IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 6509 OF 2005

Laxman Tatyaba Kankate & Anr.               …Appellants

Versus

Smt. Taramati Harishchandra Dhatrak     …Respondent

JUDGMENT

Swatanter Kumar, J.

1. Civil  Judge,  Senior  Division,  Shrirampur,  District  

Ahmednagar (for short ‘the Trial Court’), in a suit for specific  

performance  and  in  the  alternative  for  recovery  of  Rs.  

10,000/-, vide his judgment and decree dated 25th July, 1995  

partially decreed the suit of the plaintiff (respondent herein),  

dismissing  her  claim  for  specific  performance,  ordered  

refund of earnest money with interest at the rate of 6% per  

annum pendente lite and future, with proportionate cost.   

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1. Against this decree, the respondent filed an appeal before  

the District  Judge, Ahmednagar (hereinafter  referred to as  

‘the  First  Appellate  Court’),  who,  vide  his  judgment  and  

decree, dated 28th November, 2000, decreed the suit in its  

entirety.  The Court granted decree for specific performance  

in  respect  of  the  land  in  question  and  upon  grant  of  

permission  by  the  competent  authority,  as  contemplated  

under Section 12 (c) of  the Maharashtra  Re-settlement  of  

Project Displaced Persons Act, 1976, (hereinafter referred to  

as  ‘the  Re-settlement  Act’)  and  also  by  the  Society,  as  

contemplated  under  Section  47(2)  of  the  Maharashtra  

Cooperative  Societies  Act,  1960,  (for  short  ‘the  Societies  

Act’),  the  appellants  were entitled  to  specific  performance  

upon  payment  of  the  balance  sale  consideration  of  Rs.  

30,000/-.   It  also  directed  the  appellants  to  submit  an  

application seeking permission from the competent authority  

and  execute  a  registered  sale  deed  in  favour  of  the  

respondent herein.   

1. The legality  and correctness  of  the  aforesaid  decree  was  

challenged  by  the  appellants  before  the  High  Court  of  

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Judicature at Bombay at its Aurangabad Bench in Second  

Appeal  No.  96 of  2001 which came to be dismissed vide  

judgment  dated  17th July,  2001.   Aggrieved  from  the  

aforesaid  concurrent  decrees  passed  by  the  Courts,  the  

present appeal under Article 136 of the Constitution of India  

has been preferred by the appellants.  

1. The necessary facts are that, according to the respondent,  

an  agreement  to  sell  dated  08.01.1991  was  entered  into  

between  the  parties  in  terms  whereof  the  appellants  had  

agreed to  sell  the land admeasuring  1H.  60 R.  in  Village  

Pimpri  Lokai,  Taluka  Shrirampur,  District  Ahmednagar  in  

Block No. 220, the boundaries of which were stated in the  

plaint.  A sum of Rs. 10,000/- was paid at that time and it  

was  agreed  that  upon  obtaining  the  permission  from  the  

competent authority, the demarcation of the land would be  

effected and the possession of the suit land would be given.  

The appellants were expected to execute the sale deed in  

favour  of  the  respondent,  as  the  respondent  was  always  

ready and willing to perform her part of the contract.  Though  

the  appellants  assured  that  they  would  execute  the  sale  

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deed in favour of the respondent,  they failed to do so.  A  

notice dated 05.06.1992 was served upon the appellants but  

no sale deed was executed.   

1. Thereafter, according to the respondent, the appellants also  

started causing obstruction in the peaceful possession of the  

respondent  and  one  of  such  incidents  occurred  on  

11.07.1992, which compelled the respondent to file the suit  

for  specific  performance,  and  in  the  alternative,  for  the  

refund of earnest money along with damages.  One Vitthal  

Laxman Kankate also applied to the Court, vide Exh. 23, to  

be impleaded as a party, as he claimed right and interest in  

the said land.  This application was allowed.   

1. The suit was contested by the appellants who took various  

legal  objections  including,  that  the  suit  was  bad  for  non-

joinder  of  the  necessary  parties  and,  thus,  was  not  

maintainable.  On merits, it was stated that no agreement,  

as alleged, was executed between the parties and the entire  

case, as pleaded by the respondent, was false.  It was also  

averred that defendant No. 2  in the suit (appellant No. 2 in  

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the present appeal) had also filed a suit wherein injunction  

was granted in favour of the said party.   

1. A plea was also taken that the agreement to sell was not a  

registered document, as such, the same could not be acted  

upon.   The appellants  also took the stand that  there was  

rapid increase in the market value of the land and, therefore,  

they could not have agreed to sell the property at the price  

indicated in the agreement.   However, it  was really not in  

dispute that the plaintiff and the defendants were acquainted  

to each other.  The learned Trial Court, on the basis of the  

record before it, noticed that the appellants claimed that they  

wanted to obtain a loan for a sum of Rs. 2,000/- from the  

respondent and had agreed to sign certain papers by way of  

security,  that  the  respondent,  on  the  pretext,  got  certain  

blank papers signed from the appellant as well as his son  

and  that  there  was  no  intention  to  sell  the  property  in  

question.   

1. On the pleadings of the parties, the Trial Court framed the  

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following issues and gave findings thereon :  

“ Issues Findings

1 Does  the  plaintiff  prove  that  the  defendant  agreed  to  sell  the  field  for  Rs. 40,000/-?

Proved

2 Does the plaintiff  prove that  the amount  Rs. 10,000/- was paid as earnest money?

Proved

3 Does  the  plaintiff  prove  that  amount  of  Rs. 30,000/- was agreed to be paid at the  time of execution of sale deed?

Proved

4 Does the plaintiff prove that the sale deed  was to be executed within 1 month from  the  permission  of  the  Competent  Authority?

Proved  

5 Does  the  defendant  prove  that  the  plaintiff paid Rs. 2,000/- only as loan and  the  signature   were  obtained  on  blank  stamp paper by way of security?

Not proved

6 Does  the  plaintiff  prove  that  she  was  ready and willing to  perform her part  of  contract?

Proved

7 Whether  the  plaintiff  is  entitled  for  a  decree of Specific Performance?

Not proved

8 Whether the suit is bad for non-joinder of  necessary party?

Does not  survive

9 What relief and order? as per final  order

Additional issues

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1 Whether  the  agreement  is  binding  on  the defendant No. 2.

Yes

2 Does  plaintiff  prove  that  by  way  of  alternate relief, she is entitled to refund  of earnest money with damages?”

Yes

1. The learned Trial  Court  decided all  the material  issues in  

favour  of  the  respondent  and,  while  upholding  the  

agreement  in  favour  of  the respondent,  it  also returned a  

finding  in  favour  of  the  respondent  that  she  was  always  

ready and willing to perform her part of the contract and had  

paid a sum of           Rs. 10,000/- as earnest money.  It may  

be noticed, that the stand taken by the appellants, that the  

signatures were obtained on blank papers, was answered by  

the Court in the negative.  Despite these facts, the learned  

Trial Court, as already noticed, partially decreed the suit and  

directed the appellants to pay a sum of  Rs.  10,000/-  with  

interest  at  the  rate  of  6%  per  annum  and  without  any  

additional  amount  of  damages,  as  prayed  by  the  

respondent.  The learned First Appellate Court, while setting  

aside the decree passed by the Trial Court only for payment  

of money, passed the decree for specific performance while  

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otherwise affirming the conclusions  arrived at  by the Trial  

Court.   The First  Appellate  Court  returned  the  findings  in  

favour of the respondent and held as under :

“Therefore,  the  sale  is  permissible  with  the  prior permission of the government.  Admittedly, the  respondent No. 1 has agreed to obtain permission  from  the  government  prior  to  sale  transaction.  Therefore,  there  would  not  be  legal  bar  while  granting  a  relief  of  specific  performance.   The  authority cited by the learned counsel for appellant  is directly in point.  The facts of the said authority  and the facts of the present case are identical one.  Hence,  the  reasons  on  account  of  which  the  learned trial court was not pleased to grant a relief  of specific performance cannot be accepted.  After  having come to conclusion that there is no bar of  section  12  of  the  Re-settlement  Act,  the  another  reason on account of which the learned trial court  was not pleased to grant the said relief, is proper or  not is to be considered.  The learned trial court has  observed that in view of provisions of the Section  48(e) of the Societies Act, the agreement for sale is  void one, and hence it can’t be enforced.  According  to learned trial court there was charge on the suit  land  in  favour  of  the  society  i.e.  since  the  respondent no. 1 has taken the loan amount.  The  learned  trial  court  has  relief  on  the  entry  in  the  record  of  rights,  while  coming  to  conclusion  that  there was charge of the society of the suit land in  view of the loan transaction, and the appellant was  aware of it  in view of her admission that she had  seen  the  entry.   Consequently,  the  learned  trial  court  has  come to  conclusion  that  there  is  a  bar  while granting relief of specific performance u/s 48  (e) of  the Co.op. societies Act.   In my opinion, in  view  of  the  authority  reported  in  the  case  of  Narayan vs. Macchindra, 1994 Mh. L.J.558 it can’t  

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be  said  that  there  would  be  any  legal  bar  while  enforcing the agreement Exh.45. ……………..

x  x x x x x x x x     x

………………  Therefore,  there  would  not  be  any  legal impediment while granting a relief of specific  performance subject to certain conditions i.e. prior  permission of the state government and permission  from  the  society  of  village  Pimprilokai,  taluka  Newasa.  There are no reasons on record so as to  prevent  the  appellant  from  claiming  a  relief  of  specific  performance.   The respondents  were not  able  to  show as  to  why discretion  should  not  be  grant  a  relief  of  specific  performance.   Since  the  agreement for sale, Exh. 45, is lawful one, it can be  safely  enforced.   Consequently,  the  finding  in  respect of point No. 2 is answered in the affirmative.  In view of the findings in respect of point Nos. 1 and  2, it logically follows that the judgment and decree  of the learned trial court have to be set aside, and  suit  filed  by  appellant  is  decreed,  which  is  for  a  relief  of  specific  performance  however  subject  to  certain conditions i.e. regarding prior permission of  the  state  government  of  society  of  village  Pimprilokai.   Incase,  both  authorities  are  not  pleased to  grant  permission  then appellant  would  be entitled to claim refund of  the earnest  amount  from  respondents  which  is  to  the  tune  of  Rs.  10,000/-.”

1. The findings and the conclusions of fact and law arrived at  

by  the  Courts  were  affirmed  by  the  High  Court  which  

sustained the decree passed by the First  Appellate Court.  

The  learned  counsel  appearing  for  the  appellants  

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vehemently argued that the decree for specific performance  

could  not  have  been  passed  by  the  Courts  against  the  

appellants,  as  the  property  was  mortgaged  to  the  

cooperative  society,  and  the  property  being  under  the  

charge of the society, no title could be passed in favour of  

the respondent.  Secondly, it was contended that the Courts  

have  failed  to  appreciate  the  evidence  in  its  correct  

perspective and the judgment under appeal is liable to be  

set aside.  Lastly, it was contended that during the pendency  

of  the  proceedings,  the  value  of  the  land  has  increased  

tremendously and it  would be unjust  and unfair  to pass a  

decree for specific performance in favour of the respondent.  

1. At the very outset, we may notice that all the three Courts  

have returned all the findings of fact in favour of the present  

respondent.   Such  findings  are  based  upon  proper  

appreciation of evidence and no legal infirmity can be traced  

in them.  It is hardly permissible for this Court to go into such  

questions of facts alone, in exercise of its jurisdiction under  

Article 136 of the Constitution of India.    

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1. From the judgment of the learned Trial Court, it is apparent  

that  the appellants  had not  placed any such argument  or  

specific plea before that Court.   In fact, as is evident from  

the  afore  reproduced  issues,  no  such  issue  was  either  

claimed or framed, in this regard.  It is rightly contended by  

the learned counsel  appearing for the respondent  that the  

appellants had not adduced any evidence that the property  

in question had been mortgaged or was under the charge of  

the society.  Be that as it may, the provisions of clause (d) of  

Section  48 of  the Societies  Act,  places a restriction  upon  

alienation of the whole or any part of the land or interest in  

the property unless and until the whole amount borrowed by  

the member of the society has been repaid with interest.  In  

other words, the restriction is conditional and once the loan  

of  the  society  has  been  cleared,  the  society  obviously  

cannot have any objection to transfer the said property.  No  

effort  was made by the appellants  to bring on record any  

evidence  to  show  as  to  what  was  the  extent  of  money  

currently due to the society, if at all, and for what amount the  

property had been mortgaged in favour of the society.  In the  

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absence of any specific evidence in that regard, the Court  

will  have  to  draw  an  adverse  inference  against  the  

appellants  for  not  producing  before  the  Court  the  best  

available evidence.  In any case, the appellants cannot take  

advantage  of  their  own  wrong.   Coming  to  the  other  

submission, that the land could not be transferred in favour  

of  the  respondent  in  view  of  the  restriction  contained  in  

Section 12 (1) (c) and Section 12 (2) of the Re-settlement  

Act,  the  bare  reading  of  these  provisions  show  that  the  

Government  can  grant  permission  for  transfer  of  the  

property,  subject  to  such  conditions,  as  it  may  deem  fit  

and proper.   

1. In the present case, the appellants have neither claimed any  

issue nor led any evidence before the Court to substantiate  

even  this  plea.   Furthermore,  the  learned  First  Appellate  

Court while relying upon the judgment of this Court  in the  

case  of  Nathulal  v.  Phoolchand  [AIR  1970  SC 546],  had  

dealt with both these contentions rightly and in accordance  

with the law.  We see no reason as to how a presumption  

can be raised against the respondent on face of the fact that  

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the appellants chose not to lead any evidence on either of  

these aspects.  These contentions raised on behalf  of the  

appellants  are,  therefore,  without  any  substance.   The  

learned  counsel  appearing  for  the  appellants  drew  our  

attention to Section 13 (1) (c) of the Specific Relief Act, 1963  

(for  short  ‘the Act’),  which clearly postulates  that  where a  

person  contracts  to  sell  immovable  property  with  an  

imperfect title and the property is encumbered for an amount  

not exceeding the purchase money, the purchaser has the  

right to compel the seller to redeem the mortgage and obtain  

a valid discharge and then specifically perform the contract  

in its favour.  Even from this point of view, the right of the  

present respondent is fully protected.   

1. It will also be useful to refer to the provisions of Section 20  

of the Act which vests the Court with a wide discretion either  

to decree the suit for specific performance or to decline the  

same.  Reference in this regard can also be made to the  

case of Bal Krishna v. Bhagwan Das [(2008) 12 SCC 145],  

where this Court held as under :  

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“13.  ……..The  compliance  with  the  requirement  of  Section 16(c)  is  mandatory and in  the absence of proof of the same that the plaintiff  has been ready and willing to perform his part of the  contract suit cannot succeed. The first requirement  is that he must aver in plaint and thereafter prove  those averments made in the plaint.  The plaintiff’s  readiness  and willingness  must  be in  accordance  with the terms of the agreement. The readiness and  willingness of the plaintiff  to perform the essential  part  of  the  contract  would  be  required  to  be  demonstrated by him from the institution of the suit  till it is culminated into decree of the court.  

14. It  is  also settled by various decisions of  this Court that by virtue of Section 20 of the Act, the  relief for specific performance lies in the discretion  of the court and the court is not bound to grant such  relief  merely  because  it  is  lawful  to  do  so.  The  exercise  of  the  discretion  to  order  specific  performance would require the court to satisfy itself  that the circumstances are such that it is equitable  to  grant  decree  for  specific  performance  of  the  contract. While exercising the discretion, the court  would take into consideration the circumstances of  the  case,  the  conduct  of  parties,  and  their  respective interests under the contract. No specific  performance of a contract, though it is not vitiated  by fraud or misrepresentation, can be granted if it  would give an unfair advantage to the plaintiff and  where  the  performance  of  the  contract  would  involve some hardship on the defendant, which he  did  not  foresee.  In  other  words,  the  court’s  discretion  to  grant  specific  performance  is  not  exercised  if  the  contract  is  not  equal  and  fair,  although the contract is not void.”

Similar  view  was  taken  by  this  Court  in  the  case  of  

Mohammadia  Cooperative  Building  Society  Ltd.  v.  Lakshmi  

Srinivasa Cooperative Building Society Ltd.  & Ors.  [(2008)  7  

SCC  310],  where  the  Court  reiterated  the  principle  that  

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jurisdiction  of  the  Court  to  grant  specific  performance  is  

discretionary  and  role  of  the  plaintiff  is  one  of  the  most  

important factor to be taken into consideration.  We may also  

notice  that  in  the  case  of  P.V.  Joseph’s  son  Mathew v.  N.  

Kuruvila’s  Son  [AIR  1987  SC  2328],  this  Court  further  

cautioned  that  while  exercising  discretionary  jurisdiction  in  

terms of Section 20 of the Act, the Court should meticulously  

consider all facts and circumstances of the case.  The Court is  

expected to take care to see that the process of the Court is  

not  used  as  an  instrument  of  oppression  giving  an  unfair  

advantage to the plaintiff as opposed to the defendant in    the  

suit.   

1. The discretion of the Court has to be exercised as per the  

settled  judicial  principles.  All  the  aforesaid  principles  are  

squarely satisfied in the present case and it is the appellants  

before us who have taken advantage of the pendency of the  

proceedings.  They  have  used  the  sum  of  Rs.  10,000/-,  

which was given as earnest money for all this period, as well  

as, have enjoyed the fruits of the property. The present case  

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does not fall within the ambit of any of the aforesaid cases  

specified  under  Section  20 (2)  of  the  Act.  In  the  present  

case, it  is not only lawful but even equity and facts of the  

case demand that a decree for specific performance should  

be granted in favour of the respondent.  Besides all this, the  

respondent  before  us  has  agreed  to  pay  much  higher  

consideration  than  what  was  payable  in  terms  of  the  

agreement to sell between the parties.

1.   The  onus  to  prove  that  the  respondent  had  obtained  

signatures of the appellants on blank papers on the pretext  

of  advancing a  loan of  Rs.  2,000/-  was entirely upon the  

appellants.  No evidence, much less cogent documentary or  

oral  evidence,  was led by the appellants to discharge this  

onus.  The averment has rightly been disbelieved and the  

plea  was rightly  rejected  by  the  concerned  Courts  in  the  

judgment under appeal.  The appellants led no evidence and  

nothing was brought to our notice, even during the course of  

the hearing, to show that this plea could be accepted.  It is a  

settled principle of law that before the First Appellate Court,  

the  party  may  be  able  to  support  the  decree  but  cannot  

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challenge the findings without filing the cross objections.  As  

it  appears  from  the  record,  the  present  appellants  have  

neither filed cross objections nor their appeal challenging the  

findings recorded by the learned Trial  Court.   In  fact,  the  

entire  conduct  of  the  present  appellants  shows  that  they  

have not only failed to prove their claim before the Courts of  

competent jurisdiction but have even not raised proper pleas  

in their pleadings.

1. It was contended on behalf of the appellants that there has  

been  considerable  increase  in  the  price  of  the  land  in  

question.  Though that may be true, it cannot be a ground  

for  denying  the  decree  of  specific  performance  to  the  

respondent.   The learned First  Appellate  Court,  by a well  

reasoned  judgment,  has  granted  the  relief  of  specific  

performance instead of  only granting refund of  money, as  

given by the Trial Court.  The judgment of the First Appellate  

Court has been upheld by the High Court and we see no  

reason whatsoever to interfere with the concurrent findings  

of  facts  and law as stated  in  the judgment  under  appeal.  

However, the learned counsel appearing for the respondent  

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volunteered  and  after  taking  instructions  stated  that  they  

would be willing to pay a sum of Rs. 1,50,000/- instead of  

Rs.  40,000/-  as the total  sale consideration.   We find this  

offer of the respondent to be       very fair.   

1. We  have  already  held  that  the  defence  taken  up  by  the  

appellants in the suit was totally unbelievable.  There is no  

reason or ground as to why the relief of specific performance  

should be declined to the respondent.  She satisfied all the  

requirements  of  Section  20 of  the  Act.   Even then,  if  we  

examine this case purely from the point of view of equity, the  

offer  now made by the  respondent  substantially  balances  

the  equities  between  the  parties  and  the  very  argument  

raised  on  behalf  of  the  appellants  that  there  has  been  

increase  in  the  price  of  the  land  in  question  loses  its  

significance.   Now,  no  prejudice  will  be  caused  to  the  

appellants in any manner whatsoever.

1. For the reasons afore recorded,  we see no legal or other  

infirmity in the judgment under appeal.  While dismissing the  

present appeal, we direct that the respondent will abide by  

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her  offer  and would pay a total  sale  consideration  of  Rs.  

1,50,000/-  and  upon  payment  of  Rs.  1,50,000/-  –  Rs.  

10,000/-                   = Rs. 1,40,000/- and complying with the  

conditions  stated  in  the  judgment  dated  28th November,  

2000 of  the  First  Appellate  Court,  the  sale  deed shall  be  

registered in favour of the respondent in terms of the decree  

passed  by the  First  Appellate  Court  subject  to  the  above  

modifications.   

1. However,  in the facts  and circumstances of  the case,  we  

leave the parties to bear their own costs.

................................J.  [ DR. B.S. CHAUHAN ]

..............................J.       [ SWATANTER KUMAR ]

New Delhi July 8,  2010.

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