IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17.12.2009 CORAM THE HONOURABLE MR. JUSTICE B.RAJENDRAN A.S. No. 312 of 1996 M.Jayakumar ... Appellant/Plaintiff Versus 1. Minor Geetha 2. Minor Suresh 3. Shanthi 4. Palani Thevar 5. Sivakami 6. Minor Seetha ... Respondents/Defendants 2to7 (R1,2,5 and 6 are given up) RR1, 2 & 6 declared as major as per order of Court dated 10.12.2007 made in Memo (VSSR.No.5183/07) dated 10.12.2007 Prayer: Appeal filed under Section 96 Civil Procedure Code against the judgment and decree of the learned Subordinate Judge of Villupuram dated 22.11.1993 in O.S.No.68 of 1988. For Appellant : Mr.R.Balakrishnan Mr.D.Rajasekar For Respondent : Mr.T.Dhanyakumar for R3 & R4 JUDGMENT The unsuccessful plaintiff in O.S. No. 68 of 1988 on the file of the Subordinate Judge, Villupuram is the appellant. 2. The Plaintiff/appellant has filed O.S. No. 68 of 1988 for specific performance of the contract praying to direct the defendants 1 to 4, 6 and 7 to execute a sale deed in his favour conveying the suit property to him after deposit of the balance sale consideration; directing the defendants to deliver possession of the suit property to him and for costs. 3. For the sake of convenience, the parties shall be referred to as they were arrayed in the suit. 4. According to the plaintiff, the first defendant Kannan @ Annamalai was the owner of the suit property and for the purpose of purchasing it, the plaintiff has entered into a registered agreement of sale on 27.05.1987, Ex.A4. The defendants 2, 3 and 6 are the legal heirs of the deceased first defendant. According to the plaintiff, the deceased Kannan agreed to sell the suit property to https://hcservices.ecourts.gov.in/hcservices/ the plaintiff for a sum of Rs.47,000/- and the sale has to be completed within one year from the said date. On execution of the agreement, the deceased Kannan received Rs.20,000/- from the plaintiff and agreed to clear the encumbarance in the suit property before the said date. As per the agreement, the plaintiff was always ready and willing to perform his part of the contract, but the first defendant failed and neglected to fulfil his obligations. It was also contended by the plaintiff that the first defendant executed mortgage deeds in respect of the suit property in favour of the plaintiff and his wife on 29.12.1984, 08.05.1986 and received various sums, but the first defendant has not repaid the mortgage loan. When the Plaintiff demanded the first defendant to repay the loan amount, he agreed to adjust the said debt amount out of the balance consideration payable by the plaintiff. According to the plaintiff, during the third week of April 1988, the defendants 1, 4 and 5 conspired together and brought into existence some documents to defeat his right as an agreement holder. Therefore, when encumbrance certificate was applied for and obtained, he was shocked to note that the first defendant, for and on behalf of the defendants 2 and 3, has executed a sale deed in favour of the fourth defendant. Immediately thereafter, the first defendant executed a settlement deed in favour of the defendants 2 and 3 herein on 19.06.1987, however, for the reasons best known to the first defendant, the same was cancelled by executing a revocation deed dated 30.12.1987. Immediately after coming to know the fradulent act, the plaintiff has sent a notice dated 02.05.1988. Even though the defendants received the notice, no reply was sent and hence the suit came to be filed. 5. The first defendant filed a written statement and also an additional written statement. The main defence of the first defendant was that the plaintiff has manipulated and fabricated the alleged registered deed of agreement dated 27.05.1987. In view of the fact that the first defendant was a drunkard, taking advantage of his drunkenness, fraud has been committed by the plaintiff by obtaining the signature of the first defendant in blank stamp papers and it has been pressed into the service by the plaintiff. It is totally false to state that the first defendant agreed to sell the suit property to the plaintiff. He would further contend that the plaintiff was never ready and willing to perform his part of the contract and above all these things, the agreement of sale cannot bind him nor the second and third defendants, who are admittedly minors. Therefore, even if any sale agreement was in existence, it will not take away the shares of defendants 2 and 3. Further, since the property has been sold subsequently on 07.01.1988, the present suit for specific performance, based on the agreement on 27.05.1987, is legally not sustainable. Only after issuance of the suit notice, the first defendant came to know that the plaintiff has fabricated an agreement. It is also false to state that the defendants 4 and 5 conspired to get the sale deed dated 07.01.1988 to defeat the right of the plaintiff, therefore, the plaintiff is not entitled to the suit relief. 6. The minor defendants 2 and 3 were represented by the Court Guardian and Court Guardian has filed a written statement contending that the minors share will not be affected by the sale agreement under which the plaintiff claiming right as an agreement https://hcservices.ecourts.gov.in/hcservices/ holder. The minors can never accept to purchase or sell the property as there was no legal necessity to sell the property. If at all there exist any mortgage deeds, the first defendant alone is liable to repay such debts and it will not deprive the minor defendants right over the property. Moreover, the mortgage were incurred neither for family necessity nor for the benefit of the minors and therefore, the alleged mortgage or sale of the property will not deprive the minors from getting their share. 7. The Fourth Defendant, who is the wife of the fifth defendant, has filed written statement contending that originally her husband, fifth defendant entered into the suit premises as a tenant during March 1982 under the first defendant. The first defendant used to receive amount from the fifth defendant periodically for his family and other expenses. In order to settle the debt due to the fifth defendant, the first defendant agreed to sell the suit property in the name of the fourth defendant. Therefore, an agreement dated 26.02.1987 came to be entered into between the first defendant and fourth defendant for a sale consideration of Rs.42,000/- out of which Rs.17,500/- was paid on the same day as sale advance. The remaining amount was to be paid within one year for which the first defendant agreed. The first defendant also agreed to execute the sale deed for himself and on behalf of the minor defendants 2 and 3. Accordingly, on 07.01.1988, Ex.B2, after receiving the remaining sale consideration, a sale deed was executed by duly discharging the first defendant from the debts incurred by him. The Plaintiff is also having his shop just opposite to the suit property and he is fully aware of all these transactions. The allegation that the fourth and fifth defendants are aware of the agreement of sale entered into between the first defendant and plaintiff is false. Even if the sale agreement dated 27.05.1987 between the first defendant and plaintiff is true, it is later in point of time than the agreement of sale entered into by the 4th defendant with the first defendant on 26.02.1987. 8. The sixth defendant filed written statement supporting the case of the defendants 4 and 5 and repudiating the claim of the plaintiff. According to the sixth defendant, the plaintiff exploited the first defendant's weakness for liquor and manipulated the alleged agreement dated 27.05.1987 in his favour. The sixth defendant, who is the wife of the first defendant, would contend that her husband never executed any agreement of sale in favour of the plaintiff and the same has been fabricated by the plaintiff. 9. Even during the pendency of the suit, the first defendant died and his legal heirs have been brought on record. 10. Before the court below, the Plaintiff examined himself as PW1 and three other witnesses as PWs 2 to 4, besides Ex.A1 to A13 were marked. On behalf of the defendants, the fifth defendant was examined as DW1 and three other witnesses were examined as Dws 1 to 4 besides Ex. B1 to B42 were marked. The trial Court after framing necessary issues and on perusal of the evidence let in by both the sides came to the conclusion that the plaintiff is not entitled to a decree as prayed for and dismissed the suit. Aggrieved against the dismissal of the suit, the plaintiff has preferred the present appeal. https://hcservices.ecourts.gov.in/hcservices/ 11. Heard both parties. In this appeal, the defendants 2, 3, 6 and 7 have been set exparte. The defendants 4 and 5, who are the subsequent purchasers of the suit property alone contested the appeal. Even though the minors, defendants 2, 3 and 7 have been declared as major and also served, they have not chosen to contest the appeal. 12. The points for consideration in this appeal are i) Whether the plaintiff is entitled to a decree of specific performance as per agreement dated 27.05.1987, Ex.A4. ii) Whether the sale agreement dated 25.07.1987. Ex.A4 was executed by the first defendant as Kartha of the family in favour of the plaintiff and it would bind the minor children of the first defendant. 13. In this appeal, first it has to be considered whether the fourth defendant is a bonafide purchaser of the suit property under Ex.A11 = Ex.B2, sale deed dated 07.01.1988. 14. The learned counsel for the plaintiff/appellant would specifically contend that the plaintiff has entered into the sale agreement on 27.05.1987 to purchase the property for sale consideration of Rs.47,000/- and he paid an advance of Rs.20,000/- and the balance of sale consideration was agreed to be paid by the plaintiff within two years. He contend that the sale agreement itself was registered on 27.05.1987 and once it is registered, the presumption is it is a valid document, accepted by all the parties concerned and it will bind every one concerned. He would also contend that Ex.A5, A6 and A7 are admittedly registered mortgage deeds executed by first defendant in favour of the plaintiff and his wife. Ex.A5 and A6 are mortgaged for a sum of Rs.4,000/- and Rs.2,500/- respectively. The third mortgage is Ex.A7 executed in favour of the wife of the plaintiff for a sum of Rs.9,000/-. When admittedly the plaintiff has given money to the vendor/first defendant for which the suit property was also mortgaged in favour of the plaintiff, it is clear that the first defendant was having money transaction with the plaintiff right from 1984. He would also specifically contend that on executing Ex.A7, Mortgage deed dated 26.02.1987, the first defendant has received a sum of Rs.9,000/- and the mortgage deed has been executed in favour of the plaintiff's wife. The fourth and fifth defendants, knowing fully well about the transaction the plaintiff had with the first defendant, have purchased the suit property and claiming themselves to be a bonafide purchaser. 15. The learned counsel for the plaintiff/appellant would further contend that admittedly, the agreement of sale, Ex.A4 dated 27.05.1987 is a registered document. The sale deed dated 07.01.1988, Ex.A11 has been executed by the first defendant in favour of the fourth defendant only to defeat the rights of the plaintiff and to escape from the payment of mortgage debt. Admittedly the mortgage in respect of the suit properties created by the first defendant is also substituting but ignoring it, the fourth defendant has purchased the suit property. The sale agreement between the first defendant and the fourth defendant dated 26.02.1987, Ex.B1 has come into existence https://hcservices.ecourts.gov.in/hcservices/ only to defeat the rights of the plaintiff and to create encumbrance over the right of the plaintiff. He would further contend that the very purpose of introducing alleged agreement of sale on 26.02.1987 marked as Ex.B1 is only to create encumbrance over the registered sale agreement dated 27.05.1987, Ex.A4 and to show that the agreement was prior in date. Even assuming, but not admitting that any such agreement would have come into force when sale agreement was executed on 27.05.1987, anybody in normal course would apply for encumbarance certificate in respect of the property which they seek to purchase. Inasmuch as the registered agreement of sale dated 27.05.1987 namely Ex.A4 was in existence, the first defendant ought not to have executed the sale deed in favour of the fourth defendant. Therefore, a combined reading of Ex.A4 dated 27.05.1987, Ex.B1, dated 26.02.1987 and Ex.B2 dated 07.01.1988 would clearly indicate the intention of the defendants 4 and 5 to create encumbrance over the property. The court below, without properly appreciating the oral and documentary evidence on record has erroneously dismissed the suit and prayed for setting aside the decree and judgment of the court below. 16. The learned counsel for the defendants 4 and 5 would contend that the defendants 4 and 5 are bonafide purchasers for valuable sale consideration. The agreement of sale dated 27.05.1987, Ex.A4 will not bind the defendants 4 and 5 inasmuch as it came into existence only after the first defendant and the fourth defendant entered into an agreement of sale dated 26.02.1987, Ex.B1. The plaintiff has taken advantage of the drunkenness of the first defendant and obtained signatures in blank papers and made it appear that the first defendant had executed a sale agreement in favour of the plaintiff. As far as minors shares are concerned, the first defendant had executed the sale deed dated 07.01.1988, Ex.B2 in favour of the fourth defendant inclusive of the share of the minors and received the sale consideration. 17. In this background, the rival contention of the parties has to be analysed. It is evident from the pleadings that the deceased first defendant Kannan @ Annamalai was the owner of the suit property and he had several money transactions with the plaintiff. In order to prove the past transaction, the plaintiff has filed Exs.A5, A6 and A7 registered mortgage deeds executed by first defendant in favour of the plaintiff and his wife. Under Exs.A5 and A6, the suit property was mortgaged for a sum of Rs.4,000/- and Rs.2,500/- respectively in favour of the plaintiff. Under Ex.A7 dated 26.02.1987, the first defendant had executed yet another registered mortgage deed in favour of the wife of the plaintiff for a sum of Rs.9,000/-. Curiously, on the same day namely 26.02.1987, the first defendant is said to have executed an agreement of sale dated 26.02.1987 with the defendants 4 and 5 and it was not registered. According to the plaintiff, when the plaintiff had demanded the first defendant to repay the mortgage amount, he expressed his inability to repay the amount and instead, he agreed to sell the suit property in favour of the plaintiff for a sale consideration. Accordingly, the plaintiff has entered into a registered agreement of sale on 27.05.1987, Ex.A4 and on such execution, the first defendant also received a sum of Rs.20,000/- as advance. Therefore, it is clear that there were money transactions between the plaintiff and the first defendant and ultimately, it resulted in the execution of the https://hcservices.ecourts.gov.in/hcservices/ agreement of sale dated 27.05.1987, which was also registered. As per the agreement, the plaintiff was always ready and willing to perform his part of the contract, but the first defendant failed and neglected to fulfil his obligations. Since the first defendant avoided and evaded to execute the sale in favour of the plaintiff, the plaintiff applied for encumbrance certificate and only then he came to know that the property was sold by the first defendant in favour of the defendants 4 and 5. Immediately the plaintiff has sent a notice dated 02.05.1988. It is evident that the said notice was received by the defendants 4 and 5, but there was no reply forthcoming. Had the contention of the defendants 4 and 5 is true that the plaintiff had exploited and taken advantage of the drunkenness of the first defendant and created the registered agreement of sale, they could have very well replied to the notice sent by the plaintiff denying the contents of the notice, but it was not done. 18. It is evident from the pleadings that the plaintiff, first defendant and defendants 4 and 5 are having shops opposite or adjacent to each other. The Plaintiff entered into the agreement of sale with the first defendant and got it registered. Subsequent to the agreement of sale dated 27.05.1987, Ex.A4, the property was sold to the fourth defendant by the first defendant by means of a sale deed dated 07.01.1988, Ex.B2. It is also very clear from the pleadings that the defendants 4 and 5, in their written statement, have not stated anything as to whether they have applied for encumbrance certificate before getting the sale deed executed in their favour by the first defendant. A normal prudent man would not purchase a property by a sale deed without verifying the encumbrances over the property. Had the defendants 4 and 5 verified the encumbrances, the existence of agreement of sale dated 27.05.1987, Ex.A4 between the plaintiff and first defendant would have come to light. The defendants 4 and 5 also contend that they have orally entered into an agreement of sale dated 26.02.1987 with the first defendant, exactly on the date on which the first defendant subjected the property to mortgage by receiving a sum of Rs.9,000/- with the wife of the plaintiff. Therefore, the theory put forward by the defendants 4 and 5 cannot be accepted. Inasmuch as the plaintiff's agreement of sale dated 27.05.1987 is a registered one, it will prevail over the oral agreement of sale said to have entered into with the first defendant by the defendants 4 and 5. Moreover, the plaintiff had issued a notice dated 02.05.1988 to the defendants, which was also received by the third defendant under an acknowledgment dated 10.05.1988, Ex.A3. If really the third defendant had purchased the property from the first defendant on 07.01.1988 for a valuable sale consideration, on receipt of the notice dated 02.05.1988, after four months from the date of purchase, the third defendant ought to have naturally retorted by stating that she had purchased the property for a valuable sale consideration. But the third defendant remained silent without sending any reply, which is fatal to her case. 19. The court below found that Ex.A4, agreement of sale entered into between the plaintiff and the first defendant was registered in the office of the Sub-Registrar, Kallakurichi, but it was not registered with the Sub-Registrar, Ulundurpet where the https://hcservices.ecourts.gov.in/hcservices/ property is situate and the plaintiff has also not explained the reasons as to why the agreement of sale was registered with the office of the Sub-Registrar, Kallakurichi, therefore, the court below held Ex.A4, registered agreement of sale is not genuine. The fact remains that Ex.A4 is registered with the competent registration authorities. If really the subject matter of the property do not come within the jurisdiction of the Sub-Registrar, Kallakurichi, the agreement of sale would not have been entertained by the Sub- Registrar, Kallakurichi for registration and the plaintiff would have been directed to approach the Sub-Registrar, Ulundurpet. This is evident that Sub-Registrar, Kallakurichi has the territorial jurisdiction to entertain the agreement of sale for registration. The fact remains that the agreement of sale is registered with the competent registration authorities thereby the plaintiff had created encumbrance over the suit property. When there is a subsisting encumbrance over the suit property, ignoring the same, the defendants 4 and 5 have purchased the property from the first defendant under Ex.B2, sale deed dated 07.01.1988. These aspects were not properly considered by the court below while dismissing the suit filed by the plaintiff. 20. In this connection I am fortified by the decision of the Division Bench of this Court reported in (Jayaraman (died) & Others vs. Dalavai Nagarajan & others) 2004 1 Law weekly 622 of the Division Bench of the Madras High Court wherein in para Nos. 21 "21. .......Further one of the issues framed was whether the defendants 2 to 5 have obtained the deed of sale in a bona fide manner and in considering the issue, the question regarding the genuineness of the agreement dated 18.11.1983 was gone into. As a matter of fact, the parties also understood the issue in that manner and evidencewas let in on this aspect. Further, the burden is on the defendants 2 to 5 to prove the validity and genuineness of the agreement dated 18.11.1983 (Ex.B-18) and hence, the submission of learned senior counsel that there was no pleading regarding the genuineness of Ex.B- 18 agreement and therefore the evidence let in on the genuineness of Ex.B-18 should be accepted and Ex.B-18 should be declared valid is not acceptable. 44. On the other hand, Mr.Ashokan, learned counsel for the first respondent submitted that the defendants 2 to 5 are not bona fide purchasers for value as the facts clearly show that the sale transaction was concluded in a hurried manner to defeat the claims of the plaintiff and hence, they cannot be regarded as bona fide purchasers at all. He relied upon the decision of the Supreme Court in R.K.Mohammed Ubaidullah v. Hajee C.Abdul Wahab (2000) 6 SCC 402) wherein the Supreme Court held that the subsequent purchaser must prove that he is a bona fide purchaser for value without notice and the burden of proof of good faith is on the purchaser who pleads that he is an innocent purchaser. He also submitted that the case of the defendants 2 to 5 has to fail as the transferees have not paid the entire sale consideration before they had notice of the agreement dated 25.02.1984 as the payments in the instant case were made only https://hcservices.ecourts.gov.in/hcservices/ subsequent to the notice dated 15.05.1984 and hence, under the provisions of section 27(b) of the Specific Relief Act, 1877 the defendants are not entitled to any relief. He also relied upon the decision of this Court in M/s.Futnani Dairy Farm v. Rangaswamy Naar (1994 1 MLJ 119) wherein Mr.M.Srinivasan,J. (as His Lordship then was) presiding over the Bench held that where the entire consideration has not been paid to the vendor, the purchaser is not entitled to claim the benefit of Section 19(b) of the Specific Relief Act. 48. As far as the enquiry that should have been made by the plaintiff is concerned, we are of the view that the decisions relied upon by the learned senior counsel deal with the case of duty of the purchaser. In this case, the purchasers are the defendants 2 to 5 and they must establish that they made a proper enquiry. Therefore the submission of the learned senior counsel that the plaintiff should have made prior enquiry does not carry any conviction as he was still an agreement holder on the date of suit and the defendants 2 to 5 were the purchasers and they must establish that they purchased the property for value and the consideration was paid and they got the sale in good faith and the payment of consideration was made without prior notice of the suit agreement. 50. Learned senior counsel submitted that the hardship would be caused to the defendants 2 to 5 if the sale in their favour is set aside. Learned senior counsel submitted that the property is situate in a busy locality in Dharapuram town and the plaintiff has taken an unfair advantage and taking into consideration the hardship that would be caused to the appellants, the relief of specific performance should be denied to the plaintiff. However, we are unable to accept the submission of the learned senior counsel for the reason that the appellants/defendants 2 to 5 are not bona fide purchasers without notice of the agreement of sale, Ex.A- 1 and the impression that is gained is that the