1 FA.797.08.doc ndm IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE JURISDICTION FIRST APPEAL NO. 797 OF 2008 Mahadeo Namdeo Deokate and others. ... Appellants Versus Sayabu @ Sahebal Usman Mulani and others. ... Respondents ----- Mr. A.A.Kumbhakoni a/w Mr.A.P.Kulkarni for the Appellants. Mr.V.B.Tapkir for the Respondent No.1. Mr. A.V.Anturkar i/b Mr.S.B.Deshmukh for the Respondent Nos.2 to 4. ----- CORAM : A.S.OKA, J. DATE ON WHICH SUBMISSIONS ARE HEARD : 30 th September, 2011. DATE ON WHICH JUDGMENT IS PRONOUNCED : 2 nd December, 2011. JUDGMENT: 1 By the order dated 25 th August, 2008, the Apex Court expedited the hearing of this appeal. After the hearing was concluded, written submissions were filed by the Respondents. The Appellants have filed written submissions on 11 th October, 2011. 2 FA.797.08.doc 2 This is an appeal preferred by the original Plaintiffs. The suit property has been described in paragraph No.1 of the plaint. The suit property is ½ portion on the eastern side in land bearing Gat No. 689, admeasuring 9 Hectares and 11 Ares situated at village Nhavi, Taluka Indapur, District Pune. Out of the said land, an area of 2.02 Hectares is Pot Kharaba. Thus, the area of the suit property is 4-55.5 Hectares, which includes Pot Kharaba 1.01 Hectares. The Respondent No.1 is the original owner of the suit property. It is alleged that on 21 st February, 2005, a meeting was held in the evening in the house of the Respondent No.1 wherein the Appellants, the Respondent No.1, family members of the Respondent No.1 and others were present. In the said meeting, the terms of the sale of the suit property were finalized. The price was agreed to be Rs.9,11,000/-. On 22 nd February, 2005, a receipt of earnest amount was executed by the Respondent No.1 against the Appellants paying the earnest amount of Rs.25,000/-. It is alleged that the Appellants were put in possession of the suit property on the same day. The said document provided that 3 FA.797.08.doc the agreement for sale shall be executed on 22 nd March, 2005 against the payment of a sum of Rs.4,43,000/- and the sale was completed on the payment of the balance amount of Rs.4,43,000/-. 3 The Respondent No.4 is the cousin of the Appellants. It is alleged that there is a rivalry between the Appellants and the Respondent No.4. It is alleged that the Respondent No.4 misled the Respondent No.1 and stated that the Respondent No.1 should not execute the agreement for sale on 22 nd March, 2005. On 4 th March, 2005, the Appellants issued a legal notice through their Advocate to the Respondent No.1. It is alleged that on 4 th March, 2005, a public notice based on the sale transaction was issued by the Advocate for the Appellants, which was published in the city and rural editions of the Daily Sakal on 8 th March, 2005. By the notice dated 4 th March, 2005, the Appellants called upon the Respondent No.1 to remain present in the office of the Sub-Registrar on 11 th March, 2005 for the purposes of execution of the agreement for sale. The Appellants offered to pay a sum of Rs.4,43,000/-. The notice sent to the Respondent No.1 by the 4 FA.797.08.doc registered post was not accepted by him and notice sent under posting certificate was served to him. It is alleged that though the Appellant No.1 was present in the office of the Sub-Registrar with the amount, the Respondent No.1 did not remain present. Even on 22 nd March, 2005 which was the date fixed for execution of the agreement for sale, the Appellant No.1 remained present in the office of the Sub-Registrar with a sum of Rs.4,43,000/- but the Respondent No.1 failed to attend. On inquiry being made by the Appellants in the office of the Sub- Registrar at Indapur, the Appellants learnt that on 5 th March, 2005, a sale-deed was executed by the Respondent No.1 in favour of Respondent Nos.2 and 3 in respect of the area of 3 Hectares and 55 Ares out of the same larger property for consideration of Rs. 2,50,000/- . It was contended that the transaction was effected at the rate of only Rs.28,000/- per Acre which was much less than the price agreed to be paid by the Appellants in the suit agreement. It is contended that the collusive sale-deed was executed with the knowledge of the agreement in favour of the Appellants with a view to 5 FA.797.08.doc defeat the rights of the Appellants. Therefore, a suit for specific performance was filed by the Appellants on 29 th March, 2005. 4 The suit was contested by the Respondent No.1 by filing a written statement. It was contended that the father of the Appellants was carrying on money lending business. When the Respondent No.1 met the father of the Appellants for borrowing a sum of Rs.25,000/-, on the suggestion made by the father of the Appellants, the Respondent No.1 agreed to execute the receipt and accordingly the receipt dated 22 nd February, 2005 has been executed. It was contended that the Respondent No.1 never agreed to sell the suit property to the Appellants. It was contended that there was a transaction of loan between the father of the Appellants and the Respondent No.1 and as the Respondent No.1 was not getting money from anyone else, he had no option but to sign the document. It was submitted that if the Respondent No.1 had really agreed to sell the suit property to the Appellants, he would not have suffered loss by selling the suit property to Respondent Nos.2 and 3 at a lower price. It is contended that the 6 FA.797.08.doc Appellants are not on good terms with Respondent Nos.2 and 3 and therefore, they have filed a false suit. 5 The Respondent Nos.2 to 4 filed a written statement by contending that on 5 th March, 2005, the possession of the property described in the sale-deed executed by the Respondent No.1 has been already handed over to them. It was contended that the receipt dated 22 nd February, 2005 is bogus. It was contended that the Respondent Nos.2 to 4 are bona fide purchasers for value without notice of the suit transaction. It was contended that the proper Court-fee has not been paid by the Appellants. 6 After the parties adduced evidence, the trial Court held that there was no transaction of agreement for sale between the Appellants and the Respondent No.1 and that the Appellants were never placed in possession. The trial Court held that the Respondent Nos.2 and 3 are the bona fide purchasers for value without notice of the alleged suit agreement. The trial Court declined to grant relief of specific performance and passed a decree of refund of a sum of Rs.25,000/- 7 FA.797.08.doc with interest thereon at the rate of 9% per annum. 7 The learned counsel appearing for the Appellants submitted that the execution of receipt dated 22 nd February, 2005 is not disputed. He submitted that when the Appellants found that the Respondent No.1 is likely to alienate the property, on 4 th March, 2005, an Advocate's notice was sent by the Appellants to the Respondent No.1 calling upon the Respondent No.1 to remain present in the office of the Sub-Registrar at Indapur on 11 th March, 2005 for execution of the agreement for sale. He pointed out that the Appellants offered to pay a sum of Rs.4,43,000/-, but there was no response to the said notice. He submitted that on 5 th March, 2005, only with a view to defeat the claim of the Appellants, the Respondent No.1 executed a sale-deed in respect of a part of the suit property in favour of the Respondent Nos.1 and 2. He submitted that the receipt relied upon by the Appellants shows that all the material terms and conditions of the sale were agreed upon between the parties and the said conditions have been reproduced in the receipt. He, therefore, submitted that the 8 FA.797.08.doc receipt disclosed a concluded contract inasmuch as no further terms and conditions remained to be agreed upon between the parties and in fact, all terms and conditions were agreed and were incorporated in the receipt. He submitted that thus, the agreement reflected from the said document was enforceable in law. He has relied upon various decisions of this Court and the Apex Court in that behalf. He submitted that there was no evidence adduced by the Respondent No. 1 to show that the transaction was a loan transaction between the father of the Appellants and the Respondent No.1. He submitted that within a period of one month from the date of the execution of the said receipt, the Appellants had shown readiness and willingness to pay the amount payable as per the agreement by sending notice dated 5 th March, 2005. He also relied upon a public notice published by the Appellants. He pointed out that there is more than enough evidence on record to show that the Respondent Nos.2 and 3 are not the bona fide purchasers. He pointed out the evidence on record to show that the said Respondents have purchased the suit property with the 9 FA.797.08.doc knowledge of the rights of the Appellants. He submitted that this was a fit case to pass a decree for specific performance. 8 The learned counsel appearing for the Respondent Nos.2 to 4 has made detailed submissions. The learned counsel appearing for the Respondent Nos.2 to 4 submitted that the receipt relied upon by the Appellants is at the most an agreement to enter into an agreement. He submitted that the terms incorporated of the receipt show that if a sum of Rs.4,43,000/- was not paid on or before 22 nd March, 2005, the agreement for sale was not to be executed. He invited attention of the Court to the averments made in the plaint and submitted that the Appellants are not sure as to whether they want a direction against the Respondents to execute an agreement for sale or a sale-deed. He submitted that even going by the version in the plaint, the document of receipt relied upon by the Appellants was not a concluded contract of sale, but it is an agreement enter into an agreement for sale. He placed reliance on the decision of this Court in the case of Makers Development Services Pvt. Ltd Vs. M. 10 FA.797.08.doc Visvesvaraya Industrial Research & Development Centre [2008 (4) ALL MR 1]. He submitted that an agreement to enter into an agreement for sale is not enforceable by law. He invited attention of the Court to the oral evidence of the parties. He submitted that the description of the suit property incorporated in the receipt and the plaint was not sufficient to identify the property allegedly agreed to be sold. He submitted that Respondent Nos.2 and 3 had no knowledge about the said receipt and the transaction between the Appellants and the Respondent No.1 and there is no evidence adduced to show that the said Respondents had any knowledge of the suit transaction at the time of execution of the sale-deed. He submitted that in any event, the concerned Respondents are bona fide purchasers for value without notice of the suit agreement. He, therefore, submitted that the decree for specific performance cannot be passed. The learned counsel appearing for the Respondent No.1 generally adopted the submissions of the learned counsel appearing for Respondent Nos.2 to 4. The learned counsel appearing for the Appellants submitted that it is 11 FA.797.08.doc impossible to believe that the Respondent Nos.2 and 3 had no knowledge about the suit transaction. 9 I have given careful consideration to the submissions. The first question which arises for consideration is whether there was a concluded contract of sale of the suit property. As pointed out earlier, the agreement relied upon by the Appellants is in the form of a receipt of the earnest money. The first part of the receipt records that the Respondent No.1 has agreed to sell to the Appellants half share in the land bearing Gat No.689 totally admeasuring 9 Hectares and 11 Ares out of which an area of 2 Hectares and 02 Ares was Pot Kharaba land. The area of the property agreed to be sold was mentioned as 4 Hectares and 55.5 Ares inclusive of Pot Kharaba of 1 Hectare and 01 Are for the consideration of Rs.9,11,000/-. The receipt records that the payment of the earnest money of Rs.25,000/-. The receipt further records that the Respondent No.1 agreed to execute an agreement for sale on 22 nd March, 2005 on accepting a sum of Rs.4,43,000/- being the 50% of the total balance consideration. It further provides that the 12 FA.797.08.doc balance consideration was payable at the time of completion of the sale. There is a recital that the suit property has been placed in possession of the Appellants. Thus, the document provides that the agreement for sale was to be executed on 22 nd March, 2005 against the payment of a sum of Rs.4,43,000/-. However, there was no specific time prescribed for the execution of the conveyance. As pointed out earlier, the contention in the written statement of the Respondent No.1 is that the father of the Appellants was doing money lending business and for securing loan of Rs.25,000/- advanced by the father of the Appellants, the said receipt was got executed by the father of the Appellants from the Respondent No.1 and thus, there was never an agreement for sale executed by the Respondent No.1. 10 The Appellants examined their father Namdeo who deposed regarding the negotiations taken place between the parties in the second week of February 2005. In the examination-in-chief, he denied that he was carrying on money lending business and that he has advanced a sum of Rs.25,000/- to the Respondent No.1. The 13 FA.797.08.doc father of the Appellants was cross-examined by the Advocate for the Respondent No.1 as well as the Advocate for Respondent Nos.2 to 4. He denied the correctness of the suggestion that he was a money lender and he has advanced a loan of Rs.25,000/- to the Respondent No.1. The Appellants examined one Balu Baburao Jadhav as a witness by filing his affidavit in lieu of examination-in-chief. He deposed regarding the negotiations between the parties for arriving at the sale transaction. He stated that at the time of negotiations, the father of the Appellants was present and the transaction was made at his instance. He stated that ex-Sarpanch of the village, Mr.Rajendra Raskar was the middle man and a sum of Rs.25,000/- was paid to the Respondent No.1 in his presence as well as in the presence of Mr.Raskar. He identified the signatures on the receipt. He stated that the Respondent No.1 signed the receipt in his presence. He stated that the suit land was put in possession of the Appellants. In the cross-examination, he admitted that the alleged transaction was settled in the house of the Respondent No.1. In the cross-examination, 14 FA.797.08.doc he denied that the Respondent Nos.2 to 4 were in possession of the suit property. The Appellants examined the said Mr.Rajendra Raskar as a witness who has also deposed about the execution of the receipt and the fact that the Appellants were placed in possession. In the cross-examination, he denied that the father of the Appellants was a money lender. 11 The Respondent No.1 stepped into witness box. He stated that a land admeasuring 3 Hectares and 55 Ares, out of which 1 Are is Pot Kharaba, was sold by him by registered sale-deed dated 5 th March, 2005 to Respondent Nos.2 and 3 against the payment of consideration of Rs.2,50,000/-. He stated that the Respondent Nos.2 and 3 have been placed in possession of the said property and their names have been mutated in the Revenue Records. He stated that his daughter got married around the year 2004 and for the purposes of marriage of his daughter, he had obtained loan and therefore, he was in need of money for clearing his debts. He stated that the father of the Appellants agreed to advance a sum of Rs.25,000/- subject to 15 FA.797.08.doc condition of the Appellants executing the said receipt. He stated that as he was not getting the money from any other sources, he had no option, but to execute the receipt. In the cross-examination, he admitted that the Respondent Nos.2 to 4 were cousins of the father of the Appellants and they were on inimical terms with the Appellants' father. He admitted that the marriages of his both daughters were performed in the year 2000 and the alleged transaction has taken place in 2005. He admitted that no one has filed any suit against him for recovery of debt. He stated that he was not indebted to any private person. He stated that he did not incur any loan from anybody else. In the further cross-examination, he stated that there was a talk between him and the father of the Appellants before one month of the transaction. He stated that there were two meetings. It will be necessary to make a reference to paragraph No.4 of his cross- examination which reads thus: “4. There was talk in between myself and Namdeo Deokate before one month from the alleged transaction at Nhavi. There were two meetings. It was agreed to deal with alleged transaction at Indapur in between 16 FA.797.08.doc myself and Namdeo and Mahadeo, plaintiff No.1. I had no complaints about alleged transaction. The witness volunteers the alleged transaction means the money lending transaction. I left for Indapur from village Nhavi on the day of alleged transaction. Alleged transaction took place in my presence. My both sons were present. My one of son Nasir had put his signature in English script. He did S.S.C. I can read and writ and used to sign.” (Underline supplied) In paragraph No.6 of the cross-examination, the Respondent No. 1 stated thus: “6. I had received Rs.25,000/- from plaintiffs. I did not have talk with plaintiff No.1 to 4. I had talks with only Namdeo Rama. I do not know sin whose name the document was executed either plaintiff No.1 to 4 or their father Namdeo. I did not instruct my advocate about alleged execution of the document Exh.80 before the sale deed. Before a couple of days, I had informed the defendant No.2 & 4 about alleged transaction. The said fact was scribed in the sale deed (Exh.86) executed by me in favour of defendant No.1 & 3. I cannot assign any reason as to why the said fact does not find place in sale deed Exh. 86. I was well aware about giving 1 H. land to Namdeo. I was well aware about mentioning 1 H. land in alleged agreement Exh.80.” (Underline supplied) In paragraph No.7 of the cross-examination, he admitted that he has not repaid the sum of Rs.25,000/- to the Appellants. 17 FA.797.08.doc 12 At this stage, it must be noted here that in the written statement, the Respondent No.1 stated that he had borrowed amounts for the marriage of his daughter and for repaying the said amount, he had borrowed a sum of Rs.25,000/- from the father of the Appellants. It is his case that as a security for the repayment of the said loan, the said receipt was executed. In the affidavit in lieu of examination-in- chief, the Respondent No.1 stated that his daughter's marriage was solemnized in the year 2004 and he had borrowed a large amount for the purposes of the marriage of his daughter. He stated that for repaying the loan, he borrowed a sum of Rs.25,000/- from the father of the Appellants. In the written statement, the Respondent No.1 did not disclose the year of the marriage of the daughter. In the examination- in-chief, he stated that his daughter got married in the year 2004. However, in paragraph No.3 of his cross-examination, the Respondent No.1 stated thus: “3. It is true that marriages of my two daughters Raziabanu and Saphia alias Lalla were performed on a day in 2000. The alleged transaction has taken place in 18 FA.797.08.doc 2005. Nobody has filed Civil Suit against me for recovery of money. I was not indebted to private person. I did not incur any loan from anybody else. In view of aforesaid evidence of Respondent No.1, his case that he had made borrowings for the purposes of marriages of his daughters will have to be completely disbelieved. His case was that he had borrowed a sum of Rs.25,000/- as loan from the father of the Appellants for discharging debts incurred by him for marriage of his daughters. Therefore, the case of the Respondent No.1 that the said receipt was executed only by way of security for the loan transaction will have to be rejected as the Respondent No.1's cross-examination falsifies his own case. He categorically admitted that he was not indebted to any person. Apart from this, no evidence was adduced to show that the father of the Appellants was carrying on money lending business and that he had advanced a loan of Rs.25,000/- to the Respondent No.1. 13 The Respondent No.1 examined his son Nazir, who also deposed that his father had borrowed a large amount for the purposes 19 FA.797.08.doc of marriage of his sister, which was solemnized in the year 2004 and had has borrowed a sum of Rs.25,000/- from the father of the Appellants for repaying the loan. In view of the admission of Respondent No.1 himself, this portion of the evidence of his son will have to be discarded. Thus, in short, the case of the Respondent No.1 that the transaction was a money lending transaction will have to be discarded. The trial Court has not at all considered the admissions of the Respondent No.1 to the effect that he was not at all indebted. The trial Court has not at all appreciated that it very difficult to believe the case made out by the Respondent No.1 that he had borrowed a sum of Rs.25,000/- from the Appellants' father for clearing the debts which he had incurred for meeting the expenses of the marriage of his daughters. There is categorical admission by the Respondent No.1 that when the receipt was executed, he was not indebted to any private person. It is not his case that he had borrowed money from the bank or any other institution. Perusal of the judgment of the trial Court shows that there is hardly any consideration of the cross-examination 20 FA.797.08.doc of the Respondent No.1 and the evidence of the other witnesses. Thus, the execution of the agreement reflected from the said receipt has been duly proved by the Appellants. 14 Now, the other issues which will arise for consideration is whether the document represents a concluded contract and whether the Respondent No.2 and 3 are the bona fide purchasers. If the finding on the aforesaid two issues is in favour of the Appellants, then the issue regarding readiness and willingness of the Appellants and the issue whether they are entitled to specific performance of the contract will have to be considered. 15 Now, I proceed to decide the question whether the Respondent Nos.2 and 3 are bona fide purchasers for value without notice of the suit transaction. The specific plea of the Respondent Nos.2 and 3 in the written statement is that they were not aware about the suit transaction. The Respondent No.1 in his cross-examination has given a fatal blow to the said contention. In paragraph No.6 of the 21 FA.797.08.doc cross-examination, which is already quoted above, he has stated that he had informed the Respondent Nos.2 and 3 about the alleged transaction. In fact, the case made out by him was that in the sale- deed this fact is noted. It is true that his son deposed that Respondent Nos.2 and 3 had no knowledge of the transaction. However, the