THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.1899 of 1989 29th March, 2010 Between :- K. Venkat Reddy (died) as per L.Rs. K. Sudheer Reddy and others .. Appellants And Bhanwarilal Sharma & others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.1899 of 1989 JUDGMENT:- Heard the Counsel on record. 2. The learned Counsel representing the appellants – defendants 19 to 21 had taken this Court through the respective pleadings of the parties, the evidence available on record, the findings recorded by the trial Court and also the specific grounds raised in the Grounds of Appeal and would maintain that in the facts and circumstances of the case, the findings recorded by the trial Court being unsustainable, the said findings are to be disturbed and the appeal to be allowed. The learned Counsel also would maintain that the trial Court totally erred in decreeing the suit for specific performance on the strength of the alleged agreement of sale – Ex.A.1, dt.20-6-1977. The Counsel also would maintain that in the absence of any evidence whatsoever, the trial Court ought not to have recorded a finding that the property had fallen to the share of D.1 in the partition effected between D.1 and the deceased D.2. The learned Counsel also pointed out to several of the circumstances which would clearly go to show that this property in fact had fallen to the share of the deceased-2nd defendant. The Counsel would further maintain that the present appellants are the legal heirs of the deceased-D.2. The Counsel also would further point out that the agreement of sale said to have been entered by the 1st defendant is not binding on the 2nd defendant at all. While further elaborating his submissions, the learned Counsel also pointed out to Ex.B.3 to Ex.B.8 and further pointed out to the evidence of D.W.1, the son of D.2, and also D.W.2, D.W.3 and D.W.4 as well. The learned Counsel also further pointed out to Ex.B.1, Ex.B.2 and Ex.B.9 to Ex.B.12. While further making submissions, the Counsel specifically pointed out that even prior to Ex.A.1, D.2 mortgaged the property in favour of D.3, and D.2 had let out the property to tenants and had been collecting the rents. The Counsel also pointed out that even after the death of D.2; the legal heirs of D.2 are in possession of the property even to this day. Further the Counsel had pointed out that yet another important aspect is that while decreeing the suit, a direction had been given to deposit the balance of sale consideration on or before 3-8-1989 and even as on to this day, no such deposit has been made, this also would clearly go to show that the 1st respondent – plaintiff had not approached the Court with clean hands and the claim is not a bona fide one. The learned Counsel had taken this Court through the oral and documentary evidence in elaboration and ultimately would conclude that inasmuch as except the evidence of P.W.2, the brother of P.W.1, since no other acceptable evidence had been placed before the Court to prove Ex.A.1, even on this ground the appellants are bound to succeed. The learned Counsel ultimately would conclude that for the said reasons, the appeal to be allowed. 3. Per contra, the learned Counsel representing 1st respondent had taken this Court through the findings which had been recorded by the trial Court and would maintain that the close relationship between the 1st and 2nd defendants should also be taken into consideration, the trial Court appreciated the evidence on record carefully and ultimately came to the conclusion that the property in fact had fallen to the share of the 1st defendant and inasmuch as the 1st defendant had not chosen to contest the matter and after recording appropriate findings on appreciation of the evidence available on record, decreed the suit and hence this is not a fit matter to be interfered with. 4. Heard the Counsel on record, perused the respective pleadings of the parties, the issues and the additional issue settled by the trial Court, the evidence available on record, the findings recorded by the trial Court, and also the specific grounds raised in the present appeal. Pleadings of parties:- 5. The 1st respondent herein as plaintiff filed the suit O.S.No.6/78 on the file of the II-Additional Subordinate Judge, Warangal, pleading as hereunder:- “The defendants 1 and 2 are brothers and they are divided in status. The house property bearing Gram Panchayat door No.4-3-79 (old), 4-3-49 (new) situated at Mahabubabad and more specifically described in the enclosed schedule, originally formed part of their joint family properties of said defendants 1 and 2 on partition fell to the share of the 1st defendant. The defendant No.2 made the plaintiff herein believe that the 1st defendant is exclusive owner and entitled to alienate the schedule mentioned property free from all types of charges and encumbrances and accordingly the offer of 1st defendant to sell the said specified property at Rs.32,031/- was accepted by the plaintiff. On 20-6-77 agreement of sale in respect of said house was thus executed by the 1st defendant in favour of this plaintiff. The plaintiff herein paid Rs.8,131/- as earnest money on the same day i.e., on 20-6-77 and receipt of said amount was acknowledged by the 1st defendant in the agreement executed by him as aforesaid. The main relevant terms and conditions of agreement apart from those narrated herein above are as follows:- a) Balance of sale consideration of Rs.23,900/- is to be paid within one month of 20-6-77 and sale deed got registered; b) The sale deed would be executed by the 1st defendant in the name of any person nominated by the plaintiff; c) That the property agreed to be sold is free from all types of encumbrances and charges. The dues if any payable shall be discharged before presenting the document for registration. In case of any dispute or complication, the same shall be got cleared by the 1st defendant at his expense before completing the sale; d) The plaintiff shall be put in actual possession of the property hereby sold. Even though the amount of balance of sale consideration was payable at the time of execution and presenting the sale deed for registration. At the instance of defendants 1 and 2, the plaintiff paid Rs.3,000/- on 27-6-77 under receipt passed by the 1st defendant and Rs.9,000/- vide cheques No.SB/S 7573091 dt.29-6-77 drawn on State Bank of Hyderabad Branch, Mahabubabad on 29-6-77. That plaintiff has been and always is ready to perform his part of the agreement. After payment of Rs.9,000/- as aforesaid, plaintiff learnt that schedule mentioned property is subject to mortgage in favour of 3rd defendant in an amount of Rupees One Lakh Twenty thousand and above that steps for redeeming the same have not been taken. On 30-7-77 plaintiff’s brother Ramshwarlal Sharma along with Sri Vanam Laxminarayana, Advocate, and Sri K.Subash met defendants 1 and 2 herein and enquired as to the truth in the information about the schedule mentioned property bearing subject to mortgage in favour of 3rd defendant’s branch Mahabubabad as also the reason for not informing the same to the plaintiff earlier. The defendants 1 and 2 admitted the fact that the house is mortgaged in favour of 3rd defendant and assured that they6 would go over to Mahabubabad on 5-6-77 and take steps for redeeming the schedule specified property from the liability in favour of 3rd defendant. On 5th day of June, defendants did not go over to Mahabubabad as promised nor initiated any step for redeeming the property from the said liability. That plaintiff in the evening of 5th talked with 2nd defendant on phone, who promised to go over to Mahabubabad by morning of 7th July, 1977 but that promise was also broken. In the said circumstances, plaintiff got issued a notice addressed to 1st and 2nd defendants which was served on 11-7-77 and as there was no response to the said notice and as plaintiff was ready to perform his part of the agreement, he telegraphically informed the defendants 1 and 2 about his readiness and requiring them to go over to Mahabubabad with no encumbrance certificate on the schedule specified property as also mortgage debt, income tax clearance certificate from 3rd defendant regarding schedule mentioned property for carrying through the transaction. The defendants 1 and 2 through the office of Sri A.Purushotham Rao and A.Prabhakar Rao, Advocates, Khammam got issued a reply dt.26-7-77 received by the plaintiff on or about 30th day of July, 1977 enclosing a Photostat copy of certificate encumbrance on the property which disclose that the 1st defendant is the owner thereof and property is not subject to any encumbrances alleging further that the property has not been hypothecated with Andhra Bank, Mahabubabad and hence question of getting clearance certificate from 3rd defendant or its branch does not arise. The plaintiff thereupon addressed defendant No.3 on 30-7- 77 through Regional Manager, Andhra Bank Ltd., Warangal as also Branch Manager of Mahabubabad Branch, seeking information as to its interest in the property. The notice dt.8- 7-77 addressed on behalf of plaintiff to defendants 1 and 2 referred above and the reply notice got issued as aforesaid on 26-7-77 by the defendants were enclosed. Through letter dt.6-8-77 the Branch Manager, Andhra Bank Ltd., at Mahabubabad, informed that 2nd defendant is one of the loanee and guarantor to secure loan No.3/5 of 1976 for Rs.1-25 lakhs obtained on 20-8-76 by N.Laxma Reddy and others i.e., defendants 4 to 11 hearing being Abkari Contractors of Balpal Group certificate of Encumbrance bearing No.555/76 described 2nd defendant as owner was filed before it. The said 2nd defendant before the 3rd defendant claimed ownership by producing his own affidavit as also Court given by Gram Panchayat Mahabubabad which described the 2nd defendant as owner and tax payer. On receipt of the said letter, the plaintiff communicated the same to defendants 1 and 2 and required them to clear their title over the house for carrying through the transaction. As yet the defendants did not choose to reply the same. The 3rd defendant has informed that defendant No.2 and others are still due to it under the transaction in a sum of Rs.1,50,345-50 as on 27-10-77. The 1st defendant has not cleared the cloud over his title in view of the 2nd defendant dealings with 3rd defendant referred above. The defendant No.1 did not choose to satisfy the plaintiff inspite of repeated requests about the property being free from mortgage that he is entitled to alienate the same as such. It is not out of place to mention that defendant No.1 having obtained major portion of sale consideration is deriving benefit there from and is not keen to carry through the transaction. The plaintiff is thereby put to irreparable loss. The plaintiff on 20-6-77 keeping in view the oncoming “Chatturmasam” and that house warming ceremony cannot be performed for further long time, with the consent of defendant performed ‘Kalas Sthapnana’ ceremony in the house. On 29-6-77 the defendants through K.Sai Reddy, Advocate, Mahabubabad conveyed that the plaintiff can send the draughtsman for nothing actual measurements on 9th or 10th July, 1977. As the defendants 1 and 2 have not taken steps for valid and proper transfer of the title in favour of plaintiff herein, there is no other go but to seek the assistance of the Court. The defendant No.2 if is found as owner of the property, it is stated that he is bound by the agreement dt.20-6-77 entered with the plaintiff with 1st defendant and is liable to transfer whether the interest is entitled in 'A' schedule property. Further if it is found that the suit property is found as subject to equitable mortgage in favour of 3rd defendant in respect of loan 3-5-76 referred to above and obtained by defendants No.4 to 11 along with other properties shown in schedule ‘B’ enclosed hereto and owned by defendants 12 to 18 along with 'A' schedule property, the defendants 12 to 18 are liable to contribute ratably to the debt secured by the mortgage and payable to 3rd defendant. The defendants 12 to 18 therefore are added as parties to avoid multiplicity of proceedings and to ascertain their liability as to contribution in respect of schedule mentioned property. In addition to specific performance of the contract he is entitled to damages. The plaintiff who was not liable to pay balance of Rs.23,900/- until registration of sale deed as made to pay the same as aforesaid on 27-6-77 and 29-6-77 knowing fully well that title in respect of the property cannot be cleared with stipulated period. The plaintiff thus is deprived of the user of money as also the house agreed to be purchased by him. The balance of amount kept ready for payment since was also not available to the plaintiff for investment he thus also suffered heavily. The plaintiff has suffered mental agony for having lost valuable cash from hand and could carry through the transaction. The plaintiff reasonably therefore claims Rs.5,000/- towards damages in addition to the relief of specific performance.” 6. The 1st defendant though had not chosen to contest the suit filed a written statement with the following averments:- “It was pleaded that the contents of para 2 are correct and admitted. The defendant has only agreed to sell the upstairs which has come to his share but not the entire house as alleged. This defendant is in receipt of a sum of Rs.3,000/- on 27-6-77 and also in receipt of further amount of Rs.9,000/- through cheque on 29-6-77. It is incorrect to allege that the plaintiff is ready of perform his part of the agreement but on account of the mortgage of the schedule mentioned property the same could not be completed. It is false to allege that on 30-6-77 the plaintiff’s brother along with one V.Lakshminarayana, Advocate and Suresh, met defendants 1 and 2 and enquired about the scalled mortgage and that they have admitted the so-called mortgage and that they agreed to redeem the same. In fact, this defendant never mortgaged the schedule property in favour of the 3rd defendant. The defendant does not know the truth or otherwise about the telephone call by the plaintiff which defendant No.2. The defendant admits the receipt of the notice on 11-7-79. After the receipt of the said notice, the defendant on account of ill-health could not immediately attend to that and in the meanwhile he received a telegram from the plaintiff and on 26-7-77 he along with defendant No.2, has replied through Advocate that the property was not hypothecated to defendant No.3 and also sent a copy of the non-encumbrance certificate and also requested the plaintiff to get the property registered immediately by paying the remaining amount, the failure of which would result in the cancellation of the agreement of sale and also make the plaintiff liable for damages. The defendant does not know the truth of otherwise of the correspondence between the plaintiff and the 3rd defendant. As already stated through the reply notice dt.26- 7-77 the defendant has made it very clear that the property agreed to be sold was free from all encumbrances. It is absolutely false and incorrect to allege that this defendant is not keen to carry through the transaction and that the plaintiff is put to irreparable loss. He denied that so far as they are concerned with the house warming ceremony and also about the information given through Sri K.Sai Reddy, Advocate, to send a draughtsman for nothing actual measurements. The defendant having got the property in partition with defendant No.2 is the absolute owner of the same and he is entitled to alienate the same and the defendant No.2 has nothing to do with the same suffice to say that this defendant has nothing to do with the rest of the contents. The plaintiff is not entitled to claim any damages that as stated above due to unnecessary doubts and fears the plaintiff delayed the conclusion of the transaction and withheld the payment of the balance consideration amount and thereby caused irreparable loss to the defendant. The plaintiff even now did not deposit the balance consideration amount in Court. The plaintiff was never ready to perform his part of the agreement. Since the plaintiff has filed the suit unnecessarily against the defendant, he is entitled for exemplary costs.” 7. The 2nd defendant remained ex parte. 8. The 3rd defendant filed written statement with the following averments:- “The 2nd defendant obtained ownership certificate from the Gram Panchayat, Mahabubabad and sworn an affidavit before the Munsif Magistrate, Mahabubabad to the effect that he is the owner of the suit house and he lost the title deeds relating to the suit house and created equitable mortgage over the suit house as a security for the due repayment of the loan advances to Sri Nookala Laxma Reddy and others by this defendant in the year 1976. The sale transaction over the suit house entered into by the plaintiff and the 1st defendant is after the creation of equitable mortgage by the second defendant. The plaintiff should have taken all precautions and collected information with regard to the ownership of the property and encumbrances thereon before entering into an agreement of sale with defendant No.1. When the Gram Panchayat records clearly show the 2nd defendant is the owner of the suit schedule property, the plaintiff cannot, in the ordinary course of business enter into an agreement of sale with the first defendant. The care and caution that is required in such transaction does not appear to have been taken by the plaintiff in entering into the sale transaction. The plaintiff inspite of not being obliged to pay the amounts of Rs.3,000/- and Rs.9,000/- under the sale agreement has paid these amounts allegedly at the instance of defendants 1 and 2. When the 2nd defendant created equitable mortgage over the suit property in favour of the defendant, he cannot make the plaintiff believe that the 1st defendant is the owner and he can pay Rs.3,000/- on 27-6-77 and Rs.9,000/- on 29-6- 77. When the sale agreement stipulates that the balance consideration should be paid on the day of registration. Other facts mentioned in plaint are not within the knowledge of the defendant except the fact that the plaintiff enquired from the defendant’s branch at Mahabubabad about the creation of mortgage of the suit house by the 2nd defendant. The defendant has informed the plaintiff that the suit house was mortgaged by the 2nd defendant as a security for the due repayment of loans advanced to M/s.Nookala Laxma Reddy and others. The allegations made in plaint are against the first defendant and hence no reply is required by the defendant. The defendant No.2 is not liable to transfer the suit schedule property in favour of the plaintiff without redeeming the property from the liability. The contention of the plaintiff that other defendants can contribute rateably to the debt is untenable and each guarantor is individually and collectively are responsible for the entire amount due. The plaint needs no reply by this defendant as it relates to the claim of Rs.5,000/- as damages, claimed against the first defendant. The cause of action said to have arises under the sale agreement and payments made to the first defendant under the said sale agreement. There is no cause of action to file the suit against this defendant. The plaintiff entered into sale agreement with the first defendant without showing due diligence, care and caution required by a prudent man in such transactions. It was clear from records of the Gram Panchayat, Mahabubabad, that the first defendant was not the owner. Further it is clear that the suit schedule ‘A’ property was subject to mortgage to this defendant bank and unless the outstandings in the account of M/s.N.Laxma Reddy and others are not liquidates, the suit schedule ‘A’ property cannot be redeemed from the liability. The 3rd defendant bank filed a suit in O.S.No.39/78 against the 2nd defendant along with others for recovery of Rs.1,60,965-66 which is pending. The memorandum of deposit of title deeds executed by the 2nd defendant for the creation of equitable mortgage for suit schedule ‘A’ property and the ownership certificate and the affidavit given by the 3rd defendant are filed in O.S.No.39/78. The plaintiff cannot claim specific performance against defendants 1 and 2 unless the suit schedule ‘A’ property is redeemed from the liability. No specific performance is claimed against this defendant. The suit is filed deliberately, knowing fully well, that the suit property is mortgaged to this defendant bank and this defendant bank is made a party to the suit unnecessarily.” 9. Defendants 4 to 18 remained ex parte. 10. During the pendency of the suit, D.2 died and defendants 19 to 21, the legal heirs of D.2, filed written statement with the following averments:- “The contents of the plaint are incorrect and not maintainable at law. It is true that defendants 1 and 2 are brothers and it is also true that they have divided in status. It is also true that the house bearing Gram Panchayat No.4- 3-79 (old) 4-3-49 (new) situated at Mahabubabad originally formed part of joint family. But it is incorrect to state that it fell to the share of the 1st defendant herein. On the other hand that property fell to the share of defendant No.2 in partition. The defendant No.1 did not have any share in the suit property because the suit property fell to the share of defendant No.2. It is incorrect to state that these defendants’ father made to believe that the 1st defendant is the exclusive owner of the property and he is entitled to alienate the schedule mentioned properties free from all charges, encumbrances. It is also incorrect to state that the these defendants’ father also consented for selling of the property by the 1st defendant. The agreement of sale said to have been executed by the first defendant to sell the schedule property for Rs.32,031/- is a concocted story. The said agreement of sale executed by the 1st defendant is not binding on the father of these defendants as the first defendant is not entitled to sell the property. The first defendant has no right to enter into an agreement of sale in respect of the suit property, as he is not the owner, as the suit property fell to the 2nd defendant if at all any agreement with the plaintiff by the 1st defendant, they are void not binding on the 2nd defendant. The so-called terms of the agreement of sale also incorrect and they are denied. The payments as alleged is denied by the 2nd defendant and if any payment made in respect of the suit property which exclusively belongs to the 2nd defendant is not binding on these defendants nor on the father of these defendants. The question of ready to perform his part of the contract with the first defendant does not arise because the suit property does not belong to the 1st defendant. It is incorrect to state that the house has been mortgaged in favour of the 3rd defendant. The alleged redeeming of the mortgage is also a myth. The 2nd defendant did not receive any notice as alleged by the plaintiff or the notice dt.11-7-77. It is incorrect to state that no response was given to the notice. When the defendants father has not received any notice there is no question of replying notice arises. As far as these defendants knowledge goes and through their mother they denied that any notice was got issued through Sri Purushotham Rao and Prabhakar Rao jointly to the plaintiff on or about 30-7-77. To the knowledge of these defendants the father of these defendants did not go to the Advocate nor instructed. These defendants deny to have given any instructions to the said Prabhakar Rao and Purushotham Rao to give any notice