rs.5,000/- from him and executed an agreement of sale of suit field? Yes 3. Does he prove that sale deed of the suit field was to be executed on or before 31.3.1987 at his costs? Yes 4. Does he prove that he was and is ready and willing to perform the part of his contract? Yes 5. Does the defendant prove that suit transaction is money lending one? What effect? No 6. Is plaintiff entitled for the relief of specific performance of contract and possession of suit field? Yes First Appellate Court Relevant points and findings: Sr. No. Points Findings 1. Did the plaintiff prove that the defendant agreed to sell him the suit field for Rs.17,000/- ? Yes 2. Did he prove that the defendant executed an agreement of sale on 13.1.1987 on receiving Rs.5,000/- as an earnest money? Yes 3. Did he prove that he was ready and willing to perform his part of the contract? Yes 4. Did he prove that the suit transaction was that of a loan? No 5. Whether the court below has exercised the discretion judiciously while making an impugned decree? No 12. It is clear from the above referred findings recorded by both the Courts below that they are in agreement that the respondent had indeed agreed to sell the suit field to the appellant for a consideration of Rs.17,000/- and had received an amount of Rs.5,000/- as an earnest money on 13.1.1987 on which day respondent had executed a agreement of sale in favour of the appellant. This agreement to sell has been duly proved by the appellant vide Exhibit-20. The first appellate Court also endorses the finding of the trial Court, on the basis of evidence available on record, that the appellant was always ready and willing to perform his part of contract. This agreement to sell has been duly proved by the appellant vide Exhibit-20. The first appellate Court also endorses the finding of the trial Court, on the basis of evidence available on record, that the appellant was always ready and willing to perform his part of contract. Once such findings are recorded by the first appellate Court, as law of the land goes, one would expect ordinarily grant of specific performance would follow the finding. But, that has not happened in this case. The first appellate Court has found exercise of discretion in granting decree of specific performance as injudicious on the grounds mentioned in paragraphs 17 of the judgment. The legality of these grounds, as rightly urged by the learned counsel for the appellant, would have to be examined. Besides, it will also have to be seen whether these grounds had any foundation in the defence taken by the respondent in the suit that was brought against him. Before we do that, it would be necessary to briefly consider the law governing the discretion of the Courts as to decreeing the specific performance. 13. It is well settled law that ordinarily specific performance of contract, once the ingredients necessary for granting it are fulfilled, is to be granted, unless circumstances of the case are such or conduct of the parties is such that it may not be reasonable for the Court to grant it. Under Section 20(1) of the Specific Relief Act, 1963, the jurisdiction to decree specific performance has been declared to be discretionary in nature and it is laid down that the Court is not bound to grant such relief merely because it is lawful to do so. Section 20(1) makes it clear that the discretion of the Court must be exercised within bounds of law and certainly not in an arbitrary manner. It must be sound and reasonable, guided by the judicial principles and capable of correction by a court of appeal. Subsection 2 of Section 20 delineates instances in which the Court may properly refuse to grant decree of specific performance. It must be sound and reasonable, guided by the judicial principles and capable of correction by a court of appeal. Subsection 2 of Section 20 delineates instances in which the Court may properly refuse to grant decree of specific performance. These instances are : when the contract, though not voidable gives the plaintiff an unfair advantage over the defendant or when the performance of contract would involve some hardship on the defendant, which he did not foresee and whereas non performance would not result in any such hardship on the plaintiff or when the circumstances in which the contract was entered into show that it would be inequitable to enforce specific performance. Explanation 1 to subsection (2) clarifies that mere inadequacy of consideration or the fact that the contract is onerous to the defendant would be no valid ground to hold that the contract gives the plaintiff an unfair advantage over the defendant. Explanation 2 further clarifies that the question of hardship would have to be determined with reference to the circumstances existing at the time of contract, except in cases where the hardship is seen to be resulting from any act of the plaintiff subsequent to the contract. The question of unfair advantage under subsection (2) is required to be determined by considering the terms of the contract, the conduct of the parties at the time of transaction and also other circumstances, if any, attending the execution of the contract. 14. Now, let us examine whether or not the grounds mentioned by the first appellate Court in its impugned judgment and order for finding that the trial Court should not have granted specific performance accord with the law as discussed above. 15. Six grounds taken by the first appellate Court, as appearing in paragraph 17 of the impugned judgment and order, are reproduced as under: “(i) The plaintiff himself has alleged that the defendant was in need of money to meet the household expenses and to pay off the debts of the suit field. In that event, he himself could have agreed to clear those dues or could have led the defendant to make the payment out of the earnest money. He, however, allowed the defendant to spend the amount of Rs.5,000/- for his own need. In other words, the plaintiff made no attempt to see that the defendant had applied the amount for good. He, however, allowed the defendant to spend the amount of Rs.5,000/- for his own need. In other words, the plaintiff made no attempt to see that the defendant had applied the amount for good. (ii) It is not the case of the plaintiff that the execution of the sale deed was postponed for wants of funds. If the plaintiff really wanted to purchase the suit field being convenient as abutting to is field, then he himself could have insisted the defendant to execute the sale deed on the very day. (iii) The plaintiff had agreed to purchase the suit field for the consideration of Rs.17,000/without having made any enquiry, the extent of debts or encumbrances outstanding against the suit field. The amount of consideration thus has not been determined after bona fide inquiry. (iv) The suit field was undisputedly mortgaged with Vividh Karyakari Society Matargaon. The plaintiff should not agree to purchase suit field when it was encumbered in such a fashion. (v) A possession of a field is a prime object of a purchaser. No prudent purchaser would allow his vendor to remain in the possession of the suit field even after having paid good amount as an earnest money. The plaintiff could have insisted for putting him in the possession of the suit field at once when he had parted with Rs.5,000/- as an earnest money. (vi) Had the real transaction between the parties was that of a sale and purchase, then the defendant could not have hesitated in executing the sale deed in favour of the plaintiff. His such hesitation speaks in volumes leading to a possibility of some other nature of transaction between the parties.” 16. A bare perusal of pleadings of parties and evidence on record is enough to give an impression that these grounds are the products of the imagination of the first appellate Court. It was not at all the case of the respondent that the appellant ought to have ensured that the amount of Rs.5,000/- paid by him to the respondent was properly applied by the respondent towards repayment of loan. The respondent had never taken a defence that the circumstances existing at the time of transaction were such or the conduct of the parties was such that the contract gave unfair advantage to the appellant over the respondent. The respondent had never taken a defence that the circumstances existing at the time of transaction were such or the conduct of the parties was such that the contract gave unfair advantage to the appellant over the respondent. The respondent had never pleaded that if specific performance was granted, it would involve some hardship on him and that nonperformance would not involve any hardship on the appellant. The respondent had also not come out with any case showing that there were circumstances attending the execution of the agreement which made specific performance of contract inequitable. The respondent never claimed that the appellant ought to have insisted upon him to execute the sale-deed in respect of the suit field on the date of agreement to sell i.e. 13.1.1987 or that amount of consideration was not determined by the appellant after bona fide enquiry or that the appellant, having learnt about mortgage of the land with Vivid Karyakari Sahakari Society, Matargaon as a security for repayment of loan, should not have agreed in the first place to purchase the suit field or the appellant ought to have insisted upon delivery of possession of the suit field on 13.1.1987 itself or that the hesitation of the respondent in executing the sale-deed as promised by him itself indicated that the real transaction between the parties was possibly different. Yet, the first appellate Court imagined these circumstances and held that the trial Court had exercised discretion in decreeing the suit for specific performance in an unreasonable and unsound manner. These grounds, were absolutely hypothetical, as they were not at all pleaded or put-forth in evidence by the respondent. 17. No doubt, a duty has been cast upon the Court to exercise discretion regarding grant of specific performance or otherwise in a sound and reasonable manner and to do so it would be open to the Court to examine all the facts and circumstances of the case. Some of the grounds, in a given case may also not be specifically pleaded by the parties, but at the same time Court is duty bound to ensure that they are seen to be taking birth from the circumstances of the case and not from the mind of a judge. Some of the grounds, in a given case may also not be specifically pleaded by the parties, but at the same time Court is duty bound to ensure that they are seen to be taking birth from the circumstances of the case and not from the mind of a judge. Exercise of discretion on grounds rooted, not in the facts and circumstances of the case, but in the imaginary powers of a Judge, is arbitrary, not countenanced by Section 20(1). 18. In the instant case, neither the terms of the contract nor the conduct of the parties nor any other circumstances ascertained from the record give rise to what has been termed by the first appellate Court as the grounds leading to granting the appellant an unfair advantage over the respondent and also causing of hardship to the respondent which he did not foresee. At the most these grounds could be seen as constituting own views of the court, unguided and uncanalised as they are by any judicial principles, about how ideally parties should conduct themselves in such matters and upon what terms should they enter into contracts. These grounds have no legal basis and if at all they have any moral basis, one can say, such basis has no approval of law. They do not fall anywhere in the cases enumerated in subsection (2) of Section 20 of the Specific Relief Act, 1963. The Court cannot cast a duty upon the plaintiff to ensure that the amount of earnest money given by him to the defendant is properly applied by the defendant in paying the debt on the land. Court can also not question the conduct of the plaintiff whose field is abutting the field agreed to be purchased by him in not insisting upon execution of the sale-deed on the very day of execution of agreement to sell. Since mere inadequacy of consideration is not a valid ground for constituting an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b) of subsection (2) of Section 20, no duty is cast upon the plaintiff to conduct an enquiry to ascertain as to whether the consideration fixed under the agreement to sell is proper and reasonable. It is very strange for a Court of law to say that the plaintiff, upon learning that the suit property is under a mortgage, should not agree to purchase the suit field in as much as such an agreement can in law be always made conditional to clearance of the encumbrance on the property. Similarly, courts can also not draw any adverse inference against the plaintiff that the underlying transaction might be of a nature other than sale of the property for the only reason of his not insisting upon delivery of possession after payment of about 1/3rd part of total consideration. It is also illogical to say that the defendant, who is hesitant in executing the sale-deed, reasonably indicates that he does not intend and had never intended to transfer title of the property to the plaintiff. All these grounds taken by first appellate Court as constituting something which would put the appellant in a position of unfair advantage over the respondent and would also cause hardship to the respondent which he did not foresee, do not have any valid basis in law. Any use of such grounds for exercising discretion to not decree specific performance of contract would amount to arbitrary exercise of jurisdiction under Section 20 of the Specific Relief Act, 1963. But, these grounds have been used in the instant case by the first appellate Court in refusing decree of specific performance to the appellant. The whole approach adopted by the first appellate Court is perverse and, therefore, it cannot be said that this appeal does not give rise to any question of law. The contentions raised on behalf of the respondent in this behalf are, therefore, rejected. 19. Second contention of the respondent is that evidence on record amply shows that the agreement to sell was really in the nature of a money lending transaction. However, I beg to differ from him. It has been concurrently held by both the Courts below on the facts of the case that the appellant failed to prove that suit transaction was that of a loan. The findings are based upon evidence on record and I do not see any perversity in them nor any has been shown to me by the learned counsel for the respondent. The findings are based upon evidence on record and I do not see any perversity in them nor any has been shown to me by the learned counsel for the respondent. It is well settled law that while exercising jurisdiction under Section 100 of CPC, High Court cannot interfere with the concurrent findings of the Courts below by re-appreciating evidence and arriving at a different view, merely because another view is possible. In the case of Navaneethammal vs. Arjuna Chetty, reported in (1996) 6 SCC 166 , the Hon’ble Apex has held that High Court in exercise of power under Section 100 C.P.C. is not expected to reappriciate evidence, though another view is possible, unless the view taken by the Courts below is based on no material. In the case of Pakeerappa Rai vs. Seethamma Hengsu (dead) by L.Rs. and others, reported in (2001) 9 SCC 521 , Hon’ble Supreme Court, in para 2, has observed that under Section 100 C.P.C., the High Court cannot interfere with the erroneous findings of fact, howsoever, gross the error might be. I, therefore, find no merit in the said contention raised on behalf of the respondent. 20. Third contention of the respondent is that due to passage of considerable period of time, price of the suit land has got increased and, therefore, some portion of the benefit be also passed over to the respondent, if at all this Court allows this appeal in favour of the appellant. In support of the same, he has referred to me the case of Nirmala Anand vs. Advent Corporation Pvt. Ltd. and others, reported in 2003 (1) Mh.L.J. 468 . This case, reported as AIR 2002 SC 2290 , has also been referred to me by the learned counsel for the appellant to substantiate his point that ordinarily the plaintiff is not to be denied the relief of specific performance only on account of phenomenal increase of price during the pendency of litigation. 21. In the instant case, there is absolutely no material available on record or has been brought to the notice of this Court by rival parties giving an indication about the present market value of the suit land. There are also no factors brought on record of the case on the basis of which, rise in price of the suit land could be calculated on percentage basis. There are also no factors brought on record of the case on the basis of which, rise in price of the suit land could be calculated on percentage basis. Therefore, it is not possible for this Court to fix the present market value of the suit land at any reasonable point and, therefore, it would also not be possible to give any direction regarding payment of additional consideration amount by appellant to respondent. Doing so would only amount to indulging in an exercise based upon surmises and imaginations, not permissible under the law. That apart, in the said case of Nirmala Anand (supra), while determining as to how much of benefit of increase in the value of the property should be given to the other side, the Hon’ble Apex Court has laid down that while balancing the equities, one of the considerations to be kept in view is as to who is the defaulting party. In this case, I find that there was nothing on record which should have made the respondent to refuse execution of sale-deed in favour of appellant and from this view point, I am of the opinion that the respondent is a defaulting party not deserving to his credit any equitable benefit in the nature of share in the supposed rise in price of the suit land. 22. In view of the above discussion, I find that the first appellate Court, having held that transaction was one of sale and that agreement was properly executed, could not have carved out a new case on hypothetical grounds for not granting specific performance and could not have assumed that possession ought to have been taken immediately. I further find that ground Nos.1 to 6 given by the first appellate Court in paragraph 17 of the impugned judgment and order do not constitute valid and legal grounds for refusing decree of specific performance to the appellant. The discretion so exercised by the first appellate Court in denying the specific performance of contract to the appellant was unsound and injudicious in the circumstances of the case. All the three substantial questions of law are answered accordingly. Appeal, therefore, deserves to be allowed. 23. Appeal stands allowed. 24. The discretion so exercised by the first appellate Court in denying the specific performance of contract to the appellant was unsound and injudicious in the circumstances of the case. All the three substantial questions of law are answered accordingly. Appeal, therefore, deserves to be allowed. 23. Appeal stands allowed. 24. The suit is decreed as ordered by the trial Court and the judgment and order of the trial Court passed in Regular Civil Suit No.86 of 1987 on 22.4.1988 and decree drawn therein are hereby confirmed. 25. Respondent to pay costs throughout. 26. Decree be drawn up accordingly.