IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. R.S.A. No.1918 of 1991 Date of Decision: 28.1.2010 Chatru. ....... Appellant through Shri Arun Jain, Senior Advocate with Shri Amit Jain, Advocate. Versus Umar Mohd. and others. ....... Respondent no.1 through Shri Vipul Dharmani, Advocate for Shri Rahul Sharma, Advocate. CORAM: HON'BLE MR.JUSTICE MAHESH GROVER .... 1. Whether Reporters of Local Newspapers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? .... Mahesh Grover,J. This Regular Second Appeal is directed against the judgments & decrees dated 1.2.1990 and 6.6.1991 passed respectively by Sub Judge IInd Class, Ferozepur Jhirka (hereinafter referred to as `the trial Court') and the Additional District Judge, Gurgaon (described hereinafter as `the first appellate Court') whereby the suit of the plaintiff-respondent no.1 was decreed and the appeal of defendant no.8-appellant was dismissed. Respondent no.1 had filed a suit praying for passing a decree of possession by specific performance of agreement to sell dated 14.11.1983 (Exhibit P11) in respect of the agricultural land comprised in khewat no.138, khata no.197, Rect.No.21, killa no. 21/3, measuring 3 kanals 9 marlas situated in the revenue estate of Village Rajaka, Tehsil Ferozepur R.S.A.No.1918 of 1991 -2- .... Jhirka, District Gurgaon (for brevity, `the suit property'). It was pleaded that defendant nos. 1 & 2 ( respondent nos. 2 & 3 herein), acting on their own behalf and as General Power of Attorney of defendant nos. 3 to 7 ( respondent nos. 4 to 8 herein) (hereinafter called as `the vendors') had executed the aforesaid agreement in favour of respondent no.1. According to the terms of the said agreement, the sale consideration was fixed at Rs.2500/- out of which Rs.1800/- were paid as earnest money. The sale deed was to be executed by 6.11.1984 and the balance consideration was to be paid at the time of execution and completion thereof. It was averred by respondent no.1 that he and his father were cultivating the suit property as tenants for the last many years. Respondent no.1 had pleaded that he was always ready and willing to perform his part of agreement and even is now ready, but before the date fixed for execution of the sale deed, i.e., 6.1.1984, the vendors, dishonestly and with mala fide intention, executed a sale deed qua the suit property in favour of the appellant for Rs.3000/-. A legal notice was also said to have been issued by respondent no.1 to the vendors on 10.1.1985 asking them to execute the sale deed and pursuant thereto, he had gone to the office of Sub Registrar on 8.2.1985 and got himself marked present, but the vendors did not turn up. Upon notice, the vendors and the appellant appeared and filed their separate written statements. In their written statement, the vendors denied the execution of the agreement to sell in favour of respondent no.1. The appellant, in his written statement, defended the sale deed R.S.A.No.1918 of 1991 -3- .... in his favour, denied the execution of agreement to sell in favour of respondent no.1 and pleaded that he was a bona fide purchase for consideration. The parties went to trial on the following issues:- 1. Whether the defendant nos. 1 and 2 for themselves and as General Power of Attorney of defendants no. 3 to 7 had entered into an agreement of sale dated 14.11.1983 with respect to property for a sale consideration of Rs.2500/-? 2. Whether the defendant nos. 1 and 2 had received a sum of Rs.1800/- out of the sale consideration as part payment? 3. Whether the plaintiff is ready and willing to perform their part of the contract? If so, to what effect? 4. Whether the defendant no.8 is a bona fide purchaser for consideration, if so, to what effect? 5. Whether the suit is not maintainable in the present form? 6. Whether the plaintiff is estopped from filing their suit by their act, conduct and acquisence? 7. Whether the suit has not properly valued for court fee and jurisdiction? 8. Relief. After appraisal of the entire evidence on record, the trial Court decreed to suit of respondent no.1 by holding that the agreement to sell was valid, that the part of the sale consideration was passed on to the vendors and that he was ready and willing to perform his part of agreement. R.S.A.No.1918 of 1991 -4- .... In appeal, the findings were affirmed. Before the first appellate Court, the appellant had challenged the findings of the trial Court only on two issues, one pertaining to the validity of the agreement in question and the second regarding his being a bona fide purchaser of the suit property. He did not challenge the issue whereunder the finding with regard to readiness and willingness of respondent no.1 to perform his part of agreement was recorded. Aggrieved by the judgments of the trial Court and the first appellate Court, the appellant has filed this Regular Second Appeal. Learned counsel for the appellant has assailed the findings of the Courts below by contending that the agreement to sell cannot be said to be a valid piece of evidence as the handwriting expert who was produced by the appellant gave a report that on comparison, the signatures of the vendors did not tally with those appearing on the Vakalatnama and the written statement. It is the contention of the learned counsel for the appellant that the Courts below have made an observation to negate this report which was never objected to by respondent no.1 or the vendors. It was argued that as a result of this, both the Courts have gone wrong in holding that since signatures did not tally with the admitted signatures, the report had to be discarded. He also referred to the signatures of one of the vendors as procured one because on the date when he is alleged to have appended his signatures to the agreement to sell, he was present in the school attending to his duties and, thus, there was no occasion for him to sign the agreement which was supposedly signed by him between 10.00 and 11.00 A.M. It is, R.S.A.No.1918 of 1991 -5- .... thus, his argument that once the agreement to sell became a document under cloud, the Courts below could not have accepted the same and, therefore, they could not have ordered the execution of the sale deed. It was further argued that the suit itself was filed belatedly. To elaborate this argument, learned counsel for the appellant contended that after execution of the agreement to sell on 14.11.1983, the eviction proceedings were initiated by the appellant against respondent no.1 on 16.10.1984 since he was occupying the suit property as a tenant, in which proceedings the said respondent appeared, but chose to file the instant suit in February,1985 and prior thereto, issued notice to the vendors to perform their part of agreement on 10.1.1985, i.e., much after the appointed date for execution of the sale deed and had also submitted an application showing him present in the office of Sub Registrar on 8.2.1985. It was further contended that from the conduct of respondent no.1, it cannot be said with certainty that he was willing and ready to perform his part of agreement to execute the sale deed and, therefore, this singular factor should be taken against him. Lastly, it was argued that the appellant was a bona fide purchaser for consideration and, therefore, the Courts below have gone wrong in holding that he had knowledge of the agreement to sell in favour of respondent no.1. On the other hand, learned counsel for respondent no.1 argued that once the agreement to sell had been established, as also the passing of sale consideration and readiness & willingness of respondent no.1 to perform his part of agreement, there was no other option but to decree the suit which has rightly been done by the Courts below. He further argued R.S.A.No.1918 of 1991 -6- .... that before the first appellate Court, the appellant had not challenged the findings recorded by the trial Court on the issue of readiness and willingness of respondent no.1 to perform his part of agreement and consequently, at this stage, he cannot make any grievance of the same because the said finding has become final inter se between the parties. After hearing the learned counsel for the parties and going through the impugned judgments, I am of the opinion that the following substantial questions of law arise for consideration in this appeal:- 1. Whether the appellant can be held to be a bona fide purchaser of the suit property for consideration and merely because a fact of a person, who is in possession of a property as tenant, can lead to an inference regarding the existence of an agreement to sell in his favour and knowledge of this fact attributed to the proposed vendee or not? 2. Whether the willingness and readiness expressed by respondent no.1 subsequent to the date fixed in the agreement for execution of the sale deed, can be accepted to be a proof of his readiness to perform his part of agreement? 3. Whether in the given set of circumstances, resorting to the alternative relief under Section 20 of the Specific Relief Act (for short, `the Act') should have been explored by the Courts below or not? R.S.A.No.1918 of 1991 -7- .... A perusal of the material on record shows that respondent no.1 proved the agreement to sell by producing attesting witnesses whose testimony could not shattered. Similarly, passing of sale consideration was also duly established. Therefore, it cannot be said that the agreement to sell had not been executed. There was hardly any evidence on record from where it could be inferred that this document was fictitious and result of fraud. Thus, it was rightly relied upon by the Courts below. But, in so far as the question as to whether the appellant was not a bona fide purchaser of the suit property for consideration is concerned, the first appellate Court has gone wrong in holding so. On this issue, it has merely referred to the fact that respondent no.1 was a tenant on the suit property and, therefore, it was impossible to believe that the appellant was not in the knowledge of the agreement to sell in favour of respondent no.1. The first appellate Court has also observed that the appellant had not shown that he had made enquiries about the suit property being free from any encumbrance. The finding regarding the fact of the appellant being in the knowledge of the tenancy of respondent no.1 over the suit property is based upon Exhibit P7 which was a registered AD envelope purportedly sent to him in January,1985, which he refused to receive, but if the material on record is to be seen, then this was sent much after the sale deed was executed in his favour. In fact, all the documents on record indicating the anxiety of respondent no.1 to get the sale deed executed are much subsequent to the sale deed in favour of the appellant. Notice, Exhibit P1, which was issued by respondent no.1 to the appellant R.S.A.No.1918 of 1991 -8- .... and the vendors is dated 10.1.1985 and he got his presence marked in the office of the Sub Registrar on 8.2.1985, whereas the scheduled date for carrying out the agreement to sell was 6.11.1984. But, there was no challenge to this issue which was accepted by the appellant,but independently of this issue, the fact remains that the appellant was a bona fide purchaser of the suit property and the Courts below were obliged to probe the possibility of resorting to Section 20 of the Act for the following reasons. The appellant, to substantiate his plea of bona fide purchaser, had relied upon the assertion of the vendors that the suit property was free from any encumbrance and in his cross-examination while appearing as DW1, he also testified that he had enquired about that fact from the Lambardar and other persons before getting the sale deed executed. Thus, the Courts below have gone wrong in holding the testimony of DW3 against the appellant wherein he has stated that the suit property was in possession of respondent no.1 because he knew this fact on account of his filing a suit for ejectment against the said respondent. There is no evidence on record to prove the fact that the appellant was in the knowledge of the agreement to sell in favour of respondent no.1 before the execution of sale deed in his favour. The filing of the ejectment petition is not disputed as it was subsequent to the agreement to sell having been filed on 16.10.1984. In such an eventuality, the only option left with the Courts below was to explore the possibility of resorting to the provisions of Section 20 of the Act because the agreement to sell was rendered inexecutable. No such R.S.A.No.1918 of 1991 -9- .... exercise was undertaken. In view of the above, even if it is accepted that the factum of tenancy of respondent no.1 over the suit property was in the knowledge of the appellant, even then it did not mean that he was in the knowledge of the agreement to sell in question and, therefore, the appellant should have been construed as a bona fide purchaser with consideration. However, as observed earlier, the agreement to sell in favour of respondent no.1 was valid,but the same was rendered inexecutable and, therefore, it was incumbent upon the Courts below to have resorted to the provisions of Section 20 of the Act. The findings of the first appellate Court on issue no.3 are, accordingly, set aside and the suit of respondent no.1 is directed to be dismissed. However, the matter is remitted back to the trial Court with a limited aspect to determine the amount of compensation that can be awarded to respondent no.1 in the given set of circumstances as a measure of having recourse to the provisions of Section 20 of the Act. The parties are directed to appear before the trial Court on 20.2.2010 and thereafter, it will embark upon the issue of determining the adequate compensation to be paid to respondent no.1 as a result of the inexecutability of the agreement to sell in his favour. The substantial questions of law mentioned hereinabove stand answered in the foregoing discussion and it is held that merely because a person is a tenant on the suit property cannot lead to an inference of an agreement to sell existing in favour of such a tenant, and a person R.S.A.No.1918 of 1991 -10- .... necessarily has to be held to be a bona fide purchaser with consideration if he shows that adequate enquiries were made by him before effecting a sale. Further, it is held that if a proposed vendee takes no steps to show his readiness and willingness to perform his part of the agreement, then the vendor is within his rights to repudiate such an agreement and can alienate the property by selling it to some other person, unless it is shown that the agreement to sell granted some flexibility to the vendee in this regard. Once, a sale deed is executed in favour of a third person, then it is obligatory on the part of the Court to examine the feasibility of resorting to Section 20 of the Act. The appeal is disposed of in the aforesaid terms. January 28,2010 ( Mahesh Grover ) “SCM” Judge