ERANNOOR CHELLAPPAN v. MULAKKAL JOSEPH

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.SOMARAJAN** **WEDNESDAY,THE 13TH DAY OF FEBRUARY 2019 / 24TH MAGHA, 1940** **SA.No. 276 of 2002 (G)** **AGAINST THE DECREE AND JUDGMENT DATED 17/11/2001 IN AS 25/1996 of SUB COURT, SULTHAN BATHERY** **AGAINST THE DECREE AND JUDGMENT DATED 30/9/1996 IN OS 179/1994 of MUNSIFF- MAGISTRATE COURT,MANANTHAVADY** **APPELLANT/APPELLANT/DEFENDANT:** **ERANNOOR CHELLAPPAN, S/O SANKARAN RESIDING AT PAYYAMPALLY AMSOM,VEMOM DESOM, MANANTHAVADY TALUK.** **BY ADV. SRI.CIBI THOMAS** ## **RESPONDENT/RESPONDENT/PLAINTIFF:** **MULAKKAL JOSEPH, S/O MIGHAYEL RESIDING AT PAYYAMPALLY AMSOM,VEMOM DESOM,, MANANTHAVADY TALUK.** **THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 13.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** S.A.No.276/2002 2 ## **JUDGMENT** A suit for specific performance based on Ext.A1 contract for sale of immovable property dated 31.5.1993 ended in a decree granting specific performance by the trial court and the First Appellate Court. Aggrieved by the said decree and judgment, the defendant came up with this appeal. 2. Ext.A1 is the agreement for sale dated 31.5.1993 in respect of 20 cents of immovable property. The consideration enumerated in Ext.A1 comes to Rs.10,000/-. An amount of Rs.9,000/- was received by way of advance as per the agreement. The period agreed initially was for eight months upto 30.1.1994. Thereafter it was extended upto to 31.03.1994. It is thereafter Ext.A2 notice dated 31.03.1994 was issued by the plaintiff demanding specific performance of contract for sale. 3. The defendant contested the suit admitting the execution of Ext.A1 agreement, but advanced a case that it was executed under a vitiating circumstance and the plaintiff's brother is a money lender by profession. Earlier he had borrowed an amount of Rs.2,000/- and later on another amount of Rs.1,500/- from the brother of plaintiffs. The actual amount due to the plaintiff comes to Rs.3,500/-. But he could not repay the said amount when demanded due to financial crisis. Thereon the plaintiff's brother S.A.No.276/2002 3 insisted for executing a document of security by way of sale agreement and he was forced to execute such an agreement styled as Ext.A1, that too, in the name of the plaintiff. It was executed under vitiating circumstance and under undue influence exerted by the brother of the plaintiff. It was also contended that on an earlier occasion also, Ext.B1 agreement for sale of some immovable property was executed in connection with an earlier loan transaction between the same parties on 15.7.1991. 4. The questions came up for consideration in this appeal are: 1) Whether the trial court and the First Appellate court are justified in decreeing specific performance of the agreement without exercising the discretion as mandated under Section 20 of the Specif Relief Act ? 2) Whether the First Appellate Court and the Trial Court are justified in accepting the interested version of the plaintiff as PW1, when the independent witness, PW2 supports the case advanced by the defendant ? 3) Whether the Trial Court and the First Appellate Court are justified in decreeing the suit based on the interested testimony of PW1 plaintiff regarding the execution of Ext.A1 agreement. 5. A Division Bench of this Court, in which I was also a member, had the occasion to consider the mandate to be complied with while granting a decree for specific performance of contract for sale of immovable property S.A.No.276/2002 4 under Section 20 of the Specific Relief Act [ **Antony K.O. and Another v.** **M.K.Krishnankutty Menoki and others 2017 (1) KHC 479 (DB)** ]. Paragraph 11 of the said judgment is extracted below for reference : “11. It says that the Court is not bound to grant specific performance as it is a discretionary one even though it is lawful to do so. It further states that the discretion has to be exercised in a sound and reasonable manner and it should be the one capable of correction by an Appellate Court. The various expressions embodied under Section 20 of the Specific Relief Act would show that the Court is not bound to grant a decree for specific performance, even though it was found to be lawful to do so and the Court has to exercise its discretion. The question at what time the Court has to exercise its discretion is also well evident from a mere reading of Section 20 of the Specific Relief Act, which would arise only after finding that it is lawful to grant the relief sought for in favour of the plaintiff. In all other provisions of law wherein discretion could be exercised stands for exercising discretion in a positive way for granting some relief to the parties and not for refusing any relief. But, the discretionary power incorporated and embodied under Section 20 stands on a different footing in which the Court has to exercise discretion not for granting the relief, but for refusing the same. It has got its own character and peculiarity, apart from other provisions contained in other laws for the time being in force. So, the real impact of Section 20 should be and must be understood S.A.No.276/2002 5 under the background of those aspects. It is a mandate upon the Court to address the question of exercise of discretion before granting or refusing a decree for specific performance and it has to be exercised only after finding that it is lawful to grant a relief of specific performance in favour of the plaintiff. A decree which was granted without addressing and without exercising the discretion under Section 20 of the said Act is bad in law. The Court is duty bound to address the question of exercise of discretion under Section 20 of the Specific Relief Act while granting or refusing to grant a decree of specific performance. The said discretion has to be exercised only after finding that it is lawful to grant the relief prayed for in suit in favour of the plaintiff. In the present case in hand, that question is not considered or answered. So the impugned decree is bad in law due to non-compliance of requirement under Section 20 of the Specific Relief Act.” 6. Neither the Trial court nor the First Appellate Court taken up the issue of exercise of discretion as mandated under Section 20 of the Specific Relief Act and no discussions were made either in the judgment of the trial court or in the First Appellate Court. The mere entitlement of a specific performance of contract does not itself mandate the grant of decree even if it is found to be lawful to do so. The discretion to be exercised under Section 20 of the Act has got its own peculiar character apart from the other provisions empowering the courts to exercise discretion. It is mandatory that S.A.No.276/2002 6 the court should address the issue while granting specific performance or refusing the same. If it was not considered or exercised, the decree would be bad in law. Both the trial court and the First Appellate Court went wrong in applying the legal proposition in its correct perspective. In fact there is very serious omission in considering and applying the discretion as mandated under Section 20 of the Specific Relief Act which has resulted in the miscarriage of justice. 7. Two witnesses were examined in order to prove the due execution of Ext.A1 agreement and also to show that the same stood as free from any vitiating circumstance as alleged by the defendant. Among the two witnesses - PW1 and PW2, PW1 is the plaintiff. The only independent witness examined by the plaintiff is PW2. But he had categorically admitted during cross examination that Ext.A1 agreement was entered into by way of security and as an assurance to the amount due to the plaintiff from the defendant. It shows a clear loan transaction. The said admission was not properly considered or taken into account by either the trial court or the First Appellate Court. In other words, the only independent witness examined by the plaintiff in support of his case had admitted that Ext.A1 agreement was executed by way of security to the amount due to the plaintiff from the defendant. The earlier execution of Ext.B1 agreement for sale of very same S.A.No.276/2002 7 immovable property dated 15.7.1991 by the very same parties and the fact that the loan transaction under Ext.B1 agreement for sale was closed down by making payment would itself show the practice adopted by the plaintiff and his brother in obtaining sale agreement based on loan transaction. The admission made by PW2 categorically admitting that Ext.A1 agreement was executed by way of security to the amount due to the plaintiff itself would show and establish the circumstance under which Ext.A1 agreement was executed. There is no such admission of execution of Ext.A1 agreement by the defendant, but admitted that it was executed by way of security to the loan transaction as insisted by the plaintiff's brother in the name of plaintiff and he was under a compelling situation to execute such an agreement due to his financial crisis. Hence the agreement -Ext.A1 stood as vitiated and cannot be enforced. Both the trial court and the First Appellate court committed a grave mistake in the appreciation of evidence tendered by the witness and ought not to have been acted upon the interested version of the plaintiff as PW1 alone for granting a decree for specific performance. 8. There is an alternate relief sought in the plaint for recovery of the advance amount due under Ext.A1 agreement. Though there is failure to prove the due execution of Ext.A1 agreement free from any vitiating circumstance, there is an admission made by the defendant that it was S.A.No.276/2002 8 executed by way of security to the loan transaction. The loan amount admitted comes to Rs.2,000/- + Rs.1,500/-, totalling an amount of Rs.3,500/-. But the amount received as advance stated to be Rs.9,000/-. No satisfactory evidence adduced by the defendant to show the exact amount borrowed, but admitted the borrowal of Rs.3,500/- . Even if Ext.A1 agreement treated as a security document to secure repayment of loan amount, as per Ext.A1 it comes to Rs.9,000/- and hence it is fit and proper to grant a lessor relief ordering return of the advance amount/loan amount which comes to Rs.9,000/- with interest @ 6% per annum from the date of suit till the date of its realisation from the defendants. 9. Two decisions were brought to the notice of this court by the learned counsel for the respondents drawn in **Kochukunju Nair v. Velayudhan Nair ( 1980 KLT 319)** and the decision of the Apex Court drawn in **Rajeshwari v. Puran Indoria ( 2005 KHC 1360)** for the purpose of what actually amounts to substantial question of law and the test available thereof. It was argued that no substantial question of law involved in the present case and hence pressed for dismissal of the appeal. The substantial question of law involved in the case already raised and stated in the earlier paragraphs and hence there is o merit in the argument advanced by the learned counsel for the respondent. S.A.No.276/2002 9 In the result, the appeal is allowed in part. The decree and judgment of both the trial court and the first appellate court are set aside. A decree is passed for realisation of Rs.9,000/- with interest @ 6% per annum from the date of suit till the date of its realisation from the defendants. **Sd/-** **P.SOMARAJAN** sv **JUDGE**