IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE KURIAN JOSEPH & THE HONOURABLE MR. JUSTICE K.T.SANKARAN THURSDAY, THE 15TH MARCH 2007 / 24TH PHALGUNA 1928 AS.No. 341 of 1998(A) OS.206/1996 OF THE SUBORDINATE JUDGE'S COURT, PALAKKAD APPELLANT: PLAINTIFF: ----------- SINGARAVELU KOUNDER, S/O.ANDIYAPPA KOUNDER, RESIDING AT POOCHANARI, MARDHANAICKEN PALAYAM, POLLACHI TALUK, COIMBATORE DISTRICT, TAMIL NADU. BY ADV. SRI.V.GIRI RESPONDENTS: DEFENDANTS: ------------- 1. SULAIMAN, S/O.ANEEFA ROWTHER, RESIDING AT SARALPATHI, MEENAKSHIPURAM, MOOLATHARA VILLAGE, CHITTUR TALUK, PALAKKAD DISTRICT. 2. KAMARUNNISSA, W/O.SULAIMAN, -DO- -DO- 3. ABDUL RAZACK ROWTHER, S/O.HIDAYATH ROWTHER, RESIDING AT KUMARANOOR, KUNNAMKATTUPATHY VILLAGE, CHITTUR TALUK. BY ADV. SRI.T.P.KELU NAMBIAR (SR.) SRI.P.G.RAJAGOPALAN SRI.M.GOPIKRISHNAN NAMBIAR THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 1/03/2007, ALONG WITH AS NO. 346 OF 1998 AND AS NO. 422 OF 1998 THE COURT ON 15/3/2007 DELIVERED THE FOLLOWING: KURIAN JOSEPH & K.T. SANKARAN, JJ. ------------------------------------ A.S.NOS.341, 346 & 422 OF 1998 ------------------------------------ Dated this the 15th day of March, 2007 JUDGMENT Sankaran, J. These appeals arise out of two suits, namely, O.S. No. 206 of 1996 and O.S. No. 210 of 1996 on the file of the Court of the Subordinate Judge of Palakkad. O.S. No. 206 of 1996 was filed by Singaravelu Kounder against Sulaiman, his wife Kamaraunnissa and Abdul Razack Rowther for a declaration that the agreement for sale executed by defendants 1 and 2 in favour of the third defendant is invalid and for a decree for specific performance of Exhibit A1 agreement for sale executed by defendants 1 and 2 in favour of the plaintiff. There is also a prayer for injunction restraining defendants 1 and 2 from executing sale deed in favour of the third defendant or in favour of strangers. O.S. No. 210 of 1996 was filed by Sulaiman and Kamarunnissa against Singaravelu Kounder for recovery of possession of the plaint A schedule property. The trial court granted a decree in O.S. No. A.S. NOS.341, 346 & 422 OF 1998 :: 2 :: 206 of 1996 for specific performance, for declaration and for injunction. O.S. No. 210 of 1996 was dismissed. 2. A.S. No. 422 of 1998 is filed by defendants 1 and 2 and A.S. No. 341 of 1998 is filed by the plaintiff challenging the judgment and decree in O.S. No. 206 of 1996. A.S. No. 346 of 1998 is filed by the plaintiffs challenging the dismissal of O.S. No. 210 of 1996. Hereinafter, Sulaiman Rowther and Kamarunnissa are referred to as the ‘appellants’, Singaravelu Kounder is referred as the ‘1st respondent’ and Abdul Razack Rowther is referred to as the ‘2nd respondent’. 3. The contentions raised by the appellants, inter alia, are the following. The property in question belonged to appellant No. 2. For conducting the marriage of their daughter, the appellants decided to sell a portion of the property (plaint A schedule property in O.S. No. 210 of 1996) to the 2nd respondent for a consideration of Rs. 5,20,000/- as per agreement dated 20-1-1995. Advance of Rs. 50,000/- was received A.S. NOS.341, 346 & 422 OF 1998 :: 3 :: by them. 2nd respondent did not fulfill his part of the contract within the agreed period of three months. The first respondent came to know about that agreement and the failure of the 2nd respondent to complete the transaction. The 2nd respondent also joined in the settlement talks. The first respondent agreed to purchase the property for Rs. 5,35,000/-. Exhibit A1 agreement dated 9-6-1995 was entered into between the appellants and the first respondent and an advance of Rs. 1,25,000/- was paid by the first respondent. This agreement was executed in order to discharge the debts incurred by the appellants in connection with the marriage of their daughter. Three months’ period was fixed for executing the sale deed. Time was the essence of the contract. Respondents 1 and 2 were put in possession of the property excluding the house occupied by the appellants. At the request of the first respondent, time was extended till 7-11-1995. On 3-11- 1995, the first respondent paid Rs. 30,000/- to the appellants to discharge their debt to the Police Housing Society. First respondent also agreed to A.S. NOS.341, 346 & 422 OF 1998 :: 4 :: discharge the debt due to Canara Bank and he deposited Rs. 30,000/- on the next day. On Exhibit A1, an endorsement was made on 3-11-1995 stating that Rs. 60,000/- was paid to the appellants. It was agreed that the first respondent would discharge by 6-11-1995 the debt due from the appellants to the State Bank of Travancore. It was also agreed that the sale deed could be executed on 7-11-1995 after paying the balance due to the appellants. The first respondent prepared the sale deed and stated he would discharge the debt due to State Bank of India and would pay only Rs. 10,000/- to the appellants. The appellants did not agree and insisted on discharging the debt due to the Bank or to pay the full balance sale consideration. On the promise by the first respondent that somebody would bring money to pay the full amount to the appellants, the appellants were made to wait till 5 P. M. in the Sub Registrar’s office. By that time, the 2nd respondent filed O.S. No. 836 of 1995 in collusion with the first respondent and obtained an interim order of injunction restraining sale of the property. The first A.S. NOS.341, 346 & 422 OF 1998 :: 5 :: respondent was not ready and willing to perform his part of the contract. Exhibit A5 notice dated 17-11- 1995 was issued by the first respondent demanding specific performance. The appellants sent Exhibit A6 reply stating true facts. Since the first respondent refused to vacate the property, the suit for recovery of possession was filed. 4. The first respondent contended that the property belonged to the appellants. Regarding execution of the agreement, payment of advance, handing over possession of the property and the consideration agreed upon, the case of the first respondent is also the same as that of the appellants. However, the first respondent contended that Rs. 60,000/- was paid to the appellants on 3-11-1995 and in addition, he discharged the loan of Rs. 29,800/- due to Canara Bank on 4-11- 1995. Thus, a total consideration of Rs. 2,14,800/- was paid towards consideration. The first respondent was always ready and willing to perform his part of the contract. On 7-11-1995, stamp papers were purchased A.S. NOS.341, 346 & 422 OF 1998 :: 6 :: and the sale deed was prepared. To save stamp duty and registration expenses, a lower amount was shown as consideration in the document. The request made by him to the appellants to be present in the Sub Registrar’s office on 7-11-1995 with the original title deed and relevant documents was not complied with by them. They avoided registration of the document. He suspects that the agreement allegedly executed between the appellants and the second respondent is concocted by them. That agreement is not valid. O.S. No. 836 of 1995 was filed by the second respondent in collusion with the appellants. (O.S. No. 836 of 1995 was subsequently dismissed for default.) The first respondent expressed readiness to deposit the balance sale consideration. An alternative prayer for return of Rs. 2,14,800/- and damages of Rs. 25,000/- was made by the first respondent, apart from the prayer for declaration and specific performance. 5. The second respondent contended that as per the agreement dated 20-1-1995, he had paid Rs. 50,000/- A.S. NOS.341, 346 & 422 OF 1998 :: 7 :: as advance. Another sum of Rs. One lakh was paid on 17-4-1995 and the period of the agreement was extended till 20-1-1996. The agreement dated 9-6-1995 was collusively entered into between the appellants and the first respondent. The 2nd respondent did not appear in the suit and he was set exparte. No evidence was adduced by him. 6. The trial court arrived at the following findings: (A) Exhibit A1 (b) endorsement by which time for performance of the agreement was extended till 7.11.1995, was made by appellant No. 2 knowing its contents. (B) As per Exhibit A 1 (c) endorsement, the appellants were paid Rs. 60,000/- and that was inclusive of the amount of Rs. 29,800/- paid by the first respondent to Canara Bank evidenced by Exts. A2 and A3 receipts. (C) The case of the first respondent that the appellants were not present before the Sub Registrar’s office on 7-11-1995 is not correct. The appellants as well as the first respondent were present before the Sub Registrar’s office on that date. (D) A.S. NOS.341, 346 & 422 OF 1998 :: 8 :: The recital in Ext. X 2 sale deed, prepared by the first respondent, to the effect that Rs. 1,85,000/- was reserved with the first defendant for payment to State Bank of India would not affect the rights of the appellants. (E) The contention raised by the appellants that there was under valuation in Ext. X2 sale deed and therefore the first respondent is not entitled to get a decree for specific performance, is not correct, since even after taking into account the consideration shown in Ext. X2, the total amount payable to the appellants would be Rs. 3,80,000/- (F) Time was not the essence of the contract. (G) The conduct of the first respondent prior and subsequent to the filing of this suit and the attending circumstances will go to show that he was ready and willing to perform his part of contract. (H) By decreeing specific performance, no undue hardship would be caused to the appellants nor would it entail in any unfair advantage to the first respondent. 7. The points arising for consideration in this appeal are the following: (1) Whether the first A.S. NOS.341, 346 & 422 OF 1998 :: 9 :: respondent is entitled to get a decree for specific performance, declaration and injunction. (2) Whether the first respondent was ready and willing to perform his part of the contract. (3) Whether the first respondent is disentitled to get a decree for specific performance since he has incorporated recitals and conditions in Ext. X2 varying from the terms in Exhibit A1 agreement. (4) Whether time was the essence of the contract. (5) Whether the appellants are entitled to get a decree for recovery of possession as prayed for in O.S. No. 210 of 1996. For the sake of convenience, all the points are considered together. The Points:- 8. It is admitted by the first respondent in evidence that he is a money lender. The extent of the property involved in the suit is 4.04 acres. There is a house in the property in which the appellants are residing. The house is electrified. There is a well in the property. A 5 H.P. motor pump is installed for irrigation purpose. Possession of the property, except A.S. NOS.341, 346 & 422 OF 1998 :: 10 :: the house and appurtenant land having an extent of 20 cents, was handed over to the first respondent on the date of Exhibit A1 agreement. 9. In Exhibit A1 agreement for sale, there is no mention that the property was mortgaged to State Bank of Travancore and that a sum of Rs. 1,85,000/- was due to the Bank. According to the appellants, the first respondent agreed to pay the debt due to the bank. The evidence on the side of the first respondent also would indicate that he agreed to discharge the debt due to the bank. Exhibit B4 would show that the Bank had filed a suit in 1993 to recover the amount. The recitals in Exhibit A1 agreement are to the effect that there was no attachment on the property or suit pending in respect of the property. 10. At the instance of the appellants, Exhibit X2 file kept in the office of the Tahsildar, Chittur was called for. Ext. X2 file contains the sale deed prepared at the instance of the first respondent. The A.S. NOS.341, 346 & 422 OF 1998 :: 11 :: consideration stated therein is Rs. 1,95,000/- and a sum of Rs. 1,85,000/- is reserved with the first respondent for the purpose of discharging the debt due to the State Bank of Travancore. Stamps were purchased for the sale deed on the basis of the consideration of Rs. 1,95,000/-If the sale deed prepared at the instance of the first respondent is taken as correct, the appellant would be entitled to get only Rs. 10,000/- in cash. On the other hand, even if the case of the first respondent regarding payments is accepted, he would have to pay Rs. 3,20,200/- to the appellants and after reserving Rs. 1,85,000/- payable to the bank, he would have to pay Rs. 1,35,200/- to the appellants. If the case of the appellants regarding payments already made is taken as correct, the first respondent had to pay Rs. 3,50,000/- and if the amount due to the bank is deducted, the appellants would be entitled to get Rs. 1,65,000/-. However, going by the deed prepared by the first respondent, his liability is to pay only Rs. 10,000/- to the appellants and to discharge Rs. 1,85,000/- due to the bank. A.S. NOS.341, 346 & 422 OF 1998 :: 12 :: 11. Exhibit X2 file shows that the first respondent applied for canceling the stamps and for refund, by filing an affidavit stating that the sale deed could not be registered since the 2nd respondent filed a suit and obtained an order of injunction restraining sale of the property. It is stated in the plaint in the suit filed by the first respondent that the correct value was not shown in the sale deed and such a course was adopted to save stamp duty. The first respondent expressed his readiness to get a sale deed executed in his favour on showing the real consideration. It would appear that as agreed between the parties, the first respondent had to pay the stamp duty for the transaction. 12. The contention of the learned counsel for the appellants that the conduct of the first respondent would disentitle him to get a decree for specific performance is to be considered in the light of the above facts. Section 16 (b) of the Specific Relief Act A.S. NOS.341, 346 & 422 OF 1998 :: 13 :: is relevant in this context. It reads as follows: “16. Specific performance of a contract cannot be enforced in favour of a person- (a)xxxxxxxx (b) who has become incapable of performing, or violates any essential term of, the contract that on his part remains to be performed, or acts in fraud of the contract, or willfully acts at variance with, or in subversion of, the relation intended to be established by the contract;” The first respondent has shown only a sum of Rs. 1,95,000/- as consideration in the sale deed as against the agreed consideration of Rs. 5,35,000/-. By this variation, the first respondent would be liable to pay only Rs. 10,000/- to the appellants, and to discharge the debt of Rs. 1,85,000/- due to the Bank. As per the terms of the agreement, after taking into account the payments already made, the first respondent had to pay Rs. 3,20,200/- which stood reduced to Rs. 1,95,000/- by the sale deed prepared by him. If the appellant No. 2 were to execute the sale deed as prepared by the first respondent, she would not be entitled to claim anything in excess of Rs. 10,000/- The act of the first A.S. NOS.341, 346 & 422 OF 1998 :: 14 :: respondent is clearly in variance with the terms of the contract and by such variation, the relation intended to be established by the contract is varied. The further question is whether the first respondent acted at variance willfully. It is admitted by him that he did so to save stamp duty. That is a willful act. By such variance, not only the owner of the property is put to prejudice, but the first respondent willfully intended to cause loss to the State. Such a party, to our mind, is not entitled to the assistance of the court in invoking the discretionary remedy of specific performance. 13. In this context, it would also be profitable to refer to a few decisions of the Supreme Court and this Court dealing with similar circumstances disentitling specific performance. In A.I.R. 1996 S.C. 2814: Lourdu Mari David and others Vs. Louis Chinnaya Arogiaswamy and others), it was held: “It is settled law that the party who seeks to avail of the equitable jurisdiction of a Court and specific performance being equitable relief, must come to the court with clean hands. In other A.S. NOS.341, 346 & 422 OF 1998 :: 15 :: words the party who makes false allegations does not come with clean hands and is not entitled to the equitable relief”. In Parakunnan Veettil Joseph’s son Mathew Vs. Nedumbara Kuruvila’s son and others: 1987 (Supp.) S.C.C. 340 = 1988 (1) K.L.T. 7 (S.C), the Supreme Court held: “S.20 of the Specific Relief Act, 1963 preserves judicial discretion of courts as to decreeing specific performance. The court should meticulously consider all facts and circumstances of the case. The court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The court should take care to see that it is not used as instrument of oppression to have an unfair advantage to the plaintiff.” 14. In Adimakutty Hydu Ali Vs. Ambujam: 2003 (2) K.L.T. 328, a Division Bench held thus: “Before decreeing specific performance, it is obligatory for courts to consider whether by doing so any unfair advantage would result for the plaintiff over the defendant, the extent of hardship that may be caused to the defendant and if it would render such enforcement inequitable, besides taking into consideration the totality of circumstances of each case.” 15. The next question to be considered is whether A.S. NOS.341, 346 & 422 OF 1998 :: 16 :: the first respondent was ready and willing to perform his part of the contract. As per the sale deed got prepared by the first respondent, his liability was to pay a consideration of Rs. 1,95,000/- as against the real consideration of Rs. 5,35,000/- as agreed upon in Exhibit A1 agreement. This is not a question of mere under valuation in the deed. It changes or varies the liability to be met by the first respondent in favour of the appellants. As stated earlier, the first respondent was bound to pay only Rs. 10,000/- to the appellants going by the sale deed, while his liability was to pay the balance sale consideration of Rs. 3,50,000/- (or at least Rs. 3,20,200/- if the contention of the first respondent is accepted) after deducting the amounts paid by him. 16. Readiness and willingness to perform contract, is readiness and willingness to perform the essential terms of the contract as contemplated in Section 16 (c) of the Specific Relief Act. Consideration is an essential and integral term of the contract. A person A.S. NOS.341, 346 & 422 OF 1998 :: 17 :: who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, is not entitled to get a decree for specific performance, in view of the specific provision in Section 16 (c) of the Specific Relief Act. The bar of enforcing specific performance of contract includes violation of any essential term of the contract as provided in Section 16 (b). Consideration being an essential term of the contract, and the first respondent having violated the same by showing a lesser consideration in the sale deed, is not entitled to the equitable relief of specific performance. Readiness and willingness of the first respondent is to be taken as that manifested in the sale deed got prepared by him, at least at the point of time when the sale deed was agreed to be executed. Such readiness and willingness being in variance with and in violation of the terms of the contract, it cannot be termed as readiness and willingness entitling him to get a decree for specific performance. In A.I.R. 1978 Patna 192: Bishwanath Mahto A.S. NOS.341, 346 & 422 OF 1998 :: 18 :: Vs. Srimati Janki Devi, it was held that the readiness and willingness of the plaintiff to carry out his part of the agreement must refer to the real agreement and the correct terms of the agreement. In A.I.R. 1952 Nagpur 244: Sobharam Jiwan and another V. Totaram Sitaram, it was held, following the decision in Rustomali V. Ahoider Rahaman: 45 C.W.N. 837, that “in a suit for specific performance it is incumbent on the plaintiff to prove that he was ready and willing to perform the contract as it actually was and not as it is alleged to be by him.” It was also held in Sobharam’s case that making a false plea that a certain obligation under the contract has been discharged does indeed show an unwillingness on the part of the transferee to abide strictly by the contract entered into between him and the transferor. We are in respectful agreement with the view taken by the Patna, Calcutta and Nagpur High Courts in the abovementioned decisions. 17. It is a well settled principle that the A.S. NOS.341, 346 & 422 OF 1998 :: 19 :: plaintiff in a suit for must plead and prove that he was ready and willing to perform his part of the contract and that he continued to be so. It is founded on the principles of equity. In Aliyas Vs. Aboobacker: 2006 (4) K.L.T. 282, it was held: “It is trite that a person who seeks equity shall do equity. Here again, we are of the view that the judicial principles are to be invoked to find whether the discretion is to be exercised to decree or not to decree specific performance. Equitable considerations are quite relevant in the realm of exercise of discretion.” In Snell’s Principles of Equity, 28th Edition, at page 594, it is stated as follows: “Specific performance will be refused where the contract is tainted with fraud, even if it is not a fraud on the other party to the contract, but on the public, or where the plaintiff has made some positive misrepresentation, or has been guilty of fraudulent suppression, or if the particulars or conditions of sale are misleading; indeed, in such cases the contract will be rescinded, and cannot be enforced even at law. Even if there is no fraud or misrepresentation sufficient to justify the rescission of the contract, the court may still refuse the equitable remedy of specific performance if the conduct of the plaintiff has been tricky or unfair, for “he who comes into A.S. NOS.341, 346 & 422 OF 1998 :: 20 :: equity must come with clean hands,” and the court is not bound to decree specific performance in every case in which it will not set aside the contract.” 18. In Aniglase Yohannan Vs. Ramlatha: (2005) 7 S.C.C. 534 = 2005 (4) K.L.T. 280, it was held: “The basic principle behind Section 16 (c) read with Explanation (ii) is that any person seeking benefit of the specific performance of contract must manifest that his conduct has been blemishless throughout entitling him to the specific relief. The provision imposes a personal bar. The Court is to grant relief on the basis of the conduct of the person seeking relief.” The same view was taken by the Supreme Court in Indian Financial Association of Seventh Day Adventists Vs. Unneerikutty: (2006) 6 S.C.C. 351 = 2006 (4) K.L.T. 520 (S.C.) and H.P. Pyarejan Vs. Dasappa and others: (2006) 2 S.C.C. 496. 19. In the light of the principles stated above, we have to examine whether the first respondent is entitled to get the