*THE HONOURABLE SRI JUSTICE N.R.L.NAGESWARA RAO + APPEAL SUIT NO.2734 OF 2004 % 04-03-2011 # Chodi Mahalakshmi ….Appellant Vs. $ Koppada Sathiraju and others …. Respondents !Counsel for the Appellant : Sri S.Srinivas Reddy Counsel for the Respondents: Sri Y.V.Ravi Prasad <Gist : >Head Note: ? Cases referred: 1. (2008) 7 SCC 310 2. (1996) 5 SCC 589 3. (1999) 7 SCC 303 4. AIR 1957 A.P 585 5. 2002 (3) ALT 754 6. AIR 1981 SC 2085 7. AIR 1975 MADRAS 333 8. 1999 (5) ALD 472 9. 1998 (5) ALD 387 10. AIR 1962 RAJASTHAN 231 11. AIR 1989 SUPREME COURT 788 THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO A.S.NO.2734 OF 2004 JUDGMENT: The first defendant in O.S.No.1 of 1990 on the file of the Court of III Additional District Judge, Kakinada is the appellant herein. The suit was filed for specific performance of the contract of sale dated 30-04- 1981 executed by the first defendant free of the mortgage said to have been created by the first defendant in favour of the second defendant. The allegations in the plaint goes to show that the schedule property, which is an extent of Ac.5.85 cents of land, belongs to the first defendant and she agreed to sell the property for a consideration of Rs.78,000/- on 30-04-1981 and received a sum of Rs.40,000/- and the possession was delivered. The time for payment of the balance amount of Rs.38,000/- was fixed as one month i.e., before the end of May 1981. The first defendant undertook to discharge the debts owed by her to the L.M.B and thereafter undertook to give the title deeds relevant to the schedule property and the possession of the property was delivered in part performance of the contract. Subsequently, on 27-10-1981 the plaintiff paid to the husband of the first defendant a sum of Rs.33,860/- towards balance of sale consideration and he endorsed on the back of the agreement. He represented that the first defendant is not available and therefore he has acted on her behalf. In the first week of November 1981 a sum of Rs.4140/- was paid in full payment of the balance of the sale consideration and also a sum of Rs.2,000/- towards interest. The plaintiff was always ready and willing to perform his part of the contract and the first defendant has not fulfilled the obligation to discharge the loan to the land mortgage bank and to deliver the title deeds. As the first defendant avoided, a legal notice was given and the first defendant gave a reply with false allegations and pleading that the plaintiff is a tenant of the schedule property and on the date of suit agreement it is issued a only a sum of Rs.4,000/- as advance of the rent and the plaintiff wanted some documents and she signed on the papers. The second defendant is a subsequent alienee after the suit agreement in whose favour a mortgage has been created and filed a suit O.S.No.357 of 1993 and proceeding in execution. Therefore, the defendants are liable for the specific performance of the contract or in the alternative for a refund of the sale consideration of Rs.78,000/-. The first defendant filed a written statement denying the allegations in the plaint about the contract of the sale and receipt of the consideration. The defendant never executed the alleged agreement of sale. The possession of the plaintiff in the suit schedule property is only as a tenant not as a purchaser. It was further pleaded that the plaintiff was cultivating the land on an annual maktha of 90 bags of paddy and Rs.5000/- as cash for the usufruct of the trees payable by 15th January on every year. During 1981-1982 the husband of the first defendant suffered from heart attack and was ill. On 30-04-1981 the plaintiff paid a sum of Rs.4000/- to the defendant towards the advance of maktha. The husband of the first defendant was taken to the hospital of Dr.Jagannadham and Venkata Prasad of Kakinada with the assistance of Dr.S.V.Ramayya and the plaintiff and one S.Jagga Rao accompanied them. Further, it is averred in para.10 of the counter-affidavit as follows:- “ At the residence of Dr.Jagannadham and Venkata Prasad the defendant asked the plaintiff to give the amount he brought. The plaintiff brought two stamp papers of worth Rs.3/- and Rs.2/- each and insisted for the signatures of the defendant and that of her husband on those blank stamps. Due to heart trouble the husband of the plaintiff and due to anxiety the defendant were not able to resist the plaintiff and out of anxiety they signed on those two blank stamps as directed by the plaintiff. The plaintiff representing that he required some document as he is the cultivating tenant, having possession of the suit schedule property, obtained the said signatures and paid an amount of Rs.4000/- towards the advance magta to the defendant and went away.” In the year 1983, the plaintiff fell in arrears of the rent and the defendants demanded the plaintiff to pay the agreed rent but in stead of it, the plaintiff created a false story of the agreement and gave a legal notice. A criminal case was also filed by the defendants. Proceedings for eviction were also initiated under the Tenancy Act. Therefore, by playing fraud and exercising undue influence the plaintiff obtained the signatures of the first defendant and of her husband and subsequently converted the same into the suit agreement. The payment of Rs.33,860/- on 27-10-1981 is also denied. The further payment and interest payment in the last week of November 1981 is also denied. The suit is therefore liable for dismissal. The second defendant filed a written statement contending that the first defendant stood as a co-obligant for the loan obtained by M/s.Srinivasa Iron Merchants and deposited the title deeds and as the loan amount was not discharged, the suit O.S.No.357 of 1993 was filed and a preliminary decree was obtained and the execution proceedings were initiated. The agreement in favour of the plaintiff is also disputed. On the basis of the above pleadings, the following issues have been framed for trial. 1. Whether the agreement dt.30-04-1981 is true, valid and binding on the defendants? 2. Whether the alleged advance of Rs.40,000/- is true? 3. Whether the plaintiff is in possession of the plaint schedule property in pursuance of the alleged sale agreement dated 30-04-1981? 4. Whether the alleged payment of Rs.33,860/- on 27-10-1981 by the plaintiff to the husband of the first defendant is true? 5. Whether the plaintiff herein is in possession as tenant? 6. Whether the alleged payment of RS.4140/- by the plaintiff to the defendant towards full payment of balance sale consideration is true? 7. Whether the alleged payment of Rs.2000/- by the plaintiff to the first defendant towards interest in the last week of November 1981 is true? 8. Whether the endorsement dated 27-10-1984 is true, valid and binding on defendant? 9. Whether the plaintiff is entitled to specific performance as prayed for? 10. Whether the plaintiff is entitled to the alternative relief of refund of Rs.78000/- 11. To what relief? Later the following additional issue has been framed:- 12. Whether the equitable mortgage created by the first defendant in favour of the second defendant over the plaint schedule property is binding on the plaintiff? On behalf of the plaintiff, Pws.1 and 2 were examined and marked Exs.A-1 to A-9. On behalf of the defendants, Dws.1 to 4 were examined and marked Exs.B-1 to B-4. After considering the evidence on record, the learned III Additional District Judge, Kakinada decreed the suit of the plaintiff disbelieving the payment of Rs.4140/- and directed the same to be deposited. It was also held that equitable mortgage in favour of the second defendant is not binding on the plaintiff. Aggrieved by the said judgment, the present appeal is filed. Now the points that arise for consideration are:- 1. Whether the contract of sale pleaded by the plaintiff is true, valid and binding on the first defendant? 2. Whether the judgment and decree passed by the lower court in granting specific performance is legal and sustainable? POINTS:- The learned counsel for the appellant contends that there is no proof of execution of the contract of sale by the defendants and mere admission of the signatures is no proof of the execution of the document or the contents of the document and this being a suit for specific performance, it is the burden of the plaintiff to prove the truthfulness and also the entitlement of relief of specific performance. It was also his further plea that the lower court having held that the payment of Rs.4,140/- and the interest of Rs.2,000/- said to have been paid by the plaintiff is not true, should have dismissed the suit as the plaintiff has not come forward to the court with clean hands. Further more, there was no payment of money by the plaintiff under the alleged payment of Ex.A-2 dated 27-10-1981 and consequently it cannot also be taken into consideration. According to him, the evidence of PW.1 and PW.2 does not inspire confidence to get the discretionary relief of specific performance. In fact according to him PW.2 is not at all associated with Ex.A-1 or Ex.A-2 and is a person impersonating. He relied on a decision reported in Mohammadia Cooperative Building Society Limited VS. Lakshmi Srinivasa Cooperative Building Society Limited and others ([1]) and also another decision reported in Lourdu Mari David and others Vs. Louis Chinnaya Arogiaswamy and others ([2]). According to the further claim of the appellant, the plaintiff has been in possession of the property as a tenant and there was no delivery of possession as on the date of the agreement and even according to the plaintiff it was subsequent to it and the plaintiff’s possession is only as a tenant and merely because the earlier proceedings initiated against the plaintiff are dismissed, the case of the plaintiff cannot be taken to have been proved. It is also the contention of the learned counsel for the appellant that the lower court has cast the burden on the appellant to disprove the execution of the agreement and erred in relying upon the admission of signatures on Exs.A-1 and A-2 and thereby inferring the genuineness of the transaction. Further, it will be useful to refer to a decision reported in Ram Kumar Agarwal and another Vs. Thawar Das (dead) through L.Rs ([3]), where under it was held that a person who falsely claims to have paid a sum of money and attempts to prove the plea at trial stage, cannot be said to have been ever ready and willing to pay the sum due under the contract in question. On the other hand, the learned counsel for the plaintiff/respondent while supporting the judgment of the lower court contends that the theory under which the agreement Ex.A-1 is said to have come into existence is not proved and when there is an admission of the signatures, the burden is on the party to show as to under what circumstances the document has come into existence and the plea of tenancy was not accepted and therefore it would be agitated now and further there was no plea that the payment made to the husband of the first defendant is not valid and not binding on the defendants and consequently such a plea cannot be raised in the appeal. He relied upon a decision reported in Alapati Sivaramakrishnayya Vs. Alapati Kasiviswanadham and others ([4]) wherein the court considered about the burden of proof with regard to admission of signature on a letter. In fact the above judgment refers to an earlier decision where under the admission of signature on a promissory note was considered. In fact, in that case during the trial the party has admitted the letter and contents thereof. The above judgment is also unambiguous about the fact and in Para.11 their lordships observed as under:- “Before we discuss the question of burden of proof in a case of this character, it is necessary to point out that the word “execution” is hardly apt when used in regard to the drafting of a letter and is only appropriate in regard to a deed or instrument, as in such cases, certain formalities are insisted upon by law and they are to be followed by the executant in order to make the document effective in law. Where, as in the case of a will, the law requires the attestation by two witnesses of the signature of the testatory, there can be no execution, as such, unless the procedure prescribed by the law in regard to attestation is followed. A piece of paper, though styled a will and though it may contain the alleged testator’s signature will not be a will unless it has been executed in the manner prescribed by law. So also is the case with other documents where definite formal requirements are prescribed. Nobody can execute a will by merely drawing up a document containing directions as to the disposal of his property after his death followed by his signature. Nobody can be said to have executed a mortgage bond merely by signing a document called a mortgage deed. But, in the case of a letter where there can be no possible question of execution in this sense, proof of a man’s signature under it is surely prima facie proof that the contents of the letter are attributable to this authorship. If a man denies that he has written a letter which contains his signature, then surely he must prove that he alleges i.e., that the letter was got up a blank piece of paper containing his signature, as also the circumstances in which he happened to put his signature on such a piece of paper.” Their lordships have specifically made a distinction between the admission of signature on a letter and the proof of execution of a document. Therefore, in such circumstances, the above decision will not help the counsel for the respondent and the burden of proof cannot cast on the appellant. In this connection, it is useful to refer to a judgment reported in Ramnivas Gupta and others Vs. Maliram([5]) where under the judgment relied on by the counsel for the respondent along with other decisions on the points were considered and it was found that when execution is denied mere proof of signature of the executant not sufficient. Person relying upon such document must further establish that executant affixed his signature after knowing the contents thereof. In fact, it was also a case dealing with specific performance of contract. Further more, in a judgment reported in Ramji Dayawala & Sons (P) Ltd., Vs. Invest Import ([6]) it was held as under:- “Undoubtedly, mere proof of the hand-writing of a document would not tantamount to proof of all the contents or the facts stated in the document. If the truth of the facts stated in a document is in issue mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the facts or the contents of the document. The truth or otherwise of the facts or contents so stated would have to be proved by admissible evidence i.e. by the evidence of those persons who can vouchsafe for the truth of the facts in issue.” It is also useful to refer to the decision reported in N.Ethirajulu Naidu Vs. K.R.Chinnikrishnan Chettiar ([7]). Therefore, in view of the above decision, the approach of the lower court in placing the burden on the defendant by mere admission of the signatures on Exs.A-1 and A-2 is not correct and the party seeking specific performance has to prove the terms of the contract, the contents of the agreement and also the passing of the consideration. Evidently, as per law of evidence, the burden is on the person who fails if the evidence is not adduced to prove the fact in issue. The fact in issue is as to whether the agreement was executed in the manner alleged by the plaintiff. If there is an evidence on the side of the plaintiff to probablise the truthfulness of the contents, then the plea of the defendant has to be put juxtaposition and the court can decide as to whether the plea of the defendant is true or not. In a suit for specific performance where a decree is only a discretionary, in the proof of the substance of the claim of the plaintiff, the burden cannot be cast on the defendant. In fact as rightly contented by the learned counsel for the appellant, the lower court has erred in holding that the signatures on Exs.A-1 and A-2 of first defendant and her husband entitles to draw the inference of the execution is not correct. The learned counsel for the respondent also relied on a decision reported in Palika Sathiraju Vs. Pydah Soma Malleswara Rao([8]) wherein the defendant having taken a specific plea of tenancy, the burden is on him even if there is no evidence on the side of the plaintiff as he would fail. The above proposition of law has no application to the facts of this case since the suit is one for specific performance of the contract and the question of relevancy of tenancy and the earlier litigation has no application as even according to the case of the plaintiff he claims to have come into possession after the agreement. The decision relied upon by the counsel for the respondent in Secretary to Government of India, Ministry of Defence, New Delhi Vs. Indira Devi ([9]) , also does not apply to the facts of this case for the reasons already stated above. The decision relied in the lower court and repeated before this Court reported in O.P.Verma Vs. Lala Gehrilal and another ([10]) has no application in view of the judgments of our own High Court, Madras High Court and also the judgment of the Supreme Court referred above. The decision reported in Jiyajeerao Cotton Mills Ltd., and another Vs. The M.P Electricity Board and another ([11]) about the permissibility of taking a plea, which was not taken in the writ before the High Court has no application to the facts of the case. Evidently, in a civil suit issues are framed and the decision is delivered on the basis of the pleadings of both parties. The entitlement of a relief in a suit is based on the fact of enforceability of the agreement. In fact, it is not the case of the first defendant though she is admitting Ex.A-1 under Ex.A-2 transaction, receipt of consideration by DW.2 the husband of the first defendant, who is not a party to the suit, the payment under Ex.A-2 was said to have been made to him is with her consent or authorisation. In fact the endorsement under Ex.A-2 does not show that he has received the money under any authority from the first defendant. Evidently, even according to the case of the plaintiff when the first defendant is not available the said amount is said to have been paid to DW.2 and it is not with her consent. Merely because DW.2 is the husband of the first defendant, it does not mean that any amount received by him without the consent or the acknowledgment of the first defendant will bind her. In fact when the parties are denying the transaction itself, it is for the plaintiff to prove the truthfulness of the transaction, the authority and the binding nature. It is not a new plea that is developed in the appeal to be negatived as contended by the learned counsel for the respondent. The relief of specific performance can only be granted when once there is a binding acceptance of the money by the DW.2 on behalf of the first defendant only or when there is ratification of the same by D-1. When the authority of DW.2 to receive the said money is not proved then it is not a valid payment under the agreement and not in performance of the obligation under the contract. If DW.2 is to be benefited by any act by himself, the endorsement made on Ex.A-1 will not therefore be a valid enforceable payment against the first defendant when there is no consent, authority or ratification from her. The lower court has found that payments pleaded at Visakhapatnam to the husband of the first defendant towards full discharge and interest are not proved. From the above findings of the lower court under issues 6 and 7, it is quite clear that the plaintiff has not come to the court with truth and bonafides. If really the said payments were there and if the plaintiff was prudent enough in getting an endorsement like Ex.A-2, there is no reason as to why even a receipt was not taken from DW.2. Therefore, the above fact clearly goes to show that the plaintiff has come to the court with falsity and not with clean hands; the preparedness, readiness and the willingness to perform his part of the contract is doubtful. According to the case of the plaintiff, the sale of the property was said to be to discharge the loan payable by the defendants to the land mortgage bank and on the date of agreement a sum of Rs.40,000/- was paid and the agreement was executed on 30-04-1981. As per the evidence of the plaintiff as PW.1, the talks of the transaction have taken place between him and DW.2 and according to him the first defendant’s husband offered to sell the property as there is a L.M.B bank loan and he asked the first defendant’s husband to discharge the bank debt and sell the property to him. Therefore, when the plaintiff is aware that a bank loan is existing, any prudent person would have gathered the particulars of the bank loan and if a consideration of Rs.40,000/- was paid on the date of agreement and another sum of Rs.33,860/- was paid on 21-10- 1981, the purchaser would have definitely asked for discharge of the bank loan. In this particular case, there is no reason as to why the plaintiff has not made enquiries about the bank loan nor as to the reason as to why he did not see that the money paid by him was utilised for discharge of the L.M.B loan and there is no reason as to why he did not collect the particulars of those documents. It was also further said to have been represented to him that the original sale deed was with the L.M.B bank. The talks for sale were said to be a month prior to the sale agreement. Therefore, from his evidence he neither made enquiries about the bank loan nor even by the date of evidence he is able to say whether the said loan was discharged and if so what is the amount that was given in discharge. Therefore, the very reason for the sale of the property pleaded by the plaintiff is not proved and the conduct of the plaintiff lacks bonafides in not making any enquiries. The circumstance has to be kept in mind while he took plea that he got possession of the property only after the payment of Rs.33,860/- under Ex.A-2. Evidently, there is no proof of delivery of possession to him in pursuance of the contract. When such proof is wanting the other inference has to be drawn by the court according to the case of the defendant. However, any finding as to the nature of the possession of the plaintiff is not relevant in the suit since other litigation is pending between parties. It is also to be noted that under Ex.A-1 it was specifically mentioned that possession should be delivered at the time of execution of the sale deed only. There is absolutely no reason as to why on the date of Ex.A-2, the possession has to