THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.951 of 1993 15th April, 2010 Between :- Kothapalli Raja Babu and others .. Appellants And Mundru Appa Rao (died) And others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.951 of 1993 JUDGMENT:- The plaintiff in O.S.No.124/83 on the file of the Subordinate Judge, Rajahmundry, East Godavari District, being aggrieved of the allowing of the counter claim, had preferred the present appeal. The said plaintiff having died, appellants 2 and 3 were brought on record as legal representatives of the deceased sole appellant as per order dt.25.11.2008. 2. The plaintiff filed the said suit O.S.No.124/83 for the relief of specific performance of the agreement of sale dt.28-9-79. D.3 and D.4 also made a counter claim. The learned Judge after recording the evidence of P.W.1, P.W.2, P.W.3, D.W.1 and D.W.2 and after marking Ex.A.1 to Ex.A.10 and Ex.B.1 and Ex.B.2 and Ex.X.1 to Ex.X.4, came to the conclusion that the appellant-plaintiff is entitled to the relief of specific performance and further held that defendants 3 and 4 are entitled to the counter claim and accordingly granted a Decree as against the plaintiff directing the plaintiff to pay Rs.22,675/- to the 3rd defendant and to continue to pay at the rate of Rs.750/- per month along with interest at 6% per annum thereon from 9-11-1983 till 13-11- 1989 and the 3rd defendant was directed to pay Court Fee on the total value of the amount for the period from 9-11-83 to 13-11-89 within one month from today (11-12-1992) and in default that portion of the decree shall stand set aside. The Court Fee to be paid by the 3rd defendant for the subsequent period shall also be included in the costs of the counter claim. 3. Sri Ch.Dhanumjaya, the learned Counsel representing the appellants had taken this Court through the respective pleadings of the parties, the evidence available on record and the findings recorded in relation thereto and in particular had drawn the attention of this Court to the findings recorded by the learned Judge at paras 16, 17, 18, 19, 20 and 21 and would maintain that the learned Judge had not appreciated Ex.B.1 in proper perspective since the alleged agreement dt.10-5-1981 – Ex.B.1 is not true, valid and binding and the same is inoperative and unenforceable. The Counsel also would maintain that Ex.B.1 is not at all valid under law as there was misrepresentation of facts on the part of the 3rd defendant at the time of execution of the alleged agreement dt.10-5-81. The learned Counsel also would point out that Ex.B.1 agreement was entered into towards the maintenance to respondent – defendant No.3 as he was not able to alienate the properties for want of original title deeds. The Counsel also would further point out that the learned Judge should have seen that the appellant-plaintiff had taken steps before the Bank authorities for transfer of loan in his name. The learned Counsel while further making submissions pointed out that the learned Judge ought to have seen that the documents that were pledged with the Bank were not at all necessary for making any alienation whatsoever and that the reasons recorded by the learned Judge also being unsustainable, the appeal to be allowed. The recitals of Ex.B.1 also had been pointed out in this regard. 4. Per contra, Sri Suresh, the learned Counsel representing the contesting respondents – defendants 3 and 4 would contend that it is not as though the evidence available on record had not been properly appreciated by the learned Judge. The learned Counsel specifically pointed out that there was absolutely no misrepresentation on the part of the 3rd defendant while entering into Ex.B.1 agreement and hence as per the agreement the plaintiff is liable to pay an amount of Rs.750/- per month from 1-5-81 onwards till 13-11-89, the date on which the Bank loan was entirely discharged by the plaintiff. The learned Counsel also had pointed out to the finding which had been recorded by the learned Judge that Ex.B.1 agreement was not entered into either for the sake of maintenance to the 3rd defendant or for the sake of compensation as the 3rd defendant could not alienate his properties for want of original title deeds. Hence, in the light of the findings recorded by the learned Judge, this is not a fit case to be interfered with. 5. Heard the Counsel, perused the oral and documentary evidence available on record and the findings recorded by the learned Judge as well. 6. In the light of the submissions made by the Counsel on record, the following points arise for consideration in this appeal:- 1) Whether the findings recorded by the learned Subordinate Judge, Rajahmundry, while granting the reliefs prayed for under the counter claim by D.3 and D.4 to be confirmed or to be set aside in the facts and circumstances of the case? 2) If so, to what relief the parties would be entitled to? 7. Before taking up the further discussion on the points which arise for determination this appeal, it may be appropriate to have a glance at the respective pleadings of the parties, the Issues settled, the evidence available on record and also the findings recorded by the trial Court in brief. Respective pleadings of the parties:- 8. It is needless to say that the suit is filed for the relief of specific performance of agreement of sale dt.28-9-1979 and it is also not in controversy that the principal relief of specific performance had been granted in favour of the plaintiff. It was pleaded that the plaintiff is the holder of 50% shares in Sri Venkateswara Rice and Flour Mills situated in West Gonagudem. The defendants 1 and 3 are the holders of 5% shares each and the 4th defendant is the owner of the remaining 40% shares in the said mill. The 2nd defendant is the son of the 1st defendant. The defendants 5 to 8 are the children of the defendants 3 and 4. They were impleaded as proforma parties for the agreement as they constitute members of the joint Hindu Family. The defendants executed the suit agreement for sale to convey their half share in the plaint schedule mill for Rs.16,000/- as they felt it difficult to raise funds to discharge the loan of Rs.92,000/- contracted from the State Bank of India. An amount of Rs.5,000/- was paid on the date of the agreement. The plaintiff paid Rs.5,000/- on 28-10-1989. The balance sale consideration was agreed to be paid by the plaintiff on or before 1-5-1980. The loan of the State Bank should be discharged by the plaintiff after the loan is transferred in the name of the plaintiff and should release the documents belonging to the defendants 3 and 4 which was pledged with the Bank as security for the loan. The mill along with the fitting and structures was delivered to the plaintiff on the date of the agreement. The plaintiff has become the sole proprietor of the mill and owner of the mill and has been running the same. The plaintiff paid Rs.4,000/- on 2-6-1980 and Rs.1,400/- on 14-6-1980. With regard to the balance of sale consideration, the plaintiff permitted the third defendant to withdraw Rs.750/- lying the deposit with the Tahsildar, Rajamundry in RMIR case and Rs.1400/- from postal savings account and appropriate the plaintiff’s share towards the balance of the sale consideration. Thus the entire sale consideration was paid. The sale deed could not be registered as the plaintiff was corresponding with the State Bank to transfer the loan in his favour. The State Bank informed that the Regional Manager, Visakhapatnam gave approval for the transfer of the term loan. The plaintiff has performed his part of the contract. The defendants 1, 3 and 4 got issued notice dt.14-1-1982 falsely contending that they are entitled to rescind the contract as the plaintiff has not redeemed their title deeds from the State Bank causing inconvenience and loss to them. The plaintiff got issued reply. There are no laches on the part of the plaintiff. The said defendants gave a belated rejoinder. The defendant evaded execution of the conveyance deed. 9. Defendants 1, 3 and 4 filed written statement along with counter claim, which was adopted by the defendants 2, 5, 6 and 8, wherein it was pleaded that these defendants along with the defendants 2 and 5 to 8 entered into an agreement for sale dt.28-9-79 in favour of the plaintiff agreeing to sell their half share in the suit rice mill for Rs.16,000/- subject to the plaintiff discharging the entire debt to the State Bank of India, Rajahmundry to the extent of Rs.92,000/- for which the properties of the defendants 3 and 4 were given as security. The plaintiff undertook to discharge the sale debt and get the title deeds of the defendants released from the Bank and get the loan transferred in his name and release the hypothecation of the properties of the defendants 3 and 4. After satisfying all those conditions only the defendants have to execute the sale deed. The suit transaction is not only for Rs.16,000/- but is for Rs.1,08,000/- and that therefore the plaintiff has to be directed to pay the correct Court fee. The defendants agreed that the plaintiff shall discharge the Bank debt within six months. Inspite of demands, the plaintiff did not make any attempts to discharge the debt or substitute his properties as security and get release of the documents of title of the defendants 3 and 4 from the Bank. When these defendants demanded the plaintiff agreed on 10-5- 1981 that he will pay Rs.750/- per month towards damages to the defendant from 1-5-1981 till the documents of the defendants 3 and 4 are released from the Bank as he failed to fulfill the obligation of obtaining transfer of the loan in his name. He also undertook to pay interest at the rate of Rs.2-50% per month on the damages in case of default. The plaintiff executed the agreement dt.1-5-1981 embodying those terms. That agreement shows that the plaintiff committed breach of contract in paying the amount to the State Bank of India. The plaintiff is liable to pay damages for breach of contract at the rate of Rs.750/- per month from 1-5-1981 onwards till the loan of the State Bank of India is completely discharged and the documents of the defendants 3 and 4 are released. Instead of paying the said amount, the plaintiff has mischievously filed the suit for specific performance without even paying the entire sale consideration of Rs.16,000/-. The plaintiff paid only a total sum of Rs.14,000/- out of the sale consideration and failed to pay the balance sum of Rs.2,000/-. The plaintiff did not pay Rs.1400/- on 14-6-1980 towards part of the consideration. It is learnt that the plaintiff paid Rs.1400/- to the 5th defendant and obtained receipt from him in respect of some other loan transaction between them. The said payment has nothing to do with the suit agreement. It is false that the plaintiff was permitted by the third defendant to withdraw Rs.750/- lying in deposit with the Tahsildar in RMIR case and Rs.1400/- in the Postal Savings Account. The amount lying in the postal savings account was only Rs.1,000/- which was deposited by the 3rd defendant exclusively. It has no concern with the suit agreement. The plaintiff should be directed to deposit Rs.2,000/- before he seeks for the relief of specific performance. Till today the plaintiff did not discharge the loan of the State Bank of India and did not get the loan transferred in his name. The documents of the defendants 3 and 4 are not released from the Bank. The plaintiff is snot entitled to the relief of specific performance and is liable to pay damages to the plaintiff. The defendants 3 and 4 sold away Ac.5-60 cents of land in Tirumalayapalem which was given as security to the State Bank, on the assurance given by the defendants 3 and 4 to make good any loss. The plaintiff did not come to Court with clean hands. 10. A rejoinder was filed by the plaintiff with the following averments:- “The Court fee paid is correct. There is no liability for the plaintiff to pay the defendants at the rate of Rs.750/- per month from 1-5-1981 onwards and to pay interest at 2.5% p.m. The defendant misrepresented the plaintiff that due to delay in approving the approval of debts due to State Bank of India, they are unable to sustain themselves and are unable to alienate otherwise deal with their properties of Ac.5-60 cents and 2,400 sq.yds., site which was hypothecated to the Bank. They requested the plaintiff to advance Rs.750/- per month for sustenance with an undertaking that they will repay the same after their property is released. The plaintiff implicity believing their representation paid Rs.3,200/- in three instalments in June, 1981 in the first week of August, 1981 and the last week of August, 1981 through Peddiredla Apparao. The plaintiff came to know subsequently that the defendant sold Ac.5-60 cents of land. The site of 2400 sq.yds., was attached by a Creditor. The plaintiff discontinued the payment thereafter as the defendants alienated their property inspite of the security to the Bank. As there was sufficient security of 22 acres of land belonging to the plaintiff, there is no impediment for the defendants’ property. There is no liability of obligation on the plaintiff to pay at the rate of Rs.750/- per month. The alleged agreement dt.10-5-1981 is not true and correct and is invalid, inoperative and unenforceable in law. 11. In the light of the pleadings, the under-noted Issues had been settled by the trial Court:- 1) Whether the plaintiff is entitled to seek specific performance of the agreement of sale dt.20-9-1979? 2) Whether the agreement dt.10-5-1981 is true, valid and binding on the plaintiff? 3) Whether the plaintiff is liable to pay Rs.750/- per month from 1-5-1981 onwards as pleaded by defendants 1, 3 and 4? 4) Whether defendants 1, 3 and 4 are entitled to claim 30% interest on the amount if any due to them? 5) Whether the payment of Rs.3200/- paid by the plaintiff is true, valid and binding on defendants 1, 3 and 4? 6) Whether any balance of sale consideration is due to the defendants from the plaintiff? 7) Whether there are any latches on the part of the plaintiff in not discharging the debt due to State Bank of India? 8) Whether the defendants are entitled to any amount under the counter claim pleaded by them? 9) Whether the Court fee paid by the defendants is sot correct? 10) To what relief? 12. On behalf of the parties, the under-noted oral evidence had been let in and the under-noted documents had been marked:- Witnesses examined on behalf of the plaintiff:- P.W.1 :- Kothapalli Rajababu P.W.2 :- Pediredla Apparao P.W.3 :- Y.Narasimha Murthy Witnesses examined on behalf of the defendants:- D.W.1 :- B.Lakshminarayana D.W.2 :- D.Apparao Documents marked on behalf of the plaintiff:- Ex.A.1/28-9-79 :- Sale agreement executed in favour of plaintiff for Rs.16,000/- by Mundru Aparao and 7 others. Ex.A.2/28-10-79:- Endorsement of payment for Rs.5,000/- on the back of Ex.A.1. Ex.A.3/2-6-80 :- Endorsement of payment for Rs.4,000/- on the back of Ex.A.1. Ex.A.4/14-6-80 :- Receipt for Rs.1400/- issued by B.Nageswararao in favour of K.Rajababu. Ex.A.5/14-1-82 :- Regd.Notice got issued by defendants to plaintiff. Ex.A.6/8-2-82 :- Reply given by plaintiff to defendant. Ex.A.7/11-10-82 :- Regd.Notice got issued by defendants to plaintiff. Ex.A.8/2-6-79 :- Regd. Extract of sale deed executed by B.D.Narayana to M.Narasimhamurthy. Ex.A.9/17-4-85 :- Regd.extract of sale deed. Ex.A.10/17-4-85 :- Regd.extract of sale deed. Documents marked on behalf of defendants:- Ex.B.1/10-5-81 :- Agreement of Khararunama executed by plaintiff in favour of 3rd defendant Ex.X.1/16-4-79 :- Sale agreement. Ex.X.2/12-12-60 :- Sale deed executed by Guramma in favour of Lakshminarayana Ex.X.3/20-11-70 :- Sale deed executed by Veerraju and others in favour of Veerabadram. Ex.X.4/22-3-61 :- Sale deed executed by Lakshmipathi and others in favour of Lakshminarayana and others. 13. Findings recorded by the trial Court in brief:- The trial Court recorded reasons in detail in relation to the oral and documentary evidence available on record – the evidence of P.W.1, P.W.2, P.W.3, D.W.1 and D.W.2 and also Ex.A.1 to Ex.A.10, Ex.B.1 and Ex.X.1 to Ex.X.4, and ultimately came to the conclusion that the plaintiff is entitled to the relief of specific performance in pursuance of Ex.A.1 agreement dt.28-9-79 and further came to the conclusion that the counter claim also to be decreed directing the plaintiff to pay Rs.22,675/- with costs and subsequent interest at 6% per annum thereon to the 3rd defendant and shall continue to pay at the rate of Rs.750/- per month along with interest at 6% per annum thereon from 9-11-983 onwards till 13-11-1989 and no doubt certain further directions also had been given. 14. Point No.1:- The respective pleadings of the parties, the evidence available on record, the Issues settled, the findings recorded by the trial Court in brief already had been referred to above. The trial Court answered issues 2, 5 and 8 at paras 16, 17, 18, 19, 20 and 21 and ultimately came to the conclusion that while answering issue No.2, Ex.B.1 agreement dt.10-5-81 is true, valid and binding on the plaintiff and on issue No.3, the plaintiff is liable to pay at the rate of Rs.750/- per month from 1-5-81 onwards up to 13-11-1989 to the 3rd defendant and on issue No.4, the defendants 1, 3 and 4 are not entitled to claim interest at 30% per annum on the amount due from the plaintiff and on issue No.8, the 3rd defendant is entitled to the amount covered by the counter claim and also at the rate of Rs.750/- per month subsequently up to 13-11-1989. 15. The contents of Ex.B.1 already had been referred to above. Ex.B.1 agreement dt.10-5-1981 was executed by plaintiff in favour of 3rd defendant – D.W.1 agreeing to pay Rs.750/- per month from 1-5- 1981 onwards towards compensation until the plaintiff transferred the Bank loan in his favour and got release of title deeds in favour of defendants 3 and 4. The contents of Ex.B.1 and the evidence of D.W.2 had been discussed in elaboration by the trial Court. D.W.2 filed Ex.X.2 to Ex.X.4, the title deeds, which were kept by the parties in the Bank as security for the loan. He deposed that as nobody turned up to receive the said documents, they remained in the Bank. There is no controversy that the Bank did not agree for transfer of the loan of the suit mill into the individual name of the plaintiff and did not agree to release the title deeds of the defendants 3 and 4 which were deposited with the Bank as security for the loan. It is also not in controversy that on 13-11-1989 only when the Bank loan was completely discharged, the title deeds kept as security for the loan became liable to be returned to the parties. Basing upon Ex.B.1 agreement, the defendants 1, 3 and 4 made counter claim along with their written statement. P.W.1 no doubt deposed that the Bank even though promised to transfer the loan account in his name completely, it was not carried out and that subsequently the third defendant raised dispute before the mediators saying that he was not able to maintain himself because of the documents of title being held up in the bank and thus claimed Rs.750/- per month and hence he agreed for the same and executed a document to that effect and that he paid a total sum of Rs.3,200/- to the 3rd defendant in instalments through P.W.2 and he stopped payment thereafter because the properties given as security were sold by defendants 3 and 4 by that time. This witness also deposed that as per the original understanding he has to pay Rs.750/- per month until the title deeds of defendants 3 and 4 were released from the Bank and that coming to know about the sale of those properties by defendants 3 and 4, he raised dispute before the mediators and therefore he is not liable to pay Rs.750/- per month as per the counter claim. 16. It is not in serious controversy that though some mediation had been pleaded, the fact remains that Ex.B.1 – agreement was not put an end to by way of cancellation or otherwise at any point of time. Defendants 1, 3 and 4 got issued Ex.A.5 – notice to the plaintiff complaining violation of the terms of Ex.A.1 agreement and also complaining about non-compliance of Ex.B.1 – agreement. Ex.A.6 is the reply notice. Defendants 1, 3 and 4 got issued Ex.A.7 – rejoinder. D.W.1 deposed that he had to sell his site of 2400 sq.yds. at Kakinada for a lesser value than the market value because he was not having the original title deeds. P.W.3 is the purchaser of the land belonging to the 4th defendant. Ex.X.1 is the agreement dt.16-4-1979 under which defendants 3 and 4 agreed to sell Ac.5-50 cents of land. Though Ex.X.1 - agreement was in favour of P.W.3’s wife, the sale deed in pursuance of Ex.X.1 was executed in the name of P.W.3 and his wife. Ex.A.8 is the registration extract of the sale deed dt.2-6-79 under which a total extent of Ac.5-63 cents was sold to P.W.3 and his wife by defendants 3 and 4. Ex.X.1, Ex.X.2, Ex.X.3, Ex.X.4 and Ex.A.1 to Ex.A.10 also had been discussed in elaboration. The evidence of P.W.2, one of the mediators, who finalized the agreement – Ex.B.1 also had been considered. P.W.2 deposed that in pursuance of Ex.B.1 – agreement, P.W.1 paid Rs.1200/- on the same day and P.W.1 also paid Rs.1,000/- subsequently to the 3rd defendant. No doubt, this witness deposed that there are no receipts for payments of the said amounts. 17. This Court had carefully gone through the relevant portions of the evidence of P.W.1, P.W.2, P.W.3, D.W.1 and D.W.2 and also Ex.A.1 to Ex.A.19, Ex.B.1 and Ex.X.1 to Ex.X.4 and also the findings recorded by the learned Judge at paras 16, 17, 18, 19, 20, 21 and 22 as well. No doubt, certain submissions were made that even otherwise the counter claim could have been allowed from 1-5-1981 to 8-11-83 and not beyond thereto but the learned Judge recorded reasons why the said amount is payable up to 13-11-1989. No doubt, certain further directions also had been given. In the light of the facts and circumstances though this Court is not inclined to disturb the other findings relating to the quantum, on the grounds of equity and good conscience, this Court is inclined to set aside the finding relating to the interest on the said amount. Thus it is made clear that the contesting respondents are entitled to the quantum granted under the counter claim but however the granting of costs and interest, these portions are modified as specified infra. 18. Point No.2:- In the result, the appeal is partly allowed setting aside the awarding of costs and interest at 6% per annum. In all other respects, the findings recorded by the learned Judge granting the reliefs under the counter claim are hereby confirmed. Accordingly, the Decree under the counter claim is modified to the said extent indicated above. In the present appeal, the parties to bear their own costs. ______________________ Justice P.S.Narayana 15th April, 2010 smr