HON’BLE SRI JUSTICE G. BHAVANI PRASAD A.S. No.939 of 1997 and Cross Objections Date: 23-10-2009 A.S. No.939 of 1997: Between: Mandalaparthi Seetamahalakshmi and others .. Appellants And K.V.S.S.T.V. Prasada Rao and others .. Respondents Cross Objections in A.S. No.939 of 1997: Between: K.V.S.S.T.V. Prasada Rao .. Cross Objector And Mandalaparthi Seetamahalakshmi and others .. Respondents HON’BLE SRI JUSTICE G. BHAVANI PRASAD A.S. No.939 of 1997 and Cross Objections COMMON JUDGMENT: Aggrieved by the judgment and decree in O.S. No.24 of 1988 on the file of the Subordinate Judge’s Court, Tadepalligudem dated 14-10-1996, the defendants filed the present appeal. While the 1st respondent herein was brought on record in the suit as the legal representative of the deceased plaintiffs 1 and 3, due to his death during the pendency of the appeal, respondents 2 to 4 were brought on record as per orders in A.S.M.P. No.2215 of 2005, dated 31-10-2005. The parties are referred to herein as they are arrayed in the suit. The plaint schedule property of Ac.0-39 cents in R.S. No.46/1 and Ac.1-00 in R.S. No.46/2 of Valluru originally belonged to the deceased husband of the 1st defendant and the defendants, on whom the said land devolved, agreed to sell the same to the deceased 1st plaintiff for Rs.14,700/- under an agreement of sale, dated 28-09-1973 for the purposes specified in the agreement and Rs.2,100/- were agreed to be paid as advance. The balance of Rs.12,600/- was agreed to be paid by 28-09-1974 (28-02-1974) with interest at 12 per cent per annum in case of default. In case of the defendants not executing a registered sale deed, they had to refund the amount received with interest at 12 per cent per annum and Rs.2,500/- towards damages. The 1st defendant for herself and as natural guardian and mother of defendants 2 and 3 received Rs.2,100/- and delivered possession of the property with standing crop as agreed. One Kondaveeti Seshadri filed O.S. No.81 of 1974 against the 1st plaintiff and the 1st defendant and obtained an ex parte injunction claiming to be the tenant and the suit and the appeal against its dismissal failed. Then he filed A.T.C. No.200 of 1981 and A.T.A. No.73 of 1985 on its dismissal, which were dismissed. The defendants, who took possession, also received several deposits made by the said Seshadri during the pendency of the tenancy litigation and the deceased 1st plaintiff claimed to be entitled to the profits since the grant of injunction up to the suit. The deceased 1st plaintiff further claimed to have paid Rs.1,400/- on 03-02-1974 and to have not paid the balance due to the pending litigation. The 1st defendant also executed a pronote on 24-12-1978 for Rs.14,700/- and made two endorsements of part payment of Rs.50/- each on the said pronote on 21-12- 1981 and 19-12-1984. The pronote was an acknowledgement for receipt of the sale consideration and in spite of demands by the deceased 1st plaintiff through mediators, the 1st defendant refused to perform her part of the contract on 01-12-1987 in spite of the readiness and willingness of the deceased 1st plaintiff with the money and stamp and registration expenses. The limitation commenced from the date of refusal and the defendants received Rs.9,230-45 ps. between 01-04-1978 and 06-11-1984 in the tenancy proceedings and are liable to pay profits and damages towards both the crops in 1985-86 and 1986-87 and the first crop in 1987-88 to an extent of Rs.10,000/-. The defendants had to account for, thus, Rs.19,230-45 ps. and if the 1st plaintiff were to be considered disentitled to specific performance through execution of a registered sale deed and delivery of possession and for the said damages of Rs.19,230-45 ps., the defendants were liable to repay Rs.14,700/- received towards the sale consideration between 28-07-1973 and 24-12-1978 with interest at 12 per cent per annum coming to Rs.37,329-05 ps. with further interest on the same at 12 per cent per annum up to the date of the decree and 6 per cent per annum till realization. The deceased 1st plaintiff, therefore, filed the suit for the relief of specific performance and in the alternative for refund of suit amount, future profits with interest at 12 per cent per annum and costs. His son and wife were brought on record as plaintiffs 2 and 3 on his death on 25-07-1989 and subsequently, the wife also died leaving the 2nd plaintiff alone by the time of the judgment and decree. The defendants resisted the suit contending that the suit after 14 years after the agreement, dated 28-09-1973 was barred by time. The 1st defendant executed the agreement of sale treating time to be the essence of the contract and she never agreed to deliver possession of the property. The 1st plaintiff was never ready and willing to perform his part of the contract. When the 1st defendant and the 1st plaintiff approached the 1st plaintiff’s advocate on Kondaveeti Seshadri filing O.S. No.81 of 1974, the said advocate advised the 1st defendant and her father to remove the 2nd sheet of the agreement, which was a white paper and substitute another white paper incorporating clauses relating to delivery of possession, etc., and removing the default clause of cancellation of agreement if not performed within time. The same was felt necessary to defend the action taken by Kondaveeti Seshadri and accordingly the 1st defendant’s father substituted the white paper writing the required matter but without any attestation. Kondaveeti Seshadri continued to be in possession by virtue of injunction in O.S. No.81 of 1974 and the 1st plaintiff demanded refund of the advance and part payment of Rs.3,500/- in total and cancellation of the agreement. The 1st defendant received only Rs.1,200/-, which went towards discharge of the loan to the Co-operative Land Mortgage Bank, Tadepalligudem and for the total of Rs.4,700/-, the 1st plaintiff obtained a pronote for Rs.14,700/- from the 1st defendant as if she received the entire amount, as she was unable to pay the amount immediately. Due to her critical financial condition, the 1st defendant was compelled to execute the pronote, though she did not receive the entire Rs.14,700/- and the pronote was obtained in cancellation of the agreement as evident from its recitals. After A.T.A. No.73 of 1985 was dismissed, the 1st defendant took possession and is cultivating in her own right. She was entitled to receive the deposits made by Seshadri as the land owner and the 1st plaintiff was a party to the suit and the tenancy proceedings, but he never objected to the 1st defendant receiving the deposits, as the agreement was cancelled. Hence, the 1st plaintiff was estopped from questioning the same and the 1st defendant had to sign the endorsements on the pronote, as she was not in a position to pay, to avoid a suit by the 1st plaintiff on the pronote. The 1st plaintiff never made any demand for specific performance and he was never ready to perform his part of the contract. The payments said to have been made at Rs.7,000/- on 11-02-1975, Rs.3,000/- on 18-12-1975, Rs.500/- each on 17-04-1976 and 09-10-1977 and Rs.200/- on 24-12-1978 are false and the defendants were not liable to pay any interest. As the value of the lands increased to Rs.60,000/- per acre, the 1st plaintiff wanted to have wrongful gain and the valuation of the suit and Court fee were also not correct. Even any claim on the strength of the pronote was also barred by time, as there was no valid acknowledgement of the debt. Defendants 2 and 3 were not represented by the 1st defendant in the agreement of sale or the pronote and she had no such authority or power to alienate the share of defendants 2 and 3. There was no legal necessity or benefit to the estate of defendants 2 and 3 and hence, the defendants sought for the dismissal of the false and vexatious suit with compensatory costs. On such pleadings, the trial Court framed the following issues for trial and determination of the suit. 1. Whether the time is essence of the suit sale agreement ? 2. Whether the plaintiff is always ready and willing to obtain sale deed and whether the plaintiff is entitled to specific performance of the suit sale agreement ? 3. Whether the plaintiff obtained the pronote from the 1st defendant for Rs.14,700/- in cancellation of the suit sale agreement ? 4. Whether the plaintiff is entitled to any profits ? 5. Whether the plaintiff is entitled to alternative relief of refund, if so to what amount ? 6. Whether the sale agreement, dated 28-9-1973 is true and binding on defendants 2 and 3 ? 7. To what amount the plaintiff is entitled ? P.Ws.1 and 2 and D.Ws.1 and 2 were examined and Exs.A.1 to A.13 were marked during trial. (Exs.A.6 to A.13 marked during recording of the evidence of D.W.2 by advocate commissioner in I.A. No.845 of 1996). The trial Court rendered the impugned judgment noting that defendants 2 and 3 did not adduce any evidence, while the 1st defendant as D.W.1 admitted the execution of Ex.A.1 agreement of sale, dated 28- 09-1973 for the benefit of defendants 2 and 3 only to discharge the mortgage loan of her husband to the Co- operative Bank, Tadepalligudem. While concluding the sale agreement to be, hence, binding on defendants 2 and 3, the trial Court placed the burden of proving that Ex.A.3 promissory note was obtained in cancellation of Ex.A.1 agreement of sale, on the defendants. The trial Court observed that there was no evidence for the defendants that Ex.A.3 pronote was towards cancellation of the agreement of sale and Ex.A.3 was stated by the 1st plaintiff to be towards collateral security for the amount paid under Ex.A.1, which was scribed by the 1st defendant’s father. The trial Court felt that no consideration was paid under Ex.A.3 though Rs.14,700/- were recited to have been paid and the scribe D.W.2 would have obtained a receipt from the 1st plaintiff about the cancellation of Ex.A.1 agreement, if Ex.A.3 was executed for that purpose. The trial Court also concluded that in case of default in payment of Rs.12,600/- before 28-02- 1974, the liability was only to pay interest at 12 per cent per annum and there was no deeming cancellation of the agreement or forfeiture of the advance amount. The 1st defendant was noted to have never given any notice that time was the essence of the contract and the agreement was cancelled and even according to the defendants, Ex.A.3 pronote alone cancelled Ex.A.1 agreement long after the expiry of three years from Ex.A.1. The trial Court, hence, did not accept the plea that time was the essence of the contract and because the pendency of tenancy litigation prevented both the parties from specifically performing the agreement in the light of the injunction in the suit, the trial Court considered that the 1st plaintiff could issue a notice and file the suit only after the disposal of the tenancy appeal. The trial Court considered the suit to be within time from the refusal of the 1st defendant to register the sale deed in summer 1986. Presuming the 1st plaintiff to be bona fide, due to the payment of entire consideration and obtaining Ex.A.3 pronote before 1978 itself, the trial Court felt that there was nothing which remained for the 1st plaintiff to perform and the defendants having received the entire consideration, the second limb of Article 54 of the Limitation Act applied to bring this suit within time. The trial Court also concluded that the 1st plaintiff and not the defendants was always ready and willing to perform and the trial Court considered that the mention in the plaint that the balance of sale price has to be paid by 28-09-1974, is a mistake for 28-02-1974. The trial Court also noted that the actual possession was not delivered to the 1st plaintiff under Ex.A.1 and that he was not entitled to the profits claimed. As the relief of specific performance was being granted, the alternative relief of refund was held to be unavailable and the suit was decreed for execution of a sale deed within three months. The defendants challenged the said judgment and decree in the appeal contending that Ex.A.1 was barred by time, that there was no agreement for delivery of possession and that time was the essence of the contract. The parties were not prevented from performing their obligations due to the tenancy litigation and unconscionable delay militates against any specific performance, an equitable relief. Ex.A.3 pronote was obtained in cancellation of Ex.A.1 and if the time stipulated under Ex.A.1 expired by 28-02-1977 (28-02-1974) as observed by the trial Court, Ex.A.3 dated 24-12-1978 will be of no benefit to the 1st plaintiff. As the trial Court concluded that no consideration was paid under Ex.A.3, the 1st plaintiff had to prove the payment of balance of consideration apart from Rs.4,700/- received by the 1st defendant, in which he failed. The alleged refusal to execute a sale deed in summer 1986 cannot revive Ex.A.1 and the findings of the trial Court rejecting the defence version are unsustainable. The 1st plaintiff, a party to the tenancy litigation, was estopped from questioning the withdrawal of deposits by the 1st defendant in his presence. Defendants 2 and 3 were not represented in Ex.A.1 by the 1st defendant and she had no authority to alienate the shares of defendants 2 and 3, more so without any legal necessity or benefit to the estate. As the 1st plaintiff approached the Court with unclean hands, the equitable relief of specific performance should not have been granted. The defendants, therefore, desired the judgment and decree to be reversed. The 2nd plaintiff in his cross-objections questioned the refusal of the trial Court to grant profits, as the 1st plaintiff put in possession of the property under the agreement of sale, was prevented from enjoying the same by the tenancy litigation and reasonable profits received by the 1st defendant from the tenant ought to be paid towards the profits accepting the oral and documentary evidence placed before the Court. The 2nd plaintiff, therefore, desired the suit to be decreed in respect of the profits also. Sri N.V. Suryanarayana Murthy, learned senior counsel for the defendants and Sri V.S.R. Anjaneyulu, learned counsel for the plaintiffs are heard at length. Both the learned counsel cited precedents, which will be referred to in due course. The learned senior counsel for the defendants contended that Rs.2,100/- under Ex.A.1, dated 28-09- 1973, Rs.1,400/- on 03-02-1974 and Rs.1,200/- paid to the land mortgage bank were the only payments made, while the agreement stipulated payment of balance of Rs.12,600/- by 28-02-1974 and in default, with interest and damages. The learned senior counsel stated that the defendants taking possession on 08-02-1986 after end of the tenancy litigation, showed abandonment of the agreement, more so, when all the deposits were received by the 1st defendant during such litigation. The pronote Ex.A.3 and the two endorsements of part payment also indicate the sale agreement not subsisting and the pronote would not have been insisted to be executed, if the agreement were to continue. The learned senior counsel also emphasized about the absence of any suit notice from the 1st plaintiff and the transfer not being prohibited by the litigation. If Ex.A.3 pronote were without consideration, the balance consideration ought to have been offered with interest and under the circumstances, specific performance should not have been granted. The learned senior counsel also filed written synopsis of his arguments. Sri V.S.R. Anjaneyulu, learned counsel for the plaintiffs contended that the very stipulation to pay interest under Ex.A.1 shows that time was not the essence of the contract and there was no notice making time the essence of the contract. The learned counsel referred to Ex.A.3 pronote not reciting any cancellation of Ex.A.1 agreement and it was claimed that Rs.200/- were paid on the date of Ex.A.3 to complete payment of Rs.14,700/-. The learned counsel also brought to notice that as Ex.A.1 agreement was filed into Court in the tenancy litigation, no endorsements of payment could have been made on it and hence, Ex.A.3 was taken as collateral security. The learned counsel contended that otherwise the 1st plaintiff would not have accepted nominally payments under Exs.A.4 and A.5 and referred to Section 15 of the Andhra Pradesh (Andhra Area) Tenancy Act giving a right of preferential purchase to the tenant, due to which he 1st plaintiff could not obtain a sale deed. The learned counsel also referred to the admissions of D.W.2 about Exs.A.4 and A.5 being executed due to the pendency of the suit by Seshadri and the stipulation about the time being considered only informal and that normally documents will not be executed during the pendency of a suit. The learned counsel referred to the very allegations in the written statement not indicating any cancellation of Ex.A.1 and the agreement being substituted to defeat the claims of Seshadri and contended that the appeal is liable to be dismissed, while the cross-objections have to succeed. The learned counsel also filed a memo of chronology of events and a synopsis of his arguments on fact and law. With the above background, the following points arise for consideration and determination herein. 1. Whether the plaintiffs are entitled for specific performance with profits or the alternative relief of refund ? 2. To what relief ? Point No.1: The 1st plaintiff was no more by the time the trial commenced in the suit and hence, the 2nd plaintiff, who claimed to have been present at the time of execution of Ex.A.1, deposed about the suit claim but Ex.A.1 itself does not disclose his presence at the time of its execution. He claimed that possession of the property was delivered to the 1st plaintiff on the date of Ex.A.1, which was resisted by Kondaveeti Seshadri by filing O.S. No.81 of 1974. While claiming that the 1st plaintiff was always willing to perform his part of the contract having money to get a regular sale deed, the 2nd plaintiff claimed that the 1st plaintiff could not get the sale deed due to the tenancy litigation. The 2nd plaintiff only spoke about Ex.A.2 endorsement of payment for Rs.1,400/- on 03-02-1974 and his claim about paying the balance of consideration on 24-12- 1978, was not evidenced by any such similar endorsements on Ex.A.1 or independently, except the recital in Ex.A.3 pronote. The 2nd plaintiff, who stated about the demand by the 1st plaintiff both orally and by a legal notice, did not file any copy of such legal notice or any proof of service of such legal notice on the defendants. While Ex.A.3 was claimed by P.W.1 to have been executed as a collateral security, the 2nd plaintiff admitted that he did not give any legal notice and the oral demands by the 1st or 2nd plaintiff, are uncorroborated. The alleged mediators for such demands were not named. P.W.2 is the attestor of Ex.A.2 endorsement of payment on Ex.A.1 agreement and he did not speak about any other aspect of the issues in controversy between the parties except the alleged admission of the 1st defendant of receiving Rs.3,500/- and also receiving cash of Rs.1,400/- under Ex.A.2. As opposed to this, the 1st defendant as D.W.1 while admitting the agreement of sale by all the three defendants, tried to claim that there was no condition of payment of interest beyond 5 months and that the 1st plaintiff only demanded refund of the advance of Rs.2,100/-. Though she attempted to claim that on the pronote executed by her, they did not make any endorsements, she admitted signing in Exs.A.3 to A.5, the pronote and the two part payment endorsements. She claimed Ex.A.3 to be unsupported by consideration and the suit agreement to be barred by time and she was, of course, unaware whether Ex.A.1 mentions that time was the essence of the contract. She also admitted her father D.W.2 being the scribe of Exs.A.1 to A.5 and she also did not know whether Ex.A.1 recited delivery of possession of the property with standing crop. While she also referred to the tenancy litigation by Seshadri and withdrawal of rents deposited by Seshadri by her, she denied any payment of Rs.1,400/- under Ex.A.2 or her payment of Rs.50/- each under Exs.A.4 and A.5 or any demand by the 1st plaintiff for registration of the sale deed. She also denied delivery of possession of the property under Ex.A.1, which the 1st plaintiff lost due to the injunction order. D.W.2, the father of the 1st defendant, also admitted about the agreement of sale for Rs.14,700/- and payment of advance of Rs.2,100/-, but tried to deny any delivery of possession of the property as recited in the agreement. He claimed that the 1st plaintiff never demanded for registration of the property before the expiry of time and that the agreement stood cancelled due to expiry of time. D.W.2 also referred to the dismissal of the suit and the appeal by Seshadri and claimed that Ex.A.3 pronote was written towards the amount paid as advance. He also claimed that the entire consideration was not paid and he tried to claim that there was no attestor at the time of Ex.A.1 written at the house of the advocate. D.W.2 also tried to claim about the sheets 2 to 4 of Ex.A.1 being subsequently appended on the advice of the counsel, which claim was not repeated by D.W.1 herself. Though he claimed that Ex.A.3 pronote was executed in cancellation of the agreement of sale, he admitted that the endorsements of payment of Rs.50/- each on 21-12-1981 and 19-12-1984 were made due to the pendency of the suit filed by Seshadri, but not on payment of any such amounts. While he claimed that the land was never in the possession of the plaintiffs, he admitted that Exs.A.1 to A.5 were in his handwriting and that D.W.1 signed on all the pages of Ex.A.1 in his presence agreeing to the recitals therein. While he admitted the terms and conditions of Ex.A.1 as recited, he tried to claim that the stipulation about 5 months time for obtaining a sale deed, was orally, that is, informally agreed upon. The paper said to have been substituted is not before the Court and D.W.2 further referred to the 1st plaintiff also being a party to the proceedings at the instance of Seshadri and their contesting the claim of Seshadri denying his tenancy. He specifically admitted that the 1st defendant pleaded in that suit that possession of the land was given to the 1st plaintiff as per the agreement. D.W.2 also admitted that it was not specified in the written statement as to how the second general stamp was purchased and he stated that during the pendency of the suits and the proceedings at the instance of Seshadri, the 1st defendant did not state that she will execute a sale deed and the 1st plaintiff did not request for execution of such a sale deed and he also stated that normally no document will be executed during the pendency of a suit. He also stated that no separate paper was obtained at the time of Ex.A.3 pronote about cancellation of the agreement of sale and Ex.A.3 also makes no such recital. He also admitted that the 1st defendant did not repay any amount towards Rs.14,700/- recited in the agreement. He further stated that Exs.A.4 and A.5 endorsements were agreed and executed to keep Ex.A.3 pronote alive. D.W.2 also admitted that Exs.A.7 to A.13 were the receipts for repayment of the loan to new Co-operative Bank, Tadepalligudem incurred by the 1st defendant’s husband. He stated that loans were discharged by executing the suit agreement and while he admitted his experience in scribing documents and agreements, he also admitted that the 1st defendant or the 1st plaintiff or their men were prevented from entering and enjoying the suit land due to the injunction