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Karnataka High Court · body

2015 DIGILAW 1028 (KAR)

Annarao v. Gopal Rao

2015-09-02

A.V.CHANDRASHEKARA

body2015
Judgment : Heard the learned counsel for the parties. 2. The present appeal is filed under Section 100, C.P.C. by the sole plaintiff of an original suit in O.S.272/94, a suit filed before the I Additional Senior Civil Judge, Gulbarga, for the relief of specific performance against the respondent herein who was the sole defendant. The said suit came to be dismissed after contest vide judgment dated 28.11.2000 as against which an appeal under Section 96, C.P.C. was filed before the Principal District Judge, Gulbarga, in R.A.4/01. The said appeal has also been dismissed after contest. 3. While dismissing the suit for specific performance in O.S.272/94, the learned judge of the trial court has directed the respondent herein, i.e. defendant to refund Rs.25,000/-received by him as advance with interest at the rate of 12% p.a. from 28.8.1986, the date on which the agreement of sale was executed till the amount was paid. These concurrent findings are called in question before this court by the plaintiff. 4. The facts leading to the filing of the suit and consequent dismissal and filing of the present appeal are as follows: a) The defendant was the absolute owner in possession of two items of agricultural lands situated in Kudligi of Chittapur village, Jewargi Taluk. 11.25 acres in Survey No.39 and 10.13 acres in Survey No.49 were the subject matter of the suit filed for the relief of specific performance. b) The case of the plaintiff is that defendant had agreed to sell the entire extent of 21.38 acres comprising Survey Nos.39 and 49 in his favour for a total consideration of Rs.65,000/and had received Rs.25,000/by executing an agreement of sale on 14.8.1986. He is stated to have received the said sum through cheque bearing no.510943 dated 14.8.1986 drawn on State Bank of Hyderabad, Sangameshwaranagar Branch, Gulbarga. Since both the lands were the subject matter of dispute before the Land Tribunal, the defendant had agreed to execute a regular sale deed after settlement of the disputes. c) In spite of several demands, the defendant did not come forward to execute regular sale deed in favour of the plaintiff by receiving the balance of sale consideration and as such, he was constrained to get a legal notice issued through his advocate on 18.6.1986 calling upon the defendant to execute a regular sale deed. c) In spite of several demands, the defendant did not come forward to execute regular sale deed in favour of the plaintiff by receiving the balance of sale consideration and as such, he was constrained to get a legal notice issued through his advocate on 18.6.1986 calling upon the defendant to execute a regular sale deed. An untenable reply, according to the plaintiff, was got issued by the defendant through his advocate on 20.7.1986 in which he not only denied execution of the very agreement of sale, but even receipt of Rs.25,000/as advance. As a result of the same, plaintiff had to file the suit for the relief of specific performance. It is his case that he was ready and willing to perform his part of the contract which the defendant had refused. d) The suit came to be filed on 7.11.1994. The defendant entered appearance through an advocate and filed written statement denying all the averments of the plaint and had called upon the plaintiff to prove the execution of the agreement of sale and payment of Rs.25,000/as advance. The contents of the reply notice are virtually reiterated in the written statement. The averment of the plaintiff that possession of land in Survey No.49 measuring 10.13 acres had been handed over on 14.8.1986 has also been specifically denied. It is his case that he is still in lawful possession of the entire extent of 21.38 acres of land. The averment of the plaintiff that he is still ready and willing to perform his part of the contract is also specifically denied. e) The plaintiff had requested the court to direct the defendant to refund the amount of Rs.25,000/as an alternative relief. The said relief is stated to be not maintainable either in law or on facts. With the above pleadings, the defendant had requested the court to dismiss the suit. f) On the basis of the above pleadings, the trial court framed the following issues on 10.6.1998: 1. Whether the plaintiff proves that defendant on 14.08.1986 entered into an agreement of sale with him agreeing to sell the suit lands R.S.No.39 measuring 11 acres 29 guntas and R.S.No.49 measuring 10 acres 14 guntas both situated at Kudalgi village, in his favour for consideration of Rs.65,000/? 2. Whether the plaintiff proves that on 14.08.1986, he has paid earnest amount of Rs.25,000/to the defendant? 3. 2. Whether the plaintiff proves that on 14.08.1986, he has paid earnest amount of Rs.25,000/to the defendant? 3. Whether plaintiffs proves that on 14.08.1986 defendant in part performance of contract delivered possession of the suit land R.S.No.49 measuring 10 acres 13 guntas situated in Kudalgi village to him? 4. Whether plaintiff proves that on the date of suit he was in lawful possession and enjoyment of suit land R.S.No.49 measuring 10 acres 13 guntas? 5. Whether plaintiff proves that defendant is illegally interfering into his lawful possession and enjoument ver the suit land R.S.No.49 measuring 10 acres 13 guntas? 6. Whether plaintiff proves that he was and he is ever ready and willing to perform his part of contract? 7. Whether plaintiff is entitled to the relief of specific performance of contract dated 14.08.1986? 8. Alternatively whether plaintiff proves that he is entitled to return of earnest amount of Rs.25,000/with interest @ Rs.21% p.a. 9. Whether defendant proves that he is entitled to compensatory cost of Rs.10,000/? 10. What decree or order? The plaintiff has been examined as PW1 and he has examined in all 6 witness on his behalf and got marked 14 exhibits. The defendant alone is examined as DW1 and has got marked 16 exhibits. After hearing arguments and analyzing the oral and documentary evidence on record, the learned judge has answered issue nos.1, 2 and 6 in the affirmative and the remaining issues in the negative. Issue no.8 has been answered partly in the affirmative and ultimately the suit came to be decreed in part, directing the defendant to refund Rs.25,000/with interest at the rate of 12% p.a. from the date of execution of the agreement of sale till payment. g) Being aggrieved by the partial decree of the suit filed by him, plaintiff filed an appeal under Section 96, C.P.C. challenging it on various grounds. The said appeal was contested and ultimately dismissed vide judgment dated 19.10.2002. The learned judge of the first appellate court has framed two points as found in page 8 of the impugned judgment of the appellate court: 1. The said appeal was contested and ultimately dismissed vide judgment dated 19.10.2002. The learned judge of the first appellate court has framed two points as found in page 8 of the impugned judgment of the appellate court: 1. Whether the plaintiff has proved that defendant entered into an agreement of sale in respect of suit lands on 14.08.1986 for Rs.65,000/and received Rs.25,000/as earnest money and put the plaintiff in possession of Sy.No.49 and agreed to execute the registered sale deed after disposal of case before Land Tribunal in respect of Sy.No.39? 2. Whether the Judgment and decree under the appeal call for any interference? The learned judge of the appellate court has confirmed the finding insofar as it relates to execution of the agreement of sale dated 14.8.1986 and receipt of Rs.25,000/as partial consideration and has further held that plaintiff is not in possession of the land in Survey No.49. 5. After hearing arguments on both sides, the following substantial questions of law have been framed by this court on 12.10.2004: 1. Whether the findings of the Court below are perverse in the light of a finding that the appellant was ready and willing to perform his part of contract? 2. Whether the Courts below have committed an error in the light of a statutory presumption available to the appellant u/s.10(a) of the Explanation of the Specific Relief Act and also in the light of the Judgment of the Apex Court in 1973 SC 2457? 3. Whether the Court below are justified in refusing to exercise its discretionary power u/s.20 of the Specific Relief Act? 6. Learned senior counsel representing the appellant has argued that the defendant respondent cannot blow hot and cold at the same time and has relied on a single Bench decision of this court in the case of VISHNU .v. ABDULGANI ( 2013(1) KCCR 105 to contend that defendant has not challenged the concurrent finding insofar as it relates to the execution of the agreement of sale. Therefore, it is argued that defendant is inhibited from taking up any plea in regard to hardship that would be caused to him in the light of escalation of prices of the property due to Upper Krishna Project or for any other reason without a foundation being laid to that effect in the written statement. Therefore, it is argued that defendant is inhibited from taking up any plea in regard to hardship that would be caused to him in the light of escalation of prices of the property due to Upper Krishna Project or for any other reason without a foundation being laid to that effect in the written statement. He has argued that a person who denies execution of the agreement of sale and receipt of consideration and suffers a negative finding in this regard, cannot take shelter under the provisions of Section 20(2) of the Specific Relief Act. 7. Per contra, learned counsel for the respondent, Mr.Amitkumar Deshpande has argued that though the trial court has answered issues relating to readiness and willingness and limitation in the affirmative, nothing comes in the way of the court to look into the surrounding circumstances in order to mitigate the hardship that would be caused to the defendant. He has further argued that the plaintiff knew very well that the lands in question were the subject matter of dispute before the Land Tribunal and the contract entered into with the defendant for purchasing the property is squarely covered under the inhibition found in Section 32 of the Indian Contract Act. He has argued that the plaintiff has not produced any material to show that the said dispute referred to in Ex.P1, agreement of sale has come to an end and it has given him a right to file the suit for specific performance. 8. Since all the substantial questions of law are interlinked, they are taken up together for discussion. 9. For better understanding of the substantial questions of law involved, Section 10 of the Specific Relief Act referred to in substantial question of law no.2 and Section 20 referred to in substantial question of law no.3 are extracted below: “10. Cases in which specific performance of contract enforceable. – Except as otherwise provided in this Chapter, the specific performance of any contract, may in the discretion of the Court, be enforced (a) When there exists no standard for ascertaining actual damage caused by the nonperformance of the act agreed to be done; or (b) When the act agreed to be done is such that compensation in money for its nonperformance would not afford adequate relief. 20. Discretion as to decreeing specific performance. 20. Discretion as to decreeing specific performance. (1) 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 into 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 nonperformance would involve no such hardship on the plaintiff; or (c) Where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.” Admittedly Ex.P1, the agreement of sale has been held to be proved. There is a concurrent finding in regard to its execution. Therefore, it would not be proper to interfere with the concurrent factual finding of both the courts in regard to the execution of agreement of sale. 10. In Ex.P1, there is a specific reference about both the items of lands being the subject matter of dispute. In paragraph 2 of Ex.P1, it is mentioned that the lands agreed to be sold by the defendant were in dispute and that he had agreed to sell the same through registered sale deeds after settlement of the dispute. Paragraph 2 of the agreement of sale is relevant and is extracted below: “The above said lands hereby agreed to sell are in dispute. It is agreed that the seller shall agreed to execute Regd. Sale Deeds, after settling all the disputes in respect of above said lands, in favour of the purchaser by receiving the balance consideration amount.” On a plain reading of the contents of Ex.P1, it is very clear that the parties did not know as to when exactly the litigation would come to an end. Section 32 of the Contract Act, 1872, speaks about enforcement of a contract contingent on an event happening. Section 32 of the Contract Act, 1872, speaks about enforcement of a contract contingent on an event happening. The same being relevant, is extracted below: “32. Enforcement of contracts contingent on an event happening. – Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contract become void.” 11. Admittedly the lands sought to be sold by the defendant to the plaintiff were not free from litigation. As on the date when the agreement of sale was executed by the defendant, they were the subject matter of litigation before the Land Tribunal. What is argued by Mr.Sreevatsa, learned senior counsel representing the appellant is that no substantial question of law has been framed in regard to inhibition found in Section 32 of the Contract Act to enforce the relief of specific performance based on a contingent contract. Both the parties knew very well that the lands in question were the subject matter of dispute before the Land Tribunal and this is not disputed even at this stage when submissions are made by the learned counsel before this Court. This has to be taken into consideration incidentally as to whether the trial court and first appellate court is justified in invoking Section 20(2) of the Specific Relief Act. 12. Mr. Amitkumar Deshpande, on the other hand, has brought to the notice of this court a book titled Treatise On Specific performance by Rt. Hon. Sir Edward Fry (6th Edition). He draws my attention to page no.458 in Chapter XXII wherein it is held thus: ‘A contract may be originally conditional, and contingent upon the performance of some act or the happening of some event. Where that has occurred, the contract becomes absolute, and rests on the same footing for all purposes as if it had been originally made positively and without reference to any contingency. But until it has thus become absolute, no person can be entitled to call for its performance, or to sue for its nonperformance. Where, therefore, the contract is in its origin conditional, it may afford a ground of defence that the condition has not been performed.’ 13. But until it has thus become absolute, no person can be entitled to call for its performance, or to sue for its nonperformance. Where, therefore, the contract is in its origin conditional, it may afford a ground of defence that the condition has not been performed.’ 13. Ex.P3 is the legal notice got issued by the plaintiff on 18.6.1986 calling upon the defendant to perform his part of the contract by executing a regular sale deed after receipt of the balance sale consideration. Not even a whisper is found about closure of the dispute of the lands in question except stating that he has been ready and willing to perform his part of the contract. There is only a reference in paragraph 2 that the defendant had promised to execute a regular sale deed after the settlement of all disputes. Of course there is a reference in paragraph 3 of Ex.P3 about the plaintiff receiving information about settlement of disputes before different authorities. 14. If the plaintiff knew very well about the pending disputes relating to the lands in question as on the date of execution of the agreement of sale, he should have necessarily mentioned the authorities before whom the disputes were pending and the dates on which they were closed so as to seek the equitable relief of specific performance. As already discussed, the contents of Ex.P4, reply sent by the defendant on 20.7.1986 is nothing but reiteration of the stand taken in the written statement. On a plain reading, it is evident that the defendant had emphatically denied execution of the agreement of sale, receipt of Rs.25,000/and his undertaking to execute a regular sale deed after closure of pending disputes before the authorities. 15. Insofar as issue no.6 is concerned, the relevant discussion is made in paragraph 25 of the judgment of the trial court at page 18. Section 16(c) of the Specific Relief Act mandates that a person has to not only prove that he has been ready and willing to perform his part of the contract, but also to prove the same effectively. The learned judge has come to the conclusion that the plaintiff has proved the same. In fact issue no.6 is answered in the affirmative holding that no much discussion is required. It is true that this finding has remained unchallenged by the defendant in any manner. 16. The learned judge has come to the conclusion that the plaintiff has proved the same. In fact issue no.6 is answered in the affirmative holding that no much discussion is required. It is true that this finding has remained unchallenged by the defendant in any manner. 16. The learned judge has held that the suit is in time. Article 54 of the Limitation Act, 1963, speaks about limitation within which a suit for specific performance has to be filed. If date is fixed for performance of a contract, it has to be performed within 3 years from the date fixed. Part 2 of Article 54 mandates that if no date is fixed, when the plaintiff has noticed that performance is refused. The learned judge of the trial court has framed an additional issue on the aspect of limitation and the discussion is found in paragraph 30 of the judgment at page 23. The same is reproduced below: “Defendant in his written statement has contended that, the suit of plaintiff is barred by time. Ex.P1 agreement of sale clearly goes to prove that, no date has been fixed for execution of sale deed by defendant. It is the case of plaintiff that, defendant by his Reply Notice 20.07.1994 has denied the execution agreement of sale and hence, the cause of action for filing suit arose on 20.07.1994. Defendant has also admitted in his written statement that, he has issued Reply Notice to plaintiff on 20.07.1994. Under the circumstances I hold that, the suit of plaintiff is in time. Hence, I answer Addl. Issue No.1 in the Affirmative.” There is no reference about framing an additional issue in the order sheet maintained by the trial court. It appears the said additional issue came to be framed by the trial court while preparing the judgment. The court has got power to recast issues, reframe or delete the issues. If an issue is recast or reframed or deleted by the court on its own, an opportunity was given to the concerned parties to have their say. It appears no such opportunity was given. The learned judge has held that the suit is in time since the cause of action arose on 20.7.1994 when the defendant emphatically denied the claim of the plaintiff and that is the starting point for reckoning limitation. 17. It appears no such opportunity was given. The learned judge has held that the suit is in time since the cause of action arose on 20.7.1994 when the defendant emphatically denied the claim of the plaintiff and that is the starting point for reckoning limitation. 17. Interestingly a Bench consisting of three Hon’ble Judges of the Supreme Court in the case of AHMED SAHAB ABDUL MULLA (DEAD) BY L.Rs. .v. BIBIJAN AND OTHERS reported in [2009] 5 SCC 462 had the opportunity to discuss both parts of Article 54 of the Limitation Act. There is no difficulty to ascertain the period of limitation if time if fixed in the contract. What is held by the Hon’ble apex court is that even in the second part of Article 54, the stress is on when the plaintiff has noticed that performance is refused.’ Here again there is no definite point of time when the plaintiff notices refusal on the part of the defendant. In that sense, according to the Hon’ble apex court, both the parts refer to definite date and there is no question of finding a different intention from other circumstances. Paragraphs 11 and 12 of the decision in the case of AHMADSAHAB (supra) are relevant and are extracted below: 11. The inevitable conclusion is that the expression “date fixed for the performance” is a crystallised notion. This is clear from the fact that the second part “time from which period begins to run” refers to a case where no such date is fixed. To put it differently, when date is fixed it means that there is a definite date fixed for doing a particular act. Even in the second part the stress is on “when the plaintiff has notice that performance is refused”. Here again, there is a definite point of time, when the plaintiff notices the refusal. In that sense bot the parts refer to definite dates. So, there is no question of finding out an intention from other circumstances. 12. Whether the date was fixed or not the plaintiff had notice that performance is refused and the date thereof are to be established with reference to materials and evidence to be brought on record. The expression “date” used in article 54 of the Schedule to the Act definitely is suggestive of a specified date in the calendar. We answer the reference accordingly. The expression “date” used in article 54 of the Schedule to the Act definitely is suggestive of a specified date in the calendar. We answer the reference accordingly. The matter shall now be placed before the Division Bench for deciding the issue on merits.” 18. PW1 has deposed that after coming to know about the disposal of the case, he requested the defendant to execute a regular sale deed, but the defendant refused, and later on he got issued legal notice. He has admitted that the defendant did not inform him personally about disposal of the cases pending before the Land Tribunal. When exactly the dispute was decided before the Land Tribunal and on how many occasions he had met the defendant to call upon him to execute regular sale deed is not forthcoming. 19. What is argued by Mr.Sreevatsa, learned senior counsel is that a single Bench of this court in the case of VISHNU (supra) has held that a person who emphatically denies execution of an agreement of sale and fails to probablise the same, will be inhibited from taking shelter under Section 20 of the Specific Relief Act. As per the facts and circumstances of the said case, Vishnu, the purchaser therein had paid the entire sale consideration to the seller and the hike in price was not considered as a ground to deny specific performance. Apart from this, the entire sale consideration had been paid to the vendor within the time stipulated and therefore, the defendant therein had the benefit of the entire sale consideration. 20. As per the facts of Vishnu’s case, after the payment of the entire sale consideration to the owner, proceedings were initiated by the authorities under Urban Land Ceiling and Regulation Act to forfeit the land sought to be sold. In fact the plaintiff had even taken steps to get the high tension electric line removed. In fact the defendant had executed even a power of attorney in favour of the plaintiff on the basis of which plaintiff had approached revenue authorities for mutating his name on the basis of Agreement of sale. Since defendant had sold a portion of the land in that survey number to somebody, the plaintiff had approached the survey authorities to get the land described in the Agreement of Sale bifurcated for the purpose of effecting phodiwork. Since defendant had sold a portion of the land in that survey number to somebody, the plaintiff had approached the survey authorities to get the land described in the Agreement of Sale bifurcated for the purpose of effecting phodiwork. Therefore, the aspect of non-pleading of hardship is treated as one of the important grounds to refuse to accept the theory of hardship. From a reading of the entire judgment, it can be said that no law has been laid down to the effect that the moment a person proves the execution of the agreement of sale, the defendant is automatically inhibited or precluded from pleading the hardship theory without there being a foundation in the written statement. The cardinal rule in a suit for specific performance is that just because a document is proved as an agreement of sale, equitable relief of specific performance will automatically follow. Hence, the decision rendered in Vishnu’s case is of no assistance to the case of the appellants and is clearly distinguishable on facts. 21. In the present case, the facts are entirely different. The lands in question were the subject matter of dispute before the Land Tribunal and plaintiff was very much aware of the same and this is evident from paragraph 2 of Ex.P1. Nothing is forthcoming as to when exactly the dispute before the Tribunal was decided. Learned senior counsel, Mr.Sreevatsa has submitted that 11.25 acres in Survey No.39 is no more available for specific performance since the Tribunal has considered that land as a tenanted land. In all fairness, it was the duty of the plaintiff to have placed some acceptable material in regard to closure of the dispute before the Land Tribunal and the exact extent of land available for granting the relief of specific performance of the contract. In this view of the matter, Section32 of the Contract Act assumes greater importance and lends credence to the discretion exercised by the trial court in terms of Section 20(2) of the Specific Relief Act. 22. In spite of the fact that the trial court has held issues regarding limitation and ready and willing in the affirmative and in favour of the plaintiff, the long delay in filing the suit should be considered as a serious laches, disentitling the plaintiff to seek the equitable relief of specific performance. 22. In spite of the fact that the trial court has held issues regarding limitation and ready and willing in the affirmative and in favour of the plaintiff, the long delay in filing the suit should be considered as a serious laches, disentitling the plaintiff to seek the equitable relief of specific performance. What is argued by Mr.Sreevatsa, learned senior counsel for the appellant is that time is not the essence of the contract in respect of immovable properties and therefore, the affirmative finding given in regard to limitation and ready and willing will have to be taken into consideration. 23. There is no second opinion about the same, but the claim for the relief of specific performance will have to be exercised within a reasonable time when no time is fixed. Admittedly in the present case, no time is fixed in Ex.P1 and as already discussed, there is absolutely no evidence as to when the dispute pending before the Land Tribunal was closed and when the attempt was made to call upon the defendant to execute the sale deed before the legal notice was got issued. 24. Admittedly the agreement of sale came to be executed in the year 1986 and the suit was filed in the year 1994, i.e. after a lapse of 9 years from the date of execution of the agreement of sale. The learned judge has come to the conclusion that there has been a reasonable rise in the market value of the suit lands and if the defendant is compelled to sell the land in favour of the plaintiff for a meagre consideration, it will cause great hardship to him. Of course the defendant has not taken any specific plea in regard to hardship that would be caused to him in the event of performing specific performance. The learned judge has made this observation that without there being any basis in regard to the escalation of price of the property having come within the area of Upper Krishna Project. Suffice to state that the inordinate delay with which the suit was filed seeking the equitable relief of specific performance could be considered as serious laches and therefore advance amount only is refunded. Necessary discussion is found in paragraph 25 of the impugned judgment of the trial court at paragraphs 20 and 21 to this effect. Suffice to state that the inordinate delay with which the suit was filed seeking the equitable relief of specific performance could be considered as serious laches and therefore advance amount only is refunded. Necessary discussion is found in paragraph 25 of the impugned judgment of the trial court at paragraphs 20 and 21 to this effect. Thus viewed from any angle, the discretion exercised by the trial court and affirmed by the appellate court cannot be considered as improper and illegal. 25. The learned judge of the trial court has awarded interest at the rate of 12% p.a. on Rs.25,000/. Whether that would be sufficient is the question. Even if the amount of Rs.25,000/had been invested either in National Saving Certificate or any other bank, it would have earned a higher interest. During the year 1986, it would have doubled if it had been invested in NSC within 6 years. Taking into consideration the fact that awarding reasonable interest would meet the ends of justice, the appeal could be allowed in part and not otherwise. Accordingly substantial question nos.(1) to (3) are answered in the negative. 26. While moulding the relief, a higher rate of interest has to be awarded to the plaintiff. In the case of CHAND RANI .v. KAMAL RANI ([1993]1 SCC 519), the Hon’ble apex court has held that the court should look into all relevant circumstances including the time frame determined in the agreement and whether discretion should be exercised. It could be said that the relevant circumstances have been looked into by this Court while denying the relief of specific performance of the contract. 27. In the result, the following order is passed: ORDER The appeal is allowed in part enhancing the rate of simple interest from 12% p.a. to 18% p.a. from the date of execution of the agreement of sale till the date of payment on Rs.25,000/only. All other findings of the trial court and the first appellate court are confirmed. Appeal is allowed with proportionate costs throughout.