Mallappa vs Balappa

B.V. Nagarathna, J.—1. The defendant in O.S. No. 157/2008 has preferred this Second Appeal assailing the judgment and decree dated 17.07.2015 passed in R.A. No. 2/2012 by the Senior Civil Judge and JMFC, Raibag, by which, the judgment and decree of the Principal Civil Judge & JMFC, Raibag in O.S. No. 157/2008 dated 09.12.2011 has been modified and the suit for specific performance filed by the respondent/plaintiff has been decreed.

For the sake of convenience, parties shall be referred to, in terms of their status before the trial Court.

The respondent/plaintiff filed a suit seeking relief of specific performance of agreement dated 26.04.2007. The said agreement pertained to agricultural land bearing R.S. No. 39/1A measuring 3 acres 15 guntas of Devapuratti village. According to the plaintiff, the defendant agreed to sell the suit land for a sum of Rs. 1,60,000/- and executed a registered agreement on 26.04.2007. On that day itself he received advance sale consideration of Rs. 1,36,000/-. The balance consideration of Rs. 24,000/- was to be paid at the time of completion of sale transaction on or before 26.04.2008. It is the case of the plaintiff that he was ready to pay balance amount and requested the defendant to execute sale deed, but the defendant for one reason or the other postponed execution of the sale deed. That the plaintiff was every ready to perform his part of agreement dated 26.04.2007. But the defendant has failed to do so. Therefore, the plaintiff requested defendant several times to execute sale deed, but the defendant did not come forward to do so. Plaintiff got issued legal notice calling upon defendant to be present before the Sub-Registrar''s Office, Raibag, on 26.4.2008 to execute sale deed by receiving balance consideration of Rs. 24,000/-. But the defendant failed to accept notice and failed to perform his part of contract. Hence, plaintiff filed a suit seeking the relief of specific performance of contract dated 26.4.2007.

On receipt of suit summons and court notice from the trial court, the defendant appeared and filed his written statement denying the plaint averments. He contended that the defendant had not executed any agreement to sell the suit property in favour of the plaintiff or any other person. That the defendant is a Class-III contractor doing contract business and he is financially sound. There was no need to execute agreement to sell in favour of the plaintiff. Defendant''s family was never in financial difficulties. That the suit is filed on false allegations. That the defendant has not executed any agreement in favour of the plaintiff. Therefore, the question of plaintiff requesting defendant to execute sale deed or to issue legal notice to him did not arise. That the plaintiff has not approached the court with clean hands but he has suppressed the material facts and dragged the defendant to Court of law without there being any cause of action. According to the defendant suit was not maintainable. Therefore, he sought for dismissal of the suit.

On the basis of the above pleadings, the Trial Court framed the following issues for its consideration:

"1. Whether the plaintiff proves that, the defendant being the owner of suit property has agreed to sell the same to plaintiff for a sum of Rs. 1,60,000/- and executed agreement of sale on 26.4.2007 by receiving advance amount of Rs. 1,36,000/-?

Whether the plaintiff proves that, the defendant has agreed to execute the sale deed on or before 26.4.2008?

Whether the plaintiff proves that, he was/is ever ready and willing to perform his part of contract?

Is plaintiff entitled for the reliefs prayed for?

What order or decree?"

Plaintiff examined himself as PW.1 and two witnesses as PWS.1 and 3. He produced five documents which were marked as Ex. P.1 to P.5(b). Defendant examined himself as D.W.1 and one more witness was examined as D.W.2. He produced Ex. D.1 which is a Cancellation Deed of agreement to sell.

On the basis of the said evidence, the Trial Court answered issue Nos. 1 and 2 in the affirmative, issue No. 4 partly in the affirmative and partly in the negative, issue No. 3 in the negative and decreed the suit in-part by holding that the plaintiff was not entitled to the relief of specific performance of the contract dated 26.4.2007. That he was entitled to refund of earnest money of Rs. 1,36,000/- with interest at the rate of 9% p.a. from the date of agreement till realisation. Also defendant was directed to refund the earnest money of Rs. 1,36,000/- with interest at 9% p.a. and pay costs of the suit within three months from the date of the decree.

Being aggrieved of the judgment and decree dated 9.12.2011, plaintiff preferred R.A. No. 2/2012 before the First Appellate Court, which on hearing the learned Counsel for the respective parties, raised the following points for its consideration:

"1. Whether the Trial Court has not properly appreciated the oral and documentary evidence produced by the appellant while considering the Ex. P.3?

Whether the judgment and decree of the Trial Court is perverse and illegal while answering the issue No. 3?

What order or decree?"

It answered point Nos. 1 and 2 in the affirmative and set aside the judgment and decree of the trial court dated 9.12.2011 by decreeing the suit of the plaintiff and directed defendant No. 1 to execute registered sale deed as per agreement at Ex. P.1 within two months from the date of the judgment by receiving balance sale consideration of Rs. 24,000/- and that on failure of defendant to execute the sale deed, the plaintiff shall have the liberty to get the sale deed registered through process of the Court.

Being aggrieved by the judgment and decree of the First Appellate Court dated 17.7.2015 the defendant has preferred this Second Appeal.

I have heard learned Counsel for the appellant and learned Counsel for the respondent-Caveator and perused the material on record.

It is contended on behalf of the appellant that the I Appellate Court was not right in decreeing the suit filed by the plaintiff. He contended that the defendant had earlier executed an agreement to sell the very same property with plaintiff''s brother on 28.04.2006 i.e. Ex. D.1. That agreement was executed on 26.04.2007. Both the aforesaid agreements are registered instruments. On 26.04.2007 Ex. P.1 is stated to have come into existence. In fact, the defendant had no reason to execute an agreement with the plaintiff. The reasons for the defendant, plaintiff, plaintiff''s brother Kenchappa and the witness i.e. Shabu Bhimappa Alagawadi, for being present in the Sub-Registrar''s Office was to cancel the agreement dated 28.04.2006-Ex. D.1, as that agreement was a registered instrument and it had to be cancelled before the Sub-Registrar. There was no intention on the part of the defendant to sell the suit property to the plaintiff herein. In fact, P.W.2 who has attested Ex. P.1 has stated that he was not aware that he was attesting Ex. P.1 agreement to sell. Coming into existence of Ex. P.1 was not known to the defendant. Ex. P.1 is also a registered instrument but there was no intention on the part of the defendant to alienate the suit property to the plaintiff. In fact the defendant who had earlier entered into an agreement to sell the suit property to plaintiff''s brother on 28.4.2006 was in the Sub-Registrar''s Office to cancel that agreement. He, therefore, contended that there was no agreement between the parties i.e. between defendant and plaintiff to sell the suit property as per Ex. P.1. The First Appellate Court could not have granted specific performance of that agreement. He contended that the trial court was justified in not granting decree of specific performance and granting alternative relief of repayment of Rs. 1,36,000/- with interest at the rate of 9% p.a. That the relief granted was justified in law as the trial court rightly did not exercise jurisdiction in favour of plaintiff herein. He also contended that defendant has only this property with him and no other property. That great hardship would be caused to the defendant if the suit is decreed. Learned Counsel, therefore, contended that substantial questions of law would arise in the appeal which may be admitted for a detailed hearing.

Per contra, learned Counsel for Caveator-respondent-1 supporting the judgment and decree of the First Appellate Court contended that there is no merit in the argument of the learned Counsel for the appellant. He contended that the defendant was a person who had entered into three agreements. First on 28.4.2006 with the plaintiff''s brother agreeing to sell the very same property to him. Second agreement was on 26.4.2007 when the defendant cancelled the agreement dated 28.4.2006 Ex. D.1. He did not stop at that. Defendant entered into agreement to sell with the plaintiff as per Ex. P.1. All the three instruments are registered before the Sub-Registrar. Sale consideration paid was Rs. 1,60,000/-. Defendant accepted the sum of Rs. 1,36,000/- on the date of the agreement. The balance sale consideration was Rs. 24,000/-. The sale was to take place in a year''s time. When the plaintiff repeatedly requested defendant to accept the balance sale consideration and execute sale deed, defendant refused to do so. Legal Notice was issued, but he did not accept the legal notice. The plaintiff having no other alternative was constrained to file the suit seeking specific performance of the agreement dated 26.4.2007. The Trial Court was not justified in holding that the plaintiff was not ready and willing to perform his part of the contract. Major portion of the sale consideration was already accepted by the defendant on 26.4.2007 when the agreement was entered into by him in favour of the plaintiff and only Rs. 24,000/-remained to be paid. Therefore, the plaintiff was constrained to file the appeal assailing the judgment of the trial court before the I Appellate Court, which rightly has decreed the suit. Learned Counsel contended that no substantial question of law would arise in the appeal and the appeal may be dismissed in limine.

Having heard learned Counsel for the parties and on perusal of the material on record, it is noted that defendant is a person who has entered into three transactions all in respect of the suit schedule property. The first, was dated 28.4.2006 when the defendant entered into an agreement to sell the suit property to the plaintiff''s brother Kenchappa. Thereafter, on 26.4.2007, the defendant executed Ex. D.1 which is a cancellation deed which was registered in the Office of the Sub-Registrar. Certified copy of the cancellation deed is made available by the learned Counsel for the appellant during the course of submissions. It is noted that the suit property was to be sold for a sum of Rs. 1,50,000/- to plaintiff''s brother by the defendant. That he had accepted Rs. 1,22,400/- as the advance sale consideration. Balance was to be paid at the time of registration of the sale deed. But on account of cancellation of the agreement to sell dated 28.4.2006, the defendant agreed to refund the amount of Rs. 1,22,400/- to plaintiff''s brother Kenchappa. The cancellation instrument is executed before the Sub-Registrar at Raibag. Defendant did not stop at that. He entered into an agreement to sell with the plaintiff as per Ex. P.1. Consideration for the suit property was Rs. 1,60,000/-. According to Ex. P.1, certified copy of which is made available by the appellant''s Counsel, during the course of submissions, it is noted defendant had accepted Rs. 1,36,000/- as advance sale consideration. The balance amount of Rs. 24,000/- was to be paid on or before 26.04.2008 by which date the regular sale deed had to be executed by the defendant. Interestingly, P.W.2 witness to the cancellation deed Ex. D.1 is also one of the witnesses to Ex. P.1. That apart, the brother of the plaintiff, Kenchappa in whose name there was an agreement to sell dated 28.04.2006 and it was cancelled on 26.4.2007 vide Ex. D.1 is also a witness to Ex. P.1 and the witnesses remained in the Sub-Registrar''s Office until Ex. P.1 was executed. Therefore, the defendant, on cancellation of the agreement to sell dated 28.04.2006 made in the name of plaintiff''s brother, thereafter entered into an agreement to sell the same property to plaintiff by accepting Rs. 1,36,000/- as advance sale consideration. When the plaintiff requested the defendant to accept balance sale consideration of Rs. 24,000/- and to execute sale deed, defendant did not come forward to comply with his part of agreement. Therefore, there being breach in the agreement dated 26.4.2007 on the part of the defendant, plaintiff was constrained to file suit for specific performance.

Having regard to the pleadings, one of the issues raised before the Trial Court was with regard to the readiness and willingness on the part of the plaintiff to perform his part of the contract. On that issue i.e. Issue No. 3, the Trial Court held in the negative. The Trial Court answered Issue No. 3 in the negative by holding that the plaintiff did not have financial capacity, in other words, he was not ready to perform his part of contract. The trial court failed to note that out of Rs. 1,60,000/- being sale consideration, Rs. 1,36,000/- had been received by the defendant on the date of agreement to sell. A sum of Rs. 24,000/- only which is a minor portion of the sale deed had to be paid by the plaintiff. Merely because plaintiff did not have that amount in his bank account it could not be held that he had no financial capacity or readiness to perform his part of contract. Therefore, the Trial Court was not right in holding Issue No. 3 in the negative. But the first appellate Court on a reconsideration of evidence has concluded that the plaintiff was both ready as well as willing to perform his part of the contract. The same is noted from the pleadings as well as on reconsideration of the evidence. The First Appellate Court has also stated that a major portion of consideration had already been paid by the plaintiff and what remained to be paid was only Rs. 24,000/-. The plaintiff had got issued legal notice to the defendant in that regard. He had requested the defendant to accept balance sale consideration and execute the sale deed. It was the defendant who did not do so. Therefore, the First Appellate Court rightly held that the plaintiff was ready and willing to perform his part of contract and thereby rightly granted the relief of specific performance of the agreement to sell dated 26.4.2007 vide Ex. P.1 in favour of the plaintiff.

The other contention of learned Counsel for appellant is based on the plea of hardship. Under Section 20 of the Specific Relief Act, 1963, question of hardship in the performance of contract has to be considered in the context of hardship not being foreseen at the time of entering into the agreement to sell. It is not a simple case of hardship which has to be considered as under Section 20(2)(b) of the Act, hardship must be something which was not foreseen by the defendant at the time of execution of the agreement. In other words, hardship must have occurred subsequent to the execution of the agreement, in which event, the Court can exercise discretion not to decree the suit for specific performance. Such a situation of hardship has not been raised before the courts below. No evidence in that regard has been let in. The said plea has thus not been substantiated or fortified, in any manner. Therefore Section 20 of the aforesaid Act does not apply to the instant case.

I do not find any infirmity in the judgment of the First Appellate Court. No substantial question of law would arise in this appeal.

The appeal is hence dismissed.

Parties to bear their respective costs.

In view of dismissal of appeal, I.A.1/2016 is also dismissed.