Karnataka High Court

T Venkataswamy Reddy vs M H Malik S/O Late G D Chouhan on 20 November, 2023

Author:
V Srishananda

Bench:
V Srishananda

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NC: 2023:KHC:41675
RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 20TH DAY OF NOVEMBER, 2023

BEFORE
THE HON'BLE MR JUSTICE V SRISHANANDA
REGULAR FIRST APPEAL No.2314 OF 2007
C/W
RFA CROSS OBJECTION No.17 OF 2010

IN RFA No.2314/2007

BETWEEN:

T VENKATASWAMY REDDY
S/O LATE THIMMA REDDY
AGED 63 YEARS,
R/AT.NO.132, BANASWADI,
K.R.PURAM HOBLI,
BANGALORE SOUTH TALUK.
...APPELLANT
(BY SRI. K. BHANU PRASAD, ADVOCATE)
Digitally
signed by R
MANJUNATHA AND:
Location:
HIGH COURT 1. M H MALIK
OF
KARNATAKA S/O LATE G D CHOUHAN
AGED 57 YEARS,
R/AT.NO.34/2, HARIRAM COMPLEX,
(NEXT TO SAGAR THEATRE)
KEMPEGOWDA ROAD,
BANGALORE-9.

2. SMT SAYEEDA BEGUM
W/O M.E.USMAN,
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RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010

AGED 55 YEARS,
R/AT.NO.316, CHITRAMALA APARTMENT,
BYRASANDRA JAYANAGAR,
BANGALORE-11.

3. SMT KALA RAMALINGAM
W/O P.H.RAMALINGAM,
AGED 41 YEARS,
R/AT.NO.41,11TH MAIN,
VASANTHNAGAR,
BANGALORE-52.
...RESPONDENTS
(BY SRI. R. VIJAYKUMAR, ADVOCATE FOR R2 & R3
R1 SERVED)

THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 OF CODE OF CIVIL PROCEDURE AGAINST THE JUDGMENT
AND DECREE DATED 07.08.2007 PASSED IN O.S.No.8329/95
ON THE FILE OF THE XXVII ADDL. CITY CIVIL JUDGE,
BENGALURU (CCH-16), PARTLY DECREEING THE SUIT FOR
SPECIFIC PERFORMANCE AND ETC.,

IN RFA CROB 17/2010
BETWEEN

1. SMT SAYEEDA BEGUM
W/O M.E.USMAN,
AGED 58 YEARS,
R/AT.NO.316, CHITRAMALA APARTMENT,
BYRASANDRA JAYANAGAR, BANGALORE
NOW R/A NO.95,
4TH CROSS, R B EXTENSION
III BLOCK EAST JAYANAGAR
BANGALORE
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RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010

2. SMT KALA RAMALINGAM
W/O P.H.RAMALINGAM,
AGED 43 YEARS,
R/AT.NO.41,11TH MAIN,
VASANTHNAGAR,
BANGALORE-52.
... CROSS OBJECTORS
(BY SRI. VIJAYA KUMAR R, ADVOCATE FOR CROSS
OBJECTORS)

AND

1 . T VENKATASWAMY REDDY
S/O LATE.THIMMA REDDY
AGED 63 YEARS,
R/AT.NO.132, BANASWADI,
K.R.PURAM HOBLI,
BANGALORE SOUTH TALUK.

2 . M H MALIK
S/O LATE G D CHOUHAN
MALIK DISPENSARY
R/AT.NO.34/2, HARIRAM COMPLEX,
(NEXT TO SAGAR THEATRE)
KEMPEGOWDA ROAD,
BANGALORE-9.

.......RESPONDENTS
(V/O DT. 18/7/2022 SRI. P. KRISHNAPPA, ADVOCATE FOR R1
(VK NOT FILED) V/O DTD. 18/07/2022 NOTICE TO R2 IS
DISPENSED WITH)
THIS RFA.CROB IS FILED UNDER ORDER XLI RULE 22 OF
CODE OF CIVIL PROCEDURE AGAINST THE JUDGMENT DATED
07.08.2007 PASSED IN O.S.No.8329/1995 ON THE FILE OF
THE XVII-ADDL. CITY CIVIL JUDGE, BANGALORE CITY, PARTLY
DECREEING THE SUIT FOR SPECIFIC PERFORMANCE AND ETC.,
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RFA No. 2314 of 2007
C/W RFA.CROB No. 17 of 2010

THIS APPEAL ALONG WITH CROSS OBJECTION, COMING
ON FOR FINAL HEARING, THIS DAY, THE COURT DELIVERED
THE FOLLOWING:
JUDGMENT

Heard Sri K.Bhanu Prasad, counsel for appellant and Sri

R.Vijaya Kumar, counsel for respondents 2 and 3.

The present appeal is filed by the plaintiff being not

satisfied with the decree of refund of money with damages by

virtue of the judgment and decree passed in O.S.No.8329/1995

dated 07th August 2007 on the file of the XVII Additional City

Civil Judge, at Bengaluru (CCH-16).

2. The Cross Objection came to be filed belatedly in RFA

Cross Objection No.17/2010 by respondents/defendants 2 and

3 opposing the decree insofar as directing the defendants 2 and

3 to return Rs.55,000/- with damages of Rs.55,000/- and

interest at the rate of 6% per annum from the date of

agreement of sale on the earnest money, till realization.

3. For the sake of convenience, parties are referred to as

plaintiff and defendants as per their original ranking before the

Trial Court.

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RFA No. 2314 of 2007

C/W RFA.CROB No. 17 of 2010

4. The brief facts which are utmost necessary for disposal

of the present appeal and cross objection are as under:

A suit came to be filed by the plaintiff initially against first

defendant in O.S.No.8329/1995 for the relief of judgment and

decree directing the first defendant to comply with the terms of

the agreement of sale dated 18.10.1995 and execute the sale

deed in favour of the plaintiff at the cost of the plaintiff by

receiving balance amount in a sum of Rs.65,000/- or such

amount determined by the Court, failing which, the sale deed

be executed in accordance with law and consequential relief of

possession of the property directing the first defendant along

with defendants 2 and 3 to put the plaintiff in possession of the

suit schedule property.

5. The suit property is described as under:

"All that piece and parcel of the property bearing site
Nos.16 and 17 bearing house list No.245, situated at
Babusabarapalya, Chellakere Gramatana, K.R.Puram
Hobli, Bengaluru South Taluk, and measuring East to
West 40 feet and North to South 60 feet, bounded on the:

East by : Srinivasa Reddy's property,
West by : Road,
North by : Site No.15,
South by : K.R.Mahadevan's property.

And including A.C.sheet house roofing compound.

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RFA No. 2314 of 2007

C/W RFA.CROB No. 17 of 2010

6. Upon service of suit summons, defendant entered

appearance and filed written statement stating that first

defendant has alienated the property in favour of private

persons by virtue of registered sale deed dated 27.11.1995

whereby, plaint got amended and subsequent purchasers were

impleaded as defendants 2 and 3. Consequentially, prayer

column was also amended seeking direction to all the

defendants to execute the sale deed.

7. In the plaint it is contended that defendant No.1 is the

owner of the suit property and he has entered into agreement

of sale of suit property in favour of plaintiff on 18.10.1995 for

total consideration of Rs.1,60,000/-. According to the plaintiff,

a sum of Rs.55,000/- was paid as advance sale consideration to

the defendant No.1 and as per the terms of the agreement,

balance sale consideration of Rs.1,05,000/- was agreed to be

payable by plaintiff to defendant No.1 on the date of execution

of sale deed and two months' time was stipulated for

completion of the sale transaction under sale agreement.

8. Plaintiff further contended that within the stipulated

period, plaintiff was always ready and willing to pay balance

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sale consideration of Rs.1,05,000/-. However, it is the

contention of the plaintiff that, there was a demand made by

defendant No.1 to the plaintiff for payment of Rs.40,000/-

towards balance sale consideration and as such, plaintiff paid

further sum of Rs.40,000/- on 07.11.1995, but there was no

receipt passed on by defendant No.1 to the plaintiff. But first

defendant promised that same will be adjusted towards balance

sale consideration at the time of registration of the sale deed.

9. Even after payment of said sum of Rs.40,000/-, plaintiff

was ready and willing to pay balance sum of Rs.65,000/- and

he demanded the first defendant to execute the sale deed in his

favour and also demanded the title deeds to be furnished to

him for preparation of the sale deed. All such demands went in

vain and plaintiff came to know that first defendant is planning

to alienate the suit property in favour of third parties and

therefore, plaintiff caused a legal notice dated 20.11.1995

through registered post to the first defendant.

10. Plaintiff further contended that after issuance of notice on

20.11.1995, first defendant replied the legal notice on

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RFA No. 2314 of 2007

C/W RFA.CROB No. 17 of 2010

01.12.1995. Since there is denial in the reply notice, plaintiff

was constrained to file the above suit with the aforesaid prayer.

11. After the plaint got amended, further plea was added by

the plaintiff by stating that sale made by first defendant in

favour of defendants 2 and 3 is a clandestine sale and same is

made only to defeat the rights of the plaintiff. As such,

defendants 2 and 3 are not bonafide purchasers for value and

sale deed executed by first defendant in favour of defendants 2

and 3 is a sham. Therefore, plaintiff sought for decreeing the

suit.

12. The first defendant filed the written statement denying

the plaint averments in toto. First defendant also contended

that the suit property has been sold in favour of defendants 2

and 3 and therefore, suit is to be dismissed.

13. Defendants 2 and 3 filed written statement stating that

they are bonafide purchasers for value, inasmuch as they have

entered into agreement with first defendant for sale of the

property on 08.09.1995 which is much earlier to the suit

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agreement and in pursuance to the said agreement, sale deed

came to be executed by first defendant in their favour on

27.11.1995 and the averments made by plaintiff with regard to

sale deed of defendants are incorrect and sought for dismissal

of the suit.

14. In view of the rival contentions of the parties, the Trial

Court raised the following issues:

ISSUES

(1) Whether the plaintiff proves the agreement of sale
dated 18.10.1995 executed by the defendant in
respect of the schedule site?

(2) Whether he proves payment of Rs.55,000/- by
way of advance under the agreement?

(3) Whether he proves further payment of
Rs.40,000/- to the defendant on 07.11.1995?

(4) Whether the defendant proves that the sale
agreement is void and unenforceable under law?

(5) Whether the plaintiff is entitled to the relief of
specific performance as claimed?

(6) What relief/reliefs the parties are entitled to?

Additional Issue framed on 04.12.2003

(1) Whether the defendant Nos.2 and 3 proves that
they are the bonafide purchaser of the suit

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schedule property for value with notice of the prior
agreement?

Additional Issue framed on 02.09.2004

(1) Whether the suit is barred by limitation?
(2) Whether the suit is bad for mis-joinder of parties?
(3) Whether the plaintiff is entitled to the reliefs
sought against defendant Nos.2 and 3?

Additional Issue framed on 25.08.2006

(1) Whether the 1st defendant proves that he has
entered into an agreement with 2nd and 3rd
defendants on 8.9.1995?

(2) Whether the 1st defendant furthers proves that
plaintiff created the agreement of sale in favour of
the plaintiff?

(3) Whether the plaintiff proves that he is always
ready and willing to perform his part of contract?

15. In order to prove his case, plaintiff got examined himself

as P.W.1 and relied on seven documents which were exhibited

and marked as Exs.P.1 to 7, comprising of sale deed at Ex.P.1,

copy of legal notice at Ex.P.2, reply to the legal notice at

Ex.P.3, certified copy of sale deed at Ex.P.4, encumbrance

certificate at Ex.P.5, copy of the sale deed at Ex.P.6 and RP

acknowledgment at Ex.P.7.

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RFA No. 2314 of 2007

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16. Per contra, on behalf of defendants, first defendant-M.H.

Malik got examined as D.W.1, one of the subsequent purchaser

viz., Kala Ramalingam was examined as D.W.2 and one

Mohammed Haneef, an advocate got examined as D.W.3. On

behalf of defendants, two documents were exhibited and

marked as Exs.D.1 and D.2 comprising of agreement of sale

dated 08.09.1995 at Ex.D.1 and sale deed dated 27.11.1995 at

Ex.D.2.

17. On conclusion of recording of evidence, learned Trial

Judge heard the parties in detail and on cumulative

consideration of the oral and documentary evidence placed on

record by the parties, decreed the suit of the plaintiff in part, as

under:

"In the result, the suit is partly decreed with costs.

The prayer for specific performance of contract for
execution of sale deed in favour of plaintiff is hereby
rejected.

The plaintiff is entitled for refund of earnest money of
Rs.55,000/- with damages of Rs.55,000/- and interest at
the rate of 6% per annum from the date of agreement of
sale on the earnest money till realization from the
defendant Nos.1 to 3."

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RFA No. 2314 of 2007

C/W RFA.CROB No. 17 of 2010

18. Being aggrieved by the said judgment and decree,

plaintiff has preferred the present Regular First Appeal

No.2314/2007 on the following grounds:

 The appellant plaintiff has examined himself as Pw.1
& whereas the 1st defendant has been examined as
Dw.1 and the 3rd defendant has been examined as
Dw.2 and one Mohammed Haneef has been
examined as Dw.3.

 Pw.1 has deposed as to the contents of the plaint
and on a perusal of the cross-examination of Pw.1
made by the 1st defendant, it is clear as to the
execution of the Agreement of sale vide Ex.P1 and
the signature of the 1st defendant has been marked
as Ex.P1(a) and signature of the appellant - plaintiff
has been marked as Ex.P1(b) and the signatures of
Mahadevan and Venkatesh, who are the attestors
are marked as Exs.P1(c) & (d). The legal notice
issued by the appellant plaintiff is marked as Ex.P2
and the reply sent by the 1st defendant is marked as
Ex.P3 and hence, from his evidence, it is clear that
the first defendant having admitted para-9 of the
Agreement of sale and he having admitted that the
plaintiff is only entitled to liquidated damages as per
the terms of the Agreement and hence, the first
defendant cannot and he is not entitled to deny the
Agreement of Sale in question executed by him in
favour of the appellant - plaintiff.

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 Dw.2 is by name Kala Ramalingam, the third
defendant has been examined and his evidence is
contrary to the written statement filed by him.
 One M.I.Mohammed Haneef has been examined as
Dw.3 and his evidence do not help the defendants in
any manner.

 The Trial Court as per Issue No. I has held that the
Agreement dt:18/10/95 vide Ex.P1 executed by the
first defendant in favour of the appellant - plaintiff is
proved.

 So far as Issue No.2 is concerned, the Trial Court has
held that a sum of Rs.55,000/- was paid by way of
advance under the said Agreement of Sale.
 So far as Issue No.4 is concerned, it is held that the
alleged Agreement vide Ex.P1 is enforceable under
law.

 So far as additional issue framed on 4/12/2003 and
additional issue No.1 framed on 25/8/2006 i.e., as to
whether the defendants 2 & 3 are the bonafide
purchasers of the suit property without notice and as
to whether the first defendant proves that he had
entered into an Agreement of Sale with the
defendants 2 & 3 on 8/9/95 and the Trial Court erred
in holding that the defendants 2 & 3 are the bonafide
purchasers and that the first defendant had executed
the Agreement of Sale dt:8/9/95 in favour of the
defendants 2 & 3. Such a finding is incorrect in view
of the Written Statement filed by the first defendant
as well as the written statement filed by the third
defendant, wherein they have conceded that the
plaintiff is only entitled to refund of money with

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liquidated damages and hence, it is admitted both by
the first and the third defendants as to the existence
and execution of the Agreement of Sale vide Exhibit

- Pl and also having held that a sum of Rs.55,000/-
has been paid under the said Agreement of Sale and
having held that the Agreement of Sale vide Exhibit -
P1 is proved and hence, the Agreement of Sale vide
Exhibit - P1 is binding not only as against D1, but
also as against D2 & D3, since D2 & D3 had the
knowledge of the Agreement of Sale and also, when
the first defendant had sent the reply as per Exhibit-
P3 to the notice of the plaintiff vide Exhibit-P2, the
first defendant has not revealed as to the execution
of the alleged Agreement of Sale dt:8/9/95 in favour
of defendants 2 & 3 and hence, the alleged
Agreement of Sale dt:8/9/95 and the alleged Sale
Deed dt:27/11/95 were got up only with an intention
of depriving the plaintiff-appellant and hence, the
finding of the Court below that the defendants 2 & 3
are the bonafide purchasers is incorrect.
 So far as additional issue No.3 framed on 25/8/2006,
the Trial Court has clearly held that the plaintiff has
always been ready. and willing to perform his part of
the contract and in view of such a finding also, the
suit ought to have been decreed.

 So far as additional issue No.4 is concerned as to
whether the defendant proves that the Sale
Agreement executed in favour of the plaintiff is void
and unenforceable under law, the Court has held
that the defendants have proved that the Agreement
is unenforceable under law and such a finding is

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incorrect and holding the said issue in favour of the
first defendant is not sustainable under law.
 So far as additional Issue No.1 framed on 2/9/2004
as to whether the suit is barred by limitation and the
same is also held in favour of the plaintiff and on this
count also, the suit ought to have been decreed.
 So far as additional Issue No.2 framed on 2/9/2004
with regard to as to whether the suit is bad for mis-
joinder of parties and the court has held that the suit
is not bad for mis-joinder of parties.
 So far as additional Issue No.5 is concerned as to
whether the plaintiff is entitled to the relief of
specific performance and the said issue is held in
negative holding that the defendants 2 & 3 will be
put into hardship and loss due to escalation in the
land value and such a finding is without any basis
and without evidence and besides, contrary to law.
 So far as Issue No.6 and additional Issue No.3
dt:2/9/2004 i.e., with regard to whether the plaintiff
is entitled to the relief as sought for and the court
grossly erred in holding that the plaintiff is entitled to
the refund of the amount with liquidated damages
and such a finding is contrary to law.

 The appellant submits that during the subsistence of
the Agreement of Sale vide Exhibit-P1, the first and
the defendants 2 & 3 have colluded among
themselves in creating the Agreement of Sale
dt:8/9/95 and also in getting the Sale Deed dt:

27/11/95 executed by the first defendant in favour
of the defendants 2 & 3, which clearly demonstrates
that the defendants have played fraud only with an

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intention to deprive the plaintiff - appellant of his
legitimate right over the property in question and the
Court ought to have decreed the suit for the relief of
specific performance as against all the defendants.
 The appellant submits that
Sec. 12(c)
and
21(a)
of
the Specific Relief Act is for the benefit of the
promisor i.e., the first defendant and not for the
benefit of the subsequent purchasers, who are the
defendants 2 & 3 and that too, when they have
entered upon the venture of purchase of the
property with full knowledge of the Agreement vide
Exhibit-P1 and as such the defendants 2 & 3 cannot
plead that the appellant - plaintiff is only entitled to
the payment of advance amount and liquidated
damages and in view of such a pleading putforth by
the defendants 2 & 3, they were aware of the
Agreement of Sale in favour of the plaintiff and from
the same, it is clear that the alleged Agreement
dt:8/9/95 is the created document and which fact is
also clear from the reply sent by the first defendant
to the notice of the plaintiff.

 On a perusal of the evidence on record there are no
equitable considerations in favour of the defendants
2 & 3, since the property in question lies as the
vacant property without any kind of improvements or
putting up any kind of constructions by the
defendants 2 & 3 over the property in question.

 The clause No.9 in the Agreement of Sale vide
Exhibit - P1 with regard to stipulation of damages
was made only for the purpose of securing
performing the contract and not for refund of the

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money or damages and the court grossly erred in
interpreting the said clause in favour of the
defendants and such a finding is contrary to law.
 On a perusal of the documents on evidence on
record, the appellant-plaintiff has not contravened
the terms of the Agreement of Sale within the
stipulated time and on the other hand, he was
always ready and willing to comply with the terms of
the Agreement of Sale and even the appellant
plaintiff had also issued the notice to the first
defendant within the stipulated period and the Trial
Court grossly erred in refusing the relief of specific
performance in favour of the plaintiff.
 There has been no delay even on the part of the
appellant- plaintiff in exercising his right over the
property under the Agreement of Sale.

 The appellant submits that in decreeing the suit for
specific performance no hardship or loss or injury will
be caused to either the first defendant or the
defendants 2 & 3.

 The appellant submits that U/s.20 of the
Specific
Relief Act
, the discretion exercised by the Trial Court
is arbitrary and the same is unreasonable and not
guided by the established judicial principles and
consequently, the Trial Court ought to have granted
the relief of specific performance in favour of the
plaintiff.

 The alleged Agreement of Sale dt:8/9/95 is very
much doubtful and it amounts to creating of such
document, which is clear from the evidence on
record and on this count also, the Court grossly

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erred in refusing to grant the relief of specific
performance."

19. Insofar as decreeing the suit in part and directing

defendants 2 and 3 to pay a sum of Rs.55,000/- with interest

at the rate of 6% per annum, being the advance sale

consideration and also sum of Rs.55,000/- as damages, is

being questioned by defendants 2 and 3 in the RFA Cross

Objection No.17/2010, on the following grounds:

 The Trial Courts erred in decreeing the suit of the
Plaintiff even in part, whereas the suit Ought to have
been dismissed atleast against these defendants in
toto. The suit as a whole, having come to the
conclusion that Plaintiff has failed to prove the
payment of Rs.40,000/- as alleged in the Plaint. The
conduct of the Plaintiff having been questioned by the
learned trial judge, inter-alia holdings that the
Plaintiff has come up with a false case and therefore
the learned Judge ought not to have decreed the suit
even in part.

 The Trial judge grossly erred in holding that the suit
being barred by time, against these Defendants, even
though they were impleaded in the suit as party later,
no prayer was sought against these defendants in
time and therefore, that should have been sufficient
for the Trial Judge to have dismissed the suit.
 Assuming but not conceding that such a prayer was
not to be asked even then, the trial Court ought not

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to have directed these Defendants to refund any part
of the money stated to have been paid by the
Appellant to the 1st Defendant or pay any interest on
the said amount to the Plaintiff, in view of the
admitted position that what was alleged to be have
been paid by the Plaintiff is to the Defendant No.1
and not to these Defendants and therefore if at all
there could be a Decree in favour of the Appellant, as
ordered by the Trial Court, it ought to be only against
the 1st Defendant and not against these Defendants.
 The Trial Court could not have passed any kind of
decree against these Defendants to any extent. If at
all the Plaintiff was entitled to any relief, at the most
it should have been only against first Defendant and
not against these Defendants whilst the Trial Court
came to the conclusion that the Agreement in favour
of Defendant No.2 and 3 were earlier in point of time
to the Agreement claimed by the Plaintiff, the
Agreement relied upon by the Plaintiff must
necessarily yield to the sale deed executed by the 1st
Defendant in favour of Defendant 2 and 3. The only
relief the Plaintiff would have been entitled to if he
had proved the Agreement in his favour which
admittedly was later in point of time, would be for
refund of the advance amount only allegedly paid by
the Plaintiff to 1st Defendant and that too from the 1st
Defendant only and not from the other Defendants.
 The Trial Court having come to a definite conclusion
that the Plaintiff is not entitled to Schedule Property
having applied the well settle principle of law that
equitable discretion should not be exercised in favour

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of a person who has come to court with unclean
hands, should not have decreed the suit even in part,
but should have dismissed the suit in its entirety.
 The Trial Court having found that the Plaintiff is a
speculator and not a truthful witness and having
weighed the evidence on golden scales should have
dismissed the suit in toto.

 At all events, the judgments and Decree of the Trial
Court in decreeing the suit of the Plaintiff in part is
wrong and untenable, so far as it relates to fastening
the liability on these Defendants. The decree passed
against these defendants are contrary to the evidence
on record, documents produced and relied upon by
the parties and also contrary to the settled principles
of law.

20. Reiterating the grounds urged in the appeal

memorandum, Sri K.Bhanu Prasad, counsel representing the

appellant vehemently contended that the plaintiff was always

ready and willing to perform his portion of the contract and he

has paid sum of Rs.55,000/- as advance sale consideration

under Ex.P.1 which is sale agreement. Thereafter, at the

request of first defendant, he has paid sum of Rs.40,000/- as

second advance of the sale consideration on 07.11.1995. But

the same was not evidenced by executing any receipt and

plaintiff believed the promise made by the first defendant that

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the said sum of Rs.40,000/- would be adjusted in the final sale

consideration.

21. He further contended that despite receiving major portion

of the sale consideration, plaintiff clandestinely sold the

property in favour of defendants 2 and 3 by concocting the

document marked at Exs.D1 and D2. He further contended

that the sale deed Ex.D.2 is dated 27.11.1995 i.e, after receipt

of legal notice issued by the plaintiff marked at Ex.P.2 and after

the sale has been effected, reply notice came to be issued by

first defendant and in the reply notice, there is no whisper by

the first defendant about the earlier agreement or sale deed

which exposes the cunning nature of the first defendant. As

such, defendant Nos.2 and 3 are not to be termed as bonafide

purchasers of the suit property and their sale deed is nothing

but a sham document which has come into force only to defeat

the right of the plaintiff under Ex.P.1 and sought for allowing

the appeal.

22. He further pointed out that mere non passing of receipt

by the first defendant for having received Rs.40,000/- as

additional sale consideration cannot be a circumstance which

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would non suit the claim of the plaintiff in getting the suit

decreed for specific performance and sought for allowing the

appeal.

23. He also argued that the sale deed in favour of defendant

Nos.2 and 3 executed by first defendant on 27.11.1995 is well

within a period of two months i.e., the time that has been

stipulated under Ex.P.1 which is dated 18.10.1995 and

therefore, the sale in favour of 2nd and 3rd defendant cannot be

countenanced by this Court and sought for allowing the appeal.

24. It is his further argument that if the first defendant is

righteous and prudent person, he should not have entered into

an agreement on 18.10.1995 with the plaintiff if there was an

agreement on 08.09.1995 as is propounded by defendants 2

and 3. The silence on the part of the first defendant while

executing the agreement on 18.10.1995 which stands proved

by placing cogent and convincing evidence on record by

plaintiff, would speak volumes about the conduct of the first

defendant in clandestinely selling the suit property in favour of

defendants 2 and 3 and therefore, sought to allow the appeal.

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25. Sri Bhanu Prasad also contended that the suit of the

plaintiff needs to be decreed in toto and therefore, cross

objection is meritless and same needs to be dismissed.

26. Per contra, Sri R.Vijayakumar, learned counsel

representing defendants 2 and 3 who are respondent Nos.2 and

3 in this appeal contended that the agreement entered into by

the first defendant on 08.09.1995 is marked at Ex.D.1.

27. He further contended that the stamp papers purchased

for preparation of the said document by the first defendant also

mentions the date as 08.09.1995 and it has come into being in

natural course.

28. He further argued that in pursuance of the agreement

dated 08.09.1995, sale deed came to be executed on

27.11.1995 by first defendant in favour of defendants 2 and 3

vide Ex.D.2.

29. He also brought to the notice of this Court that the first

defendant was competent enough execute the sale deed in

favour of defendants 2 and 3 vide Ex.D.2 after receipt of

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necessary sale consideration mentioned in Ex.D.2 and

therefore, defendants 2 and 3 are to be construed as bonafide

purchasers for value.

30. He also argued that the first defendant was cross

examined in extenso by the plaintiff whereunder, it is not

suggested that agreement dated 08.09.1995 is concocted by

the first defendant in active collusion with defendants 2 and 3.

31. He also contended that if the first defendant has played

fraud on the plaintiff by executing an agreement on 18.10.1995

with plaintiff by suppressing the agreement dated 08.09.1995

marked at Ex.D.1, remedy for the plaintiff is to proceed solely

against the first defendant.

32. Therefore, Trial Court decreeing the suit of the plaintiff

against defendants 2 and 3 by directing them to pay the

advance sale consideration in a sum of Rs.55,000/- with

interest at 6% per annum and also directing to pay damages of

Rs.55,000/- is incorrect and sought for dismissal of the appeal

filed by the plaintiff as against defendants 2 and 3 and also

sought for allowing cross objection whereby the obligation

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created under the decree insofar as defendants 2 and 3 needs

to be set aside with costs.

33. In reply, Sri Bhanu Prasad, counsel submitted that

defendants 2 and 3 cannot possess a better title than what first

defendant possessed.

34. Therefore, liability on the suit property will have to be

now met by defendants 2 and 3 and they are also liable to

execute the sale deed in favour of plaintiff by allowing the

present appeal. In support of his arguments, counsel placed

reliance on the following judgments, wherein, it is held as

under:

Durga Prasad and another v. DeepChand and
others AIR 1954 SC 75,

36. Now arises a question which touches the
Custodian, Uttar Pradesh. The contract was for Rs
62,000. The plaintiff paid Rs 10,000 as earnest money
but this was later returned, so Rs 62,000 is still due. But
there is a conveyance outstanding in favour of the
appellants for which they have paid, according to their
case, Rs 58,000. If the Rs 62,000 due to the Nawab is
paid to him, or to the Custodian, U.P. who represents
his estate, it is evident that the Nawab, who is at fault,
will be paid twice over for the same property and his

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estate will benefit accordingly while the appellants will
be left to pursue their remedies against the Nawab or
his estate. The question is whether we have the power
to direct that the Rs 58,000 be paid to the appellants
instead of to the Nawab and thus obviate further, and
possibly fruitless, litigation. But before we decide that,
we will consider another question which is bound up
with it, namely, the proper form of decree in such cases.

37. The practice of the courts in India has not
been uniform and three distinct lines of thought emerge.
(We are of course confining our attention to a
purchaser's suit for specific performance.) According to
one point of view, the proper form of decree is to
declare the subsequent purchase void as against the
plaintiff and direct conveyance by the vendor alone. A
second considers that both vendor and vendee should
join, while a third would limit execution of the
conveyance to the subsequent purchaser alone.

42. In our opinion, the proper form of decree is to
direct specific performance of the contract between the
vendor and the plaintiff and direct the subsequent
transferee to join in the conveyance so as to pass on the
title which resides in him to the plaintiff. He does not
join in any special covenants made between the plaintiff
and his vendor; all he does is to pass on his title to the
plaintiff. This was the course followed by the Calcutta
High Court in
Kafiladdin v. Samiraddin [Kafiladdin
v.
Samiraddin, AIR 1931 Cal 67 : 1930 SCC OnLine Cal 46]
and appears to be the English practice. See Fry on
Specific Performance, 6th Edn., p. 90, Para 207;

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also Potter v. Sanders [Potter v. Sanders, (1846) 6 Hare
1 : 67 ER 1057] . We direct accordingly.

43. That brings us to the question of the Rs
62,000. We do not think it would be right to lay down
that in every case the balance of the purchase money
should be paid to the subsequent transferee up to the
extent of the consideration paid by him. There may be
equities between the vendor and the subsequent
transferee which would make that improper, so unless
they fight the question out as between themselves and
it is decided as an issue in the case, the normal rule
should be to require that the money be paid to the
vendor. But the circumstances here are peculiar. The
parties before us were prepared to compromise, and had
the Nawab been here it is more than probable that he
would have been glad to agree so as to avoid further
litigation. But he is in Pakistan and is beyond the
jurisdiction of the Indian courts. We think it would be
inequitable to leave the appellants to pursue what in all
probability is only a will-o'-the-wisp and for us to
augment the Nawab's estate by what would appear to
be an unjust enrichment. This is an equitable relief and
we have a wide discretion. We joined the Custodian,
U.P. to afford him the opportunity of showing why we
should not take what appears to be the just and
equitable course. We have afforded him an opportunity
of showing how the Nawab could have defended a suit
by the appellants for refund of the consideration. As he
has not been able to show us anything in the contract
between the Nawab and the appellants, or in the
covenants of their deed, which would disentitle the

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appellants from claiming Rs 58,000 from the Nawab, we
consider it right that Rs 58,000 should be paid to them
and Rs 4000 to the Custodian, U.P. All that the
Custodian, U.P. was able to urge was that the whole
amount had vested in him and so was his. But that is
not so. The plaintiff was directed to pay a sum of Rs
62,000 into court as a condition precedent to the
execution of a sale deed in his favour. Curiously enough,
the decree does not say what is to be done with the
money when it is paid into court. But so long as it is in
court under those conditions it lies there subject to such
decree as may ultimately be passed in appeal. We
therefore have full power to direct payment of Rs
58,000 to the appellants instead of to the Nawab,
especially as there is this curious lacuna in the decree.

Ramesh Chandra Chandiok v. Chuni Lal
Sabharwal
, AIR 1971 SC 1238

8. Coming to the last point, the High Court has
held that the appellants were disentitled to a decree for
specific performance because a statement was made at
the Bar that during the pendency of the appeal they had
executed the decree of the trial court and an amount of
Rs 7500 had been deposited by the respondents
pursuant to the execution proceedings. It is true that
the appellant could not accept satisfaction of the decree
of the trial court and yet prefer an appeal against that
decree. That may well have brought them within the
principle that when the plaintiff has elected to proceed
in some other manner than for specific performance be

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cannot ask for the latter relief. This is what Scrutton, L.
J., said in Dexters Limited v. Hill Crest Oil Company,
Bradford Ltd. [(1926) 1 KB 348, 358] at p. 358:

"So, in my opinion, you cannot take the benefit of
a judgment as being good and then appeal against it as
being bad."

It was further observed:

"It startles me to hear it argued that a person can
say the judgment is wrong and at the same time accept
payment under the judgment as being right."

This illustrates the rule that a party cannot
approbate and reprobate at the same time. These
propositions are so well-known that no possible
exception can be taken to them. In the present case,
however, the above rule cannot apply because the
appellants had, by consistent and unequivocal conduct,
made it clear that they were not willing to accept the
judgment of the trial court as correct. It has already
been mentioned at a previous stage that after the
decision of the trial court, the appellants had even
applied on March 31, 1958 for an injunction restraining
the respondents from selling or otherwise disposing of
the plot as it was apprehended that they were trying to
do so. It was stated in this application that the plaintiffs
would be preferring an appeal but it would take time to
secure certified copies. An appeal was in fact preferred
and seriously pressed before the High Court on the relief
relating to specific performance. This relief is
discretionary but not arbitrary and discretion must be
exercised in accordance with the sound and reasonable

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judicial principles. We are unable to hold that the
conduct of the appellants, which is always an important
element for consideration, was such that it precluded
them from obtaining a decree for specific performance.

9. It is common ground that the plot in dispute
has been transferred by the respondents and therefore
the proper form of the decree would be the same as
indicated at p. 369 in
Lala Durga Prasad v. Lala Deep
Chand
[(1954) SCR 360 : AIR 1954 SC 75] viz. "to
direct specific performance of the contract between the
vendor and the plaintiff and direct the subsequent
transferee to join in the conveyance so as to pass on the
title which resides in him to the plaintiff. He does not
join in any special covenants made between the plaintiff
and his vendor; all he does is to pass on his title to the
plaintiff." We order accordingly. The decree of the courts
below is hereby set aside and the appeal is allowed with
costs in this court and the High Court.

Abdul Kayum Ahmad Mohammad Siddik Husan
v. Damodhar Paikaji Kinhekar
, AIR 1964 Bom
6. According to him, granting pecuniary
compensation for non-performance of the agreement
would afford adequate relief to the plaintiff and,
therefore, specific performance ought not to be allowed.
Shri Mandlekar submitted that these sections require the
Court to consider the equities between the parties to the
agreement, so that the subject-matter of the agreement
may be saved for the promisor and the promisee may

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be adequately compensated in money. Upon this very
argument, these sections appear to me to be entirely
inapplicable to the facts of the present case. Here the
promisor, defendant No. 1, has already parted with the
house in favour of the appellants and there is no
question of saving that house for the promisor, who
cannot get back the house even if he were to be
required to give to the plaintiff monetary compensation
only. The submission of Shri Mandlekar seemed to imply
that these sections could also be availed of by the
subsequent purchasers, even if they had purchased the
property with full knowledge of the prior agreement by
the vendor. No authority was shown in support of that
suggestion. These sections appear to be only for the
benefit of the promisor, so that the property may be
saved for him and not for the benefit of subsequent
purchasers, particularly when they have entered upon
the venture of the purchase with full knowledge of the
prior agreement. The appellants, who are subsequent
purchasers, cannot claim to take up cudgels for
defendant No. 1 and to urge on his behalf that only a
decree for monetary compensation should be passed
against him. It would be interesting to note that
defendant No. 1, who alone could have sought
protection of those sections, has not cared to do so and
has not joined in this prayer of the appellants.
Moreover, there is nothing on record to show that
defendant No. 1 is or would be in a position to pay
monetary compensation, if decreed.

11. The learned counsel for the appellants then
urged that there were more equities in favour of the

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defendant-appellants than in favour of the plaintiff.
However, he did not show which were those greater
equities in favour of the appellants as claimed. The only
thing which he could pin-point in this connection was
that the appellants had paid Rs. 2,200 while the plaintiff
had paid Rs. 2,000 as per the findings of the Courts
below. The mere fact that the appellants had paid Rs.
2,200 would be neither here nor there when it would be
seen that they did it, if at all they had paid that or any
consideration, with the knowledge that the plaintiff had
acquired a right to get a sale-deed of this house on the
strength of the agreement, dated December 26, 1952.
By merely purporting to pay a larger consideration for
that house, defendants Nos. 2 to 4 cannot say that
equities are more in their favour. Again, a person
claiming equities must come with clean hands. In the
instant case, these appellants have not only tried to
steal a march over the plaintiff by securing this sale in
the circumstances which I have discussed at
considerable length but they had gone to the length of
raising false defences in the suit. Under the
circumstances, no question of equities in favour of the
appellants could arise.

Prakash Chandra v. Angadlal & ors
, AIR 1979
SC 1241,
"9. The ordinary rule is that specific performance
should be granted. It ought to be denied only when
equitable considerations point to its refusal and the
circumstances show that damages would constitute an
adequate relief. In the present case, the conduct of the

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appellant has not been such as to disentitle him to the
relief of specific performance. He has acted fairly
throughout, and there is nothing to show that by any act
of omission or commission he encouraged Mohsinali and
Qurban Hussain to enter into the sale with the first and
second respondents. There is no evidence that the
appellant secured an unfair advantage over Mohsinali
and Qurban Hussain when he entered into the
agreement. Nor is there anything to prove that the
performance of the contract would involve the
respondents in some hardship which they did not
foresee. In our opinion, there is no reason why the
appellant should not be granted the relief of specific
performance. An application has been filed before us by
the first and second respondents alleging that said
respondents had raised certain constructions on the site
during the pendency of the litigation and, therefore,
specific relief should not be granted to the appellant. It
is denied by the appellant that any permanent
constructions have been erected on the land in dispute.
It is said that a temporary wooden structure only has
been put up on a portion of the land. The respondents
have attempted to show by reference to a map and
photographs that permanent constructions have been
made on the site. Having regard to the material before
us, we are unable to hold that any permanent
constructions have been raised on the said land. If the
first and second respondents have in fact raised any
constructions on the site, it will be open to them to
remove the building material when possession is
delivered to the appellant.

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10. It is urged by learned counsel for the first and
second respondents that the contract for sale contains a
clause for payment of damages in case of breach of the
contract and that, therefore, damages should be
awarded instead of specific performance. A perusal of
the terms of the contract indicates that the stipulation
for damages was made only for the purpose of securing
performance of the contract and not for the purpose of
giving an option of Mohsinali and Qurban Hussain of
paying money in lieu of specific performance. Even if a
sum has been named in the contract for sale as the
amount to be paid in case of a breach the appellant is
entitled in law to the enforcement of the agreement.

14. The appeal is allowed, and the judgment and
decree of the High Court are set aside. The appellant is
required to deposit Rs. 1,000, which is the balance of
the purchase price, in the trial Court for payment to
respondents No. 3 within one month of the receipt of the
record from this Court. Such deposit being made within
the said period the respondents No. 3 will execute a sale
deed in favour of the appellant in accordance with the
terms of the contract dated September 11, 1956, and
the respondents Nos. 1 and 2 will join the conveyance.
On execution of the sale deed, the appellant will be
entitled to delivery of possession of land from the first
and second respondents. In the event of respondents
No. 3 failing to execute the sale deed or the first and
second respondents failing to join the conveyance, the

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appellant shall be entitled to obtain the sale deed
through the trial Court. In the circumstances of the
case, there is no order as to costs of this appeal. "

M. L. Devender Singh and ors v. Syed Khaja
,
(1973) 2 SCC 515,
"25. Lastly, it was urged before us that the High
Court should not have lightly interfered with the
exercise of its discretion by the trial court to grant or not
to grant specific performance on the facts and
circumstances of this case. It is clear that the discretion,
as
laid down in

Section 22
of the old Act (corresponding
to
Section 20
of the Act of 1963), is not to be exercised
arbitrarily but on sound and reasonable grounds "guided
by judicial principles so that it is capable of correction by
a Court of appeal". It appeared, quite rightly, to the
High Court that the trial court had gone completely
astray in the exercise of its discretion on the footing that
the plaintiff respondent enjoyed an "unfair advantage"

over the first defendant-appellant, where as, on the
facts and circumstances of the case, it was the first
defendant who was placed in a position to exploit the
need of the plaintiff and the plaintiff's allegedly insecure
position under the first agreement. It is clear that the
plaintiff-respondent had dealt very fairly and squarely
with the first defendant-appellant. The trial court's error
in the exercise of its discretion on an utterly untenable,
fanciful and unsound ground was rightly corrected by
the High Court."

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Mademsetty Satyanarayana v. G. Yelloji Rao
,
AIR 1965 SC 1405

6. At the outset we shall construe the relevant
sections of the
Specific Relief Act and the Limitation Act

unhampered by judicial decisions.

22. The jurisdiction to decree specific
performance is discretionary, and the court is not bound
to grant such relief merely because it is lawful to do so;
but the discretion of the court is not arbitrary but sound
and reasonable guided by judicial principles and capable
of correction by a court of appeal.

The following are cases in which the court may
properly exercise a discretion not to decree specific
performance:

I. Where the circumstances under which the
contract is made are such as to give the plaintiff an
unfair advantage over the defendant, though there may
be no fraud or misrepresentation on the plaintiff's part.

Illustrations

***
II. Where the performance of the contract would
involve some hardship on the defendant which he did
not foresee, whereas its non-performance would involve
no such hardship on the plaintiff.

Illustrations
***
The following is a case in which the court may
properly exercise a discretion to decree specific
performance:

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III. Where the plaintiff has done substantial acts
or suffered losses in consequence of a contract capable
of specific performance.

Illustrations
***

The First Schedule to the Limitation Act

Description of Period of Time from which
suit Limitation period begins to run

Article 113.
For Three The date fixed for
specific years the performance, or,
performance of if no such date is
a contract fixed, when the
plaintiff has notice
that performance is
refused.

Under
Section 22
of the Specific Relief Act, relief
of specific performance is discretionary but not arbitrary
: discretion must be exercised in accordance with sound
and reasonable judicial principles. The cases providing
for a guide to courts to exercise discretion one way or
other are only illustrative; they are not intended to be
exhaustive. As
Article 113
of the
Limitation Act

prescribes a period of 3 years from the date fixed
thereunder for specific performance of a contract, it
follows that mere delay without more extending up to
the said period cannot possibly be a reason for a court
to exercise its discretion against giving a relief of
specific performance. Nor can the scope of the
discretion, after excluding the cases mentioned in

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Section 22
of the Specific Relief Act, be confined to
waiver, abandonment or estoppel. If one of these three
circumstances is established, no question of discretion
arises, for either there will be no subsisting right or
there will be a bar against its assertion. So, there must
be some discretionary field unoccupied by the three
cases, otherwise the substantive section becomes
otiose. It is really difficult to define that field. Diverse
situations may arise which may induce a court not to
exercise the discretion in favour of the plaintiff. It may
better be left undefined except to state what the section
says, namely, discretion of the court is not arbitrary, but
sound and reasonable guided by judicial principles and
capable of correction by a court of appeal.

7. Mr Lakshmaiah cited a long catena of English
decisions to define the scope of a court's discretion.

Before referring to them, it is necessary to know the
fundamental difference between the two systems --
English and Indian -- qua the relief of specific
performance. In England the relief of specific
performance pertains to the domain of equity; in India,
to that of statutory law. In England there is no period of
limitation for instituting a suit for the said relief and,
therefore, mere delay -- the time lag depending upon
circumstances -- may itself be sufficient to refuse the
relief; but, in India mere delay cannot be a ground for
refusing the said relief, for the statute prescribes the
period of limitation. If the suit is in time, delay is
sanctioned by law; if it is beyond time, the suit will be
dismissed as barred by time; in either case, no question
of equity arises.

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8. With this background let us look at the English
text-books and decisions relied upon by the learned
counsel for the appellant. In Halsbury's Laws of England,
Vol. 36, at p. 324, it is stated:

"Where time is not originally of the essence of the
contract, and has not been made so by due notice, delay
by a party in performing his part of the contract, or in
commencing or prosecuting the enforcement of his
rights, may constitute such laches or acquiescence as
will debar him from obtaining specific performance. The
extent of delay which has this effect varies with
circumstances, but as a rule must be capable of being
construed as amounting to an abandonment of the
contract. A much shorter period of delay, however,
suffices if it is delay in declaring an option or exercising
any other unilateral right; and if the other party has
already given notice that he does not intend to perform
the contract, the party aggrieved must take proceedings
promptly if he desires to obtain specific performance."

In Fly on Specific Performance, 6th Edn., at p.
517, it is said:

"Where one party to the contract has given notice
to the other that he will not perform it, acquiescence in
this by the other party, by a comparatively brief delay in
enforcing his right, will be a bar : so that in one case
two years' delay in filing a bill after such notice, in
another case one year's delay, and in a third (where the
contract was for a lease of collieries) five months' delay
was held to exclude the intervention of the Court."

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Learned counsel cited many English decisions in
support of his argument that there shall be promptitude
and diligence in enforcing a claim for specific
performance after a repudiation of the contract by the
other party and that mere continual claim without any
active steps will not keep alive the right which would
otherwise be defeated by laches :

see Clegg v. Edmondson [(1857) 114 RR 336]
, Eads v. Williams [(1854) 43 ER Chan 671]
, Lehmann v. McArthur [(1968) LR 3 Ch AC 496]
, Watsoh v. Reid [(1830) 39 ER Chan 91] , and Emile
Erlanger v. New Sombrero Phosphate Company [(1878)
LR 3 AC 1218] . But as stated earlier, the English
principles based upon mere delay can have no
application in India where the statute prescribes the
tune for enforcing the claim for specific performance.
But another class of cases which dealt with the doctrine
of laches have some bearing in the Indian context.
In Lindsay Petroleum Company v. Prosper Armstrong
Hurd, Abram Farewell, and John Kemp [(1874) LR 5 PCA
221, 239-240] Sir Barnes Peacock defined the doctrine
thus:

"Where it would be practically unjust to give a
remedy, either because the party has, by his conduct,
done that which might fairly be regarded as equivalent
to a waiver of it, or where by his conduct and neglect he
has, though perhaps not waiving that remedy, yet put
the other party in a situation in which it would not be
reasonable to place him if the remedy were afterwards
to be asserted, in either of these cases, lapse of time
and delay are most material."

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This passage indicates that either waiver or
conduct equivalent to waiver along with delay may be a
ground for refusing to give a decree for specific
performance. In Caesar Lamare v. Thomas
Dixon [(1873) 6 HLC 414, 423] Lord Chelmsford said:

"The conduct of the party applying for relief is
always an important element for consideration."

The House of Lords in Emile Erlanger v. New
Sombrero Phosphate Company [(1878) LR 3 AC 1218]
approved the passage in Lindsay Petroleum
Company v. Prosper Armstrong Hurd, Abram Farewell,
and John Kemp [(1874) LR 5 PCA 221, 239-240] which
we have extracted earlier.

11. The result of the aforesaid discussion of the
case law may be briefly stated thus : While in England
mere delay or laches may be a ground for refusing to
give a relief of specific performance, in India mere delay
without such conduct on the part of the plaintiff as
would cause prejudice to the defendant does not
empower a court to refuse such a relief. But as in
England so in India, proof of abandonment or waiver of
a right is not a pre-condition necessary to disentitle the
plaintiff to the said relief, for if abandonment or waiver
is established, no question of discretion on the part of
the Court would arise. We have used the expression
"waiver" in its legally accepted sense, namely, "waiver is
contractual, and may constitute a cause of action : it is
an agreement to release or not to assert a right";
see
Dawson's Bank Ltd. v. Nippon Menkwa Kabushiki
Kaisha
[(1935) LR 62 IA 100, 108] . It is not possible or

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desirable to lay down the circumstances under which a
court can exercise its discretion against the plaintiff. But
they must be such that the representation by or the
conduct or neglect of the plaintiff is directly responsible
in inducing the defendant to change his position to his
prejudice or such as to bring about a situation when it
would be inequitable to give him such a relief.

12. Bearing these principles in mind let us now
look at the facts of the case. Both the lower courts found
that the appellant repudiated the contract even on the
next day of the auction i.e. August 24, 1954. The 1st
respondent issued a notice to the appellant on August
30, 1954, asking him to obtain from him one-fourth of
the auction price as earnest money at any time within
24 hours and the balance within a period of one week
thereafter and execute a sale deed in his favour. The
appellant did not reply to this notice. The 1st respondent
in his evidence says that he could not take effective
steps to enforce the contract for a period of 7 months as
his wife was ill and as the Hyderabad Municipal
Corporation had demolished one of his houses. The High
Court accepted the explanation given by the 1st
respondent for the delay in his taking steps in enforcing
the contract. In the affidavit filed by the 1st respondent
in the trial court on October 18, 1955, he stated that his
house had been demolished by the Municipal
Corporation before a year and a half and his wife was
also seriously ill for the "last two years" and that,
therefore, he was worried. From this statement it is
argued that both the circumstances which are said to

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have been the reasons for the delay were in existence
even before the auction and, therefore, the High Court
went wrong in accepting the explanation of the 1st
respondent for the delay. It is true that the 1st
respondent's wife was ill even before the auction, but
she continued to be ill even after the auction and there
is clear evidence that she was being treated in a
hospital. This continual illness of the 1st respondent's
wife must have unnerved him and when the High Court
accepted his evidence we cannot say that it went wrong.
It is also true that the notice by the Municipal
Corporation to demolish the house was given two
months prior to the auction, but there is nothing on the
record to show when the house was actually
demolished. Some time must have elapsed between the
notice and the actual demolition. The only evidence in
regard to the demolition of the house is that of the 1st
respondent; and it is not suggested in the cross-
examination that the demolition of the house was before
the auction. On the uncontradicted evidence of the 1st
respondent, we must hold, agreeing with the High
Court, that the 1st respondent was in a worried state of
mind because of the said two circumstances which might
have been responsible, to some extent, for his not
taking immediate active and effective steps to enforce
his right. The most important circumstance in the case
is, when did the 1st respondent come to know of the
commencement of the building operations by the
appellant on the suit site? The 1st respondent says in
his evidence that 7 or 8 months after the auction he
passed by the suit site and saw foundations had been

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dug therein and a few days thereafter he filed the suit.
The appellant, on the other hand, says in his evidence
that he started the construction after the disputed
auction and that it was completed in 5 or 6 months.
Though he says in the cross-examination that he applied
to the Municipality for permission to build, he did not
produce either a copy of that application or the sanction
issued to him by the Municipality. He is not even
prepared to deny that he got the sanction only in March
1955. The trial court surmised without any evidence that
at the time the 1st respondent saw the foundations the
stage of the construction indicated that the building
operations must have commenced two months earlier.
The High Court rightly pointed out that it was a pure
surmise and accepted the evidence of the 1st
respondent that a few days after he saw the foundations
being dug in the suit site he filed the suit. But all these
are beside the point, for it is not the case of the
appellant that because of the 1st respondent's conduct
he was induced to put up the building at a heavy cost :

his case throughout was that there was no contract at
all. If so, there was no question of his being induced to
act to his detriment because of the conduct of the 1st
respondent. Therefore, except for some delay, there are
no circumstances within the meaning of the aforesaid
decisions which should induce a court to refuse in its
discretion to give a relief of specific performance. The
High Court rightly held that it was a fit case where the
plaintiff should have been given a relief of specific
performance.

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B. R. Rangaswamy vs D. Syed Younous & ors
,
ILR 1999 KAR 2539

"Head Note: (C) SPECIFIC
PERFORMANCE ACT, 1877 (Central Act No.l of
1877) SECTION When it is proved that the
Agreements that have came into existence
subsequent to the Agreement to sell in favour
of the plaintiff, are of doubtful nature, the
Court should order specific performance of the
Agreement in favour of the plaintiff."

Sant Lal v. Shyam Dhawan, AIR 1986 Del 275

"16. Even after finding and holding that the
defendant had failed to perform his part of the contract
inasmuch as he had failed to discharge the aforesaid
three obligations cast upon him under the agreement to
sell, the plaintiff, in order to succeed in this suit for
specific performance, has to aver and prove that he has
always been ready and willing to perform the essential
terms of the contract which are to be performed by him
and this is the requirement of
S.16(c)
of the Specific
Relief Act, 1963. In other words, the aforesaid
requirement of law has to be proved by the plaintiff
notwithstanding the aforesaid default on the part of the
defendant in respect of the performance of the
obligations cast upon him. The averments of continuous
readiness and willingness to perform the essential terms
of the contract in question are set out in the plaint and

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now the only question to be answered and which forms
the subject-matter of issue No.1 is the continuous
readiness and willingness on the part of the plaintiff to
perform his part of the contract and the only essential
term of the contract to be performed by the plaintiff is
the payment of the balance price at the time of the
execution and the registration of the sale deed by the
defendant. The question of payment of balance price
could occur only after the defendant had got the sale
permission from the D.D.A. as also the income-tax
clearance certificate and the vacant possession of the
house in question from his tenant. The stage of the
payment of the balance price never arose in this case on
account of the failure on the part of the defendant in the
matter of performance of his part of the contract. The
requirement of law is simply the continuous readiness
and willingness on the part of the plaintiff to perform his
part of the contract throughout from the
commencement of the agreement to sell till the hearing
of the suit but that does not mean that the plaintiff was
expected to carry on the cash balance price of
Rs.1,45,000/- in his pocket during all the aforesaid
period, but what he was to show was simply his
continuous readiness and willingness to pay that balance
price only as and when the appropriate occasion for the
same was to arise. The expression "readiness and
willingness" cannot be treated as a strait- jacket formula
and has to be determined from the totality of facts and
circumstances relevant to the case and also to the
conduct of the party concerned and in order to be real
has to be backed by the capacity to do so.

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17. In dealing with the conduct of the plaintiff one
has to look to the replies Exts. P11 to P13 sent by the
plaintiff to the various notices of the defendant. In Ext.
P11 dated 10-3-1980 and Ext. P12 dated 9-4-1980 the
plaintiff not only denied the allegations of the defendant
doubting the financial capacity of the plaintiff to pay the
balance price of Rs. 1,45,000/- but further asserted his
being in possession of ready money to purchase the
property and to fulfil his part of the contract and further
called upon the defendant to perform his part of the
contract and to get the necessary sale permission so that
the sale deed could be executed. Finally he also
threatened the defendant to file a suit in case the
defendant defaulted to comply with the same. Similarly
the plaintiff further threatened the defendant to bring
legal proceedings against him for specific performance of
the contract in case he failed to inform him within a
week of the receipt of the same that he had already
applied for the grant of sale permission and was ready
and willing to perform his part of the contract and to
execute the sale deed in his favour. It would be also
seen that the plaintiff gave in these notices only 7 days
time to the defendant to obtain the sale permission from
the D.D.A. and not unreasonably long time so as to
evince an intention on the part of the plaintiff that he
was trying to dodge the defendant and was not
interested in the finalisation of the sale transaction. On
the other hand, the above mentioned assertions and
denials on the part of the plaintiff in Ext. P11 to Ext. P13

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go to show his keenness for the finalisation of the sale.
The plaintiff's having immediately returned the affidavit
sent to him by the defendant for obtaining sale
permission from D.D.A., after completing the same still
goes to strengthen the aforesaid inference in favour of
the plaintiff, notwithstanding the aforesaid assertions on
the part of the plaintiff the defendant, under a lame
excuse, as already pointed out above, withdrew his
application for the grant of sale permission from the
D.D.A. The story about the plaintiff having expressed his
incapacity to pay the balance sale price on the
'namkaran' ceremony of the defendant's nephew and
wanting a further period of about six months to enable
him to arrange the same, has already been found to be
dubious especially when there was no occasion for the
same in view of the defendant not having performed his
part of the contract.

19. The conclusion about the plaintiff having been
always ready and willing to perform his part of the
contract in respect of the payment of the balance price is
supported on a number of authorities. In Bank of India
Ltd. v. Jamsetji A.H. Chinoy. Chinoy and Co., AIR 1950
PC 90 (at p. 96) it was observed as follows:--

".........It is true that plaintiff 1 stated that he was
buying for himself, that he had not sufficient
ready money to meet the price and that no
definite arrangements had been made for
finding it at the time of repudiation. But in
order to prove himself ready and willing a

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purchaser has not necessarily to produce the
money or to vouch a concluded scheme for
financing the transaction. The question is one
of fact and in the present case the appellate
Court had ample material on which to found
the view it reached."

Their Lordships of the Privy Council then
added to concur with Chagla A.C.J. whose
observations run as under:--

"In my opinion, on the evidence already on record
it was sufficient for the Court to come to the
conclusion that plaintiff 1 was ready and willing
to perform his part of the contract. It was not
necessary for him to work out actual figures
and satisfy the Court what specific amount a
bank would have advanced on the mortgage of
his property and the pledge of these shares. I
do not think that any jury -- if the matter was
left to the jury in England -- would have come
to the conclusion that a man, in the position in
which the plaintiff was, was not ready and
willing to pay the purchase price of the shares
which he had bought from defendants 1 and

2."

18. The testimony of the plaintiff as PW 1 shows that
he was prepared to pay the entire balance price agreed
upon even at the time of the execution of the agreement
to sell Ext. P2 and since then up-till now he had been
prepared to pay the same. The authenticity of this
assertion in his testimony finds full support from the fact

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that he had actually brought in Court a sum of Rs.
1,60,000/- and was prepared to pay it to the defendant at
that time and this cash amount he had brought in Court
even on the previous date of hearing, as stated by him in
his cross-examination which was not challenged. His
cross-examination shows that up-till 25-2-1980 there was
a sum of Rs. 70,000/-belonging to him in his firm M/s.
Lakshmi Paper Mart and another sum of Rs. 11,000/- in
his wife's name in that very firm and further that he had
jewellery also at his house. He has further deposed that
approximately a sum of Rs. 75,000/- was lying in the said
firm in his name on 29-9-1979, the date of the
agreement to sell in question. He further goes on to say
that the aforesaid amounts in his name as also in the
name of his wife in the said firm were continuing and the
amount in his name must have swollen to Rs. 80,000/-
approximately. Regarding the cash amount of Rs.
1,60,000/- having been brought by him in Court during
the course of his testimony he stated that he had brought
this cash amount from his aforesaid firm and his brothers.
The aforesaid facts would certainly go to prove the
continuous readiness and willingness on the part of the
plaintiff to perform his part of the contract, i.e., the
payment of the balance price at the appropriate time as
and when it could come about and the contention of the
learned counsel for the defendant that the plaintiff had
not brought the account books of his firm nor the income-
tax return for the year 1979-80 and for which reason his
aforesaid testimony ought not to be believed, cannot be
accepted. The plaintiff was bold enough to assert in his
cross-examination that he sent his income-tax returns

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every year and that the income-tax return for the year
1979-80 included his aforesaid deposits. The agreement
to sell was executed on 29-9-1979 and the plaintiff stated
that on that day a sum of Rs. 75,000/- approximately
would be lying in his aforesaid firm in his name. He
conceded that he had not brought the books of account
pertaining to that day but hastened to assert that if it was
sought he would bring the same also, and thereafter the
defendant did not muster courage to request for the
production of the same in Court by the plaintiff. His
bringing in Court a cash amount of Rs. 1,60,000/- is
convincingly sufficient to dispel the contentions of the
learned counsel for the defendant regarding the
continuous readiness and willingness on the part of the
plaintiff to perform his part of the contract regarding his
ability to pay the balance price at the appropriate time as
and when it could come and this inference is fortified from
the plaintiff's conduct asserted in his notices Exts. P11 to
P13 also referred to above. It could not be difficult for
him to arrange the money from his said firm and his
brother. However, he was under no obligation to show the
cash amount or a bank draft in the sum of Rs. 1,45,000/-
to the defendant who had failed to perform his part of the
contract and that demand on the part of the defendant in
his notices sent to the plaintiff was unwarranted and
totally premature.

20.
In
Ramesh Chandra Chandiok v. Lal Sabharwal
,
(dead) by his legal representatives, AIR 1971 SC 1238 A
agreed to purchase on 18-7-1955 from R a leasehold plot
and which receipt for earnest money provided that the
balance of consideration was to be paid within a month at

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the time of the execution of the registered sale deed
which one of the conditions of the leasehold which was
executed subsequently by the Government in R's favour
only on 21-5-1956 was that the lessee was required to
obtain sanction of the Government before transfer of the
lease hold plot. R informed A by letter dated 11-8-1955
that the sale deed would be executed by him only after
required sanction and further undertook to inform A as
soon as the sanction was obtained. R, however, never
took any steps till 11-11-1956 to apply for sanction but
on the other hand informed A that he was not willing to
wait indefinitely for want of sanction and that if the rest
of the consideration was not paid within a week, the
earnest money would be forfeited and the agreement
cancelled. Even though R applied for and obtained the
required sanction on 20-11-1956, he did not inform A
about it and cancelled the contract. On 4-12-1956 A filed
a suit for specific performance after inquirying himself
from the Government about the giving of sanction. It was
observed as follows:--

"....Be that as it may R could not call upon A to
complete the sale and pay the balance money
until the undertaking given in Exhibit P-7 dated
11-8-1955 (regarding sanction) had been
fulfilled by R. The sanction was given in
November 1956 and even then R did not inform
A about it so as to enable A to perform its part
of the agreement of sale.........."

It was also held as follows:--

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"On the facts and circumstances of the case A must
be held to be ready and willing to perform his
part of the contract till date of suit and was
therefore entitled to a decree for specific
performance. Readiness and willingness cannot
be treated as a strait-jacket formula. These have
to be determined from the entirety of facts and
circumstances relevant to the intention and
conduct of the party concerned. There was no
material on record to show that A at any stage
was not ready and willing to perform his part of
contract or that he did not have the necessary
funds for payment when the sale deed would be
executed after the sanction was obtained........."

29. Thus, in view of the aforesaid discussions, I
hold that the plaintiff has always been ready and willing
to perform his part of the contract and the defendant
had failed to perform his part of the contract, and both
these issues are decided in favour of the plaintiff and
against the defendant.

30. In view of my findings in issues 1 and 2, I
pass a decree for the specific performance of the
agreement of sale in question dated 29-9-1979 with
costs in favour of the plaintiff and against the defendant
and the defendant is directed to do all acts necessary,
viz., (i) to obtain the sale permission from the D.D.A.

(ii) to obtain the income-tax clearance certificate and

(iii) to put the plaintiff into full actual physical

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possession of the house in question. These conditions be
satisfied by the defendant within three months from
today and thereafter the sale deed be executed and got
registered by him within one month thereafter on
receipt of the balance sale price from the plaintiff.

Order Accordingly."

35.
In support of the arguments that has been putforth on

behalf of respondent Nos.2 and 3, counsel has placed reliance

on the judgment of the Apex Court in the case of
Lourdu Mari

David and others vs. Louis Chinnaya Arogiaswamy and

others
reported in AIR 1996 SC 2814 and drew the attention

of this Court to paragraphs 1 to 3 wherein, it is held as under:

"1. This special leave petition arises from the
judgment of the Division Bench of the High Court of
Madras made on 12-6-1996 in LPA No. 72 of 1991. The
petitioner had filed OS No. 6 of 1977 on 10-9-1980
before the Second Additional Sub-Judge at Pondicherry
for specific performance of the agreement of sale dated
18-10-1976 to convey the property in possession as
tenants under the agreement. It is their case that a sum
of Rs 31,000 was sale consideration and a sum of Rs
4000 and odd was paid as part consideration. The
balance consideration was Rs 28,500. He was always
ready and willing to perform his part of the contract but
the respondents were avoiding to execute the sale deed.
Though the trial court found that Respondents 1 and 2

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committed breach of the agreement of sale but denied
to them specific performance of the agreement on the
ground that Respondent 3 was a bona fide purchaser for
value without notice of prior agreement with the
petitioner. The petitioner filed the appeal in the High
Court. Pending appeal, he died. Therefore, his legal
representatives have come on record. The learned
Single Judge by judgment and decree dated 11-9-1980
agreed with those findings and held that the 3rd
respondent was a bona fide purchaser without notice of
the agreement. In the impugned judgment, the Division
Bench rejected the claim on the additional ground that
the plaintiff did not come to the Court with clean hands.
Therefore, he is disentitled to relief of specific
performance. Under
Section 20
of the Specific Relief Act,
1963, (for short "the Act") the decree for specific
performance is in the discretion of the court but the
discretion should not be refused arbitrarily. The
discretion should be exercised on sound principles of law
capable of correction by an appellate court.

2. It is settled law that the party who seeks to avail

of the equitable jurisdiction of a court and specific

performance being equitable relief, must come to the

court with clean hands. In other words the party who

makes false allegations does not come with clean hands

and is not entitled to the equitable relief. The Division

Bench has pointed out in the judgment three grounds

which disentitle the plaintiff to the equitable relief as he

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came with a positive case of incorrect and false facts as

set out in paras 4 to 6 thus:

"On a perusal of the records we are
entirely in agreement with the view
expressed by the learned Judge. It is quite
clear that the plaintiff has not come to Court
with clean hands. There are three
circumstances which are pointed out by the
learned Judge and we find that they are
sufficient to warrant refusal of the claim for
specific performance. First is that the
plaintiff claimed that he was already in
possession of Door No. 2/53 as a lessee and
he was given possession of Door No. 1/53 on
the date of the agreement itself, viz., 18-10-
1976 by Defendants 1 and 2. But, in the
course of evidence he did not say anything
about taking possession pursuant to the sale
agreement. On the contrary, he deposed
falsely that he did not mention in the plaint
about getting possession of Door No. 1/53
on 18-10-1976. It is mentioned in the
evidence that Door No. 1/53 was not given
to the plaintiff at any time in December
1976. The tenant who was occupying the
said portion has vacated the same and gave
possession to Defendants 1 and 2 who in
turn handed over the same to the third
defendant. Thus, the case of the plaintiff
regarding possession of Door No. 1/53 is

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false. Learned counsel contends that there
was no mention in the plaint as to the date
on which he took possession of Door No.
1/53. This contention is not correct. In para
5 of the plaint it is mentioned specifically
that in pursuance of the agreement, the
plaintiff who was in possession of Item 2 was
given possession of Item 1 on that date and
that he was in possession of both the items
since then under the agreement dated 18-
10-1976. This plea is clearly false. DW 3 who
was occupying Door No. 1/53 has given
evidence that the portion was vacated on
12-12-1976 by his father by taking a sum of
Rs 2500 from the prior owner. The plaintiff
has himself stated as PW 1 that the tenant
delivered possession to the owner of the
property on 15-12-1976. That relied his case
that he had taken possession even on the
date of agreement viz., 18-10-1976. But, in
another place PW 1 has stated that the
tenant of Door No. 1/53 vacated the portion
on 5-12-1976. Thus, his evidence is not only
false, but also discrepant.

5. The second circumstance is that the
plaintiff has made an express allegation in
paras 7 and 9 of the plaint that he informed
the third defendant in the first week of
December 1976 about the agreement when
the third defendant inspected the house for

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the purpose of purchasing the same. This
plea is also false. PW 1 has not chosen to
make a whisper about this in his
deposition. On the other hand, it is
contended that there is no denial of the
said allegation in the written statement but
it is not correct. In the written statement,
the third defendant has clearly stated that
at no time he had any talk with the plaintiff
and he was never informed about the
agreement with the plaintiff.

6. The third circumstance is that the
plaintiff claimed that he had paid a sum of
Rs 400 in addition to the sum of Rs 4000
paid as advance to the second defendant at
the latter's request for vacating Door No.
1/53. In the deposition he had stated that
he had mentioned the same in his plaint,
but it is not so. It is also a false plea as
found correctly by the learned Judge. The
above three circumstances are sufficient to
uphold the refusal of specific performance.
It has been held by this Court repeatedly
that a person who has come to court with a
false plea is not entitled to the equitable
relief of specific performance."

3. In addition, the Division Bench also agreed with
the learned Single Judge and held that the third
respondent had no knowledge whatever of the plaintiff's
agreement and, therefore, he was a bona fide purchaser

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for value without notice. This is a concurrent finding of
fact after appreciation of evidence. It would thus be
seen that on both the grounds, the courts below rightly
refused to exercise the discretion on legal principles to
grant specific performance. It does not, therefore,
warrant interference."

36. In view of the above arguments putforth on behalf of the

parties and the material evidence available on record, in the

background of the legal principles enunciated in the aforesaid

decisions, the following points would arise for consideration:

(i) Whether the plaintiff has made out a case for
grant of decree of specific performance?

(ii) Whether the plaintiff has successfully
established that he was always ready and
willing to perform his portion of the contract?

(iii) Whether defendants 2 and 3 establish before
the Court that they are the bonafide
purchasers of suit property for value, as such,
they are not liable for repayment of earnest
money and damages?

(iv) Whether the impugned judgment is suffering
from legal infirmity and perversity and thus
calls for interference?

(v) What Order?
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37. Regarding Point Nos.1 to 4:In the case on hand, first

defendant flatly denied the very execution of suit agreement

marked at Ex.P.1. However, the cross-examination of D.W.1

and the cross examination made by counsel for first defendant

to P.W.1 on cumulative consideration would sufficiently

establish that suit agreement stands proved. The signature

found on Ex.P.1 on all pages is admitted by D.W.1 stating that

it is his signature and he has also put the date on Ex.P.1 which

is dated 18.10.1995. First defendant is an Ayurvedic Doctor

and therefore, it should not lie in the mouth of first defendant

that he has subscribed his signature on blank document which

has been misused by the plaintiff for concocting the suit

agreement marked at Ex.P.1. Since Ex.P.1 stands proved as

per judgment of the Trial Court, and in the absence of any

challenge made by the first defendant by filing a cross objection

or supporting the cross-objection filed by defendants 2 and 3

before this Court, and having remained absent before this

Court, it is to be held that suit agreement stands proved by the

plaintiff. Consequently, payment of Rs.55,000/- as advance

sale consideration made by plaintiff to the first defendant also

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stands proved. Hence detailed discussion insofar as proof of

suit agreement is necessary in this appeal.

38. However, according to P.W.1, he has paid a further sum

of Rs.40,000/- on 07.11.1995 at the request of first defendant.

In this regard, except oral testimony of P.W.1 there is no

evidence placed on record. When a sum of Rs.55,000/- is paid

by plaintiff to first defendant and same has been entered in the

agreement of sale, why would the plaintiff make payment to

first defendant within a short span of time in a sum of

Rs.40,000/- that too without taking documentary proof thereof

is a question that remains unanswered by the plaintiff.

39. No explanation whatsoever is forthcoming on record in

the oral testimony of the plaintiff in this regard except a vague

sentence is found in plaint as to non taking the document which

would evidence the payment of additional sum of Rs.40,000/-.

It is pertinent to note that in the notice which is marked at

Ex.P.2, no such explanation is forthcoming. While drafting the

plaint, however, plaintiff has chosen to explain that defendant

promised that he would adjust the additional sum of

Rs.40,000/- in the balance sale consideration. Therefore,

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plaintiff did not insist for any documentary proof insofar as

additional payment of Rs.40,000/- is concerned.

40. Fact remains that the agreement is dated 18.10.1995 and

legal notice came to be issued on 20.11.1995. Within such

short span of time, how can plaintiff make number demands for

execution of sale deed is also a question that remains

unanswered by the plaintiff. Admittedly, two months' time was

no doubt stipulated in Ex.P.1 for completion of sale transaction.

41. The sale deed executed in favour of defendants 2 and 3

by the first defendant is dated 27.11.1995. In this regard,

there is sufficient force in the argument canvassed on behalf of

plaintiff that after receipt of notice Ex.P.2, first defendant has

executed sale deed in favour of defendants 2 and 3. In this

regard, material evidence placed on record would go to show

that there was an agreement of sale dated 08.09.1995 which is

almost 40 days earlier to the execution of Ex.P.1. According to

plaintiff, Ex.D.1 which is the agreement entered into by

defendant No.1 in favour of defendants 2 and 3 is a concoction

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and it is only to defeat the rights of the plaintiff in respect of

the suit agreement marked at Ex.P.1 dated 18.10.1995.

42. As such, this Court perused Ex.D.1 in a meticulous

manner. Ex.D.1 is proved by defendants not only by examining

2nd defendant, but also by examining one of the witnesses to

Ex.D.1 who is none other than the son-in-law of the first

purchaser under Ex.D.2. He is examined as D.W.3, who, in his

evidence has stated that he is an advocate and he has drafted

Exs.D.1 and D.2. It has also come in the evidence that D.W.3

has witnessed the sale consideration being passed on and the

same was paid through cheques from the bank account of the

husband of the first purchaser.

43. These aspects of the matter would go to show that it is

the first defendant who is the mischief monger in the whole

transaction who has executed agreement with defendants 2

and 3 on 08.09.1995 and he suppressed the said agreement

when he entered into suit agreement with the plaintiff.

44. In other words, it is plaintiff who is the second agreement

holder or subsequent agreement holder in respect of suit

property. Agreement of defendants 2 and 3 with defendant

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No.1 is first in time. Therefore, contentions urged on behalf of

plaintiff that defendants 2 and 3 cannot be construed as

bonafide purchaser for value, cannot be countenanced in law.

45. The contents of Exs.D.1 and D.2 on comparison would

clearly corroborated each other and compliment to each other

inasmuch as in the sale deed which is marked at Ex.P.2

executed by first defendant in favour of defendants 2 and 3,

there is a mention about suit agreement and the date of the

agreement is also mentioned as 08.09.1995.

46. It is pertinent to note that while cross-examining the first

defendant, except suggesting that first defendant in active

collusion with defendants 2 and 3 has concocted the document,

no other question is put to first defendant as to why he

suppressed the said agreement while executing the suit

agreement.

47. These aspects of the matter when viewed cumulatively in

respect of the suit property, depicts that defendants 2 and 3

have contracted to purchase the suit property on 08.09.1995

and ultimately culminated in execution of the sale deed by the

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first defendant in favour of defendants 2 and 3 vide Ex.D.2.

First defendant might have thought that if property is sold in

favour of defendants 2 and 3 he would be absolved from his

liability to execute the sale deed in favour of the plaintiff.

Therefore, principally the remedy for plaintiff is against

defendant No.1.

48. Furthermore, since the property is sold to the 2nd and 3rd

defendant by first defendant on 27.11.1995, the suit which

came to be filed by plaintiff on 11.12.1995 after coming to

know of the reply notice initially against first defendant and

subsequently amending plaint averments and impleading

defendants 2 and 3 to the suit would go to show that plaintiff

being deceived by first defendant was entitled to have remedy

only against first defendant at the first instance.

49. Be it what it may, fact remains that the sale in favour of

defendants 2 and 3 by first defendant being in pursuance of the

agreement dated 08.09.1995, the said sale is to be held as a

proper sale.

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50. Having said so, it is settled principles of law and requires

no emphasis that the liability on the property, if any, would

pass on with the property. No doubt, while passing the decree,

learned Trial Judge has ordered for refund of Rs.55,000/- with

interest at 6% per annum. However, the learned Trial Judge

has also directed to pay additional sum of Rs.55,000/- as

damages with interest at 6% per annum. The reason for

ordering damages by the Trial Court in a additional sum of

Rs.55,000/- is based on clause No.9 of Ex.P.1. P.W.1, in his

cross-examination has flatly denied clause No.9 of Ex.P.1.

51. It is the evidence of P.W.1 that he is the person who

instructed the stamp vendor to prepare Ex.P.1 and stamp

vendor prepared the contents of Ex.P.1 based on the

instructions given by P.W.1 himself. When P.W.1 has flatly

denied clause 9, the learned Trial Judge directing that sum of

Rs.55,000/- is to be paid as damages based on clause 9 and

penalizing defendants 2 and 3 insofar as damages is concerned

is thus incorrect and needs interference by this Court.

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52. However, since the first defendant has not challenged the

decree insofar as first defendant is concerned, the decree

passed by the Trial Court needs no interference.

53. Further, there cannot be any dispute as to principles of

law enunciated in the decisions relied on by counsel for

appellant or respondents.

54. In the case of Durga Prasad supra, their Lordships of the

Apex Court were of the opinion that subsequent transferee

under the conveyance outstanding in his favour having paid the

purchase money when succeeds, what is the proper form of the

decree. In the case of hand, since the defendants have got an

agreement in their favour on 08.09.1995, they cannot be

termed as subsequent transferee and therefore, same is not

applicable to the facts of the present case.

55.
In the case of
Ramesh Chandra Chandiok
supra, their

Lordships of the Apex Court ruled as to how discretion for grant

of specific performance must be exercised. Again, having

regard to the facts and circumstances of the case, since

defendant Nos.2 and 3 are to be treated as earlier agreement

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holders, they cannot be termed as third party vis-à-vis, plaintiff

and hence, said judgment is not applicable to the facts of the

case.

56.
In the case of
Abdul Kayum Ahmad
supra, their Lordships

had taken into consideration
Section 12(c)
and
21(a)
of the

Specific Relief Act, and dealt with benefit of the promisor so as

to exercise discretion in his favour for specific performance.

They also ruled that subsequent purchaser cannot claim to take

up cudgels for the original promisor. The said decision is also

of no use to the appellant/plaintiff inasmuch as it is the

defendants who are the agreement holders first in time.

57.
In
Prakash Chandra
's case supra, the Court dealt with

ordinary rule of specific performance in granting decree of

specific performance and refusal should end up in damages

which should constitute adequate relief.

58.
In the case on hand, since the defendant Nos.2 and 3 are

the prior agreement holders than that of the appellant and the

same is established by placing necessary evidence on record,

Prakash Chandra
supra cannot be taken advantage by the

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plaintiff. Further, this Court is now enhancing the interest rate

from 6% to 12% which should meet the interest of the

appellant and he has been adequately satisfied.

59.
In
M. L. Devender Singh
case supra, dealt with the

discretion of the Trial Court in grant or otherwise of the specific

performance in the given set of circumstances. In the said

ruling, the Apex Court ruled that the Trial Court in such

circumstances, while exercising discretion, should not exercise

discretion arbitrarily but on the sound and reasonable grounds

guided by judicial principles.

60. In the impugned judgment, learned Trial Judge has

rightly applied the said guidance while ordering refund of

money in the facts and circumstances of the case.

61.
In the case of
Mademsetty Satyanarayana
supra, the

Court dealt with
Section 22
of the Specific Relief Act and has

ruled as to how the Court should exercise its discretion and also

dealt with the
Limitation Act
and the time for completion of the

contract. The said decision can also be distinguished on facts

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with regard to the present case and therefore, same is not of

any avail in advancing the case of the appellant further.

62.
In the case of
B. R. Rangaswamy
's supra, this Court held

that when the agreement is proved, subsequent agreement to

sell in favour of the plaintiff are doubtful, Court should order for

specific performance in favour of the earlier agreement holder.

Infact, said decision helps the defendants rather on plaintiff

inasmuch as on 08.09.1995 there was an agreement entered

into by the first defendant in favour of defendant Nos.2 and 3.

63. In Sant Lal's case, Delhi High Court, while dealing with

the grant of specific performance or otherwise, has dealt in

detail the principles of law that would govern the field of

specific performance and ultimately ruled that conditions have

been satisfied by the defendants and therefore, sale deed is to

be executed. The facts of the said case are different from the

facts of the present case and therefore, same is not of any use

in taking the case of the plaintiff further.

64.
In the decision relied upon by the learned counsel for

respondent in the case of
Lourdu Mari David
supra, Apex Court

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while dealing with a situation about the equitable jurisdiction of

a Court, while grant specific performance, in para-2 referred to

supra, has clearly held that the Courts are to be guided by the

circumstances which would allow a plaintiff to have a decree or

rejection thereof.

65. Applying the principles of law enunciated in the case of

Lourdu Mari David
supra to the case on hand, since the

defendant Nos.2 and 3 are the earlier agreement holders, they

are entitled for decree of specific performance and therefore,

dismissal of the suit of the plaintiff by the Trial Court is just and

proper.

66. Further, as discussed supra, since there is suppression of

material facts by the first defendant while entering into suit

agreement on 18.10.1995 about the earlier agreement dated

08.09.1995, principles of law enunciated in the decisions relied

on by the plaintiff will not be much avail in allowing the appeal

prayer.

67. Further, since the liability of payment of advance amount

with interest would pass on with the property, defendants 2

and 3 are bound to satisfy the payment of Rs.55,000/- with

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interest at 6% per annum. However taking note of the fact

that amount was paid by plaintiff which was even denied by

first defendant by denying Ex.P.1 and also taking note of the

fact that immovable property would always appreciate, the

impugned judgment and decree needs modification insofar as

interest rate at 12% per annum instead of 6% per annum.

68. However, if defendants 2 and 3 were to satisfy the decree

of payment of Rs.55,000/- being advance sale consideration

with 12% interest per annum, by virtue of indemnity clause

under Ex.D.2, defendants 2 and 3 would always be entitled to

recover the said sum of money from the other assets of the

first defendant.

69. Insofar as damages are concerned, defendants 2 and 3

being not a party to Ex.P.1 and their agreement is being earlier

to suit agreement, they cannot be held liable for damages of

Rs.55,000/- as ordered by the learned Trial Judge. More so,

when the plaintiff himself has denied clause 9 in Ex.P.1.

Therefore, to that extent, the impugned judgment and decree

needs interference by this Court.

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70. In view of the foregoing discussion, point Nos.1 and 2 are

answered in the negative and, point Nos.3 and 4 partly in the

affirmative.

71. Regarding Point No.5: In view of the finding of this Court

on point Nos.1 to 4 as above, the following:

ORDER

(i) Appeal and Cross Objection are allowed in part.

(ii) While modifying the decree of the Trial Court,
plaintiff is entitled for refund of earnest money of
Rs.55,000/- with 12% interest per annum payable
by all defendants and Rs.55,000/- as damages
recoverable by the plaintiff from first defendant
only, with interest at 6% per annum.

(iii) Cross Objection insofar as awarding damages of
Rs.55,000/- payable by defendants 2 and 3 with
6% per annum is hereby set-aside.

(iv) No order as to costs.

Sd/-
JUDGE

kcm

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