Nanjammal (died) and Another vs Palaniammal

Srinivasan, J.—Defendant is the appellant. The suit is one for specific performance of an agreement dated 25.9.1983 evidenced by Ex.A-1.

Under the agreement the sale deed was to be executed before 12.2.1984. The total consideration was Rs. 1,01,000 and the plaintiff-respondent

paid a sum of Rs. 15,000 by way of advance. She issued a notice on 23.1.1984 under Ex.A-2 and she got information that the defendant was

trying to sell away the property. She filed the suit on 3.2.1984 for specific performance. The defendant sent a reply on 6.2.1984 claiming that there

was a loan transaction and by way of security for repayment of the loan the plaintiff insisted upon an agreement of sale being executed by the

defendant and therefore, the agreement was not enforceable, it was also the plea raised in the written statement. According to the defendant the

loan amount was Rs. 15,000 and it was to be repaid in five months with interest at 18 per cent per annum. The trial Court accepted the case of the

plaintiff and granted a decree. The said decree is now challenged in this appeal.

We find that Ex.A-1 is written by one B.A. Ramasamy Chettiar, Ex-President of D.H. W.C.S. Ltd., Coimbatore who was not alive at the time

of trial. It is attested by one P. Raman Chettiar who has given evidence as P.W. 2 P.W.2 has deposed that the parties intended to have an

enforceable agreement for sale and the plaintiff paid a sum of Rs. 15,000 as advance. It is also stated by him that the details for Ex. A-1 were

given only by the defendant It is stated further that two copies of Ex.A-1 were taken and one was given to the defendant and the other was with

the plaintiff. The cross examination of P.W.2 has not elicited anything worthwhile in support of the case of the defendant, P.W.2 has denied the

suggestion that P.W. 1 (husband of the plaintiff) is doing money lending business. He has also stated that he had never gone to the defendant''s

house. He has stated that it is not possible to say that the value of the land near the suit property is Rs. 75,000 per acre.

On a perusal of the document it is seen that it makes a reference to the sale deed of the year 1978 under which the defendant purchased the

property and it mentions the number of the document. The defendant is not able to explain how the plaintiff got the number of the sale deed under

which she purchased the properly in order to mention it in Ex.A-1 if it was only a loan transaction. In evidence the defendant has deposed that she

does not know to read. That is an afterthought and the defendant has given that statement only for the first time in the witness box. There is no

statement in the reply notice, Ex.B-1 that the defendant was not a person who could read nor is there any plea to that effect in the written

statement.

It is also deposed by the defendant that she went to P.W. 1''s house with a sum of Rs. 17,000 to repay the loan and he refused to accept the

same. According to her immediately, a panchayat was held in the textile shop of P.W.1 with five or six persons and the panchayatdars took P.W.1

to task, inspite of which he refused to accept the amount. There is no reference whatever in the reply notice to the alleged panchayat nor is there

any reference to the said panchayat in the written statement. There is no explanation as to why the reply notice or the written statement does not

make a reference to the panchayat. In evidence she staled that the amount was borrowed by her for repairing her house in Telugu Brahmin Street,

Coimbatore. There has been no mention about it either in the reply notice or in her written statement. It is also stated by her that P.W.1 told her

that no promissory note was written as the Agricultural Debt Relief Act was in force. That version is also not staled either in the reply notice or in

her written statement Thus it is seen that the defendant has developed her case stage by stage and given evidence for the first time to several

mailers which she has not chosen to state either in the reply notice or in the written statement That is sufficient to discredit her evidence as false.

It was one of the contentions urged in the court below that the plaintiff had not even obtained encumbrance certificate before the execution of

Ex.A-1 and she had not taken the title deed from the defendant. The Court below has pointed out the recital in Ex.A-1 under which the defendant

had undertaken to obtain an encumbrance certificate and give it to the plaintiff. The fact that the plaintiff had not taken the title deed in advance

does not in any way discredit the truth of the agreement in Ex.A-1. In fact, the evidence of the defendant is that what was written was really an

agreement though it was only for the purpose of securing the loan. She (defendant) has admitted that the plaintiff wanted her to execute an

agreement for sale by way of security for the loan and she did execute such an agreement. When that is the fact, it is not open to the defendant to

raise a plea that the terms of the agreement should be ignored as the real purpose was to secure the loan transaction. It is conceded by learned

Counsel for the appellants that the defendant is barred from raising such a plea by Section 92 of the Indian Evidence Act.

Hence the only question to be considered is whether the relief of specific performance should hot be granted to the plaintiff. The normal rule is

that once the truth of the agreement is made out the court shall enforce it unless there are circumstances which would prove that equity will suffer

by enforcing the agreement for sale. In the present case, no such circumstance has been brought to the not the of the Court either in the pleadings

or in the evidence to show that equity favours the defendant and relief of specific performance should be denied. The defendant has stated in the

evidence that the property was worth much more than Rs. 1,01,000 at the time of the agreement. But there is absolutely no evidence in support of

the same. No document has been produced to prove the value of the lands in the locality and no witness has been examined to speak to the same.

In such circumstances we cannot accept the case of the defendant that the property is more valuable than the consideration mentioned in Ex.A-1.

It is contended by learned Counsel for the defendant that there is a provision in the agreement for payment of damages in a sum of Rs. 15,000

and the only remedy of the plaintiff is to claim the said amount when the defendant has failed to perform her part of the contract. The relevant

portion of the agreement reads as follows:

It is argued that the said clause in the agreement shows that the parties agreed that in the event of breach on the part of the defendant the remedy

of the plaintiff is only to claim a sum of Rs. 30,000 including the amount paid by way of advance. There is no substance in this argument.

The question has been considered by the Supreme Court in M.L. Devender Singh and Others Vs. Syed Khaja, . The court held that mere

specification of a sum of money to be paid for breach in order to compel the performance of the contract does not by itself remove the strong

presumption contemplated by the use of the words ''unless and until the contrary is proved'' in the explanation to Section 10 of the Specific Relief

Act, 1963. The court pointed out that the jurisdiction of the court to decree specific relief is discretionary and must be exercised on sound and

reasonable grounds ''guided by Judicial Principles and capable of correction by a Court of Appeal'' and that the said jurisdiction cannot be

curtailed or taken away by merely fixing a sum even as liquidated damages. It was further held that in each case the Court has to determine on the

facts and circumstances whether specific performace of contract ought to be granted. The relevant discussion is found in the following passage:

From what has been said it will be gathered that contracts Of the kind now under discussion are divisible into three classes:

(1) Where the sum mentioned is strictly a penalty a sum named by way of securing the performance of the contract, as the penalty is a bond;

(ii) Where the sum named is to be paid as liquidated damages for a breach of the contract;

(iii) Where the sum named is an amount the payment of which may be substituted for the performance of the act at the election of the person by

whom the money is to be paid or the act done.

Where the stipulated payment comes under either of the two first mentioned heads the Court will enforce the contract, if in other respects it can

and ought to be enforced, just in the same way as a contract not to do a particular act, with a penalty added to secure its performance or a sum

named as liquidated damages may be specifically enforced by means of an injunction against breaking it. On the other hand, where the contract

comes under the third head, it is satisfied by the payment of the money, and there is no ground for the Court to compel the specific performance of

the other alternative of the contract.

The proposition was reiterated in Prakash Chandra Vs. Angadlal and Others, . The Court observed,

The ordinary rule is that specific performance should be granted. It ought to be denied only when equitable consideration point to its refusal and the

circumstances show that damages would constitute an adequate relief. In the present case, the conduct of the appellant has not been such as to

disentitle him to the relief of specific performance. He has acted fairly throughout, and there is nothing to show that by any act of omission or

commission he encouraged Mohsinali and Qurban Hussain to enter into the sale with the first and second respondents. There is no evidence that

the appellant secured an unfair advantage over Mohsinali and Qurban Hussain when he entered into the agreement. Nor is there anything to prove

that the performance of the contract would involve the respondents in some hardship which they did not foresee.

In Kirpal Singh v. Kanaro AIR 1980 Raj. 213, the High Court of Rajasthan referred to the judgment of the Supreme Court in M.L. Devender

Singh and Others Vs. Syed Khaja, and after extracting the passage referred to above in that judgment, observed as follows;

As observed above, it is only under the third head that there is no ground for the court to compel the specific performance, that is, where the sum

named is an amount the payment of which may be substituted for the performance of the Act at the election of the person"" by whom the money is

to be paid or the act done. (the underlining is ours). The fact that the parties themselves have provided a sum to be paid by the party breaking the

contract does not by itself remove the strong presumption contemplated by the use of the words ''unless and until the contrary is proved''. As

observed by their Lordships in para 9 of the judgment, so also here, there is no mention anywhere in the contract that a party to it will, have the

option to either fulfil the contract to buy or sell or to pay the liquidated damages or penalty stipulated for a breach, as an alternative to the

performance of the contract to buy or to sell. The Supreme Court further observed in M.L. Devender Singh''s case AIR 1973 S.C. 2457, that the

effect of the presumption is that the party coming to court for specific performance of a contract for sale of immovable property need not prove

anything until the other side has removed the presumption. In such cases equity helps honest plaintiff against the defendant who breaks solemnly

given undertakings.

In the present case, we are unable to accept the contention of the defendant that the plaintiff is not entitled to specific performance of contract

in view of the provision for payment of damages in the event of breach by the defendant. There is no question of any option having been given by

the agreement to the plaintiff to make an election. Hence it is only a normal term of the contract fixing the liquidated sum of damages. That does not

prevent the plaintiff from enforcing the contract.

Consequently, the conclusion of the trial Court is unassailable. We do not find any merit in this appeal. It is dismissed with costs.

It is brought to our notice that when the appeal was pending this Court passed an order in C.M.P. No. 3199 of 1987 and while making the

interim stay absolute directed the trial court to invest the sum of Rs. 86,000 deposited by the plaintiff towards balance of sale consideration in a

nationalised bank for a period of three years in fixed deposit. It is said that the amount has been deposited in Andhra Bank, Ram Nagar Branch,

Coimbatore. The said amount shall be withdrawn by the Court from the bank. The sole defendant (first appellant) died pending appeal and her

legal representative has been impleaded as the second appellant in this appeal. Hence the sum of Rs. 86,000 (Rupees Eighty-six thousand only)

which is the amount payable under the agreement shall be paid out to the second appellant towards the consideration for the sale. It is not in

dispute that the appellants are still in enjoyment of the property. Hence they cannot have the benefit of the interest accrued on the fixed deposit.

The same shall be paid to the plaintiff by the Court. If the second appellant fails to execute the sale deed the Court shall execute the same in favour

of the plaintiff (respondent herein).