THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO APPEAL SUIT NO.2224 OF 2002 JUDGMENT: The first defendant in O.S.No.21 of 1998 on the file of the court of III Additional District Judge, Kakinada is the appellant herein. The suit was filed for specific performance of contract of sale dated 20.09.1989 for a sum of Rs.5 lakhs or in the alternative for refund of advance money of Rs.4 lakhs paid by the plaintiff. The allegations in the plaint goes to show that the defendants agreed to sell the schedule property for a consideration of Rs.5 lakhs and executed an agreement of sale on 20-09-1989 and received a sum of Rs.2 lakhs on that day. According to the terms of the agreement, the sale deed has to be executed within two (2) years and the balance of money has to be made ready by the plaintiff. Even before the due date the plaintiff was ready with the money but the defendants expressed their inability to execute the sale deed. Subsequently, the defendants requested the plaintiff for payment of Rs.2 lakhs out of the sale consideration for discharge of their debts and a sum of Rs.2 lakhs was paid on 09-07-1994 and further time was fixed for one (1) year to execute the sale deed. In spite of readiness and willingness, the defendants did not execute the sale deed and hence a legal notice was given and the suit was filed for the reliefs. The defendants filed a written statement denying the allegations that an agreement was entered on 20-09-1989 for a sum of Rs.5 lakhs and that a sum of Rs.4 lakhs was paid in instalments and that the plaintiff was ready and willing to perform the contract are all incorrect. According to the defendants, a sum of Rs.10,000/- was borrowed by mortgaging the house property on 19- 09-1989 and also a sum of Rs.20,000/- was borrowed from N.Sesha Reddy on 04-08-1988, except that there are no other loans for the defendants. The said N.Sesha Reddy, at the time of advancing loan, obtained various signatures on white papers, stamped papers and promissory notes. The plaintiff already filed a suit and obtained a money decree and the present suit was filed by the name lender of N.Sesha Reddy seeking specific performance. The cost of the property is more than Rs.18 to 20 lakhs. Hence Sesha Reddy is a proper party. The plaintiff is not entitled for any of the reliefs. On the basis of the pleadings, the following issues have been framed for trial:- 1. Whether the sale agreement dated 20-09-1989 is fabricated, forged and created for the purpose of this suit as contended by D-1? 2. Whether the suit is bad for non-joinder of necessary party i.e., N.Seshareddy as pleaded by the defendants? 3. Whether the suit is barred by time and unenforceable as contended by the defendant? 4. Whether the plaintiff is entitled to decree for specific performance as prayed for? 5. To what relief? On behalf of the plaintiff, PWs.1 to 3 were examined and marked EXs.A- 1 to A-6. On behalf of the defendants, DW.1 was examined and no documentary evidence was marked. After considering the evidence on record, the learned III Additional District Judge decreed the suit of the plaintiff and aggrieved by the said judgment, the present appeal is filed. The points that arise for consideration are:- 1. Whether the agreement of sale dated 20-09-1989 is true valid and enforceable? 2. Whether the plaintiff is entitled for specific performance of the contract or in the alternative for refund of the money? 3. Whether the judgment and decree passed by the learned III Additional District Judge, Kakinada is legal and sustainable? 4. To what relief? POINTS:- This being a case based on an agreement of sale, the execution of which has been denied, it is for the plaintiff to prove the execution of the same and also the readiness and willingness to perform the contract and entitlement for specific performance. It is to be mentioned that the agreement of sale was dated 20-09-1989. The sale was said to be for a sum of Rs.5 lakhs. Even as per the agreement a sum of Rs.2 lakhs is said to have been paid on the date of agreement and the balance of Rs.3 lakhs is to be paid after a period of two years. Evidently, even after the period of two years on 09.07.1994 i.e., after the period of nearly five (5) years, Rs.2 lakhs was paid. The balance amount was not paid and the suit was filed in the year 1998, nearly nine (9) years after the sale transaction. The agreement (Ex.A-1) stipulates that the property was sold for the purpose of purchasing a property at other places and also to discharge some debts belonging to the defendants. The property is a house property situated in Kakinada. Evidently, part of the property was gifted by the first defendant in favour of the second defendant and therefore both the defendants have executed the agreement of sale. From the contents of Ex.A-1 it is quite clear that the purpose of sale was to discharge some debts and for further purchase of some other property from out of the sale consideration. If such is the reason for sale, any prudent vendor would have insisted for payment of the money immediately. But it is strange that Rs.2 lakhs is said to have paid on the date of Ex.A-1 and another Rs.2 lakhs was paid after the period of five (5) years which is also beyond period of two years fixed under Ex.A-1. The balance of sale consideration does not contain any clause for payment of interest. Any intending vendor for need generally would not have accepted such terms of contract if really it was a sale transaction. Even according to the evidence of plaintiff, he has secured the balance of sale consideration and demanded the defendants to execute the sale deed and it was not executed on the ground that the original sale deed is not available. This appears to be an evasive conduct of the plaintiff. Even according to the case of the plaintiff, the defendants have demanded payment of further money to discharge their debts after the period of two years fixed under Ex.A-1 but after five (5) years only a sum of Rs.2 lakhs was said to have been given under the Ex.A-2 acknowledgment. The legal notice was given on 17-05-1998 i.e., also after a period of nearly four (4) years from the date of Ex.A-2. A copy of the agreement was demanded but on the notice is said to have been endorsed that the suit was already filed. Evidently, the stamps for purchase of the property will be purchased by the purchasers but not by the vendor. It is the specific case of PW.1 that defendant Nos.1 and 2 informed that they need the money for discharge of sundry debts. If such is the case, any prudent purchaser would have taken return of the discharged pronotes or the particulars of the debts owed by the defendants either at the time when Ex.A- 1 transaction was entered into or when a sum of Rs.2 lakhs is said to have been paid under Ex.A-2. The plaintiff has not enquired about the particulars of the debt nor did he make any attempt to see that the alleged debts are discharged. If really the plaintiff has secured Rs.5 lakhs within a period of Ex.A-1 as contended by him there is no reason as to why he should pay only Rs.2 lakhs on the date of Ex.A-1 and postponement of Rs.1 lakh between the period of Ex.A-1 and Ex.A-2. The plaintiff has not issued any notice about his readiness and willingness though time was fixed under Ex.A-1. The explanation was given by the plaintiff in his evidence that the defendants could not execute the regular sale deed as the house was in possession of the tenants and this is not a ground alleged earlier for the delay. Any purchaser would have made enquiries and if such is the position, it would have been mentioned in the agreement. PW.2 is said to be a private employee and claims to have attested Ex.A-1. He also claims to be attestor in Ex.A-2. The scribe of Exs.A-1 and A-2 is the same. The evidence of PW.3 goes to show that PW.2 brought defendant Nos.1 and 2 to the house of Datla Narasimha Krishna Varma and requested him to advance money but he expressed inability. Thereafter, PW.2 took defendant Nos.1 and 2 to the house of the plaintiff and requested him to lend money and the plaintiff told them that he intends to purchase the house if they are prepared to sell their house he will lend the money and accordingly the bargain was settled. Therefore, from the evidence of this witness the nature of the transaction between the plaintiff and the defendants is essentially a loan transaction and the defendants have approached for the loan and then the plaintiff insisted for sale of the property. If the real intention of the parties is for an out-and-out sale of the property as claimed by the plaintiff and if the need of the defendants is to be kept, naturally the plaintiff should have paid the entire consideration and obtained the sale deed. There is no reason as to why Rs.2 lakhs should be paid on the date of Ex.A-1 and as to why the further payment of Rs.3 lakhs should be postponed for a period of three (3) years. According to the claim of the first defendant who was examined as DW.1 that she does not know the plaintiff and she did not execute the Ex.A-1 or Ex.A-2. According to her, one Sesha Reddy obtained their signatures in the year 1989 when they borrowed Rs.20,000/- and Rs.10,000/-. The said amounts could not be discharged to Sesha Reddy. She admitted to have conveyed part of the property to second defendant and that second defendant is living separately from her. She also admitted that another suit in O.S.No.237 of 1995 was filed by one Kondapalli Manohar. She took the plea of forgery. The learned trial judge has not believed the version of the defendants about borrowing from Sesha Reddy and Sesha Reddy taking blank papers. Sofar as the documents Exs.A-1 and A-2 are concerned the cross- examination of witnesses is not very effective to disprove the truthfulness of their evidence and the nature of borrowing and execution of the documents. Even if Sesha Reddy is not examined on the side of the defendants and his association is not established, the fact remains that PWs.2 and 3 appears to be independent witnesses and their credibility is not in doubt. Further the learned counsel for the appellant tried to contend that in fact after the death of plaintiff, the son of Sesha Reddy wanted to come on record as if the plaintiff has executed a will entitling him to receive the benefits of decree. According to him, it is clearly goes to show that the contention of the appellant is believable. Evidently, the plaintiff was having children. The plaintiff claims to have borrowed some money from the son of Sesha Reddy to a tune of Rs.10 lakhs and therefore he is permitted to proceed with the prosecution of this case. The particulars of the borrowing from the son of Sesha Reddy are not mentioned and the particulars of the claim made by son of Sesha Reddy are also not mentioned. Therefore, this is a strong circumstance throwing supporting the claim of the appellant that there is part of Sesha Reddy in this entire transaction. The learned counsel for the appellant has filed number of decisions principally contending that time is essence of the contract and when the rights of the parties are affected the discretionary relief cannot be granted. It was also further contended that even if the agreement is true, the grant of relief of specific performance is equitable and as such when the value of the property is very high, the lower court should not have granted the relief of specific performance. Further more, when there is no proof of readiness and willingness and by the conduct of the plaintiff there are latches, the relief has to be refused. I would only refer the following few decisions, which are more relevant for the purpose of the case:- 1. Sardar Amarjeet Singh Vs. Nandu Bai and others([1]) 2. A.C. Arulappan vs. Ahalya Naik ([2]) 3. Prakash Chandra Vs. Angadlal and others ([3]) On the other hand, the learned counsel for the respondents contends that the second defendant who is the owner of the property and executant of the agreement has not gone into box and an adverse inference has to be drawn. He also further contends that mere escalation of the prices of the property is no ground to deny the relief of specific performance. In this case in view of the fact that the execution of the agreement is believed by this court from the evidence of PWs.1 to 3, the non-examination of second defendant is not fatal. Sofar as the contention about the value of the property having increased is no ground to refuse the specific performance is concerned, the court is not rejecting the relief on that ground and therefore the decision reported in Laxman Tatyaba Kankate & Anr Vs. Smt.Taramati Harishchandra Dhatrak([4]) relied on by the counsel for the respondents has no application. Therefore, from the material evidence available on record, I feel that true transaction is essentially a loan transaction which is supported by the evidence of PW.3 and the claim for sale of the property appears to be unbelievable and at any rate there is no proof of readiness and willingness on the part of the plaintiff and on the other hand the payment of consideration after several years will only cause hardship to the vendor and will give undue advantage to the plaintiff since no stipulation is made for payment of the interest for several years on the balance of consideration. Therefore, I hold that the plaintiff is not entitled for the relief of specific performance and instead the alternative relief of recovery of the amount paid with interest will meet the ends of justice. Accordingly the points are answered and the decree and judgment of the lower court granting specific performance of the contract of sale is set aside and instead the suit is decreed for a sum of Rs.6,52,733-30 paise with interest @ 12% per annum from the date of suit till the date of decree and with subsequent interest @ 6% p.a. till the date of realisation. Accordingly the Appeal Suit is allowed. The decree and judgment of the lower court granting specific performance is set aside and instead the suit of the plaintiff is decreed for a sum of Rs.6,52,733-30 paise with interest @ 12% per annum from the date of suit till the date of decree and with subsequent interest @ 6% p.a. till the date of realisation. Each party to bear their own costs in this appeal. _______________________ N.R.L.NAGESWARA RAO,J 23-02-2011 TSNR [1] 1998 (5) ALT 412 (D.B) [2] 2001 (6) ALT 26 (SC) [3] AIR 1979 SUPREME COURT 1241 [4] AIR 2010 SUPREME COURT 3025