The Commissioner of Incometax vs. M/s. Swarna Wines

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF JUNE, 2024 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON’BLE MR. JUSTICE C.M. POONACHA R.F.A. No.245 OF 2008 (SP) C/W R.F.A. CROB No.29 OF 2008

IN RFA No.245/2008

BETWEEN

C SADASHIVA REDDY AGED ABOUT 60 YEARS S/O C RAMA REDDY R/AT NO 307,7TH MAIN ROAD LAKKASANDRA EXTENSION BANGALORE-30 ...APPELLANT (BY SRI VIVEK HOLLA, ADVOCATE)

AND

1 . SMT RAJAMMA AGED ABOUT 56 YEARS W/O MUNISWAMAPPA NO 18,20TH CROSS BTM LAYOUT 2ND STAGE BANGALORE-81

2 .

SRI MUNISWAMAPPA SINCE DECEASED, BY HIS LRS.,

2 2(A)

M VENKATESH S/O MUNISWAMAPPA AGED ABOUT 49 YEARS NO 18, 20TH CROSS BTM LAYOUT 2ND STAGE BANGALORE-560034 ….RESPONDENTS (BY SRI M SHIVAPRAKASH, ADVOCATE FOR R2(A))

THIS RFA IS FILED U/S 96 OF THE CPC AGAINST THE JUDGEMENT AND DECREE DT. 30.1.08 PASSED IN OS NO. 4330/02 ON THE FILE OF THE VII ADDL. CITY CIVIL JUDGE, BANGALORE, (CCH.19), DISPOSING OFF THE SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT.

IN RFA CROB No.29/2008

BETWEEN

1 . SMT RAJAMMA W/O.MUNISWAMAPPA AGED ABOUT 51 YEARS, NO.18,20TH CROSS, B.T.M.LAYOUT, 2ND STAGE, BANGALORE-81.

2 .

2(A)

SRI MUNISWAMAPPA SINCE DECEASED, BY HIS LRS.,

M VENKATESH S/O MUNISWAMAPPA AGED ABOUT 49 YEARS NO 18, 20TH CROSS BTM LAYOUT 2ND STAGE BANGALORE-560034 ...CROSS OBJECTORS (BY SRI M SHIVAPRAKASH, ADVOCATE)

3 AND

SRI C SADASHIVA REDDY S/O.C.RAMA REDDY AGED ABOUT 55 YEARS, R/AT.NO.307,7TH MAIN, LAKHASANDRA EXTENSION, BANGALORE-30. …RESPONDENT (BY SRI VIVEK HOLLA, ADVOCATE)

THIS RFA.CROB IS FILED U/S XLI RULE 22 OF THE CPC AGAINST THE JUDGEMENT AND DECREE DT. 30.1.08 PASSED IN OS NO. 4330/02 ON THE FILE OF THE VII ADDL. CITY CIVIL JUDGE, BANGALORE, (CCH.19), DISPOSING OFF THE SUIT FOR SPECIFIC PERFORMANCE OF CONTRACT AND THE CROSS- OBJECTOR HEREIN PRAYS TO SET ASIDE THE JUDGMENT AND DECREE IN SO FAR AS PAYMENT OF INTEREST AT THE RATE OF 6% ON RS.25,00,000/- FROM THE DATE OF SUIT TILL REALIZATION. THIS RFA AND RFA CROB HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 10.04.2024, COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS DAY, POONACHA. J., DELIVERED THE FOLLOWING:

JUDGMENT

The present first appeal is filed by the plaintiff under Section 96 of the Code of Civil Procedure, 19081 challenging the judgment and decree dated 30.1.2008 passed in OS No.4330/2002 by the VII Addl. City Civil

1 Hereinafter referred to as the ‘CPC’

4 Judge, Bangalore, (CCH.19)2, whereunder the suit for specific performance filed by the plaintiff has been decreed directing defendant Nos.1 and 2 to jointly and severally pay a sum of ₹25.00 lakhs to the plaintiff together with interest and costs. 2. The defendants have filed RFA Crob.No.29/2008 in the aforementioned appeal under Order XLI Rule 22 of the CPC to set aside the said judgment and decree dated 30.1.2008 insofar as the payment of ₹25.00 lakhs and interest is concerned and to confirm the dismissal of the suit for specific performance. 3. For the sake of convenience, the parties will be referred to as per their rank before the Trial Court. 4. It is the case of the plaintiff that the first defendant is the owner of the suit ‘A’ and ‘B’ schedule properties and the second defendant who is the husband of the first defendant is the owner of the suit schedule ‘C’ property. That the defendants collectively agreed and undertook to sell the suit properties to the plaintiff for a

2 Hereinafter referred to as the ‘Trial Court’

5 total sale consideration of ₹25.00 lakhs and executed an Agreement of Sale dated 24.4.20003 in that regard. That as on the date of the Agreement, the plaintiff paid an advance sale consideration of ₹11.00 lakhs and the balance sale consideration of ₹14.00 lakhs was to be paid by the plaintiff at the time of execution of the Sale Deed. That a time of 8 months was stipulated for completion of the transaction, by which time the defendants undertook to register the Sale Deed in respect of the suit properties. That the defendants were under an obligation to obtain the income tax clearance certificate on or before the registration of the Sale Deed. That on a number of occasions the plaintiff expressed to the defendant his readiness and willingness to pay the balance sale consideration and to complete the sale transaction. However, the defendants on one pretext or the other, without any valid reasons did not execute the Sale Deed within the time fixed under the Agreement.

3 Hereinafter referred to as the ‘Agreement’

6 5. It is the further case of the plaintiff that under the terms of the Agreement, the defendants were to hand over vacant possession of the ‘C’ schedule property to the plaintiff at the time of registration of the Sale Deed, which was in the occupation of one Waheed Begum, who was the mortgagee in possession, by discharging the mortgage debt. 6. That, on 7.6.2000 the defendants approached the plaintiff requesting for payment of a sum of ₹1,10,000/- representing that the same would be treated as payment of the balance sale price and accordingly, the plaintiff paid a sum of ₹1,10,000/- by cash. That the plaintiff once again on 25.10.2000 paid a sum of ₹1,50,000/- by way of two cheques. That the defendants having received further amounts beyond the time stipulated under the Agreement, from the conduct of the defendants, time was not the essence of the Agreement. That the plaintiff, at the request of the defendants paid a sum of ₹1,50,000/- on 17.1.2001 by way of cheque to the mortgagee as part of the mortgage amount. That, again

7 on 18.6.2001 the defendants approached the plaintiff and requested for payment of ₹2,40,000/- and the plaintiff paid a sum of ₹70,000/- by way of cheque and ₹1,70,000/- by way of cash on the said date in part performance of the Agreement. 7. It is the further case of the plaintiff that the defendants approached him on 4.2.2002 for payment of a sum of ₹7,50,000/- for payment of the same to the mortgagee who is in possession of the suit ‘C’ schedule property and hence, said amount was paid by the plaintiff. That the said amount is deemed to have been received by the defendant towards the balance sale consideration. 8. That the defendants, having regard to the payments made by the plaintiff, handed over vacant possession of the suit properties on 4.2.2002, however postponed executing the Sale Deed. That after taking possession of the property, the plaintiff has spent a sum of ₹4.00 lakhs towards renovation, internal alterations, etc., of the suit properties. That the plaintiff has paid the entire agreed sale consideration of ₹25.00 lakhs and having been

8 in possession of the suit properties, the registration of the Sale Deed is only a formality. However, despite the repeated requests by the plaintiff to execute the Sale Deed, the defendants on one pretext or the other have been avoiding execution of the Sale Deed. 9. It is the further case of the plaintiff that on 1.6.2002 the defendants along with their servants highhandedly and illegally trespassed into the suit properties by breaking open the lock. That the plaintiff came to know of the said illegal act of trespassing on 3.6.2002 and immediately lodged a police complaint on 4.6.2002. That the defendants were attempting to sell the suit properties to the third person and the said act of the defendants amounted to a refusal to perform the Agreement/contract. Hence, the plaintiff filed the suit for specific performance. 10. The first defendant entered appearance and contested the suit of the plaintiff by filing the written statement. The first defendant has denied the case of the plaintiff and has contended that the Agreement stood

9 lapsed by efflux of time. That the defendants are illiterates, are not much educated and are flower sellers by profession. That the plaintiff is a Government College Tutor and well educated and with a view to knock off the properties of defendant Nos.1 and 2 induced them to enter into the Agreement. That up to 24.12.2000 the plaintiff paid only ₹5,50,000/- when he ought to have paid the entire sale consideration of ₹25.00 lakhs on or before the said date and time being the essence of the contract, the same is not enforceable and hence, the suit is liable to be dismissed. 11. It is the further case of the first defendant that the plaintiff has taken undue advantage of the helplessness and old age of the defendants and induced the defendants to receive a sum of ₹70,000/- on 18.6.2001. That the plaintiff has suppressed the fact that on 4.9.1998 he has advanced a sum of ₹1,50,000/- to the first defendant and got the Mortgage Deed registered by deposit of the Sale Deeds. That in the Agreement, there is no mention of the said Mortgage Deed dated 4.9.1998. It

10 is the further case of the defendants that they are living in the suit properties along with their children. That the contents of the Agreement were never read over and explained to them. Hence, the defendants sought for dismissal of the suit. 12. Based on the pleadings of the parties, the Trial Court framed the following issues: “1. Whether the plaintiff proves that he has paid the entire sale consideration to the defendants?

11 13. The plaintiff examined himself as PW.1. PWs.2, 3 and 4 are witnesses examined on behalf of the plaintiff. Exs.P1 to P 38 were marked in evidence. The first defendant examined herself as DW.1 and a witness as DW.2. Exs.D1 to D88 were marked in evidence. The Trial Court by its judgment and decree dated 30.1.2008 passed the following order:

“The defendant Nos.1 and 2 jointly and severally shall pay a sum of ₹25,00,000/- (Rs.Twenty Five Lakhs only) to the plaintiff within six months together with the cost of the suit with interest at the rate of 6% per annum from the date of the suit till realization.

Accordingly, the suit of the plaintiff has been disposed off.”

12 has erred in not ordering for specific performance merely due to the fact that the Mortgage Deeds dated 4.9.1998 (Exs.D86 and D87) between the first defendant and plaintiff have not been averred in the plaint. He submits that non mentioning of the said Mortgage Deeds cannot tantamount to suppression of material facts as held by the Trial Court since the interest of the parties in the said Mortgage Deeds is not in any manner contrary or derogation of the rights of the parties as per the Agreement (Ex.P1). He further submits that having regard to the finding recorded by the Trial Court that the entire sale consideration has been paid by the plaintiff, which has been received by the defendants, the Trial Court ought to have ordered for specific performance of the Agreement (Ex.P1). Hence, he seeks for allowing of the appeal and granting of the reliefs sought for and dismissing the cross objection. 16. Per contra, learned counsel Sri M.Shivaprakash appearing for the defendants who are the respondents in the appeal and cross objectors in the cross objection

13 contends that the first defendant who is the wife and second defendant who is her husband are flower sellers and the plaintiff who is a Government School Teacher and is also running a chit fund entity namely, Sadvijai Chits and Financial Services Private Limited as well as running another entity under the name and style of Sadvijai Enterprises, who are dealers in telephones, refrigerators, home appliances and two wheelers has had various financial transactions with the defendants and having regard to the dominant position that the plaintiff had with the defendants, the said Agreement (Ex.P1) has been executed. He further contends that the defendants have mortgaged their properties in favour of the Sadvijai Chits, in which the plaintiff was a Director and the said Mortgage Deeds (Exs.D86 and D87) which pertain to the suit properties have not been averred in the plaint. Further, the receipts for having received monies from the plaintiff have been produced as Exs.D1 to D79, which clearly demonstrate the periodical financial transactions that the plaintiff has had with the defendants. Hence, he contends

14 that the Agreement (Ex.P1) is the outcome of the said transactions and the plaintiff has taken advantage of illiteracy and lack of education of the defendants while getting executed the Agreement (Ex.P1). He further submits that the Trial Court was justified in refusing specific performance and that the Trial Court ought not to have ordered for refund of the sum of ₹25.00 lakhs together with interest at 6% pa. Hence, he seeks for dismissal of the above appeal and for allowing of the cross objection. 17. Both the learned counsel have referred to various judgments, which shall be referred to during the course of this judgment to the extent that they are necessary for adjudication of the questions that arise for consideration in these proceedings. 18. The submissions of both the learned counsel have been considered and the material on record including the records of the Trial Court have been perused. The questions that arise for consideration are:

15 i. Whether the finding of the Trial Court that the plaintiff has proved execution of the Agreement of Sale dated 24.4.2000 and paid the entire sale consideration of ₹25.00 lakhs, is erroneous and liable to be interfered with? ii. Whether the finding of the Trial Court denying the specific performance of the Agreement of Sale dated 24.4.2000, is just and proper?? iii. Whether the judgment and decree passed by the Trial Court is erroneous and liable to be interfered with?

Re. question No.(i):

16 24.4.2000 respectively drawn on Syndicate Bank in favour of defendant No.2; iii. ₹3.00 lakhs by way of pay order bearing No.093061 dated 24.4.2000 drawn in favour of the first defendant. 20. The balance sale consideration of ₹14.00 lakhs is agreed to be paid at the time of execution of the Sale Deed, which was required to be executed on or before 8 months from the date of the Agreement. It is further specified that the defendants are required to obtain necessary Income Tax Clearance Certificate from the IT Department and such other permissions necessary for completion of the sale in terms of the Agreement. It is further specifically mentioned that the second defendant has mortgaged the suit ‘C’ schedule property to one Waheeda Begum for a sum of ₹9,50,000/- and that the second defendant shall hand over the vacant possession of the suit ‘C’ schedule property on the date of execution of the registered Sale Deed and if the second defendant fails to hand over vacant possession of the same, the plaintiff is at liberty to deduct the mortgage amount of ₹9,50,000/-

17 proportionately from the balance sale consideration and under the said circumstances, the same is to be treated as the balance sale consideration. i. The two witnesses who have signed the Agreement are, one G.R.Channakeshava Reddy and Krishna Reddy and a consenting witness M.Venkatesh has also signed the Agreement.

An endorsement dated 18.6.2001 is forthcoming on the last page of Ex.P1, whereunder the defendants have received a further sum of ₹5.00 lakhs from the plaintiff in the following manner: ii. ₹1,10,000/- on 7.6.2000 by cash; iii. ₹1,50,000/- by two cheques, both dated 25.10.2000; iv. ₹1,70,000/- by cash on 18.6.2001; and v. ₹70,000/- by cheque on 18.6.2001. 21. It is further recorded by the said endorsement dated 18.6.2001 that the defendants have handed over vacant possession of the cellar portion of the schedule property to the plaintiff along with original documents in part performance of the agreement and that the time to perform the Agreement from what was originally fixed is

18 extended. The said endorsement is signed by the defendants and two witnesses namely, R.Raghavendra Reddy and R.Krishnoji Rao. 22. There is another endorsement dated 4.2.2002 in Ex.P1, whereunder the defendants have acknowledged receipt of the balance sale consideration of ₹9.00 lakhs vide payment made to Waheeda Begum, who is the mortgagee in a portion of ground and first floor of the suit property. It is further recorded in the said endorsement that the plaintiff has been handed over vacant possession of the ground and first floor of the suit property. It is further recorded that the entire sale consideration has been received and the defendants undertake to register the Sale Deed after performing the conditions. The defendants have signed the said endorsement and a witness one G.R.Vijay Lakshmi has also signed the said endorsement. 23. PW.2 is R.Krishnoji Rao, who is a witness to the endorsement dated 18.6.2001. The signature of PW.2 has been marked as Ex.P1(i). PW.3 is one G.R.Vijay Lakshmi

19 who is a witness to the endorsement dated 4.2.2002. The said endorsement is marked as Ex.P1(h); PW.4 is one N.Krishna Reddy who is a witness to the Agreement (Ex.P1). 24. PW.1 has reiterated the averments made in the plaint and the amount paid to the defendants. PW.1 has adduced his further examination-in-chief, wherein he has stated regarding the availability of funds. PW.1 has been extensively cross-examined regarding the fact that being a Government School Teacher he did not have the requisite permission to be a Director in an entity carrying on chit fund business as well as an entity, wherein he was a dealer in various home appliances. The said aspect of the matter would not be a subject matter of consideration in the present suit for specific performance. 25. PW.2 has deposed regarding the endorsement made on 18.6.2001 and he has also stated regarding the presence of another witness R.Raghavendra Reddy in terms of the said endorsement.

20 26. PW.3 who is the wife of the plaintiff has deposed regarding the endorsement dated 4.2.2002 and has stated that the plaintiff has paid a sum of ₹7,50,000/- to the mortgagee – Waheeda Begum on the instructions of the defendants and that as on the said date the plaintiff has paid a sum of ₹1,50,000/- on 17.1.2002 and ₹7,50,000/- on 4.2.2002 and thereby paid a total sum of ₹9.00 lakhs to the said mortgagee – Waheeda Begum. 27. PW.4 has deposed regarding the fact that he has signed as a witness to the Agreement (Ex.P1) and another witness G.Channakeshava Reddy was also present as also two consenting witnesses who are the sons of the defendants. He has stated that on the date of the Agreement a sum of ₹7.00 lakhs was paid by cash and two cheques of ₹1.00 lakh as well as a pay order of ₹3.00 lakhs was paid in his presence by the plaintiff to the defendants and thereby the advance sum of ₹11.00 lakhs was paid. 28. PWs.1 to 4 have been cross-examined in detail. However, there is no variation from the testimony of the

21 said witnesses as stated in the examination-in-chief with regard to the execution of the agreement and the payment of consideration. 29. The Mortgage Deed dated 4.9.1998 (Ex.D86) has been executed by the first defendant in favour of the plaintiff, whereunder the first defendant has received a sum of ₹1,50,000/- and has undertaken to repay the same with 24% interest within three years. The property which is the subject matter of said mortgage is the suit schedule ‘A’ property. 30. The Mortgage Deed dated 4.9.1998 (Ex.D87) is executed by the first defendant in favour of the plaintiff, whereunder the plaintiff has received a sum of ₹1,50,000/- and has undertaken to repay the same with 24% interest within three years. The property which is the subject matter of said mortgage is the suit schedule ‘B’ property. 31. The receipts at Exs.D1 to D79 are issued by the Sadvijai Enterprises acknowledging receipt of various amounts from the first defendant with respect to various financial transactions, which are primarily noted as Hand

22 Loans (HL). Ex.D9 is a receipt for ₹4,000/- on account of installment for a TV. The said receipts are issued between the period 8.9.1998 and 1.12.1999. 32. It is the contention of the plaintiff that he has been put in possession of the suit properties in part performance of the Agreement as is forthcoming from the endorsement dated 18.6.2001 and consequent to the plaintiff being put in possession of the suit properties, he has spent substantial amounts for carrying out repair works and other maintenance works in the schedule properties and the records with regard to the same have been produced as Ex.P4 to P13. The aspect regarding the plaintiff having been put in possession of the suit properties has been averred in para 9 of the plaint. It is the further contention of the plaintiff that the defendants have trespassed into the suit properties on 1.6.2002 and 3.6.2002 as has been averred in para 11 of the plaint and the police complaint (Ex.P25) has also been produced in proof of the fact that the defendants have trespassed into the property.

23 33. The first defendant has been examined as DW.1 and she has deposed that the plaintiff who was a lecturer/teacher has not disclosed the defendants regarding the various financial transactions and taking advantage of their illiteracy and their need for money has got registered the Mortgage Deeds and other documents including the Agreement (Ex.P1). That the plaintiff has suppressed various facts while approaching the Court and that the defendants never intended to sell the suit properties and has filed the suit with a mala fide intention. DW.1 has been cross-examined in detail with regard to her transactions with the plaintiff as well as with regard to her testimony put forth in her examination-in-chief. 34. A witness has been examined as DW.2, who has deposed that she was residing for more than 12 years in the same area as the defendants. That the first and second defendants have constructed a house in the suit properties and are residing in the same and that she was orally informed by the plaintiff that the defendants had entered into an Agreement with the plaintiff. DW.2 has

24 further deposed that the sons of defendants used to frequently quarrel with the defendants and demand money for starting a business and under these circumstances, the plaintiff was requested to pay the balance sale consideration to the defendants. DW.2 has further deposed that the plaintiff had informed that he was not serious in purchasing the suit premises/properties. DW.2 has also been cross-examined. 35. It is forthcoming from the oral and documentary evidence on record, as noticed above, that the defendants being illiterate and flower sellers were constantly having financial transactions with the plaintiff having regard to their financial position. Further, it is forthcoming that the plaintiff who is stated to be a Government School Teacher was also involved in various business activities of having financial services through Sadvijai Chits and Financial Services Private Limited as well as carrying on business of home appliances under the name and style Sadvijai Enterprises. It is further forthcoming that a portion of the premises in the suit properties was let out to one Waheeda

25 Begum who was the mortgagee in possession of the said property. It is also forthcoming that as security for the amounts borrowed by the defendants from the plaintiff, the Memorandum of Mortgage dated 4.9.1998 (Exs.D86 and D87) have been executed by the first defendant in favour of the plaintiff. 36. It is forthcoming from the aforementioned that the agreed sale consideration of ₹25.00 lakhs has been paid in the following manner:

i. ₹11.00 lakhs as on the date of Agreement (Ex.P1) dated 24.4.2000;

ii. ₹5.00 lakhs as acknowledged in the endorsement dated 18.6.2001;

iii. ₹9.00 lakhs in terms of the endorsement dated 4.4.2002.

26 precarious financial position, the plaintiff has adduced adequate oral and documentary evidence that the defendants have executed the Agreement (Ex.P1) and has received the amounts mentioned therein, to prove the same the defendants have not been able to impeach the said testimony. The Trial Court while appreciating the oral and documentary evidence available on record has recorded a finding that the plaintiff has adequately proved the due execution of the Agreement as well as the payment of a sum of ₹25.00 lakhs as agreed therein. 39. In this context, it is relevant to note that although the sale transaction has been agreed to be completed within eight months from the date of Ex.P1, the defendants have received moneys beyond the said period of eight months as acknowledged under Ex.P1. Hence, it cannot be said that the time was the essence of the contract and that the time of eight months as mentioned in Ex.P1 is required to be strictly construed. 40. It is the vehement contention on behalf of the plaintiff that the defendants were required to furnish

27 Income Tax Clearance Certificate for the purpose of registration of the Sale Deed pursuant to the execution of Ex.P1. Although there is a clause in Ex.P1, having regard to the avocation and financial status of the defendants and having regard to the fact that the plaintiff has not produced any other material on record to demonstrate that the said clearance certificate is in fact necessary for completing the sale transaction, it cannot be said that the defendants have defaulted in furnishing the Income Tax Clearance Certificate for completion of the sale transaction as per Ex.P1. 41. In view of the discussion made above, it is clear that the defendants have executed the Agreement (Ex.P1) and have also acknowledged receipt of the moneys mentioned therein of a total sum of ₹25.00 lakhs. The Trial Court has also adequately appreciated the oral and documentary evidence available on record and answered issue No.1 in favour of the plaintiff. Hence, question No.(i) framed for consideration is answered in the affirmative.

28 Re.question No.(ii): 42. While adjudicating a suit for specific performance the Court is required to consider as to whether the plaintiff has satisfied the requisite criteria as contemplated under Section 16(c) regarding readiness and willingness as well as exercise of directions as contemplated under Section 20 of the Specific Relief Act, 19634. 43. The relevant statutory provisions are noticed hereinbelow for ready reference: i. Section 16(c) of the Act states as follows: “16. Personal bars to relief.— Specific performance of a contract cannot be enforced in favour of a person— (a) … (b) …. (c)who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant.”

ii. Section 20 of the Act states follows: “20. Discretion as to decreeing specific performance.— (1)The jurisdiction to decree specific performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. (2)The following are cases in which the court may properly exercise discretion not to decree specific performance:—

4 Hereinafter referred to as the ‘Act’

29 (a)where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant; or

(b)where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or

(c)where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.

Explanation 1.—Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause (a) or hardship within the meaning of clause (b).

Explanation 2.—The question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.

(3)The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.

(4)The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party.”

30 question of considering readiness of the plaintiff does not arise. However, the willingness is another aspect that is required to be considered. For the said purpose, it is relevant to note that the plaintiff has failed in demonstrating that the defendants were required to furnish the Income Tax Clearance Certificate for completion of the sale transaction. Further, it is relevant to note that consequent to the execution of the Agreement (Ex.P1) no notice has been issued by the plaintiff to the defendants calling upon them to complete the sale transaction. 45. Having regard to the aforementioned, it is relevant to note that with regard to the readiness, the plaintiff having paid the entire sale consideration has demonstrated his readiness to complete the sale transaction. However, with regard to the willingness the two factors i.e., the plaintiff not demonstrating the requirement of furnishing the Income Tax Clearance Certificate by the defendants for the purpose of completing the sale transaction and the fact that the plaintiff has not

31 even called upon the defendants to complete the sale transaction prior to filing of the suit, would adversely reflect upon the willingness of the plaintiff to complete the sale transaction. 46. Although it is the vehement contention of the learned counsel for the plaintiff that there is no statutory requirement for the plaintiff to give a notice for completion of the sale transaction prior to filing of the suit for specific performance and that the plaintiff has repeatedly called upon the defendants to complete the sale transaction, it is relevant to note that the Court while adjudicating upon the willingness of the plaintiff is required to consider the various factors and the non issuance of a notice by the plaintiff requiring and calling upon the defendants to complete the sale transaction is a material aspect which is required to be considered. 47. Further, with regard to the hardship that may be caused to the defendants while the Court is to exercise its discretion as contemplated under Section 20(2) of the Act,

32 the fact that the defendants are un-educated and are flower sellers by avocation is an aspect which is required to be kept in mind. Further, it is forthcoming from the material on record that the suit properties are the only properties available to the defendants and they are residing in the same. It is further relevant to take note of the fact that the plaintiff was a Government School Teacher and is also involved in various financial transactions like Chit fund business as well as having dealership of home appliances. 48. It is relevant to note that a coordinate Bench of this Court in the case of Chinnaswamy v. Profulla5 has held as follows: “23. ………….. A person seeking specific performance of an Agreement must approach the court with clean hands. He or she should not suffer from or give rise to unrighteous conduct. Accordingly Point No. 3 is answered in the negative. ……….

5 ILR 1992 KAR 2294

34 However, it is clear that the plaintiff has paid moneys as per Ex.P1 to the defendants. Hence, it is just and proper that the same be refunded together with interest. 51. While adjudicating upon the rate of interest, this Court is required to exercise its discretion under Section 34 of the CPC. Keeping in mind the nature of transaction between the parties and the circumstances, as already noticed above, it is just and proper that the said amount of ₹25.00 lakhs be refunded together with interest at 8% pa. Hence, the question No.(iii) framed for consideration is answered in partly in the affirmative. 52. In view of the aforementioned, the following: ORDER i. RFA No.245/2008 is partly allowed; ii. Cross objection No.29/2008 is dismissed; iii. The judgment and decree dated 30.1.2008 passed in OS No.4330/2002 by the VII Addl. City Civil Judge, Bangalore, (CCH.19), is modified only to the extent of holding that the defendants jointly and severally

35 are liable to pay to the plaintiff a sum of ₹25.00 lakhs together with interest at 8% pa., from date of suit till date of payment with costs; iv. The judgment and decree passed by the trial court in

all other respects remains unaltered; v. Modified decree to be drawn accordingly.

Sd/- JUDGE

Sd/- JUDGE

nd/-