Case: P.S. Ranakrishna Reddy Vs. M.K.Bhagyalakshmi

to sell. As we read the agreement, it contemplates that on or before 15-4-1972 the sale deed would be executed. But what is important is that the agreement itself provides at to what is to happen if either the seller refuses to sell or the purchaser refuses to buy. In that event the agreement provides that in addition to the earnest money of Rs 1000 a sum of Rs 500 was to be given back to Tukaram Devsarkar and that no sale deed will be executed. The agreement is very categorical in envisaging that a sale deed is to be executed only if both the parties agree to do so and in the event of any one of them resiling from the same there was to be no question of the other party being compelled to go ahead with the execution of the sale deed. In the event of the sale deed not being executed, Rs 500 in addition to the return of Rs 1000, was the sum payable. This sum of Rs 500 perhaps represented the amount of quantified damages or, as the defendants would have it, interest payable on Rs. 1000. 7. If the agreement had not stipulated as to what is to happen in the event of the sale not going through, then perhaps the plaintiff could have asked the Court for a decree of specific perforamance but here the parties to the agreement had agreed that even if the seller did not want to execute the sale deed he would only be required to refund the amount of Rs 1000 plus pay Rs 500 in addition thereto. There was thus no obligation on Balwantrao to complete the sale transaction. 36. Apart from the fact that the agreement of sale did not contain a similar clause, Dadarao does not create a binding precedent having not noticed the statutory provisions as also an earlier binding precedent. 17. We may furthermore notice that recently in Jai Narain Parasrampuria (Dead) and Others vs. Pushpa Devi Saraf and Others [(2006) 7 SCC 756] , this Court categorically opined that a stipulation in regard to payment of damages by one party of the contract to the other does not establish that the same was not an agreement for sale stating: 59. One of the learned Judges of the High Court also held that the said agreement dated 12-61984 was in fact an agreement for obtaining loan. There was no warrant for such a proposition. Clause 7 of the agreement on the basis whereof such a finding was arrived at reads as under: (7) That it is further agreed that in case any defect in the right or title of the parties of the first part or the said Company is found or any other encumbrance or legal hurdle is found in respect of the said house property then in both the circumstances the second party shall have option for the refund of advance money of Rs. 10 lakhs together with interest @ 18% annum. 60. It is interesting to note that the sale deed dated 24-2-1979 whereby Sarafs purchased the property also contains an identical clause. Such types of clauses normally are found in the agreement so as to enable the vendee to protect his interest against the defects in the vendors title, if any. The agreement records the valuation of property at Rs. 11 lakhs. The respondents relying on or on the basis of another purported agreement dated 4-6-1984 executed by Sarafs in favour of their son-in-law, Original Defendant 5, S.K. Mittal stated that the property was worth Rs. 25 lakhs. The trial court, in our opinion, correctly arrived at an opinion that the said agreement was a sham one. Original Defendant 5 did not file any suit for specific performance of contract. The said agreement for sale had not been acted upon by the parties. Reliance placed on the said agreement by a learned Judge of the High Court was, therefore, unwarranted. 18. The contention of the appellant has been rejected both by the learned Trial Judge as also by the High Court upon assigning sufficient and cogent reasons. The agreement has been held to have been executed by the parties in support whereof large number of witnesses had been examined. The High Court, in particular in its judgment, has categorically opined that when the respondents served a notice upon the appellant on 29.05.1981, it was expected of the appellant to raise a contention that the said agreement was a sham one or nominal one and was not meant to be acted upon but it was not done. Failure on the part of the appellant to do so would give rise to an inference that the plea raised in the suit was an afterthought. 19. The findings of facts by both the Courts are concurrent ones and in our opinion no case has been made out to interfere therewith by this Court. 20. Submission of Mr. Chandrashekhar to the effect that having regard to the rise in price of an immovable property in Bangalore, the Court ought not to have exercised its discretionary jurisdiction under Section 20 of the Specific Relief Act is stated to be rejected. We have noticed hereinbefore that the appellant had entered into an agreement for sale with others also. He had, even after 11.5.1979, received a sum of Rs. 5,000/- from the respondent. He with a view to defeat the lawful claim of Respondent No. 1 had raised a plea of having executed a prior agreement for sale in respect of self-same property in favour his son-in-law who had never claimed any right there under or filed a suit for specific performance of contract. The Courts below have categorically arrived at a finding that the said contention of the appellant was not acceptable. Rise in the price of an immovable property by itself is not a ground for refusal to enforce a lawful agreement of sale. [See P.D Souza (supra) and Jai Narain Parasrampuria (supra)]

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]15. The purported default clause, to which our attention has been drawn by Mr. Chandrashekhar, does not lead to the conclusion that the same was a contract of loan. By reason thereof, the respective liabilities of the parties were fixed. In the event, provisions of the said contract were breached, the damage which might have been suffered by one party by reason of act of omission or commission on the part of the other in the matter of performance of the terms and conditions thereof had been quantified. The quantum of damages fixed therein was the same for both the parties. The submission of Mr. Chandrashekhar that in view of the fact that parties had agreed that in the event of breach on the part of the appellant, the respondent would be entitled to claim damages for a sum of Rs. 10,000/only and, thus, the said agreement for sale was not meant to be acted upon cannot be accepted. If the said contention is accepted, the damages quantified in the event of any breach on the part of Respondent No. 1 cannot be explained. It is clear that in the event of commission of any breach on the part of respondent, the appellant was entitled to forfeit the entire amount of advance. The very fact that the parties intentionally incorporated such default clause clearly goes to show that they intended to lay down their rights and obligations under the contract explicitly. They, therefore, knew the terms thereof. They understood the same. There is no uncertainty or vagueness therein18. The contention of the appellant has been rejected both by the learned Trial Judge as also by the High Court upon assigning sufficient and cogent reasons. The agreement has been held to have been executed by the parties in support whereof large number of witnesses had been examined. The High Court, in particular in its judgment, has categorically opined that when the respondents served a notice upon the appellant on 29.05.1981, it was expected of the appellant to raise a contention that the said agreement was a sham one or nominal one and was not meant to be acted upon but it was not done. Failure on the part of the appellant to do so would give rise to an inference that the plea raised in the suit was an afterthought19. The findings of facts by both the Courts are concurrent ones and in our opinion no case has been made out to interfere therewith by this Court20. Submission of Mr. Chandrashekhar to the effect that having regard to the rise in price of an immovable property in Bangalore, the Court ought not to have exercised its discretionary jurisdiction under Section 20 of the Specific Relief Act is stated to be rejected. We have noticed hereinbefore that the appellant had entered into an agreement for sale with others also. He had, even after 11.5.1979, received a sum of Rs. 5,000/from the respondent. He with a view to defeat the lawful claim of Respondent No. 1 had raised a plea of having executed a prior agreement for sale in respect ofe property in favour hisw who had never claimed any right there under or filed a suit for specific performance of contract. The Courts below have categorically arrived at a finding that the said contention of the appellant was not acceptable. Rise in the price of an immovable property by itself is not a ground for refusal to enforce a lawful agreement of sale. [See P.D Souza (supra) and Jai Narain Parasrampuria (supra)]