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2025 DIGILAW 2535 (KER)

M. B. Thambi v. Martin Payuva

2025-09-23

C.PRATHEEP KUMAR

body2025
JUDGMENT : C.Pratheep Kumar, J. The plaintiff in OS No. 169 of 1996, on the file of the Sub Court, Ernakulam, is the appellant. (For the purpose of convenience, the parties are hereafter referred to as per their rank before the trial court. ) 2. The plaintiff filed this suit for specific performance of an agreement for sale, entered into with the defendant on 16.01.1995. As per sale agreement dated 16.01.1995 (Exhibit A1), the plaintiff agreed to purchase the plaint schedule property, having an extent of 11.538 cents belonging to the defendant, for a price of Rs. 70,000/- per cent. At the time of executing Exhibit A1 agreement, a sum of Rs.5,00,000/- was paid as advance. As per the terms of the agreement, before the execution of the sale agreement, the defendant had to convince the extent of the property by measuring the same and also convince the encumbrance free title of the defendant over the property. According to the plaintiff, due to the default of the defendant, the sale deed could not be executed. Since the defendant failed to measure and convince the extent of the property within the agreed period, the plaintiff issued a registered notice to the defendant on 18.11.1995, expressing his willingness to purchase the property. However, the said notice was returned un- served. Thereafter, he had sent a registered lawyer's notice on 28.12.1995 and the same was accepted by the defendant on 1.1.1996. After receiving the said notice, the defendant approached the plaintiff seeking extension of time for performing the contract. At the request of the defendant, the period of the agreement was extended by one month from 15.01.1996 and on that day, a further sum of Rs. 2,00,000/- was also paid to the defendant and the said fact was endorsed on Exhibit A1 itself. The plaintiff was always ready and willing to perform his part of the contract, but still the defendant was not ready to execute the sale deed. It was in the above context that the plaintiff preferred the suit for specific performance with an alternate prayer for return of advance amount of Rs.7,00,000/- with 12% interest. 3. The defendant filed a written statement contending that there was only a loan transaction with the plaintiff. The defendant totally denied the execution of any sale agreement with the plaintiff. It was in the above context that the plaintiff preferred the suit for specific performance with an alternate prayer for return of advance amount of Rs.7,00,000/- with 12% interest. 3. The defendant filed a written statement contending that there was only a loan transaction with the plaintiff. The defendant totally denied the execution of any sale agreement with the plaintiff. According to the defendant, when he was in dire need of money he approached the plaintiff and the plaintiff advanced a sum of ? 5,00,000. As directed by the plaintiff, he had executed a document as security. He had also handed over his title deed to the plaintiff at the time of availing the loan. The mutual understanding was that, as and when the loan amount is repaid, the documents will be returned to the defendant. According to the defendant, he never expected that the plaintiff would behave in a different manner and that is why he omitted to send any reply to the notice issued by the plaintiff. According to the defendant, one cent of the plaint schedule property will fetch a sum of Rs. 5,00,000/- and hence, he will never agree to sell such a property for a meager amount of Rs. 70000/- per cent. According to the defendant, he never agreed to sell the plaint schedule property to the plaintiff. He did not send any reply to the lawyer's notice, as he was confident that on repayment of the loan amount, the transaction would be completed. Further, according to him, he had not received Rs.2,00,000/- from the plaintiff on 15.01.1996 as alleged in the plaint. That amount was written on Exhibit A1 by way of interest accrued on the principal sum of Rs. 5,00,000/-. According to the defendant, he is ready to pay the principal amount borrowed with interest to the plaintiff. Therefore, he prayed for dismissing the suit. 4. The trial court framed four issues. The evidence in the case consists of the oral testimonies of PW1, DW1, DW2, Exhibits A1 to A9, B1, C1 and C1(a). After evaluating the evidence on record, the trial court declined the prayer for specific performance, but directed the defendant to repay a sum of Rs.7,00,000/- along with interest to the plaintiff. Aggrieved by the above judgment and decree of the trial court, the plaintiff preferred this appeal, raising various grounds. 5. After evaluating the evidence on record, the trial court declined the prayer for specific performance, but directed the defendant to repay a sum of Rs.7,00,000/- along with interest to the plaintiff. Aggrieved by the above judgment and decree of the trial court, the plaintiff preferred this appeal, raising various grounds. 5. Now the points that arise for consideration are the following : 1) Whether the defendant entered into a sale agreement with the plaintiff, agreeing to sell the plaint schedule property for a price of Rs. 70,000/- per cent? 2) Whether the plaintiff is entitled to get a decree for specific performance as prayed for? 6. Heard Sri B. Premnath, the learned counsel for the appellant and Sri A.Balagopalan, the learned counsel for the respondent. 7. The points: According to the plaintiff, Exhibit A1 is a sale agreement executed between himself and defendant and thereby the defendant agreed to sell the plaint schedule property having an extent of 11.538 cents for a price of Rs.70,000/- per cent. Further, according to the plaintiff, on the date of the agreement itself, a sum of Rs. 5,00,000/- was paid as advance and subsequently at the instance of the defendant the period of the agreement was extended by one month from 15.01.1996. According to the plaintiff, on 15.1.1996, while extending the period of the agreement by one month, a further sum of Rs. 2,00,000/- was also paid to the defendant. The defendant admits the receipt of Rs. 500,000/- from the plaintiff. However, according to the defendant, it was only a loan transaction and as a security for the loan of Rs. 5,00,000/- availed by him, he happened to execute a document as instructed by the plaintiff and that he never intended to sell the plaint schedule property to the plaintiff. Further according to him, the plaint schedule property will fetch Rs.5,00,000/- per cent at the time of the agreement. The learned counsel for the appellant would argue that, Exhibit A1 is a pucca sale agreement whereby the defendant agreed to sell the plaint schedule property to the plaintiff and received a substantial portion of the sale consideration and hence the trial court was not justified in declining the prayer for specific performance. The learned counsel for the appellant would argue that, Exhibit A1 is a pucca sale agreement whereby the defendant agreed to sell the plaint schedule property to the plaintiff and received a substantial portion of the sale consideration and hence the trial court was not justified in declining the prayer for specific performance. On the other hand, the learned counsel for the respondent/defendant would argue that the defendant never intended to sell the plaint schedule property to the plaintiff and as such there is no valid grounds to interfere with the finding of the trial court. 8. In this case the defendant admits his signature in Exhibit A1, as well as in the endorsement made on Exhibit A1, which was marked as Exhibit A1(a). On a perusal of Exhibit A1 and Exhibit A1(a), it can be seen that it is a sale agreement whereby the defendant agreed to sell the plaint schedule property to the plaintiff for a price of Rs. 70,000/- per cent. As per Exhibit A1, the period of the agreement was one year and before the expiry of the one year, the defendant had to convince the plaintiff the extent of the property by measuring the same and also had to convince the encumbrance free title over the plaint schedule property to the plaintiff. According to the plaintiff, the defendant failed to measure the plaint schedule property and convince its extent to him and also failed to convince the encumbrance free title over the plaint schedule property. The defendant also has no case that he had convinced the plaintiff the extent of the property or its encumbrance free title. At the same time, his contention is that he never agreed to sell the plaint schedule property to the plaintiff. 9. Since Exhibit A1 is in the form of an agreement for sale executed by the defendant agreeing to sell the plaint schedule property for Rs. 70,000/- per cent and received Rs.5,00,000/- as advance amount and thereafter the period of the agreement was extended by one month from 15.01.1996 after receiving a further sum of Rs.2,00,000/-, the contention of the defendant that he has not agreed to sell the plaint schedule property to the plaintiff as stipulated in Exhibit A1 and A1(a), cannot be believed, especially in the absence of any convincing evidence to the contrary. On the other hand, in the light of the evidence on record, it is to be held that as per Exhibit A1, the defendant agreed to sell the plaint schedule property to the plaintiff for a price of Rs.70,000/- per cent. Further it is to be held that, at the instance of the defendant, the period of agreement was extended by one month from 15.01.1996, after receiving a further sum of Rs.2,00,000/- from the plaintiff. Therefore, as per Exhibit A1 and A1(a), the total amount received by the defendant became Rs.7,00,000/-. Since the extent of property agreed to be sold is 11.538 cents and the total amount received by the defendant came to be Rs.7,00,000/-, it is a substantial portion of the consideration. 10. Though the defendant claims that due to his financial stringency he only borrowed a sum of Rs.5,00,000/- from the plaintiff, agreeing to repay the same with interest, he has not disclosed the details of any such collateral agreement allegedly entered into with the plaintiff. In the written statement, the details like the period for which the loan was availed, the rate of interest agreed to be paid, the details of interest if any paid to the plaintiff etc. are not disclosed. The defendant has no case, so far he has repaid any amount to the plaintiff from out of the amount admitted by him. It means that, according to the defendant, Rs.5,00,000/- due to the plaintiff since January 1995 is still outstanding from him. 11. At one place in the written statement, the defendant simply states that he had paid some amount towards interest and that he is ready to repay the loan amount and interest to the plaintiff. Since the defendant admits receipt of a sum of Rs. 5,00,000/- from the plaintiff as early as on 16.01.1995, if he had paid any interest for the said amount to the plaintiff, he could have produced at least some scrap of paper to prove the same. But, the defendant could not produce even a scrap of paper to prove that he had ever paid any amount to the plaintiff so far, either towards payment of interest or towards principal, to the plaintiff till date. 12. With respect to the additional payment of Rs. 2,00,000/- mentioned in Exhibit A1, the version of the defendant is that it was the interest portion of the principal sum of Rs. 12. With respect to the additional payment of Rs. 2,00,000/- mentioned in Exhibit A1, the version of the defendant is that it was the interest portion of the principal sum of Rs. 5,00,000/- till 15.01.1996. If so, he had agreed to pay a sum of Rs.2,00,000/- for the principal sum of Rs. 5,00,000/- for a period of one year from January 1995 to January 1996. If so, the rate of interest will come to 40%. No prudent man will pay such a huge rate of interest in normal circumstances. Therefore, the contention of the defendant that Rs. 2,00,000/- stated to be paid as additional advance amount in Exhibit A1 is the interest for the principal sum of Rs.5,00,000/- cannot be believed. If so, the only other alternative is that, it was the further sum of Rs. 2,00,000/- paid by the plaintiff to the defendant as part of the sale consideration. 13. Another contention raised by the learned counsel for the respondent is that the consideration of Rs. 70,000/- per cent shown in Exhibit A1 is too meager and that the plaint schedule property would have fetched at least a sum of Rs.5,00,000/- per cent. However, in order to substantiate the said contention, the defendants could not produce any reliable evidence. What is relied upon by the learned counsel for the respondent is the evidence of DW2, a private valuer engaged by the defendant himself. He would claim that the plaint schedule property would fetch Rs.8,00,000/- per cent. The evidence of DW2 that the plaintiff's property will fetch a sum of Rs. 8,00,000/- per cent is even beyond the imagination of the defendant as according to the defendant, it will get only Rs. 5,00,000/- per cent. However, during the cross examination of DW2 admitted that he has not relied upon any documents to arrive at such a conclusion. He has not verified any of the documents relating to the properties in and around the plaint schedule property and has not verified the value of the property in the sub registry or revenue offices. Though he claims that he had conducted enquiry about the value of the property, he could not state the names of any such persons. 14. He has not verified any of the documents relating to the properties in and around the plaint schedule property and has not verified the value of the property in the sub registry or revenue offices. Though he claims that he had conducted enquiry about the value of the property, he could not state the names of any such persons. 14. In this context, it is also to be noted that, though the Exhibit B1 valuation report was prepared by DW2 on 25.10.1996, it was produced before the court only on 16.01.2006, more than 9 years and 3 months after the preparation of the said report. If there was any bona fides on the part of the defendant, he could have approached the trial court for appointing an expert to assess the value of the plaint schedule property, instead of engaging a valuer of his choice. The defendant has not offered any explanation as to why Exhibit B1 dated 25.10.1996 was produced before the court only on 16.01.2006, after more than 9 years, even though the suit was pending since 18.02.1996. 15. In this context, it is to be noted that the plaint schedule property has no direct road access. The front side of the plaint schedule property is the residential plot of the defendant. The lie of the plaint schedule property is behind the residential building of the defendant. In Exhibit A1, as access to the plaint schedule property, a pathway having a width of 4 metres (20 links) was provided. The learned counsel for the appellant has relied upon Exhibit A2, the title deed of the defendant over the plaint schedule property, to controvert the evidence of DW2. In Exhibit A2 sale deed executed on 22.11.1991, the value of the plaint schedule property is only Rs. 1,95,000/-, which means that the centage value of the plaint schedule property at the time of executing Exhibit A2 was only Rs. 16,900/- (195000/11.538). Since, in Exhibit A2 sale deed executed in November 1991, the plaint schedule property had a value of only Rs.16,900/- per cent, the price fixed in January 1995, about 3 years and 3 months after the execution of Exhibit A2 at Rs.70,000/- per cent cannot be said to be a low price. 16. 16,900/- (195000/11.538). Since, in Exhibit A2 sale deed executed in November 1991, the plaint schedule property had a value of only Rs.16,900/- per cent, the price fixed in January 1995, about 3 years and 3 months after the execution of Exhibit A2 at Rs.70,000/- per cent cannot be said to be a low price. 16. Therefore, from the available evidence on record, there is every reason to hold that Exhibit A1 is a sale agreement executed by the defendant in favour of the plaintiff agreeing to sell the plaint schedule property for a price of Rs.70,000/- per cent. Though as per the terms of Exhibit A1 the period prescribed for the execution of the sale deed was one year, the defendant has not complied with the terms in Exhibit A1, in spite of receipt of demand notice. At the same time, at the instance of the defendant, the period of the agreement was extended for a period of one month from 15.01.1996 after receiving a further sum of Rs. 2,00,000/-, making the total amount received by the defendant at Rs.7,00,000/-. Even if it is assumed that the entire 11.538 cents of property is available at the spot, the said property will fetch only Rs.8,07,660/- at the rate of Rs.70,000/- per cent. Therefore, Rs.7,00,000/- paid as advance, by the plaintiff to the defendant amounts to about 87% of the total sale consideration. Since within the agreed period the plaintiff paid about 87% of the total sale consideration and there was absolutely no latches on the part of the plaintiff in performing Exhibit A1, the plaintiff was justified in claiming specific performance of Exhibit A1. 17. It is true that granting relief of specific performance is a purely discretionary relief, till the commencement of the amendment to the Specific Relief Act in the year 2018. Section 20 of the unamended Specific Relief Act relating to the discretion to be exercised, while granting specific relief is extracted below for reference : "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. 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 non-performance 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. Explanation 1.—Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b). Explanation 2.—The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract. (3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance. (3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance. (4)The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.” 18 The learned counsel for the respondent relying upon the decision of the Hon'ble Supreme Court in Katta Sujatha Reddy and Another v. Siddamsetty Infra Projects Private Limited and Others, (2023) 1 SCC 355 and the decision in the review petition in Siddamsetty Infra Projects Pvt. Ltd v. Katta Sujatha Reddy and Others, (2024) SCC Online SC 3214, would argue that the amendments brought to the Specific Relief Act in the year 2018 is to be treated as having retrospective effect. It is true that the High Court of Telangana and Hyderabad held that the aforesaid amendment has retrospective effect. In the decision in Katta Sujatha Reddy (Supra), the Apex Court held that the above amendment has only prospective effect. It is true that the above judgment was recalled, as per the order in the review petition in Siddamsetty Infra Projects Pvt. Ltd (Supra). However, in the order passed by the Apex Court in the review petition, there is no specific finding as to whether the above amendment has prospective effect or retrospective effect. Therefore, the said question remains unsettled. In the above circumstances, I am inclined to follow the unamended provisions of the Specific Relief Act, as the transaction involved in this case is of the year 1995. 19. Even as per the yardstick provided in Section 20 of the Specific Relief Act, since the plaintiff has paid about 87% of the sale consideration, within the period of the agreement, if specific performance is denied, the same will cause irreparable loss, injuries and inconvenience to the plaintiff. Even if specific performance is granted, there is no chance for any unfair advantage to the plaintiff. Since the defendant has received 87% of the total sale consideration at the time of executing the agreement and within the extended period of the agreement, even if the value of the property has increased subsequently, the same will not cause any prejudice to the defendant. 20. Since the defendant has received 87% of the total sale consideration at the time of executing the agreement and within the extended period of the agreement, even if the value of the property has increased subsequently, the same will not cause any prejudice to the defendant. 20. At the same time, there were no latches on the part of the plaintiff and he was always ready and willing to perform his part of the contract. The plaintiff issued a lawyer's notice to the defendant demanding specific performance of the contract even within the period of agreement. Thereafter, at the instance of the defendant, the period of the agreement was extended by one month from 15.01.1996. Since the defendant was not prepared to execute the sale deed, the plaintiff filed the suit on 15.09.1996 without much delay. In the above circumstances, I find no grounds to deny the relief of specific performance to the plaintiff. Therefore, the plaintiff is entitled to get the prayer for specific performance. Considering the facts I hold that for the balance sale consideration the plaintiff can be directed to pay reasonable interest also. Considering the facts, I hold that interest @ 8% per annum will be a reasonable one. Point answered accordingly. 21. In the result, this appeal is allowed. The impugned judgment and decree of the trial court, denying specific performance to the plaintiff is set aside. The prayer for specific performance is allowed. The plaintiff is directed to deposit the balance sale consideration along with interest at the rate of 8 % per annum from the date of Exhibit A1 till the date of deposit, under intimation to the defendant, within a period of two months from today. On deposit of the said amount, the defendant shall execute a deed of conveyance in respect to the plaint schedule property in favour of the plaintiff or anybody authorized by him. In case of default, the plaintiff could get the sale deed executed through the process of the court and realise the expense from the amount so deposited. After executing the sale deed in favour of the plaintiff and handing over all documents of title relating to the plaint schedule property, the defendant could receive the balance sale consideration along with the interest so deposited by the plaintiff. Considering the entire facts, I direct both parties to suffer their respective costs in this appeal. After executing the sale deed in favour of the plaintiff and handing over all documents of title relating to the plaint schedule property, the defendant could receive the balance sale consideration along with the interest so deposited by the plaintiff. Considering the entire facts, I direct both parties to suffer their respective costs in this appeal. All pending interlocutory applications in the appeal will stand dismissed.