1 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.09.2011 CORAM THE HON'BLE MR.JUSTICE S.RAJESWARAN Civil Suit No.271 of 2001 K.Rajendran ... Plaintiff Vs. 1.A.Zakir Hussain 2.Jalees Ragman 3.Abutha Nachi 4.A.Riewana 5.Syed Musamie … Defendants Prayer: This suit has been filed to order the defendants specifically perform the Agreement dated 09.10.1998 with the plaintiff in respect to the suit schedule property and to do all acts necessary to put the plaintiff in full possession of the said schedule property. For plaintiff : Mr.C.Ravichandran For defendants : Mr.R.Subramanian Senior Counsel for Mr.M.S.Mani JUDGMENT This suit has been filed to order the defendants specifically perform the Agreement dated 09.10.1998 with the plaintiff in respect to the suit schedule property and https://hcservices.ecourts.gov.in/hcservices/ 2 to do all acts necessary to put the plaintiff in full possession of the said schedule property. 2. The case of the plaintiff as stated in the plaint, in brief is as follows: The plaintiff is the Managing Director of M/s.Narmadha Textiles Private Limited (hereinafter referred to as the Company) carrying on business of manufacture and export of textile fabrics and garments. They have their factory at Arcot Road, Kodambakkam. In the middle of 1998, the first defendant approached the plaintiff at Chennai and represented that the suit property which is adjacent to the factory premises of the company originally belonged to late K.M.Abu Thahir, the father of the defendants. The defendants 1, 2 and 5 are the sons and the defendants 3 and 4 are the daughters respectively of the said K.M.Abu Thahir. On the death of the said K.M.Abu Thahir on 27.08.1995, the defendants became the owners of the suit property as his heirs. The defendants 2 to 5 have executed Power of Attorney in favour of the first defendant giving him the full right and authority to deal with and dispose of the suit property. The defendants were willing to sell the suit property for a total sale consideration of Rs.42 lakhs. A sale agreement was accordingly entered into on 09.10.1998 between the plaintiff and all the defendants 1 to 5. In pursuance of the said agreement, the plaintiff also paid an advance of Rs.1 lakh by cash on the day of the https://hcservices.ecourts.gov.in/hcservices/ 3 agreement to the defendants towards the sale consideration. It was agreed that the balance sale consideration would be paid by the plaintiff at the time of execution of the sale deed. The defendants had also agreed to obtain an Income Tax Clearance Certificate for each of the defendants within two months as per Clause 3 of the agreement. They further agreed as per Clause 2 to vacate their tenants from the suit property before the execution of the sale deed. 3. Thereafter, the first defendant approached the plaintiff and represented that the defendants are carrying on business in the name of M/s.Al-Dho Trading Establishment (hereinafter would be referred to as the firm) and wanted the company to supply the Readymade Garments to the firm. Accordingly the company supplied the readymade garments to the firm under Invoice No.2049 dated 17.12.1998 for an amount of USD 29762.70. The said firm had paid an advance amount of USD 3500 out of the total consideration of USD 29762.70 payable by the firm towards the said invoice. Though the firm had made part payments, they failed to pay the balance amount of USD 15262 against the said invoice. Even thereafter the company had exported materials to the firm to the value of USD 9331. Even the said amount has not been paid by the firm. Thus leaving an outstanding of USD 24593 in total, payable by the firm to the company. The repeated request made by the company for payment were in vain. https://hcservices.ecourts.gov.in/hcservices/ 4 4. M/s.Western Marketing Agencies, Riyadh which is a unit of the defendants firm placed export orders for export of materials as per specifications for a value of USD 21367.50 by order dated 18.05.1999. Another order was also placed on 23.05.1999 for a value of USD 91000. The company agreed to manufacture the above said materials on the condition that the defendants should furnish sufficient security for the previous balance of USD 24543. The defendants agreed to do so but inspite of manufacturing the said garments, the company did not export the same as no security was given by the defendants as promised by them. The plaintiff on behalf of the company is taking separate proceedings in this direction. 5. With regard to the sale agreement dated 09.10.1998 the plaintiff had sent letters on 26.12.2000 and on 28.12.2000 to the first defendant calling upon the defendants to perform their part of the contract and to execute the sale deed in respect of the suit schedule property and in favour of the plaintiff. After receipt of the notice, the first defendant without replying to the same contacted the plaintiff over phone and assured him that he would register the sale deed within a week. Since the defendants did not come forward to do so, the plaintiff sent letters once again on 09.01.2001 and 17.01.2001 to the defendants calling upon the defendants to execute the sale deed, after adjusting the firm's dues to the company in https://hcservices.ecourts.gov.in/hcservices/ 5 respect of readymade garments as undertaken and promised by them. Thus, the plaintiff was always ready and willing to perform his part of the contract but it was only the defendants who did not come forward to perform their part of the obligations by executing the sale deed in favour of the plaintiff. On the other hand, the plaintiff came to know that the defendants are taking steps to dispose of the suit property to a third party. Hence the above suit has been filed for the aforesaid prayer. 6. Written statement has been filed by the defendants wherein defendants 1 to 4 were represented by their power agent D.C.Shekaran contending as follows: While making a general denial of all the averments made in the plaint, the defendants would submit that the suit suffers from want of cause of action. While admitting the execution of the sale agreement the sale consideration and the advance paid, the defendants would state that the plaintiff mis-represented the Clause 3 of the agreement. Though the defendants admitted that they undertook to vacate the tenant in occupation of the suit property the plaintiff refrained from discussing with the tenants much in contravention of Clause 2 of the agreement. The defendants specifically deny the alleged transaction with the company of which the plaintiff is the Managing Director. The defendants did not have any stake in the firm as alleged by the plaintiff and the alleged https://hcservices.ecourts.gov.in/hcservices/ 6 transaction of supply of garments is entirely concocted. The first defendant as a civil contractor at Riyadh merely introduced the plaintiff to the officials of the firm and the first defendant is not aware of any of the transaction that took place between the firm and the company. 7. It is contended that there is no privity of contract between the defendants and the company or the firm as they never transacted with either the company or the firm. Therefore there is no scope of adjusting the amounts due from the firm to the company from and out of the sale transaction payable by the plaintiff to the defendants. 8. In fact, the plaintiff has filed a suit in C.S.No.272 of 2001 before this Court against M/s.Al-Doh Trading Establishment for recovery of money, wherein the defendants are also made as parties. The said suit is pending trial. It is only a novel method of the plaintiff attempting to crab the property from the defendants and hence such allegations are made by the plaintiff. The defendants further state that they are willing to dispose off the suit property to the plaintiff even as on date and they have not taken any steps to sell the same to any other third party. But, it is only the plaintiff who does not come forward to pay the sale consideration. Therefore, the allegation that the plaintiff was ready and willing to purchase the suit property is denied by the defendants. Hence, the attempt on the part of the plaintiff is only to https://hcservices.ecourts.gov.in/hcservices/ 7 make unlawful enrichment through his baseless claims. In the result, they pray for dismissal of the suit. 9. On the above pleadings, this Court framed the following issues: 1. Is the plaintiff entitled for specific performance? 2. Is the plaintiff ready and willing to perform his contract? 3. Did the defendants perform their part of contract? 4. To what relief the parties entitled? 5. Did the defendants ask the plaintiff to adjust the money towards sale consideration? 10. The plaintiff was examined on the side of the plaintiff as P.W.1 and one of the attestors by name V.Jayaraman was examined as P.W.2. Exhibits P1 to P39 were marked on the side of the plaintiff. On behalf of the defendants, Mr.D.C.Shekaran as the power agent of the defendants 1 to 4 was examined as D.W.1 and exhibits D1 and D2 were marked. 11. I have heard the learned counsel appearing for the plaintiff and Mr.R.Subramanian, the learned senior counsel representing Mr.M.S.Mani, the learned counsel appearing for the defendants. I have also gone through the documents made available on record. https://hcservices.ecourts.gov.in/hcservices/ 8 12. The learned counsel for the plaintiff while reiterating the averments contained in the plaint submits that the sale agreement was clearly admitted by the defendants and also the main clauses of sale consideration as well as the advance received by them. In so far as the payment of the balance sale consideration payable by the plaintiff is concerned, the learned counsel relying on the clauses contained in the sale agreement submits that, that will arise only after six months from the date of vacating the tenants from the suit premises and also obtaining Income Tax Clearance Certificates. Therefore, the plaintiff is always ready and willing to perform his part of the contract. On the other hand, the learned counsel points out that the defendants have not discharged their obligations and they cannot question the readiness and willingness of the plaintiff. The learned counsel for the plaintiff further submits that the first defendant has not entered into the Witness Box and in fact, the Power of Attorney of the defendants 1 to 4 alone gave evidence on behalf of the defendants 1 to 4. From this, the learned counsel asserts that an adverse inference has to be drawn against the first defendant and further the Power of Attorney is not competent to give evidence on behalf of the defendants 1 to 4 in so far as the defendants 1 to 4's personal involvement in this matter is concerned. https://hcservices.ecourts.gov.in/hcservices/ 9 13. The learned counsel also points out that in the cross-examination of P.W.1, a specific question was put to him to the effect that signature of other defendants are forged, but, the said allegation of the alleged forgery of the signatures had been given up in the evidence of D.W.1. Having admitted the execution of the sale agreement by all the defendants in the Written Statement, it is not open to contradict the same while giving oral evidence. Further, the learned counsel for the plaintiff contends that there is a clear nexus between the defendants and the firm in Riyadh. If it is denied by the defendants, then, the onus is on them to produce necessary documents to disprove the same, as the party in whose possession the best evidence is available should produce the same before the Court. In so far as the capacity of the plaintiff to pay the balance sale consideration, the learned counsel refers to Exs.P25 to P28 which are the Income Tax Returns and Exs.P29 to P39 which are the copies of the sale deeds to show that there are properties standing in his name and also in his son's name. Further, it was pointed out that there was no specific denial in the written statement about the capacity of the plaintiff to pay the balance sale consideration. The learned counsel further adds that the plaintiff is entitled to claim the relief of specific performance and the same cannot be thrown out on the ground of latches as contended by the defendants. There are absolutely no https://hcservices.ecourts.gov.in/hcservices/ 10 latches on the part of the plaintiff, as the tenants have not been vacated even now. While winding up the arguments the learned counsel submits that in paragraph 9 of the written statement, the defendants admitted their willingness and readiness to execute the sale deed in favour of the plaintiff as on date. Therefore, the decree may be passed in favour of the plaintiff after directing the plaintiff to pay the balance sale consideration. The learned counsel relied on a plethora of judgments in support of his submissions. 14. Per contra, the learned senior counsel for the defendants submits that the plaintiff has failed to perform his part of the obligation as per the Agreement of Sale dated 09.10.1998. The learned senior counsel submits that the plaintiff has not whispered anything about the steps taken by him, as contemplated under Clause 2 of the sale agreement with regard to the fixation of compensation for the tenants by mutual negotiations. Thus, the plaintiff has not come to the Court with clean hands and therefore, he is not entitled to the relief of specific performance. 15. In lieu of Clause 9 of the Agreement, the learned senior counsel for the defendants submits that for the failure of obligation on the part of the plaintiff, the contract itself contain impliedly a term, according to which, it would stand discharged. He further points out that the agreement of sale was executed on 09.10.1998 and https://hcservices.ecourts.gov.in/hcservices/ 11 the first demand was made by the plaintiff on 26.12.2000 only – Ex.P11. This has been followed by four more letters i.e., Ex.P14 dated 28.12.2000, Ex.P17 dated 03.01.2001, Ex.P20 dated 09.01.2001 and Ex.P22 dated 17.01.2001. According to the learned senior counsel for the defendants from 09.10.1998 to 27.03.2001 when the suit was filed, the plaintiff should plead and prove his readiness and willingness, but he was found wanting in those aspects. Even a perusal of Ex.P11, P14, P17, P20 and P22 would show that the readiness and willingness of the plaintiff to pay the balance sale consideration was conspicuously absent. It is the further case of the learned senior counsel that not only the plaintiff has not come to this Court with clean hands but also come with latches. Hence, the learned senior counsel prays for dismissing the suit filed for specific performance of the sale agreement, which according to him, was already frustrated and could not be implemented at all. The learned senior counsel for the defendants also relied on a number of judgments in support of his submissions. 16. In the light of the above pleadings, the evidence both oral and documentary and the arguments advanced by both the learned counsel, now let me consider the issues that arise for consideration in this suit. Even though five issues were framed by this Court, all these issues https://hcservices.ecourts.gov.in/hcservices/ 12 could be considered together as they are inter-related and inter-linked to each other. 17. The entire suit hinges on the sale agreement dated 09.10.1998, which was marked as Ex.P1 on the side of the plaintiff. This sale agreement was not at all disputed and therefore, it is an admitted document. A perusal of the sale agreement dated 09.10.1998 would show that the agreement for sale has been entered into by the plaintiff in his individual capacity with the defendants 1 to 5. The plaintiff has been shown as Thiru K.Rajendran, residing at Mylapore, Chennai – 4 and was called as party of the first part. It was also stated in the agreement that the defendants are three sons and two daughters of their father K.M.Abu Thahir, who was the original owner of the property. The property is described as all that piece and parcel of land situated in the Sanctioned plan of Trustpuram, Kodambakkam, Puliyur, Plot No.49, bearing Corporation Door No.326, situated in Arcot Road, Kodambakkam, Chennai – 24 measuring an extent of 1 ground and 2360 sq.ft. with building consisting of ground floor and first floor. 18. As per the sale agreement dated 09.10.1998, it was clearly stated that K.M.Abu Thahir constructed the building on the land purchased by him. Whereas K.M.Abu Thahir entered into a lease agreement with one K.S.Saroja on 20.06.1990, for renting out the property for a monthly rent of Rs.4,500/- and possession was given to the lessee i.e., https://hcservices.ecourts.gov.in/hcservices/ 13 K.S.Saroja. The lessee is still in possession and running a business on the property. K.M.Abu Thahir expired on 27.08.1995 leaving behind the defendants herein as his legal heirs. His wife Tmt.Rahumath Beevi pre-deceased her husband on 07.06.1988. The sale agreement also refers to the full authority given to the A.Zakir Hussain, the first defendant herein to arrange for the disposal of the property which is jointly owned by him along with his two brothers and two sisters. 19. As per the sale agreement, the total sale consideration for the property is Rs.42 lakhs, which is also not in dispute. The sale agreement is subject to the following conditions: 1."The party of the second part i.e., the first defendant should vacate the existing tenant who is occupying the schedule property and give vacant possession to the party of the first part i.e., the plaintiff well before the preparation of the sale agreement for registration. 2.The party of the first part i.e., the plaintiff will reimburse the expenditure, if any, to the party of the second part i.e., the first defendant for vacating the existing tenant and this amount will be fixed by mutual consent by both the parties and also with the tenant who is in possession of the building. 3.The party of the second part, i.e., the first defendant should obtain Income Tax https://hcservices.ecourts.gov.in/hcservices/ 14 Clearance Certificates for all the parties, who are having shares in the property, well before two months in advance for execution of the sale deed. 4.The party of the second part i.e., the first defendant should obtain consent letters from his other two brothers and two sisters for the sale of the property for the agreed sale consideration of Rs.42 lakhs well before the preparation of the sale document for registration and also for additional expenditure involved in vacating the said premises. 5.An advance of Rs.1 lakh has been paid to first defendant by the plaintiff on the date of signing the agreement by cash and the balance amount would be paid at the time of execution of the sale deed. 6.The party of the second part i.e., the first defendant will obtain the Income Tax Clearance Certificate for himself and also for his brothers and sisters and also arrange for vacating the existing tenant and come for execution of the sale deed after six months from the date of vacating the premises. 7.It is further agreed between the parties that in case of Income Tax Clearance Certificates could not be obtained within six months after the vacation of the building, further extension of the period will be decided by mutual consent of the above two parties. https://hcservices.ecourts.gov.in/hcservices/ 15 8.Clause 8 is not very relevant but according to Clause 9 of the agreement, the first defendant herein agrees that in case if he could not vacate the existing tenant and produce the necessary certificates even after the extension period of the sale agreement, then, the first defendant will refund the entire advance amount received by him from the plaintiff along with 18% interest and take back the original documents". 20. With these important clauses, the sale agreement was entered into between the plaintiff as the party of the first part and the first defendant as the party of the second part respectively. Even though the sale agreement names only the first defendant as party of the second part, all the defendants have signed the sale agreement. 21. Now, this sale agreement is an admitted document and so its clauses. Therefore, the plaintiff has proved that the sale agreement was entered into containing those clauses. However, the plaintiff's contention is that though he has been always ready and willing to perform his part of the contract, the defendants did not come forward to do so and therefore, the suit for specific performance has been filed. 22. The plaintiff has deposed as P.W.1 and in the cross-examination he admits that the agreement was entered into in his individual capacity. This cannot be denied https://hcservices.ecourts.gov.in/hcservices/ 16 because a perusal of Ex.P1 (the sale agreement) will also make it very clear that the plaintiff entered into the sale agreement as an individual only and not as the Managing Director of the Company, representing the Company. Once that part is made clear then this Court has to necessarily come to the conclusion that the transactions between the company and firm of the defendants are said to be transactions, as per the contention of the plaintiff are irrelevant in so far as the subject sale agreement is concerned. Even according to the plaintiff, apart from Ex.P1 there is no other agreement entered into between the parties touching upon the transactions entered into by the company with the firm. Though the plaintiff has made an attempt to inter-link and inter-relate these transactions entered into between the company and the firm with the balance sale consideration that should be paid by the plaintiff, the same is not at all established by any other subsequent agreements or documents and in such an event this Court will have to necessarily treat that transaction as a separate issue in so far as the suit is concerned and those transactions entered into between the company of the plaintiff as the Managing Director and the firm are outside the purview of this Court. 23. In Ex.P1 (sale agreement), Clause 2 makes it very clear that the party of the first part will reimburse the expenditure, if any, to the party of the second part for https://hcservices.ecourts.gov.in/hcservices/ 17 vacating the existing tenant by the party of the second part (party of the first part is the plaintiff and the party of the second part is the first defendant). This clause further stipulates that the amount that would be given to the tenant for vacating the building shall be fixed by mutual consent by both the parties and also with the tenant. However in the pleadings i.e., in the plaint, the plaintiff did not refer to this clause at all. Even in his deposition, as P.w.1., in the chief examination, nothing was spoken about Clause 2 and the steps taken by him in this regard and only in the cross-examination, P.W.1 states that at the time of entering into Ex.P1 (Sale agreement), he knew that there were tenants in the suit property and the expenditure for vacating the existing tenants is inclusive of the sale consideration of Rs.42 lakhs. He further states that regarding vacating the tenant, he called the defendants orally as well as through letters for vacating the tenants, but, they have not responded. In his further cross-examination that took place on 12.08.2008, P.W.1 states that there were tenants in the suit property at the time of entering into Ex.P1 sale agreement and he has not ascertained as to how many tenants were there on the date of Ex.P1. He further admits that as per Clause 2 of Ex.P1 sale agreement, the purchaser has to bear the expenses for vacating the tenants from the suit property. He also states that in Clause 2 of Ex.P1, https://hcservices.ecourts.gov.in/hcservices/ 18 there is a mention that the quantum of expenses for vacating the tenant would have to be arrived at after holding discussions between the vendor, purchaser and tenants. He further states that he is negotiating with the tenants, agreed for some amount for vacating and they have also agreed to vacate. He had also given money