Yatish vs Nanjundappa and Others

N. Kumar, J.—This is plaintiffs regular first appeal against the Judgment and Decree of the trial Court dismissing the suit for specific performance.

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

The subject matter of the suit is land measuring 2 acres 20 1/2 guntas in Sy. No. 155/10 of Hulimangala Village, Jigani Hobli, Anekal Taluk, Bangalore District which is more fully described in the schedule to the plaint and hereinafter referred to as ''schedule property''.

The defendant is the owner of the schedule property who acquired title to the same under a family partition in the year 1984. The defendant wanted to dispose of the schedule property and was in search of a prospective purchaser. The plaintiff who is a graduate in Veterinary Sciences, was on the look out for a suitable plot of land for implementing a poultry farm project in and around Hulimangala Village. Therefore, the plaintiff approached the defendant, negotiated terms and conditions and thereafter, agreed to purchase the schedule property for a consideration of Rs. 3 lakhs per acre. The defendant agreed to sell the schedule property to him to meet his financial distress. The consideration payable for the sale of the land was fixed at Rs. 7,53,750/-. The agreement was reduced into writing which is dated 24.6.1995. On the date of execution of the agreement, a sum of Rs. 1 lakh was paid by the plaintiff to the defendant by way of cheque drawn on Vysya Bank, Nettakallappa Circle Branch, Bangalore bearing No. 210322 dated 24.6.1995. The cheque has been duly encashed and the same is acknowledged. Though the defendant had agreed to put the plaintiff in possession in part performance of the agreement, failed to hand over the possession of the schedule property. Thus, the recital in the agreement that the plaintiff is to be put in possession of the suit schedule property was not given effect to. The schedule land is an agricultural land. The parties agreed that the defendant shall get the schedule land converted or alienated for non-agricultural purposes from the concerned authorities. A period of nine months from the date of agreement was fixed for completion of the sale transaction. It is specifically agreed that the registered sale deed be executed only after an order of conversion and certificate there of is obtained and the balance sale consideration of Rs. 6,53,750/- was payable only after obtaining the order of conversion. However, on the demand of the defendant, plaintiff paid further advance of Rs. 1,75,000/- through a cheque No. 23566 dated 18.11.1995 drawn on Bank of India, JC Road Branch, Bangalore, which cheque has also been duly encashed and amount is acknowledged.

Further case of the plaintiff is, thereafter, reposing absolute faith, trust and confidence in the defendant, he has paid a further sum of Rs. 1,50,000/- by cash in the presence of witnesses who are none other than respectable residents of the village who had acted on behalf of the defendant in these transactions. Though the demand was made to acknowledge the said cash payment, the defendant went on dodging the same. The defendant was under an obligation to perform his part of agreement by obtaining the conversion order. The plaintiff was eager to complete the sale transaction. He requested the defendant to obtain necessary conversion certificate and other certificate from the tax authorities. Defendant went on postponing the same. The plaintiff was ready and willing to perform his part of the agreement. He was ready with the balance sale consideration of Rs. 3,28,750/- and was also ready with the necessary funds for meeting incidental expenses of registration. The defendant, in pursuance of the agreement had handed over Xerox copies of the revenue records and declaration given by one Ramaiah, S/o. late Thogur Pillaiah, Yellappa Venkatesh Reddy, S/o. late Venkataswamy Reddy and Obareddy, S/o. Thogur Pillaiah. However, defendant did not come forward to execute the sale deed. Thus, the plaintiff got issued legal notice on 7.10.1996 calling upon the defendant to execute the sale deed within two weeks. The said notice was duly served on the defendant and the defendant had sent an untenable reply. The plaintiff contends that from the day one of the agreement he was ready and willing to perform and discharge his part of the contractual obligation. It is the defendant who willfully neglected to discharge his part of contract. Therefore, he filed suit for specific performance of agreement of sale.

After service of notice, defendant entered appearance and has filed a detailed written statement. The defendant has denied all the allegations in the plaint. He denied the agreement. The consideration agreed upon and the total amount payable. He denied execution of the agreement. His specific case is, Rs. 1 lakh was received by him from the plaintiff towards loan amount. The alleged agreement of sale is a concoction to knock off the defendant''s property. He does not know how to read, write and understand English. Further he admits that he had received a further sum of Rs. 1,75,000/- from the plaintiff on 18.11.1995 but, the said amount was towards balance of financial accommodation sought for by the defendant from the plaintiff. On encashment of the cheque, the defendant immediately sought to return the excess amount of Rs. 75,000/- to the plaintiff but, the plaintiff asked the defendant not to bother about the same since the plaintiff had full faith in the defendant and also he would collect the said amount later from him. Under the circumstances, the defendant had received the total amount of Rs. 2,75,000/- from the plaintiff as financial accommodation. The said payments were not towards any agreement to sell or towards alleged advance.

The defendant specifically denied that a further sum of Rs. 1,50,000/- was paid in cash in the presence of the witnesses. He has not received anything more than Rs. 2,75,000/- from the plaintiff. The defendant was calling upon the plaintiff to give a copy of the sale agreement got prepared by him. The plaintiff went on postponing the same on the ground that it is not prepared. He has never refused to sign the stamp paper. The plaintiff has fabricated and forged the agreement of sale instead of loan agreement in an attempt to cheat the defendant for his valuable property and it is only because of that the plaintiff did not furnish the copy of the alleged agreement of sale to the defendant. He also specifically denied that an amount of Rs. 1.5 lakhs was paid to the defendant on 16.12.1995 by the plaintiff on request of the villagers and in the presence of Sri Rama Reddy, Sri Muni Reddy and Sri Ravishankar Reddy. As there is no agreement of sale, there was no corresponding obligation on the part of the defendant to perform his part of contract. The defendant came to know about the agreement of sale only on receipt of legal notice from the plaintiff.

Having played fraud on the defendant, plaintiff has been dodging the case to gain sympathy of the Court and making it appear that the defendant is at fault. There is no meeting of mind between the plaintiff and the defendant regarding alleged agreement of sale. Hence, the agreement is void and also there is no previty of contract. Therefore, he sought for dismissal of the suit.

On the basis of pleadings, the trial Court framed the following issues:

"(1) Whether the plaintiff proves that the defendant executed the agreement dated 21.6.1995 agreeing to sell the suit schedule property in his favour for a consideration of Rs. 7,53,750/-?

(2) Whether the defendant proves that the agreement is fabricated document?

(3) Whether the plaintiff proves that he has paid advance of Rs. 1,00,000/- under the agreement and further advance of Rs. 3,25,000/- to the defendant?

(4) Whether the defendant proves that payment of Rs. 2,75,000/- was towards financial accommodation?

(5) Whether the plaintiff proves that he has been always ready and willing to perform his part of the agreement?

(6) Whether the plaintiff is entitled for a decree of specific performance on payment of the balance sale consideration?

(7) What order?"

The plaintiff in order to substantiate his claim, examined himself as P.W. 1 and marked six documents as Ex. P1 to P6. Defendant also examined himself as D.W.. 1 but he did not produce any documents.

The trial Court on appreciation of the aforesaid oral and documentary evidence on record held, the plaintiff has proved that the defendant executed an agreement of sale dated 24.6.1995 agreeing to sell the suit schedule property for a consideration of Rs. 7,53,750/-. The defendant has failed to prove that the said agreement is fabricated document. The plaintiff has proved, he paid a sum of Rs. 1 lakh by cheque under the agreement, subsequently Rs. 1,75,000/- again by cheque but he has failed to prove that he has paid a cash amounting to Rs. 1,50,000/- on 16.12.1995. Defendant has failed to prove that the amount of Rs. 2,75,000/- received by him by way of financial accommodation. Plaintiff has proved that he was always ready and willing to perform his part of contract. The plaintiff failed to prove the payment of Rs. 1.5 lakhs as pleaded by him and also admitted that the possession has not been delivered as mentioned in the agreement of sale. It was held, the plaintiff is not entitled to the decree for specific performance. Further, the trial Court declined even to pass a decree for refund of the amount received under the agreement of sale on the ground that the plaintiff has not sought for the refund in the prayer column and therefore, in view of bar contained in sub-section (2) of Section 22 of the Specific Relief Act which forbids the grant of any such relief by the Court unless it has been specifically claimed. Thus the plaintiffs suit came to be dismissed.

Aggrieved by the said Judgment and Decree of the trial Court, the plaintiff has preferred this appeal.

The learned counsel for plaintiff-appellant assailing the impugned order contended, the defendant has not come to the Court with clean hands. The trial Court has recorded a categorical finding that the case of financial accommodation submitted by the defendant is not established. There is total inconsistency between the plea taken in the legal notice, in the written statement and in the evidence. It is settled law that the defendant who does not come to Court with clean hands is not entitled to any sympathetic consideration by the Court. When once the Court held, execution of agreement of sale is proved, when the defendant acknowledged receipt of Rs. 1 lakh by cheque and a sum of Rs. 1,75,000/- by cheque and the plaintiff was ready and willing to pay the balance sale consideration, Court below committed a serious error in not decreeing the suit for specific performance. The oral evidence on record and the evidence of witnesses proved the payment of Rs. 1.5 lakhs and in his evidence he has stated so. Even if it is held to be not proved, he is willing to pay more amount which shows fair conduct of the plaintiff and therefore, he submits, the impugned Judgment and Decree required to be set aside.

In the alternative, he submitted, now that the plaint is amended in this Court seeking alternative prayer, for refund of advance amount if this Court upholds the Judgment of the trial Court, a case for interference is made out.

Per contra, learned counsel appearing for defendant-respondent submits, the plaintiff has not come to the Court with clean hands as, in the agreement of sale and in the legal notice it is stated that defendant has put in possession the plaintiff to the schedule property. In the plaint he has given a go-bye to the said statement. He submits, possession is not delivered, the possession is continued with the defendant. Secondly he contended, when the plaintiff contends a sum of Rs. 1.5 lakh was paid by cash and the trial Court has recorded a finding, said payment is not proved, it shows, plaintiff was not ready and willing to perform his part of obligation even otherwise, plaintiff has not adduced any evidence to show that he was ready with the sale consideration, therefore, the finding recorded by the trial Court that plaintiff was ready and willing to perform his part of contract is contrary to the legal evidence on record and therefore, no case for interference in the well considered judgment of the trial Court is made out. In so far as alternative prayer is concerned, after completing the arguments on merits, appellant''s counsel submits, he has lost touch with his client.

In the light of the aforesaid facts, the points that arise for our consideration are:

"1. Whether the finding of the trial Court that the plaintiff is not entitled to the relief of specific performance is vitiated?

Whether the plaintiff is entitled to the alternative prayer of refund of a sum of Rs. 2,75,000/- paid by him to the defendant which is duly acknowledged by the defendant?"

Point No. 1:

It is not in dispute that the defendant is owner of the schedule property. It is an agricultural land. Plaintiff is a Veterinary Graduate. He wanted to set up a poultry farm. He wanted to purchase the schedule property. Since he was not an agriculturist, he could not purchase the agricultural land. Therefore, it was agreed that the land has to be converted into non-agricultural land. Thus, he entered into an agreement with the defendant on consideration of Rs. 3 lakhs per acre. It was agreed between the parties that defendant shall obtain conversion order and produce the certified copy of the same showing it is converted for non-agricultural purpose. It is the term of the contract that a sum of Rs. 1 lakh was to be paid under the agreement and the balance sale consideration is payable on the defendant producing the order of conversion. Sum of Rs. 1.5 lakh paid under the agreement by way of cheque is not disputed by the defendant. Further a sum of Rs. 1,75,000/- is also paid by way of cheque which is not disputed by the defendant. The dispute is, the nature of transaction. The plaintiff contends, though the amount was paid as part of consideration of the agreement of sale, the defendant contends, he has not executed any agreement of sale or the amount was received or paid to him by way of financial accommodation. It is in this context, both the parties have adduced evidence.

The defendant disputes his signature on the agreement of sale vide Ex. P5. It is his case that he affixed his signature on the stamp paper handed over by the plaintiff to him thinking that the same is loan agreement. His grievance is, after drafting the loan agreement it was not handed over to him. After issuance of legal notice, he came to know about his signature. The evidence on record shows in the reply notice, in the written statement, defendant pleaded that amount was received by him by way of financial accommodation. In the evidence he stated, he was having transaction with Sri Ravishankar Reddy (P.W. 2) and said Ravishankar Reddy obtained his signatures on the blank stamp papers. Under the circumstances, on appreciation of the oral and documentary evidence, the trial Court rightly held, the plaintiff has proved the execution of sale agreement in respect of suit schedule property, the transaction in question is in respect of agreement of sale and not in respect of financial accommodation as contended by the defendant. However, plaintiffs case was, he paid Rs. 1.5 lakhs as further advance by way of cash. Plaintiff has made first two payments by way of cheque which were fully encashed and acknowledged. He has not come out with any acceptable reason that he paid Rs. 1.5 lakhs by way of cash. In both legal notice as well as in the plaint, he has not mentioned the date on which this payment of Rs. 1.5 lakhs was made. In fact, for the first time in his evidence before Court, he comes up with the case that said Rs. 1.5 lakhs was paid on 16.12.1995. In order to support the said claim, he has examined P.W. 2 Ravishankar Reddy one of the attesting witnesses to the agreement of sale. The said witness does not speak about the fact that any payment was made in his presence. On the contrary, his evidence is, there is no document to show further advance of Rs. 1.5 lakhs was paid to the defendant on 16.12.1995. Further he states, there is no evidence in respect of further advance amount of Rs. 1.5 lakhs said to have been paid on 16.12.1995. Therefore, his evidence is of no use to prove the payment of Rs. 1.5 lakhs by way of cash.

The plaintiff has examined one Sri Munireddy, as P.W. 3. In the affidavit filed by him, he has stated on 16.12.1995, Rs. 1.5 lakh was paid in cash in front of witnesses. However, in the cross-examination, he states that the said amount of Rs. 1.5 lakhs was paid as cash in the poultry farm of Ravishankar Reddy to the defendant Nanjundappa. With regard to this payment also endorsement was not made on the agreement showing payment of said advance amount to the defendant. Further, he states, he does not know what has been stated by the plaintiff in the case in respect of alleged payment said to have been made on 15.12.1995. He denied suggestion that no payment was made on 15.12.1995. It is on appreciation of this evidence, the trial Court has held this payment of Rs. 1.5 lakhs in cash is not proved.

From the aforesaid discussion, it is clear, there was no reason for the plaintiff to pay a sum of Rs. 1.5 lakh by way of cash when he had made earlier two payments by way of cheque. In the legal notice and in the plaint, the date on which this payment was made is not mentioned. It is for the first time in his evidence, he states, payment was made on 16.12.1995 in the presence of witnesses, one such witness is PW2 who does not support his case. No where in the evidence he has stated that the said amount was paid by him in the presence of those persons. Even in the evidence of P.W. 3 it does not show that said amount was really paid in the poultry farm of P.W. 2. It is not accepted by P.Ws. 2 and 3 who stated payment was made on 15.12.1995 whereas, the plaintiffs case he has paid cash on 16.12.1995. In the light of these inconsistencies, the conduct of the plaintiff in the past and the finding of the trial Court that the plaintiff has miserably failed to prove the payment of Rs. 1.5 lakhs is proper and does not call for any interference.

Further, the plaintiff, in order to show he was ready and willing to perform his part of the contract, was under an obligation to place before the Court the said material to satisfy the Court to show his readiness though he was not expected to produce the cash before the Court but, certainly he has to produce evidence to show he was ready with the balance sale consideration. The learned counsel for the plaintiff submitted, the documents produced in the case do demonstrate his readiness and willingness, Ex. P3 is a statement from the Vysya Bank Ltd., which shows the payment of Rs. 1 lakh out of Rs. 1,23,450/- made by the plaintiff to the defendant under the agreement of sale. After the said payment, the amount standing to the credit of plaintiff is Rs. 23,450/-. Ex. P3 is also the pass book entries which show a payment of Rs. 1,75,000/- made to the defendant by way of cheque. After the said payment, an amount which was standing to credit of plaintiff is Rs. 135.60. Therefore, the said two documents on which reliance is placed do not show that the plaintiff was ready and willing to pay the balance sale consideration and except his assertion in the witness box that he was ready with the balance consideration, no evidence is produced.

Under the circumstances, the trial Court was not justified in recording a finding that plaintiff was ready and willing to pay the balance sale consideration and as such, that finding requires to be set aside.

When once the plaintiff has miserably failed to prove that said payments have been made and fails to establish that he was ready and willing to pay the balance sale consideration, notwithstanding the default committed by the defendant, notwithstanding the conduct of the defendant, he is not entitled to the discretionary relief of specific performance.

Section 16(1) of the Specific Relief Act provides that the plaintiff who seeks relief of specific performance must aver and prove his readiness and willingness to perform his part of contract. It is only when he discharges the said burden, the Court gets jurisdiction to pass a decree for specific performance. If the plaintiff has not discharged the said statutory obligation, Court has no jurisdiction to grant relief of specific performance. In that view of the matter, the trial Court was justified in declining to grant relief of specific performance.

Point No. 2:

Receipt of Rs. 2,75,000/- under the agreement of sale is now clearly established. Defendant has also acknowledged receipt of Rs. 2,75,000/- by way of cheque. Even if the case of the defendant has to be accepted that said amount is given as loan transaction or financial accommodation, he ought to repay the money back to the plaintiff. Eventhough plaintiff had not prayed for an alternative relief of refund of the said amount, the defendant cannot avoid the liability to repay the said amount. Now the plaint is suitably amended, that a prayer is now made by the plaintiff, the decree for refund of the said amount has to follow. The subject matter of the suit is an agricultural land, over the years, the value of the property is multiplied. The learned counsel for the respondent-defendant has submitted that the defendant has already sold the said property. Under the circumstances, not only the defendant has to refund the said amount but also he has to repay the same with interest at 12% p.a. from the date of payment of the aforesaid amount of Rs. 2,75,000/- till such payment is made. As the property is said to have been sold during the pendency of the appeal, the sale is hit by Doctrine of Lis Pendens. Therefore, amount to be paid by the defendant to the plaintiff would be a charge on the schedule property. Hence, we pass the following order:

"(a) The appeal is partly allowed.

(b) Judgment and Decree of the trial Court declining to grant the decree of specific performance is affirmed. The defendant is directed to refund Rs. 2,75,000/- with interest at 12% p.a. from the date of suit till the date of payment.

(c) The aforesaid amount due in this decree would be a charge on the schedule property.

Parties to bear their own costs."

I.A. II/08 filed to initiate contempt proceedings against respondent, is dismissed. Letter received from District and Sessions Judge, Bangaluru Rural District, is ordered to be filed.