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CASE NO.: Appeal (civil)  7601 of 1999

PETITIONER: Sargunam (Dead) By LR.

RESPONDENT: Chidambaram & Another

DATE OF JUDGMENT: 07/10/2004

BENCH: ASHOK BHAN & S.H. KAPADIA

JUDGMENT: J U D G M E N T

KAPADIA, J.

       This civil appeal, by grant of special leave, is  directed against the judgment and order dated 24.2.1999  passed by the High Court of Karnataka in RFA No.464 of  1992 decreeing the suit filed by respondent no.1 herein in  the Court of VIth Additional City Civil Judge, Bangalore,  being Suit No. O.S. 8296 of 1980.                  For the sake of convenience, the parties herein are  referred to as they are arrayed in the trial Court.

       The facts giving rise to this civil appeal are as  follows:\027  

       By an agreement for sale dated 14.6.1979, R.  Srinivasan, (since deceased) agreed to sell the suit  premises bearing No.15/18/1, Cambridge Road, Ulsoor,  Bangalore to Shri Chidambram (respondent no.1 herein)  for a sum of Rs.16000/-.  Under the said agreement,  Srinivasan agreed to complete the sale by 13.11.1979.   Under the said agreement, the vendor agreed to sell the  suit premises free from all encumbrances.  The vendor  agreed to deliver the title deeds to the plaintiff.  On the  execution of the agreement, the vendor received  Rs.3000/- from the plaintiff.  However, the said vendor,  defendant no.1, failed to carry out his obligations under  the agreement.  He failed to deliver the title deeds.  He  failed to clear the property free from encumbrances.  

       In the circumstances, the plaintiff issued legal  notices on 5.11.1979 and 9.11.1979 to the vendor to carry  out his obligations under the said agreement.  On  29.11.1979, plaintiff came to know that the vendor,  defendant no.1, had purported to sell the suit premises in  favour of Smt. Sargunam (since deceased), defendant  no.2.  In the circumstances, the plaintiff instituted suit  bearing no.8296 of 1980 in the Court of VIth Additional  City Civil Judge., Bangalore (hereinafter referred to as  "the trial Court").

       In the suit, it was alleged by the plaintiff that the  conveyance dated 29.11.1979 executed by defendant no.1

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in favour of defendant no.2 was sham and bogus.  That  defendant no.2 had notice of the suit agreement.  The  plaintiff further submitted that he was always ready and  willing to comply with his obligations under the suit  agreement; that defendant no.1 had committed breach  thereof and consequently, he was entitled to specific  performance of the suit agreement.  

       By written statement dated 9.7.1981, defendant  no.1 alleged that he had terminated the suit agreement as  the plaintiff had failed to complete the sale within the  time stipulated in the suit agreement; that defendant no.1  had given notice of termination to the plaintiff which  notice came to be returned with the postal remarks  "refused" and, consequently, he had sold the property to  the second defendant.   

       On 7.8.1981, defendant no.2 filed a memo  adopting the written statement of defendant no.1 dated  9.7.1981.   

       On 20.11.1986, defendant no.2 filed her amended  written statement.  By the said written statement,  defendant no.2 alleged that the sale in her favour dated  29.11.1979 was in pursuance of the agreement dated  15.4.1978 executed by defendant no.1; that she was the  bona fide purchaser for value without notice; that she had  no notice of the suit agreement when she entered into the  conveyance with defendant no.1 on 29.11.1979; that she  was the prior purchaser and in the circumstances, the sale  in her favour was protected.

       After framing the issues and after recording  evidence, the trial Court inter alia held that the time was  essence of the suit agreement (Ex.P1); that the plaintiff  had failed to complete the sale by 13.11.1979; that the  plaintiff had failed to pay the balance amount by  13.11.1979, which period was essence of the contract;  that defendant no.1 was always ready and willing to  comply with his part of the contract and, therefore, he  had every right to sell the suit premises vide Ex.P17  dated 29.11.1979 to the second defendant.  The trial  Court further held that the plaintiff had failed to prove  that defendant no.2 had notice of the suit agreement  (Ex.P1); that Ex.P17 was pursuant to the agreement dated  15.4.1978 (Ex.D4) and in the circumstances, the plaintiff  had failed to prove that Ex.P17 was sham, bogus and  nominal.  Consequently, vide judgment and order dated  24.9.1992, the trial Court dismissed the suit.          In appeal, the High Court, as the First Appellate  Court, re-appreciated the evidence and came to the  conclusion that the second defendant had notice of Ex.P1  dated 14.6.1979 at the time of the sale, Ex.P17; that  Ex.D4 dated 15.4.1978 was concocted and was made to  defeat the claim of the plaintiff; that the signatures of the  vendor on Ex.D4 differed from signatures on Ex.P17;  that defendant no.2 did not prove her signature on Ex.D4;  and in the circumstances, Ex.P17 was not protected.  In  the circumstances, the High Court reversed the findings  of the trial Court and decreed the plaintiff’s suit.   

       Being aggrieved, legal representative of defendant  no.2 has come to this Court by way of this civil appeal.

       Mr. S. Muralidhar, learned counsel appearing on

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behalf of the original defendant no.2 (appellant herein)  submitted that the trial Court had exercised its discretion  on the basis of evidence on record in refusing the relief  for specific performance sought by the plaintiff and in the  circumstances, the High Court should not have interfered  with the findings of fact recorded by the trial Court.  He  contended that prior to the suit agreement, Ex.P1,  defendant no.2 had agreed to purchase the suit premises  from defendant no.1 as far back as 15.4.1978 vide Ex.D4,  and, therefore, defendant no.2 was the prior purchaser of  the suit premises.  He contended that in pursuance of  Ex.D4, defendant no.1 had executed Ex.P17 in favour of  defendant no.2; that the balance consideration of  Rs.11,500/- was paid by defendant no.2 to defendant no.1  at the time of the conveyance Ex.P17; that Ex.D4 has  been duly signed by the vendor and the vendee and was  duly attested and, therefore, the High Court had erred in  coming to the conclusion that Ex.D4 was concocted.   Learned counsel further submitted that defendant no.2  had no notice of Ex.P1 when she entered into the  conveyance Ex.P17 and that defendant no.2 had paid the  balance consideration of Rs.11,500/- without notice of  Ex.P1.  In the circumstances, it was urged that the trial  Court was right in dismissing the suit.

       Lastly, it was urged that defendant no.2 was in  possession of the suit premises for last couple of years  and consequently, the High Court ought to have refused  the decree for specific performance as passing of such a  decree would cause greater hardship to the second  defendant as compared to the plaintiff.

       In this civil appeal, two points arise for  determination viz. \026 whether it is proved before the trial  Court that defendant no.2 was a bona fide purchaser for  value without notice and whether the plaintiff has proved  that Ex.P17 was sham, bogus and nominal sale entered  into to defeat the claim of the plaintiff.

       In the case of Jagan Nath v. Jagdish Rai reported  in [AIR 1998 SC 2028], it has been held that where a  transferee has knowledge of facts which would put him  on enquiry which if prosecuted would have disclosed a  previous agreement, such transferee is not a transferee  without notice of the original contract within the meaning  of exception in section 19(b) of the Specific Relief Act,  1963.          Similarly, in the case of Baburam Bag v. Madhab  Chandra Pallay reported in [AIR 1914 Cal. 333], it has  been held that possession of a property by a tenant affects  subsequent purchaser with notice of the tenant’s rights,  and if the purchaser fails to make enquiry, into the nature  of that possession, he cannot claim to be a transferee  without notice under section 27(b) of the Specific Relief  Act, 1877.

       In the light of the above tests, we may now  examine the evidence on record.   At the outset, it may be  noted that on 12.2.1980, the above suit was filed in which  the plaintiff inter alia alleged that Ex.D4 was never acted  upon by defendants no.1 and 2 and that Ex.P17 was not  entered into pursuant to Ex.D4. It was further alleged that  defendant no.2 had notice of Ex.P1 at the time she  entered into the conveyance Ex.P17.  On 9.7.1981,  defendant no.1 filed his written statement.  He did not

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deny the above allegations mentioned in the plaint.  On  7.8.1981, defendant no.2 adopted the written statement of  defendant no.1.  She filed a short memo stating that she  was adopting the written statement of defendant no.1.   On 20.11.1986, after five years, defendant no.2 files an  amended written statement in which she denies for the  first time the aforestated allegations of the plaintiff  concerning Ex.D4.  She does not explain the delay in not  filing the written statement for five years.  In his  evidence, DW1 conceded that Ex.P17 does not refer to  Ex.D4.  He further conceded that in the conveyance  Ex.P17, there was no recital stating that the conveyance  was being executed pursuant to Ex.D4.  In the  circumstances, it cannot be said that Ex.P17 was  executed pursuant to Ex.D4.  Further, there is no  evidence to show that time to complete the sale under  Ex.D4 was ever extended by defendant no.1.

       PW1 in his evidence has deposed that he was a  tenant of the suit premises from 1945; that defendant  no.2 had instituted an eviction suit under section 21(1)(h)  of the Karnataka Rent Control Act, 1961 on the ground  of bona fide requirement after she had entered into the  conveyance Ex.P17.  PW1 in his evidence has further  stated that he had entered into the agreement Ex.P1 with  defendant no.1 when he came to know that defendant  no.1 intended to sell the suit premises.  It is at this stage  that PW1 offered to purchase the suit premises.  PW1 has  further deposed that the agreement Ex.P1 was for  Rs.16000/- whereas the conveyance Ex.P17 was for  Rs.12000/-.  PW1 further deposed that he had paid  Rs.3000/- as advance on 14.6.1979, at the time of  entering into the agreement Ex.P1.  PW1 in his evidence  has further deposed that defendant no.1 had agreed to  deliver title deeds of the suit premises to him; that  defendant no.1 had agreed to sell the suit premises free  from all encumbrances; that the final sale was to be  completed by 13.11.1979, by which time defendant no.1  had agreed to free the suit premises from all  encumbrances; that after entering into the agreement  Ex.P1, defendant no.1 informed PW1 that the title deeds  were with the money lender; and accordingly on  5.10.1979 PW1 paid a further sum of Rs.1000/- to the  first defendant to enable him to get back the title deeds.   PW1 in his evidence has further deposed that he had  given legal notices on 5.11.1979 and 9.11.1979 calling  upon defendant no.1 to complete the sale; that, however,  defendant no.1 had failed to carry out his contractual  obligations and in the circumstances PW1 instituted the  suit for specific performance.

       On behalf of defendant no.1, DW1 was examined.   DW1 is the husband of defendant no.2.  DW1 is the  constituted attorney of defendant no.2.  DW1 deposed in  his evidence that before entering into the conveyance  Ex.P17, defendant no.1 had informed DW1 that Ex.P1  was executed on account of coercion and threats given by  PW1.  This evidence has been rightly relied upon by the  High Court to come to the conclusion that defendant no.2  had notice of Ex.P1 when she entered into conveyance,  Ex.P17, on 29.11.1979.  DW1 has not given any reason  as to why there is no reference to Ex.D4 and Ex.P1 in the  conveyance Ex.P17.  DW1 has not produced any  evidence to show that defendant no.1 had extended the  time to complete the sale under Ex.D4, as alleged by

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defendant no.2.  In the circumstances, the High Court  was right in coming to the conclusion, on the above  evidence, that defendant no.2 has failed to prove that she  was a bona fide purchaser of the suit premises for value  without notice.

       Lastly, the evidence on record indicates that  Ex.P17 was a nominal sale.  It was executed in order to  defeat the plaintiff’s claim.  In this connection, the  evidence on record shows that the signatures of the  vendor on Ex.D4 do not tally with the signatures with  Ex.P17.  There were two attesting witnesses who were  examined on behalf of the defendants.  Both the attesting  witnesses have deposed that the signatures of defendant  no.1 on Ex.D4 did not tally with the signatures on  Ex.P17.  Therefore, the High Court was right in coming  to the conclusion that Ex.D4 was a concocted document.   In the circumstances, we do not see any reason to  interfere with the findings recorded by the High Court.

       As stated above, it was urged on behalf of  defendant no.2 that the present case falls under section  20(2)(b) of the Specific Relief Act, 1963; that in the  present case, the family of defendant no.2 is in  possession of the suit premises for the last couple of  years; that the performance of the contract Ex.P1 would  involve hardship on the defendant whereas its non- performance  would involve no hardship on the plaintiff.   We do not find any merit in this argument.

       In the case of Mademsetty Satyanarayana v. G.  Yelloji Rao and others reported in [AIR 1965 SC 1405],  it has been held that the jurisdiction to decree specific  performance is discretionary and the Court is not bound  to grant such relief merely because it is lawful to do so;  that in cases where one of the three circumstances  mentioned in section 20(2) is established, no question of  discretion arises.  Hence, in this case, we are required to  examine, on facts, whether the circumstances in section  20(2)(a) or section 20(2)(b) are established.

       In the case of P. D’Souza v. Shondrilo Naidu  reported in [(2004) 6 SCC 649] it has been held that  Explanation-I appended to section 20 clearly stipulates  that mere fact that the contract is onerous to the  defendant or improvident in its nature would not  constitute an unfair advantage within the meaning of  section 20(2).

       Applying the above tests to the facts of the present  case, we find that defendant no.2 was aware of plaintiff’s  possession in the suit premises as a tenant.  Defendant  no.2 had filed, in the Court of Small Causes, Bangalore,  HRC No.10561/81 for eviction of the plaintiff herein,  under section 21(1)(h) of the Karnataka Rent Control  Act, 1961.  A bare reading of the order dated 14.10.1985  passed by the Small Causes Court in the above eviction  suit indicates that defendant no.2 was put to notice that in  case the plaintiff succeeds in the suit for specific  performance, defendant no.2 will have to vacate.  In the  circumstances, it cannot be said that second defendant  was not in a position to foresee the ensuing hardship.   Hence, section 20(2)(b) is not applicable to the facts of  the present case.  In any event, as stated above, defendant  no.2 had notice of Ex.P1 when she entered into the

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conveyance Ex.P17.

       In the result, the appeal fails and is dismissed, with  no order as to costs.