IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN THURSDAY, THE 4TH NOVEMBER 2010 / 13TH KARTHIKA 1932 AS.No. 555 of 1999(C) -------------------------- OS.164/1989 of I ADDL.SUB COURT, THRISSUR .................... APPELLANT(S)/(PLAINTIFF) --------------------------------- KOCHOUSEPH, S/O. ALAPPAT PALTHINGAL LONAPPAN, KARANCHIRA MURI, KATTUR VILLAGE, MUKUNDAPURAM TALUK, REPRESENTED BY REGISTERED POWER OF ATTORNEY HOLDER THOMAS, S/O. CHOWALLOOR LUVIZ, RESIDING AT PERINGAD DESOM, PAVARETTY AMSOM, CHAVAKKAD TALUK. BY ADVS. SRI.D.KRISHNA PRASAD SRI.D.NARENDRANATH SRI.JOJI VARGHESE SRI.M.HARISHARMA SRI.T.P.ELDHOSE RESPONDENT(S)(DEFENDANTS 2 TO 6) ---------------------------------------------- 1. BINI, S/O. MARIYAMMA, & EMMATTY OUSEPH, RESIDING AT EAST FORT, THRISSUR VILLAGE AND TALUK. 2. BABU JOSE, S/O. MARIYAMMA & EEMMATY OUSEPH, RESIDING AT EAST FORT, THRISSUR VILLAGE AND TALUK. 3. PHINNY JOSE, S/O. MARIYAMMA & EEMMATY OUSEPH, RESIDING AT EAST FORT, THRISSUR VILLAGE AND TALUK. 4. LEENA, D/O. MARIYAMMA & EEMMATY OUSEPH, RESIDING AT EAST FORT, THRISSUR VILLAGE AND TALUK. 5. AYYAPPAN, S/O.PERINGATHARAVATTIL VEERATHAN, MANALUR DESOM, KARAMUKKU VILLAGE, THRISSUR TALUK. THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 01/11/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: svs/ THOTTATHIL.B.RADHAKRISHNAN & P.BHAVADASAN, JJ. ------------------------------------------------------------------------ AS No.555 of 1999-F ------------------------------------------------------------------------ Dated 4th November 2010 Judgment Thottathil.B.Radhakrishnan, J. The plaintiff in a suit for specific performance of a contract for sale is the appellant. 2. The plaintiff sued on the strength of Ext.A2 contract for sale under which the first defendant agreed to transfer 1¼ cents of land with a building thereon to the plaintiff for a consideration of Rs.1,50,000/- and obtained an advance of Rs.1,00,000/- towards sale consideration by receiving Rs.50,000/- initially and the remaining Rs.50,000/- in two instalments of Rs.25,000/- each. 3. The first defendant denied the alleged contract for sale and set up Ext.A4 sale on 30.08.2004 to her son - the second defendant, for a total consideration of Rs.30,000/-. It was also contended that the additional sixth AS NO.555/99 2 defendant is a tenant under the second defendant following Ext.A4 sale by the first defendant in favour of the second defendant. 4. On the basis of the evidence on record, the court below overruled all the contentions of the defendants, upholding Ext.A2 contract for sale which reflected the payment of the initial advance of Rs.50,000/-. It also upheld the payment of the two instalments of Rs.25,000/- each, as pleaded, thus totalling the earnest to Rs.1,00,000/-. 5. After answering almost all the issues in favour of the plaintiff, ultimately in paragraph 35 of the impugned judgment, the court below said under issue No.3 that “the evidence shows that the property is already sold to the second defendant and now, it is in his possession and enjoyment. It is also come out that it is now given to the additional sixth defendant for rent”. On such view on facts, the court below held that “if the prayer for specific performance is to be allowed, it will create complications in this matter.” AS NO.555/99 3 6. The court below was apparently on the impression that since the plaintiff had sought an alternate relief for a direction to return the advance with interest, it would suffice that such relief is granted. Accordingly, the court below granted a decree for return of the advance amount with 12% interest. It also granted a further amount of Rs.50,000/-, stated to be as per the terms of the agreement, towards damages. The said amount was awarded by saying that it was found that the first defendant had assigned the property in favour of the second defendant only to defeat the claim of the plaintiff. Accordingly, the plaintiff was granted a decree for return of an amount of Rs.1,50,000/- with interest @ 12% per annum on Rs.1,00,000/- from 07.04.1983 till realisation. 7. The short issue urged in this appeal is as to whether the court below acted in terms of law in the exercise of discretion in refusing specific performance and by confirming the decree to be only one for return of the advance, with the compensation as noted, with future AS NO.555/99 4 interest. 8. For reasons best known to the respondents, none appears for them. It is also stated that even when the matter was sent to the Adalat, none responded on behalf of the respondents in spite of notice. 9. The learned counsel for the appellant argued that the exercise of discretion by the court below cannot be treated as an exercise of discretion at all, because what is required to be exercised is discretion in accordance with law and the reasons stated by the court below in paragraph 35 of the impugned judgment as noted by us above, gave no foundation to refuse a decree for specific performance, going by the facts and circumstances of the case. 10. In terms of Section 20 of the Specific Relief Act, 1963, the jurisdiction to grant a decree for specific performance is discretionary and the court is not bound to grant such relief merely because it is lawful to do so. Sub- section (1) of Section 20 further advises that the discretion that the court may exercise in terms of Section 20(1) is not AS NO.555/99 5 to be arbitrary, but one that has to be sound and reasonable, guided by judicial principles and capable of correction by a court of appeal. Sub-section (2) of Section 20 enumerates cases in which the court may properly exercise discretion not to decree specific performance. At the foot of Sub-section (2) of Section 20, three classes of cases are grouped under (a), (b) and (c) and two explanations are provided. Those explanations provide statutory guidance as to the amplitude of the indications contained in clauses (a), (b) and (c) under Sub-section (2) of Section 20. As held by the Apex Court in Sardar Singh v. Krishna Devi (1994) 4 SCC 18), the circumstances specified in Section 20(2) are only illustrative and the court would take into consideration the circumstances under each case, the conduct of the parties and the respective interest under the contract. In T.V.Alias v. A.Aboobacker (2006(2) KLJ 790), this court held that discretion should not be exercised by court against the defendant, that is to say AS NO.555/99 6 the order of specific performance, only because the defence of the defendant is either unsustainable or not proved or false or because the court found it to be so. 11. In a nutshell, while the denial of the defendant of the contract for sale may not ipso facto be a ground to refuse exercise discretion in favour of the defendant, thereby excluding a decree for specific performance, the guiding judicial principle is that the exercise by the court ought to be sound and reasonable and not arbitrary. The concept of discretion embodied in S.20 of the Specific Relief Act is nothing but judicial discretion which has to be guided by judicial principles. They have also to be capable of correction by a court of appeal. The exercise of discretion in cases of specific performance is, to a great extent, guided by the statutory provisions in S.20, though they may not be exhaustive. Clause (b) under Sub-section (2) of S.20 provides that where the performance of the contract would involve some hardship on the defendant, which he could not have AS NO.555/99 7 foreseen, whereas its non-performance would involve no such hardship on the plaintiff, the court may properly exercise discretion not to decree specific performance. Similarly, Explanation (2) under S.20(2) stands to advise that the question whether the performance of a contract would involve hardship on the defendant within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract. Equally, Explanation (1) stands to say that mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed as a hardship within the meaning of clause (b). The same is indicated in Explanation (1), even as regards whether the situation constitutes an unfair advantage within the meaning of clause (a) of Section 20(2). AS NO.555/99 8 12. On the facts of the case in hand, the written statement contained a case of total denial of the execution of Ext.A2 agreement. The allegation of defendants 1 and 2 was that the suit is filed with false averments and that the alleged contract for sale is a bogus one. It was alleged that Ext.A2 document was created artificially by the plaintiff and the endorsements on its reverse regarding receipt of further amounts of Rs.25,000/- each, are all false. The further plea of defendants 1 and 2 was that the first defendant had borrowed an amount of Rs.75,000/- from a firm, of which the plaintiff was one of the partners and since a promissory note was demanded in connection with that transaction, the first defendant happened to sign some stamp papers and some blank papers and that the intention was never to assign the properties to the plaintiff. According to the defendants, the suit was filed based on the promissory note and that the decree was passed in a different suit. It was also pleaded that the property had AS NO.555/99 9 already been assigned to the second defendant for valid consideration. 13. The materials on record would show that the first defendant executed a contract for sale (Ext.A2) in favour of the plaintiff on 07.04.1983. On 30.08.1984, she transferred the property to her son the second defendant as per Ext.A4. We also note that one of the payments of Rs.25,000/- received by the first defendant upon endorsing receipt on the reverse of Ext.A1 is on 20.03.1985 i.e., even after she had sold the property to the second defendant as per Ext.A4. We find that Ext.A5 notice was issued by the plaintiff, calling upon the defendants to perform the agreement. That notice is dated 03.01.1986. Yet, we find that the suit is filed only on 04.03.1989. We do not find any positive explanation by the plaintiff for the long delay in filing the suit for specific performance. This assumes importance having regard to the fact that giving credit to the entire advance of Rs.1,00,000/-, the balance consideration due was only Rs.50,000/- and the AS NO.555/99 10 defendants have a plea that certain signed stamp papers and blank papers were entrusted with the plaintiff in connection with the loan transaction. In that context, the escalation in land value with the passage of time, is definitely one factor, that would receive weighty consideration in the exercise of judicial discretion in matters relating to specific performance. The bargain between the parties as on 07.04.1983 the date of Ext.A2 agreement could not have necessarily been one visualising the price escalations that would have gone through, by the time the suit was filed on 04.03.1989. Therefore, the question of exercise of discretion has to be determined with the circumstances existing at the time of contract, going by Section 20(2)(b) and Explanation 2 thereto and it has necessarily to be held that the contract, if enforced would give the plaintiff an unfair advantage over the defendants which was not in the contemplation of the parties at the time of entering into Ext.A2 contract. It is not a case where Ext.A2 contract for sale is bad for inadequacy of AS NO.555/99 11 consideration or that the said contract for sale is onerous to the defendant or improvident in its nature. But, it is a case where the time lag in instituting the suit has tilted the balance of fairness in the matter of the advantage that may accrue to the plaintiff as against the disadvantage that may be occasioned to the defendant if a decree for specific performance is granted. 14. For the aforesaid reasons, though we disagree with the findings in paragraph 35 of the impugned judgment that the mere transfer in favour of the second defendant and the fact that the sixth defendant is a tenant under the second defendant should dissuade specific performance, we sustain the impugned decree for different reasons as regards exercise of discretion, as stated above. 15. The learned counsel for the plaintiff/appellant is fully justified in saying that the court below has omitted to record the charge available to the plaintiff for the decree amount on the suit property in terms AS NO.555/99 12 of S.55(6)(b) of the Transfer of Property Act and that the decree needs to be modified to that extent. In the result, while repelling the appeal of the plaintiff for a decree for specific performance, it is ordered that the decree as granted by the court below would be a charge on the property in terms of Section 55(6)(b) of the Transfer of Property Act. There will be no order as to costs. THOTTATHIL.B.RADHAKRISHNAN, JUDGE P.BHAVADASAN, JUDGE sta AS NO.555/99 13