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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF OCTOBER 2021
BEFORE
THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY
R.F.A.No.308 OF 2008
BETWEEN:
R.Nagendra Son of late R.Rangapppa, Since deceased by his LRs :
a. Smt. Lakshmi Nagendra, Wife of late R. Nagendra, Aged about 59 years.
b. Sri. Guruprasad N., Son of late R. Nagendra, Aged about 49 years.
c. Smt. Manjula N.,
D/o late R. Nagendra,
Aged about 38 years.
All are residing at
No.131/97, Bilekahalli,
Bannerghatta Road,
Bengaluru-560 076. ...Appellants
(By Sri. B.Ramaswamy Iyengar, Advocate for A-1 (a to c)
AND:
C.V.L. Satyakumar, Son of late G.S.Viswanath, Since deceased by his LRs :
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a. Smt. Vasantha Wife of late C.V.L.Sathyakumar, Aged about 69 years.
b. Sri. Vijaya Kumar,
Son of late C.V.L.Sathyakumar,
Aged about 50 years.
c. Sri. Raghavendra,
Son of late C.V.L.Sathyakumar,
Aged about 45 years.
All are now residing
At No.J-60, 3rd Cross,
R.K.Puram, S.C.Road,
Bengaluru-560 009. ...Respondents
( By Sri P.Nataraju, Advocate for Sri M.R.Balakrishna, Advocate for R-1 (a to c)
This Appeal is filed under Section 96 read with Order XLI Rule 1 of Code of Civil Procedure, praying to call for the entire records in O.S.No.1362/2002, on the file of the 7th Addl. City Civil Judge (CCH-19) Bangalore and to set aside the judgment and decree passed in O.S.No.1362/2002 dated 16.01.2008 on the file of the 7th Addl. City Civil Judge, (CCH.19) Bangalore and to pass such other order/s as this Hon’ble Court deems fit to grant in the facts and circumstances of the case, in the interest of justice and equity.
This Appeal having been heard through Physical Hearing/Video Conferencing Hearing and reserved on 25.10.2021 coming on for pronouncement of Judgment this day, the Court delivered the following:
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JUDGMENT
It is the defendant’s appeal. The present respondent, as a plaintiff, had instituted a suit for specific performance against the present appellant in O.S.No.1362/2002, on the file of learned VII Addl.City Civil Judge, Bengaluru (CCH-19), (hereinafter for brevity referred to as `trial Court’).
The summary of the case of the plaintiff in the trial Court was that the defendant being an allottee of the suit schedule property under an allotment, which was on Lease- cum-Sale basis, dated 23.11.1984 by the Bengaluru Development Authority (hereinafter for brevity referred to as `BDA’), had agreed to sell the same in favour of the plaintiff for a total sale consideration of a sum of `30,000/-. In that regard, both the parties had entered into an Agreement of Sale on 23.04.1992, under which, the plaintiff had paid a sum of `10,000/- towards part consideration to the defendant and the plaintiff was also put in actual possession of the suit schedule property by the defendant on the same day. After receiving a call letter from BDA, which was dated 02.05.2001, asking the defendant to pay the balance amount of `11,000/- towards the final payment of the valuation of the house, the plaintiff
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approached the defendant requesting him to pay-off the balance amount to the BDA and to get executed a registered Sale Deed in his favour and immediately thereafter, to execute a Sale Deed in favour of the plaintiff by receiving the balance sale consideration. However, the defendant refused to do the same, which constrained the plaintiff to institute a suit for specific performance.
In response to the summons served upon him, the defendant appeared through his counsel and filed written statement, wherein though he admitted entering into an agreement dated 23.04.1992 by him with the plaintiff, but, specifically contended that the time stipulated in the Agreement of Sale dated 23.04.1992 since has expired long back, the suit is hopelessly barred by limitation. He contended that by virtue of the same, the Agreement of Sale has stood cancelled. As such, he had directed the plaintiff to hand over the premises under occupation.
Based on the pleadings of the parties, the trial Court framed the following issues :
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“ 1. Whether the plaintiff proves that he has been always ready and willing to perform his part of the contract?
Whether the suit is barred by limitation? 3. Is plaintiff entitled for the relief of specific performance? 4. To what Order or Decree?
In support of his suit, the plaintiff got himself examined as PW-1 and got examined his son S.S.Vijayakumar as PW-2 and got marked documents from Exs.P-1 to P-7. The defendant got examined himself as DW-1, but, no documents were marked as exhibits from his side. After hearing both side, the trial Court by its impugned judgment and decree dated 16.01.2008, while answering issues Nos.1 and 3 in the affirmative and issue No.2 in the negative, decreed the suit of the plaintiff and held that the defendant shall execute a regular registered Sale Deed in respect of the suit schedule property in favour of the plaintiff within a period of six months from the date of receipt of the said judgment and decree and after receipt of the balance consideration in terms of the Agreement of Sale at Ex.P-3. Being aggrieved by the same, the defendant has preferred this appeal.
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In response to the notice served upon him, the respondent is appearing through his counsel. 7. Records from the trial Court are called for and the same are placed before the Court. 8. For the sake of convenience, the parties would be referred to as per their rank before the trial Court. 9. Heard the arguments of learned counsel from both side and perused the materials placed before this Court, including the impugned judgment and the trial Court record. 10. The points that arise for my consideration are, 1. Whether the finding of the trial Court that the plaintiff has proved that he has been always ready and willing to perform his part of contract is erroneous?
Whether the finding of the trial Court on the point of limitation is also erroneous?
Whether the judgment and decree under appeal deserves any interference at the hands of this Court?
The defendant in his written statement has admitted as true that he had entered into an Agreement of Sale with the plaintiff on 23.04.1992, agreeing to sell the suit schedule
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property, which is a residential house more fully described in the schedule to the plaint, for a total sale consideration of a sum of `30,000/-. He has also not denied or disputed having received `10,000/- from the plaintiff. He has also not specifically denied or disputed that by virtue of the said Agreement of Sale, he has put the plaintiff in possession of the suit schedule property as a part performance of the said agreement. Thus, the trial Court rightly did not frame a specific issue regarding the existence of an Agreement of Sale dated 23.04.1992 with respect to suit schedule property between the parties. However, contrary to his pleading, the defendant as DW-1 in his evidence has taken a contention that though he had executed an agreement dated 23.04.1992, but, he had put his signatures on a plain paper. He also took a defence in the cross-examination of PW-2 that the plaintiff was put in possession of the suit property as a tenant of the said premises, but, not by virtue of Ex.P-3. Since plaintiff’s witness has specifically denied the said suggestion, the burden of proving that the plaintiff was put in possession of the suit premises as a tenant of the said premises was upon the defendant, which he
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could not discharge in the trial. Thus, the fact remains that the defendant as an allottee of a residential house, which was the suit schedule property, from BDA, had agreed to sell the same to the plaintiff on 23.04.1992, by entering into an agreement as per Ex.P-3 even though the defendant, as a vendor, himself had not become the absolute owner of the said property and was a mere allottee of the said residential property by BDA. It is also established that, in the said process, the defendant as a vendor had received a sum of `10,000/- as an advance amount towards sale consideration.
It is in these established and undisputed facts, the case of the parties has to be analysed. The argument of learned counsel for the appellant was only on three points. The first point was that the suit was hopelessly barred by law of limitation. The second point was that the plaintiff has failed to prove that he was ready and willing to perform his part of promise and the last point was that the Agreement at Ex.P-3 does not allow or permit the plaintiff to file a suit for specific performance, on the other hand, at the best, the plaintiff can only seek for damages.
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Article 54 of the Schedule to the Limitation Act, 1963, prescribes a period of three years as limitation for filing a suit for specific performance of a contract wherein the said period of limitation is to be calculated from the date fixed for the performance, if any, or if no such date is fixed, when the plaintiff had notice that performance is refused.
According to the learned counsel for the appellant, the suit ought to have been filed within a period of three years from the date of the agreement, which is seriously denied by the learned counsel for the respondent, who contends that the cause of action has commenced for the plaintiff when the defendant failed to execute the Sale Deed even after he receiving a notice from the Bengaluru Development Authority demanding the payment of the balance sale consideration from the defendant (allottee) as per Ex.P-6.
The Agreement of Sale dated 22.04.1992, which is at Ex.P-3, in Para-2 of Page-1 mentions that the house (suit schedule property) was allotted to the first party (defendant) by the Bengaluru Development Authroity taking on Lease-cum- Sale for a term of eighteen years.
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The very same exhibit in its further recital at Clause No.5 mentions as below :
“ The First Party is agreeing to execute General Power of Attorney etc.. and a fresh sale agreement in favour of the Second Party within a period of 90 (Ninety) days from the date of this agreement.”
Thus, a reading of Ex.P-3 no where specifically and clearly mention as to within what period, the performance of contract has to be performed by the parties. Admittedly, as on the date of the Agreement for Sale at Ex.P-3, the defendant was only an allottee of the suit schedule property by the BDA and absolute Sale Deed with respect to the said property has not been executed in his favour by the BDA. He had not even paid the sale consideration in full to the BDA and had paid only a sum of `100/- + `1,900/- to the BDA. The said document mentioned that he was allotted with the suit schedule property by the BDA on a Lease-cum-Sale basis, which term was for a period of eighteen years. Admittedly, the said allotment letter showing the conditions of the allotment and the exact term of alleged lease has not been produced by either of the parties to the suit.
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The very same agreement at Ex.P-3, at a later stage, in Clause-5, mentions about obligation of the first party i.e., the defendant to execute a General Power of Attorney etc., and a fresh Sale Agreement in favour of the second party (the plaintiff) within a period of ninety days from the date of the said agreement. Neither through Ex.P-3 nor through the evidence of the parties, it could be ascertained as to what for the alleged fresh Sale Agreement was required and by the said Clause, what the parties were actually meant. Thus, the Agreement of Sale at Ex.P-3 has not specifically given any specific date for the performance of the contract. In such circumstances, where there is no date is fixed for performance in Ex.P-3, then, the law of limitation of three years starts from the date when the plaintiff had the notice that the performance is refused. In that regard, the plaintiff in his plaint for the first time has stated that cause of action has arisen to him on 11.11.2001. In his evidence as PW-1, he has stated that after receiving the intimation from BDA, which is at Ex.P-6 and dated 02.05.2001, he met the defendant on 11.11.2001 and requested him to make the payment to the BDA, so that, he could get a Sale Deed from the BDA in his name and then could sell the house to
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him, but, he refused to make the payment and get the Sale Deed executed from the BDA.
The said contention was not admitted by the defendant. As such, mere taking such a contention without any corroborative material to substantiate the same would not make it to believe that on 11.11.2001, the plaintiff met the defendant seeking specific performance of the contract and that the defendant refused to do the same.
The above inference gains support by the fact that DW-1 in his evidence has stated that though he was ready to get the Sale Deed executed in his favour, but, the BDA did not execute the Sale Deed, as such, he had to approach this Court by filing a Writ Petition in Writ Petition No.3766/1993. The said statement of the witness has not been specifically denied or disputed by the plaintiff. However, the fact remains that the absolute Sale Deed came to be executed by the BDA in favour of the defendant only on 27.08.2003 as could be seen from Ex.P-7, which is a certified copy of the Sale Deed executed by the BDA in favour of the defendant. The said fact is also an undisputed fact. Therefore, if at all any cause of action accrues
RFA.No.308/2008 13
to the plaintiff to seek the relief of specific performance from the defendant, the same would be only on and after 27.08.2003 when the absolute Sale Deed came to be executed in favour of the defendant by the BDA. The said cause of action does not arise in favour of the plaintiff on 11.11.2001 merely because on the said day, he is said to have met the defendant and requested him to pay-off the balance amount towards the Sale Deed to the BDA. It is because, the very Agreement of Sale at Ex.P-3 specifically mentions that the first party i.e., the defendant (vendor) is entitled to convey the schedule property on the expiry of the lease period, subject to the conditions of the said agreement. If that is so, even according to the very same agreement, the lease period is for a period of eighteen years from the date of allotment i.e., 22.02.1985. Thus, the date of expiry of eighteen years is on 21.02.2003. Till then, neither the vendor get any absolute right and marketable title in the property by himself to convey it to the plaintiff nor the plaintiff gets any right to seek for specific performance of the contract. The absolute Sale Deed. as per Ex.P-7, came to be executed only on 27.08.2003. As such, it is only thereafter, the plaintiff could have filed a suit for specific performance.
RFA.No.308/2008 14
However, in the instant case, the suit has been filed on 26.02.2002, which was nearly one and half years prior to the date of arising of cause of action and also a premature one. This aspect, the trial Court did not notice and appreciate.
The second point of argument of learned counsel for the appellant was that the plaintiff has failed to prove that he was ready and willing to perform his part of the promise and the said aspect has not been properly appreciated by the trial Court. Section 16(c) of the Specific Relief Act, 1963 as it was standing in the year 2002 reads as below : “ 16. Personal bars to relief.- Specific performance of a contract cannot be enforced in favour of a person –
(a) xxx
xxx
(b) xxx xxx
(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.
Explanation. – For the purposes of clause (c). –
(i) Where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the
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defendant or to deposit in court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction.”
Thus, unless the plaintiff avers and proves 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 the terms of performance of which has been prevented or waived by the defendant, he cannot seek the enforcement of specific performance of contract in his favour. In his plaint, he has averred that he was always been ready and willing to pay the balance consideration to the defendant and thus, was ready to perform his part of the promise under the contract. However, in proving the same, except reiterating his plaint averments in his examination-in-chief as PW-1 and making his son to state the same by examining him as PW-2, the plaintiff has not produced any piece of document to show that he has always been ready and willing to perform his part of the contract. Though by producing a notice dated 02.05.2001 issued by the BDA addressing to the defendant, calling upon him to pay the balance amount of sale consideration, the
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plaintiff contended that he approached the defendant with the said notice and asked him to pay the balance amount to enable him to get the Sale Deed executed in his favour, but, the said contention of the plaintiff has been specifically denied by the defendant. As such, mere oral statement of PW-1 that he had always been ready and willing to perform his part of the promise is not sufficient. Admittedly, he has not even sent any notice to the defendant prior to filing of the suit calling upon him to perform his part of the contract.
It is needless to observe that the person who approaches the Court by instituting a suit for specific performance of the contract, more particularly, as a purchaser of an immovable property, then it is for him or her to prove his/her readiness and willingness rather than pointing out the alleged non-performance of some part of the agreement by the defendant unless the said non-performance of the promise on the part of the defendant, has, in any manner, prevented the plaintiff from performing his or her part of the promise. The agreement at Ex.P-3 though mentions that the first party is entitled to convey the schedule property on the expiry of the lease period, but, no where it mentions that the second party
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i.e., the plaintiff to pay the alleged balance sale consideration of `20,000/- only after the defendant (vendor) gets the registered Sale Deed executed in his favour by the BDA. Thus, the agreement at Ex.P-3 is not a contingent agreement making the performance of the promise of purchaser/plaintiff dependant upon the performance of some of the act on the part of the vendor/defendant. In a similar circumstance, in Man Kaur (Dead) by LRs – vs- Hartar Singh Sangha, reported in [(2010) 10 SCC 512], one of the arguments of learned counsel for the respondent before the Hon’ble Apex Court was that, in terms of the agreement, the defendant had to furnish NOC from Chandigarh Administration, as also ULC clearance and income tax clearance required for the sale and there was nothing to show that she had obtained them, and therefore the question of the plaintiff proving his readiness and willingness to perform his obligations did not arise. Observing that the said contention has no merit, the Hon’ble Apex Court in Paragraph-40 of its judgment was pleased to observe as below :
“ 40. This contention has no merit. There are two distinct issues. The first issue is the breach by the
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defendant vendor which gives a cause of action to the plaintiff to file a suit for specific performance. The second issue relates to the personal bar to enforcement of a specific performance by persons enumerated in Section 16 of the Act. A person 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 the terms the performance of which has been prevented or waived by the defendant) is barred from claiming specific performance. Therefore, even assuming that the defendant had committed breach, if the plaintiff fails to aver in the plaint or prove that he was always ready and willing to perform the essential terms of contract which are required to be performed by him (other than the terms the performance of which has been prevented or waived by the plaintiff), there is a bar to specific performance in his favour. Therefore, the assumption of the respondent that readiness and willingness on the part of the plaintiff is something which need not be proved, if the plaintiff is able to establish that defendant refused to execute the sale deed and thereby committed breach, is not correct.”
Since in the instant case also, the performance of the promise by the plaintiff/purchaser under Ex.P-3 was not contingent upon performance of some part of the promise on the part of the defendant and more importantly, admittedly the
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plaintiff has instituted a suit for specific performance prior to BDA executing a registered absolute Sale Deed in favour of the defendant, the plaintiff cannot take any contention that proving his readiness or willingness or performing his promise was depending upon BDA executing absolute Sale Deed in favour of the vendor/defendant.
In Punny Akat Philip Raju, since dead by his LRs. Vs. Sri. Dinesh Reddy reported in ILR 2016 Kar.2252, a Division Bench of this Court in paragraph 32 of its judgment was pleased to observe that, the proof of readiness necessarily means demonstration of financial ability or capacity to pay the balance sale consideration and take the sale deed. When a person on oath states in the witness box that he is ready with the requisite funds, he must produce some evidence to prove his possession of the required funds. The explanation to Section 16(c) of the Specific Relief Act makes it clear that the proof of requisite funds does not mean he should produce the currency before the Court or he should deposit the money in Court. But at the same time, mere statement on oath in the witness box that he is possessed of the requisite funds would
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also do not prove the possession of funds. The said proof has to be necessarily by way of documentary evidence. In paragraph 33 of the same judgment, it was further held that, when a person claims that he is possessed of sufficient funds, he has to produce some documentary evidence, which proves his capacity to raise the funds or he possess the funds. It may be a pass book issued by a Bank where he has kept the balance sale consideration ready for payment. If he has invested his money by way of securities, he has to produce those Certificates/securities before the Court to show that, any time he can encash the same and pay the balance sale consideration. If he intends to borrow from a Nationalised Bank or from his employer or from any other financial Institution, it has to be demonstrated by producing a request for such financial assistance in writing, sanctioning of the said loan, which has to be necessarily in writing. Thus, it has been clearly held in the said judgment that, there must be some material documents and proof to show that the plaintiff, as an agreement holder and purchaser, has always been ready and willing to perform his/her part of the promise under the contract. A mere statement that he or she is ready
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and willing to perform his/her promise would only show his/her desire to acquire the property by purchasing the same, but it does not substitute the requirement of proving his/her readiness in the matter. 20. The Hon’ble Apex Court in the case of C.S. Venkatesh Vs. A.S.C. Murthy (Dead) by Legal Representatives and others reported in 2020 (3) Supreme Court Cases 280 at paragraph 16 was pleased to observe as follows: “ 16. The words “ready and willing” imply that the plaintiff was prepared to carry out those parts of the contract to their logical end so far as they depend upon his performance. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of performance. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of contract, the court must take into consideration the conduct of the plaintiff prior, and subsequent to the filing of the suit along with other attending circumstances. The amount which he has to pay the defendant must be of necessity to be proved to be available. Right from the date of the execution of the contract till the date of decree, he must prove that he is ready and willing to perform his part of the contract. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready to perform his contract.”
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In the instant case, the plaintiff except stating that he was always been ready and willing to perform his part of the contract, has no where produced any material to show that he was ready with the balance consideration of a sum of `20,000/-. Therefore, it cannot be said that the plaintiff was ready and willing to perform his part of the promise under the contract. However, the trial Court without noticing these aspects, has misinterpreted the alleged receipt and possession of the notice at Ex.P-6 addressed by the BDA to the defendant as the proof of readiness of the plaintiff to perform his part of the promise. Further, without there being any corroboration to the oral contention of the plaintiff that with the said notice at Ex.P-6, he approached the defendant and requested him to get the Sale Deed executed in his favour, proceeded to hold that the plaintiff has proved his readiness and willingness in performing his part of the contract. However, it failed to notice that, much prior to the plaintiff alleged to have approached the defendant, the defendant himself had filed a Writ Petition before this Court in Writ Petition No.3766/1993, seeking a direction to the BDA to execute the registered Lease-cum-Sale
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Agreement in favour of the writ petitioner (defendant in the suit). Therefore, the said finding of the trial Court on issue No.1 holding that the plaintiff has proved that he has been always ready and willing to perform his part of the contract is an erroneous finding and the said issue ought to have been answered in the negative. 21. The last point of argument of the learned counsel for the appellant was that the agreement at Ex.P-3 does not permit the plaintiff to sue for the relief of specific performance of contract, but, he can claim only the damages. On the said point, learned counsel for the respondent did not address his arguments at all. A perusal of the agreement go to show that at Clause-4 of the said document, it is mentioned as below :
“ 4. If due to some Technical problems, if the First Party fails to or breaches this agreement, the first Party is liable for damages incurred by the Second Party, like arranging money by selling certain things for under value due to the urgent need of finance of the First Party.”
Thus, even if it is assumed that the plaintiff has been ready and willing to perform his part of the promise under the
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contract, still, for the breach of contract, as agreed to between the parties, the plaintiff is entitled only for damages, but, not for specific performance of the contract. Furthermore, considering the facts and circumstances of the case, admittedly the suit schedule property is a small residential house, measuring 11.63 sq.meters, allotted by the BDA in favour of the defendant/vendor and in getting the Lease-cum-Sale Agreement executed by the BDA in his favour, the defendant much prior to the agreement at Ex.P-3 coming into existence, had fought a legal battle by filing a Writ Petition for a direction to the BDA to execute the Lease-cum-Sale Agreement in his favour. Thus, the defendant has shown that he was in very much requirement of a residential house for his use and occupation. Merely because at a later date, that too, before an absolute Sale Deed could be executed in his favour by the BDA, the defendant since is said to have entered into an agreement of sale with the plaintiff, by that itself, it cannot be held that the plaintiff is entitled for the specific performance of the contract. The greater hardship would be caused to the defendant if the specific performance of the contract is enforced in favour of the plaintiff. On the other hand, since the Agreement at Ex.P-3
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permits the plaintiff as a purchaser only to claim damages in case of breach of contract, the plaintiff can only claim damages, but, not the specific performance of the contract.
Since the trial Court has not considered these aspects in their proper perspective and without appreciating the oral and documentary evidence before it in their proper perspective, has arrived at an erroneous finding holding that the plaintiff has proved his case and is entitled for the specific performance of the contract, the said judgment and decree which is impugned in this appeal, decreeing the suit for specific performance deserves to be set aside. However, the plaintiff’s suit deserves to be partly allowed entitling him to get the refund of the advance amount paid by him with a reasonable interest thereupon as damages.
Accordingly, I proceed to pass the following order: ORDER The Regular First Appeal is allowed in-part. The judgment and decree dated 16.01.2008, passed by the learned VII Addl.City Civil Judge, Bengaluru (CCH-19), passed in O.S.No.1362/2002, is modified to the effect that the
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suit of the plaintiff stands partly allowed. The prayer for the specific performance of the contract stands rejected, however, the plaintiff in the suit is entitled for the refund of the advance amount of a sum of `10,000/- paid by him to the defendant, together with interest thereupon at the rate of 9% per annum and compounded annually from the date of the Agreement i.e., 23.04.1992, till the date of refund of the amount with interest thereupon by the defendant to the plaintiff. The judgment and decree of the trial Court stands modified on the lines of the above. There is no order as to costs. Draw modified decree accordingly. Registry to transmit a copy of this judgment along with records to the concerned trial Court without delay.
Sd/-
JUDGE
bk/