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CASE NO.: Appeal (civil)  5628 of 1999

PETITIONER: Devalsab (Dead) By LRs.

RESPONDENT: Ibrahimsab F.Karajagi & Anr.

DATE OF JUDGMENT: 04/03/2005

BENCH: ASHOK  BHAN & A.K. MATHUR

JUDGMENT: J U D G M E N T  

A.K. MATHUR, J.

               This appeal is directed against an order passed by  learned Single Judge of the High Court of Karnataka at Bangalore in  Regular Second Appeal No.68 of 1994 whereby  learned Single  Judge by his order dated October 17,1997 has allowed the second  appeal of the defendant No.1 and set aside the order passed by the  trial court and the first appellate court and dismissed the suit filed by  the plaintiff for specific performance but decreed the suit of the  plaintiff for the alternative relief  for refund of the purchase money of  Rs.15,000/- with future interest and the court costs from Defendant  No.1. Aggrieved against this order the Special Leave Petition was  filed by the plaintiff.

               Brief facts for disposal of this appeal are that the  Defendant No.1 was the owner of the suit property which is a house  bearing HDMC No.715 comprised in CTS No.1529/16-C situated at  Hubli.  Defendant No.1 agreed to sell the suit property to the plaintiff  on March 13, 1981 for a sum of Rs.15,500/- and received an advance  of Rs.2,000/- and executed an agreement for sale  agreeing to  execute the sale deed within two months after obtaining necessary  permission. The plaintiff assisted the Defendant No.1 in obtaining  necessary permission from the competent authority. But Defendant  No.1 after getting necessary permission for sale failed to execute the  sale deed accepting the balance consideration money of Rs.13,500/-  from the plaintiff. Defendant No.1 took the plaintiff to the Sub- Registrar’s Office on February 23, 1982 and persuaded him to  purchase the stamp paper  but  Defendant No.1 escaped from the  Office of the Sub-Registrar when the sale deed was about to be  registered. The plaintiff was ready and willing to perform his part of  the contract according to the terms and conditions of the agreement  of sale on March 13, 1981. In spite of requests by the plaintiff,  Defendant No.1 did not execute the registered sale deed receiving  the balance amount.  Hence, the suit was filed for specific  performance of the agreement by the plaintiff and in the alternative   the plaintiff also prayed  if the court were to come to the conclusion  that  specific performance cannot be granted then  a decree for  refund of the earnest money including the cost of registration and  damages  to the plaintiff should be awarded.  The plaint was  subsequently amended on account of the new facts coming to the  light that  Defendant No.1 has executed another agreement for sale  in favour of Defendant No.2 on March 8,1982.  The plaintiff got a  news item published in Vishwavani daily on March 24, 1982 about the  earlier transactions between himself and Defendant No.1 with respect  to the suit property.  But defendant Nos. 1 & 2 with an intention to  defeat and defraud the plaintiff filed  another collusive suit being

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O.S.No.101 of 1983 before the Munsif, Hubli and obtained a  compromise decree. By virtue of the said compromise decree   Defendant No.2 obtained the sale deed from Defendant No.1 in  respect of the suit property.  Therefore, the plaintiff amended the  plaint and impleaded Defendant No.2 and prayed that the collusive  decree obtained by Defendant Nos.1 & 2 is illegal, void and not  binding on the plaintiff.  It was further prayed that Defendant No.2  was also bound to execute the sale deed along with Defendant No.1  and hand over possession of the suit property.

               A written statement was filed by Defendant No.1. He  denied the allegation in the plaint  but subsequently Defendant No.1  did not contest the suit. Defendant No.2  i.e. the subsequent  purchaser was impleaded as a party by amendment of the plaint  carried on November 21, 1986 and assisted the suit by filing the  written statement. He denied the allegation about the agreement of  sale executed in favour of the plaintiff.  It was also pointed out that he  was a tenant in the suit premised under Defendant No.1 since long  time.  It was contended that Defendant No.1 agreed to sell the suit  property and entered into an agreement for sale on March 8,1982.  It  was further contended that Defendant No.2 was not aware of the  previous transaction between the Plaintiff and Defendant No.1. Since  Defendant No.1 avoided to execute the sale deed, therefore, he filed  the suit i.e. O.S.No.101 of 1983 for specific performance which was  decreed by compromise and Defendant No.1 subsequently executed  the sale deed in  his favour.  It was pointed out that Defendant No.1  did not reveal previous transaction between himself and the plaintiff  to him.  It was further pointed out that he was a bona fide purchaser  for the value of the suit property. It was contended  by Defendant  No.2 that the sale between the plaintiff and Defendant No.1 was not  binding on him.  

               On the pleadings of the parties, eleven issues were  framed by the trial court. Both the parties led necessary evidence.  Learned Munsif after hearing the parties and considering the relevant  evidence came to the conclusion that Issue Nos.1 to 4 regarding  agreement of sale executed in favour of the plaintiff and also the  ready and willingness of the plaintiff in affirmative.  He also answered  Issue No.5 in negative. It was held that the sale agreement was not  taken for security of the loan and the parties never intended to act  upon it. Issue No.6 was also answered in negative and the contention  of Defendant No.2 that the agreement of sale between  the plaintiff  and Defendant No.1 as a sham document.  With regard to Issue  No.7, that  Defendant No.2 is a bona fide purchaser, it was answered  in negative and it was held that the sale deed executed in favour of  Defendant No.2 was illegal. Therefore, the learned Munsif decreed  the suit of the plaintiff for specific performance of the contract.  Aggrieved against the said judgment and decree passed by the trial  court, Defendant No.2 i.e. the second purchaser filed an appeal  before the first appellate court though Defendant No.1 did not prefer  any appeal against the said order of the trial court. The decree  passed against Defendant No.1 was not challenged by  him but since  the decree affected the rights of Defendant No.2, he filed an appeal  contending that he was a bona fide purchaser of the suit property for  consideration and he had no knowledge about the plaintiff’s interest  in it, agreement of sale executed in favour of the plaintiff by   Defendant No.1  was not binding on him.  But the first appellate court  did not agree and dismissed the appeal filed by Defendant No.2 and  affirmed the judgment and decree passed by the trial court.  Aggrieved against the said order Defendant No.2  preferred a second  appeal being R.S.A.No.68 of 1994 before the High Court.         The High Court framed two substantial questions of law which  

are reproduced as under :

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               " 1.   Whether the two courts below have  proceeded to grant decree for specific  performance without bearing in mind that it is a  discretionary relief and have granted the relief  only because it is lawful to do so ?

2.      Whether in view of undisputed tenancy of  the appellant, the two courts below were  right in directing him in the present  proceeding to put the plaintiff in actual  physical possession of the property in  question ?

The High Court after hearing the parties found that the view taken by  both the Courts below is correct but it was held that Defendant No.2  was not aware of the transactions between the plaintiff and  Defendant No.1, he cannot be held to be bona fide purchaser for  value as the matter was pending before the trial court and it was lis  pendence. It was also held that the compromise decree obtained by  Defendant Nos.1 & 2 was a collusive one as on the same day the suit  was filed & the compromise decree was obtained.  But the learned  Single Judge of the High Court held that both the courts below have  not committed any error but they did not advert to Section 20 of the  Specific Relief Act. Section 20 of the Specific Relief Act lays down  that the grant  of relief of specific performance is discretionary and  the Courts should keep in view the hardship which is likely to cause  to the other party  while exercising this discretionary power. Learned  Single Judge of the High Court after taking into consideration the  hardship which is likely to  cause to Defendant No.2  that  he is in  possession of the suit property prior to the agreement of sale by  Defendant No.1  in favour of the plaintiff and if he is evicted from the  suit premises he would lose money as well as long possession,  therefore, considering the hardship to Defendant No. 2 declined to  confirm the decree granted by both the courts below but directed that   the plaintiff is entitled to the alternative relief as claimed by him i.e.  refund of money with costs. Hence the present appeal by the plaintiff.

               In fact, so far as the questions of fact are concerned, all  the three Courts are unanimous  that the plaintiff entered into an  agreement for purchase of  the suit premises first in point of time, that  the plaintiff had already issued advertisement in the press which was  published in the daily newspaper that the suit property has been  purchased by him. The Courts below have also held against  Defendant No.2 that it cannot be said that Defendant No.2 was not  aware of the transactions between the plaintiff and Defendant No.1.   It has also been held that Defendant No.2 cannot be treated as a  bona fide purchaser for value. But learned Single Judge of the High  Court has invoked Section 20 of the Specific Relief Act,1963 and held  that it will be more harsh to  Defendant No.2 as he has already paid   the consideration and he is residing in the very premises for a very  long time and the suit premises are in his possession, therefore, it  would be more harsh to him than to the plaintiff-appellant herein.   Therefore, instead of granting decree for specific performance of the  agreement to sell against Defendant No.1, learned Single Judge of  the High Court6 modified the decree and denied relief of specific  performance of the agreement being discretionary remedy and  directed the Defendant No.1 for refund of the purchase money for a  sum of Rs.15,500/- with future interest and costs and dismissed the  suit of the plaintiff for possession of the suit schedule property.                 Learned counsel for the plaintiff-appellant submitted that  in fact exercise of discretionary relief in favour of Defendant No.2 is  not correct as this kind of discretion if exercised in favour of  Defendant No.2  then it is likely to lay down a bad precedent. This will  give premium to unethical transaction and a bona fide purchaser will

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be left high and dry. Learned counsel for the defendants  submitted  that it is true that Section 20 of the Specific Relief Act is a  discretionary remedy that is not always necessary to grant a decree  for specific relief if it appears to be inequitable and causes hardship  to the other side. But looking to the facts of the present case we are  of opinion that  it will be unfair  and inequitable not to grant a decree  for specific relief in favour of the plaintiff-appellant herein because he  is a bona fide purchaser and he has done everything which is  possible, that he has purchased the stamp paper and was ready and  willing to perform his part of the contract, that he went  along with  Defendant No.1 to the Sub-Registrar’s Office for registration but  some how Defendant No.1 sneaked away from that place as he had  already entered into another agreement to sell  the present premises,   so much so that a sham suit was got filed by Defendant No.2 against  Defendant No.1 and  on the same day a compromise decree was  obtained. These facts go to show that there is not much equity left in  favour of Defendant No.2 as it appears that  the suit by Defendant  No.2 was a pre-arranged affair with connivance with Defendant  No.1.  Otherwise the suit would not have been filed on the same day and a  compromise decree would not have been obtained the very same  day. This shows that there was a pre-conceived agreement between  Defendant Nos.1 & 2 in order to cheat the plaintiff- appellant herein.  Therefore, we are of opinion that the discretionary power exercised  by learned Single Judge of the High Court was not correct. In fact, it  appears that Defendant No.2 has purchased the litigation and  therefore, there is no equity in his favour.                  Hence, in the result of our above discussion, we allow this  appeal and set aside the impugned order of the learned Single Judge  of the High Court of Karnataka passed in R.S.A. No.68 of 1994, affirm  the decree of the trial court as well as the first appellate court and  grant a decree for specific performance of the agreement to sell  against Defendant No.1. However, so far as the question of granting  possession of the suit premises is concerned, that order we are not  passing for the reason that Defendant No.2 is in possession of the  premises for a long time and the plaintiff- appellant herein has to  execute a formal agreement of purchase with Defendant No.1.  However, it would be open for the plaintiff to take appropriate  proceedings for eviction of Defendant No.2 and take possession of  the suit premises in accordance with law.  It will be open to Defendant  No. 2 to file a suit against  Defendant No. 1 to recover his money in  accordance with law. There shall be no order as to costs.