Atma Ram vs Palas Ram and Another

A.L. Vaidya, J.—The Plaintiff-Respondent preferred a suit for specific performance of the contract dated 24th November, 1977, which the Defendant-Appellant executed in his favour. It has been pleaded in the plaint that on 24th November, 1977 the Plaintiff transferred the suit land in favour of the Defendant through a registered sale deed (Ex.PA) for a sum of Rs. 3,500/- and on that very day an agreement was executed by the Defendant in favour of the Plaintiff whereby it was agreed that the Plaintiff shall have the right to re-purchase the suit land from the Defendant for a sum of Rs. 3,500/- within fifteen years of the said date. According to the Plaintiff, within the aforesaid stipulated period he asked the Defendant to receive the said amount of Rs. 3,500/- and re-convey the suit land to him, as agreed, but the Defendant did not accede to that request. Hence, the suit for specific performance was filed.

The Defendant-Appellant in his written statement denied the execution of the agreement for re-sale of the land in favour of the Plaintiff. It was also pleaded that agreement as it stood was not legally operative and was void. According to the Defendant-Appellant, he had spent Rs. 1,500/- on the improvement and was therefore, entitled to get the same besides the alleged sale consideration, in case the suit of the Plaintiff was to be decreed.

The parties were put to trial on following issues by the trial court:

Whether the Defendant executed agreement mark ''X'' dated 24.11.77 in favour of the Plaintiff, as alleged? OPP.

If issue No. 1 is proved whether the agreement mark ''X'' dated 24.11.1977 was for consideration? OPP

Whether the agreement in suit is invalid and un-enforceable and infructuous as alleged? OPD.

Whether the Defendant has effected improvements on the suit land? If so to what extent and to what effect? OPD.

Relief.

Issues No. 1 to 3 were decided in favour of the Plaintiff and under Issue No. 4 it was held that Defendant was entitled for additional sum of Rs. 1,000/- on account of improvements made by him on the suit land. The trial court, as such, passed a decree for specific performance of the contract, on the condition of payment of improvement charges amounting to Rs. 1,000/-.

The aforesaid judgment and decree were assailed in an appeal, before the first Appellate Court, on various grounds. The first Appellate Court after hearing the parties, dismissed the appeal and modified the decree under appeal and suit of the Plaintiff for specific performance of the agreement to sell was decreed on the condition that the Plaintiff shall deposit sale consideration of Rs. 3,500/- in the trial court within two months from the date of the decree and immediately thereafter the Defendant shall execute the sale deed in favour of the Plaintiff.

The aforesaid judgment and decree have been assailed in the present appeal on various pleas.

The learned Counsel for the parties have submitted their arguments and the entire record has also been scrutinised by this Court.

The learned Counsel for the Appellant has made three pronged attack assailing the decree under appeal. Learned Counsel''s submission has been as under:

(i) That the agreement for re-sale of the suit land in favour of the Plaintiff, executed on 24th November, 1977 was not legally enforceable, as the agreement was void and not a legal one.

(ii) According to the Defendant, the Plaintiff Sh. Bhagat Ram was not having cordial relations with his son and in order to deprive him of the suit land, the alleged agreement was executed with the sole purpose that in case the son preferred any suit for pre-emption, in that event through this agreement, the suit for pre-emption could be defeated by getting this property through re-sale.

(iii)The circumstances established 1n the present case do not warrant the exercise of discretion in favour of the Plaintiff for decreeing the suit for specific performance.

Ex.PB. is the agreement, alleged to have been executed by the Defendant Atma Ram, in favour of the Plaintiff Sh. Bhagat Ram pertaining to the suit land. The Defendant in his pleadings, has denied execution of the sale agreement which otherwise stood legally established.

Plaintiff Sh. Bhagat Ram in order to prove this agreement Ex.PB on record, examined himself and other witnesses. He deposed on oath while appearing as PW-1 that Defendant executed the alleged agreement (Ex.PB) in his favour and signed the same in his presence on 24th November, 1977. PW-2 Sh. Dila Ram is the scribe of the sale deed Ex.PA and of the agreement Ex.PB, who has proved execution of this agreement by deposing that he scribed the same at the instance of the Defendant who signed Ex.PB in- his presence. Defendant himself when examined on oath stated regarding this agreement that when he purchased the suit land at that time no agreement was executed by him, but he further added that the land could be taken back. However, according to the Defendant, Plaintiff at that time represented that Plaintiff was not having cordial relations with his son and he was fearing that he may not file a suit for pre-emption. During the cross-examination this witness has been very specific in deposing that it was correct that Ex.PB was scribed but no signatures were affixed but then again said he did not remember. However, he further added that on the day when the sale deed was executed this agreement was also executed. He also stated that it was correct that the agreement Ex.PB was handed over by him to the Plaintiff. He has been avoiding to give reply whether he signed this agreement. On the basis of the evidence examined by the parties, it stood established that the agreement (Ex.PB) was executed by the Defendant in favour of the Plaintiff on 24th November, 1977 and on the basis of this agreement it was agreed that in case Bhagat Ram required this land within 15 years, for his own need, the Defendant through a sale deed shall re-convey the same in his favour by receiving an amount of Rs. 3,500/- which amount has been paid by the Defendant to the Plaintiff on that very day, as the sale price of the suit land. There were other conditions also, referred therein.

Ex.PA. is the copy of the sale deed whereby the suit land was transferred by the Plaintiff in favour of the Defendant. This sale deed was executed on 24th November, 1977. Plaintiff sold the suit land as he required some money for his household expenditure. In a way the fact remains that the agreement to sell was executed on that very day by the Defendant in favour of the Plaintiff, which agreement on record is Ex.PB.

It has been very forcefully contended on behalf of the Defendant-Appellant that this agreement even if was signed by the Defendant alone, can be said to be unilateral agreement and under the Contract Act, this document would only mean a proposal made by the Defendant in favour of the Plaintiff and, according to the learned Counsel, as there is nothing on record to suggest that this proposal has been accepted by the Plaintiff, this agreement will not exist in the eye of law. It is not so simple a matter as has been contended on behalf of the Appellant.

It is correct that the agreement has not been signed by the Plaintiff, but the Defendant in his statement very specifically stated, as has been referred to above, that this agreement Ex.PB after the execution was delivered by him to the Plaintiff. At this stage, Section 4 of the Contrast Act can be safely referred, which provides that communication of a proposal is complete when it comes to the knowledge of the person to whom it is made. It has also been provided in this very Section that communication of an acceptance . is complete as against the proposer when it is put in a course of transmission to him, so as to be out of the power of the acceptor. It has also been provided that the communication of an acceptance is complete as against the acceptor, when it comes to the knowledge of the proposer. An illustration, has been provided in the aforesaid Section of the Contract Act that A proposes, by letter, to sell a house to B at a certain price. The communication of the proposal is complete when B receives the letter. In the present case, Defendant admitted in his statement that whatever proposal he made in the agreement Ex.PB, he handed over the same to the Plaintiff and the Plaintiff on the basis of the same by accepting this proposal filed the suit. Thus, in the aforesaid background, it cannot be said atleast by the Defendant-Appellant that Ex.PB was not lawful agreement. On the other hand, its execution in accordance with law has been proved and the Defendant has tried to evade the questions, regarding its execution, which conduct of the Defendant would not be praise worthy.

On the other hand, learned Counsel for the Plaintiff-Respondent has relied upon Rakhama Sitaram Ghadge Vs. Laxman Sitaram Ghadge and Another, wherein it has been held that an agreement to reconvey land to the vendor at any time on repayment of the sale price cannot be said to be void on ground of absence of mutuality and is specifically enforceable. There is absolutely no dispute to this proposition. The same principle is envisaged in AIR 1967 Mad 375 Vazhakulangarayil Safiya Bi and Anr. v. Arivur Abdul Shukoor Sahib.

Thus, on the basis of the aforesaid circumstances present in this case the execution of the agreement for sale Ex.PB has been legally established and it cannot be said that this agreement is void as the proposal has not been accepted, as has been argued on behalf of the Appellant.

It has been the case of the Defendant-Appellant that the Plaintiff was not having cordial relations with his son and, therefore, this agreement Ex.PB. was executed in order to avoid any suit for pre-emption, which could have been filed by the son against the father in respect of the aforesaid sale. It has been contended in this behalf that actually the Plaintiff had absolutely no interest for getting this property back on account of this agreement, which was executed only to defeat any right of pre-emption, held by the son of the vendor, on account of the strained relations between father and son. Admittedly, son did not file any suit for pre-emption and according to the Defendant-Appellant, there was no necessity for the Plaintiff to have filed a suit for specific performance, in the aforesaid background. It has been contended that the Plaintiff appears to have developed some greed for the land which forced him to file the present suit otherwise as per facts established during the trial, he had absolutely no right or cause which led to the filing of the present suit.

The Defendant while appearing as his own witness, has supported his aforesaid case on oath.

The Plaintiff examined PW-2 Sh. Dila Ram, who scribed the sale deed Ex.PA as well as the alleged agreement Ex.PB. He has proved execution of both the documents. During the cross-examination, this witness very specifically deposed that the sale deed was read over by him to Sh. Bhagat Ram, who after admitting the same to be correct signed the same. He further deposed that the Plaintiff wanted that the land may not be taken back by his son and , therefore, agreement Ex.PB. was executed. When this witness was, allowed to be cross-examined on behalf of the Plaintiff he stated that he had heard Atma Ram and Bhagat Ram talking with each other and representing that the agreement was executed for the purpose so that son of vendor may not file a suit for pre-emption. However, he has stated that he did not have any talk on this matter with any party. He further added that this talk regarding pre-emption was being held between the parties when he was scribing the agreement Ex.PB.

Plaintiff when cross-examined or the point of pre-emption, as referred to above, has denied that fact. However, on the basis of the circumstances, referred to above, the likelihood of the agreement Ex.PB having been executed on the ground, referred to'' above, could not be ignored.

The agreement to sell was executed on 24th November, 1977 and the suit was filed in September, 1983. In the plaint, it has been pleaded that on 24th November, 1977 the Plaintiff was under financial pressure and accordingly he sold the land at a concessional price, as the Defendant agreed for re-transfer, but the sale deed Ex.PA does not help in this regard wherein it has been recorded that the vendor required the money for his personal expenditure and there was nothing that he was under the financial crises of bank loan, which has been stated to be so by the Plaintiff while appearing as PW-1. Otherwise also, in case the Plaintiff wanted re-conveyance of this land in his favour, it could have been so provided in Ex.PA itself. To execute an independent agreement in this behalf only supported defence version, that it was so done in order to defeat any proposed pre-emption suit to be filed by the son. Re-sale in favour of the vendor would be in case need arose (AGAR JARURAT PARE) as per term of Ex.PB. What was the need, has neither been, referred in the agreement or in the pleadings at all.

Section 20 of the Specific Relief Act, lays down at the outset that the jurisdiction to decree specific performance is discretionary. Section sets out this discretion. This provision says that the Court is not bound to grant such relief merely because it is lawful to do so. Such a discretion, however, is not to be arbitrarily exercised. Section 20 also provides that the discretion must be sound and reasonable and guided by judicial principles. Section then specifies in three successive paragraphs circumstances under the first two of which the Court may properly exercise a discretion not to decree specific performance, while under the third, it may appropriately give a decree. It may be pointed out that the circumstances stated in the said three provisions are merely illustrative of the general principle embodied in the first, paragraph of the section and are not intended to be exhaustive. It is well settled that it would neither be possible nor desirable to lay down any hard and fast rules regarding the principles en which discretion can be exercised. Nor it is possible to exhaustively define the circumstances in which the equitable relief could or could not be granted. Usually specific performance is allowed in case of immovable property, but such presumption is not absolute and no one can claim this equitable relief as a matter of right and that being so the Court also would not grant it as a matter of course and each case has to be considered in the light of its own facts and circumstances.

For the sake of convenience Section 20 of the Specific Relief Act is being reproduced hereunder:

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 the 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 which he did not foresee, whereas its non-performance would involve no such hardship on the Plaintiff;

(c) where the Defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inevitable 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 CL.(a) or hardship within the meaning of Cl.(b)

Explanation 2. - The question whether the performance of a contract would involve hardship on the Defendant within the meaning of Cl.(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 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 other party.

In AIR 1987 SC 2329 Parakunnan Veetill Joseph''s Son Mathew v. Nedumbara Kuruvila''s Son and Ors., para 14 is relevant, which is being reproduced hereunder:

Section 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 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. The High Court has failed to consider the motive with which Varghese instituted the suit. It was instituted because Kuruvila could not get the estate and Mathew was not prepared to part with it. The sheet anchor of the suit by Varghese is the agreement for sale Ex.A.1 Since Chettiar had waived his rights thereunder, Varghese as an assignee could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance.

Thus, taking note of the aforesaid provision of law, the facts brought on record during the trial of the suit, if appreciated in a legal and proper manner would disentitle the Plaintiff to claim relief of specific performance, asked for by him.

The totality of the circumstance established during the trial of the suit clearly indicated that likelihood of the father defeating the right of son for pre-emption could not be ruled out and it was with that motive in mind that a separate agreement was executed on that very day. The fact of pre-emption suit could not have been referred in the agreement itself so that the son could not know about such arrangement having made by the father. The suit land is only 1 bigha 15 biswas. It is not a big chunk of land which would have in any way affected adversely or improved the financial condition of the Plaintiff. Moreover, the Plaintiff kept on waiting about seven years for filing this suit without disclosing as to what was the need for filing the suit, as per the condition of agreement Ex.PB. The Plaintiff has stated on oath before the Court below that he had to sell this land as he was to pay back some loan to the bank, which fact has not been established or so recorded in the sale deed, as pointed out earlier. This Plaintiff, during his cross-examination deposed that he sold eight bighas of land in favour of one Master Parma Nand. He further added that this land was sold for Rs. 15,000/- and not for Rs. 8,000/-. He further added that only last year he also sold some land in favour of Master Chet Ram. He also added that he had effected two sales of the land in favour of the Defendant prior to the sale under reference. He has admitted that he has evicted (BE DAKHAL) his own son Paras Ram.

Thus, the revelation made by the Plaintiff himself coupled with other circumstances already discussed, do not warrant at all favourable exercise of discretion for passing a decree for specific performance. It is a case where Defendant-Appellant since 1977 till today has been in occupation of the suit land on the basis of sale and the rights so enjoyed cannot be taken away by decreeing the suit, especially in view of the peculiar circumstances as detailed above having come to light in this case.

In view of the foregoing reasons, the present appeal succeeds and the judgment and decree passed by the two courts below are set aside and as a consequences thereof suit of the Plaintiff-Respondent is dismissed. However, the parties are left to bear their own costs throughout.