H. Venkata Swamy and Others vs Jayamma and Others

N. Kumar, J.—This is the plaintiffs'' regular first appeal, against the Judgment and Decree of the trial Court, decreeing their suit for recovery of Rs. 3,00,000-00 with interest at 6% p.a. from the date of the suit till realization. However, refusing to grant the relief of specific performance of contract and also refusing to declare the compromise entered between the defendants in O.S. No. 443/2003 is not binding on the plaintiffs.

For the purpose of convenience, the parties are referred to as they are referred to in the original suit.

The subject matter of the suit is vacant land bearing Sy. No. 29/1, khata No. 35, I.H.C. No. 7/2000-2001, measuring 2 acres and 4.5 guntas situated at Doddanagamangala village, Konappana Agrahara Panchayat, Begur Hobli, Bangalore South Taluk. It is more particularly described in the schedule to the plaint and hereinafter referred to as "the schedule property".

Defendants 1 to 3 are the owners of the suit schedule property. They agreed to sell 2 acres 4 Ms guntas in Sy. No. 29/1. The Agreement was reduced to writing on 15.10.2002. The total consideration agreed upon is Rs. 16,68,875-00 at the rate of Rs. 7,90,000-00 per acre. A sum of Rs. 3,00,000-00 by way of cash was paid under the Agreement. It was agreed that a sum of Rs. 5,00,000-00 should be paid within a period of 5 months from 15.10.2002. The remaining balance sale consideration of Rs. 8,68,875-00 is to be paid within 6 months from the date of payment of the second instalment of Rs. 5,00,000-00. The case of the plaintiffs is that they were always ready and willing to perform their part of the contract. Defendants 1 to 3 were obliged to obtain the signatures of defendants 4 to 9 as consenting party. Defendants 1 to 3 did not get their signatures. The 3rd defendant has filed a suit in O.S. No. 433/2000, seeking confirmation of partition entered into on 02.11.1999 by metes and bounds, which fact was suppressed at the time of execution of the Agreement. In the said suit, the parties have entered into a compromise, under which only a lesser extent was allotted to the share of defendants 2 and 3, thus denying their legitimate right to the plaintiffs under the Agreement of Sale. Therefore, they wanted a declaration that the said compromise and the decree passed on it are not binding on them. As the defendants 1 to 3 could not obtain the signatures of defendants 4 to 9 as consenting parties, a sum of Rs. 5,00,000-00 agreed to be paid under the Agreement was not paid. In fact, the plaintiffs approached the said defendants on 12.09.2003 with total cash of Rs. 13,68,875-00 and demanded them to execute the Sale Deed. As they were not ready and willing to execute the Sale deed, a legal notice came to be issued on 13.09.2003 to defendants 1 to 3. No reply was sent. Therefore, the plaintiffs were constrained to file this suit for Specific Performance of the Agreement of Sale. The plaintiffs were put in possession of the schedule property under the Agreement. Therefore, their possession is protected under Section 53A of the Transfer of Property Act [hereinafter referred to as "the T.P. Act" for short].

After service of summons, the defendants entered appearance, filed their detailed written statement contesting their claim. They deny execution of the Agreement. They contended that the plaintiffs did not perform their part of the contract, did not make payments in terms of the contract. The defendants 4 to 9 have no right over the suit schedule property. Therefore, the question of getting their signatures as consenting witness did not arise. They affirm the partition decree passed in O.S. No. 433/2000. They also contended that the Agreement of Sale is not registered and therefore, it is hit by Section 17-A of the Registration Act. Therefore, they sought for dismissal of the suit.

On the aforesaid pleadings, the trial Court framed the following issues:

"1) Whether plaintiffs prove that defendants have executed an agreement of sale dated 15.10.2002 agreeing to sell the schedule property for Rs. 16,68,875-00 and defendant No. 1 to 3 have received Rs. 3,00,000-00 towards earnest money?

2) Whether plaintiffs further prove that defendants No. 1 to 3 have received further amount of Rs. 5,00,000-00 towards earnest money in all, total amount of Rs. 8,00,000-00 towards amount of sale consideration?

3) Whether plaintiffs further prove that defendants No. 4 to 9 are consenting witnesses to the said agreement of sale.

4) Whether defendant No. 4 prove that plaintiff has not included all the properties and suit is bad for partial partition?

[Deleted as per order dated 06.02.2015.].

5) Whether plaintiffs prove that they always ready and willing to perform their part of the contract?

6) Whether plaintiffs are entitled for relief sought?

7) What order or decree?"

The plaintiffs examined the 1st plaintiff as P.W.1 and produced 15 documents, which are marked as Exs. P1 to 15. On behalf of the defendants, the 2nd defendant was examined as D.W.1 and the 3rd defendant was examined as D.W.2 and they also produced 8 documents, which are marked as Exs. D1 to 8.

The trial Court on appreciation of the aforesaid oral and documentary evidence on record held that the plaintiffs have established execution of the Agreement of Sale. However, they have failed to establish payment of Rs. 5,00,000-00 in terms of the Agreement within 5 months from the date of the Agreement. It also held that the plaintiffs have failed to prove that defendants 4 to 9 are consenting witnesses to the said Agreement. It declined to answer issue No. 4 as did not arise for consideration in the suit. It also recorded a finding that the plaintiffs were not ready and willing to perform their part of the contract. Ultimately, it dismissed the suit for the relief of specific performance and decreed the suit for refund of Rs. 3,00,000-00 with interest. Aggrieved by the said Judgment and Decree, the plaintiffs are in appeal.

Learned counsel for the appellants assailing the impugned Judgment and Decree contended that as the plaintiffs were put in possession of the suit property under the Agreement of Sale, they have invested huge amount and developed the suit property. Therefore, the trial Court committed a serious error in not taking into consideration the statutory provision and in dismissing the relief of specific performance. Secondly, he contended that defendants 4 to 9 are the daughters, whose signatures were necessary as consenting witnesses to the Sale Deed to be executed, obligation is on defendants 1 to 3. It is they, who did not perform the contract. Lastly, he contended that a collusive suit was filed and a decree was obtained behind the plaintiffs and it was not binding on the plaintiffs to any extent. The plaintiffs did not pay Rs. 5,00,000-00 because defendants 1 to 3 did not perform the contract and therefore, he submits that the findings of the trial Court that the plaintiffs committed breach of terms of the Agreement, the plaintiffs were not ready and willing to perform the contract and the plaintiffs have not paid Rs. 5,00,000-00 in terms of the Agreement of Sale is unsustainable and requires to be set aside.

Per contra, learned counsel appearing for the defendants supported the impugned Judgment and Decree.

In the light of the aforesaid facts and the rival contentions, the points that arise for our consideration are;

"1) Whether the findings of the trial Court that the plaintiffs were not ready and willing to perform the contract and therefore, they are not entitled to the relief of specific performance call for interference?

2) Whether the plaintiffs can claim any right in part performance of the Agreement under Section 53A of the T.P. Act?"

POINT No. 1: The facts are not in dispute. Defendants 1 to 3 entered into Agreement of Sale dated 15.10.2002 as per Ex. P15 for sale of the schedule property to the plaintiffs for a consideration of Rs. 16,68,875-00. A sum of Rs. 3,00,000-00 was paid under the Agreement, which is not in dispute. Within 5 months from the date of the Agreement, the plaintiffs were expected to pay another sum of Rs. 5,00,000-00, which is admittedly not paid. The balance consideration has to be paid at the time of registration within 6 months from the date of second instalment. Defendants 1 to 3 undertook to get the signatures of defendants 4 to 9 as consenting witnesses. Now, the evidence on record discloses that the plaintiffs have not paid Rs. 5,00,000-00 as per agreed terms. Defendants 1 to 3 contend that defendants 4 to 9 have no right in the schedule property and therefore their consent is not required. The plaintiffs have not produced any material on record to show that they were ready and willing to pay Rs. 5,00,000-00 within 5 months from the date of the Agreement or with the amount of Rs. 13,68,875-00, the balance consideration payable under the Agreement. They were not expected to produce before the Court the cash. When the plea of readiness and willingness is disputed by the defendants, an issue is framed in this regard and the burden of proving the said issue is squarely on the plaintiffs. Though they have not expected to pay the cash before the Court, they are expected to produce such documents, which are within their possession to show the availability of money with them to perform their part of the contract. Mere issue of a legal notice stating that they are ready with the balance sale consideration or entering into the witness-box and repeating those words is not proof of readiness and willingness. Ex. D1 is the copy of the legal notice, Ex. D2 is reply notice, Ex. D3 is postal receipt, Ex. D4 is reply notice, Exs. D5 and 6 are the copies of the acknowledgment, Ex. D7 is the certified copy of the order sheet in O.S. No. 433/2000, Ex. D8 is the compromise petition in O.S. No. 433/2000 and Ex. P1 is the copy of the legal notice. Exs. P2 to 7 are 6 postal receipts, Exs. P8 and 9 are 2 acknowledgements, Ex. P10 is the reply notice. Exs. P11 to 14 are 4 photos with negatives. Ex. P15 is the Sale Agreement. The said documents are not evidence of the plaintiffs readiness with the balance sale consideration. Therefore, the trial Court has rightly held that when admittedly Rs. 5,00,000-00 is not paid within 5 months from the date of the Agreement and the balance amount is not kept ready for payment within 6 months from the date of the second instalment, the plaintiffs have miserably failed to prove their readiness and willingness to perform their part of the contract. The said finding is based on material evidence and it cannot be found fault with. Accordingly, Point No. 1 is answered.

POINT No. 2: Insofar as application of Section 53A of the T.P. Act is concerned, no-doubt the plaintiffs on being objected to at the time of marking have paid duty and penalty under the Karnataka Stamp Act. However, the Parliament has introduced sub-Section 1(A) of Section 17 of the Registration Act by Act No. 48/2001, which came into force on 24.09.2001, wherein the registration of an Agreement under Section 53A is made compulsory and the document is not registered, it is declared that it shall have no effect for the purpose of said Section. Therefore, though there is an Agreement of Sale, possession is delivered in part performance, the plaintiffs have paid the duty and penalty under the Karnataka Stamp Act in view of Section 17(1)(A) it has no effect insofar as Section 53A of the T.P. Act is concerned. Therefore, the trial Court is justified in ignoring Section 53A of the T.P. Act while considering the case of the plaintiffs possession. In that view of the matter, we do not see any merit in this appeal. Accordingly, the appeal is dismissed. In the circumstances, I.A. Nos. 1 and 2/15 filed for temporary injunction do not survive for consideration and they are accordingly rejected.