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CASE NO.: Appeal (civil)  6925 of 2000

PETITIONER: P.S. Ranakrishna Reddy

RESPONDENT: M.K. Bhagyalakshmi and Anr

DATE OF JUDGMENT: 20/02/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G E M E N T S.B. SINHA,J.

       Defendant No. 1 in the suit is Appellant before us.   He was  admittedly owner of a residential house admeasuring 40 ft. x 30 ft bearing  No. 148 (New Plot No. 78), 8th Cross, N.R. Colony, Bangalore.   Respondent  No. 1 has been in possession of the suit property as a tenant on a monthly  rent of Rs. 115/-.  The appellant admittedly had taken loan from Respondent  No. 1 herein from time to time, the details whereof are as under :

"23.4.79                Rs. 8000 27.4.79 Rs. 4000 10.5.79 Rs. 2900 11.5.79 Rs.   100"

       Admittedly, the parties entered into an agreement for sale on  11.05.1979.  The aforementioned sum of Rs. 15,000/- received by the  appellant was treated to be the amount of advance paid out of the amount of  consideration fixed in the said agreement of sale i.e Rs. 45,000/-.   The  relevant terms of the said agreement are as under :

       "Whereas the first party is the absolute owner of  house bearing No. 148, 8th cross N.R. colony, Bangalore- 19 more fully described in the schedule hereunder,  having acquired the same under registered gift deed,  executed by Mrs. B.N. Vijaya Deva.

       Whereas the second party has offered to buy and  the first party has agreed to sell to the second party the  schedule property for a sum of Rs. 45,000/- (Rupees  fourty five thousand only.)

       The first party hereby agreed to sell the schedule  property to the second party on the following terms and  conditions.

a)      A sum of Rs. 15,000/- (Rupees fifteen thousand  only) has been paid this day by the second party to the  first party which he hereby acknowledges out of the said  price of Rupees Forty Five thousand.

b)      A further sum of Rs. 5,000/- (Rupees five thousand  only) in respect of the balance of the price shall be paid  by the second party to the first party within one year from  this date, i.e., 11-5-79.   c)      The remaining balance of the consideration for the  sale, i.e., Rs. 25,000/- (Rupees twenty five thousand

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only) shall be paid by the second party to the first party  within five years from this date.                  On payment of the full consideration of Rs.  45,000/- to the first party by the second party in the  manner aforesaid the first party shall execute a registered  deed of sale in favour of the second party conveying the  schedule property to the second party.  The expenses for  conveyance for stamp and registration shall be borne by  the second party only but the first party shall apply to the  competent authorities for permission to sell the property  to the second party and take other steps necessary for the  purpose.

                       xxx                    xxx                 xxx

       The first party shall notify the tenants in the  property of the fact of sale at the time the sale deed is  executed in the manner mentioned above and call upon  them to vacate the property and render all assistance and  help to the second party to obtain in vacant possession of  the schedule property.

       In case the first party shall commit breach of the  agreement, he shall, besides refunding the sum he has  received under this agreement, to the second party, shall  in addition pay a sum of rupees ten thousand as damages.    In case the second party commits breach of this  agreement she shall forfeit a sum of Rs. ten thousand out  of the amounts paid."                  Although a period of five years was fixed for execution of the sale  deed on payment of the balance sum,  admittedly, the appellant herein has  received a further sum of Rs. 5,000/- from Respondent No. 1.

       It is furthermore not in dispute that the respondents served a notice  upon the appellant on or before 29.5.1981 alleging that he had been making  attempts to sell the property to third parties.

       Appellant was called upon to execute a registered deed of sale on  receipt of the balance amount and as he did not agree thereto, the respondent  No. 1 filed a suit for specific performance of the said agreement of sale  dated 11.05.1979.    

       The said suit was decreed by the learned Trial Judge by a judgment  and decree dated 05.04.1989.   A first appeal preferred thereagainst by the  appellant has been dismissed by the High Court by reason of the impugned  judgment.   

       Mr. G.V. Chandrashekhar, learned counsel appearing on behalf of the  appellant, submitted that the learned Trial Judge as also the High Court  committed a serious error in construing the said document as an agreement  for sale in stead and place of an agreement for loan.    It was urged that  having regard to the fact that diverse amounts had been taken by the  appellant from the respondents as also the fact that similar agreements for  sale were entered into by and between the appellant and other persons  categorically demonstrate that he had merely borrowed some amount and the  purported agreement for sale was not meant to be acted upon.    The learned  counsel urged that in view of the default clauses contained in the agreement,  the same could not have been construed to be an agreement for sale.  Strong  reliance in this behalf has been placed on Dadarao and Another v. Ramrao  and Others [(1999) 8 SCC 416].

       In any event, it was urged that it is not a fit case where the Courts  below should have exercised their discretionary jurisdiction under Section

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20 of the Specific Relief Act, 1963.    

       Mr. S.N. Bhat, learned counsel appearing on behalf of the  respondents, on the other hand, supported the judgment.   

       Original relationship of the parties as landlord and tenant is not in  dispute.   The fact that the appellant intended to convey his right, title and  interest in respect of the said property is also not in dispute.   As noticed  hereinbefore, he entered into more than one agreement in respect of the self- same property and took advances in respect thereof from more than one  person.    

       The agreement in question has been described as an agreement for  sale. Appellant admittedly was owner of the property.  The agreement shows  that there had been negotiations between the parties as a result whereof the  respondent herein had offered to buy and the appellant had agreed to sell the  said property for a sum of Rs. 45,000/-.  The terms and conditions stipulated  therein were arrived at as a result of the negotiations between the parties.  

       No part of the agreement supports the contention of Mr.  Chandrashekhar that the same was not meant to be acted upon.   It was  signed by the parties.  Two witnesses who had attested the signature of the  parties to the agreement were examined before the Trial Court.   It may be  that despite the said agreement, Respondent No. 1 was allowed to continue  to remain in possession of the premises in question as a tenant and not in  part performance of the said agreement for sale, but it was not necessary for  the parties to adopt the latter course only.   The parties, on a plain reading of  the agreement, apparently intended to continue their relationship as landlord  and tenant till a regular deed of sale was executed.

       A document, as is well known, must be read in its entirety.   The  intention of the parties, it is equally well settled, must be gathered from the  document itself.   All parts of the deed must be read in their entirety so as to  ascertain the nature thereof.   

       The purported default clause, to which our attention has been drawn  by Mr. Chandrashekhar, does not lead to the conclusion that the same was a  contract of loan.  By reason thereof, the respective liabilities of the parties  were fixed.  In the event, the provisions of the said contract were breached,  the damage which might have been suffered by one party by reason of act of  omission or commission on the part of the other in the matter of performance  of the terms and conditions thereof had been quantified. The quantum of  damages fixed therein was the same for both the parties.  The submission of  Mr. Chandrashekhar that in view of the fact that parties had agreed that in  the event of breach on the part of the appellant, the respondent would be  entitled to claim damages for a sum of Rs. 10,000/- only and, thus, the said  agreement for sale was not meant to be acted upon cannot be accepted.  If  the said contention is accepted, the damages quantified in the event of any  breach on the part of Respondent No. 1 cannot be explained.   It is clear that  in the event of commission of any breach on the part of respondent, the  appellant was entitled to forfeit the entire amount of advance.   The very fact  that the parties intentionally incorporated such default clause clearly goes to  show that they intended to lay down their rights and obligations under the  contract explicitly. They, therefore, knew the terms thereof.  They  understood the same.  There is no uncertainty or vagueness therein.

       The decision of this Court in Dadarao (supra), whereupon reliance has  been placed by Mr. Chandrashekhar is wholly misplaced.   The term of the  agreement therein was  absolutely different.  We need not dilate on the said  decision in view of the fact that in a subsequent decision of this Court in  P.D’ Souza v. Shondrilo Naidu [(2004) 6 SCC 649], it has been held to have  been rendered per incuriam, stating:

"34. In Dadarao whereupon Mr Bhat placed strong  reliance, the binding decision of M.L. Devender

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Singh4 was not noticed. This Court furthermore  failed to notice and consider the provisions of  Section 23 of the Specific Relief Act, 1963. The  said decision, thus, was rendered per incuriam. 35. Furthermore, the relevant term stipulated in  Dadarao was as under: (SCC p. 417, para 2) Tukaram Devsarkar, aged about 65, agriculturist,  r/o Devsar, purchaser (ghenar) Balwantrao  Ganpatrao Pande, aged 76 years, r/o Dijadi, Post  Devsar, vendor (denar), who hereby give in  writing that a paddy field situated at Dighadi  Mouja, Survey No. 7/2 admeasuring 3 acres  belonging to me hereby agree to sell to you for Rs  2000 and agree to receive Rs 1000 from you in  presence of V.D.N. Sane. A sale deed shall be  made by me at my cost by 15-4-1972. In case the  sale deed is not made to you or if you refuse to  accept, in addition of earnest money an amount of  Rs 500 shall be given or taken and no sale deed  will be executed. The possession of the property  has been agreed to be delivered at the time of  purchase. This agreement is binding on the legal  heirs and successors and assigns.(emphasis  supplied) Interpreting the said term, it was held: (SCC p.  418, paras 6-7) 6. The relationship between the parties has to be  regulated by the terms of the agreement between  them. Whereas the defendants in the suit had taken  up the stand that the agreement dated 24-4-1969  was really in the nature of a loan transaction, it is  the plaintiff who contended that it was an  agreement to sell. As we read the agreement, it  contemplates that on or before 15-4-1972 the sale  deed would be executed. But what is important is  that the agreement itself provides as to what is to  happen if either the seller refuses to sell or the  purchaser refuses to buy. In that event the  agreement provides that in addition to the earnest  money of Rs 1000 a sum of Rs 500 was to be  given back to Tukaram Devsarkar and that no sale  deed will be executed. The agreement is very  categorical in envisaging that a sale deed is to be  executed only if both the parties agree to do so and  in the event of any one of them resiling from the  same there was to be no question of the other party  being compelled to go ahead with the execution of  the sale deed. In the event of the sale deed not  being executed, Rs 500 in addition to the return of  Rs 1000, was the only sum payable. This sum of  Rs 500 perhaps represented the amount of  quantified damages or, as the defendants would  have it, interest payable on Rs 1000. 7. If the agreement had not stipulated as to what is  to happen in the event of the sale not going  through, then perhaps the plaintiff could have  asked the Court for a decree of specific  performance but here the parties to the agreement  had agreed that even if the seller did not want to  execute the sale deed he would only be required to  refund the amount of Rs 1000 plus pay Rs 500 in  addition thereto. There was thus no obligation on  Balwantrao to complete the sale transaction. 36. Apart from the fact that the agreement of sale  did not contain a similar clause, Dadarao does not

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create a binding precedent having not noticed the  statutory provisions as also an earlier binding  precedent."

       We may furthermore notice that recently in Jai Narain Parasrampuria  (Dead) and Others v. Pushpa Devi Saraf and Others [(2006) 7 SCC 756], this  Court categorically opined that a stipulation in regard to payment of  damages by one party of the contract to the other does not establish that the  same was not an agreement for sale stating:

"59.  One of the learned Judges of the High Court also  held that the said agreement dated 12-6-1984 was in fact  an agreement for obtaining loan.    There was no warrant  for such a proposition.   Clause 7 of the agreement on the  basis whereof such a finding was arrived at reads as  under:

       "(7) That it is further agreed that in case any  defect in the right or title of the parties of the first  part or the said Company is found or any other  encumbrance or legal hurdle is found in respect of  the said house property then in both the  circumstances the second party shall have option  for the refund of advance money of Rs. 10 lakhs  together with interest @ 18% per annum."

       60.   It is interesting to note that the sale deed  dated 24-2-1979 whereby Sarafs purchased the property  also contains an identical clause.   Such types of clauses  normally are found in the agreement so as to enable the  vendee to protect his interest against the defects in the  vendor’s title, if any.   The agreement records the  valuation of property at Rs. 11 lakhs.  The respondents  relying on or on the basis of another purported agreement  dated 4-6-1984 executed by Sarafs in favour of their son- in-law, Original Defendant 5, S.K. Mittal stated that the  property was worth Rs. 25 lakhs.  The trial court, in our  opinion, correctly arrived at an opinion that the said  agreement was a sham one.   Original Defendant 5 did  not file any suit for specific performance of contract.    The said agreement for sale had not been acted upon by  the parties.  Reliance placed on the said agreement by a  learned Judge of the High Court was, therefore,  unwarranted."

       The contention of the appellant has been rejected both by the learned  Trial Judge as also by the High Court upon assigning sufficient and cogent  reasons.  The agreement has been held to have been executed by the parties  in support whereof large number of witnesses had been examined.  The High  Court, in particular in its judgment, has categorically opined that when the  respondents served a notice upon the appellant on 29.05.1981, it was  expected of the appellant to raise a contention that the said agreement was a  sham one or nominal one and was not meant to be acted upon but it was not  done.   Failure on the part of the appellant to do so would give rise to an  inference that the plea raised in the suit was an afterthought.

       The findings of facts by both the Courts are concurrent ones and in  our opinion no case has been made out to interfere therewith by this Court.    

       Submission of Mr. Chandrashekhar to the effect that having regard to  the rise in price of an immovable property in Bangalore, the Court ought not  to have exercised  its discretionary jurisdiction under Section 20 of the  Specific Relief Act is stated to be rejected.   We have noticed hereinbefore

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that the appellant had entered into an agreement for sale with others also.    He had, even after 11.5.1979, received a sum of Rs. 5,000/- from the  respondent.   He with a view to defeat the lawful claim of Respondent No. 1  had raised a plea of having executed a prior agreement for sale in respect of  self-same property in favour of his son-in-law who had never claimed any  right thereunder or filed a suit for specific performance of contract.   The  Courts below have categorically arrived at a finding that the said contention  of the appellant was not acceptable.  Rise in the price of an immovable  property by itself is not a ground for refusal to enforce a lawful agreement of  sale.  [See P.D’ Souza (supra) and Jai Narain Parasrampuria (supra)]                  For the reasons aforementioned, there is no merit in this appeal which  is dismissed accordingly.  In the facts and circumstances of this case,  however, there shall be no order as to costs.