Russi Fisheries P. Ltd. & Anr vs Bhavna Seth & Ors

Pankaj Mithal, J

This is an appeal arising from a suit for specific performance of an agreement to sell.

The said  suit for specific performance was dismissed with the alternative relief of refund of the admitted amount paid in advance  with  interest.  The  decree  passed  by  the  court  of  first instance was reversed in first appeal which judgment and order has been upheld by the High Court in Second Appeal.

One Anil Kishore Seth (since deceased) now represented by his heirs and legal representatives ‘plaintiff(s)’ entered into an Agreement dated 18.07.1988 with Russi Fisheries (P) Ltd. ‘defendant No.1’ through its Managing Director Smt. Surjit Kavaljit Singh ‘defendant No.2’ to purchase agricultural land admeasuring 79 Kanals 15 Marlas for a total sale consideration of Rs. 15,41,000/-.

The aforesaid agreement to sell was executed by defendant No.1  through  its  Managing  Director,  defendant  No.2  and  was attested inter alia by her son Sanjit Kumar Singh ‘defendant No.3’. The aforesaid  agreement  is  an  unregistered  agreement  but  as  the same was not denied, it was marked as an Exhibit.

Under the agreement, time was the essence of the contract and the sale deed was to be executed by 15.12.1988. The time for execution of the sale deed was twice extended and the last extended time was up to 30.06.1989.

It is alleged that on the last date of the extended time i.e. 30.06.1989, the plaintiff attended the office of the Sub- Registrar with the balance sale consideration to get the sale deed executed but no one appeared on behalf of the defendants to execute the sale deed. Accordingly, after service of notice, the plaintiff instituted Civil Suit No. 985/1989 for specific performance of the agreement to sell dated 18.07.1988 contending  inter  alia  that  under  the  agreement  the  total  sale consideration agreed was Rs. 15,41,000/- out of which Rs. 75,000/- was paid by cheque as earnest money; 2,00,000/- by cheque on 11.11.1988 to the defendant Nos. 2 and 3; thereafter, a sum of Rs. 2,00,000/- was paid on 01.12.1988 in cash to the defendant No. 3 and again a sum of Rs. 3,00,000/- on 20.12.1988 to the defendant No. 3 when the time for execution of sale deed was first extended to 31.01.1989. In this way, the plaintiff allegedly paid Rs. 2,75,000/- by cheque and Rs. 5,00,000/- in cash, totaling Rs. 7,75,000/-, and the balance was payable at the time of execution of the sale deed. He contended that he was always ready and willing  to get the sale deed executed and to perform his part of the agreement.

Defendant Nos.1, 2 and 3 all filed appearance but the suit was contested by Defendant Nos. 1 & 2 only by filing a joint written statement. They admitted the agreement to sell and the receipt of Rs. 2,75,000/- through cheque as part of the sale consideration but denied receiving the cash payment and that the plaintiffs were never ready and willing to fulfill their part of the  agreement.  They  further  stated  that  Defendant  No.  3  was not authorized to receive any payment on behalf of the defendant  No.  1 as  he  was  merely  an  attesting  witness  to  the agreement.

The court of first instance dismissed the suit for specific performance on 10.12.1999 by holding that the plaintiff failed to  prove  his  continuous  readiness  and  willingness  to  perform his  part  of  the  contract,  but  decreed  it  for  the  refund  of  sale consideration of Rs. 2,75,000/-, admitted to have been paid in cheques with interest @ 12% per annum.

Aggrieved by the aforesaid judgment and order, the heirs of the plaintiff preferred an appeal which was allowed on 23.04.2003 holding that the plaintiff had paid Rs. 7,75,000/- and since he attended the office of the Sub-Registrar on 30.06.1989, he was ready and willing to perform his part of the agreement and as such is entitled to a decree of specific performance.

On Second Appeal being preferred on behalf of the defendants, the  judgment  passed  by  the  first  appellate  court  was  upheld. Thus, the decree of the specific performance as passed in first appeal was maintained.

The decree of specific performance passed by the first appellate court and  as upheld by the High Court in Second Appeal  was challenged by the defendants by filing a Special Leave Petition on 20.08.2009 before this Court which was duly entertained by granting leave on 08.01.2010 with an interim order, as prayed for. Therefore, this appeal is before us.

Despite the fact that the leave was granted in the SLP and an interim order was also passed, the heirs of plaintiff through the process of the Court on the same very day i.e., 08.01.2010 got the  sale  deed  executed  in  their  favour  on  the  strength  of  the decree of specific performance passed by the first appellate court as affirmed in second appeal.

It is also pertinent to mention that the defendants sold 60 percent of the suit land on 12.02.2009 i.e., even before the SLP was filed but during the pendency of the litigation. The remaining 40 percent of the land was sold by them during the pendency  of  this  appeal  on  27.02.2025.  Therefore,  though  on the  one  hand  there  is  a  sale deed  in  favour of  the  plaintiffs  of the suit land, the same also stands transferred to third parties by the defendants during the pendency of the litigation.

In the background of the above transfers of the suit land made by the parties, one of the points before this Court would be as to the effect and impact of the above transfers on the outcome of the suit itself.

We  have  heard  Shri  K.  Parameshwar,  learned  senior  counsel for the defendants and Shri Pawanjit Singh Bindra, learned senior counsel for the substituted plaintiffs.

Shri K. Parameshwar, learned senior counsel appearing for the defendants,  at  the  very  outset,  tenders  unconditional  apology for not disclosing the fact of execution of the sale deeds dated 12.02.2009 and 27.02.2025, transferring the said land to third parties and submits that such an omission in the pleadings had occurred only on account of improper advice and the fact that the sale, if any, made would be subject to the doctrine of lis pendens. There was no oblique motive or any deliberate concealment  on  the  part  of  the  defendants.  Further,  the  sale deeds so  executed  are not void ab initio but are subject to the decision of this appeal. In this connection, he relied upon.

It is worth noting that the aforesaid transfers have been made during  the  pendency  of  the  litigation  and  therefore,  the  same would be governed by the principle of lis pendens as enshrined under Section 52 of the TP Act and the said  transfers have to abide by the ultimate decree to be passed in this appeal. In this connection, reliance has been placed upon Thomson Press (India) Ltd. vs Nanak Builders & Investors (P) Ltd (2013) 5 SCC 397, wherein the  Division  Bench  held  that  transfer  pendente  lite  is  neither illegal  nor  void ab initio  but  remains  subservient  to  the  rights of  the  parties  eventually  determined  by  court  in  the  pending litigation.  In  view  of  the  above,  whatever  transfers  have  been made pending the litigation or this appeal would follow the decision passed in this appeal. Therefore, in the facts, we ignore the omission and proceed on the merits.

On merits, Shri K. Parameshwar submits that the grant of relief of specific performance of an agreement to sell is an equitable and a discretionary relief. The agreement to sell is dated 18.07.1988 and the first appellate court had decreed the suit on 23.04.2003. In between, there was immense increase of price  of  the  land  and  as  such  it  became  unequitable  with  the passage of time to grant the relief of specific performance of the agreement.  In  view  of  the  above,  he  submits  it  is  not  justified to uphold the decree after such a long distance of time from the date  of  the  agreement.  It  would  be highly  unequitable to  the defendants.

He  next  submitted  that  the  plaintiff  had  not  entered  into  the witness box to prove the plaint allegations despite the fact that he was alive until 13.05.1996 and had the opportunity before the court of first instance to appear and testify. In the absence of any proof of pleadings contained in the plaint, the suit could not  have  been  decreed  on  the  basis  of  the  testimony  of  other witnesses.

He further submitted that the plaintiff had only paid a sum of Rs.2,75,000/-  through  cheques  and  thereafter,  there  was  no payment  in  favour  of  the  defendant  no.1-company.  The  cash payment of Rs.2,00,000/- plus Rs.3,00,000/- totaling Rs.5,00,000/- alleged to have been paid to the defendant no.3 would not enure to the benefit of defendant nos.1 i.e., the Company inasmuch as defendant no.3 who allegedly accepted the  cash  payment  was  never  examined  as  a  witness  and  also had no authority to receive the same on behalf of the company.

Shri  K.  Parameshwar  further  submitted  that  the  plaintiff  was never  ready  and  willing  to  perform  his  part  of  the  agreement inasmuch as under the agreement dated 18.07.1988, time was the essence of the contract and the sale deed was to be executed on or before 15.12.1988. Further, the defendants have  not  permitted  any  extension  of  time  and  even  if  the  last extended period is treated to be up to 30.06.1989, the plaintiff had not given any notice requiring  the defendants  to appear before  the  office  of  Sub-Registrar  for  the  execution of  the  sale deed. The defendants categorically denied receiving the notices dated 13.06.1989 and 22.06.1989 alleged to have been issued by the plaintiff in this connection.

In addition to the above, he submitted that there is no evidence to prove that the plaintiff attended the office of the sub- Registrar on 30.06.1989. The testimony of PW-4 in this connection, is not admissible as there is no document or pleading to verify PW-4’s involvement. Further, PW-1, the clerk of  the  office  of  the  Sub-Registrar  had  not  and  could  not  have proved the signatures of the Sub-Registrar as he was not in the office of Sub-Registrar in 1989 and had no personal knowledge of the events. Therefore, there was no continuous readiness and willingness on part of the plaintiff to carry out his obligation under the agreement.

Lastly, Shri K. Parameshwar submitted that the suit for specific performance as filed by the plaintiff was dismissed by the court of first instance which decree was reversed by the first appellate court.  As  such,  there  were  two  contrary  judgments  recording conflicting  findings  on  the  facts  as  regards  to  the  payment  of part of the sale consideration as well as on readiness and willingness of the plaintiff. This being the position,  the High Court was not justified in dismissing the second appeal only on the ground that it raises no substantial question of law by simply stating that the findings recorded by the First Appellate Court  are  correct  in  view  of  the  testimony  of  PW-1  and  PW-4 but without even considering the statements of the said witnesses  which  do  not  actually  prove  what  has  been  held  by the first appellate court.

Shri  Bindra,  learned  senior  counsel  on  behalf  of  the  plaintiff has strongly opposed all the arguments advanced on behalf of the  defendants  aforesaid.  He  contends  that  the  agreement  to sell is an admitted document which bears the signatures of both the parties. The cash payment receipts are duly signed by the defendant no.3 and stood proved by the handwriting expert. Moreover, the receipts clearly states that the cash payment is being received on behalf of the defendant no.1 - company. This sufficiently proves the cash transactions.

Secondly,  he  submits  that  even  on  the  letters  of  extension  of time, there are signatures of the defendant no.2–the Managing Director  of  the  Company  which  have  not  been  denied  by  her rather accepted in her cross-examinationand further identified and proved by the expert.

Shri Bindra further submits that the plaintiff had given due notice not one but two, dated 13.06.1989 and 22.06.1989 calling upon the defendants to attend the office of Sub- Registrar for the execution of the sale deed. The defendants were  actually  aware  of  the  last  date  fixed  for  the  execution  of the sale deed and as such they were obliged to attend the office of  the  Sub-Registrar  which  they  failed  to  do.  The  plaintiff  has proved his attendance on the said date before the Sub-registrar by moving an application which was duly accepted, signed and stamped by the Sub-Registrar. There is no contrary evidence to belie the said document.

Lastly,  he  submits  that  non-appearance  of  the  plaintiff  in  the witness  box  is  not  fatal  to  the  suit  as  his  Manager,  PW-4  has appeared as a  witness and has proved the entire transactions as  he  was  working  with  him  since  before  the  execution  of  the agreement.

In the end, he sums up by saying that the findings of fact recorded by the First Appellate Court are not perverse and are final. Therefore, there was no occasion for the Second Appellate Court to re-appraise the evidence to examine the correctness of the same. He further contends that once a sale deed dated 08.01.2010 had already been executed pursuant to the decree of the First Appellate Court which  has been upheld in second appeal, there is no equity in favour of the defendants to get the said sale deed reversed or set aside, rather in view of the said sale deed, the sale deeds executed by the defendants are void and non est.

In the instant case, though an issue was raised before the Court of First Instance as to the valid existence of the agreement to sell dated 18.07.1988, the said issue upon consideration of the evidence adduced by the parties was decided  in  favour  of  the  plaintiffs  but  the  suit  was  dismissed for the relief  of specific performance.  Against the said  finding, the defendants have not filed any cross-objectionsin the appeal preferred  by  the  plaintiff.  The  said  finding  was  accepted  even by the First Appellate Court and the suit for specific performance was decreed. The defendants preferred second appeal but never assailed  the finding with  regard to  existence of the agreement. No argument in this regard was raised, thus, conceding  that  there exists  a valid agreement  to sell.  In this view of the matter, the existence of the valid agreement to sell dated 18.07.1988 is no longer in dispute. Since, the said agreement is acceptable to both the parties and has been marked as an Exhibit, the question as to whether it was unenforceable in law for want of registration loses all significance and need not be gone into by us.

No doubt, the relief of specific performance was not granted by the Court of First Instance and only the alternative relief to refund  the  cheque  amount  of  Rs.2,75,000/-  paid  in  advance was granted, nonetheless, the findings recorded by the First Court were reversed by the Court of First Appeal and categorical findings were recorded that the plaintiffs have proved the extension of time for the execution of the sale deed, the  cash  payment  of  Rs.5,00,000/-  and  that  the  plaintiff  was always  ready  and  willing  to  get  the  sale  deed  executed  within time.  These  findings  are  strictly  findings  of  facts  and  are  not shown to be perverse in any manner. They have not been returned on the basis of any inadmissible evidence. Therefore, in  such  a situation  it  was  not  open  for the  Second  Appellate Court to go into the correctness of those findings by reappreciating the evidence adduced by the parties.

It is settled in law that the findings of fact howsoever erroneous, cannot  be  reopened  and  disturbed  in  second  appeal  which  is required to be adjudicated only upon the substantial question of law, if any, arising therein. Thus, the argument that the High Court  in  second  appeal  ought  to  have  examined  the  evidence to ensure the correctness of the findings of the First Appellate Court has no legs to stand and fails.

Long  back  in  1981,  three  judges  of  this  Court  in  the  case  of Bholaram vs. Ameerchand (1981) 2 SCC 414 had ruled that even if findings of facts by courts below are wrong or grossly inexcusable that by itself would not entitle the High Court to interfere under Section 100 CPC in the absence of clear error of law. A similar view was reiterated in Madhavan Nair vs. Bhaskar Pillai (Dead) by Lrs. (2005) 10 SCC 553, wherein it has been laid down that even if the First  Appellate  Court  commits  an  error  in  recording  a  finding of  fact,  that  itself  will  not  be  a ground  for  the  High  Court  to upset the same.

In Kashibai w/o Lachiram and Another vs. Parwatibai w/o Lachiram  and  others (1995) 6 SCC 213, a  similar  proposition  of  law  was  laid down by this Court and it was held that the High Court cannot reappreciate the evidence and interfere with the findings of facts unless a substantial question of law or a question of law duly  formulated  is  to  be  decided.  The  second  appeal  does  not lie on the ground of erroneous findings of facts based on appreciation of the relevant evidence.

Similar is the situation in the case at hand. The High Court has not found any substantial question of law or a question of law worth consideration in the second appeal and, therefore, there was no occasion for it to have reappreciated the evidence so as to come to a different conclusion.

Again, in Kulwant Kaur and Others vs. Gurdial Singh Mann (Dead) by Lrs and Others AIR (2001) SC 1273,  it  was  emphasized  that  the  fact remains that in a second appeal, a finding of fact, even if erroneous, will not be disturbed unless it is found that it stands vitiated for want of perversity. No such case for interference has been made out in the present case.

Even if we examine the evidence on record for the satisfaction of the defendants, we find that the parties have mutually agreed for the grant of extension of time to execute the sale deed despite time being the essence of the agreement. The documents  showing  extension  of  time,  two  of  which  bear  the signatures of not only the defendant no.3 but also that of defendant no.2 – the Managing Director of the Company –defendant no.1. Significantly, defendant no.2, while appearing as DW-1, has admitted her signatures on the agreement as well as  on  other  relevant  documents,  and  has  also  acknowledged that the last date of execution was extended till 30.06.1989. No concrete  or  reliable  evidence  has  been  adduced  to  prove  that the extension of time was granted without taking her consent. Further, the handwriting expert also corroborated the genuineness of the disputed signatures. Therefore, the finding of the First Appellate Court on the above score does not suffer from any material illegality.

Secondly,  the  cash  payment  was  made  to  the  defendant  no.3 who is none other than the son of defendant no.2 - the Managing Director of the Company–defendant no.1. In the receipts  issued  by  him,  he  has  categorically  stated  that  he  is accepting payment on behalf of the company in the capacity of being its Director and was authorized to receive the same. The narration in the receipts that he is receiving payment on behalf of  the  Company-defendant no.1  as  the  Director,  has  not  been denied  by him as  he never stepped into the witness box.  No evidence  was  brought  on  record  to  establish  that  he  was  not the  Director  of  the  Company-defendant  no.1.  The  submission that the said receipts were in relation to some other transactions does not stand established by any evidence adduced by the defendants.  Therefore, the finding of the First Appellate Court in this connection is justified.

Lastly, the period of execution of the sale deed as last extended was expiring on 30.06.1989. Therefore, the defendants were under an obligation to show that they were also ready and willing to execute the sale deed on or before the said date. However, there is no positive evidence from their side to prove discharge of their obligation. On the other hand, the plaintiffs have  issued  notices  dated  13.06.1989  and  22.06.1989  to  the defendants to attend the office of the Sub-Registrar on 30.06.1989  for  the  execution  of  the  sale  deed  as  that was  the last day for executing the same. No doubt, the said notices were sent to the defendants under certificate of posting, which proves  that  the  notices  were dispatched.  Although,  that  may not be conclusive evidence regarding their service, simply denying receiving the notices would not mean that the notices were  not  served,  as  it  is  not  the  allegation  of  the  defendants that they were not sent to the proper address. The defendants have not adduced any evidence to prove that they were not actually served with the said notices. The allegation in this regard by them is only a bald allegation.

The plaintiff after giving the aforesaid notice had attended the office  of  the  of  the  Sub-Registrar  on  30.06.1989  which  stand proved by his application submitted to the Sub-Registrar on the  said  very  date.  The  application  clearly  states  that  he  has come  prepared  and  ready  with  the  balance  sale  consideration to get the sale deed executed. The receipt of the said application in the office of Sub-Registrar with the stamp of the office of the Sub-Registrar is duly proved by the evidence of the PW-1. The mere fact that  he  has not  proved  the signatures  of  the Sub- Registrar is not sufficient to belie the above document when the submission of the application and the stamp of the Sub- Registrar stand proved. Moreover, there is no denial of the fact or evidence by the defendants that the contents of the application are incorrect and that the plaintiff had not attended the office with the necessary finances so as to get the sale deed executed. The submission that no proof of possessing such finance was produced is not material when the allegation in the application that the plaintiff has come prepared with the necessary funds is not sufficiently denied.

In  view  of  the  aforesaid  facts  and  circumstances,  the  findings as returned by the First Appellate Court on readiness and willingness, extension of time and payment of cash money are not perverse and illegal, which may warrant any interference.

Now, the crucial issue which remains is about the effect of non- appearance of the plaintiff in the witness box to prove his plaint case.  It  is  an  admitted  position  that  the  plaintiff  himself has not  entered  the  witness  box  and  has  not offered  himself  to be cross-examined. In such a situation, a presumptioncan always be drawn against him that the case, as pleaded by him, is not correct. In this connection, a reference can be made to the decision of this Court in the case of Vidhyadhar vs Manikrao and  Another (1999) 3 SCC 573, which lays down that where a  party  does not appear in the witness box, a presumption would arise that the case set up by him is not correct. This Court in laying down as aforesaid  has  referred  to  various  decisions  of  the  High  Court. The decisions of the High Court are also to the effect that when a party fails to appear as a witness, it gives rise to an adverse inference and nothing more.

The  adverse  presumption,  if  any,  drawn  for  non-appearing  in the witness box by the plaintiff, is a rebuttal presumption and if the aforesaid presumption is successfully rebutted by the other  cogent  evidence  on  record,  the  said  presumption  would not be material and applicable. In the present case, PW-4, the Manager of the plaintiff, had appeared as a witness. He has stated  that he  had  been  working  with  the  plaintiff  since  1988 and had the knowledge of all the transactions in relation to the agreement to sell dated 18.07.1988. His testimony substantially corroborates the case as set up by the plaintiff in the plaint, including execution of agreement, payment of consideration  and  extension  of  time.  Therefore,  in  the  light  of the evidence of the PW-4, the plaint allegations stand corroborated. The adverse inference drawn on account of non-appearance of the plaintiff stands rebutted by his evidence and other evidence on record. In these circumstances, the non- appearance of the plaintiff in the witness box would not be fatal in this case.

In  the  recent  case  of Rajesh Kumar vs Anand Kumar and Others (2024) 13 SCC 80  in which one of us (P. Mithal, J) was a party, relying upon Janki Vashdeo Bhojwani and Another vs Indusind Bank  Ltd.  and  Other (2005) 2 SCC 217, it  was  held  that  a power  of  attorney holder may depose on behalf of the principal in respect of such acts  which  are  within  his  personal  knowledge  but  he  cannot certainly depose for the principal, for the acts done by the principal and not known personally by him. Applying the same analogy, the Manager, PW-4 herein had deposed about the entire transaction based upon his personal knowledge as  he was attached to the plaintiff as the Manager. In such circumstances, his evidence cannot be discarded.

This  takes  us  to  the  last  limb  of  the  argument  of  the  parties with  regard  to  the  equitable  and  discretionary  jurisdiction  of the court to grant the relief of specific performance. No doubt, the agreement to sell was executed on 18.07.1988 and the decree of specific performance was passed by the First Appellate Court on 23.04.2003, after a gap of 15 years, no evidence  whatsoever  was  brought  on  record  to  establish  that within this period the price of property in the area had escalated, making it inequitable to grant the decree of specific performance.

The sale deeds executed by the defendants during the pendency of the litigation are certainly hit by doctrine of lis pendens and are non est. At the same time, the plaintiffs have got  the  sale  deed  of  the  suit  land  executed  in  their  favour  by following  the  due  process  of  law  on  the  basis  of  the  decree  of specific performance granted in their favour by the First Appellate  Court.  In  such  circumstances  when  the  decree  has already been executed and substantive rights have accrued in favour  of  the  heirs  of  the  plaintiff,  it  would  be  inequitable  to dislodge them from the benefit of the sale in exercise of discretionary jurisdiction.

Accordingly, in the facts and circumstances of the case, we find no merit  in this  appeal  and the  same is  dismissed.  The sale deeds executed by the defendants on 12.02.2009 and 27.02.2025 are held to be non est and the decree as passed by the First Appellate Court is maintained.