Ravi @ Surendan (K.S. Nathan) S/O Kalleparambil Lakshmi Kutty Amma v. Soman S/O Pallath Chandrabhanu, and Addl. R2: Thrissur Urban Co-operative Bank Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.ABRAHAM MATHEW FRIDAY, THE 23RD DAY OF MAY 2014/2ND JYAISHTA, 1936 RFA.No. 668 of 2008 ( ) ------------------------ AGAINST THE ORDER/JUDGMENT IN OS 8/1999 of I ADDL.SUB COURT, THRISSUR DATED 31-07-2008 APPELLANT(S)/DEFENDANT-: ------------------------------------------------ RAVI @ SURENDRAN (K.S.NATHAN) S/O.KALLEPARAMBIL LAKSHMI KUTTY AMMA, AGED 58 YEARS VELIYANNUR DESOM, THRISSUR VILLAGE, THRISSUR TALUK. BY ADVS.SRI.M.K.DAMODARAN (SR.) SMT.DHANYA P.ASHOKAN SRI.M.R.VENUGOPAL RESPONDENT(S): PLAINTIFF ---------------------------- SOMAN, S/O. PALLATH CHANDRABHANU, AGED 58 YEARS, MARAR ROAD, THRISSUR VILLAGE THRISSUR TALUK. ADDL.R2: THRISSUR URBAN CO-OPERATIVE BANK NO.187, REPRESENTED BY GENERAL MANAGER IN CHARGE P. SATHIDEVI, W/O.KUNDUVARA VASUDEVAN AND D/O. NANDANATHI AMMINI AMMA, VALORE HOUSE, KUTTUMUCK DESOM, VIVATTOM VILLAGE, THRISUR TALUK. (ADDL. R2 IMPLEADED AS PER ORDER ON IA NO.2137/2012 DT.6.3.2014 R,R1 BY ADV. SRI.MILLU DANDAPANI R, BY ADV. SRI.T.KRISHNAN UNNI (SR.) R, BY ADV. SRI.S.VINOD BHAT(ADV.COMM.) R2 BY ADV. SRI.C.D.DILEEP THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 4/4/2014, THE COURT ON 23-5-2014, DELIVERED THE FOLLOWING: ## **T.R.RAMACHANDRAN NAIR & K. ABRAHAM MATHEW, JJ.** **- - - - - - - - - - - - - - - - - - - - - - - - - -** ## **R.F.A. No.668 of 2008** **- - - - - - - - - - - - - - - - - - - - - - - - - -** ## **DATED THIS THE 23RD DAY OF MAY, 2014** ## **JUDGMENT** ## Ramachandran Nair, J. This appeal is filed by the defendant in O.S.No.8/1999 on the file of the Ist Additional Sub Court, Thrissur. The suit was filed by the first respondent plaintiff seeking for a decree for specific performance of an agreement for sale. The trial court decreed the suit and directed the defendant/appellant to accept the balance sale consideration and to comply with other formalities including execution of the sale deed. 2. We heard learned Senior Counsel for the appellant Shri T. Krishnanunni and Smt. Sumathi Dandapani, learned Senior Counsel appearing for the first respondent. 3. Before going into the respective contentions, we shall re-state the necessary facts for the disposal of the appeal. The parties are referred to as arrayed in the suit. The case of the plaintiff is that an agreement for sale was executed on 10.8.1998 before a Notary public who has attested the same. The total consideration was fixed at Rs.4,40,000/-, out of which an RFA No.668/2008 -2- amount of Rs.3,50,000/- was paid on the date of agreement and four months period was fixed for executing the sale deed. Even though the plaintiff was ready and willing for execution of the sale deed, the defendant failed to perform his part. The plaintiff, through his counsel, sent a legal notice on 23.10.1998. The property is having an extent of ten cents with a building in it. 4. The defendant raised the following contentions: There is no agreement for sale of the property in question. The defendant, to tide over his financial difficulties, had approached Nadakkavu Kuries and Loans (P) Ltd., Thrissur for a loan. The Directors and shareholders of it were closely known to him. In May, 1996, by surrendering the original title deed of the plaint schedule property as security, the defendant had borrowed an amount of Rs.2,50,000/- from them. As additional security, an agreement for sale was also executed on 29.5.1996 in favour of the Chairman of the said Kury company. It was a registered one. But actually there was no intention to sell the property by the defendant or there was any idea for the Chairman of the Kury company to purchase the same. This was executed only as demanded by the Kury company for disbursing the loan amount. Therein, the price of RFA No.668/2008 -3- the property was shown as Rs.5 Lakhs. The defendant paid off the loan and again he applied for another loan on 10.9.1997 to the tune of Rs.3,50,000/and after considering his application an amount of Rs.2,50,000/- was sanctioned as loan on 19.9.1997 and at that point of time also the original sale deed of the property was kept by the Kury company and on its security alone, the loan was granted. Due to the loss caused to his business and other financial hardships, he could not remit back the amount in time. The defendant approached the Urban Co-operative Bank, Thrissur for getting a further loan for investment in his business towards capital. As he was informed that the document of title will have to be given as security for the loan, he informed the details to Nadakkavu Kuries & Loans (P) Ltd. and requested to return the security document. He was informed by them that he will have to pay back the entire amount of loan on getting a fresh loan from the Urban Co-operative Bank. As an additional security for the transaction, an agreement for sale was executed in favour of the plaintiff who is a shareholder of Nadakkavu Kuries & Loans (P) Ltd. This was done as directed by them and as he had to get back the title deed urgently. It is in these circumstances the agreement was executed. As on the date of RFA No.668/2008 -4- agreement, i.e. on 10.8.1998, he had to pay back an amount of Rs.2,50,000/- towards principal and another amount of Rs.1,00,000/towards interest of the existing loan and it is in that circumstance an amount of Rs.3,50,000/- was shown as earnest money in the agreement. He has not received any amount from the plaintiff. The said amount actually represented the amount payable by the defendant to Nadakkavu Kuries & Loans (P) Ltd. On the date of execution of the document itself, the original title deed was returned and this was presented before Urban Cooperative Bank, Thrissur by the defendant and he was sanctioned an amount of Rs.7.5 lakhs as loan, out of which Rs.2 lakhs was paid to the Kury company on 10.8.1998 itself, but no receipt was given, which was the practice. 5. When the legal notice was issued by the plaintiff, the defendant approached Nadakkavu Kuries & Loans (P) Ltd. and the plaintiff and he was assured that the legal notice was issued only as a formality. Hence he did not give any reply to the same. When the summons in the suit was received from the court, the defendant again approached the plaintiff and the Kury company and he was assured that he need only to meet the plaintiff's RFA No.668/2008 -5- counsel who will make arrangements and accordingly he approached the counsel for the plaintiff himself and a colleague of the counsel, Smt. Seema Harikumar was given vakalath as per the advice of the counsel for the plaintiff. Certain signed blank papers were also furnished to the Advocate. From 4.12.1999 onwards he was under treatment in Jubilee Mission Hospital, Thrissur and he had undergone a surgery on 7.12.1999. He had to take complete rest for six months and was not in a position to travel or move about. Therefore, he could not enquire about the civil suit filed and he did not get any further intimation from his counsel Smt. Seema Harikumar and Nadakkavu Kuries. It was specifically contended in paragraph 10 of the written statement that the defendant was residing in the plaint schedule property along with his wife and two children and he had never thought of selling it and there was no occasion for him to offer this property for sale also. Even at the time when the agreement was executed, in that locality the value of property was at least Rs.2 lakhs per cent. By reckoning such value, he was given Rs.7.5 lakhs as loan by the Urban Cooperative Bank. In fact, the price fixed in the agreement executed with the plaintiff is lower than the amount shown in the former agreement for sale RFA No.668/2008 -6- executed with the Chairman of Nadakkavu Kuries & Loans (P) Ltd. The agreement is not actually one meant for sale of the property. 6. The evidence consists of the oral deposition of P.Ws.1 and 2 and that of D.Ws.1 and 2 and the documentary evidence as Exts.A1 to A4 on the part of the plaintiff and Exts.B1 to B5 on the side of the defendant. The plaintiff was examined as P.W.2 and the defendant was examined as D.W.1. Exts.X1 to X14 have also been marked through witnesses. 7. While elaborating his arguments, Shri T. Krishnanunni, learned Senior Counsel for the appellant contended that actually Ext.A1 karar was not intended as one for sale of the property of the appellant. It was the practice of Nadakkavu Kuries & Loans (P) Ltd. to get from the customers such type of agreements as additional security for the loan granted. In 1996 in the same pattern another agreement was executed by the defendant with the Chairman of the said Kury company. They did not insist for execution of the sale deed and once the amount was paid back, the document was returned. Thereafter, again the defendant had borrowed money from the Kury company. It is submitted that on 10.8.1998 itself the document was got returned from the Kury company for surrendering it before the Urban Co- RFA No.668/2008 -7- operative Bank which had granted an amount of Rs.7.5 Lakhs as loan from which, a part of the amount payable to the Kury company was paid also. It is therefore submitted that no consideration was paid by the plaintiff actually and the amount of Rs.3.5 lakhs out of the total amount of Rs.4.40 lakhs itself is shown as earnest money. It is submitted that the plaintiff being a shareholder of the Company, was fully aware about it and therefore the attempt now to get the sale deed executed through court is without any justification. Learned Senior Counsel submitted that in the evidence P.W.1, who is the Chairman of Nadakkavu Kuries & Loans (P) Ltd., elaborately explained the way in which the transactions are being entered into when loans are sanctioned, which also supports the case of the defendant. It is further submitted that the evidence of the plaintiff will also show that no other formalities like furnishing of prior title deed, encumbrance certificate, possession certificate or tax receipt were insisted by the plaintiff at the time of execution of the agreement for sale or even thereafter and this also lends credence to the case of the defendant. The plaintiff's evidence will show that he has no detailed knowledge about the property in question also. The property is in an important part of Thrissur town. RFA No.668/2008 -8- 8. While highlighting the variation of the price shown in the two agreements for sale in the years 1996 and 1998, learned Senior Counsel for the appellant submitted that this itself is a circumstance supporting the plea of the defendant. In the agreement of the year 1996 the price of the property was shown as Rs.5 lakhs and in 1998 it was shown as Rs.4.40 lakhs and it does not reflect any true value of the property. The property is having 10 cents in extent and there is a residential building also in it. It is an admitted fact that the price of the property in the locality has been increasing. For getting the loan from Urban Co-operative Bank a valuation certificate was obtained and the documents produced by the defendant will show that they valued the property at Rs.15 lakhs. The same has been accepted by the Urban Co-operative Bank. It is therefore submitted that there is real hardship as far as the case of the defendant is concerned and these aspects have not been considered by the trial court while granting the decree. Actually, the agreement was executed only for the benefit of Nadakkavu Kuries & Loans (P) Ltd. of which the plaintiff is a shareholder also. At any rate, learned Senior Counsel submitted that it is well settled that grant of decree for specific performance is discretionary and in this case RFA No.668/2008 -9- the entire background will only support the case of the defendant and on that score also the plaintiff is not entitled for a discretionary relief. 9. Learned Senior Counsel for the plaintiff, Smt. Sumathi Dandapani submitted that all the above arguments are without any merit. The agreement was executed before a Notary public and the defendant has clearly admitted the execution of the document and therefore he cannot be heard to say that it is not supported by consideration or that it was really not intended to be an agreement for sale. Learned Senior Counsel submitted that the alleged difference in the price of the property shown in the agreement with the defendant and the Chairman of the Kury company (Ext.B1) and that is shown in Ext.A1 has no significance. At any rate, inadequacy of price cannot be a defence when there is strong evidence with regard to the execution of a karar. Learned Senior Counsel further submitted that none of the vitiating factors pointed out by the learned Senior Counsel appearing for the defendant has any merit. P.W.1 has proved all the documents and the accounts maintained by Nadakkavu Kuries & Loans (P) Ltd. On the date of execution of the sale deed the plaintiff had applied for sanctioning a loan from Nadakkavu Kuries & Loans (P) Ltd. and RFA No.668/2008 -10- the amount payable by the defendant was adjusted in it and the said amount was shown as earnest money in the document. The plaintiff was always ready and willing to pay the balance price. Actually he wanted the property for his residence and it is only 1 ½ kms. away from the press run by the plaintiff. Learned Senior Counsel further submitted that the plea of the appellant/defendant that such agreements for sale were being executed by the loanees as additional security, has no credence on the special facts of this case. It is submitted that the defendant was granted loan by the Urban Co-operative Bank on a day later than 10.8.1998, the date of execution of Ext.A1. Therefore, only after the loan amount sanctioned in favour of the defendant was adjusted, the title deed was released to him. This also lends credence to support the plea of the plaintiff. 10. It is submitted that for a long time the defendant did not contest the matter before the trial court and ultimately an ex-parte decree was passed. Pursuant to the passing of the said decree, the sale deed was executed also. It is further pointed out that the defendant did not care to pay back the loan amount towards Urban Co-operative Bank, Thrissur and has not taken any steps to contest the case filed by the said Bank and the RFA No.668/2008 -11- plaintiff alone has approached the Debt Recovery Tribunal. In fact, the plaintiff is prepared to clear off the said arrears as on today. It is submitted that at any rate, after the sale deed was executed through court, no bona fides can be attached to the case pleaded by the defendant. Learned Senior Counsel further submitted that the defendant's plea of undue influence by Nadakkavu Kuries & Loans (P) Ltd. is without any substance. In that context, learned Senior Counsel relied upon the following decisions of the Apex Court and this Court: **Afsar Shaikh and another v. Soleman Bibi and others** (AIR 1976 SC 163), **Lourdu Mari David and others v. Louis Chinnaya Arogiaswamy and others** {(1996) 5 SCC 589}, **Jai Narain Parasrampuria (dead) and others v. Pushpa Devi Saraf and others** {(2006) 7 SCC 756}, **Silvey and others v. Arun Varghese and another** {(2008) 11 SCC 45), **Laxman Tatyaba Kankate and another v. Taramath Harishchandra Dhatrak** {(2010) 7 SCC 717} and Y **ohannan and another v. Harikrishnan Nair and others** (AIR 1992 Ker. 49). 11. The points that arise for consideration are: (i) Whether the agreement Ext.A1 executed between the parties is really intended as an agreement for sale of the property; (ii) Whether the plaintiff is entitled for a RFA No.668/2008 -12- decree as sought for; and (iii) Whether the plea of the defendant is an acceptable one or not. 12. We are considering the above three points together. Ext.A1 is the agreement executed between the two parties. A reading of Ext.A1 will show that the title of the property originally stood in favour of the mother of the appellant who had purchased it in the year 1119 M.E. as per document No.5395. Both the parents are no more. The property thereafter devolved on the children including the appellant herein. There were 15 numbers of legal heirs including the appellant. Two out of them, viz. one Shri Unnikrishnan and one Shri Sivaramakrishna Menon died subsequently and their right devolved on their wife and children. All these persons have executed separate release deeds and accordingly the appellant became the sole owner. 13. In Ext.A1 the consideration is shown as Rs.4.40 lakhs, out of which Rs.3.50 lakhs is shown as earnest money. It is shown in the filled up portions of the printed part of the document that out of Rs.3,50,000/-, an amount of Rs.2,89,875/- has been adjusted towards the loan taken by the defendant from Nadakkavu Kuries & Loans (P) Ltd. and the remaining RFA No.668/2008 -13- amount of Rs.60,125/- has been received by the defendant. 14. Ext.B1 is the similar agreement for sale executed between the defendant and the Chairman of Nadakkavu Kuries & Loans (P) Ltd. Which is dated 29.5.1996. Similar recitals are seen in the said document. Therein, the price of the property is shown as Rs.5 lakhs and an advance of Rs.2,50,000/- is shown as paid to the defendant. The period fixed for execution of the document is shown as six months. 15. We will now discuss the oral evidence. P.W.1 is the Chairman of Nadakkavu Kuries & Loans (P) Ltd. In the proof affidavit it is stated that the defendant had executed an agreement for sale as No.3316/1996, based on which they had paid an advance of Rs.2.5 lakhs. The period of agreement was extended by another one month, on 28.11.1996 and during this period the defendant paid back Rs.2.5 lakhs, which amount he had received as per the agreement. Again he borrowed another amount of Rs.50,000/- as fresh loan on 2.5.1997 and applied for another loan to the tune of Rs.3.50 lakhs on 10.9.1997. An amount of Rs.2.5 lakhs was sanctioned as loan on 19.9.1997 and the outstanding amount of Rs.50,000/towards the previous loan and its interest, viz.Rs.3,425/- were adjusted and RFA No.668/2008 -14- the balance amount of Rs.1,96,575/- was released to him. The plaintiff applied for a loan of Rs.3 lakhs on 31.7.1998 and it was informed that he would clear off the loan arrears of the defendant. They executed a sale agreement on 10.8.1998 and the plaintiff remitted an amount of Rs.2,89,875/- towards the loan amount taken by the defendant. Various documents have been marked by P.W.1 as Exts.X1 to X12 which include Day Book for the year 1995-96 (Ext.X6), Day Book for the year 1997-98 (Ext.X7) and Day Book for the year 1998-99 (Ext.X8). 16. In cross examination he has stated that he is the Chairman of Nadakkavu Kuries & Loans (P) Ltd. and prior to that he was the Deputy Chairman. The Kury company was started in the year 1993 and he was an active member from that date. The defendant, for the first time, approached him in the year 1996 for getting money from the establishment. Significantly, he has stated that for getting amount the defendant had executed an agreement for sale in favour of the Chairman. The same has been marked as Ext.B1. According to him, the amount was paid as advance and not as loan. Inter-alia, he has deposed that in Ext.B1 the total amount is shown as Rs.5 lakhs. He further deposed that he had not visited the RFA No.668/2008 -15- property and the facts are known to the then Chairman and that the property is situated within 2 kms. from Swaraj Round in Thrissur town. To a specific question whether the defendant had paid back the amount covered by Ext.B1, he answered that the amount was paid which is evident from Ext.X7(a). It was paid on 31.3.1997. He deposed that no interest was collected and the entire amount of Rs.2.5 lakhs was paid in one lump. He was specifically asked whether after the payment of the money, any steps were taken to cancel the karar, Ext.B1. According to him, the document received from the defendant was returned to him which alone is the formality and no other legal steps for cancellation of the agreement was taken, which is the practice followed by them. With regard to the subsequent loans, it is stated that they were sanctioned on the security of the property and finally Rs.50,000/- was sanctioned in the year 1997 and the document of title was received at that time. Receipts are not being issued when documents are received. He also deposed that the plaintiff is a shareholder of the establishment. Of course, he denied the suggestion that the document was given back for getting a further loan from Urban Cooperative Bank, Thrissur and as additional security an agreement for sale RFA No.668/2008 -16- was executed. In the further cross examination he admitted that for specific performance of the agreement Ext.B1, no steps have been taken. 17. The plaintiff has filed a proof affidavit in tune with the averments in the plaint. The cross examination of the plaintiff will show the following details: He came to know the defendant only 5 - 10 days prior to the execution of the agreement and he specifically stated that prior to 5 - 10 days of the date of karar he had no acquaintance with the defendant. He is a shareholder of Nadakkavu Kuries & Loans (P) Ltd. from the inception. He knows about the procedures prevalent in the establishment. When the agreement was executed and when the defendant was given back the title deed, he was present in Nadakkavu Kuries & Loans (P) Ltd. According to him, the original title document of the schedule property was seen by him in Nadakkavu Kuries & Loans (P) Ltd. ten days prior to the execution of the agreement. Even though he stated that one Shri Sasi was the broker for the transaction, he pleaded ignorance about the address, house name or father's name of the said broker. He plainly admitted that he has not seen the prior title deed, encumbrance certificate and the receipt showing payment of tax for the plaint schedule property at the time of execution of RFA No.668/2008 -17- agreement or even thereafter. According to him, in the year 1998 the property may fetch Rs.50,000/- per cent. It is situated within 1 ½ kms. of Swaraj round in Thrissur. There is a general increase of price of the property in the year 1998 compared to that of 1996. According to him, he knew about the loan availed in the same month by the defendant from Urban Co-operative Bank after the filing of the suit only. 18. According to P.W.2, he had visited the property once or twice. His deposition will show that he has spoken about the existence of residential properties on the western and eastern sides of it but pleaded ignorance about the boundary on the southern side. Even though he stated that he had gone inside the house, he could not say the measurements in square feet or about the number of bedrooms. He does not remember the person by whom the agreement was written. According to him, only the copy of the title deed was taken for preparing the agreement. The document was sent from Nadakkavu Kuries & Loans (P) Ltd. for preparing Ext.A1. According to him, he paid back an amount below Rs.1 Lakh out of the total amount of loan received from Nadakkavu Kuries & Loans (P) Ltd. But he admitted that he has not produced any document or Pass Book in RFA No.668/2008 -18- relation to the transaction. According to him, the amount is liable to be paid back with 14% interest. 19. D.W.1 is the defendant and D.W.2 is an employee under the Urban Co-operative Bank, Thrissur. Exts.X11 and X12 were produced through P.W.1. By Ext.X11 the period of the agreement, Ext.B1 was extended by another one month. Ext.X12 is an application filed by him for extension of the period. According to D.W.1, he did not engage any broker for sale of the property and no prior acquaintance was there with the plaintiff and only from the date of execution of Ext.A1 he knew the plaintiff. The plaintiff is conducting a press in Thrissur town. According to him, he had paid back Rs.2 Lakhs to Nadakkavu Kuries & Loans (P) Ltd. in August 1998, but no receipt was given. It was paid on 19[th] of August. He was sanctioned loan by Urban Co-operative Bank on 19.8.1998. They granted the loan only after a decision was taken by the Director Board and after verification of the security property. Ext.B5 is the passbook showing the said loan transaction. According to him, the Chairman of Nadakkavu Kuries & Loans (P) Ltd. was aware that to repay their loan, he has approached the Urban Bank for getting a loan. RFA No.668/2008 -19- 20. Ext.B5 is the passbook produced by the defendant to prove the loan transaction of the appellant with the Urban Co-operative Bank and the loan was sanctioned on 28.8.1998. Certain amounts have been repaid by him on different dates. 21. We will now refer to some of the documents produced by the plaintiff. Ext.X1 is the loan application submitted by the plaintiff which is dated 31.7.1998. The total amount of loan sought is Rs.3 Lakhs. His monthly income is shown as Rs.6,000/-. Column 16 provides for showing the details of the security property, but none of them have been filled up. In the next page the decision to grant the loan has been recorded. It is noted therein that the property is already mortgaged with them and about Rs.3 Lakhs remains to be paid. It is further noted therein that an agreement for sale has to be executed between the parties and once the sale deed is executed, the property will be mortgaged with the Company. A promissory note has been executed on 10.8.1998. Ext.X11 papers also contain the loan application submitted by the defendant on 10.9.1997 for getting loan. Therein, in column 16 the details of the security property and the price of the same have been shown. The same property is shown and the price is RFA No.668/2008 -20- shown as Rs.25 Lakhs. He has also executed a promissory note. The loan application of the defendant submitted to Urban co-operative Bank has been marked as Ext.X13. This is dated 31.7.1998. The requirement shown is Rs.10 lakhs repayable in 60 months. The very same property having 10 cents is shown as security property. Column II requires to show the details of security property. Serial No.13 therein gives the details of the prior title documents including the document numbers. Column III again gives the details of the original and prior document numbers, encumbrance certificate for the period from 1982 to 1996, possession certificate, location certificate, land tax receipt, building tax receipt, etc. These are the documents submitted along with the loan application. The application stands recommended on 10.8.1998 subject to legal scrutiny and verification of the property. The internal page of Ext.X14 shows the verification report of the Board which includes the particulars of the property. The approximate value of the building is shown as Rs.2,50,000/- and that of the property is shown as Rs.12,50,000/-. Thus, the total value of the property is shown as Rs.15,00,000/-. The market value of the property in the locality is shown as Rs.1,25,000/- per cent. On 20.8.1998 an amount of Rs.7,50,000/- has RFA No.668/2008 -21- been sanctioned as loan on the security of the property. The further stipulation is that his wife should also join as a party to the mortgage deed. The property has thus been obtained as security by way of mortgage. 22. While evaluating the points raised by the appellant whether the agreement Ext.A1 was really intended as an agreement for sale, we will have to consider the whole aspects of the case including the case pleaded in the plaint and the oral evidence of P.Ws.1 and 2. Admittedly the parties were not known earlier. According to the plaintiff, he came to know the defendant only 5- 10 days prior to the execution of Ext.A1. Even though he has stated that there was a broker named Sasi, none of those details have been pleaded in the plaint and he could not give his address or residential place. Therefore, the said version cannot be accepted. According to him, he saw the document of title from the Kury company. He is a shareholder of the kury company also. The property in question is situated within Thrissur town itself. There is no averment in the plaint with regard to the verification of the prior title deed, encumbrances, any visit conducted by the plaintiff to the property and verification of the other documents relating to the property. It is clear from Ext.A1 document and from its recitals that RFA No.668/2008 -22- the property was purchased by the defendant's mother and after the death of the parents the property devolved on the legal heirs. The defendant obtained the property when the others have released their rights in the property by separate registered documents. None of the documents have been verified, admittedly by the plaintiff. The only averment in para 5 of the plaint is that the defendant failed to furnish the details of the property after measurement and survey and what was supplied was the prior title deed for preparing the sale agreement. If the plaintiff was a prudent man who intended to purchase the property with the real intention to do so, definitely he would have verified the prior title deeds and insisted for a proper encumbrance certificate and document to prove payment of tax. 23. The plaintiff has not given any explanation as to why he obtained a loan from the very same establishment where he is a shareholder, for the alleged payment of money to the defendant as earnest money. Out of the amount of Rs.4.40 lakhs, Rs.3.50 lakhs is shown as earnest money paid to the defendant. This also is unusual, going by the total price of the property. He is conducting a Press in Thrissur town itself. Even though it is argued by the learned Senior Counsel for the plaintiff that actually he RFA No.668/2008 -23- wanted the property for immediate residence, no details regarding the enquiries made with regard to the property have been stated in the plaint or in the deposition. It is therefore rather unusual for the plaintiff to enter into a loan transaction for the purpose of execution of an agreement for sale. This is significant since he has not produced the passbook to show the loan transaction or the details of payment of an amount less than Rs.1 lakh towards the said loan. 24. In the loan application, Ext.X1 submitted by the plaintiff his monthly income is shown as Rs.6,000/-. As we have already noted, column 16 regarding the security property has been kept unfilled. The practice of the Kury company in granting loans is evident from the evidence of P.W.1 as well as the documents relating to the sanctioning of loan to the defendant in the year 1997 (Ext.X11). They have been granting the loan after getting security of the property. Admittedly, going by the evidence of P.W.1 and that of P.W.2 and D.W.1, it can be seen that the title deed of the property was surrendered before the Kury company for sanctioning of loan in favour of the defendant in the year 1997. Why such a practice was not insisted when the plaintiff applied for loan, is not clear from his pleadings or in his RFA No.668/2008 -24- oral evidence. Of course, there is a note in the loan application submitted by the plaintiff that after the execution of the sale deed pursuant to the agreement, the same will be accepted as mortgage deed. No reason/explanation is attributed by P.W.1 as to why the regular practice of accepting security was relaxed in favour of the plaintiff. Learned Senior Counsel for the plaintiff submitted that a promissory note was executed by the plaintiff. But when we consider the plea of the defendant along with the attendant circumstances, the same is significant. Along with the loan application of the defendant, Ext.X11, there is a memorandum of deposit of title deeds in respect of the very same property which is absent in the case of the plaintiff's document, Ext.X1. Any other property of the plaintiff has not been obtained as security for the transaction, which also is unusual. 25. The oral evidence of P.W.1 in the cross examination will show that in 1996 the defendant approached Nadakkavu Kuries & Loans (P) Ltd. for a loan. Therefore, the background of execution of Ext.B1 is clear from the evidence of P.W.1 itself. He has stated that the defendant approached him in the year 1996 for getting money and for disbursing the loan amount, an agreement for sale was executed in favour of the Chairman of the Kury RFA No.668/2008 -25- company as Ext.B1 which is a copy of the original agreement. Admittedly, the original of Ext.B1 was a registered one as No.3316/1996. No document has been executed, going by the evidence of P.W.1, for cancelling the same and they did not take any steps for specific performance of the agreement also. P.W.1 clearly admitted that on payment back of the entire loan amount by the defendant, the transaction was treated as closed and according to him, the only formality for closure was return of the document of title surrendered by the defendant. According to him, this was the practice being adopted by them. Even his evidence will show that in Ext.B1 the price of the property was shown as Rs.5 lakhs. The defence case that only by way of additional security Ext.B1 was executed as an agreement for sale, is probable. 26. The other circumstance relevant is that at the time of execution of Ext.A1, the defendant was having a loan transaction with Nadakkavu Kuries & Loans (P) Ltd. and the loan was sanctioned on 19.9.1997 to the tune of Rs.2.5 lakhs. The loan application submitted by the defendant before the Urban Co-operative Bank, Thrissur will show that, after the submission of the loan application, along with the prior document, encumbrance RFA No.668/2008 -26- certificate, location sketch and tax receipts showing payment of tax for the residential building and the landed property, etc. have been produced. Opinion from the legal advisor was also obtained and a physical verification of the property was done by the Board of Directors. Finally, the market value of the property has been shown as Rs.15 lakhs and a loan to the tune of Rs.7.5 lakhs was sanctioned with a condition that the security property will be mortgaged and the wife of the defendant should also join as a party in the mortgage deed. Even though the plaintiff pleaded ignorance about the said transaction, it is clear from Ext.X13 that the said loan application is dated 31.7.1998, the same date on which the plaintiff also filed an application for loan, Ext.X1 before Nadakkavu Kuries & Loans (P) Ltd. The transaction with Urban Co-operative Bank, Thrissur could be gone through only after returning of the original document of title deed to the defendant. Even though in the oral evidence when examined as P.W.2, the plaintiff came with a case that he knew about the transaction only from the written statement, there is no case that the defendant tried to enter into such a transaction to defeat the agreement Ext.A1. Therefore, the entire circumstances under which these transactions have been entered into will RFA No.668/2008 -27- only lend credence to the case of the defendant. It cannot be taken on the face value that the plaintiff came to know about the transaction only from the written statement or the stand of P.W.1 that he was also not aware about it. 27. Learned Senior Counsel for the plaintiff submitted that the difference in price of the property in the years 1996 and 1998 shown respectively in Exts.B1 and A1 and showing of reduced price in 1998 have no significance. It is true that inadequacy of consideration as such is not a ground for refusing a decree for specific performance (para 63 of **Jain Narain Parasrampuria's case -** {(2006) 7 SCC 756} and Explanation (1) to Section 20 of the Specific Relief Act). But the question is not whether the defendant is entitled for the discretionary relief purely based on the inadequacy of price. 28. True that going by the dictum laid down in **Afsar Shaikh's case** (AIR 1976 SC 163) undue influence is a matter which has to be separately pleaded and proved by the defendant. Of course, learned Senior Counsel for the plaintiff relied upon the decision of the Apex Court in **Laxman Tatyaba Kankate's case** {(2010) 7 SCC 717} to contend that the conduct RFA No.668/2008 -28- of the defendant will disable the defendant from claiming the equity. According to the learned Senior Counsel, the defendant has not taken any interest in defending the case filed by the Chairman of Urban Co-operative Bank, Thrissur for realising the loan amount and the plaintiff has really been taking strenuous efforts to pay off the debt. It is also submitted that actually, pursuant to the ex-parte decree passed earlier in the suit the document of sale has been executed and the defendant has caused unreasonable delay in pursuing the proceedings before the court below. Of course, it is true that based on the ex-parte decree the plaintiff has remitted the amount of balance consideration, but the said ex-parte decree was set aside by the court below and thereafter the defendant filed a written statement and then the parties went into trial. Therefore, anything that has happened based on the ex-parte decree cannot help the plaintiff and based on that the plaintiff cannot seek for equity before this Court. The subsequent events pointed out by the learned Senior Counsel for the plaintiff and also highlighted in the argument notes that the plaintiff has been defending the case before the Debt Recovery Tribunal by filing S.A. No.372/2010 which is still pending and has filed an impleading application RFA No.668/2008 -29- in E.P.No.347/2008 in ARC No.1491/1999 on the file of the Sub Court, Thrissur, will also not help the plaintiff. These alleged steps taken by the plaintiff have not been brought on record by amending the pleadings. Still, those cannot be treated as subsequent events which will go to the root of the matter, as we have to find out whether Ext.A1 is a real transaction evidencing agreement for sale. Therefore, the said steps cannot turn the scale in favour of the plaintiff. 29. Herein, the price variation in 1996 and in 1998, going by the two transactions, is significant and it is not a case of inadequacy of consideration at all. In 1996 when Ext.B1 was executed between the Chairman of Nadakkavu Kuries & Loans (P) Ltd. and the defendant, the amount representing the value of the schedule property is shown as Rs.5 lakhs. The admission of the plaintiff himself that there has been price increase in the locality between 1996 and 1998, but a lesser price of Rs.4.40 lakhs is sown in Ext.A1. In the loan document of the defendant with Urban Co-operative Bank (Ext.X14), after verification of the property, the price is shown as Rs.15 lakhs which include the landed property and the residential building. Significantly, they have sanctioned an amount of Rs.7.5 lakhs on RFA No.668/2008 -30- the security of the very same property. This is a significant circumstance in assessing the real nature of the transaction, Ext.A1. 30. It is settled law that the jurisdiction of the court under Section 20 of the Specific Relief Act to decree specific performance is discretionary and the court is not bound to grant relief merely because it is lawful to do so. The discretion will have to be exercised on sound judicial principles. The court will have to assess the conduct of the parties at the time of entering into the contract. It will have to consider the other circumstances under which the contract was entered into. If in that process it is seen that the contract gives the plaintiff an unfair advantage over the defendant, the court can exercise the discretion not to grant specific performance even if the agreement is a lawful one. 31. In **Mathew v. Kuruvila** (1988 (1) KLT 7) the Apex Court has held as follows in para 14, while considering the true scope of Section 20 of the Specific Relief Act: “14. S.20 of the Specific Relief Act, 1963 preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because RFA No.668/2008 -31- it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The Court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff...........” 32. Herein, therefore, it can be seen from the evidence adduced by both sides that the defendant has been indebted to Nadakkavu Kuries & Loans (P) Ltd. at the time of execution of the agreement on 10.8.1998. He had applied for another loan from the Urban Co-operative Bank, Thrissur for an amount of Rs.7.5 lakhs before the said date itself. Therefore, it cannot be taken as normal that he will go for another transaction by way of sale of the property for a lesser price of Rs.4.40 lakhs, as the very same property has been offered as security for the first loan taken from Nadakkavu Kuries & Loans (P) Ltd. and the second loan availed from Urban Co-operative Bank, Thrissur. The position of the defendant at that point of time was of a debtor. This is a significant circumstance which goes in favour of the defendant, as otherwise the plaintiff will be getting an undue advantage if the specific performance of the agreement is allowed. The probabilities of the case of the defendant is evident from the fact that the plaintiff has lend his name for the transaction in question, that too RFA No.668/2008 -32- without verifying any of the prior title deeds of the property and without insisting for encumbrance certificate or evidence for payment of tax. If he is a prudent purchaser, he will definitely insist for furnishing of prior documents, since the recital in Ext.A1 itself shows that various release deeds are stated to have been executed by different parties in favour of the defendant. This is especially so, since the argument of the learned Senior Counsel for the plaintiff itself was that the plaintiff was in need of a residential building. Nobody will usually enter into a transaction without verifying the prior title deeds. 33. No reason is attributed by the plaintiff to obtain a loan for payment of the purchase price. He is stated to have paid a large share of the amount to the defendant as earnest money out of the total loan amount received by him This is quite unusual in the way in which the transaction has been entered into. He has not adduced any evidence to show that he has paid back the said loan amount. True that the defendant has also not adduced any evidence to show that he has paid the amount payable to Nadakkavu Kuries & Loans (P) Ltd. towards the loan transaction, from the amount sanctioned by Urban Co-operative Bank, Thrissur, but that cannot RFA No.668/2008 -33- help the plaintiff at all. The fact that Nadakkavu Kuries & Loans (P) Ltd. has not insisted for any security by way of surrender of the title deed of the property when the loan was sanctioned in favour of the plaintiff, is significant. Normally, they would not have given back the document of the defendant since the very same property is shown as security. This also lends credence to the acceptability of the circumstances pleaded by the defendant that he had informed Nadakkavu Kuries & Loans (P) Ltd. that he wants the document back for availing loan from Urban Co-operative Bank, Thrissur. The production of the document alone will help him for obtaining a loan from the said bank. If actually the property had to be treated as security for the alleged loan transaction of the plaintiff, then it would not have been returned to the defendant by Nadakkavu Kuries & Loans (P) Ltd., since as on 10.8.1998 only Ext.A1 has been executed and the parties had not proposed to execute a sale deed on the said date. Therefore, the stand of the plaintiff that the document was returned back for enabling the defendant to execute the sale deed has no real credence. 34. Thus, it can be safely concluded that the defendant who was a debtor for a long time to Nadakkavu Kuries & Loans (P) Ltd. was under RFA No.668/2008 -34- pressure to execute Ext.A1 and thus, we are of the view that the entire circumstances and the evidence will only support the case of the defendant. All the circumstances discussed above, when taken together, will lead to the conclusion that the document Ext.A1 is only executed by way of additional security to a transaction of loan, and not really intended as an agreement for sale. 35. In the light of the above, the relief of specific performance being only discretionary, we are of the view that the discretion has to be exercised in favour of the defendant/appellant. The court below has not considered any of these circumstances while granting the decree. It has only gone by the proof of execution of Ext.A1 and the fact that the document Ext.X1 will prove the different transactions. We therefore allow the appeal and the suit is dismissed in reversal of the decree granted by the court below. The parties will bear their costs in the appeal and in the suit. ## **(T.R.RAMACHANDRAN NAIR, JUDGE)** ## **(K. ABRAHAM MATHEW, JUDGE)** **kav/**