C.R. Viran and others v. A. Sujaudheen and others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE & THE HONOURABLE MR. JUSTICE P.SOMARAJAN WEDNESDAY, THE 4TH DAY OF APRIL 2018 / 14TH CHAITHRA, 1940 RFA.No. 17 of 2009 AGAINST THE ORDER/JUDGMENT IN OS 525/2006 of SUB COURT,ERNAKULAM DATED 31-10-2008 ## APPELLANT(S)/DEFENDANT IN THE SUIT: 1. C.R.VIRAN, S/O.LATE RAMASWAMY IYER, VISHALABHAVAN, CHITTTOOR ROAD, KOCHI-682011.REP., THROUGH POWER OF ATTORNEY HOLDER,C.V.VENKATESH, ALIAS SURESH, KRISHNAGEETH APARTMENTS, NO.98,, 2ND MAIN ROAD, SHESHADRIPURAM, BANGALORE-560020. [DIED] ## *ADDL.APPELLANTS IMPLEADED Addl. 2. NAGALAKSHMI, AGED 79 YEARS, WIFE OF LATE C.R.VIRAN, 98/6, KRISHNAGEET APARTMENTS, 2ND MAIN ROAD, SHESHADIRIPURAM, BANGLORE-560020. Addl. 3. SITA GOPAL, AGED 60 YEARS, D/O LATE C.R VIRAN, NO.1, BHUVANESWARI NAGAR, PLOT 10, VELACHERY, CHENNAI-600042. Addl. 4. RADHA RANGANATHAN, AGED 56 YEARS, D/O LATE C.R.VIRAN, 3C, GRAND RESIDENCY 137, VELACHERY MAIN ROAD, VGP SELVA NAGAR, CHENNAI-600042. Addl. 5. C.V.VENKATESH, AGED 52 YEARS, S/O LATE C.R VIRAN, 98/6, KRISHNAGEET APARTMENTS, 2ND MAIN ROAD, SHESHADIRIPURAM, BANGLORE-560020. Addl. 6. PADMINI ANAND, AGED 52 YEARS, WIFE OF LATE C.V.ANAND, C.C.27/2752, C2, 1ST FLOOR, EDELWEISS OF LITTLE FLOWER HOMES, KADAVANTHARA, KOCHI-682020. Addl. 7. ABIJITH ANAND, AGED 24 YEARS, SON OF LATE C.V.ANAND, C.C.27/2752, C2, 1ST FLOOR, EDELWEISS OF LITTLE FLOWER HOMES, KADAVANTHARA, KOCHI-682020. Addl. 8. ANJU ANAND, AGED 20 YEARS, D/O LATE C.V.ANAND, C.C.27/2752, C2, 1ST FLOOR, EDELWEISS OF LITTLE FLOWER HOMES, KADAVANTHARA, KOCHI-682020. BY ADVS.SRI.R.D.SHENOY (SR.) SMT.I.SHEELA DEVI ADDL.A2 TO A8 SRI.S.VINOD BHAT SRI.LEGITH T. KOTTAKKAL RFA NO.17/2009 -2- ## RESPONDENT(S)/(PLAINTIFF IN THE SUIT): A.SUJAUDHEEN, S/O.ABBAS GANI, FATHIMA MANZIL, VENNALA P.O. ARAKKAKADAVU, KOCHI-28. *ADDL.R2 IMPLEADED: Addl.2. C.V.RAMASWAMY, S/O LATE C.R.VIRAN, P.O.BOX 37267, DUBAI, U.A.E. (*LEGAL HEIRS OF DECEASED SOLE APPELLANT ARE IMPLEADED AS ADDL.A2 TO ADDL.8 AND ADDL.R2 AS PER ORDER DATED 28.2.2017 IN IA NO.2952/2016) R1 BY ADV. SRI.S.RAMESH BABU ADDL.R2 BY ADV. SRI.M.K.THANKAPPAN THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 15-03-2018,THE COURT ON 4/4/2018 DELIVERED THE FOLLOWING: **RFA NO.17/2009** ## **APPENDIX** ## **APPELLANT'S EXHIBITS** **ANNEXURE A: TRUE COPY OF CHALAN DATED 29.1.2009. ANNEXURE A1: TRUE COPY OF THE CHALAN DATED 30.1.2009.** **//True Copy//** **PS to Judge** **Rp** ## **A.M. SHAFFIQUE & P.SOMARAJAN, JJ.** ========================== RFA No. 17 of 2009 ==================== Dated this, the 4[th] day of April, 2018 ## **J U D G M E N T** ## _**Shaffique, J.**_ This appeal is filed by the defendant in a suit filed for specific performance of a contract for sale of immovable property. The respondent is the plaintiff in the suit. Original appellant died and legal heirs had been impleaded as additional appellants 2 to 8 and additional 2nd respondent. 2. The material allegations in the suit are as under:- Plaintiff entered into an agreement with the defendant on 29/7/2005 for purchasing an extent of 68.649 cents of property in Poonithura village offering to pay an amount of `3.20 lakhs per cent. A sum of `25 lakhs was paid as advance and plaintiff offered to purchase the property within a period of one year. Though there was no provision in the agreement to pay further advances, on the request of the defendant, plaintiff paid `5 lakhs on 22/8/2005 and a further amount of `5 lakhs on 6/9/2005 to be adjusted towards sale RFA No.17/2009 -:2:- consideration. While so, the defendant by letter dated 25/1/2006 (Ext.A2) informed the plaintiff that he will not be in a position to execute the sale deed and the plaintiff has to take back the advance amount and withdraw from the agreement. Defendant also stated that the property was conveyed in the name of a company and the Directors of the Company are not permitting sale of property. The plaintiff alleges that despite the said disinclination of the defendant to assign the property, when he issued a legal notice dated 26/6/2006 (Ext.A4), defendant had later agreed to comply with the terms of the agreement and the period of agreement was extended upto 25/8/2006. 3. Plaintiff further averred that in the meantime, defendant informed that the title deeds were pledged to the Bank of India towards loan obtained by third parties. According to the plaintiff, he had agreed to make necessary arrangements to meet the dues to the Bank of India and to obtain the original title deeds in his favour. Since the defendant did not comply with the terms of agreement, the suit is filed stating that the plaintiff has always been ready and willing to perform his part of the bargain, that is to pay the balance consideration to the defendant after adjusting RFA No.17/2009 -:3:- the advance amount. Accordingly, the plaintiff sought for specific performance of the agreement dated 29/7/2005 and for consequential reliefs and in the alternative, claims for recovery of the amounts advanced by him. 4. In the written statement defendant took up a contention that he is the Director of M/s.Bagsvig, a public limited company which has its factory and the business place in the plaint schedule property. The property belongs to the company and it is not the personal asset of the defendant. When the plaintiff who is dealing in real estate business approached the defendant offering to purchase the property, the defendant had informed that unless the approval of the members of the Board are obtained, the property could not be sold. It was at the insistence of the plaintiff that he entered into an agreement and `25 lakhs was received as advance on the _bonafide_ belief that the Board will sanction the concurrence. He further contended that the Board of Directors of the company refused to sell the assets as the unit was running very profitably and lot of workers were earning their livelihood out of the employment in the unit. But the plaintiff was ready to face the contingency and he was willing to take the responsibility RFA No.17/2009 -:4:- though knowing that it was impossible for performance. Defendant being made aware of the aforesaid situation started to take law into the hands and intimidated the defendant and members of the Board with dire consequences. Plaintiff himself compelled the defendant to extend the period in order to see that approval of the Board is obtained. Out of fear, defendant cooperated with the extension, but it was not voluntary. The defendant further contended that the plaintiff's readiness and willingness for purchasing the property was not correct and that the plaintiff cannot be ready to purchase the company property from one of its Directors without approval of the Board. It is further contended that the defendant was ready to return the amount received in advance whenever plaintiff conveys his willingness to receive the same and he had even deposited the money . 5. The Trial Court having framed the issue, evidence was taken. Plaintiff was examined as PW1 and he relied upon Exts.A1 to A13. Defendant's son was examined as DW1 and he placed reliance on Exts.B1 to B16(a). Ext.A1 is the agreement for sale of property, Ext.A2 is letter dated 25/1/2006 issued by the RFA No.17/2009 -:5:- defendant to plaintiff wherein he expressed the disinclination to withdraw from the agreement. Ext.A3 is the copy of release deed No.4872/1995 of SRO, Maradu. Ext.A3 indicates that the property is in the name of the defendant and not in the name of the company. Ext.A4 is the lawyer's notice dated 26/6/2006 issued by the plaintiff to defendant seeking specific performance of the agreement. Ext.A5 is letter dated 27/10/2005 issued by Bank of India, Mumbai Branch to M/s Bagsvig High Tech Ltd., a copy of which is marked to the plaintiff wherein they have indicated the outstanding amount due for settling the loan account and releasing the title deed. 6. While giving evidence, PW1 stated that he has issued a cheque dated 21/8/2006 in favour of Bank of India for an amount of `85,10,000/- being the outstanding amount. The cheque was however returned by letter dated 26/8/2006 stating that by the time the account has already been closed. The plaintiff in his evidence has stated that all alone plaintiff was ready and willing to pay the balance consideration and to get the sale deed executed but it was only on account of the breach committed by the defendant that the sale deed could not be executed. He had RFA No.17/2009 -:6:- also stated that at all times he was ready and willing to perform his part of the contract. 7. The defendant's son was examined as DW1. He is the Managing Director of M/s.Bagsvig Hi-tech Ltd., a company registered under the Companies Act. Though execution of the agreement is admitted, his evidence is that the defendant had to execute the agreement on account of the old age and the force exerted by the plaintiff. In the scheduled property, the factory, office and other structures of the company are situated. The plaintiff was informed that without the permission of the Director Board, the property could not be sold. The defendant is under treatment for his old age. In the chief affidavit DW1 says that the agreement was not executed by mutual consent. However, he admits that advance amount was received and they are willing to return the said amount. He had further stated that the plaintiff had offered to purchase the property to derive excessive profit. It is also averred that the property originally belonged to the defendant and one Kerala Varma. They were running a manufacturing unit of heat treatment equipments in a factory situated in the property. Kerala Varma had released his rights in RFA No.17/2009 -:7:- favour of the defendant. Thereafter the factory was run as a partnership. Defendant was one of the partners. The property was transferred to the partnership. The building was constructed by Bagsvig Electronics, the business concern at that time. Ext.B1 is the bill given by Royal Construction Company contractors for constructing the building. The financial statement of the firm for the year 1994-95 is produced as Ext.B2. In the financial statement, among the fixed assets in list no.13, the plaint schedule property is also mentioned. Bagsvig Electronics is a partnership firm which was been registered on 19/1/1964 and the plaint schedule property is shown as the place of business. Ext.B3 is the certificate of registration. Ext.B4 is the certificate issued by the Small Scale Industries Department treating M/s Bagsvig as an SSI Unit. It is further averred that later the partnership was changed to Bagsvig Hi-tech Limited and was functioning in the very same premises. Kerala Varma who was a partner of M/s Bagsvig Electronic had retired from the firm on 22/1/1979 and the retirement deed is Ext.B6. The property was treated as that of a partnership and it was valued accordingly. In the audit report ending with 31/3/1996 of M/s Bagsvig Hi-tech Ltd, the plaint RFA No.17/2009 -:8:- schedule property is shown as an asset of the company. It is stated in the audit report that the fixed assets of the partnership firm was taken over by the company. The company also has Central Excise Registration which is marked as Ext.B9. Certain other documents were also produced like lease deed in favour of Godrej Ltd, property tax receipts, electricity invoice, water bills, etc., to indicate that the property belonged to the company. In the evidence it is further indicated that if this property is sold by the defendant, the company will be put to irreparable loss and injury. In cross examination it is indicated that Ext.B6 was of the year 1979 and it is thereafter that a release deed had been executed with reference to the property as per Ext.A3 in the year 1995. In further cross examination he admits that there is no material to indicate that the property was contributed to the partnership firm. 8. Ext.A1 is the agreement. The agreement recites that the scheduled property having an extent of 68.649 cents is part of document No.4872 of the year 1995. The derivation of title has also been indicated in the document. Though it is contended by the appellant/defendant that the property was contributed to a RFA No.17/2009 -:9:- firm and later on it is in the name of a company, no materials had been produced to prove the said fact. An attempt had been made to prove that the property was contributed to a firm M/s Bagsvig Electronic Industries. But, Ext.B3 has been issued by the Registrar of Firms which indicates that the defendant and one P.Kerala Varma were the partners of the firm. The firm was constitued apparently on 1/11/1964 and this document evidences the change of the firm's name as Bagsvig with effect from 1/03/1971. The firm has been given permanent registration certificate as a small scale unit by the District Industries Centre as evident from Ext.B4. Ext.B5 is an affidavit of the defendant given before the Managing Director, KSIDC wherein it is stated that he is the Director of Bagsvig Hi-Tech Private Ltd., and he does not own or possess any land or property. His affidavit is only a self serving document and has no evidentiary value for the purpose of the case on hand. Ext.B6 is a deed of retirement for dissolving the firm M/s Bagsvig. This document is executed on 22/1/1979. It is _inter alia_ stated in the said document that the property of the partnership business consists of land, building, plant and machinery, furniture, fixtures, fittings, tools and equipments, raw RFA No.17/2009 ## -:10:- materials, components, trade mark etc,. It is stated that Sri.P.Kerala Varma, one of the partners, has decided to retire from the firm. It is further stated that the continuing partner shall take over all the assets and liabilities together with the goodwill, trademark and monogram 'Bagsvig' of the partnership firm as a going concern. It is also stated that as per agreement dated 22/1/1979 executed between the parties, the retiring partner will have no further claims either in the firm's business or in the properties of the firm otherwise than as provided in the agreement. The continuing partner shall take over all the liabilities of the firm including the loans taken from State Bank of India, the Industries Department of the Government of Kerala or any other public or private corporations. This document also does not indicate as to whether the property has been acquired by the firm or contributed to the firm's business at any point of time. Ext.B7 is the balance sheet of the firm as on 22/1/1979. The schedule to the fixed assets would show that the property is valued at `11,22,000/- and the factory building, machinery, building etc., are seen separately valued, the total would come to `17,80,395/- and after depreciation, the value is fixed at RFA No.17/2009 -:11:- `17,24,924/-. What was the property that is valued is not specifically stated in the said document. Ext.B8 is the auditor's report and balance sheet of Bagsvig Hi-tech Ltd., a company as on 31/3/1996. Schedule 7 is statement of fixed assets as on 31/3/1996 wherein the land has been valued at `2,08,74,000/and including all other assets, the value would come to `2,35,39,407.88/-. 9. The contention of the defendant is that the aforesaid land had been utilized by the company after the firm was dissolved and therefore, without the consent and approval of the company, the sale agreement should not have been executed. Ext.B10 is a deed of surrender of lease of the company Bagsvig Hi-Tech Ltd., represented by its Director Mrs.Nagalakshmi Viran and the defendant. The document indicates that the company had taken building Nos.30/1172 to 30/1175 and 30/1177 to 30/1179 along with the appurtenant land and all rights therein in respect of land situated in 1.5 acres of land in Sy.Nos.722/1, 2, 3 and 4 to its owner, the defendant herein. This document is produced to prove that surrender of lease is created as per document No.2161/02 dated 17/6/2002. This document would only prove RFA No.17/2009 -:12:- that the defendant had given on lease the property in the schedule annexed which includes building and 1.5 acres of land to the company represented by one of its Directors. Exts.B11 and B11(a) are the lease deed and rent agreement between the company on the one hand and M/s Godrej Sara Lee Ltd., on the other hand and yet another agreement with Bharati Cellular Ltd. All these documents have been produced to indicate that the company was managing or was holding the properties. But the evidence discloses the fact that the partnership firm Bagsvig was utilizing the property for the purpose of running a unit and it has constructed a building thereof. One of the partners retired and thereafter the property came in possession of the defendant as a partner of the firm exclusively. He had permitted the company to use the land and building for the purpose of functioning of the company and the land had been shown as an asset of the company. 10. It is true that for the purpose of contributing an immovable property, as an asset of a partnership firm, though no registered document is required, there has to be evidence to show that the property was actually contributed to the firm. RFA No.17/2009 -:13:- 11. In this case, other than the oral testimony of DW1 and the balance sheet, nothing else had been produced to indicate that the property was contributed to the firm and thereafter it was transferred in the name of the company. Therefore, we have to proceed on the basis that the defendant himself is the owner of the property. 12. Learned counsel for the appellant however raised the following contentions:- - (I) Though the plaintiff had pleaded that he is ready and willing to purchase the property by complying with his part of the contract, there is absolutely no evidence to prove that the plaintiff was in possession of sufficient funds for acquiring the property by paying the balance sale consideration. - (II) That the Court below had not properly appreciated the question whether plaintiff's readiness and willingness to comply with the terms of contract was _bonafide_ and factually correct. - (III) Even assuming that the plaintiff was always ready and willing to comply with his obligations under the agreement, the Court below was expected to consider whether a decree RFA No.17/2009 -:14:- should be granted under section 20 of the Specific Relief Act which is not borne out by the judgment. 13. Learned counsel for appellant also placed reliance upon the judgment of the Apex Court in _**B.K.Sri Harsha v. M/s.Bharath Heavy Electricals Ltd**_ [AIR 2008 SC 1267]. In the said judgment, the Apex Court placed reliance upon an earlier judgment in _**Rajeshwari v. Puran Indoria**_ [(2005) 7 SCC 60] wherein it was held as under:- _"_ _**5.** Normally, a suit for specific performance of an agreement for sale of immovable property involves the question whether the plaintiff was ready and willing to perform his part of the contract in terms of Section 16 of the Specific Relief Act, whether it was a case for exercise of discretion by the court to decree specific performance in terms of Section 20 of the Specific Relief Act and whether there were laches on the part of the plaintiff in approaching the court to enforce specific performance of the contract. In some cases, a question of limitation may also arise in the context of Article 54 of the Limitation Act on the terms of the agreement for sale. Other questions like the genuineness of the agreement, abandoning of the right to specific performance, a novation and so on, may also arise in some cases. No doubt, a finding on the three primary aspects indicated earlier would depend upon the appreciation of the pleadings and the evidence in the case in the light of the surrounding circumstances. Could_ RFA No.17/2009 -:15:- _it be appropriate to understand these questions purely as questions of fact in the context of Section 100 of the Code of Civil Procedure, 1908? In Raghunath Prasad Singh v. Dy. Commr. of Partabgarh the Privy Council, though, in the context of Section 110 of the Code of Civil Procedure, negatived the theory that to be a substantial question of law, a question of law has to be of general importance and stated that “a substantial question of law” is a substantial question of law as between the parties in the case involved. This approach was adopted by this Court in Dy. Commr. v. Rama Krishna Narain. This Court held, again in the context of Section 110 of the Code of Civil Procedure, that since the ground on which the appeal was dismissed by the High Court raised a question of law of importance to the parties, on that ground alone the appellant was entitled to a certificate under Section 110 of the Code. In Chunilal V. Mehta and Sons Ltd. v. Century Spg. and Mfg. Co. Ltd. this Court, again in the context of Section 110 of the Code and Article 133(1)(a) of the Constitution, had occasion to consider the question. A Constitution Bench of this Court held that the proper test for determining whether a question of law raised in the case is substantial would be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this Court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are_ RFA No.17/2009 -:16:- _well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd, the question would not be a substantial question of law. Thus, it was accepted that a question of law would be a substantial question of law if it directly and substantially affects the rights of the parties and if it was not covered by a decision of the Supreme Court or of the Privy Council or of the Federal Court._ _**6.** The right to specific performance of an agreement for sale of immovable property, when filed, raises questions of substantial importance between the parties as to whether the plaintiff has satisfied the requirements of Section 16 of the Specific Relief Act, whether it is a case in which specific performance of the contract is enforceable in terms of Section 10, whether in terms of Section 20 of the Act, the discretion to decree specific performance should be exercised by the court and in some cases, whether the suit was barred by limitation and even if not, whether the plaintiff has been guilty of negligence or laches disentitling him to a decree for specific performance. These questions, by and large, may not be questions of law of general importance. But they cannot also be considered to be pure questions of fact based on an appreciation of the evidence in the case. They are questions which have to be adjudicated upon, in the context of the relevant provisions of the Specific Relief Act and the Limitation Act (if the question of limitation is involved). Though an order in exercise of discretion may not involve a substantial question of law, the question whether a court could, in law, exercise a discretion at all for decreeing specific performance, could_ RFA No.17/2009 ## -:17:- _be a question of law that substantially affects the rights of parties in that suit. Therefore, in the case on hand, the High Court was not justified in dismissing the second appeal in the manner in which it has done. Be it noted, that the High Court has also not spoken while dismissing the second appeal. We are therefore of the view that it is necessary for the High Court to consider whether a substantial question of law is involved or not and to give its reasons for coming to its conclusion either way, and if it finds that a substantial question of law or substantial questions of law is or are involved, to frame that question or those questions and to answer it or them in accordance with law. In the context of the notice issued by this Court while entertaining the petition for special leave to appeal, the proper course to adopt is to set aside the judgment and decree of the High Court in the second appeal and remand the second appeal to the High Court for a consideration of the question whether any substantial question of law is involved in the case in the light of the pleadings and the facts established and if it arises, to decide whether any interference in the second appeal under Section 100 of the Code of Civil Procedure, 1908 is warranted or justified.”_ 14. Reliance was also placed on _**Velayudhan Sathyadas v.**_ _**Govindan Dakshyani**_ [(2010) 15 SCC 722]. In this case, the Apex Court was considering a suit for specific performance in respect of an immovable property. One of the contentions urged was that no plea had been raised by either of the parties in terms RFA No.17/2009 -:18:- of S.20 of the Act and when the Courts below had come to the conclusion that the agreement has been proved, question was whether the Court could decree the suit. That was a case in which the Trial Court decreed the suit and in first appeal, it was affirmed. In second appeal, the High Court found that it was a fit case in which discretion u/s 20 ought to have been exercised and only then a decree in terms of S.21(2) of the Act could have been made. It was held that mere establishment of the facts that the agreement for sale had been entered into is not sufficient to grant a decree for specific performance and if the circumstances as indicated in S.20 of the Act exist in a particular suit, the Court ought to certainly exercise its discretion in favour of the defendant and give lesser or limited relief to the plaintiff as indicated in S.21 of the Specific Relief Act. Since the High Court did not refer to such aspects in detail, the judgment was set aside and the matter was remitted for fresh consideration. 15. Another judgment of this Court in _**Thomas P.Abraham v. Aleyamma Abraham**_ (2003 (3) KLT 864) is also relied upon. In this case, the question considered was with reference to an application to set aside an _ex parte_ decree. While considering the RFA No.17/2009 ## -:19:- same, the Division Bench placed reliance upon the judgment in _**Balraj Taneja and another v. Sunil Madan and another**_ [(1999) 8 SCC 396] wherein the Apex Court had occasion to consider as to the procedure to be followed while passing a judgment under Order 8 Rule 10 C.P.C. and it was further held that in a suit for specific performance, Court has got considerable discretion to grant decree or not, even in a case where no written statement had been filed. Being a discretionary remedy, even when no written statement has been filed, Court has the duty to examine whether the suit can be decreed on the averments made in the plaint alone. If the plaintiff had failed to comply with the statutory requirements for the grant of decree for specific performance, the suit has to be dismissed. In other words, the Court is not bound to decree specific performance merely it is lawful to do so. However, the discretion is to be exercised on sound legal principles. It was therefore held that being a discretionary remedy, the fact that the defendant has not filed written statement is not at all a ground for passing an _ex parte_ decree. 16. On the other hand, learned senior counsel appearing on RFA No.17/2009 -:20:- behalf of the respondent/plaintiff contended that the plaintiff had clearly pleaded and proved his readiness and willingness to comply with the terms of the contract. It is argued that plaintiff had given oral evidence expressing his willingness to comply with the terms of the agreement. That apart, plaintiff had taken all necessary steps to get the property assigned in his favour. After execution of the agreement, though there was no stipulation in the agreement to give further advances, the defendant collected `5 lakhs on 22/8/2005 and another amount of `5 lakhs on 6/9/2005 and had issued letter dated 25/1/2006 stating that the other Directors and shareholders of the company are not inclined to assign the property and that he is trying to convince them. Further he got legal opinion that he has no right to sell the property and it may lead to a miserable state of affairs. The workers union is also against the same and they have already threatened Mr.Vinod couple of times. He had apprehended that the workers may create a problem. Further the Bank of India had called back the advance and they were discussing with the Federal Bank to settle the liability. He expressed his desire not to put the plaintiff to difficulties since he was facing a lot of RFA No.17/2009 -:21:- problems and that apart the sale conducted by him could be challenged as well. He further stated that he had come to know about all these matters when the plaintiff's lawyer requested a paper from Registrar of Companies about the transfer of properties in the Company's name. He also stated that he is calling for a meeting during the next month to set right things and he has requested the plaintiff to wait till then. Despite that, no action has been taken by the defendant. However, the plaintiff was made known that there was an outstanding liability to the Bank. Plaintiff offered to arrange settlement of the Bank's liability and accordingly a lawyer's notice was issued on 26/6/2006 calling upon the defendant to comply with the terms of the agreement. It is also stated that the contentions urged by him in his letter dated 25/1/2006 are not _bona fide_ or genuine. Learned counsel submits that plaintiff had also received Ext.A5, copy of letter dated 27/10/2005 from Bank of India stating that the outstanding dues to be paid as on 16/11/2005 would come to `67,40,684.41. Subsequently, defendant by endorsement dated 15/7/2006 has even extended the time and has agreed to execute the sale deed within a period of 30 days from 25/7/2006 i.e., on or before RFA No.17/2009 -:22:- 25/8/2006. When the defendant did not take any steps to comply with his promise as stated in Ext.A1 agreement and even during the extended period, the suit was filed on 1/9/2006 expressing plaintiff's readiness and willingness to comply with the terms of the agreement. That apart, it is submitted that a cheque for `85,10,000/- was issued to the Bank of India, D.N. Road Branch, Mumbai on 21/8/2006 for the purpose of covering the liability due from M/s Bagsvig Hi-tech Ltd. for which the collateral security of the above mentioned property was given by the defendant. However, by Ext.A8, the cheque had been returned stating that the company had already closed the account and they do not hold any security of the title deeds. It is argued that the aforesaid fact itself would prove that all along the plaintiff was ready and willing to comply with the terms of the agreement. Learned counsel further argued that there is no specific denial of the expression of interest shown by the plaintiff showing the readiness and willingness to comply with the terms of agreement. It is only stated that the said contention is incorrect on account of the fact that the property belonged to the company. It is stated in paragraph 5 as under:- RFA No.17/2009 ## -:23:- _“The alleged readiness and willingness stated by the plaintiff is not correct. He cannot be ready to purchase the company property from one of its Directors without the approval of the Board.”_ 17. The argument therefore, is that even according to the defendant, the only reason why they are not able to assign the property is on account of the fact that consent of Directors of the company could not be obtained. That apart, the defendant did not have a case that the plaintiff was not having sufficient funds to pay the balance sale consideration. Immediately after decree of the suit, the plaintiff had deposited the entire balance sale consideration before the Court as per the directions and therefore, it cannot be stated for a moment that the plaintiff did not have sufficient funds to pay the balance sale consideration. He also placed reliance upon a recent judgment of the Apex Court in _**A.Kanthamani v. Nasreen Ahmed**_ [(2017) 4 SCC 654]. In this case, one of the questions raised was whether the plaintiff was ready and willing to perform her part of the agreement, and whether she had the money to pay the balance sale consideration and to get the sale deed executed in her favour. The Apex Court referred to _**Bank of India Ltd v. Jamsetji A.H.Chinoy**_ (AIR 1950 RFA No.17/2009 ## -:24:- ## BC 90] wherein Chagla A.C.J. held as under:- _“It is not necessary for the plaintiff to produce the money or vouch a concluded scheme for financing the transactions to prove his readiness and willingness.”_ 18. Further reference was made to _**Sukhbir Singh v. Brij Pal Singh**_ [(1997) 2 SCC 200] wherein it was held that law is not in doubt that it is not a condition that the respondents should have ready cash with them. It is sufficient for the plaintiff to establish that they had the capacity to pay the sale consideration. It is not necessary that they should always carry the money with them from the date of suit till the date of the decree. In regard to the submission that plaintiff did not have sufficient funds, it was held that no such plea was raised in the written statement and therefore no issue was framed and in consequence, the Trial Court nor the High Court did not enter into such finding. In that case it was held that the plaintiff proved the readiness and willingness to perform her part of the agreement and also proved it by adducing adequate evidence. 19. Learned counsel also placed specific reference to the affidavit filed by the defendant's representative in lieu of chief examination wherein according to the counsel for respondent, the RFA No.17/2009 -:25:- witness has virtually admitted the readiness and willingness of the plaintiff to purchase the property. 20. There is no doubt about the legal proposition as laid down in the judgments cited above. The question would be whether those judgments can be applied to the facts of the present case. There is no doubt about the proposition that for a plaintiff to succeed in a case relating to specific performance of a contract for sale of the immovable property, plaintiff will have to aver and prove his readiness and willingness to comply with the terms of the agreement. 21. In _**J.P.Builders v. A.Ramadas Rao**_ [(2011) 1 SCC 429], the Apex Court had occasion to consider as to what would amount to “readiness and willingness” as expressed in Section 16(c) of the Specific Relief Act and it was held at paragraphs 22 to 27 and 45 as under:- _**“22.** The words “ready” and “willing” imply that the person was prepared to carry out the terms of the contract. The distinction between “readiness” and “willingness” is that the former refers to financial capacity and the latter to the conduct of the plaintiff wanting performance. Generally, readiness is backed by willingness._ RFA No.17/2009 -:26:- _**23.** In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao at SCC para 5, this Court held: (SCC pp. 117-18)_ _“5. … Section 16(c) of the Act envisages that the 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.”_ _**24.** In P. D’Souza v. Shondrilo Naidu this Court observed:_ RFA No.17/2009 ## -:27:- _(SCC p. 654, paras 19 and 21)_ _“19. It is indisputable that in a suit for specific performance of contract the plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the plaintiff or not will depend upon the facts and circumstances of each case. No straitjacket formula can be laid down in this behalf. …_ _* * *_ _21. … The readiness and willingness on the part of the plaintiff to perform his part of contract would also depend upon the question as to whether the defendant did everything which was required of him to be done in terms of the agreement for sale.”_ _**25.** Section 16(c) of the Specific Relief Act, 1963 mandates “readiness and willingness” on the part of the plaintiff and it is a condition precedent for obtaining relief of grant of specific performance. It is also clear that in a suit for specific performance, the plaintiff must allege and prove a continuous “readiness and willingness” to perform the contract on his part from the date of the contract. The onus is on the plaintiff._ _**26.** It has been rightly considered by this Court in R.C. Chandiok v. Chuni Lal Sabharwal that “readiness and willingness” cannot be treated as a straitjacket formula. This has to be determined from the entirety of the facts and circumstances relevant to the intention and conduct of the party concerned._ _**27.** It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute_ RFA No.17/2009 ## -:28:- _that the plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. “Readiness and willingness” to perform the part of the contract has to be determined/ascertained from the conduct of the parties”._ _**“45.** With the materials placed, specific assertion in the plaint, oral and documentary evidence as to execution of agreement, part-payment of sale consideration, having sufficient cash and financial capacity to execute the sale deed, bank statements as to the monies in fixed deposits and saving accounts, we are of the view that the plaintiff has proved his “readiness” and “willingness” to perform his part of obligation under the contract. The concurrent findings of the trial court as well as the High Court as to readiness and willingness to perform the plaintiff’s part of the obligations under the contract, in the absence of any acceptable contra evidence are to be confirmed. We agree with the conclusion arrived at by the trial court as well as by the High Court on the readiness and willingness on the part of the plaintiff and reject the argument of the learned Senior Counsel for the appellants.”_ 22. Therefore, one of the factors which has to be proved is the plaintiff's capacity to raise funds for acquiring the property. In the case on hand, the facts disclose that the plaintiff had RFA No.17/2009 ## -:29:- approached the defendant before expiry of one year period, the time fixed for performance and the defendant agreed to assign the property on or before 25/8/2006. But since he did not comply with the said promise, the suit itself was filed on 1/9/2006. Still, the plaintiff ought to adduce evidence to prove that he had the capacity to raise sufficient funds before expiry of the said period. In the plaint, it was specifically averred that the plaintiff has been ready and willing to perform his part of the bargain, that is to pay the balance sale consideration which amounted to `2,19,67,680/after deducting the advance already paid and he is fully prepared to meet his obligations. But nothing has been stated as to how he had made arrangements for paying the balance sale consideration. Learned counsel for the defendant's main argument is that, it is the obligation of the plaintiff to aver and prove that he had sufficient funds available with him at that point of time which according to the learned counsel is lacking in the case. Section 16(c) of the Specific Relief Act reads as under:- - _“_ _**16. Personal bars to relief.-** Specific performance of a contract cannot be enforced in favour of a person-_ - _(a) - (b) * * *_ - _(c) who fails to aver and prove that he has performed_ RFA No.17/2009 ## -:30:- _or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant._ _Explanation.- For the purposes of clause (c)-_ _(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in Court any money except when so directed by the Court;_ _(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.”_ 23. Therefore, even if there is no necessity to deposit the amount, it is the statutory obligation on the part of the plaintiff to aver and prove his readiness and willingness to perform the essential terms of the contract. In the case on hand, the capacity of the plaintiff to arrange necessary funds for acquiring the property has not been specifically disputed. But, learned counsel for appellant submits that when the plaintiff's contention that he was ready and willing to perform his part of the obligations has been denied, necessarily, the Court will have to consider the issue as to whether the plaintiff was in possession of sufficient funds. 24. In this case, what is curious to note is that though the plaintiff pleads that he was ready and willing to perform the RFA No.17/2009 -:31:- essential terms of the contract, nowhere in the plaint he had stated as to how he would arrange the balance funds. Therefore, necessarily, the plaintiff will have to adduce evidence to prove as to how he could have arranged funds for acquiring the property at the relevant point of time. In the affidavit filed by PW1, plaintiff in lieu of chief examination, what he has stated is that “ _I continue to be ready, willing and fully prepared to meet all my obligations and liabilities under the agreement including payment of balance sale consideration to the defendant so as to obtain execution of the sale deed in connection with the plaint schedule properties_ ”, but nothing seems to have been stated in the plaint about the manner in which plaintiff intended to make arrangements for the balance sale consideration. While cross examining the plaintiff, no questions are asked regarding the plaintiff's capacity to raise funds for acquiring the property. But the contention urged by learned counsel for appellant is that even in a case where no written statement is filed and a judgment is passed under Order 8 Rule 10 C.P.C. or an _ex parte_ decree is passed, still the Court will have to consider whether the discretionary remedy should be exercised. RFA No.17/2009 -:32:- 25. The first question is whether plaintiff should state in the pleading that he had the necessary funds with him to purchase the property or he could arrange necessary funds for purchasing the property. The statute clearly states that it is not essential for the plaintiff to actually tender to the defendant the money or to deposit the same in Court unless the Court so directs. But the question is, should not the plaintiff aver and prove that he had sufficient funds with him or he will be in a position to raise sufficient funds for the purpose of purchasing the property at the relevant time. In _**Jamsetji A.H**_ (supra), the learned Judge observed that, it is not necessary for the plaintiff to produce the money or vouch a concluded scheme. But, being a question of fact, should not the plaintiff in a suit for specific performance aver and prove that he has either the requisite funds with him or that he could make arrangements for those funds at the relevant time. In _**A.Kanthamani**_ (supra), the plaintiff proved her readiness and willingness to perform her part of the agreement and also proved her financial capacity to purchase the suit property. Apparently in this case, there is no such material. 'Readiness' to perform the contract as held in _**J.P.Builders**_ (supra) includes the capacity to RFA No.17/2009 -:33:- raise funds. 26. Now let us examine as to how the Court below has dealt with such a situation. The issue raised was whether the plaintiff was entitled to get a decree for specific performance as sought for or in the alternative his entitlement to get the advance amount with interest. Most of the contentions of the parties related to the right to alienate the property. As already observed by us, defendant alone had the right over the property. Of course, there is some material to indicate that a building was constructed by a firm of which the defendant was a partner. The other partner retired and the defendant became the sole owner. It seems that the unit was taken over by a company and the company is running the unit. But, the property had not been transferred in the name of the company and therefore, the contention that company has right over the property is belied. 27. Then the issue is regarding the compliance of S.16(c). In fact, there is no finding to that effect and no issue is raised regarding the said fact. In a suit for specific performance, the language of S.16(c) clearly indicates that specific performance of a contract cannot be enforced in favour of a person who fails to RFA No.17/2009 -:34:- aver and prove that he has performed or has been always ready and willing to perform the essential terms of the contract which are to be performed by him. Therefore, it is for the Court to consider based on the pleadings and evidence, as to whether it is a fit case to enforce specific performance of a contract. As held in _**Thomas P.Abraham**_ (supra), even in a case decided _ex parte_ , the Court can pass a decree only on being satisfied that there is no fact which need be proved on account of deemed admission. Necessarily, when the statute indicates that a specific performance of a contract cannot be enforced unless there is averment and proof regarding the readiness and willingness, Court will have to consider the same even in the absence of a defence regarding readiness and willingness. The burden is upon the plaintiff to prove the aforesaid fact. By readiness and willingness, it apparently indicates the readiness of the plaintiff to purchase the property as is where is condition and that he has sufficient funds to pay the balance consideration and to meet the expenditure for registration. In this case, unfortunately, the Court below did not consider the said fact whereas it proceeded to consider whether it is a fit case that the Court should exercise its RFA No.17/2009 -:35:- discretion to grant a decree u/s 20 of the Act. 28. One of the issues taken up by the defence was that the performance of contract involves hardship on account of the fact that a manufacturing unit is functioning with several employees and the unit is being run by a company. Court below observed on considering the evidence that the plaintiff has always been ready and willing to perform his part of contract by offering the balance sale consideration. In regard to the fact that the unit is functioning in the property, it is observed that it is the duty of the purchaser to get the eviction of the company if the same is functioning in the said premises. Further it was observed that even if the unit has to be shifted, it can be shifted to a part of the property covered by Ext.A3 since the company is having other properties which is functioning in branches at Mumbai and Bangalore. In the result, the Court felt that it need not exercise the discretion in favour of the defendant. Court also observed that the company had no objection in selling a part of the property after referring to Ext.A12 sale deed. Ext.A12 is a sale deed by which a portion of the property covered by Ext.A3 title deed had been sold. The Court also came to a finding that the plaintiff raised money for RFA No.17/2009 -:36:- purchasing the plaint schedule property by selling his own property. But it is relevant to note that there is neither any pleading nor any evidence to that effect and in what circumstances the Court had come to such a conclusion is not known. 29. It is submitted by the learned senior counsel appearing for the respondent/plaintiff that plaintiff had deposited the entire balance sale consideration as per the decree of the Court below. 30. From the records, it is discerned that by order dated 18/2/2009 in IA No.695/2009, the respondent was permitted to withdraw the amount deposited in Court amounting to `1,84,67,680/- and deposit the same in a Nationalized Bank. 31. Taking into account all these factual circumstances and considering the respective contentions, our findings are as under:- (I)The Court below failed to consider that the burden of proof is cast upon the plaintiff to aver and prove the ingredients of S.16(c). (ii) Though the plaintiff had averred that he was ready and willing to perform his part of the contract, he had failed to prove that he was ready with sufficient funds to purchase RFA No.17/2009 ## -:37:- the property, as on the date of performance. (iii) The grant of specific performance of the contract in favour of the plaintiff would become inequitable for the following reasons:- (a) That there was an existing unit in the property. (b) Nothing has been stated in the agreement with reference to the closure of the unit and the deployment of the workers engaged in the said unit. (c) The agreement does not contemplate as to how the building, plant and machineries are to be removed. (d) Evidence indicates that the unit was being run by a partnership firm and later by a company. (e) The company was in possession of the unit and therefore, the consent of the company to surrender possession of the unit had not been obtained nor contemplated under the terms of the agreement. 32. Taking into account all these facts, we are of the view that the Court below was not justified in granting specific performance of the contract. However, the plaintiff is entitled for the alternate relief which he had claimed namely for return of the RFA No.17/2009 ## -:38:- advance. The amount which the plaintiff has deposited is already lying in a Fixed Deposit in a Nationalized bank and therefore such a compensation on account of deposit of the said amount does not arise. In the suit, alternate relief claimed is for refund of `35 lakhs with interest @12% per annum from the date on which such payments were made till repayment. 33. We are of the view that the plaintiff is entitled for the said relief and also the entire cost incurred by him for prosecuting the case. Accordingly, the appeal is allowed setting aside the judgment of the court below and the suit is decreed as under:- (i) The decree for specific performance of the contract is set aside. (ii) Plaintiff is granted a decree to realise a sum of `25,00,000/- (Rupees Twenty five lakhs only) with interest at the rate of 12% per annum from 29/7/2005, to recover `5,00,000/(Rupees Five lakhs only) with interest @12% per annum from 22/8/2005, and to recover `5,00,000/- (Rupees Five lakhs only) with interest @12% per annum from 6/9/2005 till realisation along with entire cost incurred by the plaintiff before the Trial Court and RFA No.17/2009 ## -:39:- the cost for the respondent/plaintiff in this proceedings. (iii) The appellant/defendant is not entitled for any costs. (iv) The decree shall be a charge on the plaint schedule property. (v) The personal liability of the legal heirs of the appellant/defendant will be to the extent of property inherited by them from the deceased. Sd/- ## **A.M. SHAFFIQUE, JUDGE** Sd/- **P.SOMARAJAN, JUDGE** Rp //True Copy// PS to Judge