Court : High Court of ANDHRA PRADESH
Brief : Specific Relief Act, 1963, Section 16(c) - Ready and willing - Mere assertion in plaint is not sufficient - It must be proved that consideration amount was available - When such proof is not produced before Court then it must be held that plaintiff was not always ready and wiling to perform his part of the contract. (B.Rajamani Vs Mrs.Azhar) 2005(2) Civil Court Cases 696 (A.P.)
Citation : http://www.judis.nic.in/andhra/qrydisp.asp?tfnm=808
THE HON'BLE SRI JUSTICE V.V.S. RAO
C.C.C.A. No. 51 of 1993
21-12-2004
B.Rajamani, W/o B.Balaiah, R/o H.No.3-5-801, Hyderguda, Hyderabad.
Mrs.Azhar Sultana, W/o Sri Asif Ali Khan, R/o H.No.16-9-571, Old Malakpet,
Hyderabad and others. ....RESPONDENTS
Counsel for the Appellant : Mr. Vedula Venkata Ramana
Counsel for the Respondent Nos.1 to 4: Mr. Koka Raghava Rao
:ORDER:
This appeal is preferred by the sixth defendant in O.S.No.1436 of 1981 on
the file of the Court of I Additional Judge, City Civil Court, Hyderabad. By
judgment and decree impugned in the appeal, the trial Court directed respondents
2 to 4 herein and appellant herein to execute and register sale deed in respect
of plaint schedule property in favour of the first respondent herein. The
appellant is a subsequent purchaser of the property under registered sale deed
from Ramesh Chand Khanna, the predecessor of respondents 2 to 4. In this appeal
for the sake of convenience, the parties shall be referred to as they are
arrayed in the suit.
The plaintiff filed the suit for specific performance of the agreement of
sale, dated 04.12.1978 in respect of property bearing Municipal
No.4-1-1 admeasuring 220 square yards situated at King Koti, Hyderabad. Her
allegations in the plaint in brief are as follows. The first defendant Ramesh
Chand Khanna represented in December 1978 that he purchased the suit schedule
plot with a room under registered sale deed from Private Estate of His Exalted
Highness the Nizam VII and wanted to dispose of the same. Accordingly he
executed suit agreement of sale in favour of the plaintiff agreeing to sell the
property at Rs.325 per square yard. The plaintiff paid advance amount of
Rs.30,000/- (Rupees thirty thousand only) through a cheque drawn on Allahabad
Bank, Hyderabad branch and the first defendant acknowledged the amount under a
separate receipt. The vendor promised to get the sale deed executed and
registered in favour of the plaintiff but he dodged the issue on one pretext or
the other. The plaintiff has been offering the balance sale consideration of
Rs.41,500/- (Rupees forty one thousand five hundred only) for execution of the
sale deed and he has been ready and willing to perform her part of the contract.
The plaintiff later learnt that permission from Urban Land Ceiling authorities
is not required, that the first defendant was desperately in need of money and
therefore he executed sale agreement, but after taking money refused to sell the
property. Having come to know this, the plaintiff got issued a telegraphic legal
notice through her lawyer. The plaintiff is ready to deposit balance
consideration and further amount towards stamps and registration charges to
fulfil her part of the obligation and formalities under the sale agreement.
Hence, she prayed for specific performance of agreement of sale and for a
direction to the first defendant to execute the sale deed.
The suit was filed against the vendor Ramesh Chand Khanna. He filed a
written statement admitting the execution of agreement of sale and receipt of an
amount of Rs.30,000/- (Rupees thirty thousand only) towards sale money. He,
however, opposed the suit alleging that the plaintiff purchased the property
knowing fully well that there was litigation in relation to the property agreed
to be purchased and therefore she developed cold feet and was not agreeable to
purchase the plot subject to litigation and that the plaintiff was not always
ready and willing to perform her part of the contract. The plaintiff's
representative was informed that he should either complete the transaction or
terminate the agreement and receive the advance amount paid, for which the
plaintiff's representative agreed to terminate the contract by mutual consent
and receive back the amount advanced by the plaintiff. Subsequently, the vendor
sold the land to third party and informed the plaintiff's representative to take
back the amount of Rs.30,000/-. However, on coming to know of the increase in
price, the plaintiff developed second thoughts with a mala fide intention and
therefore refused to accept repayment of Rs.30,000/-. The telegraphic notice was
not followed by confirmatory notice and during the period from the date of
agreement, the plaintiff never demanded for the completion of the contract and
she was not ready to pay the balance sale consideration. Hence, the plaintiff
is not entitled for the relief as prayed for.
During the pendency of the suit, Ramesh Chand Khanna died and his wife,
son and daughter (respondents 2 to 4 herein) were brought on record in 1983.
They did not file any separate written statements. Be that as it is, the
plaintiff filed I.A.No.1031 of 1985 for impleading defendants 5 to 7, which was
ordered on 17.11.1987. The subsequent purchaser of the property was impleaded
as defendant No.6 and her husband was impleaded as defendant No.5.
In the written statement, defendants 5 and 6 alleged that sixth defendant
purchased the suit schedule property from deceased Ramesh Chand Khanna for
valuable consideration under registered sale deed dated 31.10.1981, that the
purchaser had no knowledge about the agreement of sale between the plaintiff and
the deceased first defendant, and that since the date of purchase they are in
exclusive possession of the suit schedule property. They further alleged that
the total area purchased by the sixth defendant is 217 square yards, that sale
agreement in favour of the plaintiff is invalid and unenforceable, that the suit
is barred by limitation and that the plaintiff is not entitled for the relief of
specific performance of agreement. They also further alleged that there was a
longstanding dispute regarding the title and ownership of the suit schedule
property pending in the civil courts, that the suit schedule property was
subject matter of O.S.No.216 of 1973 on the file of the Court of III Assistant
Judge, City Civil Court, Hyderabad, filed by deceased Ramesh Chand Khanna
against Bahadur Hussain. When the said suit was decreed, Bahadur Hussain
preferred an appeal being A.S.No.151 of 1977 on the file of the Court of the
Additional Chief Judge, Hyderabad, which was allowed on 30.12.1978. It was also
alleged that though the suit filed by Ramesh Chand Khanna was dismissed by the
appellate Court, sixth defendant intervened and settled the disputes and
thereafter the property was sold to sixth defendant for valuable sale
consideration.
The plaintiff filed a lengthy rejoinder denying the averments made in the
written statement of first defendant as well as the written statement filed by
the defendants 5 and 6 alleging that Ramesh Chand Khanna conspired with sixth
respondent and her husband as well as Bahadur Hussain and on a single day two
sale transactions were brought into existence so as to deprive the plaintiff of
her right for specific performance of suit contract of sale. In the rejoinder,
the improbabilities of sixth defendant purchasing the property without notice of
prior agreement with plaintiff, were pointed out elaborately. The allegations
that plaintiff terminated the agreement, that the sixth defendant purchased the
property in good faith and that she is a bona fide purchaser and that the
plaintiff has no interest to purchase the property are denied in the rejoinder.
The trial Court framed the following issues and additional issues for
trial.
1)Whether the plaintiff is entitled for specific performance of agreement in
respect of suit schedule property?
2) Whether the suit is barred by limitation?
3) To what relief?
2)Additional Issues:
1) Whether the defendant No.6 is a bona fide purchaser of the suit property for
value without notice of suit agreement of sale in favour of the plaintiff?
2) Whether the suit agreement of sale is not binding on the defendant including
the defendant Nos.5 and 6?
The plaintiff examined her husband as P.W.1 and two attesters of the agreement
of sale as P.Ws.2 and 3. Ex.A.1 to A.12 were marked on her behalf. Ex.A.1 is
agreement of sale dated 04.12.1978 and Ex.A.2 is the receipt given by deceased
first defendant acknowledging Rs.30,000/-. Exs.A.6 and A.12 are copies of the
sale deeds in favour of sixth defendant executed by Bahadur Hussain and deceased
first defendant respectively. On behalf of sixth defendant, her husband, fifth
defendant was examined as D.W.1 and marked Ex.B.1 sale deed dated 31.10.1981
executed by Ramesh Chand Khanna in favour of sixth defendant. The trial Court
decreed the suit directing the legal representatives of Ramesh Chand Khanna -
defendants 2 to 4; and sixth defendant to execute registered sale deed in favour
of the plaintiff and put her in possession of the property within six weeks from
the date of the judgment after receiving balance sale consideration, failing
which, the plaintiff was given liberty to get the sale deed registered through
the Court and obtain delivery of possession.
The findings of the trial Court are as follows. 1) The suit agreement of sale is
true, valid and binding on first defendant and his legal representatives and
also on sixth defendant; 2) The case of the plaintiff that she has been always
ready and willing to perform her part of the contract is proved and the case of
the defendants that plaintiff terminated the contract and she was not ready and
willing to perform her part of the contract is improbable. For this conclusion,
the trial Court believed the evidence of P.W.1 as well as Exs.A.1 to A.3 as
corroborated by P.Ws.2 and 3; 3) The purchase by the sixth defendant
subsequently is not a bona fide and that she is not a purchaser in good faith.
The sale deeds i.e. Exs.A.12 and B.1 are brought into existence by collusion
among Ramesh Chand Khanna, Bahadur Hussain and the husband of sixth defendant.
The sale deed by Ramesh Chand Khanna in favour of the sixth defendant for a sum
of Rs.48,000/- and sale deed Ex.A.12 by Bahadur Hussain in favour of the sixth
defendant for a sum of Rs.45,000/- would lead to an inference that there is
collusion between first defendant and D.W.1; and 4) the fourth defendant has not
property discharged the burden of proof to show that she is a bona fide
purchaser for a valuable consideration and she subsequently purchased the suit
schedule property without knowledge of the prior agreement by the first
defendant in favour of the plaintiff.
In this appeal, Sri Vedula Venkata Ramana, learned counsel for the
appellant/sixth defendant made elaborate submissions on questions of fact as
well as questions of law in support of the appeal. The summary of his
submissions is as follows. Ex.A.1 is not signed by the plaintiff and therefore
it is not a valid agreement as per Section 54 of the Transfer of Property Act,
1882. The fact that plaintiff is not a signatory to Ex.A.1 signifies non-
compliance with the requirement of Section 16(c) of the Specific Relief Act,
1963 (the Act, for brevity) with regard to the readiness and willingness of
plaintiff. In the absence of any concluded contract as per Sections 7,8 and 9
of the Indian Contract Act, 1872 (for short, the Contract Act), the plaintiff is
not entitled to seek specific performance of the contract of sale. Till the
issue of Ex.A.3 notice, just before expiry of three years, which is the first
time demand, there is no evidence about plaintiff being ready and willing to
perform her part of contract and therefore Section 16(c) of the Act is not
complied with. The non-examination of the plaintiff on the sole ground that she
is pardanashin lady cannot satisfy the requirements in a suit for specific
performance with regard to Section 16(c) of the Act. Even if Ex.A.1 is lawful,
the relief being within the discretion of the Court, the Court below erred in
not considering Section 20 of the Act. The finding of the lower Court that
sixth defendant/appellant is not a bona fide purchaser is not correct. Burden
of establishing notice of prior sale is on the plaintiff and not on the
subsequent purchaser. There is no pleading or rebuttal evidence lead by the
plaintiff that sixth defendant is not a bona fide purchaser. The plaintiff
failed to discharge the burden and therefore under Section 19(b) of the Act, the
Court ought to have refused to enforce specific performance of Ex.A.1 in the
absence of any assertion by the plaintiff in the amended pleadings that sixth
defendant is not a bona fide purchaser. In support of these submissions, the
learned counsel placed reliance on Kirtarath Rai v Sripat Rai1 Bagiriti v
Laxmibai2, Veeramalai v Thadikara3, Vomisetti Papa Rao v J.Venkataramana4, Durga
Prasad v Lilawati5, D.V.Seshaiah v D.Venkayya6, K.Subbayyamma v S.Chimpirayya7,
Parakunnan Veetill Joseph's Son Mathew v Nedumbara Kuruvila's Son8,
N.P.Thirugnanam v Dr.R.Jagan Mohan Rao9, K.S.Vidyanadam v Vairavan10, Jagan Nath
V Jagdish Rai11, Sardar Amarjeet Singh v Nandu Bai12, Ram Awadh v Achhaibar
Dubey13, Ram Niwas v Bano14, M.A.Jabbar v L.I.C.House Building Employees
Society15, Veerayee Ammal v Seeni Ammal16, Zorawar Singh v Sarwan Singh17,
Nirmala Anand v Advent Corpn.(P) Ltd18 and Manjunath Anandappa v Tammanasa19.
The learned counsel for plaintiff/first respondent submits that none-execution
of Ex.A.1 agreement of sale by the plaintiff is of no consequence as the
deceased first defendant in his written statement admitted the existence of
agreement of sale between the plaintiff and the first defendant and therefore
there is a concluded contract for sale of immovable property under Section 54 of
the Transfer of Property Act read with Sections 7, 8 and 9 of the Contract Act.
Further the agreement of sale executed by the first defendant in favour of the
plaintiff, even if it does not contain the signature, which is a curable mistake
and plaintiff being in custody of Ex.A.1 could have always subscribed her
signature but as there is no dispute with regard to execution of Ex.A.1 by
Ramesh Chand Khanna, there was no such necessity. Either in the pleadings or in
the evidence, no such objection was ever raised and therefore it would be
impermissible for the appellant to raise the ground before this Court.
Secondly, the plaintiff pleaded and proved that she was always ready and willing
to perform her part of the contract and that the evidence of P.W.1 is supported
and corroborated by Ex.A.3, written statement of deceased first defendant as
well as the conduct of the plaintiff, who took prompt steps to amend the plaint
to direct the legal representatives of first defendant and sixth defendant to
execute the sale deed. He brought to the notice of this Court that to that
effect plaint was amended by reason of the orders of the trial Court in
I.A.No.1048 of 1990 dated 19.11.1990. Nextly, he would submit that sixth
defendant has not produced any evidence to show that she is a subsequent bona
fide purchaser of the suit schedule property under Ex.B.1. The learned counsel
would point out that there are circumstances to show that sixth defendant had
notice of the earlier sale by first defendant to plaintiff. The learned counsel
would point out that in Ex.A.1, sale consideration for 220 square yards is
mentioned as Rs.71,500/- but the sale consideration in Ex.B.1, sale deed, for
217 square yards is shown as Rs.48,000/-. There is no reason as to why the
first defendant had to sell the same property to a lesser amount. This would
show that sixth defendant was aware of the prior agreement between the plaintiff
and first defendant and therefore a lesser price was negotiated. When Ex.A.4,
notice, was published in newspapers, sixth defendant failed to immediately get
impleaded in the suit and that in the written statement and in her evidence,
there is no attempt to show that sixth defendant made enquiries before
purchasing the property under Ex.B.1.
In the background of pleadings, the oral and documentary evidence, that was lead
and brought on record during the trial and the rival submissions before this
Court would give raise to the following points for consideration.
1) Whether plaintiff is entitled to seek enforcement of specific performance of
Ex.A.1, agreement of sale?
2) Whether sixth defendant is bona fide purchaser of the suit schedule property
having paid her consideration in good faith and without notice of the original
contract? and
3) Whether the discretion of this Court out not to be exercised in favour of the
plaintiff for specific performance of Ex.A.1.
The first point for consideration
In every suit for specific performance of agreement of sale of immovable
property - needless to point out; the Court has to essentially considered two
questions: i) Whether the suit agreement of sale alleged is true and valid and
binding between the vendor and vendee; and
ii) Whether the plaintiff/vendor as has complied with the provisions of Section
16(c) of the Act by pleading and proving that the vendee has performed or has
always been ready and willing to perform his part of the contract. These two
questions would be considered in seriatum.
The plaintiff's case is simple. Ramesh Chand Khanna impressed upon her
that he purchased suit schedule property from the Secretary of HEH Nizam, that
he executed Ex.A.1, agreement of sale, on 04.12.1978 for a sale consideration at
Rs.325/- per square yard and that she paid an amount of Rs.30,000/- by way of
cheque. When she came to know that the vendor is avoiding the execution of the
sale on the ground that permission of authorities under Urban Land (Ceiling and
Regulation) Act, 1976 is required, she got issued Ex.A.3, telegraphic notice
expressing her willingness to perform her contract and demanding execution of
sale deed in vain and therefore the suit. The plaint's case was proved by the
oral evidence of P.W.1 as well as Exs.A.1, A.2 and A.3. That deceased first
defendant executed agreement of sale in favour of plaintiff was also proved by
P.Ws.2 and 3, who are the attestors of Ex.A.1. Further, in the written
statement filed by Ramesh Chand Khanna, the execution of the agreement is
admitted without any demur though the relief claimed by the plaintiff was
opposed. In that view of the matter, the question under consideration need not
detail this Court further, notwithstanding the feeble submission of the learned
counsel for the appellant that the agreement of sale is forged and not true.
Indeed as rightly contended by the learned counsel for the plaintiff/first
respondent either in the written statement of the first defendant or the written
statement of the sixth defendant, the plea of forgery was not raised nor any
evidence was let in by the defendants. A suggestion was not even made to P.W.1,
the husband of the plaintiff, who deposed on her behalf by reason of special
power of attorney, Ex.A.8. In the absence of any specific plea of forgery, no
amount of evidence is useful and submission of the learned counsel for the
appellant cannot be countenanced. Therefore, this Court holds execution of the
agreement by the deceased Ramesh Chand Khanna in the presence of P.W.2 and 3 and
the receipt of amount of Rs.30,000/- by way of cheque is duly proved by
plaintiff.
Whether Ex.A.1 is unlawful and illegal not binding on the parties for non-
execution of the same by plaintiff is an incidental question raised for the
first time before this Court by the appellant. To appreciate this, it is
necessary to extract Sections 7, 8 and 9 of the Contract Act as well as Section
54 of the Transfer of Property Act, 1882, which read as under.
Contract Act
7. Acceptance must be absolute
In order to convert a proposal into a promise the acceptance must-
(1) be absolute and unqualified.
(2) be expressed in some usual and reasonable manner, unless the proposal
prescribes the manner in which it is to be accepted. If the proposal prescribes
a manner in which it is to be accepted, and the acceptance is not made in such
manner, the proposer may, within a reasonable time after the acceptance is
communicated to him, insist that his proposal shall be accepted in the
prescribed manner, and not otherwise; but, if he fails to do so, he accepts the
acceptance.
8. Acceptance by performing conditions, or receiving consideration
Performance of the conditions of a proposal, for the acceptance of any
consideration for a reciprocal promise which may be offered with a proposal, is
an acceptance of the proposal.
9. Promises, express and implied
In so far as the proposal or acceptance of any promise is made in words,
the promise is said to be express. In so far as such proposal or acceptance is
made otherwise than in words, the promise is said to be implied.
Transfer of Property Act
54."Sale" defined:- "Sale" is a transfer of ownership in exchange for a price
paid or promised or part-paid and part-promised.
Sale how made: Such transfer, in the case of tangible immovable property
of the value of one hundred rupees and upwards, or in the case of a reversion or
other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property, of a value less than one
hundred rupees, such transfer may be made either by a registered instrument or
by delivery of the property.
Delivery of tangible immovable property takes place when the seller places
the buyer, or such person as he directs, in possession of the property.
Contract for sale: A contract for the sale of immovable property is a
contract that a sale of such property shall take place on terms settled between
the parties.
It does not, of itself, create any interest in or charge on such property.
Sections 7 and 8 of the Contract Act deal with acceptance of the proposal
by one party to the contract made by the other party. An acceptance must be
absolute and unqualified and must be express or implied. If one party to the
contract accepts the proposal and performs reciprocal promise, the acceptance is
complete. For instance, in the case of sale of immovable property, the vendor
will propose the sale of certain extent of land or house for a consideration
subject to certain conditions. If the purchaser accepts the proposals and
performs the reciprocal promise of paying consideration or part of the
consideration, the acceptance is absolute and it cannot be said that the
purchaser has not accepted the proposal. Further Section 9 of the Contract Act
postulates that promises by either of the party that is promise and reciprocal
promise can be either express or implied. However, the law does not require the
proposal or acceptance always to be in writing. If it is in writing it is
certainly said to be express. If the proposal for acceptance is otherwise than
in writing, the existence of binding contract cannot be ruled out. Therefore, a
contract to come into existence does not require that party should reduce the
terms of the contract into writing and accept reciprocal promise by signing the
contract in writing.
Section 54 of the Transfer of Property Act defines sale as transfer of
ownership in exchange for price paid or promised or part paid or part promised.
A contract for sale of immovable property is a contract that a sale shall take
place on terms settled between the parties. It is no doubt true that for a
contract of sale to come into existence necessarily there should be seller and
buyer and such parties should agree and settle terms of the contract. Though
the buyer and seller are required to settle the terms of the contract, there is
no necessity that in the event of the contract being reduced to writing, seller
(reciprocal promisor) should execute the document or subscribe his/her signature
in execution of the document. The question whether the terms of the contract of
sale of immovable property are binding on the parties or not is a matter of
evidence. In a given case, the execution by the buyer and seller, as the case
may be, is itself presumed to be the proof of acceptance of terms of the
contract unless and otherwise is proved. Similarly, even in the absence of
buyer's or seller's signature to the contract of sale of immovable property, if
both the parties agree that such contract was in existence subject to the terms
agreed, no further evidence would be required nor the law facilitates rejection
of the prayer for enforcement of such contract. It is always the matter of
interpretation of the covenants of the contract when a dispute arises as to
whether such terms are binding on the contracting parties. The very definition
of sale, if the agreement is for a sale of immovable property for consideration,
the law presumes the existence of the contract and indeed a binding contract can
always be presumed from the contemporaneous needs and circumstances at or about the time of coming into existence of contract. Therefore, the submission of the learned counsel for the appellant that there is no concluded contract between
the plaintiff and the first defendant is misconceived. Of course, it is always
a different question whether by reason of non-execution of Ex.A.1 by the
plaintiff herself, she can be said to be always ready and willing to perform her
part of the contract and such question has to be considered independently.
Whether the plaintiff properly pleaded and proved that she is always ready
and willing to perform her part of the contract? Section 16 of the Act is to the
effect that specific performance of a contract cannot be enforced, inter alia,
in favour of a person who fails to aver and prove that he/she has performed or
has always been ready and willing to perform the essential terms of the
contract, which are to be performed other than the terms of the performance of
which has been prevented or waived by the defendant. As per the explanation to
Section 16(c) of the Act for the purpose of said provision, it shall be not
essential for the plaintiff to actually tender to the defendant or deposit in
Court any money except when so directed by Court. This provision has been the
subject matter of interpretation in a number of cases arising under the Specific
Relief Act, 1877 as well as the present Act. It has been consistently held that
mere assertion in the plaint that plaintiff is ready and willing to perform the
contract is not sufficient. The plaintiff must not only aver and also prove
that he/she has been always ready and willing to perform part of the contract.
Mere use of the words in a mechanical manner would not be sufficient. There
must be acceptable cogent and convincing evidence before the Court, before
compliance with the provision is recorded in favour of the plaintiff.
In N.P.Thirugnanam v Dr.R.Jagan Mohan Rao (supra), the Supreme Court laid
down as under.
Section 16(c) of the Act envisages that plaintiff must plead and prove
that he had performed or has always been ready and willing to perform the
essential terms of the contract which are to be performed by him, other than
those terms the performance of which has been prevented or waived by the
defendant. The continuous readiness and willingness on the part of the
plaintiff is a condition precedent to grant the relief of specific performance.
This circumstance is material and relevant and is required to be considered by
the Court while granting or refusing to grant the relief. If the plaintiff
fails to either aver or prove the same, he must fail. To adjudge whether the
plaintiff is ready and willing to perform his part of the contract, the court
must take into consideration the conduct of the plaintiff prior and subsequent
to the filing of the suit along with other attending circumstances. The amount
of consideration which he has to pay to the defendant must of necessity be
proved to be available. Right from the date of the execution till date of the
decree he must prove that he is ready and has always been willing to perform his
part of the contract. As stated, the factum of his readiness and willingness to
perform his part of the contract is to be adjudged with reference to the conduct
of the party and the attending circumstances. The court may infer from the
facts and circumstances whether the plaintiff was ready and was always ready and
willing to perform his part of the contract. (emphasis supplied)
In Sardar Amarjeet Singh v Nandu Bai (supra), a Division Bench of this Court
concluded that the averment that the plaintiff is ready and willing to perform
his part of the contract must be supported by satisfactory evidence and that at
all material times plaintiff should be ready to perform the contract. The
relevant observations are as follows.
As already noticed, there is no iota of explanation coming from the side of the
appellant-plaintiff as to why he kept quiet without taking any steps or without
making known his readiness and willingness to the other party. Mere averment in
the plaint or pre-suit notice that he was al all material times ready and
willing to perform his part of the contract is not sufficient. But such
averment should be supported by satisfactory evidence. That is utterly lacking
in this case. As indicated by the Supreme Court, though time may not be the
essence in a contract of sale of immovable property, the performance of
obligations cannot be postponed for an unreasonably long length of time unless
there is a satisfactory explanation for such delay. Keeping the principle laid down in the above two decisions, issue may be
considered. P.W.1 is the lone witness on behalf of the plaintiff. P.W.1 is
facilitator of Ex.A.1 but he is not a party. By reason of Ex.A.8 special power
of attorney, he gave evidence on behalf of plaintiff. It is the plaintiff, who
gave the cheque for an amount of Rs.30,000/- drawn on Allahabad Bank, Hyderabad
as per Ex.A.2 receipt. The first defendant agreed to sell the suit schedule
property in favour of Azhar Sultana, wife of Ashif Ali Khan and as per the
agreement is under obligation to pay the balance of consideration to the vendor.
There is a privity of contract between the plaintiff and the first defendant.
Readiness and willingness of P.W.1 is of no significance. In paragraphs 3, 6
and 7, the plaintiff allege that she has always been ready to fulfil her part of
obligation. P.W.1 in evidence stated that he is always ready and willing to
perform his part of the contract but never even whispered that his wife is ready
and willing to perform her part of the contract. Be that as it is, no statement
is made by P.W.1 that the balance amount has been kept ready or kept in deposit
of any bank. No further corroboration is coming forth. Though in Ex.A.3,
telegraphic notice, the plaintiff informed the first defendant that she is ready
with balance consideration, she did not come to the box to depose in support of
the same and in the absence of any proof that amount was kept under by plaintiff
herself, as rightly contended by the learned counsel for the appellant, the
legal requirement under Section 16(c) of the Act must be held as not complied
with. In that context, the non-execution of Ex.A.1 by the plaintiff assumes
importance. Ex.A.1 is not signed by the plaintiff and this is certainly
significant and therefore it is doubtful whether the plaintiff had been always
ready and willing to perform her part of the contract. Except making an
averment in the plaint and Ex.A.3 notice as well as deposition of P.W.1, no
evidence is forthcoming. As held by the Supreme Court in N.P.Thirugnanam v
Dr.R.Jagan Mohan Rao (supra), the amount of consideration which has to be paid
to the defendant must of necessity be proved to be available. Such proof was
not produced before the Court and therefore it must be held that the plaintiff
was not always ready and willing to perform her part of the contract. The fact
that Ex.A.3 notice issued long after Ex.A.1 on 19.11.1981 would not be of any
substantial assistance to the plaintiff in this regard.
In so far as the case of the defendants is concerned, as per the written
statement of Ramesh Chand Khanna plaintiff purchased the property knowing fully
well there is a litigation between himself and Bahadur Hussain; she developed
cold feet due to litigation and did not evince any interest to complete the sale
transaction by paying the balance of sale consideration. Therefore, she agreed
to terminate the contract and take back the amount of Rs.30,000/- paid under
Ex.A.2. Though no witness deposed about these allegations and no documentary
evidence is produced, there is an admission about those allegations in the
rejoinder filed on behalf of the plaintiff on 01.08.1991. In paragraph 9 of the
rejoinder of the plaintiff, it is stated as under.
The averments in para 4 of the plaint that there was a long standing
dispute regarding the ownership of the plaint schedule property and was pending
in civil courts in O.S.No.216 of 1973 on the file of III Asst.Judge, City Civil
Court, Hyderabad between the Ist defendant and one Mr.Bahadur Hussain, that
there was an appeal A.S.No.151 of 1977, that the appeal was allowed on
30.12.1978 are not al all germane and relevant to the present suit.
Neither the first defendant nor defendants 5 and 6 (who by mistake in
their written statement referred themselves as defendants 4 and 5 respectively)
have produced any records relating to alleged O.S.No.216 of 1973 or that of
A.S.No.151 of 1977.
Defendants 5 and 6 in their written statement made the averments in relation to
the suit and appeal between deceased first defendant and Bahadur Hussain, which
was not specifically denied in the above paragraphs. Therefore, it is
reasonable to draw an inference that by the date of Ex.A.1 dated 04.12.1978, a
suit between first defendant and Bahadur Hussain in relation to same property
was pending and it was only on 30.12.1978 that the matter was decided in favour
of Bahadur Hussain by the appellate Court and that is the reason why the
plaintiff did not evince interest in completing the sale transaction by
obtaining proper sale deed. Further, the submission of the learned counsel for
the plaintiff that the deceased first defendant already complied to urban land
ceiling authorities under Section 27 would also prove that as on the date of
agreement of sale, Section 27 of the Urban Land Ceiling Act was very much on the
statute book but only subsequently by reason of the judgment of the Supreme
Court in Bhim singh v Union of India20, the same was declared ultra vires. The
theory developed by the plaintiff that Ramesh Chand Khanna mislead her with
regard to opening permission under the Urban Land Ceiling Act and therefore the
sale deed could not be obtained earlier has to be disbelieved. At the time of
execution of notice, permission for sale of house or of vacant land within
ceiling area was required and therefore the deceased first defendant acted
correctly in informing the plaintiff and also incorporating covenant to that
effect. On this score, plaintiff cannot gain any advantage to support her case
that she has been ready and willing to perform her part of the contract.
Therefore, this Court holds that the plaintiff was not ready and willing to
perform her part of the contract and that she issued a notice Ex.A.3 belatedly
by which time Ramesh Chand Khanna sold away the property to sixth defendant
under Ex.B.1 sale deed. The plaintiff therefore is not entitled for enforcement
of specific performance of contract of sale under Ex.A.1.
The second point for consideration
The plan appended to Ex.A.12 sale deed, which is executed by Bahadur
Hussain in favour of the sixth defendant and the plan appended to Ex.B.1 sale
deed executed by Ramesh Chand Khanna in favour of sixth defendant would show
that Bahadur Hussain and Ramesh Chand Khanna owned property admeasuring 195 square yards and 217 square yards respectively in King Koti, Hyderabad. Both the sale deeds were executed and registered on 31.10.1981. The property of
Ramesh Chand Khanna bearing No.3-5-783 (old No.4-1-1) is situated towards north of the property of Bahadur Hussain bearing No.3-5-783/24 (old No.4-1-1). So to say, the northern boundary of the property demised under Ex.B.1 is a property demised Ex.A.12 and both the properties are adjacent to each other. Both were assigned the same assessment number as No.4-1-1 and presumably due to the settlement between Bahadur Hussain and deceased first defendant, they got their respective shares in the property. It is in the evidence of D.W.1, that prior
to execution of Ex.A.12 and Ex.B.1 by the respective vendors, he came to know
about Bahadur Hussain that he settled the dispute between Bahadur Hussain and
deceased first defendant and purchased the property. The sale consideration
paid under Ex.A.12 is Rs.45,000/- for 195 square yards whereas the consideration
paid under Ex.B.1 is Rs.48,000/- for 217 square yards. The value per square yard
is almost same. In the rejoinder, a case was made out by the plaintiff that
when the sale consideration under Ex.A.1 dated 04.12.1978 was about Rs.71,500/-, deceased first defendant sold the property for a lesser sum of Rs.48,000/- and therefore the sale is not bona fide and that Bahadur Hussain, first defendant and D.W.1 colluded to defeat the rights of the plaintiff. Indeed plaintiff did not take any steps to amend the plaint to that effect in spite of the fact that
the plaintiff amended the plaint twice for the purpose of bringing legal
representatives of the deceased first defendant as well as amending the relief
after those legal representatives came on record. Plaint was also amended on
19.11.1990 as per orders in I.A.No.1048 of 1990, but no steps were taken to
amend the plaint with regard to allegations of collusion and sale of property
for a lesser value.
Under Order VIII Rule 1, the defendant is required to file written
statement after receipt of summons and produced all the documents upon which the defendant relies. The law requires defendant to specifically plead all new
facts and when once the written statement is filed, ordinarily no pleadings of
subsequent written statement are permissible. Order VIII Rule 9 is to the
effect that no pleading subsequent written statement shall be presented except
by leave of the Court and upon such terms as the Court feels fit. Curiously, in
this case, though the trial Court relied on the averments and allegations in the
rejoinder, the plaintiff has not filed any application along with rejoinder
seeking leave of the Court to file such rejoinder. Therefore, the trial Court
must be held to be in error relying on the allegations made in rejoinder and
also was in error in drawing inferences from such allegations in the rejoinder.
The trial Court, as noticed earlier, came to the conclusion that there was a
collusion between the first defendant, the sixth defendant and Bahadur Hussain
though there was not even a whisper in the evidence of P.W.1 and P.W.3 to that
effect nor there was any pleading in the plaint.
Section 19 (b) read with Section 20 of the Act does not permit enforcement
of specific performance of a contract against a transferee of the immovable
property for value, who has paid money in good faith and without notice of the
original contract. That is to say, if third party has purchased the suit
schedule property subsequent to the date of original contract under bona fide
impression and in good faith for value, in equity, the vendee would not be
entitled for specific performance of the contract. When a third party comes to
the Court with such a plea; on whom the burden lies. The law in this regard is
well settled. A subsequent purchaser is required to come to the box and make a
statement that he/she has purchased the property subsequently for a
consideration and that he/she had no knowledge of the earlier contract. That
would be sufficient to discharge the burden and the burden to lead rebuttal
evidence would shift to the plaintiff seeking specific performance of original
agreement. The learned counsel for the appellant cited various decisions of
various Courts in support of this. It is appropriate to refer to a few of them
only.
In Kirtarath Rai v Sripat Rai (supra), a Division Bench of the Allahabad
Court dealing with Section 27 of the Specific Relief Act, 1877, made the
following observations. There is, however, an exception in favour of a transferee for value who has paid his money in good faith and without notice of the plaintiff's contract. From the language of this section it is clear that any person who wishes to
bring himself within the exception must in the first instance show that he is
entitled to that exception. I expressed the same view in my dissenting judgment
in first Appeal No.183 of 1919, decided on 25th May, 1923, where I quoted cases
of all the High Courts in support of that view. Out of these I may only refer
to the case of Naubat Rai v Dhaunkal Singh21. Since then these rulings have
been followed in several other cases. In this view of the matter it is correct
to say that the burden of proving want of notice, in the first instance, lies on
the defendant transferee. But this he can do by merely denying the fact on
oath, and, therefore, the question of burden of proof loses much of its
importance. (emphasis supplied)
In Ramchander v Bibi Asghari22, the Patna High Court held as under.
It is true that the plaintiff has to establish the contract of sale
between him and the vendor; but as soon as the plaintiff establishes the prior
contract, the onus of proof that a third party has subsequently purchased the
property bona fide, and without notice, is on the party who claims to be such
purchaser. The general rule, under the Indian Evidence Act, is that where a
party claims exemption from a general provision of law, the onus lies upon him
to prove that he comes within the exception. In view of this general rule, in a
suit for specific performance of an agreement, for the sale of land as against
the vendor and a subsequent purchaser from him, the burden, therefore, lies upon
the latter to show that he is a transferee in good faith for valuable
consideration, and without notice. ...It is not for the plaintiff to show that
the subsequent purchaser had notice of the previous contract in favour of the
plaintiff. The onus of such a negative issue of proving that the subsequent
purchaser had no notice of a prior claim is ordinarily discharged by a denial
and by a negative evidence. Very little evidence, and, in certain
circumstances, a mere denial, regarding want of knowledge of the plaintiff's
contract would discharge this onus and shift the onus on the plaintiff. But
under no circumstance, the initial onus, which is on the subsequent transferee,
shifts on the plaintiff at the first stage, even when, the plaintiff mentions in
his plaint the reason why he is making the subsequent purchaser a party, and how
he came to know that the person concerned was a subsequent purchaser. (emphasis supplied)
In Durga Prasad v Lilawati (supra), the Patna High Court held that the
initial burden is always on the vendee (subsequent purchaser) to show that he
had no knowledge of the agreement, the vendee has only to discharge the burden
by leading negative evidence and that such evidence can only consists of his own
statement denying the fact that he had no knowledge of the same. It was further
held that as soon as the vendee denies notice, the burden is discharged and then
the burden shifts to plaintiff to prove that the vendee had notice of the
earlier agreement. In Vomisetti Papa Rao v J.Venkataramana (supra), a
Division Bench of this Court considered Section 27(b) of the Specific Relief
Act, 1877, which came to be re-enacted as Section 19(2) of the present Act.
This Court while reiterating that burden is on the transferee to show that he is
a bona fide purchaser for value without notice made the following observations
with regard to nature of proof.
...But he relied upon a decision of the Madras High Court in Marwadi
Sumermal Tamatraj v Thukkappa23, about which reference has already been made above to show that it is very difficult and at times may be impossible to prove a negative and in a case like this more attention has to be paid to the positive case of the plaintiff than to the bare denial made by the defendant. The 3rd defendant had denied in his evidence that he had notice of the prior agreement
of sale. The Sub-Judge accepted his evidence. He should therefore be taken to
have discharged his initial burden. It is not always possible to adduce
positive evidence to prove a negative. In a case like this where the plaintiff
adduced some evidence to prove the knowledge of the prior agreement of sale to
the subsequent purchaser and it is not acceptable and that coupled with the
denial of the subsequent purchaser goes a long way to establish his case about
his ignorance of the prior agreement of sale. If there are some circumstances
from which it can be said that the purchaser must have had knowledge of the
prior agreement of sale, it may be for the purchaser to show that in spite of
the existence of those circumstances in fact he was not aware of the prior
agreement of sale.
In K.Subbayyamma v S.Chimpirayya (supra), is a case in which the subsequent
purchaser (appellant) sought recourse to Section 19(b) of the Specific Relief
Act, 1963. While holding that such a purchaser must establish the absence of
notice as well as payment of consideration without notice this Court explained
the legal position thus:
"The law was and is both under Section 27 of the old Specific Relief Act
and under section 19 of the new Specific Relief Act that the onus is on the
subsequent purchaser to prove that he is a bona fide purchaser for value without
notice of the earlier contract. The defendant must establish both parts of plea
viz., absence of notice and payment of consideration without notice. It may be
that the onus is ordinarily discharged by the transferee denying on oath
knowledge of the plaintiff's contract. But that does not affect the onus of
proof. Needless to point out that each case will have to be considered on its
own facts to see whether the onus has been discharged by the transferee for it
is conceivable that by the transferee for it is conceivable that in some cases a
mere denial may not be sufficient. Ordinarily in suits of this type the
plaintiff-vendee should first adduce evidence regarding his contract. The
defendant-vendor then adduces evidence in rebuttal. The subsequent purchaser
can then lead evidence in support of his purchase. The initial onus is on him
to prove that he is a purchaser for consideration and without notice of the
earlier contract. After the subsequent purchaser has given such evidence, the
plaintiff can adduce evidence in rebuttal. It has been held that this would be
the position that even if the plaintiff had stated in the plaint that the
subsequent purchaser had notice of the earlier contract.
(emphasis supplied)
In Ram Niwas v Bano (supra), the Supreme Court considered Section 19(b) of
the Specific Relief Act, 1963. After referring to Snell's Equity (13th edition,
p.48), ruled that a transferee for value who paid money in good faith and
without notice of the original agreement, is excluded from enforcement of
specific performance of a contract. The Apex Court also considered the purport
of the term "notice" appearing in Section 19(b) of the Act and laid down as
under.
The word "notice" should have been used in Issue 10 instead of "knowledge"
because Section 19(b) uses the word "notice". From the definition of the
expression "a person is said to have notice" in Section 3 of the Transfer of
Property Act, it is plain that the word "notice" is of wider import than the
word "knowledge". A person may not have actual knowledge of a fact but he may
have notice of it having regard to the aforementioned definition and Explanation
II thereto. If the purchasers have relied upon the assertion of the vendor or
on their own knowledge and abstained from making inquiry into the real nature of
the possession of the tenant, they cannot escape from the consequences of the
learned notice under Explanation II to Section 3 of the Transfer of Property
Act.
Keeping the settled legal position as above, can it be said that the
plaintiff has proved that the sixth defendant had knowledge of Ex.A.1 before
obtaining Ex.B.1 sale deed? After impleading defendants 5 and 6 in 1987, the
plaintiff did not take any steps to amend the plaint. A lengthy rejoinder was
filed alleging that the sixth defendant had knowledge of Ex.A.1 and that
deceased first defendant, Bahadur Hussain and D.W.1 in collusion, brought into
existence Ex.B.1 sale deed. The payment of consideration by the sixth defendant
was not denied but it was suggested that when the Ex.A.1 sale deed is for
Rs.71,500/-, in Ex.B.1 sale deed, the consideration amount was Rs.48,000/-. The
plaintiff wanted the Court to draw an inference that as defendants 5 and 6 were
aware of Ex.A.1, the price was drastically reduced to Rs.48,000/- and therefore
the sixth defendant had knowledge of the prior agreement. A similar submission
is made before this Court by the learned counsel for the plaintiffs Sri Koka
Raghava Rao. The submission is misconceived for more than one reason.
First, the plaint is silent as to whether the sixth defendant had
knowledge of Ex.A.1. The rejoinder makes elaborate reference to this aspect but
no order of the trial Court is placed in the record to show that the trial Court
granted leave to plaintiff to file such a rejoinder. Any reference made by the
trial Court to rejoinder, therefore was not correct and on that score the
judgment of the trial Court suffers from error. Even in the evidence of P.W.1,
husband of the plaintiff, there is not even a whisper on this aspect. In the
cross examination, on 22.03.1991, P.W.1 deposed that he does not know whether
first defendant executed sale deed in respect of suit property and the does not
know defendants 5 and 6. He does not even adverts to various allegations in the
rejoinder and therefore the pleadings in rejoinder remain unproven statements,
which illegally found place in the record of the suit. All the inferences drawn
by the trial Court regarding the alleged collusion are mere surmises not
supported by the legal pleadings and the evidence on record.
Secondly, as per Section 19(b) of the Act, as interpreted by various
Courts, D.W.1 stated that sixth defendant had no knowledge of Ex.A.1 before
obtaining Ex.B.1 sale deed from Ramesh Chand Khanna. That is sufficient
compliance with law to prove a negative and by speaking thus defendants 5 and 6
have discharged their initial burden and the onus that shifted to plaintiff
remained undischarged. The plaintiff, failed to prove that the sixth defendant
is not a transferee for value, who paid money in good faith and/or that the
sixth defendant had notice of original contract. In the absence of any evidence
let in by plaintiff, the sixth defendant is entitled to seek relief under
Section 19(b) of the Act. D.W.1 on behalf of the sixth defendant stated that he
enquired the vendor as to whether anybody else has interest in the land and the
first defendant informed that there are no claims nor he was informed about any
litigation by the first defendant. He denied the suggestion that the first
defendant informed the fifth defendant about the prior agreement existed between
the plaintiff and the first defendant. In spite of such categorical statement,
the plaintiff did not bring in any rebuttal evidence and therefore must not be
held to have not discharged burden. The learned counsel for the plaintiffs made
strenuous attempt to point out certain inconsistencies in the evidence of D.W.1.
A careful scrutiny of these would show that they are insignificant and the
gravaman of the matter that the sixth defendant had no notice of prior agreement
remains unimpeached.
Thirdly, as noticed hereinabove, under Ex.A.6 sale deed and Ex.B.1 sale
deed, the sixth defendant purchased two items of property out of the old
premises No.4-1-1 on the same day and merely because the sale consideration is
less than the market rate or lesser than the sale consideration in Ex.A.1, it
cannot be presumed that the sale in favour of the transferee is not bona fide.
In the entire cross-examination of D.W.1, this subject matter was never broached
nor a suggestion was given to that effect. On the sale consideration mentioned
in Ex.A.1, an inference cannot be drawn that the sale in favour of sixth
defendant is not bona fide. Therefore, on point No.2, this Court holds that in
view of Section 19(b) of the Act, the plaintiff cannot enforce the specific
performance of contract as against the sixth defendant, who is a subsequent bona
fide purchaser for value and without notice of Ex.A.1.
In Re Point No.3 A Court is not bound to grant decree of specific performance merely because it is lawful to do so. The Court has to exercise discretion in a
reasonable and unarbitrary manner guided by sound principles. The learned
counsel for the appellant contends that plaintiff chose to issue Ex.A.3 notice
at or about the completion of three years of period from the date of Ex.A.1,
that her entire case regarding willingness to perform her part of contract is in
the realm of conjuncture and unproven allegation and therefore discretion ought
not to be exercised. He would also plead that the agreement between the
plaintiff and the first defendant was executed in December, 1978, whereas the
sixth defendant purchased the property under Ex.B.1 on 31.10.1981 and has been
in possession and enjoyment of the property for the last more than twenty years.
He would therefore plead not to exercise discretion in favour of the plaintiff.
He placed strong reliance on the judgment of the Supreme Court in Manjunath
Anandappa v Tammanasa (supra). In the said judgment, after referring to catena
of earlier judgments of the Supreme Court made the following observations.
There is another aspect of the matter which cannot be lost sight of. The
plaintiff filed the suit almost after six years from the date of entering into
the agreement to sell. He did not bring any material on records to show that he
had ever asked defendant No.1 the owner of the property, to execute a deed of
sale. He filed a suit only after he came to know that the suit land had already
been sold by her in favour of the appellant herein. Furthermore, it was
obligatory on the part of the plaintiff for obtaining a discretionary relief
having regard to Section 20 of the Act to approach the Court within a reasonable
time. Having regard to his conduct, the plaintiff was not entitled to a
discretionary relief.
In the sands of time more than quarter century has become past. The
plaintiff, as found by this Court, issued Ex.A.3 notice almost after three years
and also failed to implead the subsequent purchaser immediately after such an
averment is made by the first defendant in the written statement. Defendants 5
and 6 were impleaded on 17.11.1987 alleging that the sixth defendant is a bona
fide purchaser. Plaintiff did not adduce any evidence to disprove the case of
the sixth defendant, nor there is an evidence to show that the plaintiff was
always ready and willing to perform her part of the contract. Taking an overall
view of the matter, this Court to countenances the submission of the learned
counsel for the appellant/sixth defendant that discretion under Section 20 of
the Act ought not to be exercised in favour of the plaintiff. This issue is
decided accordingly.
In the result, for the findings recorded on various points for
consideration, the Appeal succeeds and is accordingly allowed. However, in the
facts and circumstances, the parties shall bear their own costs throughout.
?1 AIR 1928 Allahabad 307
2 AIR 1953 HYD 121
3 AIR 1968 Madras 383
4 1970 (2) An.W.R. 280
5 AIR 1972 Allahabad 396
6 AIR 1974 AP 193
7 1976 (1) An.W.R. 438
8 1987 Supp. SCC 340
9 (1995) 5 SCC 115
10 AIR 1997 SC 1751
11 AIR 1998 SC 2028
12 1998 (5) ALT 412 (D.B.)
13 2000 (1) Supreme 319
14 (2000) 6 SCC 685
15 2000 (1) ALT 385
16 AIR 2001 SC 2920
17 (2002) 4 SCC 460
18 (2002) 8 SCC 146
19 AIR 2003 SC 1391
20 AIR 1981 SC 234
21 (1916) 38 All.184 = 32 I.C. 953 = 14 A.L.J 111
22 AIR 1957 PATNA 224
23 (1944) 1 M.L.J. 376 : AIR 1944 MAD.391
