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CASE NO.: Appeal (civil)  1055 of 2002

PETITIONER: Waheed Baig

RESPONDENT: Bangi Lakshmamma & Ors

DATE OF JUDGMENT: 21/04/2008

BENCH: DR. ARIJIT PASAYAT & P. SATHASIVAM

JUDGMENT: JUDGMENT REPORTABLE

CIVIL  APPEAL NO. 1055 OF 2002

Dr. ARIJIT PASAYAT, J.

1.      Challenge in this appeal is by the defendant No. 1 who was  the respondent No.1 in the Second appeal filed by the  respondents 1, 2 & 3.  The second appeal filed in terms of  Section 100 of the Code of Civil Procedure, 1973 ( in short the  ’Code’) was allowed by the High Court by the impugned  judgment.  

2.      The background facts in a nutshell are as follows:

OS No. 953 of 1984 on the file of the Second Additional  Judge, City Civil Court, Hyderabad was filed by one B.  Venkatachalam, the husband of the respondent No.1 and father  of respondents 2&3.  During pendency of the suit, the said  Venkatachalam died and his legal representatives were brought  on record.  I The suit was filed by the plaintiffs for the specific  performance of agreements of sale (Ex.A-1 and A-4) by passing a  decree in favour of the plaintiffs, to convey the plaint schedule  property in favour of the plaintiffs by executing a proper sale  deed, and if the specific performance of the suit contract is not  possible, to repay an amount of Rs.22,475.30 received by the  defendant towards the sale consideration with interest thereon at  12% per annum from the date of suit till the date of realization,  and to deliver vacant possession of the plaint schedule property  to the plaintiffs.

       According to plaintiff, the 2nd defendant allotted the plaint  schedule house bearing No.SRT 374 situated in the Industrial  Housing Colony, Sanathnagar to the 1st defendant in 1962  under the Subsidised Industrial Housing Scheme. The 1st  defendant, who was working as helper in the Engineering  Industrial Corporation, was in occupation of the suit house as  tenant since 1962. In 1968, the 1st defendant leased out the  major portion of the house to the plaintiff, and the 1st defendant  was residing in the kitchen room. The 1st defendant offered to  sell the suit house, and the plaintiff agreed to purchase the same  for a consideration of Rs.13,000/-, and accordingly, they entered  into an agreement of sale dated 8.2.1976 (Ex.A-1) and pursuant

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to the said agreement of sale, an amount of Rs.3,000/- was paid  by the plaintiff to the defendant. As per Ex. A-1, the time fixed for  concluding the said contract was 6 years; and the balance was  agreed to be paid before the expiration of the time fixed for  concluding the contract. As the said agreement was not  concluded, the same was ratified by another agreement of sale  dated 16.7.1976 (Ex.A-4). By that date, the 1st defendant had  already received an amount of Rs.6,200/- towards earnest  money, and again five years’ period was fixed for completion of  the concluded contract. As per the terms of Ex.A-4, the original  plaintiff has to pay the remaining instalments of the hire- purchase amount due to the Commissioner of Labour apart from  the agreed sale consideration of Rs.13,000/- in respect of the  suit schedule house. The plaintiff, being a tenant even prior to  the contract of sale, is in possession of the suit house as the  owner under the part performance of the said contract of sale. It  is the case of the plaintiff that the 1st defendant only paid an  amount of Rs.1,696.55 in respect of the hire purchase deposit on  25.2.1972.  Except the said amount, the 1st defendant has not  paid any amount towards the installments.  The plaintiff not only  paid back the said amount Rs.1,692.55 to the 1st defendant on  the next day, but also paid the further installments amount of  Rs.9,475.30 on 7.6.1982 towards the full discharge of the hire  purchase amount in respect of the suit schedule house on behalf  of the  1st defendant in discharge of all installments. Though the  1st defendant had to vacate the kitchen portion, which was  under his occupation, and deliver vacant possession to the  plaintiff as per the terms of the agreement of sale (Ex.A-4), he  has not done so.

As per the agreement of sale (Ex.A-4), the suit house was  allotted to the 1st defendant in 1962 and since then, the 1st  defendant was in possession of the suit house, and therefore, the  1st defendant inducted the plaintiff into possession of the suit  house since last 10 years as on the date of Ex.A-4, i.e. the tenant  is in possession of the suit house since 1966. Out of total sale  consideration of Rs.13,000/-, an amount of Rs.7,500/- was  already paid and the remaining installments amount of  Rs.5,500/- was paid by the plaintiff to the Commissioner of  Labour. It is further stated that the portion in occupation of the  1st defendant was also to be vacated and handed over to the  plaintiff and the plaintiff has to pay the expenses of registration  of the suit schedule property and the 1st defendant was to assist  the plaintiff in transferring the suit schedule property. The future  water charge shall be born by the plaintiff only. Thus, the plaintiff stated that as per the agreement, he has  discharged his part of his contract and paid the entire  instalments amount and also discharged loan amount taken by  the 1st defendant vide promissory note dated 7.4.1978. Though  the plaintiff performed his part of the obligation and he was  ready and willing to get the sale deed registered at his expense,  the 1st defendant was not willing to perform his part of the  contract. It is also stated by the plaintiff that the entire  instalments amount has been paid and the consideration payable  to the 1st defendant amounting to Rs. 13,000/- was also paid in  addition to the instalments amount. He filed an amended plaint stating that he became the  owner by part performance, and therefore, the 1st defendant is  liable to pay rents to the plaintiff and the rent is calculated at  Rs.92/-per month and the rental dues are calculated at  Rs.5,520/-. As regards the 2nd defendant, it is stated that the 2nd  defendant is fully aware about the agreement of sale entered into  by the 1st defendant and the plaintiff, and the 2nd defendant  received the entire installment amounts from the plaintiff without

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any protest, and the plaintiff alone was to pay the electricity and  water charges, which he received from time to time without any  protest, and after the death of the original plaintiff, his wife, son  and daughter, who were brought on record as plaintiffs 2 to 4,  are residing in the suit schedule property.

The 1st defendant filed a written statement disputing the  contract of sale between the 1st defendant and the plaintiff.  According to him the 1st defendant is only a lessee and he has  no right to alienate the suit schedule house by agreement of sale,  and the right vested with the 2nd defendant as per the terms of  the allotment until the entire amount is paid under the lease- cum-sale agreement (Ex.B-2). It is further stated that the suit  agreement is not a contract meant to be acted upon by the  parties, but it is time by the way of a collateral security in respect  of the amounts lent from time to time by the plaintiff to the 1st  defendant, and therefore, the suit agreement executed is not an  agreement of sale, but was executed for the purpose of a  collateral security. It is admitted that the plaintiff paid an  amount of Rs.7,500/- to the 1st defendant by cash on different  occasions, but the 1st defendant is not aware of the payments  made by the plaintiff on behalf of the 1st defendant to the  Commissioner of Labour. The 1st defendant is also not aware  about the alleged claim of payment of final installment amount  by the plaintiff to the Commissioner of Labour. It is stated that  the total amount paid by the plaintiff to the 1st defendant and  the Commissioner of Labour was only Rs.13,975/-. The 1st   defendant stated that the plaintiff is a lessee of the 1st   defendant on a monthly rent of Rs.150/- which was enhanced to  Rs.200/- subsequently, and again enhanced to Rs.350/- and,  therefore, the rental amount is set off against all the amounts  paid by the plaintiff.  The 1st defendant further stated that the  agreement dated 16.7.1976 has no legal basis, and the suit filed  by the plaintiff is not maintainable and the 1st defendant has not  tried to forcibly evict the plaintiff with the help of anti-social  elements as pleaded.  

After the written statement was filed, the Commissioner of  Labour i.e. respondent no. 4 in this appeal was impleaded.  

The following issues were framed:

1.      Whether the suit agreement in true, valid and  binding on the defendant? 2.      Whether the agreement was intended to be as  evidence of loan transaction as contended by the  defendant? 3.      Whether the suit is bad for non-joinder of  parties? 4.      Whether the suit has not been properly valued? 5.      Whether the plaintiff is entitled to specific  performance as prayed for? 6.      To what relief?

Additional issue was framed which is of considerable  significance and reads as follows: "Whether any relief can be granted  against D2".  

The suit was decreed by judgment dated 5.4.1993 in OS No.  953 of 1984.  Waheed Baig filed an appeal which was numbered  as AS No.76 of 1993 on the file of the Chief Judge: City Civil  Court, Hyderabad against the judgment and decree of the trial  court dated 5.4.1993.  The lower appellate court set aside the

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judgment and decree of the trial court.  The plaintiffs filed the  second appeal and the questions which were formulated for  consideration as substantial questions of law are as follows:

1.      Whether the original plaintiff was ready and  willing to perform his part of the contract; and   2.      Whether the observations of the Lower Appellate  Court that the plaintiff was not ready and willing  to perform his part of the contract is an obvious  error of fact, as the plaintiff averments and also  the evidence on record proved that the plaintiff  offered the balance of sale consideration as per  Ex.A-60, and as per the evidence of PW-3, and  when in fact that was found to be correct by both  the Courts below that money was offered but the  1st defendant refused to receive the same?"

The High Court held that the plaintiffs were entitled to  succeed in the suit and the appeal was allowed with inter-alia the  following conclusions, directions and observations:

"In the result, the suit is decreed directing the  plaintiffs to deposit the balance of sale  consideration of Rs.5,500/- along with interest  @ 12% per annum from the date of filing of the  suit, i.e. from 16.7.1984, till the date of deposit  into the Court, within two months from today.   On depositing such amount by the plaintiffs,  the 1st defendant is directed to obtain regular  registered sale deed in his favour from the 2nd  defendant on paying the registration expenses  within two months thereafter, and within one  month thereafter, the 1st defendant shall  execute a regular sale deed in respect of the  suit property in favour of the plaintiffs at their  expense.  It is further directed that if the 1st  defendant fails to take steps to get the sale  deed registered in his favour as directed above  within the time stipulated above, the 2nd  defendant shall directly execute a regular sale  deed in favour of the plaintiffs on payment of  the registration expenses and other legal  expenses, if any, by the plaintiffs within three  months from the date of this decree.  It is  further decreed that if the 2nd defendant fails  to execute a registered sale deed either in  favour of the 1st defendant as directed above  for the fault of the 1st defendant or in favour of  the plaintiffs as directed within the time  stipulated, the plaintiffs are at liberty to  approach the Court to get the sale deed  executed in their favour on behalf of the  defendants 1 and 2 on payment of necessary  registration expenses. Admittedly, the kitchen  room portion of the suit house is still in the  occupation of the 1st defendant. Therefore, the  lst defendant is directed to vacate the said  kitchen portion and deliver it to the plaintiffs  within three months from the date of this  decree. If the 1st  defendant fails to deliver the  said kitchen portion as a directed above, after  registration of the sale deed in favour of the  plaintiffs as directed above, the plaintiffs are at

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liberty to approach the Court for taking  possession of the said kitchen portion, which  is in the possession of the 1st defendant,  through process of law."

3.      Learned counsel for the appellant submitted that the  directions as given by the High Court could not have been given  in a Second Appeal.

4.      The High Court could not have directed transfer of the  property in favour of the appellant and thereafter directing him to  transfer the property by giving full effect to the agreement for  sale.  Such a course is unknown in law.

5.      Undisputedly, the land belonged to the Government and the  land in question was given on lease cum sale agreement basis by  the Labour Department.  There was a clear stipulation that the  lessee is not the owner of the property and did not have any right  to sell or mortgage or otherwise to dispose of the property until  sale price finally determined by the Commissioner of Labour,  Andhra Pradesh, in his sole discretion is paid in full.   Undisputedly at the time alleged agreement of sale was entered  into, the appellant was not the owner of the property.   

6.      The questions formulated were not questions of law and  therefore the Second Appeal was incompetent.    7.      Learned counsel for the respondents on the other hand  submitted that on payment of the installment the lessee became  the owner and therefore there was nothing wrong in the direction  by the High Court.  

8.      The questions formulated were as follows:  

"1.     Whether the original plaintiff was ready  and willing to perform his part of the contract;  and 2.      Whether the observations of the Lower  Appellate Court that the plaintiff was not ready  and willing to perform his part of the contract  is an obvious error of fact, as the plaintiff  averments and also the evidence on record  proved that the plaintiff offered the balance of  sale consideration as per Ex.A-60 and as per  the evidence of PW-3, and when in fact that  was found to be correct by both the Courts  below that money was offered but the 1st  defendant refused to receive the same."  

9.      A copy of the agreement for sale has been filed before us.   This does not refer to any condition that after payment of  installment the lessee can become the owner and the agreement  for sale was to take effect.  Since the appellant was not the owner  of the property, he could not have entered into an agreement to  sell a property of which admittedly he was not the owner.  Great  emphasis is laid by learned counsel for the respondents on  Section 13 of the Specific Relief Act, 1963 (in short the ’Act’).   Section 13 reads as follows:

"13. Rights of purchaser or lessee against  person with no title or imperfect title.

13. (1) Where a person contracts to sell or let  certain immovable property having no title or  only an imperfect title, the purchaser or lessee

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(subject to the other provisions of this  Chapter), has the following rights, namely :\027 (a) if the vendor or lessor has subsequently to  the contract acquired any interest in the  property, the purchaser or lessee may compel  him to make good the contract out of such  interest; (b) where the concurrence of other persons is  necessary for validating the title, and they are  bound to concur at the request of the vendor  or lessor, the purchaser or lessee may compel  him to procure such concurrence, and when a  conveyance by other persons is necessary to  validate the title and they are bound to convey  at the request of the vendor or lessor, the  purchaser or lessee may compel him to  procure such conveyance; (c) where the vendor professes to sell  unencumbered property, but the property is  mortgaged for an amount not exceeding the  purchase money and the vendor has in fact  only a right to redeem it, the purchaser may  compel him to redeem the mortgage and to  obtain a valid discharge, and, where  necessary, also a conveyance from the  mortgagee; (d) where the vendor or lessor sues for specific  performance of the contract and the suit is  dismissed on the ground of his want of title or  imperfect title, the defendant has a right to a  return of his deposit, if any, with interest  thereon, to his costs of the suit, and to a lien  for such deposit, interest and costs on the  interest, if any, of the vendor or lessor in the  property which is the subject-matter of the  contract. (2) The provisions of sub-section (1) shall also  apply, as far as may be, to contracts for the  sale or hire of movable property

10.     The Section deals with rights of a purchaser in certain  cases, where a person contracts to sell or let certain immovable  property having no title or only an imperfect title.  These rights  enable the purchaser to take action when title of vender is  bettered in the circumstances given in this Section.  The vender  is under a duty to prove his title and to convey what he has  contracted to convey. The Section gives right to purchaser  in the  event there is a defect in title as enumerated in Clauses (a) to (d)  to  compel the vender to convey the title or to secure the  concurrence or conveyance or to redeem  the mortgaged etc. as  the case may be.  In the instant case the Labour Department was  not a party to the agreement.  It was not bound to sell the  property to the appellant.  The State Government had by a  detailed written statement before the trial Court stated that the  present appellant has no alienable right over the suit property.   The High Court did not notice the specific stand of the Labour  Department.  It has been stated in the written statement that  when an authorized officer of the second defendant inspected the  quarter it was found that the first defendant was not residing in  the quarter and a portion was let out to the first plaintiff.  Similar  was the position on 18.7.1987. It was categorically pointed out  that the alleged agreement between the first plaintiff and the first  defendant was without the knowledge of the defendant No.2, it  was null and void and it was not binding upon the Government  even if certain payments were made by the plaintiff. The title in

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the property still vests in the Government and was not registered  in favour of the first defendant.  The first defendant had no right  to sell or alienate the property to any other person. It has been  pointed out that in terms of the agreement notice was given to  the first defendant to reside in the property immediately,  otherwise allotment of the same would be cancelled more  particularly when there was sub letting.  It was pointed out that  the Government has constructed the quarters for the industrial  workers on rental basis and subsequently there was a decision to  sell those to the industrial workers. The arrangement was for the  benefit of the industrial workers and therefore the defendant  No.1 had no alienable right in the property.   

11.     There is substance in the plea as taken by the appellant.   As a matter of fact there was no question of the High Court giving  direction to the Labour Department to allot the land for  facilitating the transfer of the property in favour of the  respondent No.1 and further there could not have been any  direction to the Labour Commissioner to transfer the property in  favour of the respondents 1 to 3.  Looked at from any angle, the  judgment of the High Court is indefensible and deserves to be set  aside which we direct.

12.     The direction given by the first appellate Court for refund of  the amount paid stands restored.  

13.     The appeal is allowed to the aforesaid extent without any  order as to costs.