Case: ABDULLAKOYA HAJI Vs. RUBIS THARAYIL

2. The appellants herein were the defendants in the suit bearing OS No.89 of 2008. The suit in question was filed by the respondents herein seeking for a judgment and decree for specific performance of the agreement for sale dated 26.03.2007. The Trial Court on having considered the matter has decreed the suit in part by its judgment dated 23.12.2010. Through the said judgment, the decree for specific performance was declined and the alternate relief directing the appellant herein to pay the sum of Rs. 75 Lakhs with interest at 9% per annum was granted. The plaintiffs claiming to be aggrieved by the same had preferred the appeal under Section 96 of the Civil Procedure Code before the High Court of Kerala at Ernakulam in RFA No. 344 of 2011. The Division Bench of the High Court through its judgment dated 21.08.2018, set aside the judgment passed by the trial court and has allowed the appeal3. The appellants herein have accordingly been directed to execute the sale deed in favour of the Respondent No. 1 herein, conveying the properties described in Item Nos. 1, 2, & 5 on the balance sale consideration being deposited within the period of two months. In respect of the properties described in Item Nos. 3 & 4, the same was not included in the judgment since the said properties involved the minors interest. The defendants in the suit, who are the respondents in the appeal before the High Court are therefore before this Court claiming to be aggrieved by the judgment dated 21.08.2018 passed by the High Court in RFA No.344 of 2011. Thus, on the divergent conclusion reached by the two Courts, consideration is required in this appeal4. For the sake of convenience and clarity the parties would be referred to in the same rank as assigned to them in the original suit wherein the respondents herein were the plaintiffs and the appellants herein were the defendants5. The brief facts necessary to be noted for the consideration of this appeal is that the defendants are the owners of the different item of properties which are described in the schedule to the suit subject agreement dated 26.03.2007. The total extent of property was indicated in the agreement as 12.775 acres. The plaintiffs agreed to purchase the said land at the rate of Rs. 11,350 per cent of land. In that regard the agreement dated 26.03.2007 was entered into and an advance of Rs. 75 lakhs was paid by the first plaintiff to the defendants. The plaintiffs agreed to make a further payment of Rs. 75 lakhs on or before 15.10.2007 and before such time the actual measurement of the property was required to be made so as to determine the actual sale consideration payable and to complete the sale transaction6. According to the plaintiffs, they were ready and willing to pay the balance and secure completion of the transaction. In that regard the plaintiffs claim that they had also kept ready the sum of Rs. 75 lakhs which was agreed to be paid on or before 15.10.2007. The plaintiffs contend that defendants did not make available all the documents necessary for executing the sale deed. They therefore contend that the said position was accepted by the defendants and an appropriate endorsement was made at the foot of the agreement and the defendants had conceded that the amount payable on 15.10.2007 can be paid on the date of the conveyance and that the documents will be satisfied prior to this date. The outer limit for completion of the transaction was fixed as 22.01.2008. The further contention of the plaintiff is that despite they being ready and willing, since the defendant did not come forward to complete the transaction, they were constrained to file this suit7. The defendant on being served with summons had appeared and filed their written statement. The execution of the agreement, the receipt of the sum of Rs. 75 lakhs as also the manner in which the balance amount was to be paid and the transaction was to be completed was not disputed. However, it was contended that the plaintiffs did not possess the funds for paying the balance of the sale consideration and in such event the completion of the transaction did not arise. It was accordingly contended that the plaintiffs were not ready and willing to complete the transaction. It was alleged therein that since the plaintiffs did not have sufficient funds, they had entered into an agreement with regard to the same properties with one Shri Ali Khan without involving the defendants but neither the plaintiffs nor the said Shri Ali Khan had the funds to pay and complete the transaction8. The Trial Court, in the light of the rival pleadings had framed five issues for its consideration which read as hereunder:(i) Whether the suit is bad for misjoinder of causes of action and parties?(ii) Whether the first plaintiff was ready and willing to perform their part of the contract?(iii) Whether the first plaintiff is entitled to get a decree for specific performance of the contract?(iv) Whether the first plaintiff is entitled to get a decree for realization of Rs. 75,00,000/- (Seventy-five lakhs) together with 18% interest per annum as an alternative relief?In order to discharge the burden cast by the said issues, the second plaintiff examined himself as PW-1 and relied upon the documents at Exhibits A1 to A13. The first defendant examined himself as DW-1 and examined a witness i.e., the said Shri Ali Khan as DW-2 and relied upon the documents at Exhibit B1 to B25. The report of the Court Commissioner was marked as Exhibit C1 and C1(a). The subsequent agreement between the plaintiffs and Shri Ali Khan was marked as Exhibit X19. The evidence as tendered by the parties was taken note by the Trial Court and concluded that the plaintiffs were not ready and willing to perform their part of the obligation under the agreement and therefore has dismissed the suit. The High Court on the other hand has arrived at the conclusion that the plaintiffs were ready and willing to perform their part of the agreement and that they had also possessed sufficient funds to pay the remaining sale consideration and therefore decreed the suit. In that background, though on the other issues framed by the Trial Court there is no serious dispute for consideration, the issue which arises for consideration is as framed at Issue No. 2 relating to the readiness and willingness of the plaintiffs.

Court's reasoning:
11. In that background, in so far as the execution of the agreement dated 26.03.2007 and the payment of the advance amounting to Rs. 75 lakhs, there is no serious dispute. The requirement under the agreement was for the plaintiffs to pay a further sum of Rs. 75 lakhs on or before 15.10.200712. In that background, in so far as the payment of the advance amount of Rs. 75 lakhs though appears to be a substantial sum, the readiness and willingness of the plaintiffs with the balance sale consideration is to be taken note keeping in view that the balance sale consideration payable was also substantial. The second plaintiff examined himself as PW-1 by filing his affidavit through which he has reiterated the plaint averments13. Be that as it may, as rightly pointed out by the learned Senior Advocate appearing for the defendants, the depiction in the said endorsement about the production of the title deeds does not reflect the true state of affairs in as much as PW-1 in his cross- examination has admitted that prior to the execution of the agreement, the copies of the title deeds produced before the Court were shown to him and that he had entered into the agreement on being satisfied that the defendants have ownership and title to the suit property. Though the issue relating to the transfer of the rights of the minor had also arisen, the defendants were prepared to execute the sale deed through the natural guardian representing the interest of the minors. Though the said aspect was also one of the issues, considering the fact that the Trial Court and the High Court have arrived at divergent conclusion relating to the availability of the remaining sale consideration, examination of that issue would be appropriate as other issues would depend on that aspect15. It is in that back drop even if the lower sum of Rs. 1,02,60,850 (One Crore Two Lakhs Sixty Thousand Eight Hundred and Fifty only), is taken into consideration the availability of funds in that regard to pay balance sale consideration is to be examined. In that regard even though the document at Exhibit A5, the account extract of Axis Bank for the periods 09.10.2007 to 08.11.2007 is taken note, the same will at least indicate that the sum of Rs. 75 lakhs was available in the account as on 15.10.2007. Though the sum of Rs. 75 lakhs was shown in the account and even if the endorsement dated 14.10.2007 at the foot of the agreement is taken note, the said amount should be shown to have been available with the plaintiffs even subsequent to 08.11.2007, as also on the date when the demand was made by issue of legal notice and further when the suit was filed and specific performance was sought. In the absence of the same, a temporary arrangement made to have certain funds in the account on a relevant date alone cannot be considered as the financial resource being available to complete the transaction when in addition to the said amount, further sum was required. This is more so in a circumstance where in the instant facts the first plaintiff had entered into an agreement of sale dated 23.10.2007 (Exhibit X1) with one Shri Ali Khan during the subsistence of the suit subject agreement and in the said agreement the first plaintiff with reference to the very properties which is the subject matter of the suitHaving taken note of the decision we are of the opinion that the said decision would not be squarely applicable to the present facts so as to discard the evidence of PW-1. In so far as the agreement dated 26.03.2007 regarding which specific performance is sought, we notice that though Shri Devassy has entered into the agreement with the defendants it is done so, for and on behalf of Shri Rubis Tharayil and therefore Shri Rubis Tharayil is also arrayed as the plaintiff No. 1 in the suit. If that be the position, in so far as the suit transaction and the evidence to prove the sufficiency of funds, the evidence tendered by him would be relevant. Hence, in so far as the personal knowledge relating to the other aspects i.e. entering into agreement with Shri Ali Khan and the recitals therein, it was required to be explained by examining Shri Devassy who would have been the relevant and competent witness to explain that aspect of the matter more particularly when reference with regard to the financial capacity is made therein17. In that regard, the extract from the agreement dated 23.10.2007 (Exhibit X1) between Shri Devassy and Shri Ali Khan noticed above indicates that the intention of seeking specific performance of the agreement dated 26.03.2007 is given up there under. One of the parties to the said agreement namely Shri Ali Khan was examined by the defendants as DW-2, who apart from referring to the agreement has also stated that the same was entered into since the plaintiffs did not have the financial resources to continue the transaction. In that circumstance, it is only Shri Devassy who could have explained the real reason if any for executing the said agreement dated 23.10.2007 if it was not for the purpose indicated therein and as spoken to by DW-2. In such situation the execution of the said agreement dated 23.10.2007 will have to be taken as a strong circumstance wherein it indicates that the plaintiffs, prior to filing the suit itself had intended to give up their right to seek for specific performance for want of the financial resources19. In that background, the perusal of the judgment passed by the Trial Court would indicate that the Trial Court on appreciating the evidence has at the outset arrived at the conclusion that in view of endorsement dated 14.10.2007 contained in the agreement the non- payment of Rs. 75 Lakhs on or before 15.10.2007 would constitute waiver and cannot be considered as a breach committed by the plaintiff. To that extent the Trial Court was justified and even if that be so the availability of the sum of Rs. 75 Lakhs sought to be established through the document at Exhibit A5 is taken into consideration, whether the said amount was still available subsequent thereto and whether the readiness and willingness can be accepted as proved was the appropriate consideration required to be made. Hence the Trial Court in that regard has rightly taken note of the entire evidence. While taking note of this aspect, as has been referred to by us herein above, the Trial Court has taken note that the plaintiffs were required to arrange the total balance sale consideration of Rs. 1,31,79,700/- (One Crore Thirty-One Lakhs Seventy-Nine Thousand Seven Hundred only)20. In that regard, the document at Exhibit A5 namely the accounts statement of Axis Bank was taken into consideration and had rightly observed that the ledger extract for the period subsequent to 19.10.2007 was not produced and in that view the evidence of PW-1 was referred as he could not say on which day he withdrew Rs. 75 Lakhs from his bank account. The Exhibits A6, A7 and A8 were taken note though it was not appropriately attested and the amount as indicated in the said documents at Rs. 15,62,426.70/- Rs. 5,00,488/- and Rs. 7,97,205/- which were in credit to the said account was taken note. Having discarded Exhibit A9 which was a fax message without the supporting bank documents, the amount of Rs. 2,33,399/- in Exhibit A11 and Rs. 37,187/- in Exhibit A12 was also taken note. The Trial Court had also taken into consideration the agreement entered into between Shri Devassy and Shri Ali Khan, dated 23.10.2007 marked as Exhibit X1 which was also one of the reasons to arrive at the conclusion that the plaintiff had not proved their readiness and willingness23. In the above background, we find that the consideration as made by the High Court does not indicate that the High Court has taken note of the evidence in the manner as has been analysed by the Trial Court. From the reasoning as extracted above the High Court has proceeded by indicating that the readiness includes the capacity to raise funds for purchasing the property. To that extent though the High Court was justified, the assessment of the evidence made does not indicate that there were sufficient documents to show that they had the capacity to raise the funds for the entire balance sale consideration. The error committed by the High Court is that it proceeded on the basis that the total consideration of the transaction is Rs. 1.5 crores of which Rs. 75 Lakhs was paid as advance and since there was an offer to pay the balance of Rs. 75 Lakhs on or before 15.10.2007 which was available in credit to their account as on 11.10.2007 the same was sufficient. Hence it concluded that it cannot be stated that the plaintiffs were incapable of raising the funds. From the discussion made by the Trial Court as also by us in the course of this judgment, it would indicate that in so far as the total sale consideration is concerned, even if the extent indicated as per the Court Commissioners report is taken, it would be the sum of Rs. 2,01,00,850/-. Therefore, the balance payable would be Rs. 1,26,00,850/-. Towards payment of such balance sale consideration though as on 15.10.2007 the sum of Rs. 75 Lakhs was shown to the credit, the availability of that amount subsequent to 08.11.2007 is not shown as the statement at Exhibit A5 is only for the periods 09.10.2007 to 08.11.2007. Hence, the said amount will have to be taken as being made available at one point in time by juggling the figures and was not shown available for payment at the relevant point when the suit was filed. Hence on exclusion of the same the remaining amount through Exhibit A11 to A13 would be in-sufficient to indicate that as on date of filing the suit they had the entire remaining balance sale consideration and were ready and willing to complete the transaction. In that circumstance, the deposit presently made after the judgment is rendered by the High Court to the reduced extent would not be of assistance as there would be change in the circumstances after more than a decade, as against what the position was in the year 200724. In that circumstance, when not only the availability of fund was satisfactorily explained but in a circumstance where the first plaintiff had entered into an agreement dated 23.10.2007 in favour of Shri Ali Khan in respect of the very same properties even before securing the sale deed in their favour, the bonafides would also become relevant when the specific performance as an equitable relief is taken into consideration. In that view, the Trial Court while declining the relief of specific performance has appropriately granted the decree for realisation of the sum of Rs. 75 Lakhs with interest at 9% per annum. To that extent though the Trial Court was justified, we find it necessary to protect the interest of the plaintiffs to recover the said amount. In that view, it is necessary to direct the defendants to refund the amount to the plaintiffs within a time frame, failing which the amount is to be paid with the higher rate of interest. Further, charge is to be created over the suit schedule properties to ensure repayment of the amount. Subject to the above the impugned judgment dated 21.08.2018 in RFA No. 344/2011 is liable to be set aside.