Case: C.S.VENKATESH Vs. A.S.C.MURTHY (D) BY LRS

2. A.S.C. Murthy was the plaintiff in the suit. He died during the pendency of the suit. Therefore, his wife Smt. Jayashree was brought on record as his legal representative. She is the first respondent in this appeal. C.S. Venkatesh, the appellant herein, was defendant No.2 in the suit. C. Sethurama Rao, was the defendant No.1 in the suit. He also died during the pendency of the suit, therefore, his wife Smt. C.S. Lalithamma was brought on record as his legal representative. She is arrayed as respondent No. 2A in this appeal. Defendant Nos. 3 and 4 are respondent Nos. 3 and 4 in this appeal. The parties are hereinafter referred to in their respective capacities before the trial court3. The subject matter of the suit was the property situated at Site No. 522, 17 th Main Banashankari, I Stage, First Block, Srinagar, Bangalore – 560 050 (hereinafter referred to as the schedule property)4. A.S.C. Murthy had filed the above suit against defendants for specific performance of the agreement of reconveyance dated 23.04.1975 in respect of the schedule property and alternatively to declare that the sale deed dated 23.04.1975 executed by him in favour of the defendants is null and void. It was alleged in the plaint that the City Improvement Trust Board, Bangalore (for short CITB) had allotted the site in question in favour of the plaintiff. Thereafter, he commenced construction of the building on the said site. Since he did not have sufficient funds, he approached the defendants for certain financial assistance. Accordingly, the defendants advanced a sum of Rs.2,000/- as loan. Subsequently, a further sum of Rs.10,000/- was advanced on the condition of payment of interest at the rate of 18% p.a. However, the plaintiff failed to pay the interest on the said sum as agreed, except for a period of two months. Since the defendants were in need of accommodation, the plaintiff put them in possession of the schedule property by executing a deed of mortgage dated 11.10.1973. According to the plaintiff, the defendants have advanced, in all, a sum of Rs.29,000/-. As the plaintiff could not pay the interest regularly, the defendants asked the plaintiff to execute a nominal sale deed in order to ensure prompt payment of interest. Accordingly, the plaintiff executed a deed of sale dated 23.04.1975 in favour of the defendants for a sale consideration of Rs.35,000/- by receiving Rs.6000/-, the difference in the sale price. It was alleged that the sale deed was executed as a security for the amount advanced by the defendants. It was contended that the defendants executed an agreement of reconveyance in respect of the schedule property dated 23.04.1975 in favour of the plaintiff. It was also agreed that the defendants were put in possession of the schedule property on the understanding that they need not pay rent and the plaintiff need not pay interest on the amount advanced by them to the plaintiff. After the expiry of five years and the defendants having received the sum of Rs.35,000/- advanced by them, the plaintiff demanded that the defendants execute a reconveyance deed in terms of the agreement of reconveyance dated 23.04.1975. However, the defendants have failed to execute sale deed5. The second defendant filed the written statement admitting the execution of the mortgage deed dated 11.10.1973 and borrowing of a sum of Rs.29,000/- by the plaintiff. It was contended that the defendants agreed to reconvey the property and executed the reconveyance agreement prior to the execution of the sale deed. However, the plaintiff did not agree for reconveyance. The plaintiff gave up his demand for reconveyance and executed the sale deed. It was contended that even otherwise the reconveyance agreement was not to be acted upon. It was further contended that the plaintiff had borrowed the loan from the bank on different occasions by mortgaging the title deeds of the property. As the plaintiff failed to discharge his debt to the bank, the defendants paid the said dues in order to save the schedule property from auction. It was also contended that there was no plea or proof regarding readiness and willingness to perform the plaintiffs part of the contract as required under Section 16(c) of the Specific Relief Act, 1963 (for short the Act). It was denied that the sale deed dated 23.04.1975 was nominal and was executed for the purpose of security for the loan advanced by the defendants6. On the basis of the pleadings of the parties, the trial court framed the relevant issues. In support of the suit claim, wife of the deceased plaintiff was examined as PW-1 and exhibited documents P-1 to P-19 in her evidence. The second defendant was examined as DW-1 and exhibits D-1 to D-15 were marked in his evidence. On consideration of the evidence of the parties and materials on record, the trial court came to a conclusion that the plaintiff has established the execution of agreement of reconveyance. The Court also came to a conclusion that the sale deed dated 23.04.1975 was not a nominal one, as contended by the plaintiff. The Court recorded a finding that the plaintiff has averred in the plaint that there was sufficient plea in relation to readiness and willingness of the plaintiff to perform his part of the contract. However, it was held that the plaintiff had failed to prove that he was ready and willing to perform the contract. Consequently, the trial court dismissed the suit7. The plaintiff filed R.F.A. No. 626 of 2001, challenging the judgment and decree of trial court. The High Court on consideration of the rival contentions of the parties held that the sale deed executed by the plaintiff in favour of the defendants was security for the loan advanced by the defendants. Consequently, the High Court allowed the appeal. The defendants were directed to execute a deed of reconveyance in respect of the schedule property in favour of the plaintiff.

Court's reasoning:
13. It is settled that the real character of the transaction has to be ascertained from the provisions of the documents viewed in the light of surrounding circumstances. Since two documents were executed on the same day, the transaction cannot be a mortgage by way of conditional sale in view of the express provisions contained in Section 58(c) of the Transfer of Property Act, 1882. A perusal of the recitals contained in the sale deed at Exhibit P-8 shows that the property was agreed to be sold absolutely for a total consideration of Rs.35,000/-. The plaintiff has also stated that since possession has already been delivered earlier under a deed of mortgage, delivery of possession under this document does not arise. It was further stated that henceforth neither himself nor his heirs have any right, title or interest in the property and that the plaintiff is entitled to water, air, right of easement, etc. concerning the property together with all rights, title and interest and right of disposal of the property. The defendant, his son and grandson, etc. unto posterity are entitled to enjoy the property without any obstruction or trouble either by the plaintiff or from anyone claiming under him. He has delivered the possession certificate issued by the CITB and Khata certificate for transfer of Khata from Bangalore City Corporation. Thus, the language employed in this document is plain and unambiguous and the intention of the parties is also very clear from its recitals. Even the evidence led by the parties does not indicate to the contrary. Thus, a careful perusal of all the clauses of the sale deed and the evidence on record would clearly show that the intention of the parties was to make the transaction a sale. We are also of the view that since the execution of the reconveyance deed has already been established, question of holding the sale deed to be nominal cannot be acceptedThough a question was raised before the trial court that there are no pleadings as regards the plaintiffs readiness and willingness to perform the contract, the trial court has rightly held that there is sufficient compliance of Section 16(c) of the Act to the extent of pleadingsMere plea that he is ready to pay the consideration, without any material to substantiate this plea, cannot be accepted. It is not necessary for the plaintiff to produce ready money, but it is mandatory on his part to prove that he has the means to generate the consideration amount. Except the statement of PW-1, there is absolutely no evidence to show that the plaintiff has the means to make arrangements for payment of consideration under the reconveyance agreement21. It is relevant to state here that before filing the suit, the plaintiff had filed an application before the competent authority under the Karnataka Debt Relief Act seeking extinguishment of the debt and delivery of the property back to him. No doubt, the application was dismissed by the authority. But the fact remains that the intention of the plaintiff was not to pay the amount as per the re- conveyance agreement22. The deed of re-conveyance, contains a clause for payment of interest on the consideration amount of Rs.35,000/-. However, the plaintiff has pleaded that there is no agreement to pay the interest. This shows that the plaintiff was not ready to perform his part of the obligation as per the agreement. Further, the plaintiff had mortgaged the property with the bank and the bank had obtained an award against the plaintiff. When the suit property was put up for auction, the defendants paid the entire amount to the bank which was payable by the plaintiff under this award. This aspect also indicates the conduct of the plaintiff23. Taking an overall view of the matter, the trial court has rightly held that the plaintiff was not ready and willing to perform his part of the contract. The High Court, in our view, was not justified in reversing the well-reasoned judgment of the trial court15. The words ready and willing imply that the plaintiff was prepared to carry out those parts of the contract to their logical end so far as they depend upon his performance. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of performance. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of contract, the court must take into consideration the conduct of the plaintiff prior, and subsequent to the filing of the suit along with other attending circumstances. The amount which he has to pay the defendant must be of necessity to be proved to be available. Right from the date of the execution of the contract till the date of decree, he must prove that he is ready and willing to perform his part of the contract. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready to perform his contract