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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF FEBRUARY, 2023
BEFORE
THE HON’BLE MRS. JUSTICE M G UMA REGULAR SECOND APPEAL NO. 714 OF 2017 (SP)
BETWEEN:
SRI. A. PAPANNA S/O LATE ANNAIAH AGED ABOUT 72 YEARS RE/AT HINKAL VILLAGE MYSORE TALUK MYSORE DISTRICT - 570 017. ... APPELLANT
(BY MR: C.M. NAGABHUSHAN, A/W MR: ANANDA K., ADVOCATES)
AND:
SRI. D.M. PATEL S/O M.M. PATEL AGED ABOUT 64 YEARS R/AT NO.10 INDUSTRIAL SUBURB MYSURU - 570 016.
... RESPONDENT
(BY MR: CHANDRAKANTH R. GOULAY, ADVOCATE)
THIS R.S.A. IS FILED UNDER SECTION 100 OF CPC AGAINST THE JUDGMENT AND DECREE DATED: 23.01.2017 PASSED IN R.A.NO.579/2016 ON THE FILE OF THE II ADDITIONAL DISTRICT JUDGE, MYSURU, ALLOWING THE APPEAL AND MODIFIYING THE JUDGMENT AND DECREE DATED: 13.04.2016 PASSED IN OS.NO.1024/2007 ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL JUDGE AND CJM., MYSURU.
2 THIS R.S.A. HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 14.11.2022 COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT DELIVERED THE FOLLOWING:
J U D G M E N T
The defendant is before this Court impugning the judgment and decree dated 23.01.2017 passed in RA No.579 of 2016 on the file of the learned II Additional District Judge, Mysuru (hereinafter referred to as 'the First Appellate Court' for brevity), allowing the appeal and modifying the judgment and decree dated 13.04.2016 passed in OS No.1024 of 2007 on the file of the learned I Additional Senior Civil Judge and CJM, at Mysuru (hereinafter referred to as 'the Trial Court' for brevity), and decreeing the suit of the plaintiff for specific performance of the contract directing the defendant to execute the registered sale deed by receiving a sum of Rs.30,00,000/-.
For the sake of convenience, parties are referred to as per their status and rank before the Trial Court.
Brief facts of the case are that, the plaintiff filed the suit OS No.1024 of 2007 against the defendant seeking specific performance of the contract i.e., the agreement to sell
3 dated 16.08.2004. It is the contention of the plaintiff that the defendant approached him with an intention to sell 20 guntas of land in Sy.No.4/2B situated at Hinkal Village, Mysuru Taluk, proclaiming that he is the absolute owner in possession of the property. The parties have agreed for a total consideration amount of Rs.3,20,000/-. It was agreed to pay Rs.1,75,000/- as advance and the balance amount at the time of executing the sale deed. The defendant undertook to hand over the possession of the property in favour of the plaintiff at the time of executing the sale deed and also to hand over the original documents. Accordingly, the agreement dated 16.08.2004 was executed and the same was registered by the defendant after accepting the part consideration amount of Rs.1,75,000/-.
It is contended by the plaintiff that after execution of the sale agreement, he came to know that the land bearing Sy.No.4/2B is involved in litigation under Urban Land (Ceiling and Regulation) Act, 1976 (hereinafter referred to as 'ULC proceedings' for brevity) and major portion of the land was not free from encumbrance. Immediately, the plaintiff approached the defendant who promised to settle all those
4 disputes as he has challenged the order passed by the Deputy Commissioner, Mysuru before the High Court in Writ Petition No.31306 of 2003. The defendant also promised to complete the sale transaction as agreed and to hand over the possession of the property immediately after disposal of the writ petition and getting Sy.No.4/2B mutated in his name. Accordingly, ULC proceedings ended in favour of the defendant and his name was mutated in the revenue records in respect of Sy.No.4/2B measuring 1.20 acres of Hinkal Village.
It is contended that the defendant demanded the balance consideration amount of Rs.1,45,000/- towards litigation expenses and assured to execute the registered sale deed by delivering the possession of the property. Accordingly, the plaintiff paid the balance consideration amount. Therefore, it is contended that the entire sale consideration was paid by the plaintiff to the defendant. In spite of that, the defendant was not ready and willing to perform his part of the contract. The plaintiff issued the legal notice, calling upon the defendant to perform his part of the contract and to execute the sale deed as undertaken. The
5 defendant has neither replied nor complied with the demand made by the plaintiff.
It is stated that the defendant had sent a legal notice to the plaintiff on 28.03.2007 through his advocate contending that he had executed the agreement for sale dated 16.08.2004 in favour of the plaintiff and had received Rs.1,75,000/- towards part sale consideration. It is contended that the balance amount at the rate of Rs.1,000/- per square feet is due and the time is the essence of the contract. It is also stated in the notice that since the plaintiff was not ready and willing to perform his part of the contract, the defendant revoked the agreement of sale. The defendant knowing fully well about the agreement dated 16.08.2004 and receipt of the balance consideration amount, suppressed the same and taken up a new contention.
It is also contended that the defendant even though received the entire consideration amount of Rs.3,20,000/- falsely claiming that the plaintiff is due in a sum of Rs.1,45,000/-. The plaintiff in order to avoid the controversy was ready to make the payment once again. It is
6 stated that the cause of action for the suit arose on 16.08.2004, when the agreement of sale is executed and when the balance consideration amount is paid. Therefore, prayed for a decree for specific performance of the agreement to sell by accepting the balance consideration of Rs.1,45,000/-.
The defendant appeared before the Trial Court and filed the written statement denying the contention taken by the plaintiff. Execution of the agreement dated 16.08.2004 and paying of the advance of Rs.1,75,000/- are all denied. On the other hand, it is contended that the plaintiff being a business man with an intention to acquire the property had orally entered into a gentleman agreement with the defendant agreeing for the sale consideration amount of Rs.1,75,00,000/-, but to avoid income tax, to save the stamp duty and registration charges, the consideration amount was shown less. The defendant agreed for the same. It is contended that time was the essence of the contract.
It is further contended that the plaintiff has already filed another suit against the defendant in OS No.868
7 of 2007 seeking similar relief of specific performance of the contract. Since the parties and the relief claimed in both the suits are one and the same, it is contended that the suit is not maintainable. The defendant contended that he entered into the agreement for sale with the plaintiff in respect of the land bearing Sy.No.4/2B measuring 20 guntas situated at Hinkal Village with the boundaries mentioned therein. It was mutually agreed that the sale consideration for the above said property is Rs.1.75 crores, if the defendant gets quashed the notification made under ULC Act in Writ Petition No.31306 of 2003 filed before this Court. The said writ petition came to be disposed of on 28.06.2005. The agreement referred to by the plaintiff was entered into only to produce before the Department of Income tax and such other authority and to save the stamp duty. Separate sale agreement has been executed agreeing to pay the sale consideration of Rs.30,00,000/- which was meant to be shown to the lenders of the plaintiff. Taking advantage of these two agreements, the plaintiff is seeking specific performance of the contract under both the agreements, which is unsustainable in law.
It is contended that the plaintiff has filed OS No.1025 of 2007 against the defendant seeking specific performance of the agreement dated 28.07.2004. The agreement dated 28.07.2004 and 16.08.2004 are one and the same and are in respect of the same property. The agreement dated 16.08.2004 is a registered agreement, whereas agreement dated 28.07.2004 is an unregistered agreement. Therefore, it is contended that the plaintiff is not entitled for the relief of specific performance of the contract. Accordingly, he prays for dismissal of the suit.
The plaintiff got amended the southern and northern boundary of the schedule property by deleting the earlier boundary shown as South: A Papanna's Land and North:Sy.No.6, amended it as North: A Papanna's land and South : Sy.No.6. An additional written statement came to be filed after amendment of the plaint and contended that the amendment was an afterthought and therefore, prayed for dismissal of the suit.
Plaintiff filed rejoinder contending that the earlier suit filed for specific performance of the contract came to be
9 decreed and the defendant has preferred RA No.143 of 2011 which was remanded for fresh disposal. It is contended that the defendant is trying to make out a new case by filing amended written statement and the same is liable to be dismissed. The contention taken by the defendant that the parties have entered into gentleman agreement to pay sale consideration of Rs.1.75 crores to avoid income tax, stamp duty etc., are all denied. It is contended that the defendant deliberately suppressed the fact that there was litigation pending with regard to ULC proceedings. The defence taken by the defendant that OS No.868 of 2007 was filed in respect of the same property is also denied. It is contended that the plaintiff and the defendant mutually agreed under two different agreement for purchase of two different properties, measuring 20 guntas each, with different boundaries. Therefore, it is stated that the contention taken in the written statement are all false and untenable. It is also stated that agreement dated 28.07.2004 and 16.08.2004 are quite different in respect of two distinct properties and therefore, prayed for decreeing the suit.
On the basis of these pleadings, the Trial Court framed the following issues and additional issue for consideration:
(1) ªÁ¢AiÀÄÄ zÁªÁ D¹ÛAiÀÄ£ÀÄß ¥ÀæwªÁ¢AiÀÄÄ 3,20,000.00 gÀÆ.UÀ½UÉ ªÀiÁgÁl ªÀiÁqÀ®Ä M¦àzÀgÀÄ. PÀæAiÀÄzÀ PÀgÁgÀÄ §gÉzÀÄPÉÆnÖzÁÝgÉ. 1 ®PÀëzÀ 75 ¸Á«gÀ gÀÆ.UÀ¼À£ÀÄß ªÀÄÄAUÀqÀªÁV ¥ÀqÉ¢zÁÝgÉ. PÀæAiÀÄzÀ PÀgÁgÀÄ §gÉzÀÄPÉÆnÖzÁÝgÉ. PÀæAiÀÄ ¥ÀvÀæ §gÉzÀÄ £ÉÆÃAzÁ¬Ä¹PÉÆqÀĪÀAvÉ MvÁ۬ĹzÀÝgÀÆ ¤gÁPÀj¹zÁÝgÉ JA§ÄzÁV gÀÄdĪÁvÀÄ ªÀiÁqÀÄvÁÛ£ÉAiÉÄÃ?
(2) vÀ£Àß ¥Á°£À PÀgÁj£À°è£À PÀvÀðªÀåªÀ£ÀÄß AiÀiÁªÁUÀ®Æ ¤ªÀð»¸À®Ä ¹zÀÞ¤gÀĪÀÅzÁV gÀÄdĪÁvÀÄ ªÀiÁqÀÄvÁÛ£ÉAiÉÄÃ?
(3) ¥ÀæwªÁ¢AiÀÄÄ ªÀiÁgÁl ªÀiÁqÀ®Ä M¦àgÀĪÀ zÁªÁ D¹Û £ÀUÀgÀ ¨sÀÆ«Äw PÁAiÉÄÝ C£ÀéAiÀÄ «ªÁzÀzÀ°è EvÀÄÛ. CzÀ£ÀÄß DvÀ£ÀÄ ªÀÄgɪÀiÁazÁÝ£É JA§ÄzÁV ªÀÄvÀÄÛ CzÀÄ wêÀiÁð£ÀªÁzÀ £ÀAvÀgÀ PÀæAiÀÄ¥ÀvÀæ §gÉzÀÄPÉÆnÖ®è JA§ÄzÁV ªÁ¢ gÀÄdĪÁvÀÄ ªÀiÁqÀÄvÁÛ£ÉAiÉÄÃ?
(4) ¥ÀæwªÁ¢AiÀÄÄ vÁ£ÀÄ zÁªÁ D¹ÛAiÀÄ£ÀÄß ªÁ¢UÉ ªÀiÁgÁl ªÀiÁqÀ®Ä M¦à PÀæAiÀÄzÀ PÀgÁgÀÄ §gÉzÀÄPÉÆnÖgÀĪÀÅzÁVzÉ. DzÀgÉ PÀæAiÀÄzÀ ªÉÆvÀÛ 1 PÉÆÃn 75 ®PÀë gÀÆ.UÀ¼ÁVzÉ. ªÁ¢AiÀÄÄ ªÀåªÀºÁgÀ¸ÀÜ£ÁVzÀÄÝ ¸ÁÖöåA¥ï qÀÆånAiÀÄ£ÀÄß ªÀgÀªÀiÁ£À vÉjUÉ G½¸À®Ä ªÀÄvÀÄÛ £ÉÆÃAzÁªÀt ±ÀĮ̪À£ÀÄß PÀrªÉÄ ªÀiÁrPÉƼÀî®Ä £ÁªÀÄPÁªÀ¸ÉÜUÁV MAzÀÄ PÀgÁgÀ£ÀÄß §gɹPÉÆArgÀÄvÁÛ£É ªÀÄvÀÄÛ vÁ£ÀÄ D¹ÛAiÀÄ ¸ÀA§AzsÀzÀ J¯Áè «ZÁgÀUÀ¼À£ÀÄß DvÀ¤UÉ w½¹zÀÄÝ DvÀ£ÀÄ CzÀ£ÀÄß ¥Àj²Ã°¹ MAzÀÄ wAUÀ¼ÉƼÀUÁV D¹ÛAiÀÄ£ÀÄß Rjâ¸À®Ä M¦à PÀæAiÀÄzÀ PÀgÁgÀÄ ªÀiÁrPÉÆArzÁÝ£É. DzÀgÉ M¥ÀàAzÀzÀAvÉ MAzÀÄ wAUÀ¼ÉƼÀUÁV PÀæAiÀÄzÀ ¨ÁQ ºÀtªÀ£À£ÀÄß ¥ÁªÀw ªÀiÁr®è, vÀ£Àß ¥Á°£À PÀgÁj£À PÀvÀðªÀåªÀ£ÀÄß ¤ªÀð»¸À®Ä
11 AiÀiÁªÁUÀ®Æ ¹zÀݤ®è. ¸ÀªÀÄAiÀĪÉà PÀgÁj£À ªÀÄÄRå CA±À (time is essence of contract) JA§ÄzÁV gÀÄdĪÁvÀÄ ªÀiÁqÀÄvÁÛ£ÉAiÉÄÃ?
(5) zÁªÁªÀ£ÀÄß ªÀiË°åÃPÀj¹gÀĪÀÅzÀÄ, £ÁåAiÀiÁ®AiÀÄPÉÌ ±ÀÄ®Ì ¥ÁªÀw ªÀiÁrgÀĪÀÅzÀÄ ¸Àj¬Ä®è.
ªÀiÁgÀÄPÀmÉÖ ¨É¯ÉAiÀÄ ªÉÄÃ¯É zÁªÁªÀ£ÀÄß ªÀiË°åÃPÀj¸À¨ÉÃPÁVvÀÄÛ JAzÀÄ ¥ÀæwªÁ¢AiÀÄÄ gÀÄdĪÁvÀÄ ªÀiÁqÀÄvÁÛ£ÉAiÉÄÃ?
(6) ¤¢üðµÀÖ ¥Á®£ÉUÁV rQæ ªÀiÁrzÀ°è CxÀªÁ ªÀiÁqÀzÉà EzÀÝ°è AiÀiÁªÀ ¥ÀPÀëUÁgÀ¤UÉ ºÉaÑ£À ºÁ¤ GAmÁUÀÄvÀÛzÉ? ¥ÀPÀëUÁgÀgÀÄ AiÀiÁªÀ ¥ÀjºÁgÀ ºÉÆAzÀ®Ä CºÀðgÀÄ?"
Additional issue:
"Whether the defendant proves that, the suit schedule property covered under agreement of sale dated 16.08.2004 and property covered under agreement of sale dated 28.07.2004 are one and the same, as contended in para 14(b) of the amended written statement?"
The plaintiff examined himself as PW1 and got marked Exs.P1 to P10 in support of his contention. The defendant examined himself as DW1 and examined DWs.2 and 3 and got marked Exs.D1 to 17 in support of his defence. The Trial Court after taking into consideration all these materials on record, answered issue Nos.1, 3 and 4 partly in the Affirmative and issue Nos.2 and 5 and additional issue
12 No.1 in the Negative, accordingly, decreed the suit of the plaintiff in part. The prayer for specific performance of the contract was rejected. The defendant was directed to repay Rs.1,75,000/- paid under the agreement - Ex.P.1, with interest at 12% p.a. from the date of agreement till the date of realization.
Being aggrieved by the same, the plaintiff has preferred RA No.579 of 2016. The First Appellate Court on re- appreciation of the materials on record, allowed the appeal with costs and decreed the suit for specific performance of the contract directing the plaintiff to pay additional sum of Rs.30,00,000/- to the defendant. Being aggrieved by the same, the defendant is before this Court.
Heard Sri C M Nagabhushan and Sri K Ananda, learned counsel for the appellant and Sri Chandrakanth R Goulay, learned counsel for the respondent. Perused the materials on record including the Trial Court records.
Learned counsel for the appellant contended that the plaintiff has filed OS No.1025 of 2007 before the Trial Court in respect of similar agreement dated 28.07.2004,
13 alleging that the defendant had agreed to sell the schedule property and therefore sought for specific performance of the contract. The said suit was partly allowed directing the defendant to pay Rs.30,00,000/-. But the prayer of the plaintiff for specific performance of the contract was rejected. The said judgment directing payment of the amount was challenged by the defendant by preferring the first appeal before this Court, which is still pending for consideration. However, the co-ordinate Bench of this Court directed the defendant to deposit 50% of the amount and accordingly, the amount was deposited. The plaintiff had withdrawn the said amount. The plaintiff had never challenged the judgment refusing specific performance of the contract i.e., the agreement dated 28.07.2004. On the other hand, he accepted the judgment by withdrawing the amount that was deposited by the defendant.
Learned counsel further submitted that the plaintiff contended that similar agreement was also entered into between the parties on 16.08.2004 and filed the present suit seeking specific performance of the contract. There is no explanation as to why two different agreements for sale were
14 entered into in respect of the same property. There is also no explanation as to why the second suit for specific performance of the contract was filed by the plaintiff when his first suit is already partly decreed and specific performance of contract was refused. Learned counsel further submitted that the Trial Court and the First Appellate Court recorded a concurrent finding that the subject matter of the agreements dated 28.07.2004 and 16.08.2004 are one and the same. The plaintiff had never challenged such finding recorded by the Trial Court and the First Appellate Court and thereby accepted the said finding. Under such circumstances, the present suit for specific performance of the contract in respect of the same property, is not maintainable.
Learned counsel further submitted that even according to the plaintiff, the time fixed for performance of the contract is two months from 16.08.2004. The sale consideration is said to be Rs.3,20,000/- and the plaintiff contended that the entire amount of consideration is already paid. However, during cross examination he admits that he has not paid the entire consideration amount, but some amount is due to be paid to the defendant. This shows the
15 conduct of the plaintiff who seeks specific performance of the contract.
Learned counsel also submitted that the plaintiff issued the legal notice as per Ex.P2 on 12.03.2007 i.e., after lapse of more than 2½ years after entering into the agreement in question. The said notice was never served on the defendant. The defendant issued the notice as per Ex.P6 on 28.03.2007 repudiating the contract as the plaintiff was not ready and willing to perform his part of the contract. In spite of that, the plaintiff has not stated anything in the plaint regarding his readiness and willingness to perform his part of the contract, thereby, he has not complied with the requirements of Section 16(c) of the Specific Relief Act.
It is further contended that the second agreement dated 16.08.2004 is a sham document and it is unenforceable in law. It is stated that the first agreement for sale is dated 28.07.2004. The total consideration agreed to be paid was Rs.30,00,000/-, but under the second agreed dated 16.08.2004 the consideration agreed is only Rs.3,20,000/-. There is absolutely no explanation for this disparity in the
16 amount agreed to be paid as consideration. Even according to the plaintiff, the consideration agreed under Ex.P2 is inadequate which is a valid reason to deny specific performance of the contract as per Explanation-2 of Section 25 of the Contract Act. The Trial Court on proper appreciation of the materials on record, rejected the prayer of the plaintiff for specific performance of the contract. However, the First Appellate Court without proper appreciation of the materials on record, decreed the suit of the plaintiff. The finding recorded by the First Appellate Court that the plaintiff was not aware of ULC proceedings, is erroneous.
Learned counsel further stated that the plaintiff had filed an application before the First Appellate Court seeking permission to amend the plaint by inserting a paragraph to plead his readiness and willingness to perform the contract. The said application came to be rejected by the First Appellate Court, but however decreed the suit of the plaintiff without there being any pleading regarding readiness and willingness to perform the contract.
Learned counsel contended that Ex.P1 is a registered document and Ex.P4 is an unregistered document. Ex.P4 is already enforced by the plaintiff by filing a suit for specific performance of the contract. The Trial Court rejected the claim for specific performance of the contract and ordered for refund of the amount already paid. Under such circumstances, the plaintiff cannot now seek for enforcement of Ex.P1, solely on the ground that it is a registered document. Learned counsel drawn the attention of this Court to Ex.P2 to contend that the plaintiff issued the legal notice demanding specific performance of the contract, alternatively claimed huge sum of Rs.20,55,000/- with interest at 18% p.a. There is absolutely no basis for claiming such a huge amount when the consideration amount itself is only Rs.3,20,000/- and he paid an amount of Rs.1,75,000/- as advance. This shows the conduct of the plaintiff to take advantage of the situation.
It is also contended that the First Appellate Court referred to the financial capacity of the plaintiff by referring to the withdrawal of the amount deposited by the defendant on 24.04.2013, but it had not taken into consideration the fact
18 that no materials are placed before the Court to determine the financial capacity of the plaintiff from 2004 till 2007. He placed reliance on the decisions in Ravi Setia Vs. Madan lal and others1 and U.N. Krishna Murthy (since deceased through Lr's) Vs. A.M.Krishnamurthy2 in support of his contentions. Therefore, the impugned judgment and decree passed by the First Appellate Court was perverse, erroneous and calls for interference by this Court. Hence, he prays for allowing the appeal.
Per contra, learned counsel for the respondent submitted that the plaintiff has proved execution of Ex.P1 - the agreement for sale dated 16.08.2004. It is a registered agreement for sale. The First Appellate Court never held that the subject matter of the agreement dated 28.07.2004 and the schedule property are one and the same. On the other hand, the finding on additional issue No.1 recorded by the First Appellate Court disclose that both the properties are different. Learned counsel further submitted that Ex.P1 - agreement is dated 16.08.2004 and before expiry of the period of limitation, the legal notice as per Ex.P2 was issued
1 (2019) 9 SCC 381 2 AIR 2022 SC 3361
19 on 12.03.2007. There was no reply by the defendant. However, a notice as per Ex.P6 was issued terminating the agreement in question. The defendant himself had filed an application seeking appointment of a Commissioner for identification of the schedule property. The same came to be rejected by the Trial Court. The defendant had filed writ petition challenging the order of the Trial Court, but the writ petition also came to be dismissed.
Learned counsel further contended that normally the time is not considered as the essence of the contract. The First Appellate Court assigned valid reasons to hold that the plaintiff was ever ready and willing to perform his part of the contract. The conduct of the defendant from the date of agreement was also considered by the First Appellate Court in decreeing the suit of the plaintiff. Learned counsel further submitted that the defendant has consciously entered into Ex.P1 with the plaintiff. There is absolutely no reason as to why the agreement is to be ignored. The First Appellate Court on re-appreciation of the materials on record arrived at a right conclusion. There is no perversity or illegality in the impugned judgment and decree. Since there is no merits in
20 the appeal, the same is liable to be dismissed. Accordingly, he prays for dismissal of the appeal with costs.
The appeal was admitted vide order dated 01.12.2021 and the following substantial questions of law were formulated:
"1) Whether the first appellate court was justified in decreeing the suit in the absence of necessary pleadings with regard to readiness and willingness of the plaintiff to perform his part of the contract and having regard to Section 16(c) of the Specific relief Act?
2) whether the judgment and decree passed by the first appellate court is in compliance of the requirements of Order 41 Rule 3 of CPC?"
This Court vide order dated 31.10.2022 has formulated the following additional substantial question of law:
"Whether the First Appellate Court was justified in allowing the appeal and decreeing the suit of the plaintiff by answering point No.2 in favour of the plaintiff, when a categorical finding
21 on point No.1 is recorded and answered it in favour of the defendant?"
It is the specific contention of the plaintiff that the defendant had executed the agreement for sale dated 16.08.2004 agreeing to sell 20 guntas of land bearing Survey No.4/2B situated at Elkal village Mysuru taluk for a total consideration of Rs.3,20,000/-. An amount of Rs.1,75,000/- was paid in advance and it was agreed that the balance consideration amount would be paid at the time of registration of the sale deed. The agreement was registered. It was also contended that when the plaintiff approached the defendant about the ULC proceedings which was pending in respect of the schedule property, he promised to settle it and demanded for the balance consideration amount. Accordingly, the plaintiff paid balance amount of Rs.1,45,000/-. Since the defendant was not ready to execute the sale deed, the legal notice came to be issued. In the meantime, the defendant also issued a notice terminating the agreement, contending that, time is the essence of contract and the plaintiff is not willing and ready to perform his part of the contract and therefore, the agreement was revoked. Thus, it is the
22 contention of the plaintiff that even though, he was ready and willing to perform his part of the contract, the defendant was not ready to execute the sale deed and therefore, sought for specific performance of the contract.
On going through the pleadings of the plaintiff before the Trial Court, it is clear the plaintiff has not specifically averred that he was ready and willing to perform his part of the contract. On the other hand, he contended that entire consideration of Rs.3,20,000/- was already paid and nothing is due to be paid. However, it is stated that the plaintiff to avoid controversy is ready to make payment of Rs.1,45,000/- for the second time. With these pleadings, the parties went to adduce the evidence before the Trial Court. During cross examination of PW1, he categorically admitted that the entire amount of consideration was not paid by him. This admission of the plaintiff assumes importance in view of Section 16(c) of the Specific Relief Act. When the plaintiff fails to prove his readiness and willingness to perform his part of the contract, he will not be entitled for specific performance of the contract.
It is pertinent to note that when the defendant challenged the impugned judgment and decree passed by the Trial Court before the First Appellate Court, the plaintiff had filed an application seeking permission to amend the pleadings i.e., to insert a paragraph regarding his readiness and willingness to perform the contract. The said application was accompanied by an affidavit sworn by the plaintiff, wherein he had categorically stated that he could not plead readiness and willingness in the plaint as the same was omitted by mistake. Therefore, it is clear that even the plaintiff admitted that there is no pleading regarding his readiness and willingness to perform his part of the contract, in the plaint. The conduct of the plaintiff in contending that he had already paid the entire balance consideration amount, but admitting during cross examination that he had not paid the entire balance consideration amount and some amount is due from him to be paid to the defendant also assumes importance while deciding the readiness and willingness of the plaintiff to perform the contract.
The Hon'ble Apex Court in Katta Sujatha Reddy and another Vs Siddamsetty Infra Projects Private
24 Limited and Others3, considered the question regarding the readiness and willingness to perform the contract and held in paras 66 and 67, which reads as under:
"66. The next aspect which this Court needs to consider is whether the parties had requisite willingness and readiness to perform the contract. The aforesaid requirement is one of the essential ingredients under Section 16 of the Specific Relief Act, 1963 which reads as under:
"16. Personal Bars to relief.-Specific Performance of a contract cannot be enforced in favour of a person-
(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 c are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant."
It is clear that in order to prove readiness and willingness, the burden is on the purchaser to prove that they were always ready
3 (2023) 1 SCC 355
25 and it is only the vendor who refused to perform the contract for extraneous considerations."
The Hon'ble Apex Court in U.N Krishnamurthy (supra), considered the requirement of pleading and proving the readiness and willingness on the part of the plaintiff to perform his part of the contract and considering its various decisions rendered earlier, held in paras 25 and 30 as under:
"25. To aver and prove readiness and willingness to perform an obligation to pay money, in terms of a contract, the plaintiff would have to make specific statements in the plaint and adduce evidence to show availability of funds to make payment in terms of the contract in time. In other words, the plaintiff would have to plead that the plaintiff had sufficient funds or was in a position to raise funds in time to discharge his obligation under the contract. If the plaintiff does not have sufficient funds with him to discharge his obligations in terms of a contract, which requires payment of money, the plaintiff would have to specifically plead how the funds would be available to him. To cite an example, the plaintiff may aver and prove, by adducing evidence, an arrangement with a financier for disbursement of adequate funds for timely compliance with the
26 terms and conditions of a contract involving payment of money.
This Court, in effect, held that for determining whether the Plaintiff was ready and willing to perform his part of the agreement it is necessary for the Court to consider the conduct of the Plaintiff prior and subsequent to filing the suit for specific performance. The relevant part of the judgment is extracted hereinbelow:–
“5. ...Section 16(c) of the Act envisages that plaintiff must plead and prove that he had 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 those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief...”
Thus, the position of law is very well settled that the plaintiff has to plead and prove his readiness and
27 willingness to seek the decree for specific performance of the contract, which is lacking in the present case. When the plaintiff admits that he had not paid the entire consideration amount and also admits that there was no pleading in the plaint regarding his readiness and willingness to perform his part of the contract, the plaintiff is not entitled for grant of specific performance of the contract.
Admittedly, there were two agreements entered into between the plaintiff and defendant, wherein, the defendant had agreed to sell the specified property in favour of the plaintiff. The suit agreement is dated 16.08.2004 whereas the other agreement is dated 28.07.2004. Admittedly, the plaintiff filed suit OS No.1025 of 2007 seeking specific performance of the contract in respect of the agreement dated 28.07.2004. The said suit came to be decreed in-part directing the defendant to refund an amount of Rs.30,00,000/-, but refused to grant specific performance of the contract. The said judgment was not challenged by the plaintiff. The defendant challenged it. While granting stay of the impugned judgment and decree passed by the Trial Court, the First Appellate Court directed the defendant to deposit
28 50% of the amount and accordingly, the defendant deposited the amount. It is not in dispute that the plaintiff had withdrawn the said amount of 50% of the decreetal amount.
In the meantime, the plaintiff filed the present suit seeking specific performance of the contract dated 16.08.2004. The description of the schedule property in both the suits are identical except in stating the western boundary. In OS No.1025 of 2007, the western boundary is mentioned as ring road and in the present case it is mentioned as road. The plaintiff during cross examination specifically stated that the schedule property in the present case is abutting the ring road and also admits its boundaries. The First Appellate Court framed the specific point for consideration as to whether the schedule property in OS No.1024 of 2007 was identical with the schedule property in OS No.1025 of 2007 and recorded a categorical finding that the properties are identical. The plaintiff accepted this finding and has never challenged the same.
Now, I have to consider what is the effect of the finding of First Appellate Court that the schedule properties in
29 both the suits are identical. When there are two agreements in respect of the same property i.e., one dated 28.07.2004 and the other one dated 16.08.2004, the plaintiff has to choose as to which of the agreement he would chose to seek specific performance of the contract from the defendant. The agreement dated 16.08.2004 which is referred to in this suit is a registered agreement, but the fact remains that the plaintiff has already enforced the agreement dated 28.07.2004 and obtained a decree for refund of an amount of Rs.30,00,000/-. The said judgment was never challenged by the plaintiff. When the defendant deposited 50% of the decreetal amount before the Court as per the directions of the First Appellate Court, the plaintiff has chosen to withdraw the said amount and thereby accepted the judgment rejecting the claim for specific performance of the contract and decreeing the suit for only refund of the amount.
Now, the question arises as to whether the plaintiff can enforce the agreement dated 16.08.2004 after enforcing the agreement dated 28.07.2004 in respect of the same property. Naturally, the answer will be in the Negative. The First Appellate Court held that there is no bar for entering
30 any number of agreements in respect of a property between the parties, but that does not mean to say that the plaintiff can enforce all such agreements. The plaintiff has to chose between the agreements to seek enforcement of the contract. Under such circumstances, the plaintiff now cannot contend that these two agreements are separate and distinct relating to different properties. He also cannot maintain the suit for enforcing the second agreement, after enforcing the first agreement in respect of the same property. When the plaintiff has not chosen to challenge the decree passed in OS No.1025 of 2007 refusing to grant specific performance of the contract, he cannot contend that he is entitled for the decree for specific performance of the contract in the present suit.
The agreement dated 16.08.2004 was entered into between the plaintiff and defendant in respect of the schedule property for a total consideration Rs.3,20,000/- and the defendant accepted advance amount of Rs.1,75,000/-. It was agreed between the parties that the balance amount is to be paid by the plaintiff and the defendant has to execute the same within two months from the date of agreement. But the plaintiff got issued the notice as per Ex.P2, calling upon the
31 defendant to execute the sale deed only on 12.03.2007, which was also not served on the defendant. In the meantime, the defendant issued notice as per Ex.P6, repudiating the contract on the ground that the plaintiff was not ready and willing to perform his part of the contract. It is only thereafter the plaintiff has filed the present suit on 19.06.2007.
As per Section 55 of the Contract Act, when a party to the contract promises to do a certain thing at or before a specified time, and if he fails to do so at or before the specified time, the contract become voidable at the option of the promisee when the intention of the parties was that, the time is the essence of the contract. In the present case, both the parties entered into an agreement fixing the time for performance of the contract as two months from the date of contract. The plaintiff kept quite for about three years to seek specific performance of the contract from the defendant and had filed the suit just about two months earlier to the expiry to the period of limitation.
The First Appellate Court even after recording its categorical finding that the subject matter of the suit OS
32 No.1024 of 2007 was identical with the suit property in OS No.1025 of 2007, proceeded to decree the suit of the plaintiff without any basis. As already discussed above, the finding of the First Appellate Court that the parties are free to enter into any number of contracts cannot be the basis to enforce the second agreement in respect of the same property after enforcing the first agreement. The First Appellate Court even after observing the conduct of the plaintiff in not approaching the defendant with the balance consideration amount, on the other hand, contending that the entire sale consideration amount is paid, however admitting during cross examination that the balance amount is still due to be paid, proceeded to decree the suit which is nothing but perverse and illegal. Similarly, the First Appellate Court even after dismissing the application filed by the plaintiff seeking amendment of the plaint with regard to his readiness and willingness to perform the contract could not have decreed the suit for specific performance of the contract.
The finding of the First Appellate Court regarding the financial condition of the plaintiff to pay the balance consideration amount is also erroneous as it has taken into
33 consideration the withdrawal of an amount of about Rs.17,00,000/- on 30.04.2013 as per Ex.D6, ignoring the fact that the date of agreement is 16.08.2004 and the period fixed for payment of balance consideration was two months. The financial condition of the plaintiff after about 13 years is of no help to the plaintiff to decide his financial condition to perform his part of the contract.
Thus, I am of the opinion that the suit of the plaintiff for specific performance of the contract was liable to be dismissed. The First Appellate Court committed an error in decreeing the suit of the plaintiff. Therefore, the same are to be set aside. In the result, the suit of the plaintiff for specific performance of the contract is dismissed. Since the Trial court was right in directing the defendant to refund the amount of Rs.1,75,000/- which was admittedly paid by the plaintiff under Ex.P1, the said judgment and decree is required to be restored.
From the discussions held above, the substantial questions of law Nos.1 and 3 are to be answered in favour of the defendant - appellant and against the plaintiff -
34 respondent. Learned counsel for the appellant has not addressed any argument about the substantial question of law No.2, hence, the same is answered against the appellant.
Hence, I proceed to pass the following: ORDER (i) The appeal is allowed with cost, through out.
(ii) The judgment and decree dated 23.01.2017 passed in RA No.579 of 2016 on the file of the learned II Additional District Judge, Mysuru, is hereby set aside.
(iii) The judgment and decree dated 13.04.2016, passed in O.S No.1024 of 2007 on the file of the learned I Additional Senior Civil Judge and CJM, at Mysuru is restored.
Registry is directed to send back the Trial Court records along with copy of this judgment.
Sd/-
JUDGE
*bgn/-SKS