REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs.  9821-9822               OF 2010 (Arising out of S.L.P. (C) Nos. 14985-14986 of 2010)

M/s J.P. Builders & Anr.                               .... Appellant(s)

Versus

A. Ramadas Rao & Anr.                    .... Respondent(s)

WITH

CIVIL APPEAL NOs. 9824-9825              OF 2010     (Arising out of S.L.P.(C) Nos. 15008-15009 of 2010)

AND  

CIVIL APPEAL NO.    9826            OF 2010 (Arising out of S.L.P.(C) No. 17435 of 2010)

     J U D G M E N T  

P. Sathasivam, J.

1) Leave granted in all the Special Leave Petitions.

2) These  appeals  seek  to  challenge  the  common  

judgment  and  order  dated  23.02.2010  passed  by  the  

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Division Bench of the High Court of Judicature at Madras  

in A.S. Nos. 708 of 2008 and 946 of 2009 and W.P. No.  

23405 of 2009 whereby the High Court partly allowed A.S.  

No.  708  of  2008  confirming  the  decree  for  specific  

performance  granted  by  the  Principal  District  Court,  

Chengalpet in O.S. No. 336 of 2008 and dismissed A.S.  

No. 946 of 2009 preferred by the appellants herein.  By  

the  same  order,  the  High  Court  disposed  of  W.P.  No.  

23405 of 2009 with certain directions. By a subsequent  

order  dated  29.04.2010,  the  High  Court  dismissed  the  

Review Application No. 37 of 2010 in A.S. No. 708 of 2008  

and Review Application No. 47 of 2010 in W.P. No. 23405  

of 2009 preferred by the appellants herein.   

Brief facts:-

3) (a) The subject matter of the suit is a total extent of 30  

acres  86  cents  of  land  in  Senthamangalam  Village,  

Sriperumbadur Taluk, Kancheepuram District comprised  

in 38 items.  M/s J.P. Builders-Appellant No. 1 and Shri  

J.P.  Paramanandam-Appellant  No.  2  herein  are  the  

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owners  of  the  suit  property  which  they  acquired  under  

various  sale  deeds.   The  sister  concern  of  M/s  J.P.  

Builders  viz.,  M/s  Anand  Agency  has  availed  certain  

financial  assistance  from  the  Indian  Bank,  (hereinafter  

referred  to  as  ‘the  Bank’)  and  for  the  said  assistance  

Appellant  Nos.  1  and  2  herein  offered  their  various  

properties including the suit property as security for the  

principal  as  well  as  interest  amount  payable  by  M/s  

Anand  Agency  of  which  Appellant  No.  2  is  the  sole  

proprietor.    

(b)   On  15.08.2005,  the  appellants  entered  into  a  

Memorandum  of  Understanding  (MoU)  (Ex.  A-2)  with  

Respondent No. 1 herein for sale of the suit property at a  

sale consideration of Rs. 14 lakhs per acre and a sum of  

Rs. 1 lakh was paid as advance by way of cheque on the  

same  day.   Balance  sale  consideration  was  to  be  paid  

within  three  months  from  the  date  of  obtaining  

confirmation letter from the Bank.   

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(c) On  10.10.2005,  M/s  J.P.  Builders,  by  a  letter  

addressed  to  the  AGM,  Indian  Bank,  Asset  Recovery  

Management Branch II, offered a sum of Rs. 100 lakhs as  

full and final settlement of the dues of its sister concern,  

M/s Anand Agency, which was declined by the Bank by  

letter dated 15.10.2005 advising them to revise the offer  

with substantial improvement. By letter dated 23.01.2006,  

the Bank stated that Appellant No. 2 herein had not made  

any  improvement  in  his  One  Time Settlement  (in  short  

‘OTS’) proposal of Rs. 100 lakhs and hence the Bank is  

proceeding to enforce its rights under the Securitization  

and Reconstruction of Financial Assets and Enforcement  

of Security Interests Act, 2002 (hereinafter referred to as  

‘the  Act’).   By  letter  dated  01.02.2006,  Appellant  No.  2  

offered a sum of Rs. 148 lakhs as one time settlement of  

the loans availed by M/s Anand Agency.   

(d) On 03.02.2006, Respondent No. 1 entered into a Sale  

Agreement  with  the  appellants  for  purchase  of  the  suit  

property.   The sale  price  of  Rs.  14 lakhs per  acre  was  

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enhanced  to  Rs.  18  lakhs  per  acre  and  the  total  sale  

consideration  was  fixed  at  Rs.  5,55,48,000/-.   On  the  

same day, Respondent No. 1 had paid a sum of Rs. 24  

lakhs by way of cheque as further advance to Appellant  

No.2  in  addition  to  Rs.  1  lakh  already  paid.  On  

18.04.2006, a further payment of Rs. 50 lakhs was made  

by Respondent No. 1.   

(e) On 26.04.2006, the Bank rejected the OTS offer  of  

Rs. 148 lakhs stating that since the amount offered is very  

low,  the  Bank  has  decided  to  pursue  the  recovery  

application  filed  before  the  Debts  Recovery  Tribunal,  

(hereinafter referred to as ‘DRT’) Chennai for the recovery  

of  the  dues  of  the  Bank.   Again,  by  letter  dated  

15.05.2006, the Bank stated that out of court settlement  

can be done if an offer of Rs. 629.60 lakhs by working out  

interest  at  PLR  i.e.  11%  compound  on  the  principal  

outstanding as on 31.03.1993 be made.  However, since  

the  settlement  amount  was  more  than  the  sale  

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consideration for  the suit  property,  the  Appellant  No.  2  

could not agree to pay the same.  

(f)  On 26.07.2006, Respondent No. 1 issued a legal notice  

to the appellants calling upon them to liquidate the loans  

out  of  the  amounts  received  from him and retrieve  the  

original documents from the Bank in order to execute the  

sale deed.  By letter dated 27.07.2006, the Appellant No. 1  

replied to the notice stating that the first respondent had  

not  paid  the  balance  sale  consideration  in  spite  of  

repeated  requests  and  raised  doubt  that  the  first  

respondent  is  no  longer  interested  to  buy  the  suit  

property,  therefore, a legal notice was sent calling upon  

Respondent No. 1 to pay a sum of Rs. 1 crore as liquidated  

damages.  

(g) On 07.08.2006, Respondent No. 1 filed O.S. No. 336  

of  2006 before  the  Principal  District  Judge,  Chengalpet  

against the appellants and the Bank.  By judgment and  

decree  dated  30.04.2008,  the  Principal  District  Judge,  

Chengalpet decreed the suit partly, granting the relief of  

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specific performance directing appellant Nos. 1 & 2 herein  

to specifically perform their part of the obligations arising  

out of the agreement for sale (Ex. A-3) dated 03.02.2006  

by executing the sale deed in favour of Respondent No. 1  

on  receipt  of  the  balance  sale  consideration  of  Rs.  

4,80,48,000/-  subject  to  the  mortgage  of  the  Bank.  

Further  the  relief  in  respect  of  permanent  injunction  

restraining the appellants from alienating or encumbering  

or  dealing  with  the  subject  property  was granted.   The  

prayer  for  mandatory  injunction  for  directing  the  

appellants  to  discharge  the  loan  in  respect  of  DRT  

proceedings pending on the file of DRT-I, Chennai, thereby  

retrieve  the  documents  and  deliver  the  same  to  

Respondent No. 1 at the time of execution and registration  

of sale deed was refused.  Challenging the rejection of the  

prayer of mandatory injunction and failure to award costs,  

Respondent No. 1 filed A.S. No. 708 of 2009 before the  

High  Court  of  Madras  along  with  interim  applications  

being  M.P.  Nos.  1  and  2  of  2008.   On  01.02.2009,  

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Respondent No. 1 filed another interim application in M.P.  

No. 1 of 2009 in A.S. No. 708 of 2008.  By order dated  

18.04.2009, the Division Bench of the High Court passed  

an order of injunction in M.P. No. 1 of 2008 and M.P. No.  

1  of  2009  restraining  the  appellants  herein  from  

alienating, encumbering or dealing with the suit property  

pending appeal.   

(h)  On 06.10.2006, the Bank filed OA No. 491 of 1999  

withdrawing its OTS offer of Rs. 629.60 lakhs and called  

upon the appellants to pay the total  amount due along  

with  future  interest,  costs  and charges.  By order  dated  

15.05.2009,  the  Presiding  Officer,  DRT-I,  Chennai,  

disposed of O.A. No. 491 holding that the Bank is entitled  

to recover a sum of Rs. 11,08,51,875/- from M/s Anand  

Agency.   Pursuant  to  the  order,  the  Recovery  Officer  

issued  the  recovery  certificate  being  D.R.C.  No.  102  of  

2009  and  also  issued  the  1st sale  notification  dated  

23.10.2009 bringing to sale the suit property.  The upset  

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price was fixed at Rs. 27 crores and the date of sale was  

fixed as 25.11.2009.   

(i) Challenging  the  decree  for  specific  performance  

granted  by  the  Principal  Judge,  Chengalpet,  the  

appellants  filed  A.S.  No.  946  of  2009  before  the  High  

Court  which  was  admitted  by  the  Division  Bench  on  

20.10.2009.  On 16.11.2009, Respondent No. 1 filed a writ  

petition  being  W.P.  No.  23405 of  2009 before  the  High  

Court praying for a writ of mandamus for bringing the suit  

property  in  O.S.  No.  336  of  2006  on  the  file  of  the  

Principal District Judge, Chengalpat in his favour and also  

filed Miscellaneous Petition in the aforesaid writ petition  

being M.P. No. 1 of 2009 praying to stay the auction sale  

of  the property covered by the decree dated 30.04.2008  

made in O.S.  No.  336 of  2006.   On the same day,  the  

interim applications bearing M.P. Nos. 2 & 3 of 2009 in  

A.S.  708  of  2008  were  also  listed  and  the  same  were  

dismissed by the Division Bench.

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(j) Questioning  the  auction  sale  proposed  to  be  

conducted by the DRT, on 19.11.2009, Respondent No. 1  

filed I.A. Nos. 1 to 3 in D.R.C. No. 102 of 2009 in O.A. No.  

491 of 1991 before the Recovery Officer, DRT-I, Chennai  

praying for release of the scheduled property and stay of  

auction sale. On 23.11.2009, the Recovery Officer, DRT-I,  

Chennai dismissed the said applications.  On 24.11.2009,  

Respondent No. 1 filed SLP (C) No. 31358 of 2009 before  

this Court challenging the order dated 16.11.2009 passed  

by the Division Bench of the High Court in M.P. No. 1 of  

2009 in W.P. No. 23405 of 2009.  Respondent No. 1 also  

filed another SLP (C) Nos. 19154-55 of 2009 challenging  

the order dated 18.04.2009 passed by the Division Bench  

of the High Court in M.P. No. 1 of 2008 and M.P. No. 1 of  

2009 in A.S. No. 708 of 2008 and order dated 16.11.2009  

in M.P. Nos. 2 & 3 of 2009 in A.S. No. 708 of 2008.  On  

the very same day, i.e. on 24.11.2009, this Court passed  

an order to continue auction but not to declare the result.  

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On 11.12.2009,  this  Court  dismissed  the  SLPs  filed  by  

Respondent No. 1.   

(k) On  23.02.2010,  the  Division  Bench,  by  impugned  

judgment,  partly  allowed A.S.  No.  708 of  2008 filed  by  

Respondent  No.  1  herein  directing  him  to  deposit  the  

balance sale consideration of Rs.4,80,48,000/- with 18%  

interest from the date of filing of the suit and also directed  

the appellants herein to execute the sale deed conveying  

the subject property to Respondent No. 1 and the Bank  

was  directed  to  proceed  against  the  various  other  

properties of  the appellants  being the subject  matter  of  

O.A. No. 491 of 1999 for recovering the balance amount.  

The appellants preferred Review Petition No. 37 of 2010  

before  the  High  Court  which  was  dismissed  on  

29.04.2010.  Being aggrieved by the impugned judgment  

dated  23.02.2010  and  order  dated  29.04.2010,  the  

appellants have preferred these appeals by way of special  

leave petitions before this Court.   

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4) Heard  Mr.  L.  Nageswara  Rao  and  Mrs.  Nalini  

Chidambaram, learned senior counsel for the appellants  

and  Mr.  R.F.  Nariman,  learned  senior  counsel  for  

respondent  No.1  and  Mr.  Himanshu  Munshi,  learned  

counsel for respondent No.2-Bank.

5) Mr. L.N. Rao and Mrs. Nalini Chidambaram appearing for  

the appellants after taking us through the pleadings, judgment  

of the trial Court as well as the impugned judgment of the High  

Court raised the following contentions:

i) The  plaintiff  has  not  established  “readiness  and  

willingness” in terms of  Section 16(c)  of  the Specific  

Relief Act, 1963, hence the Courts below ought not to  

have granted discretionary relief of decree for specific  

performance.

ii) Inasmuch  as  the  agreement  being  a  contingent  

contract,  which is impossible to fulfil  and cannot be  

implemented,  in  such  circumstance,  whether  the  

Courts  below  are  justified  in  granting  the  relief  in  

favour of the plaintiffs.

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iii) Whether  the  right  of  marshaling  by  subsequent  

purchaser as provided in Section 56 of the Transfer of  

Property Act, 1882 (hereinafter referred to as ‘the T.P.  

Act’) is available to a decree holder in a suit for specific  

performance and whether the High Court is justified in  

granting such a relief in the absence of any pleading  

and issue before the trial Court.

iv) Whether the High Court is justified in hearing a writ  

petition  filed  under  Art.  226  of  the  Constitution  of  

India along with the regular  first  appeal  filed under  

Section 96 C.P.C.   

v) Whether the High Court is justified in issuing certain  

directions to the Bank which are contrary to the orders  

passed  by  the  competent  forum,  namely,  Debts  

Recovery Tribunal.

vi) Whether the High Court is justified in granting cost in  

favour  of  the  plaintiff  when  the  same  was  rightly  

disallowed by the trial Court.

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6) On  the  other  hand,  Mr.  R.F.  Nariman,  learned  senior  

counsel for the first respondent, by drawing our attention to  

all the relevant materials relied on by the trial Court and the  

appellate Court supported the ultimate decision of the High  

Court.  He submitted that -  

i) The  plaintiff  has  established  his  readiness  and  

willingness  all  along  and  the  same  was  rightly  

accepted by the  trial  Court  and confirmed by the  

High Court.  

ii) The  contract  in  question  is  not  a  contingent  

contract  in  terms  of  Sections  31  and  32  of  the  

Indian Contract Act, 1872.   

iii) In view of the fact that the plaintiff has prayed for  

larger  relief  and  the  trial  Court  has  confined  to  

lesser relief of decree for specific performance, the  

plea  of  marshaling  being  a  question  of  law  and  

taking note  of  equity  and justice,  the  High Court  

rightly  applied  the  said  principle  and there  is  no  

error warranting interference on this ground.   

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iv) The  subject  matter  of  the  appeals  and  the  relief  

prayed for in the writ petition were interconnected,  

hence the High Court is justified in disposing of the  

writ petition along with the appeals.   

v) Inasmuch  as  the  plaintiff  has  succeeded  partial  

relief  at  the hands of  the trial  Court  after  paying  

substantial court fee, the High Court is justified in  

awarding cost which was omitted by the trial court.

vi) In any event, in view of the materials placed and the  

ultimate  decision  by  both  the  Courts  below,  

interference  by  this  Court  exercising  jurisdiction  

under Art. 136 is not warranted.  Even after grant of  

leave,  this Court  has ample power to dismiss the  

appeal without going into all the issues.

7) We have considered the rival contentions and perused all  

the relevant materials  in the form of  oral  and documentary  

evidence.

Readiness and Willingness   

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8) Section 16(c) of the Specific Relief Act, 1963 provides for  

personal  bars  to  relief.   This  provision  states  that  specific  

performance of a contract cannot be enforced in favour of a  

person,

a) who would not be entitled to recover compensation for its breach;  

or  

b) who has become incapable of performing, or violates any essential  

term of, the contract that on his part remains to be performed, or  

acts in fraud of the contract, or wilfully acts at variance with, or in  

subversion  of,  the  relation  intended  to  be  established  by  the  

contract; or

c) who fails to aver and prove that he has performed or has always  

been  ready  and  willing  to  perform  the  essential  terms  of  the  

contract which are to be performed by him, other than terms the  

performance  of  which  has  been  prevented  or  waived  by  the  

defendant.

Explanation.-  For  the  purposes  of  clause  (c),-

(i)  where  a  contract  involves  the  payment  of  money,  it  is  not  

essential for the plaintiff to actually tender to the defendant or to  

deposit in court any money except when so directed by the court;

(ii)  the  plaintiff  must  aver  performance  of,  or  readiness  and  

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willingness  to  perform,  the  contract  according  to  its  true  

construction.”

Among the three sub-sections, we are more concerned about  

sub-section(c).   “Readiness  and willingness”  is  enshrined  in  

clause  (c)  which  was  not  present  in  the  old  Act  of  1877.  

However,  it  was later  inserted with the recommendations of  

the 9th Law Commission’s report.  This clause provides that  

the person seeking specific performance must prove that he  

has performed or has been ready and willing to perform the  

essential terms of the contract which are to be performed by  

him.   

9) The words  “ready”  and “willing”  imply  that  the  person  

was  prepared  to  carry  out  the  terms  of  the  contact.   The  

distinction between “readiness” and “willingness” is that the  

former refers to financial capacity and the latter to the conduct  

of the plaintiff wanting performance.  Generally, readiness is  

backed by willingness.   

10) In N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao &  

Ors., (1995) 5 SCC 115 at para 5, this Court held:

“…..Section 16(c) of  the  Act  envisages  that  plaintiff  must  plead and prove that he had performed or has always been  

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ready  and  willing  to  perform  the  essential  terms  of  the  contract which are to be performed by him, other than those  terms  the  performance  of  which  has  been  prevented  or  waived  by  the  defendant.  The  continuous  readiness  and  willingness  on  the  part  of  the  plaintiff  is  a  condition  precedent  to  grant  the  relief  of  specific  performance.  This  circumstance is material and relevant and is required to be  considered by the court while granting or refusing to grant  the  relief.  If  the  plaintiff  fails  to  either  aver  or  prove  the  same, he must fail. To adjudge whether the plaintiff is ready  and willing  to  perform his  part  of  the  contract,  the  court  must  take  into  consideration  the  conduct  of  the  plaintiff  prior and subsequent to the filing of the suit alongwith other  attending  circumstances.  The  amount  of  consideration  which he has to pay to the defendant must of necessity be  proved to be available. Right from the date of the execution  till date of the decree he must prove that he is ready and has  always been willing to perform his part of the contract. As  stated,  the  factum  of  his  readiness  and  willingness  to  perform  his  part  of  the  contract  is  to  be  adjudged  with  reference  to  the  conduct  of  the  party  and  the  attending  circumstances.  The  court  may  infer  from  the  facts  and  circumstances whether the plaintiff  was always ready and  willing to perform his part of the contract.”

11) In  P.D’Souza vs.  Shondrilo Naidu, (2004)  6 SCC 649  

paras 19 and 21, this Court observed:

“It is indisputable that in a suit for specific performance of  contract  the  plaintiff  must  establish  his  readiness  and  willingness to perform his part of contract. The question as  to whether the onus was discharged by the plaintiff or not  will depend upon the facts and circumstance of each case.  No strait-jacket formula can be laid down in this behalf….  The readiness and willingness on the part of the plaintiff to  perform his  part  of  contract  would also depend upon the  question as to whether the defendant did everything which  was required of him to be done in terms of the agreement for  sale.”

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12) Section 16(c)  of  the  Specific  Relief  Act,  1963 mandates  

“readiness and willingness” on the part of the plaintiff and it is  

a condition precedent for  obtaining relief  of  grant of  specific  

performance.   It  is  also  clear  that  in  a  suit  for  specific  

performance, the plaintiff must allege and prove a continuous  

“readiness and willingness” to perform the contract on his part  

from the date of the contract.  The onus is on the plaintiff.  It  

has been rightly considered by this Court in R.C. Chandiok &  

Anr. vs. Chuni Lal Sabharwal & Ors., (1970) 3 SCC 140 that  

“readiness  and  willingness”  cannot  be  treated  as  a  straight  

jacket formula.  This has to be determined from the entirety of  

the  facts  and  circumstances  relevant  to  the  intention  and  

conduct of the party concerned.  It is settled law that even in  

the  absence  of  specific  plea  by  the  opposite  party,  it  is  the  

mandate of the statute that plaintiff has to comply with Section  

16(c)  of  the  Specific  Relief  Act  and  when  there  is  non-

compliance  with  this  statutory  mandate,  the  Court  is  not  

bound to grant specific performance and is left with no other  

alternative  but  to  dismiss  the  suit.   It  is  also  clear  that  

readiness  to  perform  must  be  established  throughout  the  

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relevant points of time.  “Readiness and willingness” to perform  

the part of the contract has to be determined/ascertained from  

the conduct of the parties.   

13)  In the light of the above principles, let us consider whether  

the  plaintiff  has  established  his  case  for  decree  for  specific  

performance.   

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14) Mr. L.N. Rao and Mrs. Nalini Chidambaram vehemently  

contended that the plaintiff has miserably failed to prove that  

he has fulfilled his obligation both under Ex. A-2 (MoU) and  

Ex.  A-3  –  Agreement  for  Sale  and  in  those  circumstances,  

defendants 1 & 2 are not bound to convey the suit property in  

favour of the plaintiff.  It is not in dispute that on 15.08.2005,  

the defendants entered into a MoU with respondent No.1 for  

sale of the suit property at a sale consideration of Rs. 14 lakhs  

per  acre  and  a  sum  of  Rs.  1  lakh  was  paid  as  advance.  

Balance sale consideration was to be paid within three months  

from the date of obtaining confirmation letter from the second  

respondent-Bank.   It  is  seen  from  the  materials  that  on  

10.10.2005,  M/s J.P.  Builders,  by a  letter  addressed to the  

AGM,  Indian  Bank  Assets  Recovery  Management  Branch  II,  

offered a sum of Rs. 100 lakhs as full and final settlement of  

the dues of its sister concern which was declined by the Bank  

advising to revise the offer with substantial improvement.  By a  

letter dated 23.01.2006, the Bank stated that defendant No.2  

herein  had  not  made  any  improvement  in  his  one  time  

settlement proposal of Rs. 100 lakhs and hence the Bank is  

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proceeding to enforce its rights under the Act.   It  is further  

seen that on 01.02.2006, the appellant No.2 offered a sum of  

Rs. 148 lakhs as one time settlement.  Within two days of the  

said  offer  i.e.  03.02.2006  the  plaintiff  entered  into  a  Sale  

Agreement  with  the  defendants  for  purchase  of  the  suit  

property.  The sale price of Rs. 14 lakhs per acre was enhanced  

to Rs. 18 lakhs per acre and the respondent No.1 had paid a  

sum of Rs. 24 lakhs as further advance to defendant No.2.  It  

is further seen that on 18.04.2006, a further payment of Rs. 50  

lakhs  was  made  by  the  plaintiff.   It  is  also  seen  that  on  

15.05.2006, the Bank rejected the one time settlement offer of  

Rs. 148 lakhs stating that out of court settlement can be done  

if an offer of Rs. 629.60 lakhs by working out interest at PLR  

i.e.  11%  compound  on  the  principal  outstanding  as  on  

31.3.1993 be made.  For this, defendant No.2 could not agree  

to pay the same.

15) A perusal of the recitals in the Agreement for Sale (Ex.A-

3) are to the effect that to discharge the bank loan and for the  

business purpose of the vendors, the appellants have decided  

to sell  the properties and offered the same for sale and the  

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Respondent No. 1 has agreed to purchase the said property.  

In Ex. A-3, it is stated that defendant Nos. 1 & 2/vendors have  

undertaken to discharge the loans and hand over the original  

title  deeds of  the  said  property  to  the  plaintiff  within  three  

months from the date of the agreement for scrutiny of title.  It  

is  relevant  to  mention  here  that  Ex.  A-3,  was  executed  on  

03.02.2006.  The recital also shows that the plaintiff  has to  

pay further advance, if any, required by the vendors to release  

the documents from the Bank.  It is the definite case of the  

plaintiff that defendant Nos. 1 & 2 had agreed to liquidate the  

property and hand over the original title deeds for which the  

plaintiff  had  paid  further  advance  of  Rs.  24  lakhs  and  on  

18.04.2006, he had paid Rs.50 lakhs.   

16) We  have  already  adverted  to  the  initial  OTS  proposal  

dated 01.02.2006 expressing second defendant’s willingness to  

pay  for  Rs.  148  lakhs  since  the  bank  has  expressed  its  

inability to consider, by letter dated 15.05.2006, the bank has  

conveyed that OTS will be accepted if the offer is given for Rs.  

629.60 lakhs by working out compound interest at 11%.  In  

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the plaint, there is a specific averment that the plaintiff even  

on 18.4.2006 has paid a further advance of Rs. 50 lakhs.   

17) In his oral evidence before the Court, the plaintiff - PW-1  

had reiterated and in fact asserted that he was always ready  

with  the  money  and  duly  pursuing  the  OTS  along  with  

Defendant Nos. 1 & 2.  Insofar as readiness and willingness on  

the part of the plaintiff is concerned, apart from the specific  

plea  in  the  plaint  about  the  payment  and  advance  of  

substantial amount, he also placed the relevant materials in  

the form of letters to show that he was corresponding with the  

Bank for early settlement of  the dues.  In other words,  the  

assertion  in  the  form  of  specific  plea  in  the  plaint  and  

correspondence  in  the  form  of  letter,  his  assertion  in  the  

witness box at the time of trial, the Courts below are right in  

arriving  at  a  conclusion  that  the  plaintiff  has  proved  and  

complied with the mandates provided under Section 16 (c) of  

the Specific Relief Act.

18) Mrs. Nalini Chidambaram before the High Court as well  

as before us by basing reliance on clause 4 of the MoU (Ex. A-

2)  contended that  the  balance  sale  consideration  has to  be  

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paid within one week of the receipt of Confirmation Letter from  

the Bank and absolutely there is no material to show that the  

plaintiff  was  ready  with  the  money  within  the  prescribed  

period of one week.  It is also pointed out that in addition to  

the same, plaintiff has to pay the amount to clear the bank  

loan  and  without  paying  the  amount  within  the  prescribed  

period, the plaintiff has committed breach of his obligations,  

hence, the plaintiff  is not permitted to blame the defendant  

which would arise only after the performance of the plaintiff’s  

obligation.  In order to prove her stand, learned senior counsel  

for the appellants heavily placed reliance on Clauses 4, 6 and  

7 of Ex. A-2.  In the light of the said claim, we perused various  

clauses in Ex. A-2 as well the subsequent agreement for sale  

dated  03.02.2006,  Ex.  A-3.   As  rightly  pointed  out  by  the  

Division Bench,  defendant Nos.  1  & 2 had entered into  an  

agreement  to  sell  the  suit  property  to  discharge  loans  and  

handover the original title deeds has been reiterated both in  

Ex.  A-2 and Ex.  A-3.  However,  it  is  to be noted that after  

execution of Ex. A-3, i.e. agreement for sale dated 03.02.2006,  

defendant Nos. 1 & 2 have undertaken to discharge the loans  

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and  handover  the  original  title  deeds  to  the  plaintiff.   No  

doubt, as per Ex. A-3, plaintiff has to pay further advance, if  

required by the  vendors  to  release  the  documents  from the  

Bank.   The  plaintiff  has  demonstrated  by  placing  oral  and  

documentary evidence that on the date of execution of Ex. A-3,  

he has paid further advance of Rs. 24 lakhs and Rs. 50 lakhs  

on 18.04.2006. It was pointed out that the plaintiff has settled  

Rs. 75 lakhs out of the sale consideration and for the balance  

sale  price  he  has  deposited  a  sum of  Rs.  2,45,00,000/-  in  

Indian  Overseas  Bank,  Sowcarpet  Branch,  Chennai.   The  

deposit receipt of the said amount is produced as Ex. A-13.  In  

order to prove that he had sufficient  means of  finance,  the  

plaintiff has produced documents under Ex. A-12 and Ex. A-

13.  In his evidence as PW-1, the plaintiff has asserted that he  

was having  ready cash and also produced  Ex. A-11, Fixed  

Deposit Receipt (FDR dated 19.04.2006 in his name) in Indian  

Overseas Bank for Rs. 2,45,00,000 with date of maturity as  

18.07.2006.  Ex. A-12 is the certificate issued by the Indian  

Bank, Alwarpet Branch, Chennai stating that the plaintiff  is  

maintaining  Savings  Bank  Account  No.726244658  in  their  

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bank and the balance as on 20.04.2007 is Rs. 1,50,00,444/-  

Ex.  A-13 is  the  Certificate  issued by Indian Overseas Bank  

stating that credit balance of plaintiff’s savings bank account  

No. 6874 is Rs. 304,12,574.08 as on 21.04.2007. If we analyse  

Ex. A-11 to Ex.A-13 coupled with assertion made in the oral  

evidence  of  PW-1,  it  would  amply  show  that  plaintiff  was  

having sufficient cash and financial capacity to complete the  

transaction.   Further  the  plaintiff  is  required  to  pay  the  

balance  amount  of  consideration  only  on  the  event  of  a  

demand  made  for  payment  of  further  amount  by  the  

defendants  on  the  basis  of  the  confirmation  letter  to  be  

obtained from the bank as per the agreement for sale under  

Ex. A-3.  Absolutely, there is no evidence as to any demand  

made by defendant Nos. 1 & 2 from the plaintiff for further  

payment of sale price.  Inasmuch as under Ex. A-4, he had  

intimated that he is prepared to get the sale executed while  

perusing  the  aforesaid  bank  deposit  receipts,  it  is  clearly  

revealed that the plaintiff was endowed with the means to pay  

the sale consideration and had ever been prepared to do the  

same.  On the other hand, it is not the case of Defendant Nos.  

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1 & 2 that they have asked for further advance and that the  

plaintiff did not respond for their request.  As rightly pointed  

out by the trial Court and commended by the High Court, it is  

not  clear  that  why  Defendant  Nos.  1  &  2  fail  to  led  oral  

evidence in support of their claim.  It is also not clear why they  

have  avoided  the  witness  box,  though  it  is  stated  that  the  

plaintiff  had  admitted  the  stand  of  Defendant  Nos.  1  &  2  

which  is  factually  incorrect  and  unacceptable.   The  only  

objection pointed out was that for effective OTS, even though,  

the  plaintiff  has  deposited  Rs.10,01,000/-  in  the  “No  lien  

account” of second defendant, the plaintiff has surreptitiously  

withdrawn the said amount which had upset the settlement  

talks between defendant Nos.  1 & 2 and the 3rd defendant-

Bank on the other side.  It is true that as per clause 4 of Ex.  

A-2 MoU, the plaintiff  has agreed to pay further advance to  

defendant Nos. 1 & 2 to enable them to pay and clear the bank  

loan  obtained  by  their  sister  concern  namely,  M/s  Anand  

Agency, wherein defendant No.1 – J.P. Builders have stood as  

guarantors to the said loan.  It is equally true that in the letter  

(Ex. B-1), addressed to the Assistant General Manager of the  

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Bank,  the  plaintiff  has  stated  that  he  has  deposited  

Rs.10,01,000/-  in  a  “No-lien  account”  towards  M/s.  Anand  

Agency and that he has proposed to purchase the property  

from  them  which  was  mortgaged  to  the  Bank  and  after  

acceptance of the compromise settlement, the amount can be  

appropriated towards the compromise arrived.  In the same  

letter, the plaintiff has also informed that if the compromise  

settlement  is  not  materialized,  the  said  deposit  may  be  

released to him.  However,  as pointed out earlier,  one time  

settlement offer of Rs. 148 lakhs was not acceptable by the  

Bank and because of the same, the plaintiff withdrew the said  

deposit and the bank by a letter (Ex. B-2), informed the second  

defendant about the same.   As rightly pointed out by the High  

Court, mere withdrawal of Rs. 10,01,000/- deposited in “No-

lien  account”  by  the  plaintiff   has  no  significance  since  

subsequent to the same both parties have entered into Ex. A-

3, Agreement for sale on 03.02.2006 and on which date the  

plaintiff  has  also  paid  a  further  advance  of  Rs.  25  lakhs.  

These  facts  have  been  clearly  explained  by  PW-1  in  his  

evidence and he also asserted that the same fact was orally  

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informed to Defendant Nos. 1 & 2.  We have already pointed  

out that there is no reason to disbelieve the assertion of PW-1.  

As  rightly  pointed out  by Mr.  R.F.  Nariman,  learned senior  

counsel for the first respondent-plaintiff  that after receipt of  

Ex. B-2 Defendant Nos. 1 & 2 have not raised any protest but  

on the other hand they proceeded to further advance of Rs. 50  

lakhs from the plaintiff on 18.04.2006 and made endorsement  

in  Ex.  A-3  agreement  for  sale.   In  those  circumstances,  as  

rightly  pointed  out  and  correctly  appreciated  by  the  High  

Court, withdrawal of Rs. 10,01,000 from “No-lien account” of  

M/s  Anand  Agency  by  the  plaintiff  would  not  lead  to  the  

conclusion that the plaintiff  had committed breach and was  

not ready to perform his part of the contract.

19) With the materials placed, specific assertion in the plaint,  

oral and documentary evidence as to execution of agreement,  

part-payment of sale consideration, having sufficient cash and  

financial capacity to execute the sale deed, bank statements as  

to the moneys in fixed deposits and saving accounts, we are of  

the  view  that  the  plaintiff  has  proved  his  “readiness”  and  

“willingness”  to  perform  his  part  of  obligation  under  the  

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contract.  The concurrent findings of the trial court as well the  

High  Court  as  to  readiness  and  willingness  to  perform  

plaintiff’s  part  of  the  obligations  under  the  contract,  in  the  

absence of any acceptable contra evidence is to be confirmed.  

We agree with the conclusion arrived at by the trial Court as  

well as by the High Court on the readiness and willingness on  

the part of the plaintiff  and reject the argument of the learned  

senior counsel for the appellants.     

Contingent Contracts

20) By pointing out various clauses in the MoU (Ex. A-2), Ms.  

Nalini Chidambaram, learned senior counsel for the appellants  

heavily  contended  that  inasmuch  as  the  contract  was  

depending upon uncertain events of the Indian Bank, agreeing  

for OTS, the contract entered is contingent depending on the  

move  of  the  Indian  Bank.   According  to  her,  inasmuch  as  

various  clauses  insists  certain  impossible  conditions  at  the  

hands of the Indian Bank, the contract entered into between  

the  plaintiff  and  defendants  become  impossible  and  void.  

Though such an argument was advanced before us, there was  

no such specific plea in their written statement and the Trial  

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Court has not framed separate issue and considered the same.  

Irrespective  of  the  above  position,  in  view  of  the  assertion  

made by learned senior counsel, we intend to discuss and give  

our answer.

21) Chapter III of the Indian Contract Act, 1872 deals with  

Contingent Contracts.  Contingent contract has been defined  

in Section 31 and method of enforcement is stated in Section  

32 which reads as under:

“31.  “Contingent  contract”  defined.—  A  “contingent  contract” is a contract to do or not to do something, if some  event, collateral to such contract, does or does not happen.

32.  Enforcement  of  contracts  contingent  on  an  event  happening.—  Contingent  contracts  to  do  or  not  to  do  anything if  an uncertain future event  happens,  cannot be  enforced by law unless and until that event has happened.  If  the  event  becomes  impossible,  such  contracts  become  void.”

It is clear that if the condition prescribed or even described in  

the  contract  is  impossible,  undoubtedly,  such  contracts  

become void and not enforceable in terms of Section 32.  The  

events  enumerated  in  the  contract,  according  to  Ms.  Nalini  

Chidambaram are (a) a letter specifying the balance due to the  

bank (b) an undertaking later from the Bank that it will receive  

the said balance amount (c)  they will  handover the original  

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documents directly to the plaintiff.  While elaborating the said  

points, learned senior counsel highlighted that for executing  

the sale deed, getting confirmation or clearance letter from the  

Indian Bank on payment of the dues to the Bank and getting  

original documents have been emphasized in various clauses  

in the MoU (Ex. A-2).  Among various clauses, she highlighted  

Clauses  4,  6,  7  in  the  MoU  (Ex.  A-2).   No  doubt,  those  

conditions  have  been  enumerated  in  the  above  referred  

clauses.  She also brought to our notice that the Indian Bank  

not  only  declined  the  OTS offer  of  Rs  148 lakhs  but  got  a  

decree  for  Rs.  8,51,825.29  from the  DRT.   The  very  same  

contentions  were  raised  before  the  High  Court.   Mr.  R.  F.  

Nariman, by drawing our attention to Ex. A-3 contended that  

Agreement  for  Sale  dated  03.02.2006  is  a  fresh  agreement  

hence clause 4, 6 and 7 of the MoU (Ex. A-2) would not govern  

the parties.  We have once again perused various clauses in  

Ex. A-2 as well as subsequent agreement for sale Ex. A-3.  It is  

relevant to note that in the plaint, in paragraph 7, this aspect  

has been specifically pleaded wherein it was highlighted that  

the  plaintiff  sought  for  performance  of  contract  strictly  in  

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accordance with the original Memorandum of Understanding  

(MoU) dated 15.08.2005 as emerged with the agreement for  

sale dated 03.02.2006 entered into between the plaintiff and  

the defendant Nos. 1 and 2 in Chennai for sale and purchase  

of the suit property.  In fact, this was specifically mentioned by  

the  plaintiff  in  his  rejoinder  notice  dated  31.07.2006  

addressed to defendant Nos. 1 and 2 and even after receipt of  

the same, they have not chosen to send any reply disputing  

the  same.   In  those  circumstances,  we  agree  with  the  

conclusion  arrived  at  by  the  High  Court,  namely,  after  the  

parties entered into Ex. A-3 agreement for sale, Clauses 4, 6  

and 7 of the MoU (Ex A-2) would not govern the parties.  On  

the  other  hand,  as  per  Clause  3,  4  and  6  in  Ex.  A-3,  the  

vendor  and  defendant  Nos.  1  and  2  have  undertaken  to  

discharge their loans and hand over title deeds.  The relevant  

clauses, namely, 3, 4 and 6 of Ex. A-3 are as follows.  

“……3. The balance of sale consideration shall be paid by the  PURCHASER  TO  THE  VENDORS  on  or  before  the  Registration of the Deed of Sale.

4. The Vendor undertake to discharge the Loans and hand  over  the  ORIGINAL  TITLE  DEEDS  relating  to  Schedule  mentioned  properties  to  the  PURCHASER,  within  three  months from this date for scrutiny of title.  HOWEVER, the  

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purchaser has to pay further advance if any required by the  VENDORS, to release the documents from Bank.

6. The sale shall be completed within six months from the  date  of  production  of  ORIGINAL  DOCUMENTS  by  the  VENDORS to the Purchaser…..”

22) If we accept the above stand and conduct of the parties  

and fresh terms as mentioned above in Ex. A-3, the conditions  

incorporated  in  Ex.  A-2  need  not  be  complied  with  and  it  

cannot  be  contended  that  the  contract  was  a  contingent  

contract and unless and until a letter of confirmation issued  

by the Indian Bank, the same is not enforceable.  As rightly  

pointed out by Mr R. F Nariman, the vendors have agreed to  

sell  the  property  but  agreed  to  execute  the  sale  deed  after  

discharge  of  the  mortgage  in  favour  of  the  defendants.   In  

other words, it was only the execution of the sale deed which  

was postponed to a future date. The clauses referred above in  

Ex A-3 do not insist the sale deed is to be executed only after  

the acceptance of OTS proposal by the Bank.  It is true that  

the  first  OTS  offered  by  defendant  Nos.  1  and  2  was  not  

acceptable by the Bank.  When the Bank offered OTS for Rs.  

629.60 lakhs, it was not acceptable by the defendant Nos 1  

and 2.  Clause 4 of Ex. A-3, makes it clear that to discharge  

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the loans of the Bank, the vendors are free to make a request  

to  the  purchaser,  namely,  the  plaintiff,  to  make  further  

advance  and  after  getting  the  amount  from  the  plaintiff,  

defendant Nos. 1 and 2 have to secure documents from the  

Bank.   The trial Court as well as the High Court held that  

there is no material to show that the defendant Nos. 1 and 2  

made  any  attempt  to  comply  with  Clause  4  in  Ex.  A-3  by  

requiring the plaintiff to make further advance.  In the earlier  

paragraphs,  we  have  also  highlighted  the  conduct  of  the  

plaintiff in keeping the required money, no doubt, in their SB  

account  for  the  purpose  of  meeting  the  demand  of  the  

defendant Nos. 1 and 2.  Even otherwise, the agreement to  

discharge the loans of the Bank and handover the original title  

deeds to the plaintiff cannot be construed as impossible event  

and it would affect the terms of contract to become void, more  

particularly, when the plaintiff deposited substantial amount  

facilitating  the  defendant  Nos.  1  and  2  to  meet  their  

requirement for fulfilling the contract.  As rightly observed by  

the  High  Court,  in  the  light  of  various  clauses  in  the  

agreement agreed to by both the parties, the same cannot be  

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termed as a contingent contract.   

23) As  stated  earlier,  merely  because  the  contract  insist  

settlement of a loan of the bank and handover the title deeds  

to the plaintiff from the bank are not impossible events in the  

light of the performance made by the plaintiff, the contract in  

question did not come to an end on this  ground and such  

contract  is  not  a  contingent  contract  and undoubtedly,  the  

Court has jurisdiction to grant relief in terms of the contract.  

Obtaining No Objection Certificate  (NOC)  from the authority  

concerned, clearance of NOC from Income Tax Department or  

any other State/Central  authority,  securing title  deeds after  

clearing certain loans are incidental and implied covenant on  

the part of the vendors to do the needful to give effect to the  

agreement.   

24) It is also relevant to point out that though defendant Nos.  

1 and 2, at the first instance offered OTS for Rs. 148 lakhs,  

the  Bank,  after  taking  note  of  various  aspects  claimed  Rs.  

629.60 lakhs as their proposal.  As rightly pointed out by Mr.  

R.F.  Nariman,  it  was  not  an  impossible  performance  

considering the amount borrowed by the sister agency of the  

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Ist defendant and various properties possessed by defendant  

Nos. 1 and 2 in prime localities of Chennai and in and around  

the sub-urban areas of Chennai.   

25) We are satisfied that the contract in question is capable  

of  performance  and  the  contention  of  the  learned  senior  

counsel for the appellants that it is a contingent contract and  

is  incapable  of  performance  cannot  be  accepted.   We  have  

already pointed out that this was not an issue before the trial  

Court and such plea was not raised in the written statement.  

We have also pointed out that defendant Nos. 1 and 2 did not  

bother to explain all salient features by entering the witness  

box in support of their claim.  We have already highlighted  

that  the  plaintiff  has  established  that  he  has  partially  

performed  his  part  of  obligations  by  paying  the  advance  

amount of Rs. 25 lakhs and another Rs. 50 lakhs in addition  

to the initial deposit of Rs. 1 Lakh.  We also hold that plaintiff  

has proved his readiness and willingness and financial ability  

to complete the sale transaction.  Accordingly, we reject the  

second contention also.   

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Marshalling

26) It is the claim of the plaintiff before the High Court that  

having  secured  a  decree  for  specific  performance  as  per  

Section 56 of the T.P. Act, 1882, by applying the principles of  

Marshalling, directions may be issued to the Bank to exhaust  

its remedy from other items of property which are located in  

the  prime  places  in  Chennai  before  bringing  the  properties  

covered in the agreement of sale.   

27) In order to understand the claim of the plaintiff and the  

stand taken by the defendant Nos. 1 and 2, it is useful to refer  

Section 56 of the T. P. Act.   

“56. Marshalling by subsequent purchaser.—If the owner  of two or more properties mortgages them to one person and  then sells one or more of the properties to another person,  the buyer is, in the absence of a contract to the contrary,  entitled  to  have  the  mortgaged-debt  satisfied  out  of  the  property or properties not sold to him, so far as the same will  extend, but not so as to prejudice the rights of the mortgagee  or persons claiming under him or of any other person who  has  for  consideration  acquired  an  interest  in  any  of  the  properties.”

Similar to this is Section 81 of the T.P. Act which speaks about  

marshalling securities.  The High Court after noting that the  

plaintiff had paid substantial amount as advance and secured  

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decree for specific performance, came to the conclusion that  

the right of marshalling is available to the plaintiff.  Section 56  

deals  with  the  right  of  subsequent  purchaser  to  claim  

marshalling.  It should be contrasted with Section 81 which  

refers to marshalling by a subsequent mortgage.  The concept  

as in Section 56 applies to sales in a manner similar to Section  

81 which applies to mortgages alone.   

28) The concept of marshalling by subsequent purchaser can  

be  explained  by  the  following  illustration.  Suppose  A  owns  

properties X and Y. Both these properties are mortgaged to C.  

Later, A sells property X to B. Now, B will be entitled to insist  

that  his  vendor  A,  shall  satisfy  his  mortgage  debt  out  of  

property Y (unsold) in the first instance as far as possible. If  

after  property Y is  exhausted there  still  remains balance of  

debt,  only  then property  X will  be  drawn upon.   As stated  

earlier, Section 56 deals with the concept of marshalling in a  

transaction involved in subsequent sale,  on the other hand,  

Section 81 is applicable only to mortgages.   The doctrine of  

marshalling rests upon the principle that a creditor who has  

the means of satisfying his debt out of several funds shall not,  

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by the exercise of his right, prejudice another creditor whose  

security comprises only one of the funds.   

29) As  rightly  pointed  out,  in  view  of  the  sale  agreement  

which results into decree for specific performance, the plaintiff  

is entitled to insist upon defendant Nos. 1 to 3 to have the  

mortgage debt satisfied out of the properties not sold to the  

plaintiff and in any case if the sale proceeds are not sufficient  

then  to  proceed  against  the  said  suit  properties.   Learned  

senior  counsel  for  the  appellants  strongly  objected  the  

application  of  the  principle  of  marshalling  by  subsequent  

purchaser by the High Court when the plea of marshalling was  

not taken by the plaintiff in the trial Court.  In other words,  

according to them, without taking such plea before the trial  

court, the same cannot be taken for the first time before the  

Appellate  Court.   It  is  not  in  dispute  that  the  plea  of  

marshalling and applicability of Section 56 of the T.P. Act was  

not raised before the trial Court.  However, if we consider the  

entire plaint, which is available in the appeal paper-book, the  

plaintiff has claimed a larger relief.  In para 12 of the plaint,  

the plaintiff has prayed for the following reliefs.

4

(i) “directing  the  Defendant  Nos.  1  and  2  to  specifically  perform the Agreement for Sale Deed dated 03.02.2006 in  respect of the suit schedule mentioned property which is  more  fully  described  in  the  schedule  hereunder,  by  executing a Deed of Sale or Deeds of Sale and register a  valid conveyance in favour of the Plaintiff or his nominee  or nominees on a date to be fixed by this Court and/or in  default, direct the officer of this Court to convey the suit  schedule mentioned property on behalf of the Ist and 2nd  Defendants herein in favour of the plaintiff or his nominee  or nominees on a date to be fixed by this Court on receipt  of  the  balance  sale  consideration  of  Rs.  4,80,48,000/-  payable by the Plaintiff to them.

(ii) For  a  mandatory  injunction  directing  the  1st and  2nd  Defendants  to  discharge  the  loan  payable  to  the  3rd  Defendant Bank in respect of DRT proceedings pending  on  the  file  of  DRT,  Chennai  as  per  the  terms  of  the  contract  dated  03.02.2006  thereby  retrieve  the  documents and deliver the same to the plaintiff at time of  execution and registration of Sale Deed or Sale Deeds in  favour of the plaintiff or his nominee or nominees either  in one lot or in pieces as the case may be.

(iii) Not pressed, deleted.

(iv) For a permanent injunction restraining the Defendants 1  and 2, their men, servants, agents, or any one claiming  through  them  or  authorized  by  them  in  any  manner  alienating, encumbering or dealing with the suit schedule  mentioned property either by way of sale, mortgage, lease,  joint-development,  or  otherwise,  or  putting  up  any  construction thereon except in accordance with law.

(v) To grant such further or other reliefs; and

(vi) To award the costs of this suit.”

30) As observed by the High Court, the plaintiff was under an  

impression that the trial Court would grant the entire relief as  

claimed and he did not anticipate that he could get a part of  

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relief sought for by him.  In this circumstance, learned senior  

counsel  appearing  for  the  plaintiff  was right  in  highlighting  

that there was no occasion for the plaintiff to raise the plea of  

marshalling at the time of filing of the suit.  Even otherwise, as  

rightly  observed by the High Court,  the plea of  marshalling  

being pure question of law based upon the decree obtained for  

specific  performance,  cannot  simply  be  thrown  out  merely  

because the same was not specifically pleaded.   

31) Mrs. Nalini Chidambaram strongly contended that in the  

absence of any plea the claim of marshalling cannot be applied  

to  the  plaintiff.   In  support  of  her  stand  she  relied  on  

Anathula Sudhakar vs P. Buchi Reddy (Dead) By Lrs. And  

Ors. (2008) 4 SCC 594 wherein this Court held “no amount of  

evidence or arguments can be looked into or considered in the  

absence of pleadings and issues, is a proposition that is too  

well settled.”  Absolutely, there is no dispute about the said  

proposition.  In the said decision, the High Court in a Second  

Appeal arising from a suit for bare injunction while reversing  

the  decision  of  the  first  Appellate  Court,  examined  various  

aspects relating to title and recorded findings and proceeded to  

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discuss and grant relief in the absence of pleadings and issues  

regarding title.  Similar view has been expressed in  Bachhaj  

Nahar vs. Nilima Mandal and Anr (2008) 17 SCC 491.  It is  

relevant to extract the principles enunciated in para 23 of the  

judgment which are as follows.  

“23. It is fundamental that in a civil suit, relief to be granted  can  be  only  with  reference  to  the  prayers  made  in  the  pleadings.  That  apart,  in  civil  suits,  grant  of  relief  is  circumscribed by various factors  like  court  fee,  limitation,  parties to the suits, as also grounds barring relief, like res  judicata,  estoppel,  acquiescence,  non-joinder  of  causes  of  action  or  parties,  etc.,  which  require  pleading  and  proof.  Therefore, it would be hazardous to hold that in a civil suit  whatever  be  the  relief  that  is  prayed,  the  court  can  on  examination of facts grant any relief as it thinks fit. In a suit  for  recovery of  rupees one lakh,  the court  cannot  grant  a  decree for rupees ten lakhs. In a suit for recovery possession  of property ‘A’, court cannot grant possession of property ‘B’.  In  a  suit  praying  for  permanent  injunction,  court  cannot  grant a relief of declaration or possession. The jurisdiction to  grant  relief  in  a  civil  suit  necessarily  depends  on  the  pleadings, prayer, court fee paid, evidence let in, etc.”

In those circumstances, while reiterating the principles laid  

down above, we hold that the same are not applicable to the  

case on hand.   

32) We have already demonstrated the relief  prayed in the  

plaint by paying substantial court fee of Rs. 41,66,326.50.  In  

such circumstance, when a party is able to secure substantial  

relief, namely, decree for specific performance with clearance  

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of mortgage amount, it is the duty of the Court to mould the  

relief so as to render substantial justice between the parties.  

In this regard, we accept the course adopted by the High Court  

in granting relief to the plaintiff.   

33) We are also satisfied that merely because for recovery of  

the loan secured by banks, a special Act, namely, Recovery of  

Debts due to Banks and Financial Institutions Act, 1993 has  

been enacted which is not a bar for the civil Court to apply to  

other relief such as Section 56 of the T.P. Act.  We are also  

satisfied that by issuing such direction on the application of  

Section 56 of the T.P. Act, the Division Bench has not modified  

or eroded the order passed by the DRT.  On the other hand, it  

is an admitted fact that the Bank has accepted the impugned  

verdict  of  the  High  Court  and  did  not  challenge  the  same  

before this Court by filing an appeal.   We are also satisfied  

that by granting such a relief, the Bank is not prejudiced in  

any way by bringing other properties for sale first to satisfy the  

mortgage debt payable by defendant Nos. 1 and 2.  In fact, the  

High  Court  was  conscious  and  also  observed  that  if  sale  

proceeds  of  other  items  of  properties  are  not  sufficient  to  

4

satisfy the debt payable to the Bank by defendant Nos. 1 and  

2, in that event, Bank can proceed against the suit properties.  

34) We are also conscious of the fact that the said doctrine  

cannot be permitted to become a device for  destructing the  

sanctity of contract.  The court will also not apply the doctrine  

of impossibility to assist a party which does not want to fulfill  

its obligations under the contract.   

About Writ Petition:

35) It  is  relevant  to  note  that  during  the  pendency of  the  

appeals  before  the  High Court,  the  very  same plaintiff  filed  

Writ Petition No. 23405 of 2009, impleading defendant Nos. 1  

and  2,  M/s  Anand  Agency  which  is  a  sister  concern  of  

defendant No. 1 and 3rd defendant-Bank apart from Union of  

India, praying for issuance of a writ of Mandamus forbearing  

the respondents from bringing the scheduled property forming  

the subject matter of the decree in his favour in O.S. No 336 of  

2006 on the file of the Principal District Judge, Chengalpet by  

way of auction.  He also prayed for certain other directions.  

Objections were raised by the appellants about the hearing of  

4

the  writ  petition  along  with  the  appeals.   We  have  already  

adverted to the facts leading to the filing of two regular First  

Appeals before the High Court.  It is not in dispute that the  

parties in those appeals as well as in the writ petition are one  

and the same except Union of  India against whom the writ  

petitioner has not sought any relief.  It is also not in dispute  

that the subject matter of the  lis and properties are one and  

the same in both the appeals and the writ petition.  There is  

no bar for the Division Bench which has jurisdiction to hear  

appeal, to hear writ petition when the same is connected with  

the main issue.  In fact, no serious objection was raised before  

the  High Court  for  hearing  the  writ  petition along with the  

appeal.  On the other hand, on the earlier occasion, when the  

parties have filed special leave petitions against certain interim  

orders, this Court requested the High Court to dispose of all  

the  matters  together.   It  is  relevant  to  point  out  that  no  

clarification  or  direction  was  sought  in  respect  of  the  said  

order passed by this Court.   

36) Mr. R.F. Nariman, learned senior counsel has pointed out  

that the writ petitioner has highlighted the applicability of the  

4

principle of marshalling.  He pointed out that in grounds (j)  

and (k), the factual aspects about applicability of marshalling  

have been highlighted.   Since  the appellants  have seriously  

objected that in the absence of any material, the High Court  

ought not to have considered the same, we reproduce the said  

grounds hereunder:    

(j) “When there are other properties belonging to the Judgment  Debtors are available for auction sale for realization of the  D.R.C.  issued  the  suit  properties  are  brought  to  auction  sale,  leaving  out  the  other  valuable  properties  of  the  Respondent Nos. 1 & 2 at Chennai and the property covered  by  the  decree  situate  at  Senthamangalam  village  are  brought  to  sale  and  the  said  action  of  the  respondents  would  defeat  and  frustrate  the  decree  for  specific  performance granted in favour of the petitioner herein.

(k) When there are more than one property belonging to the  borrowers  are  available  leaving  out  all  the  properties  including the 3 valuable properties at Chennai are left from  auction sale and the property situate at Senthamangalam  village (forming the decree property) would demonstrate that  the  respondent  bank  with  tacit  understanding  with  the  borrowers is attempting to destroy the rights of the Decree  Holder  who  is  holding  a  decree  for  specific  performance  which has not been stayed by the High Court, Madras and  the  respondent  bank is  not  willing  to  receive  the  monies  offered by the petitioner on behalf of the Respondents 4, 5  and 6 ever since the inception of the suit in August 2006 till  date which would demonstrate the motive of  the bank in  indulging in dilatory tactics,  the Respondents 2 and 3 in  collusion and connivance of the respondents 4, 5 and 6 are  bringing the property covered by the decree solely with a  view  to  frustrate  the  decree  secured  by  the  petitioner  herein.”   

4

Though  the  plea  of  ‘marshalling’  has  not  been  specifically  

mentioned but all the required details have been referred to. It  

is not clear whether any objection/counter has been filed by  

the respondent Nos. 4 to 6 therein (respondent Nos. 1 & 2  

herein) about those factual details.  Irrespective of the same,  

we have already concurred with the High Court in applying the  

said principle  considering the larger relief  prayed for  in the  

suit  and  the  plaintiff  was  having  a  decree  for  specific  

performance subject  to  clearance of  mortgage loan with the  

Bank.   

37)  In Sain Ditta Mal vs. Bulagi Mal & Sons and others,  

AIR (34) 1947 Lahore 230, the High Court after adverting to  

Section 56 of the Transfer of Property Act has held that this  

equitable  doctrine  exists  for  the  benefit  of  the  buyer  alone.  

Following the said decision of the Lahore High Court, Karam  

Singh Sobti vs.  Smt Shukla Bedi, AIR 1962 Punjab High  

Court at Delhi 477 reiterated the same principle.   

4

38) The principle laid down in Brahm Parkash vs. Manbir  

Singh & Ors., [1964] 2 SCR 324 at 335 is also relevant to  

quote:.

“The  other  submission  of  learned  counsel  was  that  the  learned  Judges  failed  to  give  effect  to  the  last  portion  of  Section 56 under which marshalling is not to be permitted  so as to prejudice the rights inter alia of the mortgagees or  other  persons  claiming  under  him  i.e.  under  the  original  mortgagor. Learned counsel pointed out that the appellant  having  proved  his  mortgage  and  the  fact  that  it  was  subsisting, the learned Judges of the High Court ought to  have  held  that  any  direction  as  to  marshalling  must  necessarily prejudice him. We are unable to agree that this  follows as any matter of  law.  The question of  prejudice is  purely one of fact which has to be pleaded and the necessary  facts and circumstances established. It is obvious that the  question of prejudice would be intimately connected with the  value of the property against which the mortgagee is directed  to proceed in the first instance. If even after paying off such  a  mortgage  there  is  enough  left  for  payment  over  to  the  subsequent encumbrancer referred to in the last portion of  Section  56  it  would  be  manifest  that  there  would  be  no  question of  prejudice.  If  therefore  the appellant  desired to  invoke the benefit of the last portion of Section 56 he should  have made some plea as to the value of the property and  shown how it  would prejudice his  rights  as a subsequent  encumbrancer.  He  however  made  no  such  plea  and  no  evidence was led as to the value of the property. Even at the  stage of the appeal in the High Court the contention that to  allow marshalling in favour of the subsequent purchaser —  Mukhamal would result in prejudice to him was admittedly  never put forward before the learned Judges. As the point is  one not of pure law but springs from the factual inadequacy  of the property mortgaged to him to discharge his debt it is  too late for the appellant to raise such a plea in this Court.”

It is clear that the application of the principle of marshalling  

may cause prejudice to the other party,  but their  Lordships  

have held that the said prejudice is a pure question of fact and  

depends upon various factors.   

5

39) In the light of the details and materials highlighted in the  

earlier paragraphs and as discussed by the High Court, we are  

satisfied that the High Court is right in applying the principle  

of  marshalling  in  favour  of  the  plaintiff  that  too  by  

safeguarding the interest of the 3rd defendant-Bank. In fact,  

the  Bank  did  not  challenge  the  impugned  judgment  of  the  

High Court.   Accordingly,  we reject  the  contrary  arguments  

made in respect of applying the principle of marshalling at the  

appellate stage.   

Cost

40) Though no  serious  argument  was  advanced  about  the  

award  of  cost,  in  the  grounds  raised  in  the  appeal,  the  

appellants have agitated the award of cost by the High Court  

in favour of the plaintiff.  Section 35 of the CPC speaks about  

Cost.  Inasmuch as the plaintiff after valuing the suit paid a  

substantial  court  fee of  Rs.  41,66,326.50 and ultimately he  

secured a decree for specific performance though he could not  

secure a relief  in its entirety,  the plaintiff  is entitled for his  

cost.  It is not in dispute that the court has granted the major  

5

relief,  namely,  decree  for  specific  performance  subject  to  

clearance of the mortgage debt.  In those circumstances, the  

High Court having noticed the payment of substantial court  

fee ordered cost payable by the contesting defendant Nos. 1  

and 2 to the plaintiff.  We agree with the said direction.

Direction to the Recovery Officer/Tribunal

41) Learned senior counsel for the appellants contended that  

the jurisdiction of Recovery officer/Tribunal is exclusive and  

no other Court can go into their order for which they relied on  

Allahabad Bank vs.  Canara Bank & Anr., (2000)  4 SCC  

406, State Bank of India vs. Allied Chemical Laboratories  

&  Anr., (2006)  9  SCC  252,  India  Household  and  

Healthcare  Ltd.  vs. LG  Houshold  and  Healthcare  Ltd.,  

(2007)  5  SCC  510.   We  are  conscious  of  the  principles  

enunciated in these decisions.  However, in our case, the High  

Court taking note of the fact that it had considered various  

connected issues in respect of the same properties in which  

both the Civil Court and the DRT passed several orders and  

the  fact  that  defendant  Nos.  1  and  2  are  having  sufficient  

other  properties  in  prime  locations  at  Chennai  and  other  

5

places nearby Chennai and also of the fact that the Bank was  

also  party  to  both  these  proceedings  and  accepted  the  

impugned order of the High Court and not filed any appeal  

before  this  Court,  we  feel  that  the  direction/clarification  

issued by the High Court does not run counter to the orders of  

DRT/Recovery Officers, on the other hand, it safeguards the  

interest of all parties.  Only because of the delay on the part of  

the defendant Nos.  1 and 2 in not  settling the  dues of  the  

Bank at  the appropriate  time,  in the recent times,  property  

value has risen to some extent.  On this ground, we cannot  

interfere with the direction of the High Court about the sale of  

the said properties.   

Interference under Article 136 of the Constitution of India

42) Though we have exhaustively dealt with the merits of the  

appeals,  Mr.  R.F.  Nariman,  learned  senior  counsel  for  

Respondent No. 1 highlighted that even after grant of leave,  

there is no obligation on the part of this Court to go into all  

aspects and decide after giving reasons.  According to him, in  

view of  the  concurrent  findings  by  the  Trial  Court  and the  

High  Court  about  the  decree  for  specific  performance  and  

5

other relief by the High Court based on the question of law  

and  equity,  this  Court  has  ample  power  to  dismiss  all  the  

appeals even without assigning any reason.

43) In  Balvantrai  Chimanlal  Trivedi,  Manager  Raipur  

Manfg.  Co.  Ltd.,  Ahmedabad  vs. M.N.  Nagrashna  and  

Others, AIR  1960  SC  407,  while  considering  the  scope  of  

Article 136 of the Constitution of India, a three-Judge Bench  

of this Court has concluded:

“5. The question then arises whether we should interfere in  our jurisdiction under Article 136 of the Constitution, when  we  are  satisfied  that  there  was  no  failure  of  justice.   In  similar circumstances this court refused to interfere and did  not go into the question of jurisdiction on the ground that  this Court could refuse interference unless it was satisfied  that the justice of the case required it: see A.M. Allison vs.  B.L.  Sen,  (1957)  SCR 359:  ((S)  AIR 1957 SC 227).   On a  parity  of  reasoning  we  are  of  opinion  that  as  we  are  not  satisfied that the justice of the case requires interference in  the  circumstances,  we should refuse  to  interfere  with  the  order of the High Court dismissing the writ petition of the  appellant.   We accordingly dismiss the appeal,  but having  regard to the peculiar circumstances of the case which we  have referred to above we order that each party will bear its  own costs of this appeal.”  

44) In Balvantrai Chimanlal Trivedi vs. M.N. Nagrashna  

and Others, AIR 1960 SC 1292, the Constitution Bench of  

this  Court,  while  considering  the  jurisdiction  of  this  Court  

under Article 136, has held:

5

“….It is necessary to remember that wide as are our powers  under Article 136, their exercise is discretionary; and if it is  conceded, as it was in the course of the arguments, that this  Court could have dismissed the appellant’s  application for  special leave summarily on the ground that the order under  appeal  had  done  substantial  justice,  it  is  difficult  to  appreciate  the  argument  that  because  leave  has  been  granted this Court must always and in every case deal with  the merits even though it is satisfied that ends of justice do  not  justify  its  interference  in  a  given  case.  In  the  circumstances  we  are  of  opinion that  this  Court  was  not  bound to decide the question of jurisdiction on the facts and  circumstances  of  this  case  when  it  had  come  to  the  conclusion in dealing with an appeal under Article 136 of the  Constitution that there was no failure of justice. The review  application  therefore  fails  and  is  hereby  dismissed  with  costs.”

45) In  Taherakhatoon  (D)  By  Lrs.  vs. Salambin  

Mohammad, (1999) 2 SCC 635, the following point arose for  

consideration.  

“(2) Whether the discretionary power available to this Court  at the time of grant of special leave continues with the Court  even after grant of special leave and when the appeal is being  heard on merits and whether, this Court could declare the  law  and  yet  not  interfere  or  could  mould  the  relief?  Or  whether,  once the law is declared,  this Court  is bound to  grant possession and the mandatory injunction?

Their Lordships have held:

15. It is now well settled that though special leave is granted,  the  discretionary  power  which vested  in  the  Court  at  the  stage of the special leave petition continues to remain with  the Court even at the stage when the appeal comes up for  hearing  and  when both sides  are  heard  on merits  in  the  appeal.  This principle is  applicable to all  kinds of appeals  admitted by special leave under Article 136, irrespective of  the nature of the subject - matter. It was so laid down by a  Constitution Bench of five learned Judges of this Court in  Pritam Singh v.  State.  In that  case,  it  was argued for  the  appellant that once special leave was granted and the matter  was registered as an appeal, the case should be disposed of  

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on  merits  on  all  points  and  that  the  discretionary  power  available  at  the  stage  of  grant  of  special  leave  was  not  available when the appeal was being heard on merits.

20. In view of the above decisions, even though we are now  dealing with the appeal after grant of special leave, we are  not bound to go into merits and even if we do so and declare  the law or point out the error — still we may not interfere if  the justice of the case on facts does not require interference  or if we feel that the relief could be moulded in a different  fashion.  We  have  already  referred  to  the  various  circumstances of the case which show that the plaintiff, on  her  own  admission,  had  knowledge  of  the  trespass  in  December  1967  and  did  not  raise  any  objection  to  the  construction of the two rooms though she was the adjacent  neighbour. She gave notice only after 7 years in 1974 and  she filed suit in 1975. These two rooms have been there for  the last 30 years. In those circumstances, we declare the law  by holding that the High Court while dealing with a second  appeal  under  Section  100  CPC  erred  in  not  framing  a  substantial  question  of  law  and  that  it  also  erred  in  interfering  with  a  pure  question  of  fact  relating  to  the  genuineness of the agreement. We declare that this was not  permissible in law. Even while so declaring, we hold that in  the peculiar circumstances referred to above, this is not a fit  case for interference and that in exercise of our discretion  under Article 136, — a discretion which continues with us  even after the grant of special leave, — the decree passed by  the High Court dismissing the suit for possession need not  be  interfered  with  and  the  two  rooms  need  not  be  demolished. The plaintiff could be adequately compensated  by way of damages…...”  

46) In  Chandra Singh and Ors.  vs. State of Rajasthan  

and  Anr. (2003)  6  SCC  545,  a  three-Judge  Bench,  after  

following the principle in Taherakhaton (supra), held:

“42. In any event, even assuming that there is some force in  the contention of the appellants, this Court will be justified  in following  Taherakhatoon v.  Salambin Mohd. wherein this  Court declared that even if the appellants’ contention is right  

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in law having regard to the overall circumstances of the case,  this  Court  would  be  justified  in  declining  to  grant  relief  under Article  136 while declaring the law in favour of the  appellants. 43. Issuance of a writ of certiorari is a discretionary remedy.  (See  Champalal  Binani v.  CIT)  The  High  Court  and  consequently this Court while exercising their extraordinary  jurisdiction under Article  226 or 32 of the Constitution of  India may not strike down an illegal order although it would  be lawful to do so. In a given case, the High Court or this  Court  may refuse  to  extend  the  benefit  of  a  discretionary  relief to the applicant. Furthermore, this Court exercised its  discretionary  jurisdiction  under  Article  136  of  the  Constitution of India which need not be exercised in a case  where the impugned judgment is found to be erroneous if by  reason thereof substantial justice is being done. [See S.D.S.  Shipping (P) Ltd. v. Jay Container Services Co. (P) Ltd.] Such a  relief can be denied, inter alia, when it would be opposed to  public policy or in a case where quashing of an illegal order  would revive another illegal one. This Court also in exercise  of  its  jurisdiction under  Article  142 of  the Constitution of  India is entitled to pass such order which will do complete  justice to the parties. 45. This Court said that this principle applies to all kinds of  appeals  admitted  by  special  leave  under  Article  136,  irrespective of the nature of the subject-matter. So even after  the  appeal  is  admitted  and  special  leave  is  granted,  the  appellants  must  show  that  exceptional  and  special  circumstances  exist,  and  that,  if  there  is  no  interference,  substantial and grave injustice will result and that the case  has features of sufficient gravity to warrant a review of the  decision  appealed  against  on  merits.  So  this  Court  may  declare the law or point out the lower court’s error, still it  may not interfere if special circumstances are not shown to  exist and the justice of the case on facts does not require  interference  or if  it  feels  the relief  could be moulded in a  different fashion. 46. The observations made in paras 15-20 of Taherakhatoon  can be usefully applied to the facts and circumstances of the  case on hand.”

It  is  clear  from the  above  decisions,  even after  issuance  of  

notice in the special  leave petition and after  grant of  leave,  

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irrespective of the nature of the subject matter, the appellants  

must show that exceptional and special circumstances exists  

and if there is no interference by this Court substantial and  

grave injustice will  result and that the case has features of  

sufficient  gravity  to  warrant  a  decision  from this  Court  on  

merits.   

Conclusion

47) In the light of the above discussion, more particularly,  

the  factual  findings  rendered  by  the  trial  Court  and  the  

Appellate Court-High Court in respect of grant of decree for  

specific  performance  and  application  of  principle  of  

marshalling under Section 56 of the Transfer of Property Act,  

we are in entire agreement with the conclusion arrived by the  

High Court.  We have also gone through the elaborate order of  

the High Court in review petitions filed by the appellants.  As a  

matter of fact, after highlighting the jurisdiction under review,  

the  Division  Bench  of  the  High  Court  had  taken  pains  to  

discuss once again and rendered a finding on all aspects with  

which  we  fully  agree.   Inasmuch as  we  are  confirming  the  

impugned judgment of the High Court in toto, there is no need  

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to  refer  the  affidavit  of  undertaking  filed  by  the  first  

respondent herein and the objection raised by the appellants  

as  to  the  contents  of  the  same.   Since  we  confirm  the  

conclusion and ultimate decision of the High Court, we grant  

further  time  of  three  months  from today  for  deposit  of  the  

balance amount as directed by the High Court in paragraph  

85.  In case defendant Nos. 1 and 2 fail to comply with the  

said directions in executing the sale deed, the trial Court is  

directed  to  execute  the  sale  deed  incorporating  all  the  

directions and observations made in the judgment of the High  

Court.  Consequently, all the appeals are dismissed as devoid  

of any merit with no order as to costs.   

...…………………………………J.                 (P. SATHASIVAM)  

...…………………………………J.   (ANIL R. DAVE)    

NEW DELHI; NOVEMBER 22, 2010.

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