M.G. Mathew v. V. Nagappan Nair

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **&** **THE HONOURABLE MR. JUSTICE P.SOMARAJAN** **TUESDAY, THE 13TH DAY OF MARCH 2018 / 22ND PHALGUNA, 1939** **RFA.No. 532 of 2010** **AGAINST THE ORDER/JUDGMENT IN OS 417/2005 of II ADDL.SUB COURT,THIRUVANANTHAPURAM DATED 30-09-2009** ## **APPELLANT/PLAINTIFF** **M.G.MATHEW, S/O M.K.GEORGE, MEENATHETHIL BSNRA 18, PATHIRIPALLY MURI, KUDAPANAKUNNU VILLAGE, NALANCHIRA P.O., THIRUVANANTHAPURAM.** **BY ADV.SRI.PIRAPPANCODE V.S.SUDHIR** ## **RESPONDENT(S)/DEFENDANT:** **V.NAGAPPAN NAIR, S/O VELAYUDHAN PILLAI, RETIRED GOVERNMENT SERVANT, ALUVILAKATHU VEEDU, PANAYARA WARD, KUDAPPANAKUNNU VILLAGE,, NALANCHIRA, THIRUVANANTHAPURAM.** **BY ADV. SRI.T.M.ABDUL LATHEEF** **THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 1-02-2018,THE COURT ON 13/3/2018 DELIVERED THE FOLLOWING:** ## **A.M. SHAFFIQUE & P.SOMARAJAN, JJ.** ========================== R.F.A. No. 532 of 2010 ==================== Dated this, the 13[th] day of March, 2018 ## **J U D G M E N T** ## _**Shaffique, J.**_ This appeal is filed by the plaintiff in OS No.417/2005 challenging judgment dated 30/9/2009 by which the suit for specific performance of an agreement for sale of immovable property was dismissed by the Court below. 2. The short facts of the case are as under:- Plaintiff and defendant entered into an agreement dated 29/01/2005 by which defendant agreed to sell an extent of 43.70 Ares of land belonging to him to the plaintiff. Plaintiff agreed to pay sale consideration at the rate of `72,000/- per cent. He paid an advance of `10,00,000/- as part of sale consideration. He also offered to pay a further amount of `10,00,000/- on or before 30/4/2005 on condition that, before the said date, the defendant should fix the boundaries of the property and should construct a compound wall under his supervision and responsibility for which RFA No.532/2010 -:2:- the expenses will be paid by the plaintiff. According to the plaintiff, he made arrangements for payment of `10 lakhs in his account which was available from 24/3/2005 itself. However, the defendant did not either take any steps to measure the property and fix the boundaries or to arrange construction of the compound wall. Plaintiff even arranged a contractor to effect construction of the compound wall and paid an advance of `50,000/-. But still, the defendant was not willing to perform his part of the contract. Plaintiff therefore caused the issuance of a lawyer's notice on 17/6/2005 seeking specific performance of the contract as the time for performance would expire by 29/7/2005. Having received the notice, no action was taken by the defendant. It was later understood that the defendant was trying to sell the property to certain others and accordingly plaintiff filed a suit as OS No. 915/2005 on 25/6/2005 before the Munsiff's Court, Thiruvananthapuram and sought for a permanent prohibitory injunction to restrain the defendant from alienating the plaint schedule properties. An interlocutory application was also filed seeking for temporary injunction to restrain the defendant from alienating the plaint schedule property to any other person other RFA No.532/2010 -:3:- than the plaintiff/nominees. Interim injunction was granted by the Munsiff's Court. In the meantime, defendant also issued a reply dated 28/6/2005 and the contents according to the plaintiff was untenable. Stating that the plaintiff has been ready and willing to perform his part of the contract, suit is filed on 8/8/2005. 3. The defendant filed written statement stating that the plaintiff completely failed to comply with the terms of the contract as he failed to pay the second instalment of `10 lakhs on or before 30/4/2005. Having failed to comply with the terms of the contract, defendant has no obligation to perform his part of the contract. According to the defendant, plaintiff did not show any readiness or willingness to purchase the property as per the agreement and he was deliberately evading the stipulations in the agreement. It is contended that the defendant had complied with the contractual terms whereas it is on account of the plaintiff's attitude that the sale did not fructify. Before the Court below, plaintiff was examined as PW1 and a witness was examined as PW2. Plaintiff relied upon Exts.A1 to A18 documents. Defendants examined DW1 and DW2. 4. Court below found that the plaintiff having not paid `10 RFA No.532/2010 -:4:- lakhs on or before 30/4/2005, it amounts to breach of contract and indicates his unwillingness to perform his part of the contract. It being a wilful default, the defendant is justified in denying specific performance. It was also found that the documents produced by the plaintiff to prove that he was having sufficient funds at the relevant time for performing his part of the contract was not enough to prove his readiness and willingness to perform his part of the contract. However, the Court below disallowed the relief for specific performance and decreed the suit allowing plaintiff to recover `10 lakhs with interest at the rate of 12% from 29/01/2005 till realisation. 5. Learned counsel for the appellant while impugning the aforesaid judgment contended that the Court below had completely erred in arriving at a conclusion that the plaintiff failed to comply with the terms of the contract. It is contended that the obligation to pay a further amount of `10 lakhs would arise only after the property is measured, boundaries are fixed and the compound wall is constructed under the supervision of the defendant. The defendant having not done so, there is no obligation to pay a further amount of `10 lakhs. It is also RFA No.532/2010 -:5:- contended that the documents produced by the plaintiff namely Exts.A8 to A12 would clearly show that the plaintiff was in possession of sufficient funds at all relevant point of time to purchase the property and the Court below had erroneously found otherwise. 6. On the other hand, learned counsel appearing for the defendant/respondent supported the judgment of the Court below and contended that the Court below was justified in directing refund of the advance amount with interest at 12% per annum. It is submitted that it was only on account of the plaintiff's inaction that the compound wall could not be constructed. Further, it was not the intention of the parties that the payment would be made only after construction of the compound wall. Learned counsel also submitted that being a discretionary relief, the Court has always a discretion either to grant specific performance or not. In the case on hand, when the Court below had relied upon various circumstances to deny the grant of specific performance, there is no reason why this Court should interfere in the matter. He had relied upon the judgment of the Apex Court in _**Padmakumari and another v. Dasayyan and others**_ [(2015) 8 SCC 695]. RFA No.532/2010 -:6:- ## Reference is made to paragraphs 19 and 20, which read as ## under:- _**“19.** The said legal contention urged on behalf of Defendants 12 to 15 has been strongly rebutted by the learned counsel on behalf of the plaintiff contending that the question of payment of balance consideration amount of Rs 63,000 within nine months would have arisen after the terms and conditions of the contract agreed upon by Defendants 1 to 11 if they had measured the suit scheduled property. They have not discharged their part of the contract stipulated in the agreement to sell, therefore, it is urged by him that time was not the essence of the contract as Defendants 1 to 11 themselves have failed to perform their part of the agreement._ _**20.** The said contention urged on behalf of the plaintiff is unacceptable to us that the question of taking measurement would not arise before the plaintiff performed his part of the contract regarding the balance consideration within the period stipulated in the agreement. Undisputedly, that had not been done by the plaintiff in the instant case within the stipulated time and the notice was issued by the plaintiff only after one year, therefore, the plaintiff has not adhered to the time which is stipulated to pay the balance consideration amount to Defendants 1 to 11 which is a very important legal aspect which was required to be considered by the courts below at the time of_ RFA No.532/2010 ## -:7:- _determining the rights of the parties and passing the impugned judgment. The courts below have ignored this important aspect of the matter while answering the contentious Issues (i) and (ii) in favour of the plaintiff and granted decree of specific performance in respect of the suit scheduled property. The said finding of fact is contrary to the terms and conditions of the agreement, pleadings and the evidence on record. Accordingly, we answer the said issues in favour of Defendants 12 to 15 after setting aside the concurrent finding of fact recorded by the High Court.”_ ## 7. Yet another judgment relied upon is _**Pemmada Prabhakar and Others v. Youngmen's Vysya Association**_ [(2015) 5 SCC 355]. Reference is made to paragraphs 34 and 35 which read as under:- _**“34.** It is an undisputed fact that the plaintiffs have not approached the trial court with clean hands. It is evident from the pleadings of the agreement of sale which is produced for the decree for specific performance of agreement of sale as the plaintiffs did not obtain the signatures of all the co-sharers of the property, namely, the mother of the defendants, the third brother and three sisters. Therefore, the agreement is not enforceable in law as the persons who have executed the sale deed, did not have the absolute title of the property. Apart from the said legal lacuna, the terms and conditions of the agreement of sale for_ RFA No.532/2010 -:8:- _payment of sale consideration agreed to be paid by the first plaintiff in instalments within the period stipulated as indicated above were not paid._ _**35.** The first appellate court and the High Court have not exercised their power under Section 20(2) of the Specific Relief Act which by itself is the substantial question of law which fell for consideration before the High Court as the first appellate court failed to consider this important aspect of the matter and exercised its power while determining the rights of the party, particularly, in the light of the unenforceable contract between the plaintiffs against the defendants as all of them are not parties to the agreement of sale document (Ext. A-1) and the executants viz. Defendants 1 and 2 have not acquired absolute title to the property in question. Therefore, the impugned judgment is vitiated and liable to be set aside.”_ 8. The short question to be considered is whether Court below was justified in denying specific performance. An answer to this question depends upon the interpretation of the terms of agreement. Ext.A2 is the agreement dated 29/1/2005. There is no dispute regarding the terms and conditions of the agreement or its execution thereof. As per the agreement, defendant asserts that the property is unencumbered and that under his supervision, he will measure and construct a compound wall in RFA No.532/2010 -:9:- respect of 43.70 Ares of land. The consideration is `72,000/- per cent which is to be paid within 6 months from the date of agreement and the sale deed is to be executed either in the name of his relative or nominee/nominees, either as single plot or separate plots and `10 lakhs which he has already received as per cheque dated 14/2/2005 was treated as advance. He further agrees that before the expiry of the period specified, at the expense of the plaintiff and under his supervision, he will measure and demarcate the properties and if at all there is any encumbrance, he shall arrange to clear the encumbrances and after adjusting the advance amount, the balance has to be paid before registration. The agreement clearly specifies that it is the obligation of the defendant to measure and demarcate the property and under his supervision to construct a compound wall. Yet another clause indicates that plaintiff will have an obligation to pay `10 lakhs on or before 30/4/2005 provided the boundaries are separately demarcated and fixed. 9. The argument raised by the learned counsel for the respondent/defendant is that the averments in the plaint would disclose that the defendant had undertaken to construct a RFA No.532/2010 -:10:- compound wall demarcating the boundaries of the scheduled properties under his supervision and responsibility at the expense of the plaintiff and it is only on such construction being made on or before 30/4/2005, the plaintiff is under obligation to pay `10 lakhs being the second instalment as part of sale consideration. It is contended that the liability to pay `10 lakhs arises only when the property is demarcated and construction of a compound wall was not a condition precedent. Ext.A4 is the lawyer's notice issued on behalf of the plaintiff to the defendant. In the said notice itself it is stated that “ _as per the agreement you have agreed that within the 30[th] day of April, 2005, the compound wall on all the boundaries of the said property would be constructed at the expense of my client and to measure out the said property and fix the extent on your responsibility and on completion of the same, my client has to give you a further amount of_ ` _10,00,000/(Rupees Ten lakhs only) as part of sale consideration_ .” Ext.A7 is the reply notice issued wherein the defendant had taken a stand that the plaintiff failed to comply with the terms and conditions of the agreement. It is also stated that he had decided to sell the property for the purpose of his daughter's marriage and there was RFA No.532/2010 -:11:- failure to pay the second instalment of `10 lakhs as stipulated. Further, the plaintiff had not spent any amount to construct compound wall after measuring the property. The defendant also stated that the plaintiff had informed him that the plaintiff was not interested to purchase the property or to transfer the same to any other person. In the written statement, defendant reiterated the contention that the condition imposed in the agreement was that the plaintiff shall pay the second instalment of `10 lakhs on or before 30/4/2005. But the plaintiff deliberately deviated from the said condition and failed to pay the said amount. He contended that he had fully complied with the terms of the agreement and it was on account of the non performance by the plaintiff that the sale did not take place. 10. But on a perusal of the agreement Ext.A2, it is rather clear that both the parties proceeded on a wrong basis. In the agreement, there was an obligation on the part of the defendant to demarcate the property and to construct a compound wall at the expense of the plaintiff. The value of the property is fixed at `72,000/- per cent and the balance amount payable will depend upon the actual extent of property measured and demarcated. RFA No.532/2010 -:12:- Therefore, there was an obligation on the part of the defendant to demarcate the boundaries and separate it and the fencing or compound wall is to be done at the expense of the plaintiff under the supervision of the defendant. The obligation to pay second instalment of `10 lakhs before 30/4/2005 arises only when the boundaries of the property are fixed and demarcated. Apparently, the defendant did not measure the property nor did he demarcate the same before 30/4/2005. Therefore, he could not have insisted that the plaintiff has to pay `10 lakhs before 30/4/2005. Similarly, plaintiff proceeded on the basis that before 30/4/2005, property will be measured and a compound wall will be constructed by the defendant, of course, at the expense of plaintiff. There is no mention of construction of a compound wall in the agreement. Agreement only indicates actual measurement and demarcation of boundaries and at best, putting up of a fence. Therefore, this is an instance where both the parties have proceeded on a wrong basis. The plaintiff did not pay second instalment of `10 lakhs as even according to him, the defendant did not take steps to construct the boundary wall. As already stated, defendant proceeded on the basis that irrespective of the measurement or RFA No.532/2010 -:13:- demarcation of boundaries, `10 lakhs ought to be paid on or before 30/4/2005. Therefore, we are of the view that the both the parties proceeded on a wrong basis. 11. At any rate, it is further seen that even before expiry of the period covered by the contract, the defendant was not ready and willing to comply with the terms of the contract. 12. In the reply notice sent by the defendant, he had raised a contention that money was required for his daughter's marriage especially the second instalment of `10 lakhs and since the said amount has not been paid, there is breach of contract on the part of plaintiff. Taking into account the above factual circumstances, we are of the view that even after 30/4/2005, defendant had an opportunity to comply with the terms of contract before the period of six months from the date of agreement and he had virtually committed breach of contract by not effecting sale of property immediately after the expiry of the period. 13. Plaintiff had produced enough documents to prove that he was in possession of sufficient funds during the relevant time and in fact as per direction issued by this Court on 19/8/2010, an interim injunction was granted restraining alienation of the RFA No.532/2010 -:14:- property on condition of the appellant depositing balance sale consideration in a Fixed Deposit in his name. Learned counsel submits that the balance consideration has already been deposited in Fixed Deposit. 14. The Court below proceeded on the basis that plaintiff failed to pay `10 lakhs on or before 30/4/2005 and therefore he had committed breach of contract. As already stated, we cannot subscribe to the said view as the obligation to pay `10 lakhs before 30/4/2005 was on certain conditions i.e., the defendant measuring the property and demarcating its boundaries appropriately, which he had not done and therefore we cannot uphold the said finding 15. As far as the financial capacity of the plaintiff is concerned, there cannot be any dispute as even the plaintiff had deposited the balance sale consideration in a Fixed Deposit. The question is whether in such an instance, this Court will be justified in directing grant of specific performance. 16. As already stated, one of the reason stated by the plaintiff for not paying `10 lakhs was that the defendant did not take any steps to construct the compound wall. This approach of RFA No.532/2010 -:15:- the plaintiff was erroneous. There is absolutely nothing in the contract to indicate that a compound wall ought to be constructed. But, it is seen from the written statement that the allegation of the plaintiff in that regard has not been disputed. Defendant only stated that the plaintiff did not comply with the terms of agreement. Therefore, we are of the view that this is an instance where there was an understanding between the parties to demarcate the boundaries and to construct either a compound wall or an appropriate fencing at the expense of the plaintiff which was to be supervised by the defendant. Having not done so before the expiry of the period of contract, it is the defendant who is responsible for non compliance of the terms of contract. 17. The next question is whether it would be appropriate for this Court to direct grant of specific performance at this stage of the proceedings. Substantial time has elapsed and the land value would have gone up to a considerable extent. Further, both the parties proceeded on a mistake as evident from the pleadings and the terms of agreement. Being a discretionary power granted u/s 20 read with S.16(b) of the Specific Relief Act, 1963, it has to be considered whether the plaintiff had approached the Court stating RFA No.532/2010 -:16:- the true and correct facts. In _**Padmakumari**_ (supra), the Apex Court held that if there is failure on the part of the plaintiff to perform his part of the contract within the stipulated time in the agreement, that is to pay balance sale consideration within the time specified in the agreement, he is not entitled for specific performance of the contract. In the case on hand, such a situation had not arisen. Here the defendant alleges breach when the second instalment of `10 lakhs was not paid on or before 30/4/2005. The averments in the plaint further discloses that the plaintiff had some doubt regarding the title of the property. In paragraph 11, plaintiff has stated that it was understood that the schedule properties are involved in civil litigation with respect to boundary dispute with the adjacent property owners and a suit OS No. 847/2004 is pending on the file of the Munsiff's Court, Thiruvananthapuram. Probably, it is taking note of the dispute between the neighbours that the plaintiff insisted that the property should be measured, demarcated and a fence should be constructed. But when there is doubt regarding the title and admittedly when the plaintiff projects certain dispute with the neighbours, we do not think that the willingness shown for RFA No.532/2010 -:17:- purchasing the property was genuine. Under such circumstances when the plaintiff doubts the defendant's title and they are not convinced about the measurement of the property, it can be a reason for the Court to deny specific performance of the contract. In the result, we do not find any ground to interfere with the judgment of the Court below. Accordingly, this appeal is dismissed. Sd/- ## **A.M. SHAFFIQUE, JUDGE** Sd/- ## **P.SOMARAJAN, JUDGE** Rp