KALLARAKOTTARATHIL KUNHIKANNAN v. NARAMBAN KRISHNAN and THAYALE VEETTIL BALACHANDRAN

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE P.BHAVADASAN** **THURSDAY, THE 3RD NOVEMBER 2011 / 12TH KARTHIKA 1933** **AS.No. 492 of 2000(D)** **--------------------------------** **OS.NO.153/1995 of SUB COURT, PAYYANNUR** **....................** ## **APPELLANT(S)/2ND DEFENDANT** **------------------------------------------------** ## **KALLARAKOTTARATHIL KUNHIKANNAN, S/O.NARAYANAN, RIOT PARIYARAM AMSOM DESOM, TALIPARAMBA TALUK.** **BY ADV. SRI.CIBI THOMAS** ## **RESPONDENT(S)/ PLAINTIFF AND 1ST DEFENDANT** **--------------------------------------------------------------------------** **1. NARAMBAN KRISHNAN,S/O.RAMAN, VELICHAPPAD, RESIDING AT KURUMATHOOR PANNIYOOR AMSOM, POOMANGALAM DESOM, TALIPARAMBA TALUK.** **2. THAYALE VEETTIL BALACHANDRAN, S/O.NARAYANAN NAIR, PARIYARAM AMSOM DESOM, TALIPARAMBA TALUK.** ## ***ADDL.R3 IMPLEADED** ***R3: P.P.RAVINDRAN, S/O.KUNHURAMAN, AGED 41 YEARS, SECRETARY, MADAI CO-OPERATIVE RURAL BANK LIMITED, MADAI.** - ***ADDL.R3 IMPLEADED AS PER ORDER DATED 03/11/2011 IN C.M.P.NO.1624/2001** **R1 BY ADV. SRI.M.VIJAYAKUMAR SRI.M.RAMESH CHANDER R2 BY ADV.SRI.M.K.SUMOD ADDL.R3 BY ADV. SRI.M.SASINDRAN** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 21/10/2011, THE COURT ON 03/11/2011 DELIVERED THE FOLLOWING:** **sts** ## **P. BHAVADASAN, J.** - - - - - - - - - - - - - - - - - - - - - - - - - - - A.S. No. 492 of 2000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 3rd day of November, 2011. ## **JUDGMENT** The second defendant in O.S.153 of 1995 before the Sub Court, Payyannur is the appellant. The parties and facts are hereinafter referred to as they are available before the trial court. 2. The suit was one for specific performance. Admittedly the plaintiff and the first defendant entered into a sale agreement evidenced by Ext.A1 dated 15.5.1995 whereby the plaint schedule property was agreed to be sold to the plaintiff for a sum of Rs.75,000/-. Rs.45,000/- was received as advance from the date of Ext.A1 itself. The first defendant was to receive the balance sale consideration on or before 25.8.1995 and was to execute the sale deed. The plaintiff averred that he was always ready and willing to perform his part of the contract. Though plaintiff sought A.S.492/2000. 2 specific performance of the contract, there was no response from the side of the first defendant. Later the plaintiff came to know that contrary to the terms of the agreement the first defendant is trying to alienate the property. That caused him to send a notice, namely, Ext.A2 dated 17.6.1995, which was received by the first defendant. Though the plaintiff was waiting for the first defendant in the Registrar's office on 30.5.1995 in pursuance to the notice given to the first defendant, the first defendant did not turn up. Later the plaintiff came to know that the property had been sold to the second defendant and therefore he is also arrayed as a party to the suit. Pointing out that the first defendant was bound to perform the contract with the plaintiff, and that the sale to the second defendant is not binding on him, the suit was laid for specific performance. 3. The first defendant remained ex-parte. The second defendant filed a written statement denying the claims in the plaint. It is claimed by him that he had 3 purchased the property with all bonafides and later on he had mortgaged the property to Co-operative Bank and obtained a loan. He was not aware of the agreement between the plaintiff and the first defendant. It is also pointed out that in fact his purchase was after a publication in the newspaper calling upon objections from persons who had any claim over the property. No objection was brought to his notice. According to him, Ext.A1 is a subsequent creation by the plaintiff and the first defendant to defeat his rights. He therefore prayed for a dismissal of the suit. 4. On the above pleadings, issues were raised by the trial court. The evidence consists of the testimony of P.Ws.1 and 2 and documents marked as Exts.A1 to A4 from the side of the plaintiff. The defendants had D.W.1 examined and Exts.B1 to B5 marked. The trial court found that the plaintiff is entitled to specific performance and decreed the suit directing the plaintiff to deposit a sum of Rs.45,000/-, which the Bank to whom the property was A.S.492/2000. 4 mortgaged was allowed to be withdrawn and the first defendant was directed to execute the document. If he failed to do so, the plaintiff was given option to approach the court for having the document executed. 5. The questions that arise for consideration are (i) whether the claim put forward by the second defendant that he is a bonafide purchaser and protected under Section 19(b) of the Specific Relief Act is justified and (ii) whether the court below was justified in granting specific performance of the contract to the plaintiff. 6. Learned counsel appearing for the appellant contended that the trial court has made a fundamental error in holding that Ext.A1 agreement and Ext.B1 publication are on the same date. It is averred that the plaintiff was aware of the publication as could be evident from a reading of his evidence. Inpite of coming to know of the publication made A.S.492/2000. 5 by the second defendant, he did nothing to inform the second defendant about the contract. He has no consistent case regarding the claim put forward by the second defendant. It is contended that the second defendant is a bonafide purchaser entitled to protection under section 19(b) of the Specific Relief Act. Merely because the purchase by the second defendant was for a lesser amount, that is for Rs.60,000/-, whereas in Ext.A1 the consideration is Rs.75,000/-, that by itself is not a ground to doubt the genuineness of the transaction between defendants 1 and 2. Another ground taken by the trial court to find against the second defendant is that even though D.W.1 has stated that there was an agreement for sale preceding Ext.B2, that does not find a place in the sale deed Ext.B2 and that is suspicious. Learned counsel pointed out that the law is well settled that merely because there is no mention regarding agreement for sale in the sale deed, by itself is not a ground to doubt the sale. In support of his contention, learned A.S.492/2000. 6 counsel relied on the decision reported in **Ram Prakash v. Baddal Husain** (AIR 2007 Allahabad 212). 7. Learned counsel for the appellant conceded that it is true that the initial burden is on the second defendant to show that he is a bonafide purchaser. He has given evidence in that regard. There is nothing to show that he was aware of Ext.A1 between the first defendant and the plaintiff. D.W.1 was cautious enough to issue a publication before he purchased the property. He had thus taken all necessary precautions and evidence shows that he had discharged his initial burden. It is also significant to notice, according to the counsel, that the second defendant had mortgaged the property to the Bank and availed of a loan. Moreover, he resides in the said property. Relying on the decision reported in **Abdul Mazid v. Burhanuddin Ahmed** (AIR 1980 Gauhati 44) it is contended by learned counsel for the appellant that unless there is some overt act by the proposed vendee, his claim of bonafide purchase cannot be A.S.492/2000. 7 attributed with the knowledge of prior agreement. It is also contended that once both sides adduced evidence, burden of proof pales into significance and case has to be decided on the basis of preponderance of probability. Learned counsel very vehemently contended that the court below has not considered the discretion that has to be exercised under Section 20 of the Act and that is a serious infirmity in the judgment of the court below. Accordingly it is contended that the judgment and decree are clearly unsustainable in law or at any rate the discretion available under Section 20 ought to have been exercised in favour of the second defendant. 8. Learned counsel appearing for the respondent pointed out that there is no basis for the above contention. Going by Ext.A1 agreement, the sale deed had to be executed on or before 25.8.1995. But the plaintiff was competent to call upon the first defendant to execute the sale deed on 25.8.1995 or any day prior to that date. The 8 A.S.492/2000. date mentioned in the agreement, that is 25.8.1995 is the outer limit. The plaintiff had issued Ext.A2 notice which was received by the first defendant. It is pointed out that significantly enough Ext.B2 in favour of the second defendant was executed after the receipt of Ext.A2. Learned counsel contended that on an evaluation of the evidence, it can be found that the second defendant was aware of Ext.A1 agreement and the publication made by the second defendant is a very unusual step which creates doubt or suspicion regarding his conduct. Even though the second defendant has contended that there was agreement for sale between him and the first defendant, the details of the agreement have not been given. Moreover, there is no mention of agreement for sale in Ext.B2. To crown it on, according to learned counsel, the sale in favour of the second defendant was for a sum of Rs.60,000/- whereas the agreement for sale with the plaintiff evidenced by Ext.A1 is for a sum of Rs.70,000/-. These telling circumstances, A.S.492/2000. 9 according to learned counsel, are sufficient to show that Ext.B2 is nothing but a collusion between defendants 1 and 2. 9. Ext.A1 agreement is between the plaintiff and the first defendant. In the suit, the first defendant remained ex-parte. It is seen that the first defendant had assigned the property to the second defendant as per Ext.B2 dated 30.6.1995. It cannot be disputed that Ext.B2 was executed after receipt of Ext.A2 notice issued by the plaintiff to the first defendant. The plaintiff had also produced evidence to show that he was present in the SRO's office on 30.6.1995 waiting for the first defendant. The first defendant did not go there. Probably it could be said that the plaintiff has expressed his readiness and willingness to perform his part of the contract. 10. The question that arises for consideration is whether the second defendant, while taking Ext.B2 sale deed from the first defendant, was aware of Ext.A1. There is A.S.492/2000. 10 absolutely no evidence on record to show that he was aware of Ext.A1 document. It is necessary to notice that by way of abundant caution, the second defendant had issued Ext.B1 publication dated 15.6.1995. True, a reading of Ext.B1 would indicate that the sale deed had already been executed. But Ext.B2 sale deed was executed only on 30.6.1995. 11. As per Ext.A1 10 cents of property with a building was to be sold to the plaintiff for a sum of Rs.75,000/-. Rs.45,000/- was paid by the plaintiff as advance and Rs.30,000/- remains to be paid on or before 25.8.1995. On payment of the balance amount, the sale deed had to be executed by the first defendant. A reading of Ext.A1 will leave one in no doubt that 25.8.1995 is the outer limit for the parties and the plaintiff is well within his rights to call upon the first defendant to execute the sale deed after receiving the balance consideration even before the expiry A.S.492/2000. 11 of the date. So it could not be said that the suit is premature. 12. However, the fact remains that Ext.B1 publication had been effected by the second defendant. Of course, it is unusual and odd. But the second defendant when examined as D.W.1 had offered an explanation for his conduct. The explanation offered was that knowing the first defendant well he had consulted a lawyer and on his advise that the publication is made. It could not be said that Ext.B1 publication was made knowing about Ext.A1 agreement. 13. Here one has to notice a significant aspect. One of the grounds which prompted the court below to hold against the second defendant is that Ext.B1 publication is on the date of Ext.A1. In several places in the judgment, it is mentioned that Ext.B1 publication is on the same day and the court jumps into the conclusion that that must have been made after coming to know about Ext.A1. In fact the court below also found that Ext.A1 was entered into in the A.S.492/2000. 12 morning of 15.5.1995 and Ext.B1 publication was in the evening of the same day. 14. The view taken by the lower court is clearly wrong. Ext.A1 is dated 15.5.1995, whereas Ext.B1 is dated 15.6.1995. One fails to understand how the court came to the conclusion that Ext.B1 and Ext.A1 are on the same date. Therefore, one of the reasons which prompted the court below to hold against the second defendant is erroneous. As already noticed, the second defendant, while examined as D.W.1, has offered an explanation and it looks reasonable and probable and there is no reason to doubt his version. 15. The question is whether the second defendant can be treated as a bonafide purchaser entitled to protection under Section 19(b) of the Specific Relief Act. 16. The plaintiff was unable to show that the second defendant was aware of Ext.A1. True that the property was sold for a lesser amount and that the publication had been effected by the second defendant do A.S.492/2000. 13 arose some doubts. Normally a person, who had contracted with another person to sell the property would not sell it for a lesser price unless there are compelling reasons. One is unable to obtain the reasons because the first defendant has remained ex-parte. 17. But what is significant is the inconsistency in the pleadings and the evidence of P.W.1 regarding the knowledge of sale to the second defendant as per Ext.B2. In paragraph 4 of the plaint when amended it is stated that the plaintiff came to know about the sale on 5.3.1996. In the affidavit in counter to the petition for amendment moved by the second defendant, the version is as follows: “വസ��� രജ�സര ച�യ�ന അവസരത�ല അന�യക�രന സബ� രജ�സ����ര ഓഫ�സ�ല ഉണ�യ�ര�ന�.അന�യക�രന അപ#�ഴ�% 2 �'��പയ��� 'റഞ��ല ""ന� പ'�യ� പ+സ� ച+���ത�ച+�ള+ ഞ�ന എചനറ ഇഷ% പ'�ച1 ച�യ�% “ എന� 'റഞ� വസ��� രജ�സര ച�യ��� വ�ങ�+യ�ണ�ണ�യ��.” A.S.492/2000. 14 The version is that the plaintiff had occasioned to meet the second defendant in the Registrar's office and had told him about Ext.A1 agreement. However, the second defendant did not pay heed to him and went on with the transaction. In his evidence he has another version, when examined as P.W.1 his case was that he came to know about Ext.B1 publication and then had met the second defendant personally and told him about the agreement in his favour. He stated that however he has not informed the second defendant by any communication about the agreement in his favour, namely Ext.A1. In his cross examination he would say that when he came to know that the second defendant was going to purchase the property, he informed him about Ext.A1 agreement for sale. A reading of his cross examination shows that to several questions he had no answer. However, it is evident from the evidence and averments that his claim in the plaint that he came to know about the sale only on 5.3.1996 is obviously false. A.S.492/2000. 15 18. It is clear that the plaintiff was attempting to improve his case stage by stage. He has no consistent case at all. His silence to several crucial questions asked in cross examination creates considerable doubt regarding his version. 19. The factum of publication and also the fact that there is no mention of Ext.A1 by themselves are insufficient to come to the conclusion that the second defendant was aware of the existence of Ext.A1 agreement. The finding of the lower court in this regard cannot be admitted. 20. Even assuming that the second defendant had not been successful in establishing that he is a bonafide purchaser, in the facts and circumstances of the case the relief of specific performance ought not to have been granted. As is now well settled, while considering a suit for specific performance, the court is bound to consider and A.S.492/2000. 16 discuss the discretion under Section 20 of the Specific Relief Act. Section 20 reads as follows: ## _“_ _**20. Discretion as to decreeing specific**_ _**performance** .- (1) The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal._ _(2) The following are cases in which the court may properly exercise discretion not to decree specific performance:-_ _(a) where the terms of the contract or he conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or_ _(b) where the performance of the contract would involve some hardship on the defendant_ A.S.492/2000. 17 _which he did not foresee, whereas its nonperformance would involve no such hardship on the plaintiff; or_ _(c) where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance._ _Explanation 1.Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b)._ _Explanation 2.- The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract._ _(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts_ A.S.492/2000. 18 _or suffered losses in consequence of a contract capable of specific performance._ _(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.”_ 21. A reading of the provision shows that there are three circumstances under which the court may decline to grant specific performance of an agreement for sale. However, in the case on hand, none of those three instances apply. But it is well settled that the circumstances made mention of in the said Section are not exhaustive. Each case has to be determined on the basis of the facts and evidence of the said case. 22. Even though the court is given a wide discretion, it has to be exercised in a judicial manner. It is evident from the Section itself which says that discretion has to be exercised guided by judicial principles and which is capable of correction by a court of appeal. There can be no A.S.492/2000. 19 doubt that the plaintiff has to show the circumstance which satisfy the court that specific performance should be granted. The discretion conferred is not an arbitrary and unfettered one. It has to be exercised on the basis of well settled rules and principles. 23. As already noticed, it may not be possible to lay down exhaustively the circumstances under which specific performance may be declined. It is also the settled proposition that if it is found that specific performance is to be declined, the court is well within its powers to direct the defendants to pay value of the land to the plaintiff. It is settled by precedents that the court may well be within its jurisdiction to direct return of the money received by the defendant and also damages in lieu of specific performance. 24. Merely because, the defendant has denied the agreement for sale or had set up incorrect or false or frivolous contentions, by itself is not a ground to grant A.S.492/2000. 20 decree for specific performance. The court has to evaluate the entire facts and circumstances of the case. 25. The nature of the agreement, the position in which the parties are placed, the nature of the contentions, the nature of evidence, the hardship that is likely to be caused, possibility of compensation to the injured etc are some of the factors which are treated as relevant for consideration. 26. On the facts of this case, the sale in favour of the second defendant was in 1995. It is an admitted fact that since then he was in possession. He is residing there. He in his evidence has also stated that the original title deeds were shown to him. He had paid both property tax and building tax. Further he had availed of a loan from the Bank by mortgaging the property. Of course the mortgage was during the pendency of the suit. There is a suggestion to D.W.1, i.e., the second defendant, in cross examination that P.Ws.1 and 2 had met him and told him about the A.S.492/2000. 21 agreement in favour of the plaintiff. In fact what is stated is that the plaintiff had told him that he had purchased the property. It is significant to notice here that the plaintiff had no such case in the plaint or while giving evidence. 27. It is quite unfortunate that the trial court has not considered section 20 of the Specific Relief Act at all and has mechanically granted a decree for specific performance. Considering the facts and circumstances of the case, it is felt that it will not be proper to grant specific performance. But the interests of justice would be met by directing the defendants to deposit a sum of Rs.45,000/- received by the first defendant as advance from the plaintiff with 9% interest from the date of suit till realisation charged on the suit property. There will be no order as to costs in this appeal. Therefore this appeal is allowed and the judgment and decree are set aside and the first defendant is directed to pay Rs.45,000/- with 9% interest from the date of suit till A.S.492/2000. 22 realisation to the plaintiff and charged on the suit property under Section 55(6)(b) of the Transfer of Property Act. **P. BHAVADASAN, JUDGE** sb.