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PETITIONER: KALLATHIL SREEDHARAN A ANR.

       Vs.

RESPONDENT: KOMATH PANDYALA PRASANNA & ANR.

DATE OF JUDGMENT:       08/08/1996

BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J)

CITATION:  JT 1996 (8)    40        1996 SCALE  (6)311

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Leave granted.      These appeals  by special leave arise from the judgment and order  dated August  10, 1995  of the  Kerala High Court made in  A.S. Nos.147  and 303  of 1987. The appellants were the plaintiffs.  The first  respondent and  her son  Sailesh were defendants  in 0.5.  No.56/80 for partition between the co-parceners. Therein  Prabha  Cinema  Theatre  situated  in Cannanore was  allotted to  them  in  a  compromise  decree, subject to  their paying  a sum of Rs.1,55,000/- each to the plaintiff and  the second  defendant  therein  within  three months  from   the  date  of  the  compromise  decree  dated 22.10.30. Since  the amount  could not  be paid, the theatre was brought  to sale  at a court auction dated June 24, 1982 and was  sold for a sum of Rs.5,44.000/-. The auction was to be confirmed  on or  before July 25, 1982. Since she was not in a  position to  pay  the  amount,  she  had  through  her brother, DW-2  approached the  appellant. In  furtherance of the  understanding,   the  appellant   was  to  deposit  Rs. 2,10.391/- in  the court  before confirmation  of  the  sale towards the  1/3rd of  the amount  deposited plus  5% of the founding fees.  Accordingly. the  appellant  had  lent  that amount with  a condition  that the  respondent and  her  son would sell  the theatre to the appellant, the later agreeing to pay  a further  sum of Rs.2 lakhs. In other words, he had agreed to  purchase the  theatre for 5,44.000/- and 2 lakhs. It is the case of the appellant that the contract came to be executed on  July 22,  1982 and  the sale  was set  aside on deposit of the amount advanced by the appellant.      When he  issued a  notice to  the respondent to get the sale deed  executed in  furtherance of  the  agreement,  she pleaded that  it was not intended to be executed; rather, it was by way of security for loan. Consequently, the appellant laid  the   suit  for   specific  performance.  Therein  the appellant prayed  for decree for specific performance and in the alternative  for refund  of the  amount advanced by him,

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namely, Rs.2,10,391/-.  The trial  Court noticing  that  the appellant had  not had the sanction of the civil Court under Section 8  of the  Hindu Minority and Guardianship Act, 1956 held that  the agreement of sale to the extent of half share of the  minor was  not valid  in  law.  However,  since  the respondent had  executed the agreement decreed to the extent of her  half share  in the  theatre a  decree  for  specific performance was  granted subject to the appellant depositing a sum  of Rs.1,61,609  towards the  half share  of the first respondent. Both  the appellant  as well  as the respondents file the  appeals against the decree of the trial Court. The High Court  in the  impugned judgment reversed the decree of the trial  Court even  to the  extent of granting the decree for specific  performance against  the first  respondent and granted alternative  relief of refund of the amount advanced by the appellant. Thus, these appeals by special leave.      Though the  first respondent had pleaded in her written statement  and   an  issue   was  raised  that  due  to  her impecunious circumstances the appellant and her brother DW-2 Premarajan  had   a  dominating  influence  over  the  first respondent  and,   therefore,  the  agreement  of  sale  was vitiated by  undue influence, that plea was negatived by the trial Court as well as the appellate Court. Therefore, it is not necessary  to dwell  at length  on this issue though the learned counsel  for the respondent sought to press the same for  our   consideration.  Shri  Venugopal,  learned  senior counsel for the appellants has strenuously contended that in view of the findings concurrently recorded by the High Court as well  as the  trial  Court  that  the  agreement  is  not vitiated by  either fraud  or undue  influence and the first respondent having  received the  consideration to  discharge the decree  debt to  set aside  the sale, the High Court was not right  in reversing  the decree  of the  trial Court and granting the  decree of refund of the amount advanced by the appellant. In  view of the admitted finding that she was not in a  position to  discharge the  compromise decree debt and when the  theatre was  brought to  sale at  her instance the appellant had  advanced the money and agreed to purchase the theatre for  a sum  of Rs.7,44,000/-. In the partition suit, the parties  valued the  theatre at  around Rs.8  lakhs and, therefore, the  consideration shown  in adequate.  Since the agreement was  found  to  be  voluntarily  executed  by  the respondent, though  the Court  had discretion in granting or refusing to  grant specific  performance, the High Court has committed  error  of  law  in  refusing  to  grant  specific performance of the agreement.      Shri Nair,  learned counsel  for the respondent, on the other hand  contended that  the evidence  discloses that the respondent was  in hard  up circumstances  to discharge  the decree debt; when she approached the respondent, it would be obvious that the agreement was for lending the money with an intention to  pay back the amount but not for enforcement of the agreement;  even though  it is  now found  to  be  valid agreement, due  to the  evidence adduced  by the  respondent that the  value of  the theatre  even as  on the date of the agreement was  more than Rs.24 lakhs the consideration shown in the agreement was inadequate; considering the impecunious situation in which the respondents came to be placed and the value of the property, the High Court had properly exercised its discretion;  this Court  may not interfere under Article 136 of the Constitution with the discretion exercised by the High Court  since the  appellant was recompensated by refund of the  earnest money  with interest  as decreed by the High Court; the  discretion was  exercised by  the High  Court on sound principles and, therefore, it is not a case warranting

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interference.      Having  regard   to  the  respective  contentions,  the question that  arises for  consideration is:  whether    the agreement dated July 22, 1982 for sale of the cinema theatre is to  be specifically  enforced?  When  the  special  leave petitions were  filed, the appellants had filed an affidavit seating that  they are  not claiming specific performance as regards half  share of the second respondent minor. it would be obvious  that since the mandatory requirement of sanction from the  Court for alienating the property of the minor, as required  under   Section  8   of  the  Hindu  Minority  and Guardianship Act,  had not  been obtained,  the contract  of sale to  the extent  of the  half share of the minor is void and it  does not  bind the  minor. The  courts have  rightly declined to exercise discretion on sound principle of law to protect the estate of the minor.      The question  then is: whether the High Court committed any error  of law  warranting interference  by  refusing  to exercise  discretion?   The  High   Court  after   elaborate consideration and  appreciation of the evidence recorded the findings as under:      "Obviously,    the     irresistible      inference is that the defendant did      not what  to part with the property      and  did  not  intend  to  get  the      auction sale  set aside  solely for      the  benefit   of  a  third  party,      namely, the  plaintiffs. We  are of      the view  that taking  advantage of      the   situation    in   which   the      defendants as judgment-debtors were      placed,  the  plaintiffs  tried  to      secure    for     themselves    the      properties,  not  negotiations  for      them on  equal terms.  There can be      no dispute  that the price obtained      at the  Court auction  was not  the      fair   market    price    of    the      properties. The  valuation  of  the      property for  Rs.26,13,415/-  given      by   DW3,   a   retired   Assistant      Executive  Engineer,   PW2,  is  of      course disputed  on the ground that      the plaintiffs  has no  notice when      he valued  the property; not was he      appointed by  the Court  to do  the      same.  Of  course,  there  is  some      force    in     this     objection.      Nevertheless,     the     property,      according to  us, cannot  be valued      at less then Rupees 15 lakhs. It is      true that,  that by  itself  is  no      ground to refuse the enforcement of      the contract.  But, this  has  some      significance when it is taken along      with  other  factors,  namely,  the      situation in  which he  defendants      were placed, that is to say, unless      they could find the necessary money      for depositing  into court  to  set      aside  the   auction  sale  and  to      conduct  the  proceeding  for  this      purpose, they  had no  prospect  of      regaining title to the properties.      Hence we  hold that it would not be

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    just  and   proper  to  direct  the      defendants to execute the sale deed      in pursuance  of Ext. A1 agreement.      Point No.3  is, therefore, answered      in favour of the defendants.      But, however,  the plaintiffs would      be   entitled    to    claim    the      alternative relief asked for in the      plaint. This consists of the return      of Rs.2,10,391/-  gives an  advance      with  interest  at  6%  per  annum.      Since  admittedly   the  defendants      regained the property on payment of      the   aforesaid   amount   by   the      plaintiffs  treating  the  same  as      advance towards  the price  of  the      property agreed  to  be  sold,  the      defendants are  bound to refund the      same to the plaintiffs."      The High  Court thus,  on appreciation of evidence, has concluded that  the value  of the property would be at least Rs.15 lakhs.  Though that  circumstance itself  may not be a ground to  refuse enforcement of the contract, the Court has taken into  consideration the  impecunious circumstances  in which the  contract came  to be  executed by the respondents and  since   the  first  respondent-woman  was  in  hard  up circumstances, the agreement was held to be not specifically enforceable.      Section 20  of the Specific Relief Act, 1963 deals with discretion and  jurisdiction to  the Court, It says that the Court is  bound to  grant such  relief merely  because it is lawful to  do so,  but at  the same time it enjoins that the discretion of  the Court  should not  be arbitrary but sound and reasonable, guided by judicial principles and capable of correction by  a court of appeal. It would thus be seen that the discretion  given to  the Court of equity is required to be exercised  not arbitrarily  but on  sound and  reasonable basis guided by judicial principles,      It is  seen that  the appellant had himself admitted in the cross-examination that he was not particular to have the agreement enforced  with the  respondent for the purchase of Prabhat Cinema  Theatre since he was already having theaters in Cannanore  itself. He  says that "if Premarajan had asked me to  give two  lakhs or more to pay the Prabhat theatre, I would not  have purchased  it on that day. I have no idea of purchasing the  Prabhat theatre."  But finding the situation in which  the first  respondent was situated, he was willing to purchase the property on paying an additional sum of Rs.2 lakhs towards  the respondent-judgment  debtors’  share  and tried to  secure the  theatre for  the judgment-debtors.  It would, thus,  be seen  that the appellant was already having the theatres.  He  was  not  serious  about  purchasing  the theatre. But  since she  had offered  to sell the theatre to him, he had agreed to purchase the property, It is seen that the cinema  theatre is  a joint  property between  the first respondent  and   her  minor   son.  Considered   from  this perspective and  in view of the finding recorded by the High Court on  appreciation of  the evidence,  we are of the view that the  High Court  has not  committed any error of law in declining to  exercise  the  discretion  in  favour  of  the appellant  by  granting  decree  for  specific  performance. Instead, it granted decree for refund of the amount advanced by the appellant to discharge the decree debt which she owed to salvage  the theatre  from being  confirmed in  the Court auction. Considered  from this  perspective, we  are of  the

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opinion that  the discretion  exercised by the High Court is on sound  principles and,  therefore, it  does  not  warrant interference.      The appeals are accordingly dismissed. No costs.