Karnataka High Court

P N Madhava Kumar vs R Ramesha on 21 November, 2023

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RFA No. 1191/2010

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 21ST DAY OF NOVEMBER, 2023

PRESENT
THE HON'BLE MRS JUSTICE K.S.MUDAGAL
AND
THE HON'BLE MR JUSTICE K V ARAVIND
REGULAR FIRST APPEAL NO. 1191/2010 (SP)
BETWEEN:

1. P N MADHAVA KUMAR
S/O LATE NARAYANA SETTY
AGED ABOUT 51 YEARS

2. P N SRIDHAR
S/O LATE NARAYANA SETTY
AGED ABOUT 46 YEARS
BOTH ARE R/AT NO.648/91,
5TH CROSS, 10TH MAIN, 2ND BLOCK,
BSK I STAGE, BANGALORE - 560 050
3. P N PADMANABHA
S/O LATE NARAYANA SHETTY
AGED ABOUT 48 YEARS
4. P N SUBRAMANYAM
Digitally
S/O LATE NARAYANA SHETTY
signed by K S AGED ABOUT 43 YEARS
RENUKAMBA
Location: NOS.3 AND 4 ARE R/AT NO.14/296,
High Court of MURUGAN TAKES ROAD,
Karnataka
KUPPAM, ANDRAPRADESH ... APPELLANTS

(BY SRI.M.V.CHANDRASHEKAR REDDY, ADVOCATE)

AND:

1. R RAMESHA
S/O LATE RANGAPPA
AGED ABOUT 35 YEARS
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RFA No. 1191/2010

2. BHARATHI RAMESHA
W/O R RAMESH
AGED ABOUT 34 YEARS

BOTH ARE R/AT 188/3, 3RD CROSS,
14TH MAIN, FIRST BLOCK,
BSK I STAGE, HANUMANTHA NAGAR
BANGALORE - 560 050 ... RESPONDENTS

(BY SRI. H R ANANTHA KRISHNA MURTHY, ADVOCATE)

THIS R.F.A. IS FILED UNDER SECTION 96 OF
CPC
AGAINST
THE JUDGMENT AND DECREE DATED 15.04.2010 PASSED IN
OS.NO.5268/2005 ON THE FILE OF THE V ADDL. CITY CIVIL AND
SESSIONS JUDGE, BANGALORE, DECREEING THE SUIT FOR
SPECIFIC PERFORMANCE.

THIS APPEAL COMING ON FOR DICTATION, THIS DAY,
K.S.MUDAGAL J., DELIVERED THE FOLLOWING:

JUDGMENT

Challenging the judgment and decree for Specific

Performance granted in favour of the respondents, the

defendants in O.S.No.5268/2005 on the file of the V Additional

City Civil Judge, Bengaluru have preferred this appeal.

2. The appellants were defendant Nos.1 to 4 and

respondents were plaintiff Nos.1 and 2 in O.S.No.5268/2005.

For the purpose of convenience, the parties are referred to

henceforth according to their ranks before the trial Court.

3. Plaintiffs filed O.S.No.5268/2005 before the trial

Court against the defendants seeking decree for Specific

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Performance of agreement of sale dated 25.03.2005 and other

alternative reliefs. The subject matter of the suit was

residential building bearing No.648/91 situated at 5th Cross,

10th Main, II Block, Banashankari-I stage, Bangalore-50.

4. The case of the plaintiffs in brief is as follows:

i) That defendant Nos.1 to 4 are the absolute owners

of the suit schedule property. The defendants agreed to sell the

said property to the plaintiffs for a consideration of

Rs.14,50,000/-. In pursuance of such agreement, they

executed the agreement of sale dated 25.03.2005 receiving

advance amount of Rs.3,00,000/-. Out of the said amount,

Rs.2,90,000/- was paid by Demand Draft and Rs.10,000/- was

paid in cash. Balance amount of Rs.11,50,000/- was agreed to

be paid at the time of registration of the sale deed. Plaintiffs

were always ready and willing to perform their part of the

contract. They made arrangements for funds and purchased

the demand drafts for balance sale consideration. Defendants

started evading execution of the sale deed. Therefore, the

plaintiffs got issued notice dated 20.05.2005 calling upon the

defendants to execute the sale deed. The defendants did not

respond to the said notice.

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ii) The plaintiffs spent in all Rs.31,700/- for obtaining

the documents etc. They are paying interest at 7.5% per

annum towards loan borrowed by them from HSBC Bank and

interest at 15% per annum towards loan borrowed from ICICI

Bank. The plaintiffs are entitled for decree of Specific

Performance. In the alternative, they are entitled to decree for

Rs.16,81,700/- towards advance sale consideration, liquidated

damages and expenses of the documents etc., Thus they

sought decree accordingly.

5. The defendants contested the suit by filing their

written statement. The gist of the written statement is as

follows:

i) Ownership of the suit property was admitted. It

was admitted that on 25.03.2005 they have executed Ex.P12.

But according to them, Ex.P12 was executed as security for the

loan of Rs.3,00,000/- borrowed by them for their family

commitments. It was agreed that Ex.P12 is only a security

document for the said loan and that was not intended to be

acted upon. Despite defendants repaying the said loan amount

and demanding the return of agreement of sale dated

25.03.2005, the plaintiffs did not return the same. To make

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unlawful gain, they have filed the suit. The value of the

property during the relevant period was Rs.50,00,000/-. That

also goes to show that the transaction was only a security

transaction.

ii) To the notice of the plaintiffs, the defendants issued

suitable reply dated 18.06.2005. The readiness and willingness

of the plaintiffs to perform their part of the contract was

denied. The availment of the loan by the plaintiffs for the

purpose of the transaction was also denied. The plaintiffs in

collusion with some other interested persons have made false

claim of agreement of sale and decree for Specific

Performance. Out of loan of Rs.3,00,000/-, the plaintiffs

deducted Rs.10,000/- by way of interest and only paid

Rs.2,90,000/-. Therefore the allegation that Rs.3,00,000/- was

paid as advance sale consideration is also disputed. The suit

property is the only dwelling house of the defendants. If decree

for Specific Performance is passed, they will be put to greater

hardship. Thus they sought dismissal of the suit.

6. On the basis of the said pleadings, the trial Court

framed the following issues:

i) Does the plaintiffs prove that the defendants
executed an agreement of sale on 25.03.2005 for selling

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the schedule property to them for a consideration of
Rs.14,50,000/- and that they paid Rs.3,00,000/- to them
as earnest money?

ii) Do the defendants prove that the agreement is just
a nominal document executed by them by way of security
for the hand loan that they obtained from the plaintiffs?

iii) Do the plaintiffs prove that they are always ready
and willing to perform their part of the contract?

iv) Do the plaintiffs prove that they are entitled for
relief of specific performance or for alternative relief as
prayed for by them?

v) What order or decree?

7. In support of the case of the plaintiffs, plaintiff No.1

was examined as PW.1. His mother-in-law and sister-in-law

were examined as PWs.2 and 3 and on their behalf, Exs.P1 to

P35 were marked. On behalf of defendants, defendant No.1

was examined as DW.1 and defendant No.4 was examined as

DW.2, on their behalf Ex.D1 was marked.

8. The trial Court on hearing the parties by the

impugned judgment and decree held that the defendants

admitted their signature and text of the document. Whereas

they failed to prove their defence that the said document was

only a security document, therefore, the plaintiffs' claim that

Ex.P12 the agreement of sale was proved. The plaintiffs have

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proved their readiness and willingness to perform their part of

the contract. Thus, the trial Court decreed the suit for Specific

Performance of agreement of sale. Defendants challenged the

said judgment in the above appeal.

Submissions of Sri. M.V.Chandrashekar Reddy, learned
Counsel for the appellant/defendants:

9. Though the defendants admitted their signature on

Ex.P12, they were not well versed with English language. It

was for the plaintiffs to prove the payment of the entire

amount. Though it was claimed that Rs.10,000/- was paid in

cash, the same was not proved. That substantiates the claim of

the defendants that the transaction was a loan transaction and

the plaintiffs deducted Rs.10,000/- out of the loan of

Rs.3,00,000/- as advance interest.

The witnesses examined by the plaintiffs were all

interested witnesses. They were the close relatives of the

plaintiffs. Though PW.1 claimed that he struck the deal through

the broker by name Jayaram, he was not examined. The scribe

of Ex.P12 was not examined. The loan borrowed by plaintiff

No.1 was a personal loan. If really the loan was for purchasing

the property, the plaintiffs should have taken the title deed and

created lien on the same. Admittedly the original title deeds

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were with the defendants. That substantiated the claim of the

defendants that the transaction was a loan transaction.

As per
Section 16(c)
of the Specific Relief Act, 1963 ('the

Act' for short) as applicable to the present case, the plaintiffs

had the burden to prove that they were ready and willing to

perform their part of the contract all along. As per Ex.P20, the

plaintiffs surrendered the home loan before filing of the suit.

Therefore, it cannot be said that the plaintiffs were always

ready and willing to perform their part of the contract.

The evidence adduced by the plaintiffs regarding

execution of the document was very doubtful. Ex.P12 itself

states that in the case of breach of terms of agreement, the

plaintiffs were entitled only for refund of the amount with

liquidated damages of Rs.2,00,000/-. Therefore, the trial Court

was in error granting decree for Specific Performance. Even on

proving the execution of the document and the readiness and

willingness to perform the contract,
Section 20
of the Act

mandates that the Court has to exercise the discretion to grant

Specific Performance of contract only if all the conditions stated

therein are satisfied. In the present case, admittedly the

plaintiffs owned three houses and suit property was the only

dwelling house for the defendants. Therefore comparative

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hardship was on the defendants. On that count also, the decree

for Specific Performance is unsustainable.

10. In support of his submission he relies on the

following judgments:

(
i) Mayawanti Vs Kaushalya Devi1

(
ii) Sharadamma Vs Gunashekar2

(iii) Smt. Asharaj and Others Vs S.G.Nagaraj @
Suga Nagaraj3

(
iv) Kali Dei and another Vs Brundaban Malik4

(
v) Ramjan Khan and others Vs Baba Raghunath
Dass
and others5

(
vi) N.K Giriraja Shetty Vs N.K Parthasarathy
Shetty
and others6

(
vii) B.R Mulani Vs Dr.A.B Aswathanarayana7

(viii) Bal Krishna and Anr Vs Bhagwan Das (Dead)
by L.Rs and Ors8

(
ix) Vimlesh Kumari Kulshrestha Vs Sambhajirao
and Another9

(
x) U.N Krishnamurthy (Since Deceased) Thr.Lrs
Vs A.M.Krishnamurthy10

(
xi) Shamsher Singh Vs Rajinder Kumar11

(
xii) V Muthusami (dead) by LRS Vs Angammal and
Ors12
(1990) 3 SCC 1
LAWS (KAR)-2008-9-26
3 ILR 2014 Kar 5778
4 AIR 1972 ORISSA 132
5 AIR 1992 Madhya Pradesh 22
6 ILR 2006 KAR 1692
7 ILR 1992 KAR 2224
8 AIR 2008 SC 1786
9 (2008) 5 SCC 58
10 AIR 2022 SC 3361
11 2014 AIR SCW 3292
12 AIR 2002 SC 1279

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(
xiii) Ranganayakamma Vs Govinda Narayan13

(xiv) Bhaurao Dagdu Paralkar Vs State of
Maharashtra14

Submissions of Sri H.R.Anantha Krishna Murthy, learned
Counsel for the respondents:

11. The contention of the defendants that they were

not well versed with the English language was not established.

One of the defendants was a Government servant and the

document was attested by the daughter of the first defendant

who is an engineering student. Moreover, they admitted

execution of the document, but according to them, the

document was executed as security for repayment of the loan.

Therefore the burden was on them to establish their defence.

The defendants though claimed that they have paid the

interest, except their self-serving evidence, there was nothing

to prove the same.

The evidence adduced by the plaintiffs shows that the

document executed was agreement of sale and the plaintiffs

were always ready and willing to perform their part of the

contract. The contention that at the relevant time the property

was valued more than Rs.50,00,000/- was not established. So

far as hardship, the plaintiffs invested Rs.3,00,000/- in the

13 ILR 1982 KAR 1211
14 (2005) 7 SCC 605

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year 2005. Therefore, if Specific Performance is denied,

plaintiffs will be put to greater hardship as the plaintiffs will not

be in a position to acquire any such urban property for that

price after about 20 years. There is no merit in the appeal. He

sought for dismissal of the suit.

12. In support of his submissions, he relies on the

following judgments:

(
i) Dattatraya Vs Rangnath Gopalrao
Kawathekar
(dead) by his LRs and
others15
(
ii) Roop Kumar Vs Mohan Thedani16

(iii) Jayamma Vs Venkatesh Shetty and Ors17
(
iv) Narayan Bhagwantrao Gosavi Balajiwale
Vs Gopal Vinayak Gosavi18

(
v) Vishnu Vs Abdulgani19

(vi) K Prakash Vs B.R Sampathkumar20
(
vii) Zarina Siddiqui Vs A Ramalingam @ R
Amarnathan21

(viii) Basavaraj Vs Padmavathi22
(
ix) Prakash Chandra Vs Narayan23

(
x) Ferrodous Estates (PVT)Ltd Vs
P.Gopirathnam
(dead) & ors24

15 AIR 1971 SC 2548
16 AIR 2003 SC 2418
17 2017(1)KarLJ 100
18 AIR 1960 SC 100
19 2013(1) KCCR105
20 (2015) 1 SCC 597
21 (2015) 1 SCC 705
22 AIR 2023 SC 282
23 (2012) 5 SCC 403

24 Civil Appeal No.13516/2015 DD 12.10.2020

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13. On considering the submissions of both side and on

examination of the records, the points that arise for

consideration of this Court are:

(i) Whether the finding of the trial Court that the

defendants executed Ex.P12 agreeing to sell the suit property

for Rs.14,50,000/- is sustainable?

(ii) Whether the finding of the trial Court that the

plaintiffs were always ready and willing to perform their part of

contract is sustainable?

(iii) Whether the trial Court was justified in granting

decree for Specific Performance?

ANALYSIS:

Reg. Point No.1:

14. To prove that the defendants executed the

agreement to sell the suit schedule property for consideration

of Rs.14,50,000/- on receiving advance consideration of

Rs.3,00,000/-, the plaintiffs relied on the evidence of PWs.1 to

3 and Ex.P12 the agreement of sale. The defendants did not

dispute that they were the absolute owners of the suit schedule

property. As per Ex.P12 the agreement of sale, the defendants

agreed to sell the suit property for consideration of

Rs.14,50,000/- and they received advance sale consideration

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of Rs.3,00,000/-. Even out of that Rs.3,00,000/-,

Rs.2,90,000/- was paid by different demand drafts, drawn on

City Bank and ICICI Bank. The receipt of money under the

demand drafts was also not disputed. As per clause-2 of

Ex.P12, the defendants agreed to convey the property free of

all encumbrances and execute the sale deed within three

months of Ex.P12. The defendants agreed to execute the sale

within three months from the date of the said document.

15. On admitting the text of Ex.P12 and receipts of

demand drafts, the burden was on the defendants to prove

that Ex.P12 was executed as security for repayment of loan. It

was for them to prove that they had received a sum of

Rs.3,00,000/- mentioned in Ex.P12 as loan amount. It is no

doubt true that the plaintiffs did not examine the scribe of the

document or alleged broker, but on having admitted the

documents, the burden was on the defendants to prove that

the document was only a security document and was not

intended to be acted upon. Though much was argued to

contend that PWs.2 and 3 were interested witnesses, in the

light of their own admission regarding execution of Ex.P.12,

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PWs.2 and 3 being the relatives of the plaintiffs cannot be

blown out of proportion.

16. The next question is "whether the defendants

established their defence that Ex.P12 was only a security

document and not the loan transaction". The defendants in

their written statement though contended that they were

willing to return the loan amount and paid the interest accrued

from the date of execution of the same, except their self

serving statement, there was no proof of such payment of

interest. If the plaintiffs were dragging the matter, taking

advantage of Ex.P12, the normal course of conduct of a man of

ordinary prudence is to first tender the amount and issue

notice to the plaintiffs and call upon them to hand over the

document. But the defendants did not take any steps till the

plaintiffs issued notice to them as per Ex.P.33.

17. Learned Counsel for the appellants submits that the

plaintiffs issued notice even before the expiry of the stipulated

period of three months, therefore, there was no need to issue

notice before that. But according to the plaintiffs, the

defendants were trying to alienate the property. Therefore they

had to issue notice within stipulated time. Whatever it may be,

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to establish their defence, the defendants atleast could have

examined the witnesses to the document. Admittedly, the first

defendant's daughter was a witness to the document and she

was an engineering student. Atleast she could have been

examined to show that the document was a nominal document

not intended to be acted upon. Under the circumstances, the

trial Court was justified in holding that the defendants failed to

establish their defence that the document was a nominal

document or a security document for the loan transaction.

18. As rightly pointed out by the learned Counsel for

the plaintiffs/respondents,
Section 91
of the Indian Evidence

Act, 1872 bars leading of oral evidence to prove the terms of

the contract, if the contract itself is reduced to the form of a

document. Having executed Ex.P12 as the agreement of sale

the defendants were excluded from adducing any oral evidence

contrary to the terms stated thereon in view of
Section 91
of

the Evidence Act. Even otherwise, the defendants failed to

prove that there was loan transaction and they had paid the

interest, etc. Therefore, defendants cannot be permitted to

lead any evidence to the exclusion of terms of Ex.P12, that too,

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when they do not contend that the said document was obtained

from them by any fraud or coercion.

Reg. Readiness and willingness:

19. There is no dispute with regard to the legal

proposition that to claim relief of specific performance, the

proof of execution of the agreement of sale itself is not

sufficient.
Section 16(c)
of the Act as it stood in the year 2005

mandated that the plaintiffs have to aver and prove that they

were always ready and willing to perform their part of the

contract. Pleading and proving the same was the statutory

requirement under
Section 16(c)
of the Act.

20. According to the defendants themselves, plaintiff

Nos. 1 and 2 were both employed and they were earning

handsome income. It is suggested by the defendants

themselves to PW.1 that plaintiff Nos.1 and 2 were in the habit

of lending money and getting such documents executed. To

substantiate that defendants themselves produced Ex.D1 the

certified copy of the plaint in OS No.9162/2004. The

defendants contend that similar to the present case, plaintiff

No.2 got executed agreement of sale in respect of property

belonging to one Shanmugaraj and filed similar suit

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against him for specific performance of contract. Thereby it

becomes clear that financial affordability of the plaintiffs was

not in dispute.

21. Further the defendants themselves claim that

plaintiffs owned three properties. As per the defendants

themselves the plaintiffs had paid Rs.2,90,000/-, though not

Rs.3,00,000/-. They failed to establish that Rs.10,000/- out of

Rs.3,00,000/- was deducted as interest in advance. The

plaintiffs contend that to pay the balance sale consideration

they had availed loan from HSBC Bank. To prove that they

relied on Ex.P1 letter of HSBC Bank, Ex.P10 loan sanction letter

and Ex.P11 loan cancellation letter.

22. To prove that they were always ready and willing to

perform their part of the contract and were pooling funds, the

plaintiffs relied on Ex.P20 the letter said to have been issued

by HSBC Bank along with transaction details. The defendants in

the cross examination of PW.1 suggested that was a personal

loan. On that ground also the trial Court was justified in holding

that the plaintiffs were always ready and willing to perform

their part of the contract. We do not find any perversity or

illegality in the finding of the trial Court in that regard.

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Reg. Relief of specific performance:

23. The defendants contested the granting of the relief

of specific performance on two points. First one is that, as per

the stipulation under the head of breach of contract in Ex.P12,

plaintiffs were entitled only for refund of the earnest money

and liquidated damages of Rs.2,00,000/- and not for specific

performance. The second ground is that suit property is the

only dwelling house for all the four defendants together.

Whereas the plaintiffs owned three houses and they are

financially far above the defendants. If the suit for specific

performance is decreed, they become homeless. Such greater

hardship to them disentitles the plaintiffs to seek the decree for

specific performance.

24. PW.1 in his cross examination has admitted that

except the suit property the defendants have no other shelter.

He also admits that they have three houses for their living. It is

settled law that, even if the plaintiffs establish execution of

agreement of sale and their readiness and willingness, the

grant of decree of specific performance is not a matter of

course or a matter of right. That is discretionary relief.
Section
of the Specific Relief Act as it was applicable to the parties

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at the relevant time specifically states that the jurisdiction to

decree the specific performance is discretionary and the Court

is not bound to grant such relief merely because it is lawful to

do so.
Section 20
further states that discretion of the Court

shall not be arbitrary but sound and reasonable, guided by

judicial principles.

25.
Section 20(2)(b)
and (c) of the Act at the relevant

time which are relevant for the purpose of this case reads as

follows:

"20. Discretion as to decreeing specific performance.--

(1) 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.

(2) The following are cases in which the court may properly
exercise discretion not to decree specific performance:--

(a) xxxxxxxx

(b) 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; or

(c) where the defendant entered into the contract under
circumstances which though not rendering the contract
voidable, makes it inequitable to enforce specific performance."

26. Reading of the above provision shows that even if

the contract entered into between the parties is not voidable,

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looking to the circumstances under which the Court is satisfied

that it is inequitable to enforce specific performance, the Court

can reject the specific performance.
Section 20(2)(b)
of the

Act states that, if the contract involves some hardship to the

defendant which he did not foresee at the time of entering into

the contract, then discretion may not be exercised to grant

specific performance. In the present case, the evidence on

record shows that defendant Nos.1 to 4 were economically not

well placed as compared to the plaintiffs. Secondly, in Ex.P12

the plaintiffs' own document i.e., agreement, it is stated that

vendors agreed to sell the suit property to meet the expenses

towards domestic and legal necessities of their family. The

evidence on record shows that defendants entered into the

agreement to meet out the expenses of marriage of defendant

No.4 and for the purpose of higher education of the daughter of

the first defendant. That substantiates the contention of the

defendants that Ex.P12 was executed under compelling

financial pressure.

27. The next thing to be seen is, what was the

understanding of the parties regarding the consequences that

entail, if they fail to comply the terms of the contract. In the

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agreement the term that is enlisted under the head 'Breach of

Terms of conditions of the agreement", clause-A says what

shall be done if the purchaser fails to perform his part of the

contract. Clauses-B and C read as follows:

"B. In the event of default committed by the VENDORS
regarding their duties and obligations under this agreement of
Sale, the PURCHASERS shall be entitled to claim refund of the
advance of Rs.3,00,000/- (Rupees Three Lakh only) already

paid to the VENDORS with an additional amount of

Rs.2,00,000/- (Rupees Two Lakh only) by way of liquidated

damages.

C. Both the parties are at liberty to approach the appropriate
court of law for specific performance of this agreement in case
of breach of the terms and conditions of this agreement against
the defaulting party."

[[

28. The reading of the above conditions in the

agreement shows that in case of default on the part of the

vendors, firstly the parties agree that advance amount shall be

refunded with additional amount of Rs.2,00,000/-. Thereafter

by way of general condition, they say that both parties are at

liberty to approach the appropriate Court of law for specific

performance of agreement. When there are clauses containing

specific and general conditions, the clauses containing the

specific condition shall prevail. Moreover such clauses dilute the

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agreement aiming at the relief of only specific performance of

the contract.

29. In a similar circumstance, the Hon'ble Supreme

Court in paras 14, 15 and 16 of the judgment in Mayawanti's

case referred to supra held that, when a promise is made in an

alternative form, it may be that on proper construction of the

contract, that it contains alternative obligations namely

promise of either to execute the sale deed or pay back the

advance or compensation, the promisor has the option either

to do or abstain from doing. It was held that the Court may

treat the covenants to perform or to pay as alternative where

specific performance would work unreasonable results. It was

further held that in such circumstances specific performance

can be rejected. Needless to say that need for relief of specific

performance is an equitable relief, the same has to be granted

on pragmatically examining all the facts and circumstances of

the case.

30. The above facts and circumstances show that the

defendants agreed to sell the property when there was financial

stress. The agreement contained an alternative clause to

specific performance, for refund of the earnest money with

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damages which diluted the general condition that the parties

are entitled to specific performance.
In case of breach even in

the judgment in
Ferrodous Estates Pvt. Ltd
's case relied on

by learned counsel for the respondents, the Hon'ble Supreme

Court declined to interfere in the judgment of the High Court

denying the specific performance and granting decree for

refund of earnest money with damages.

31. So far as the other judgments relied on by both

side, suffice it to say that they all are covered under
Section 20

of the Act and the other two
judgments
referred to above
.

Therefore, it is not necessary to refer to other judgments relied

on by both counsel.

32. On evaluation of the aforesaid facts and

circumstances, in the considered opinion of the Court, granting

specific performance in favour of the plaintiffs is inequitable

and causes undue hardship to the defendants. However, as the

defendants have enjoyed Rs.3,00,000/- since 2005, they are

liable to refund the earnest money with agreed damages of

Rs.2,00,000/- and Rs.31,700/- spent by the plaintiffs which

comes to Rs.5,31,700/- with interest.

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RFA No. 1191/2010

33. What shall be rate of interest is the question. The

agreement does not contain any clause regarding rate of

interest on the earnest money. The defendants contended that

Rs.3,00,000/- was lent by way of loan which shall carry

interest at 9% per annum. This matter is dragged nearly for

two decades and the defendants have not even deposited the

agreed sum. Therefore it would be just to award interest at

10% per annum. The appeal deserves to be allowed in part.

Hence, the following:

ORDER

i) The appeal is partly allowed.

ii) The impugned judgment and decree so far it relates

to the specific performance of contract is hereby set aside.

iii) Suit in O.S.No.5268/2005 is partly decreed.

iv) The prayer in the suit for specific performance is

hereby dismissed.

v) The suit is decreed for recovery of Rs.5,31,700/-

with interest thereon at 10% per annum from the date of the

suit till its realization.

vi) The defendants shall deposit 50% of the decreetal

amount with accrued interest before the trial Court within four

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RFA No. 1191/2010

weeks from the date of the receipt of the copy of this

judgment. The balance 50% shall be deposited before the trial

Court within next four weeks.

Draw decree accordingly.

Sd/-

JUDGE

Sd/-

JUDGE

PKN,AKC