Mugla (Since Deceased) through Lrs. and Others vs Ram Narain and Another

K. Kannan, J.—The following substantial questions of law arise for consideration in both the second appeals:-

Whether the decision regarding non-existence of mortgage between the same parties rendered in Suit No. 77 of 1976 constitute res judicata in the subsequent suit filed for specific performance where one of the items of consideration was the mortgage itself?

Whether the plaintiff was entitled to a discretionary relief of specific performance, having not come to the Court with clean hands as regards the recital of consideration in the sale agreement?

Whether the plaintiff had established his readiness and willingness to perform his part of the contract, especially when the suit had not been filed immediately when the time for performance had come about but was filed literally towards the end of the period of limitation?

The two appeals are connected and they are at instance of parties in the same suit. The appeal in RSA No. 705 of 1985 is at the instance of the defendant while the appeal in RSA No. 1595 of 1985 is at the instance of the plaintiff, both of them being aggrieved by the directions given in the decree for specific performance by the Appellate Court. The Appellate Court was reversing the decree of dismissal of the trial Court in the suit for specific performance. The plaintiff is aggrieved with the direction that the finding regarding the invalidity of mortgage in an earlier suit constituted a res judicata and a direction given by the Court below for paying the consideration of Rs. 16,000/- which was one of the items of consideration mentioned in the agreement. This amount was to be taken as constituting a discharge of the liability by the plaintiff to the defendant for the total amount of sale consideration as per the recitals in the sale agreement.

The suit for specific performance was filed at the instance of the plaintiff for enforcing an agreement of sale dated 08.03.1977 for a consideration of Rs. 22,000/-. As per the recitals in the agreement, the advance of Rs. 3,000/- had been paid on the same day and Rs. 16,000/- was to be adjusted against liability due by the defendant to the plaintiff under a mortgage dated 13.06.1974 and a balance of Rs. 3,000/- was to be paid before 30.03.1977. On the suit filed by the plaintiff for enforcement of his right under the agreement; the defence was that the plaintiff had earlier filed a suit for injunction claiming to be in possession under the mortgage dated 13.06.1974 and that suit had been dismissed on a finding that the mortgage was not true and that the property had not been put in possession of the property claimed by him. The defendant pleaded that finding regarding the invalidity of the mortgage constituted res judicata. The defendant''s further contention was that the period of enforcement of the agreement fell on 30.03.1977 but the suit had been filed on 17.03.1980 well beyond the period when the plaintiff was required to perform his part of the contract. The contention, therefore, was that the plaintiff had not been ready and willing to perform his part of the contract which is necessary requisite for getting the discretionary relief of specific performance.

The trial Court found that the issue specifically raised about the validity of the mortgage was concluded in the earlier proceedings itself and that the plaintiff had even failed to produce the document of mortgage to substantiate the validity of a mortgage or the proof of consideration which was recited in the agreement. The suit was dismissed. The Appellate Court reversed the finding to hold that even if the mortgage had not been proved, the item of consideration would stand substituted as a liability by the plaintiff to pay the amount in cash and the agreement having been proved, the plaintiff is entitled to decree for specific performance.

The second appeal is brought at the instance of both parties who are aggrieved for the reasons referred to already and the most crucial issue that would fell for consideration would be whether the decision rendered earlier in the suit for injunction filed by the plaintiff regarding the validity of mortgage will constitute res judicata. Learned counsel appearing on behalf of the respondent-plaintiff would point out that the earlier suit which had been dismissed was on a finding that identity of property which was the subject matter of suit was not established by reference to the recitals in the mortgage and therefore, the finding ought to be taken as not concluding the validity of the mortgage itself. The counsel would urge that the copy of the mortgage itself had been filed by the defendant thereby admitting the existence of the mortgage and therefore, it was irrelevant that the Court had earlier found that the mortgage was not true. I would find that in the previous case when the plaintiff was suing for injunction, the contention was that he had been put in possession of the suit property pursuant to the mortgage and therefore, the validity of mortgage and the claim to possession in respect of the property were substantial and direct issues for consideration and if the Court had held that the mortgage had not been established, it was not merely incidental but it was the requisite issue that the Court had to adjudicate upon for consideration of whether the plaintiff was entitled to relief of injunction or not. All the ingredients of Section 11 namely of the congruity of the document and parties and adjudication on merits. It had become final and therefore, I find that the plaintiff cannot pick holes on a reasoning adopted by the Court in earlier judgment and plead that the suit failed only because of his inability to prove the identity of the property and that the invalidity of mortgage as found already, ought not to be taken as final. Even his argument that the defendant himself had filed the registration copy of the mortgage could prove nothing, for validity of mortgage became an essential issue for consideration in the previous case and the dismissal had a direct bearing on a finding regarding an item of consideration itself.

Even for argument sake if the earlier decision was not to be taken as constituting res judicata regarding the validity of mortgage, the plaintiff had perforce to prove important item of consideration in the sale agreement namely of the liability of the defendant to pay Rs. 16,000/- under the document pleaded as going in partial discharge of the total consideration payable by the plaintiff under the sale to the defendant. The plaintiff had yet another opportunity to produce the document to substantiate the item of consideration as recited in the document. The plaintiff chose not to file the document for the reasons best known to him and in spite of an adverse finding given against him by the trial Court, the plaintiff had not given any explanation as to why he could not produce the original document of mortgage at the time of trial for non-production of the document. It appears that an application for reception of additional evidence had been filed before the Court below but the trial Court had dismissed it. The plaintiff could have remedied the breach or the error committed by the Appellate Court as ground to assail the order as it was permissible u/s 105 CPC and contended for a position that the document ought not to have been rejected. The plaintiff has not even adopted such a course. The inevitable consequence, therefore, will be that a major portion of consideration of Rs. 16,000/- out of Rs. 22,000/- remained unproved. The Court below adopted a procedure of discarding the inability of the plaintiff to prove this consideration and directed the cash to be paid. The Court was literally substituting a fresh contract for the parties which power the Court did not have. Neither party nor a Court can substitute a bargain in a suit for specific performance for which the parties had agreed to under the document. The Court below was, therefore, in error in having found that the mortgage recital as found was not established to direct the plaintiff to pay the amount in cash.

In a suit for specific performance, the relief which the Court will grant are guided by the parameters set down u/s 20 of the Specific Relief Act. The Section lays down that it shall not be possible to grant a decree merely because it is lawful to do so and the Court is entitled to look into the contract of parties. The truth of the contentions of the plaintiff and the balance of equities obtained greater relevance in suit for specific performance and the plaintiff had set out a particular plea which he failed to establish. So, it could only be taken that the plaintiff had not come to Court with clean hands and he could not have been favored with decree of specific performance ( Mohammedia Coop. Building Society Ltd. Vs. Lakshmi S. Coop. Building Society Ltd. and Others, ).

The questions raised in the appeals as substantial proposition of law would require to be, therefore, answered thus; that finding regarding the validity for mortgage in an earlier suit did constitute res judicata and the plaintiff was bound by the said decision. The item of consideration which was recited in the agreement had been omitted to be proved and therefore, plaintiff was not entitled to the discretionary relief of specific performance. I am not prepared to go into the issue of whether there had been any delay in filing the suit since, as per the decision of the Supreme Court in Madamsetty Satyanarayana Vs. G. Yellogi Rao and Others, that if there was a delay, it was sanctioned by law by virtue of Article 54 that provides for three years from the date when the agreement was required to be performed. The law has undergone some modification about the rise in prices and imminence of performance within time stipulated but it becomes irrelevant to us for on two substantial questions raised, the plaintiff cannot be favorably answered and therefore, the Appellate Court decree according specific performance is required to be set aside and the trial Court''s decision is restored. The appeal filed by the defendant in RSA No. 705 of 1985 is allowed and the appeal filed by the plaintiff in RSA No. 1595 of 1985 is dismissed. Costs in both cases and counsel''s fee Rs. 5,000/- in each case.