IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 22.1.2008 CORAM: THE HONOURABLE MR.JUSTICE C.NAGAPPAN A.S.No.1115 of 1995 and CMP.No.15355 of 1995 1. K.V.Narasimhan (died) No.26-A, T.K.Nambi Street, Kancheepuram. 2. K.V.Indira 3.R.Mani Valli 4.N.Geetha 5.N.Srikanth (Appellants 2 to 5 have been brought on record as Legal Representatives of the deceased sole appellant as per Order of this Court dated 26.7.2001 in CMP.Nos.17266 to 17268 of 1998) .. Appellants -Vs- 1. S.Salammal W/o.P.M.Subramania Mudaliar 43-C, Vilakkadi Koil Street, Kancheepuram. 2.K.H.Munavar Basha S/o.K.M.Haneef Sahib No.12, Thenmathathi Street, Thiruvannamalai. .. Respondents Appeal against the judgment and decree dated 1.3.1993 made in O.S.No.388 of 1990 on the file of Subordinate Judge, Kancheepuram. https://hcservices.ecourts.gov.in/hcservices/ For appellants : Mr.S.Balasubramanian For respondents : Mr.M.Venkatachalapathy Senior Counsel for Mr.M.Sriram for R1 No appearance for R2. JUDGMENT The first defendant has preferred the appeal challenging the judgment and decree dated 1.3.1993 passed in O.S.No.388 of 1990 by the learned Subordinate Judge, Kancheepuram and pending appeal, first defendant died and his legal representatives have been added as appellants 2 to 5. 2. The first respondent herein filed the suit seeking for a judgment and decree against the defendants directing the first defendant to specifically perform the suit sale agreement in favour of the plaintiff by executing and registering a sale deed in respect of the entire suit property or such portion as determined by the Court by receiving the balance of sale consideration or such portion as determined by the Court and after discharging all the dues over the suit property and on failure to do so, the same may be performed through the process of the Court and also for directing the delivery of possession of the suit property and in the event of the Court refusing the specific performance of the contract, in the alternative, to pass a decree against the first defendant to return the advance amount of Rs.55,600/- with interest at 24% per annum from 30.5.1990 for the use and enjoyment of the plaintiff's money till realisation and for further sum of Rs.50,000/- as damages for wilful breach of the contract and to create a charge over the suit property for the said amount and for costs of the suit. 3. The case of the plaintiff is that the first defendant is the absolute owner of the suit property and he offered to sell the same to the plaintiff for a sum of Rs.2,75,000/- free of all encumbrances and after discharging the Kanchipuram Co-operative House mortgage decree dues and after obtaining necessary income-tax clearance, in order to tide over certain of his pressing problems and family commitments and the plaintiff accepted the offer and the first defendant received a sum of Rs.12,000/- as advance which was confirmed by his letter dated 26.5.1990 wherein he agreed to execute the sale agreement and the plaintiff further paid a sum of Rs.43,600/- and in total, the first defendant received a sum of Rs.55,600/- and executed an agreement to sell the suit property on 30.5.1990. It is further stated by the plaintiff that she has been requesting the first defendant to complete the sale transaction by clearing the house mortgage society dues, but https://hcservices.ecourts.gov.in/hcservices/ the first defendant was postponing the execution of sale deed on the ground that he has to settle his daughter's marriage in the same house before parting it to the plaintiff and the plaintiff patiently waited till September 1990 and issued notice dated 21.9.1990 demanding the immediate execution of the sale deed and the first defendant though received the notice, did not send any reply. The plaintiff has further stated that the conduct of the first defendant was quite evasive and amounts to wilful breach of the contract and the plaintiff has always been ready and willing and continues to be so even on date to perform her part of the contract and she has sufficient means and ready cash for paying the balance of sale consideration. It is further stated by the plaintiff that the second defendant seems to have obtained some sale agreement in respect of 9 feet east to west and 45 feet north to south, the vacant site on the west of the building portion of the suit property from the first defendant and the second defendant seems to have abandoned and waived specific performance of the agreement for want of funds and was beyond time. According to the plaintiff, the suit sale agreement is in respect of the entire house property including the said side open site on the west and the value fixed includes the value of open site also and she is ready and willing to pay the balance of sale consideration fully if the first defendant discharges the Co-operative House mortgage dues and clears the claim of the second defendant with regard to the vacant site. It is further stated by the plaintiff that she estimated the value of the western vacant site, the subject matter of the agreement of the second defendant, at Rs.75,000/- and she is ready and willing to have specific performance of the house property even excluding the vacant site on proportionate deduction of the value of the site. The plaintiff has further stated that she issued legal notice dated 17.11.1990 which was received by the first defendant on 20.11.1990 and he has not chosen to send any reply and hence the suit. 4. The first defendant filed detailed written statement and the same was adopted by the second defendant. The first defendant denied the plaint averment that he offered to sell the suit house to the plaintiff for a sum of Rs.2,75,000/- and he further denied that he received a sum of Rs.12,000/- and a further sum of Rs.43,600/-, totalling a sum of Rs.55,600/- from the plaintiff and executed the suit sale agreement on 30.5.1990. According to the first defendant, the remedy for the plaintiff is not for specific performance of the alleged contract, but to get back the money paid as loan. It is further stated by the first defendant that he was undergoing rigorous imprisonment in the Central Jail, Madras for certain offences under the Income-Tax Act and the plaintiff's son Ponnusamy used to visit the jail and voluntarily came forward to purchase the suit house, knowing fully well that the wife and children of the first defendant are placed in a precarious condition; that none would come forward to help them and there was no way for the first defendant except to agree for any terms imposed upon him to part with the suit property for grossly inadequate price so as to meet the https://hcservices.ecourts.gov.in/hcservices/ exigencies namely to come out of the jail and the first defendant was made to write number of letters inclusive of the letter dated 26.5.1990 in the manner directed by Ponnusamy, the son of the plaintiff, who came to jail and those letters are produced by the plaintiff in this suit, just to make out a case for specific performance. The first defendant has further stated that the sale agreement, dated 30.5.1990 was obtained by the plaintiff's son Ponnusamy and his brother by escorting the first defendant from Central Jail to their house at Madras immediately after his release and the plaintiff knows that the value of the suit property is twice the value given in the sale agreement and hence the letter dated 30.5.1990 has to be taken as a loan transaction. According to the first defendant, the amount of Rs.12,000/- alleged to have been shown as paid in the month of November, 1989 to the first defendant, was paid to the first defendant's family at Kanchipuram. It is further stated in the written statement that the letter dated 26.5.1990 was written under the direction of the plaintiff so as to make it appear that the money borrowed was required other than the purpose qua the family expenses and for not paying the fine amount in the court and actually the sum of Rs.37,000/- was paid by the plaintiff towards the fine amount due in the Economic Offences Court and a further sum of Rs.5,000/- was paid to one Raman, the brother-in-law of the first defendant, who earlier paid the fine of Rs.5,000/- at the Trial Court after conviction and the balance of Rs.1,600/- is with the first defendant. The first defendant has further stated that the alleged suit sale agreement was never intended for contract of sale, but for simple money transaction nay a loan and the sale agreement is only a receipt for the hand loan. According to the first defendant, the debt due to the Cooperative House Mortgage Bank was blown out of proportion and no award was passed against the first defendant under the provisions of the special Act and the first defendant has filed the suit in O.S.No.474 of 1988 and obtained an injunction against the Bank from in any manner realising the debt by sale of his portion of the vacant site in his possession and the suit is pending disposal on the file of Additional District Munsif, Kanchipuram. It is further stated that the alleged sale agreement dated 30.5.1990 was never intended for creating a contract of sale of the suit house for inadequate consideration of Rs.2,75,000/- and the debt is only a loan transaction and the Court has to strike down an unfair and unreasonable contract entered into between parties who are not equal in bargaining power and the plaint averment that the first defendant required time till 15th 'Ippasi' of the year 1990 for executing the sale deed is not true and correct and the letter dated 30.5.1990 may at the best be treated by the plaintiff to create a secured debt and the plaintiff is aware of the loan transaction and therefore she has prayed for return of advance money, though the plaint is well drafted to make the said claim of hand loan as only an alternative remedy. According to the first defendant, if the plaintiff's case is accepted as true, then the alleged agreement dated 30.5.1990 ought not to have comprised the portion given under the registered agreement to the second defendant, https://hcservices.ecourts.gov.in/hcservices/ since the plaintiff had knowledge of the existence of the sale agreement for portion of the suit property in favour of the second defendant. It is further stated by the first defendant that there is no breach of contract by him since the alleged contract was never intended to be so and it was only a loan transaction and the first defendant is not liable for any damages and the suit may be decreed for the amount paid to the first defendant without any interest. 5. The plaintiff, in the reply statement, has stated that the transaction is not one of loan nor entered under any pressure from Jail and the talks were going on for more than three months prior to the agreement and the agreement was entered into only after lot of deliberations and under compulsion from the first defendant and the first defendant even after coming out of the Jail, promised and confirmed to execute the sale deed and there was no undue influence or compulsion involved in the case. It is further stated by the plaintiff that the first defendant convinced her that the agreement in favour of the second defendant was a sham and nominal one, obtained by his counsel Mr.Abdul Rasheed in the name of his close relative promising to render help in conducting the criminal case against the first defendant and it was executed as security for legal fees and the same is not specifically enforceable and the first defendant would settle the same and would execute the sale deed in respect of the entire suit property. According to the plaintiff, the contract is valid in law and specifically enforceable and she is not guilty of any conduct or act that would dis-entitle from securing the relief of specific performance. 6. The Trial Court framed six issues and the plaintiff examined her son as P.W.1 and marked Exs.A1 to A14 on her side and the first defendant examined himself as D.W.1 and marked Ex.B1 on their side. On a consideration of oral and documentary evidence, the Trial Court held that the plaintiff is entitled to the relief of specific performance in respect of the suit property excluding the vacant site on its west on deduction of its value of Rs.50,000/- from the total sale consideration of Rs.2,75,000/- and directed the first defendant to receive the balance of sale consideration and execute and register the sale deed and decreed the suit accordingly with costs. Aggrieved by the same, the first defendant has preferred the present appeal and on account of his death, his legal representatives have been brought on record as appellants 2 to 5. For the sake of convenience, in this Judgment, the parties are referred to as arrayed in the suit. 7. The Points for determination in this appeal are:- 1. Whether the suit sale agreement was never intended for a contract of sale but was only a loan transaction between the parties. https://hcservices.ecourts.gov.in/hcservices/ 2. Whether the discretion exercised by the Trial Court in granting the relief of specific performance of the suit property excluding the vacant site by deducting its value from the total consideration, is legally sustainable. POINT NO.1:- 8. Mr.S.Balasubramanian, the learned Counsel appearing for the appellants, contended that the first defendant was undergoing rigorous imprisonment in Central Jail, Madras for certain offences under the Income Tax Act at the time of contract and he was not in free mind and he never intended to create a contract for sale of the suit property in favour of the plaintiff and the parties were not in equal terms and it is only a loan transaction and the suit property is indivisible and it is not open to the Trial Court to estimate the value of the vacant site sold to the second defendant at Rs.50,000/- and deduct the same from the actual sale price and the relief of specific performance under Section 12 of the Specific Relief Act, cannot be claimed and in view of the fact that the plaintiff had claimed alternative plea of return of advance amount and damages, the Trial Court ought to have granted only the alternative plea and the discretion exercised by the Trial Court in granting the relief of specific performance is not legally sustainable. 9. Per contra, Mr.M.Venkatachalapathy, the learned Senior Counsel appearing for the first respondent, contended that the suit agreement was entered into only after lot of deliberations and compulsion from the first defendant and there is no undue influence or pressure involved in the case and the first defendant confirmed the sale agreement in various letters and promised to execute the sale deed and the plaintiff has averred in the plaint that she is ready and willing to have the specific performance of the house property excluding the vacant site on proportionate deduction of its value from the total sale price and has prayed for a direction to the first defendant to execute a sale deed in respect of the entire suit property or such portion by receiving the balance of sale consideration or such portion as determined by the Court and the vacant site being a small proportion in value, the Trial Court deducted the same from the total sale price and directed the specific performance of the house property excluding the vacant site and the value of the vacant site has to be construed as compensation deductible and the alternative plea of refund of advance amount and damages, cannot itself be a bar to the claim for specific performance of the contract of sale and the discretion exercised by the Trial Court is legally sustainable. 10. Ex.A4 is the suit sale agreement dated 30.5.1990 with regard to the suit property and the first defendant has admitted that he executed the same in favour of the plaintiff. The first defendant has got https://hcservices.ecourts.gov.in/hcservices/ title to the suit property by virtue of Ex.A11 sale deed, dated 16.7.1979 and the case of the first defendant is that he was undergoing Rigorous Imprisonment in Central Jail, Madras and he had no other way except to agree to the terms imposed on him by the plaintiff and the sale agreement was not entered into in a peaceful atmosphere and it was only a loan transaction. According to the plaintiff, the sale agreement was preceded by letters written by the first defendant to the plaintiff, pressurising and requesting her to purchase the suit property. Ex.A1 is the letter, dated 28.12.1989, written by the first defendant to the plaintiff family promising to execute the sale agreement with regard to the suit property immediately on coming out of the jail. Ex.A2 is also a letter dated 24.5.1990 addressed to plaintiff family written by the first defendant reiterating his promise to execute the sale agreement. Ex.A3 is another letter, dated 26.5.1990, written by the first defendant to the plaintiff, in which, besides acknowledging the receipt of Rs.12,000/-, he requested the plaintiff for making a further payment of Rs.42,000/- to his wife and promised to discharge the Bank loan and execute the sale deed to the suit property within a period of fifteen days after his release and in that letter, he has also mentioned the description of the property to be sold by him. During the cross-examination, the first defendant as D.W.1, has admitted that he wrote Exs.A1 to A3 letters from the jail in his own handwriting to the plaintiff and whatever he has stated therein are true. Immediately, after his release on 30.5.1990, the first defendant has executed Ex.A4 sale agreement in favour of the plaintiff promising to sell the suit property for a sale consideration of Rs.2,75,000/- free of encumbrances and he has acknowledged the receipt of a sum of Rs.55,600/- as advance towards his family expenses. In his testimony as D.W.1, the first defendant has admitted that he executed Ex.A4 sale agreement in the house of the plaintiff. Ex.A5 is the letter dated 14.9.1990 written by the first defendant to the plaintiff, in which, he has stated that he has settled his daughter's marriage and he required time for executing the sale deed and the sale deed can be registered by fifteenth of Tamil month 'Ippasi'. This document was also put to the first defendant during his cross- examination and he admitted the same and stated that the contents therein are true. Moreover, the first defendant has stated that P.W.1 has demanded the execution of the sale deed for nearly four times after his release from the jail. Ex.A8 is the legal notice dated 17.11.1990, in which, the plaintiff called upon the first defendant to execute the sale deed immediately by receiving the balance of sale consideration. Ex.A9 is the postal acknowledgment containing the signature of the first defendant evidencing the receipt of the legal notice by him. Ex.A10 is the Fixed Deposit Receipt dated 17.7.1991 of Indian Overseas Bank, Muthialpet, Madras, for a sum of Rs.2 lakhs, standing in the name of the plaintiff. According to P.W.1, the plaintiff's family is a joint family and they are doing textile business in Kancheepuram and Madras and the plaintiff is an income-tax assessee and she was always ready and willing to perform her part of the https://hcservices.ecourts.gov.in/hcservices/ contract. It is also relevant to note that the first defendant has never disputed the financial capability of the plaintiff to pay the balance of sale consideration. 11. It is stated that the first defendant was not in free mind at the time of entering into Ex.A4 sale agreement. The sale agreement was executed after the release of the first defendant from the jail. While undergoing the imprisonment, the first defendant has written Exs.A1 to A3 letters to the plaintiff side repeatedly assuring them that he would execute the sale agreement and then the sale deed for the suit property after his release from the jail. In other words, the first defendant has reflected his mind in all those letters in clear terms that he would sell the suit property free of encumbrances to the plaintiff. After a period of three months from the date of execution of the sale agreement, the first defendant had written Ex.A5 letter seeking apology for the delay caused in the execution of the sale deed and has sought for time extension of forty five days on the ground of settling his daughter's marriage. On account of failure of the first defendant to keep up his promise, the plaintiff has issued Ex.A8 legal notice and the same was received by the first defendant, but he did not send any reply and hence the suit came to be filed. The first defendant himself in his testimony in the cross-examination has admitted about the demands made on behalf of the plaintiff calling upon him to execute the sale deed. The first defendant had not disputed Ex.A4 sale agreement at any point of time before the filing of the suit. In the cross-examination, the first defendant has admitted that he did not take any steps to cancel the suit sale agreement. For the first time, in the written statement, the first defendant has alleged that the agreement was never intended for contract of sale and was only a loan transaction. Such a contention can never be appreciated and the Trial Court has rightly rejected the same. Point No.1 is answered accordingly. POINT NO.2: 12. The suit property is house building with vacant site measuring East to West 33 feet and North to South 56 feet. The second defendant has entered into Ex.B1 sale agreement dated 9.4.1987 with the first defendant for a sum of Rs.15,000/- with regard to the vacant site in the western portion of the suit property measuring East to West 9 feet and North to South 45 feet. The plaintiff has averred about that sale agreement in the plaint and has stated that the value of the vacant site could be Rs.75,000/- in her estimate and has further stated that the plaintiff is ready and willing to have the specific performance of the house property excluding the vacant site on proportionate deduction of its value from the sale price. The second defendant has not let in any independent evidence, but cross-examined the witnesses. In the cross-examination, the first defendant has stated that he handed over the vacant site, which is the subject matter of Ex.B1 sale agreement to the second defendant, on the date of agreement itself and later he https://hcservices.ecourts.gov.in/hcservices/ received the balance of sale consideration and executed the sale deed to the second defendant. The above vacant site is only a small portion of the suit property and the sale consideration mentioned for it in Ex.B1 sale agreement is Rs.15,000/-. The first defendant, in the cross-examination of the plaintiff, has stated that the actual value of the vacant site is Rs.50,000/-. On account of sale, the first defendant is unable to perform the whole of his part of the contract with regard to the entire suit property, but the part which is left unperformed bears only a small proportion to the whole in value and admits compensation in money, as contemplated under Section 12(2) of the Specific Relief Act. The Trial Court has not dealt with this legal aspect. Sections 12(2) and 12(3) of the Specific Relief Act were enacted with a view to meet such eventualities when the whole of the contract cannot be performed the vendor and the said provisions have been enacted for the benefit of the purchaser and thus cannot operate to his detriment. As already seen, the plaintiff has specifically stated that she is ready and willing to have specific performance of the property even excluding the vacant site. In this context, the law laid down in the decisions of the Apex Court in P.C.VARGHESE Vs. DEVAKI AMMA BALAMBIKA DEVI AND OTHERS ((2005) 8 SUPREME COURT CASES 486) and SURINDER SINGH Vs. KAPOOR SINGH (DEAD) THROUGH LRS. AND OTHERS ((2005) 5 SUPREME COURT CASES