1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 193 OF 1989 1. Shri Shriniwas shankar Potnis 2. Shri Raghunath Shankarrao Potnis - deleted (2a) Mr. P.D.Kudva adult, Occ: Chartered Accountant having address at 4 Kumar Panorama 45/1-B Shankersheth Road, Pune. (2b) Mr. Shrikrshna Shankarrao Potnis (Already on record as Appellant no.4). 3. Shri Arvind Shankar Potnis, since deceased, his legal heirs : a) Smt. Kunda Arvind Potnis b) Shri Mangesh Arvind Potnis c) Ku. Yashodini Arvid Potnis d) Shri Yaqshodhan Arvind Potnis - Deleted d(a) Smt. Yashasvi Yashodan Potnis Age 32 years Occ: House wife d(b) Sanika Yashodan Potis (Minor daughter) 4. Shri Shrikrishna Shankarrao Potnis. ..Appellants Vs. 1. Raghukul Sahakari Griharachana Sanstha Maryadit 2. Shri Ratnakar Kashinath Chandorkar ..Respondents Mr. Viswajeet P. Sawant with Ms. Rajalakshmy Mohandas and Ajay Basutkar i/b. Subhash Jadhav , Advocates, for the appellants. Mr. A.V.Anturkar i/b. Mr. Sandeep A.Bhagwat,Advocates, for the respondent No.1. Mr. Sachin Chavan i/b. Shriram S. Kulkarni, Advocates for respondent No.2. 2 Mr. P.K.Hushing, Advocate fr the Intervener. Mr. Suyog Londhe, i/b. M.S.Lagu, Advocates for the Applicant in CAF No.3706 of 2006. CORAM: J.H.BHATIA,J. JUDGMENT RESERVED ON: 13.8.2009 JUDGMENT PRONOUNCED ON: 10.9.2009. JUDGMENT 1. The original defendant Nos. 1 to 4 have preferred this Appeal challenging the Judgment and decree for specific performance of contract in Special Civil Suit No. 595 of 1986 passed by the Civil Judge, Senior Division, Pune, in favour of the original plaintiff, who is respondent No.1 in the present Appeal. 2. To state in brief, the plaintiff is a Co-operative Housing Society and it filed the suit for specific performance of contract against the defendants. The suit pertains to two properties shown as property “A” and property “B” in the plaint. Property “A” is 2 acres and 10 gunthas land from southern side out of Survey No.30/2 admeasuring 13 acres and 15 gunthas belonging to defendant no.3 – Arviind Shankar Potnis. Property “B” is 2 acres 3 and 2 gunthas land from southern side of Survey No.29/2 admeasuring 1 Hectare and 91 Ares and it belongs to the defendant no.2 - Raghunath Shankarrao Potnis. 3. According to the plaintiff, it had purchased certain lands and constructed certain houses for its members. However, even after accommodating about 30 members, there were large number of persons, who were on waiting list, aspired to have their own houses in the Society. Therefore, the plaintiff-society was interested in purchase of some land, particularly adjoining or near its existing land. The defendant Nos. 1 to 4 had assumed the possession of the lands survey Nos. 29, 30 and 31 in the year 1970 from their tenants. While defendant nos. 1 to 4 were residing at Gwalior, defendant No.5 was managing their property and claimed to be their agent. He used to act as per the advice of one Vasant Karhalkar Advocate of Kopargaon, who is the maternal uncle of defendant Nos. 1 to 4. The plaintiff approached defendant no.5 for purchase of the suit property and he assured to see that the suit property was sold by defendant Nos. 1 to 4 to the plaintiff. In the year 1972, the plaintiff paid amount of Rs. 9,000/- to defendant No.5 for and on behalf of defendant Nos. 1 to 4. 4 Defendant no.5 gave that amount to Vasant Karhalkar Advocate, towards part of consideration of the land. As per the oral agreement, the rate of the land would be Rs.1,30,000/- per acre and the actual price would be determined only after measurement of the land. It was also agreed that the suit land marked “A” would either be directly sold in favour of the plaintiff or the defendant no.5 would get the sale deed in his favour and then he would transfer the property to the plaintiff. Even though defendant no.5 assured all the co-operation, he was avoiding the measurement of the land by giving one or the other reason from time to time. In the year 1976, Urban Land Ceiling Act came into force and,therefore, the property could not be sold. The defendants refused to sell the suit property by giving one or the other reasons and finally, the defendants denied that there was any agreement for sale. 4. In view of these circumstances, in 1982, the plaintiff had to involve a third person, namely, Shrikant Murlidhar Chandratre to get this property from the defendants. As per the agreement between the plaintiff and said Shrikant Chandratre, said Shrikant Chandratre was to get an agreement for sale executed from the defendants. Accodingly, Shrikant entered into an agreement with defendant Nos. 2 and 3 to 5 purchase suit land marked “A” at the rate of Rs.1,30,000/- per acre and defendant No.2 as power of attorney holder for defendant No.3 executed the agreement for sale on 7.11.1982. An amount of Rs. 1,50,000/- was paid to the defendants by a demand draft as earnest money and that money was paid by the plaintiff. The defendants were aware that Shrikant Chandratre was entering into contract with them for and on behalf of the plaintiff. Shikant Chandratre, in turn executed similar agreement for sale in favour of the plaintiff. Similarly, on 7.11.1982, defendant No.2 executed an agreement for sale of suit land marked “B” in favour of defendant No.5, who had in fact entered in the agreement for and on behalf of the plaintiff. Even though defendant no.5 had assured to give co-operation, he in fact did not co-operate except putting signature on the statement to be submitted to the Competent Authority under the Urban Land Ceiling Act. He did not execute any other document. On 28.9.1984, the plaintiff issued a notice to the defendant Nos. 1 to 4 to execute sale deed. However, they did not respond which made it clear that they were not inclined to perform their part of the contract. In such circumstances, the plaintiff filed the suit for specific performance of contract. According to them, by virtue of the agreements dated 7.11.1982 executed in favour of Shrikant 6 Chandratre and defendant No.5and signing of the statement by defendant no.5 on 1.8.1983, the earlier oral agreement of 1972 was only confirmed. Therefore the suit is within limitation. According to the plaintiff,it has been ready and willing to perform its part of the contract and to pay the balance amount of consideration and to get sale deed executed. 5. Defendants Nos. 1 and 4,who were the formal parties, and defendant no.5 did not file any written statement. Defendant no.2 and the legal representatives of deceased defendant No.3 contested the suit by filing written statement, exhibit 34. They denied that defendant No. 5 was their agent at any time and that he was authorised to enter into any contract for sale of their property. They also denied that defendant No.5 had ever entered into any agreement with the plaintiff for and on behalf of the defendant nos. 2 and 3 to sell the land. They also denied that they had received any amount as part of the consideration. They also denied that defendant no.5 or one Vasant Kolhalkar were their power of attorney holders with authority to sell their property. They also denied that Shri Vasant Korhalkar had received any amount on behalf of the defendants from the plaintiff in the year 1972 or so. They 7 admitted that defendant No.3 had entered into an agreement for sale of the suit property marked “A” in favour of Shrikant Chandratre and that defendant no.2 had executed an agreement for sale in respect of the suit property marked “B” in favour of defendant No.5 but according to them, the plaintiff had no concern with the said transactions between defendant nos. 2 and 3 on one hand and defendant no.5 and said Shrikant Chandratre on the other. They denied that Shrikant Chandratre and defendant No.5 had any right to enter into any transaction with the plaintiff-Society. They also denied that they had received amount of Rs.1,50,000/- or any other amount from the plaintiff through Shrikant Chandratre in the year 1982. According to them, they did not reply to the notice issued by the plaintiff in 1984 because they had no concern with the plaintiff. According to them, the plaintiff was trying to take undue advantage of the agreement executed by defendant Nos. 2 and 3 in favour of defendant No.5 and Shrikant Chandratre. They also contended that that suit was barred by limitation. Several other technical pleas were taken and, according to them, the suit was liable to be dismissed. 6. Several issues were framed by the trial Court at Exhibit 31. 8 On behalf of the plaintiff, its Secretary, PW.1 – Bhagwan Mainkar and P.W.2 – Vilas Kulkarni were examined. Besides this,no oral evidence was led by any of the parties. The parties totally relied upon the documentary evidence. After hearing the evidence led by the parties, the trial Court held that the suit was within limitation, that defendant no.5 was working as Manager for defendant Nos. 1 to 4, that the plaintiff had entered into agreement for sale of the suit lands with the defendants through defendant no.5 in 1972 and that the plaintiff had paid amount of Rs.9,000/- to the defendant no.5 for and on behalf of the defendant Nos. 1 to 4 as part of the consideration amount. The trial Court also held that the agreements dated 7.11.1982 executed by the defendants Nos. 2 and 3 in favour of defendant No.5 and Shrikant Chandratre were for the benefit of the plaintiff-society and the said agreement confirmed the original agreement of 1972. In the result, the suit came to be decreed for specific performance of the contract. 7. Heard the learned Counsel for the parties. Perused the oral and documentary evidence as well as the impugned judgment passed by the trial Court. 9 8. Following points arise for my determination and I record my findings against them for the reasons given below :- POINTS FINDINGS (i) Whether the plaintiff prove sthat the No defendant No.5 was authorised by the defendants Nos.1 to 4 to enter into any transaction for sale of the suit land on their behalf in the year 1972 or thereafter? (ii) Whether the plaintiff proves that in the year No 1972, defendant No.5 had entered into an agreement for sale of the suit land on behalf of the defendants Nos. 1 to 4 and in favour of the plaintiff? (iii) Whether the agreements dated 7.11.1982 No only confirmed the agreement for sale of 1972 in favour of the plaintiff? (iv) Whether the agreement for sale dated 7.11.82 No executed by defendant no.2 in favour of defendant no.5 – Ratnakar Chandorkar was for the benefit of the plaintiff-society ? (v) Whether the agreement for sale executed No by defendant No.3 in favour of Shrikant Chandratre on 7.11.1982 was for the benefit of the plaintiff-society? (vi) Whether the plaintiff, being a principal of No Shrikant Chandratre, is entitled to enforce agreement for sale in 10 respect of the suit property “A” against the defendant No.3 ? (vii) Whether the plaintiff is entitled to get decree No for specific performance of contract for sale of the suit land ? (viii) What order ? As per final order. R E A S O N S 9. There is no dispute about the title of defendant Nos. 2 and 3 on the suit land marked “B” and “A” respectively. Defendants Nos. 1 and 4 are brothers of defendants Nos. 2 and 3 and they were impleaded only formal parties just to avoid any future complications and they do not have any direct concern with the property or with the suit transactions. Voluminous documentary evidence was produced by the plaintiff before the trial Court to establish that the defendant no.5 was the local manager of the suit property on behalf of defendants Nos. 1 to 4 and he represented himself as Manager or agent of the defendants Nos. 1 to 4. According to the plaintiff, the first agreement took place in May 1972 between the plaintiff and the defendant No.5 whereby defendant no.5 agreed, on behalf of defendants Nos. 1 to 4, to sell or to 11 get the suit land sold in favour of the plaintiff at the price of Rs. 1,30,000/- per acre. The actual consideration was to be determined only after the measurement of the land. According to the plaintiff, amount of Rs.9,000/- was paid to defendant No.5 Ratnakar Chandorkar in 1972 and he had deposited that amount with Vasant Korhalkar, Advocate, who is the maternal uncle of defendants Nos. 1 to 4. On behalf of the plaintiff, PW-1 Bhagwan Mainkar deposed about these facts and in the cross-examination, suggestions were given to him that that evidence is false. It is true that the defendant no.5 Chandorkar did not enter into witness box. It is material to note that about the alleged agreement of May 1972, there is no written document either to show the agreement or to show that any amount was paid by the plaintiff to the defendants Nos. 1 to 4 through defendant No.5 or through Vasant Korhalkar, Advocate. It was contended on behalf of the plaintiff that they had learnt that the said amount of Rs.9,000/- was also shown by said Vasant Korhalkar in his income-tax returns as a deposit received from the plaintiff on behalf of the defendants Nos. 1 to 4. The recored reveals that on the request of the plaintiff, information was called from the Income-tax Officer “C” Ward, Ahmednagar by the trial Court and the copy of the assessment order, Exhibit 66 for the assessment year 12 1973-74 in respect of Shri Vishveshwar M.Korhalkar of Kopergaon was submitted by the I.T.O. to the trial Court. It is said that Vishweshwar Korhalkar is also known as Vasant Korhalkar. Mr. Sawant, the learned Counsel for the defendants/appellants pointed out from para 2 of the assessment order that the assessee Vishweshwar Korhalkar had stated before the Income-tax Authorities that he along with others was a promoter of the Co-op. Housig Society and that he had received amount of Rs.9,000/- from Ratnakar Chandorkar – defendant No.5 who was also a member of the said Society. Thus, the statement of Vishweshwar before the Income-tax Officer during the year 1973-74 only indicated that the said amount was lying with him as a deposit received from Ratnakar Chandorkar as a member of the Housing Society of which Vishweshwar Korhalkar was himself a promoter. It is not the case of the plaintiff-Society that said Vishweshwar, or Vasant Korhalkar was ever a promoter or member of the plaintiff-society or that defendant no.5 – Ratnakar Chandorkar was a member of the plaintiff-society at any time. The learned trial Court held that amount of Rs.9,000/- was found lying as a deposit with Vasant Korhalkar Advocate and therefore, the contention of the plaintiff should be believed that the said amount was paid by the plaintiff to 13 defendant no.5 and Vasant Korhalkar for and on behalf of the defendants Nos. 1 to 4. In fact, the assessment order, Exhibit 66, nowhere indicates that the said amount was received as a deposit by Korhalkar Advocate for and on behalf of the defendants Nos. 1 to 4 or any of them or from the plaintiff-society. The learned trial Court clearly erred in holding that this document provides corroboration to the plaintiff in respect of advance payment of Rs.9,000/- to the defendants Nos. 1 to 4. 10. The pleadings of the plaintiff as well as the oral and documentary evidence led by the plaintiff only go to show that defendant No.5 Ratnakar Chandorkar was working as a local manager of the property of the defendants Nos. 1 to 4 as they themselves used to reside at Gwalior. They have also pleaded that defendant No.5 himself claimed and represented to be a manager and agent for the defendants Nos. 1 to 4. In view of the documentary evidence on record pertaining to different litigations, etc., it can be believed that the defendant no.5 was working as local manager for the defendants Nos. 1 to 4 to look after their property. However, there is no document to show that he was holding any power of attorney to enter into any transaction for sale 14 of the property on behalf of defendants Nos. 1 to 4. No such evidence was produced by the plaintiff. It is material to note that the plaintiff produced a copy of the power of attorney dated 12.3.1979 Exhibit 70 which was executed by defendant No.2 – Raghunath Shankarrao Potnis in favour of defendant no.5 – Ratnakar Chandorkar and one Bhalchandra Korhalkar, who is said to be the brother of Vasant @ Vishweshwar Korhalkar. There is no evidence to show that there was any power of attorney executed by any of the defendants nos. 1 to 4 in favour of defendant No.5 or said Bhalchandra Korhalkar prior to 12.3.1979. On perusal of the power of attorney, Exhibit 70, also it appears that Ratnakar Chandorkar and Bhalchandra were only authorised to look after the general maintenance and upkeep of the lands belonging to the defendant No.2 – Raghunath and they were also authorised to file cases against the Municipal Corporation or against any other persons who might be trying to encroach upon the land, to sign the plaint/complaint, to engage an advocate and to take all other necessary action and also to represent him before the Competent Authority (Urban Land Ceiling), Pune. The power of attorney specifically provides thus: “the aforesaid power of attorney will not be entitled to transfer my aforesaid land by way of sale, mortgage, lease, 15 gift or otherwise and/or enter into an agreement to that effect.” From this, it is clear that the said power of attorney executed by defendant No.2 only empowers defendant no.5 and Bhalchandra Korhalkar to look after the general maintenance and upkeep and protection of the property of the defendant no.2 and for this purpose, they could sign any documents and file or defend any suits or cases. They could also represent the defendant No.2 before the Competent Authority (Urban Land Ceiling), Pune. Naturally, all this authority was to protect the property, but this document did not give any authority or power to any of them to sell, mortgage, lease, gift or to enter into any agreement for that purpose on behalf of the defendant No.2. In view of this document executed in 1979, it can be held without any difficulty that even though the defendant No.5 – Ratnakar Chandorkar was a manager or the agent for and on behalf of the defendants Nos. 1 to 4 to look after their property, he had no authority to enter into any agreement for sale on their behalf and if he entered into any agreement for and on behalf of the defendants Nos. 1 to 4, that could not be valid and binding on defendants 1 to 4. 11. There is no dispute that defendant No.2 – Raghunath 16 Potnis executed an agreement Exhibit 69 dated 7.11.1982 in favour of defendant No.5 Ratnakar Chandorkar. As per that agreement, defendant No.2 agreed to sell the suit land marked “B” to defendant no. 5 at the rate of Rs.50,000/- per acre. The agreement shows that amount of Rs.10,000/- was received earlier from him and amount of Rs.60,000/- was paid at the time of execution of the agreement Exhibit 69. The balance amount was to be paid at the time of execution of sale deed and the possession was also to be given only at the time of execution and registration of sale deed. It is material to note that in terms of the agreement, it is specifically mentioned that because defendant no.5 was a relative of the defendant No.2 and because he had taken care of their property for long period, defendant no.2 had agreed to sell the property at concessional rate of Rs.50,000/- per acre. Admittedly, it was a concessional rate because on the same day, defendant no.3 Arvind Shankar Potnis had executed a sale deed Exhibit 67 of the suit land marked “A” in favour of Shrikant Chandratre at the rate of Rs.1,30,000/- per acre. Not only this, according to the plaintiff, even in 1972, they had entered into an agreement with defendant No.5 to purchase the suit land at the rate of Rs.1,30,000/- per acre. From these circumstances and the specific statement in the agreement for 17 sale, Exhibit 69, it is clear that the defendant No.2 had agreed to sell the suit land marked “B” at a very concessional rate of Rs.50,000/- per acre, taking into consideration close relationship with and the services rendered by defendant No.5 for maintenance and management of the properties of the defendants for long. 12. Mr. Anturkar, the learned Counsel for the plaintiff/respondent no.1 vehemently contended that the defendant no.5 Ratnakar Chandorkar and Shrikant Chandratre both were agents of the plaintiff and the plaintiff, being a principal of both of them, is entitled to enforce the agreements for sale by virtue of the provisions of Section 15 of the Specific Relief Act. Whether that section can be applied to the agreement between Shrikant Chandratre and defendant no.3 will be looked into at the appropriate stage. However, it is material to note that it was never the case of the plaintiff that defendant No.5 Ratnakar Chandorkar was their agent in this transaction. Before the trial Court, they had produced voluminous documentary evidence, which need not be discussed here, to establish that the defendant No.5 was manager and agent of the defendants Nos. 1 to 4 and in that capacity, he had entered into an agreement with the plaintiff. It appears that during the 18 arguments before this Court, a completely different stand is tried to be taken by the learned Counsel for the plaintiff and for the first time, an attempt was made to show that defendant No.5 was in fact an agent of the plaintiff and that the plaintiff was his principal. There is no material to support this stand. It needs to be noted that in the plaint, the plaintiff has specifically pleaded that in 1972, there was an agreement under which the plaintiff was to purchase the property for consideration of Rs.1,30,000/- per acre. However, the defendants had refused to perform that contract and in fact they had denied that there was any such agreement. In such circumstances, having denied the agreement of 1972 and having refused to perform that agreement under which the defendants Nos. 2 and 3 were to get price of Rs.1,30,000/- per acre, it is impossible to believe that the defendant No.2 would execute the agreement apparently in favour of the defendant No.5 but in reality for the benefit of the plaintiff, whereby the plaintiff could purchase the suit land at the rate of Rs.50,000/- per acre. It is also material to note that on or after 7.11.1982, the defendant No.5 had never executed any document or agreement in favour of the plaintiff which would indicate that the defendant No.5 had agreed to purchase the land from defendant No.2 only to sell or transfer the same to the plaintiff. There is no 19 document to show that the defendant no.5 had agreed to act as agent or representative of the plaintiff in this transaction. The stand taken by the learned Counsel for the plaintiff during the arguments before this Court is without any basis or foundation nor it is supported by any documentary evidence and, therefore, it is liable to be rejected. 13. There is no evidence that in 1972, the defendant no.5 had entered into an agreement for sale of the suit land on behalf of the defendants Nos. 1 to 4 in favour of the plaintiff. Even if for the sake of arguments it is assumed that there was any such agreement, that agreement was specifically refuted and denied by the defendant Nos. 1 to 4 even prior to 1982 and they had refused to perform that agreement. Therefore, the suit filed in