Specific performance - sale agreement obtained from two brothers only not valid - The said agreement is not enforceable in law in view of Section 17 of the Specific Relief Act in view of right accrued in favour of defendant Nos. 3 to 6 under Section 8 of the Hindu Succession Act. The provisions of Section 17 of the Specific Relief Act in categorical term expressly state that a Contract to sell or let any immovable property cannot be specifically
enforced in favour of a vendor or lessor who does not have absolute title and right upon the party. Though, the defendants on merits have succeeded in this case for the reasons recorded by us on the substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and circumstances of the case particularly, the execution of Agreement of Sale, Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part consideration of Rs.15,000/-, and the submission made by the learned counsel for the defendants, it would be just and proper for this Court to award a sum of Rs.6,00,000/- by lump-sum amount of compensation to the plaintiffs within 3 months from the date of receipt of a copy of this judgment as provided under Section 22 of the Specific Relief Act.=
the suit schedule property is self
acquired property by late Pemmada Venkateswara Rao as he had
purchased the said property vide Sale-Deed Document No.5174 of 1970
dated 24.11.1970 from his vendors.
It is also an undisputed fact that the
said property is intestate property. He is survived by his wife, 3 sons and
3 daughters.
The said property devolved upon them in view of Section 8 of
Chapter 2 of the Hindu Succession Act as the defendants are class I legal
heirs in the suit schedule property.
Undisputedly, the Agreement of Sale-
Ex.-A1 is executed only by defendant Nos. 1 and 2.
The 3rd son, mother and
3 sisters who have got equal shares in the property have not executed the
Agreement of Sale.
In view of the matter, the Agreement of Sale executed by
defendant Nos. 1 and 2 who have no absolute right to property in question
cannot confer any right whatsoever upon the plaintiffs for grant of decree
of specific performance of Agreement of Sale in their favour.
Whether the plaintiffs are entitled for the decree for specific
performance of the Agreement of Sale (Ex.-A1)
when Agreement of
Sale entered between the plaintiffs and defendant Nos. 1 and 2
who do not have absolute title to the property?
Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the
other defendants/co-sharers is it valid, even assuming that Agreement of
Sale is valid, there is breach of terms and conditions of the Contract on
the part of the plaintiffs in not paying the sale consideration amount of
Rs. 1,70,000/- within 10 days from the day of vacating the tenants,
Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before
30.3.1994 to the defendants and plaintiffs are entitled for decree of
specific performance of the Agreement of Sale?
Whether the plaintiffs are entitled for discretionary relief of specific
performance under Section 20(2) of the Specific Relief Act when it has not
approached the court with clean hands?
What relief?
Answer to Point No. 1
29. It is an undisputed fact that the suit schedule property is self
acquired property by late Pemmada Venkateswara Rao as he had
purchased the said property vide Sale-Deed Document No.5174 of 1970
dated 24.11.1970 from his vendors.
It is also an undisputed fact that the
said property is intestate property. He is survived by his wife, 3 sons and
3 daughters.
The said property devolved upon them in view of Section 8 of
Chapter 2 of the Hindu Succession Act as the defendants are class I legal
heirs in the suit schedule property.
Undisputedly, the Agreement of Sale-
Ex.-A1 is executed only by defendant Nos. 1 and 2.
The 3rd son, mother and
3 sisters who have got equal shares in the property have not executed the
Agreement of Sale.
In view of the matter, the Agreement of Sale executed by
defendant Nos. 1 and 2 who have no absolute right to property in question
cannot confer any right whatsoever upon the plaintiffs for grant of decree
of specific performance of Agreement of Sale in their favour.
The said
agreement is not enforceable in law in view of Section 17 of the Specific
Relief Act in view of right accrued in favour of defendant Nos. 3 to 6
under Section 8 of the Hindu Succession Act. The provisions of Section 17
of the Specific Relief Act in categorical term expressly state that a
Contract to sell or let any immovable property cannot be specifically
enforced in favour of a vendor or lessor who does not have absolute title
and right upon the party.
It is worthwhile to extract Section 17 of the
Specific Relief Act,1963 here :-
“17.-Contract to sell or let property by one who has no title, not
specifically enforceable.- A contract to sell or let any immovable property
cannot be specifically enforced in favour of a vendor or lessor;
(a) who, knowing not to have any title to the property, has contracted to
sell or let the property
(b) who, though he entered into the contract believing that he had a good
title to the property, cannot at the time fixed by the parties or by the
court for the completion of the sale or letting, give the purchaser or
lessee a title free from reasonable doubt.”
In view of the aforesaid provisions of the Specific Relief Act, the
Agreement of Sale entered between the plaintiffs and some of the co-sharers
who do not have the absolute title to the suit schedule property is not
enforceable in law. This aspect of the matter has not been properly
appreciated and considered by both the First Appellate Court and the Second
Appellate Court. Therefore, the impugned judgment is vitiated in law.
30. Even assuming for the sake of argument that the agreement is valid,
the names of three sons are mentioned in Agreement of Sale, out of whom the
agreement is executed by defendant Nos. 1 and 2 and they assured that they
would get the signatures of the 3rd brother namely, Srinivasa Rao and also
the remaining 3 sisters. At the time of execution of this agreement
signatures were not obtained. Therefore, the agreement is not executed by
all the co-sharers of the property which fact is evident from the recitals
of the document itself. Hence, the plaintiffs are not entitled for specific
performance decree.
This vital factual and legal aspect has been ignored by
both the First Appellate Court and the Second Appellate Court.
Therefore,
the impugned judgment is vitiated both on facts and law. Accordingly, the
point No. 1 is answered in favour of the defendants.
Answer to Point No. 2
31. The second point is also required to be answered against the
plaintiffs for the following reasons:-
As could be seen from the Agreement of Sale document marked as Ex.-A1 and
the pleadings of the parties payment of sale consideration was agreed to be
paid to the defendant Nos. 1 and 2 as per following terms of the agreement
:-
“…
(i) an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within
10 days from the day of vacating the tenants in the property,
(ii) Rs.
50,000/- shall be paid on 30.11.1993.,
(iii) the remaining sale
consideration of Rs.1,50,000/- shall be paid on or before 30.3.1994.”
32. It is an undisputed fact that except payment of Rs.5,000/- and
Rs.10,000/- paid by the purchaser-plaintiff No.1 to the defendant Nos. 1
and 2 according to the Agreement of Sale, the remaining installment i.e. an
amount of Rs.1,70,000/- which was to be paid to the Vendors within 10 days
from the day of vacating the tenants in the property was not paid.
Even
assuming that the amount could have been paid had the tenants vacated the
schedule property then the remaining part of the sale consideration agreed
to be paid as notified under clauses (ii) and (iii) as per aforesaid
paragraph of the Agreement of Sale undisputedly not paid to the defendant
Nos. 1 and 2.
Therefore, there is breach of contract on the part of the
plaintiffs as could be seen from the agreement of sale regarding the
payment of part sale consideration amount.
For this reason itself
plaintiffs are not entitled for a decree of specific performance.
Answer to the Point Nos. 3
33. Point No. 3 is also answered in favour of the defendants for the
following reasons:-
It is an undisputed fact that the plaintiffs have not approached the Trial
Court with clean hands.
It is evident from the pleadings of the Agreement
of Sale which is produced for the decree for specific performance of
Agreement of Sale as the plaintiffs did not obtain the signatures of all
the co-sharers of the property namely, the mother of the defendants, the
third brother and 3 sisters.
Therefore, the agreement is not enforceable in
law as the persons who have executed the sale deed, did not have the
absolute title of the property.
Apart from the said legal lacuna, the terms
and conditions of the Agreement of Sale for payment of sale consideration
agreed to be paid by the first plaintiff in installments within the period
stipulated as indicated above were not paid.
The First Appellate Court and
the High Court have not exercised their power under Section 20(2) of the
Specific Relief Act which by itself is the substantial question of law
which fell for consideration before the High Court as the First Appellate
Court failed to consider this important aspect of the matter and exercised
its power while determining the rights of the party, particularly, in the
light of the unenforceable contract between the plaintiffs against the
defendants as all of them are not parties to the Agreement of Sale document
(Ex.-A1) and the executants viz. defendant Nos. 1 and 2 have not acquired
absolute title to the property in question. Therefore, the impugned
judgment is vitiated and liable to be set aside.
Answer to Point No. 4
34. Though we have answered the questions of law framed in this appeal in
favour of the defendants, the learned counsel for the defendants during the
course of arguments, has offered some monetary compensation in favour of
the plaintiffs if this Court set aside the impugned judgment and decree of
specific performance granted in their favour. Though, the defendants on
merits have succeeded in this case for the reasons recorded by us on the
substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and
circumstances of the case particularly, the execution of Agreement of Sale,
Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part
consideration of Rs.15,000/-, and the submission made by the learned
counsel for the defendants, it would be just and proper for this Court to
award a sum of Rs.6,00,000/- by lump-sum amount of compensation to the
plaintiffs within 3 months from the date of receipt of a copy of this
judgment as provided under Section 22 of the Specific Relief Act.
35. Since, we have answered point Nos. 1 to 4 in favour of the defendants
and against the plaintiffs, the appeal of the defendants must succeed.
Accordingly, the impugned judgment and decree passed by the High Court in
affirming the judgment and decree of the First Appellate Court, is set
aside. The judgment and decree of the Trial Court is restored with
modification that the defendants shall pay a sum of Rs.6,00,000/- to the
plaintiffs as lump-sum compensation within 3 months from the date of
receipt of copy of this order. The appeal is allowed in the above said
terms. No costs.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7835 OF 2014
(Arising out of SLP(C) NO. 24653 OF 2012)
PEMMADA PRABHAKAR & ORS. …APPELLANTS
Vs.
YOUNGMEN’S VYSYA ASSOCIATION & ORS. …RESPONDENTS
J U D G M E N T
V.GOPALA GOWDA, J.
Leave granted.
2. This appeal has been filed against the judgment and final order dated
04.11.2011 passed in the Second Appeal No. 815 of 2011 by the High Court of
Judicature of Andhra Pradesh at Hyderabad, whereby the High Court has
dismissed the Second Appeal.
3. Certain relevant facts are stated for the purpose of appreciating the
rival legal contentions urged on behalf of the parties with a view to
examine the correctness of the findings and reasons recorded by the High
Court in the impugned judgment.
For the sake of brevity and convenience, the parties are referred to in
this judgment as per the rank assigned to them in the original suit
proceedings.
4. The property bearing Door No. 20/42-1-9 with land measuring about 657-
1/3rd sq. yards situated to the west of Vallabhai Street, Cinema Road,
Kakinada (hereinafter, referred to as the ‘suit schedule property’) was the
self acquired property of one Pemmada Venkateswara Rao. He died intestate
and survived by wife Syama Sundari, three sons and three daughters (the
defendant Nos. 1 to 6).
5. The plaintiffs-the Youngmen’s Vyasa Association (who are the
respondents herein), instituted O.S.No.267 of 1995 for the specific
performance of Agreement of Sale dated 03.05.1993 against the defendants
(the appellants herein). The plaintiffs alleged that the defendant Nos. 1
and 2, who are managing the suit schedule property, agreed to sell the same
to plaintiff No. 1.
6. According to the plaintiffs, the defendant Nos. 1 and 2 executed the
Agreement of Sale dated 03.05.1993 in favour of plaintiff No. 1 agreeing to
sell the suit schedule property at the rate of Rs.575/- per sq. yard, the
total consideration of which was to be fixed later after taking the actual
measurement. Later on, the total land value was fixed at Rs.3,77,967/- for
657-1/3 sq. yards. The defendant Nos. 1 and 2 received advance amount of
Rs.5000/- and Rs.10,000/- also. Under the Agreement the plaintiff No. 1
agreed to pay Rs.1,70,000/- to the defendants within 10 days from the day
of vacating the tenants from the suit schedule property. Rs.50,000/- was to
be paid on 30.11.1993 and that the balance amount of Rs.1,50,000/- was to
be paid by 30.3.1994. The defendant Nos. 1 and 2 agreed that they would
obtain the signatures of their 3rd brother-the defendant No. 3 by
9.05.1993. Defendant Nos. 7 and 8 are the tenants in the sheds situated in
the suit schedule property. The defendant Nos.1 & 2 stated that their
sisters were married long ago therefore, they had no interest in the suit
schedule property, and that they would also get the sisters’ signatures on
the agreement.
7. The 2nd Addl. Senior Civil Judge, Kakinada (the Trial Court) by his
judgment dated 12.7.2006 dismissed O.S. No 267/95, in so far as the main
relief for the specific performance of sale is concerned. The Trial Court
has directed the defendants to refund Rs.5000/- with interest at the rate
of 12% p.a. from 5.03.1993 till the date of realization and Rs.10,000/-
with the interest rate at 12% p.a. from 6.08.1993 till the date of
realization.
8. The Trial Court after considering the oral and documentary evidence
on record, observed that as the suit schedule property is adjacent to the
plaintiff’s property, taking advantage of the financial difficulties of
defendant Nos. 1 and 2, the plaintiffs attempted to grab the suit schedule
property and dragged the defendants to the court of law.
9. The Trial Court further held that the Agreement of Sale was not valid
as the defendant Nos.3 to 6 and their mother did not give consent to sell
the suit schedule property to the plaintiffs. Accordingly, the main relief
for specific performance was rejected and the defendants were directed to
refund the amount of advance sale consideration to the plaintiffs with
interest at the rate of 12% p.a.
10. Being aggrieved by the judgment and decree dated 12.7.2006 of the
Trial Court, the plaintiffs filed an appeal being A.S. No. 269 of 2006
before the Court of 3rd Additional District Judge, Kakinada, the First
Appellate Court.
11. On 28.04.2010 the First Appellate Court allowed the appeal partly,
directing the defendant Nos. 1, 2, 4 and 5 to execute the registered sale
deed in favour of the plaintiff’s Association in respect of their 1/6th
share each i.e. 4/6th share by receiving their respective shares of the
balance sale consideration from the plaintiffs and modified the decree for
specific performance of Agreement of Sale.
12. The First Appellate Court vide its order dated 28.4.2010 held that
the transaction between the parties is real sale transaction and not mere
money transaction and the sale agreement is valid and binding between the
parties and the plaintiffs are entitled for the first main relief of
specific performance and directed defendant Nos. 1, 2, 4 and 5 to execute
sale deed in respect of their 4 shares of the suit schedule property after
receiving proportionate sale price.
13. Being aggrieved by the judgment and decree dated 28.04.2010 of the
First Appellate Court, the defendants preferred Second Appeal being S.A.
No. 815 of 2011 before the High Court of Judicature of Andhra Pradesh at
Hyderabad whereby the High Court vide order dated 4.11.2011 dismissed the
Second Appeal which is impugned in this appeal.
14. The High Court held that the approach of the First Appellate Court in
granting the relief of specific performance directing defendants 1, 2, 4
and 5 to execute sale deed in respect of their shares, i.e. 4/6th share of
the suit schedule property in favour of the plaintiffs on receipt of their
respective balance consideration which stood deposited in the court, cannot
be faulted with.
15. It was further held by the High Court that the mother of the
defendants was alive when the suit was instituted in 1995 and she died on
29.09.2005. She had one share and after her death, the property would be
divided into 6 shares and the agreement was held as binding on the
defendants 1, 2, 4 and 5. Therefore, the High Court upheld the decision of
the First Appellate Court and moulded the relief in the above terms while
granting decree of specific performance of the Agreement of Sale by
executing the sale deed of their share in the property in favour of the
plaintiffs.
16. The following submissions were made by the learned counsel for both
the parties in support of their claim and counter claim.
17. On behalf of the defendant Nos.1 & 2, it is contended that their
father Pemmada Venkateswara Rao was engaged in lathe works which incurred
heavy loss and he was allegedly indebted to various creditors. They
approached one Murali Krishna (who had acquaintance with them) who was the
Secretary of the plaintiff Association to borrow some money. Taking
advantage of their situation, the Secretary and the President of the
Plaintiff Association obtained the signatures of defendant Nos. 1 and 2 on
a blank sheet of paper and gave Rs.5000/- on 3.5.1993 and Rs.10,000/- on
6.8.1993 to them.
18. It was further contended by the learned counsel that the defendants
never intended to sell the suit schedule property and the transaction with
the plaintiffs Association was only money transaction and was not a sale
transaction with it. A separate written statement was filed by the 4th
defendant to the same effect.
19. It was further contended by defendant Nos. 1 to 6 that even on the
date of execution of Agreement of Sale their mother was very much alive
and, therefore in the absence of execution of Agreement of Sale by all the
seven co-sharers of the suit schedule property the suit for specific
performance does not lie. The learned counsel for the defendants placed
reliance on the decisions of Andhra Pradesh High Court and this Court in
the cases of Kommisetti Venkatasubbayya v. Karamestti Venkateswarlu[1] and
Lourdu Mari David & Ors. v. Louis Chinnaya Arogiaswamy & Ors.[2] in support
of their claim.
20. Further, they placed reliance upon the case of this Court in
Rameshwar & Ors. v. Jot Ram & Anr.[3]. In the said authority it has been
held as follows:
“9…First, its bearing on the right of action, second, on the nature of the
relief and third, on its impotence to create or destroy substantive rights.
Where the nature of the relief, as originally sought, has become obsolete
or unserviceable or a new form of relief will be more efficacious on
account of developments subsequent to the suit or even during the appellate
stage, it is but fair that the relief is moulded, varied or reshaped in the
light of updated facts. Patterson illustrates this position. It is
important that the party claiming the relief or change of relief must have
the same right from which either the first or the modified remedy may flow.
Subsequent events in the course of the case cannot be constitutive of
substantive rights enforceable in that very litigation except in a narrow
category (later spelt out) but may influence the equitable jurisdiction to
mould reliefs. Conversely, where rights have already vested in a party,
they cannot be nullified or negated by subsequent events save where there
is a change in the law and it is made applicable at any stage. Lachmeshwar
Prasad Shukul v. Keshwar Lal Chaudhuri falls in this category. Courts of
justice may, when the compelling equities of a case oblige them, shape
reliefs — cannot deny rights — to make them justly relevant in the updated
circumstances. Where the relief is discretionary, courts may exercise this
jurisdiction to avoid injustice. Likewise, where the right to the remedy
depends, under the statute itself, on the presence or absence of certain
basic facts at the time the relief is to be ultimately granted, the Court,
even in appeal, can take note of such supervening facts with fundamental
impact…”
(Emphasis supplied)
21. The High court held that defendants pleaded falsehood at the time of
execution of the Agreement of Sale by stating that their mother had
predeceased their father. The agreement and the endorsement thereon made by
defendant Nos.1 and 2 had swayed discretion of the High Court in favour of
the plaintiffs which is an Association engaged in the welfare of the
community.
22. The High Court further held that the suit schedule property was not
purchased for unlawful gain of an individual and that the First Appellate
Court considered the entire evidence on record and exercised its sound
jurisdiction and modified the judgment of the Trial Court by granting a
decree of specific performance as per the terms stipulated therein.
23. The High Court dismissed the second appeal without adverting to the
substantial questions of law that were framed in the second appeal at the
admission stage itself stating that there is no substantial question of
law for its adjudication. The First Appellate Court and the Second
Appellate Court committed serious error in law in not noticing the relevant
important findings of fact recorded by the Trial Court on the contentious
issues on proper appreciation of pleadings and evidence on record with
reference to the legal submission made on behalf of the parties. The Trial
Court after proper appreciation of evidence on record, particularly, Ex.-
A1, the Agreement of Sale, has held that it is not a valid agreement and no
rights can flow from it in favour of the plaintiffs in the light of the
fact that the signatures of defendant Nos. 1 and 2 were obtained on
different dates on blank papers as they were in financial crisis and that
fact is proved by producing Exs.-B1 to B-8 to show that the entire family
(defendant Nos. 1 to 6) were in financial crisis and they were forced to
pay the debts to their creditors. Therefore, they were in urgent need of
money and they approached the PW-1 for financial help, who obtained the
signatures of defendant Nos. 1 and 2 on blank paper and the same was
fabricated as a receipt. The said receipt was not signed by defendant Nos.
3 to 6. The mother of the defendant Nos. 1 and 2 is one of the co-sharers
of the suit schedule property as a class-I legal heir to succeed to the
intestate property of her deceased husband, which was his self acquired
property left by him, as he had purchased the same vide Sale-Deed document
No. 5174/1970 dated 24.11.1970 from his vendors. In fact, there is a
reference made in this regard in the Agreement of Sale executed by
defendant Nos. 1 and 2 to the effect that after demise of Pemmada
Venkateswara Rao, the father of defendant Nos. 1 to 6, the property
devolved upon them jointly and they are enjoying with absolute rights. As
per Section 8 of the Hindu Succession Act, 1956 the general rules of
succession would be applicable in the case of a male Hindu dying
intestate, relevant portion of which reads as under :-
“8. General rules of succession in the case of males.- The property of a
male Hindu dying intestate shall devolve according to the provisions of
this Chapter-
Firstly, upon the heirs, being the relatives specified in class I of the
Schedule;
XXX XXX XXX”
In the Schedule of the said Act, class I heirs are son, daughter, widow,
mother and others. In view of the enumeration of the class I heirs in the
Schedule, the mother and sisters of the defendant Nos. 1 and 2 are also co-
sharers of the property left intestate by the deceased Pemmada
Venkateswara Rao. As could be seen from the Agreement of Sale-Ex.-A1
undisputedly, the third brother and 3 sisters, (defendant Nos. 3 to 6) and
their mother have not executed the Agreement of Sale in favour of the
plaintiffs. Therefore, the same is not enforceable under Section 17 of the
Specific Relief Act, 1963. The mother lived upto September, 2005, the
aforesaid legal heirs of deceased Pemmada Venkateswara Rao got equal shares
in the suit schedule property.
24. It is further contended on behalf of the defendants that the First
Appellate Court and the High Court have failed in not applying the legal
principle laid down by this Court in the case of Lourdu Mari David & Ors.
(supra), wherein this Court held that the party who seeks to avail of the
equitable jurisdiction of a court and specific performance decree being
equitable relief must come to the court with clean hands. In other words,
the party who makes false allegations against the defendants does not come
with clean hands and therefore, it is not entitled to the equitable relief
of specific performance decree from the court.
25. Another legal contention urged on behalf of the defendants is that
the High Court has erroneously come to the conclusion on facts and evidence
on record and it has affirmed the divergent findings of fact recorded by
the First Appellate Court without examining and answering the substantial
questions of law framed in the Second Appeal and it has erroneously
dismissed the appeal holding that the suit schedule property was not
purchased by the plaintiffs for unlawful gain of an individual. The said
property is probably purchased by the plaintiffs to put it to use for the
purpose of the community. The High Court without considering the legal
submissions urged on behalf of the defendants adjudicated the rights of the
parties ignoring certain facts, evidence on record and legal contentions
urged. It has erroneously held that the plaintiffs are entitled for the
relief of specific performance while the Agreement of Sale is not
enforceable under Section 17 of the Specific Relief Act, 1963, in view of
the fact that all the legal heirs of the deceased Pemmada Venkateswara Rao
are not parties to the Agreement of Sale and the defendant Nos. 1 and 2 do
not have absolute title and right upon the entire suit schedule property.
Even assuming for the sake of argument that the Agreement of Sale is valid,
the same could not have been enforced against the defendants as the
plaintiffs have committed breach of the contract as agreed upon by them as
per clause 2 of the penultimate paragraph Nos. 2 and 3 of the Agreement of
Sale. The plaintiffs gave a sum of Rs.5,000/- & Rs. 10,000/- as an advance
amount towards sale consideration and the remaining sale consideration,
i.e.(i)an amount of Rs.1,70,000/- which was to be paid within 10 days from
the day of vacating the tenants in the property, (ii) Rs.50,000/- to be
paid on 30.11.1993 and the remaining sale consideration of Rs.1,50,000/- to
be paid on or before 30.3.1994 was not paid to the defendant Nos. 1 and 2.
26. It is also contended by the learned counsel that the First Appellate
Court and the Second Appellate Court have not exercised their discretionary
powers as required under Section 20(2) of the Specific Relief Act for
decreeing the specific performance in favour of the plaintiffs, even
though, the defendants have made out a case before the Trial Court that
the plaintiffs are not entitled for the decree for specific performance.
Therefore, the First Appellate Court and the Second
Appellate Court have gravely erred in not exercising their discretionary
power under Section 20(2) of the Specific Relief Act at the time of passing
decree for specific performance in favour of the plaintiffs, which is not
only erroneous in law but also vitiated in law and therefore, the same is
liable to be set aside.
27. On the contrary, the learned counsel for the plaintiffs has
sought to justify the impugned judgment contending that the Second
Appellate Court in exercise of its appellate jurisdiction after examining
the facts and evidence on record has held that the substantial questions of
law framed by the defendants in the second appeal, on the divergent
findings of fact recorded by the First Appellate Court would not arise.
Decreeing the suit by the First Appellate Court as prayed by the plaintiffs
is correct as it has set aside the decree of the Trial Court. It is further
urged that the High Court is right in dismissing the second appeal and
therefore, the same does not call for interference by this Court as there
is no substantial question of law which would arise for consideration.
Therefore, the learned counsel for the respondent-plaintiffs prayed for
dismissal of this civil appeal as the same is devoid of merit.
28. With reference to the above said rival contentions, the following
points would arise for our consideration :-
Whether the plaintiffs are entitled for the decree for specific
performance of the Agreement of Sale (Ex.-A1) when Agreement of
Sale entered between the plaintiffs and defendant Nos. 1 and 2
who do not have absolute title to the property?
Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the
other defendants/co-sharers is it valid, even assuming that Agreement of
Sale is valid, there is breach of terms and conditions of the Contract on
the part of the plaintiffs in not paying the sale consideration amount of
Rs. 1,70,000/- within 10 days from the day of vacating the tenants,
Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before
30.3.1994 to the defendants and plaintiffs are entitled for decree of
specific performance of the Agreement of Sale?
Whether the plaintiffs are entitled for discretionary relief of specific
performance under Section 20(2) of the Specific Relief Act when it has not
approached the court with clean hands?
What relief?
Answer to Point No. 1
29. It is an undisputed fact that the suit schedule property is self
acquired property by late Pemmada Venkateswara Rao as he had
purchased the said property vide Sale-Deed Document No.5174 of 1970
dated 24.11.1970 from his vendors. It is also an undisputed fact that the
said property is intestate property. He is survived by his wife, 3 sons and
3 daughters. The said property devolved upon them in view of Section 8 of
Chapter 2 of the Hindu Succession Act as the defendants are class I legal
heirs in the suit schedule property. Undisputedly, the Agreement of Sale-
Ex.-A1 is executed only by defendant Nos. 1 and 2. The 3rd son, mother and
3 sisters who have got equal shares in the property have not executed the
Agreement of Sale. In view of the matter, the Agreement of Sale executed by
defendant Nos. 1 and 2 who have no absolute right to property in question
cannot confer any right whatsoever upon the plaintiffs for grant of decree
of specific performance of Agreement of Sale in their favour. The said
agreement is not enforceable in law in view of Section 17 of the Specific
Relief Act in view of right accrued in favour of defendant Nos. 3 to 6
under Section 8 of the Hindu Succession Act. The provisions of Section 17
of the Specific Relief Act in categorical term expressly state that a
Contract to sell or let any immovable property cannot be specifically
enforced in favour of a vendor or lessor who does not have absolute title
and right upon the party. It is worthwhile to extract Section 17 of the
Specific Relief Act,1963 here :-
“17.-Contract to sell or let property by one who has no title, not
specifically enforceable.- A contract to sell or let any immovable property
cannot be specifically enforced in favour of a vendor or lessor;
(a) who, knowing not to have any title to the property, has contracted to
sell or let the property
(b) who, though he entered into the contract believing that he had a good
title to the property, cannot at the time fixed by the parties or by the
court for the completion of the sale or letting, give the purchaser or
lessee a title free from reasonable doubt.”
In view of the aforesaid provisions of the Specific Relief Act, the
Agreement of Sale entered between the plaintiffs and some of the co-sharers
who do not have the absolute title to the suit schedule property is not
enforceable in law. This aspect of the matter has not been properly
appreciated and considered by both the First Appellate Court and the Second
Appellate Court. Therefore, the impugned judgment is vitiated in law.
30. Even assuming for the sake of argument that the agreement is valid,
the names of three sons are mentioned in Agreement of Sale, out of whom the
agreement is executed by defendant Nos. 1 and 2 and they assured that they
would get the signatures of the 3rd brother namely, Srinivasa Rao and also
the remaining 3 sisters. At the time of execution of this agreement
signatures were not obtained. Therefore, the agreement is not executed by
all the co-sharers of the property which fact is evident from the recitals
of the document itself. Hence, the plaintiffs are not entitled for specific
performance decree. This vital factual and legal aspect has been ignored by
both the First Appellate Court and the Second Appellate Court. Therefore,
the impugned judgment is vitiated both on facts and law. Accordingly, the
point No. 1 is answered in favour of the defendants.
Answer to Point No. 2
31. The second point is also required to be answered against the
plaintiffs for the following reasons:-
As could be seen from the Agreement of Sale document marked as Ex.-A1 and
the pleadings of the parties payment of sale consideration was agreed to be
paid to the defendant Nos. 1 and 2 as per following terms of the agreement
:-
“… (i) an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within
10 days from the day of vacating the tenants in the property, (ii) Rs.
50,000/- shall be paid on 30.11.1993., (iii) the remaining sale
consideration of Rs.1,50,000/- shall be paid on or before 30.3.1994.”
32. It is an undisputed fact that except payment of Rs.5,000/- and
Rs.10,000/- paid by the purchaser-plaintiff No.1 to the defendant Nos. 1
and 2 according to the Agreement of Sale, the remaining installment i.e. an
amount of Rs.1,70,000/- which was to be paid to the Vendors within 10 days
from the day of vacating the tenants in the property was not paid. Even
assuming that the amount could have been paid had the tenants vacated the
schedule property then the remaining part of the sale consideration agreed
to be paid as notified under clauses (ii) and (iii) as per aforesaid
paragraph of the Agreement of Sale undisputedly not paid to the defendant
Nos. 1 and 2. Therefore, there is breach of contract on the part of the
plaintiffs as could be seen from the agreement of sale regarding the
payment of part sale consideration amount. For this reason itself
plaintiffs are not entitled for a decree of specific performance.
Answer to the Point Nos. 3
33. Point No. 3 is also answered in favour of the defendants for the
following reasons:-
It is an undisputed fact that the plaintiffs have not approached the Trial
Court with clean hands. It is evident from the pleadings of the Agreement
of Sale which is produced for the decree for specific performance of
Agreement of Sale as the plaintiffs did not obtain the signatures of all
the co-sharers of the property namely, the mother of the defendants, the
third brother and 3 sisters. Therefore, the agreement is not enforceable in
law as the persons who have executed the sale deed, did not have the
absolute title of the property. Apart from the said legal lacuna, the terms
and conditions of the Agreement of Sale for payment of sale consideration
agreed to be paid by the first plaintiff in installments within the period
stipulated as indicated above were not paid. The First Appellate Court and
the High Court have not exercised their power under Section 20(2) of the
Specific Relief Act which by itself is the substantial question of law
which fell for consideration before the High Court as the First Appellate
Court failed to consider this important aspect of the matter and exercised
its power while determining the rights of the party, particularly, in the
light of the unenforceable contract between the plaintiffs against the
defendants as all of them are not parties to the Agreement of Sale document
(Ex.-A1) and the executants viz. defendant Nos. 1 and 2 have not acquired
absolute title to the property in question. Therefore, the impugned
judgment is vitiated and liable to be set aside.
Answer to Point No. 4
34. Though we have answered the questions of law framed in this appeal in
favour of the defendants, the learned counsel for the defendants during the
course of arguments, has offered some monetary compensation in favour of
the plaintiffs if this Court set aside the impugned judgment and decree of
specific performance granted in their favour. Though, the defendants on
merits have succeeded in this case for the reasons recorded by us on the
substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and
circumstances of the case particularly, the execution of Agreement of Sale,
Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part
consideration of Rs.15,000/-, and the submission made by the learned
counsel for the defendants, it would be just and proper for this Court to
award a sum of Rs.6,00,000/- by lump-sum amount of compensation to the
plaintiffs within 3 months from the date of receipt of a copy of this
judgment as provided under Section 22 of the Specific Relief Act.
35. Since, we have answered point Nos. 1 to 4 in favour of the defendants
and against the plaintiffs, the appeal of the defendants must succeed.
Accordingly, the impugned judgment and decree passed by the High Court in
affirming the judgment and decree of the First Appellate Court, is set
aside. The judgment and decree of the Trial Court is restored with
modification that the defendants shall pay a sum of Rs.6,00,000/- to the
plaintiffs as lump-sum compensation within 3 months from the date of
receipt of copy of this order. The appeal is allowed in the above said
terms. No costs.
……………………………………………………………………J.
[DIPAK MISRA]
……………………………………………………………………J.
[V. GOPALA GOWDA]
New Delhi,
August 20,2014
-----------------------
[1] A.I.R. 197?
enforced in favour of a vendor or lessor who does not have absolute title and right upon the party. Though, the defendants on merits have succeeded in this case for the reasons recorded by us on the substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and circumstances of the case particularly, the execution of Agreement of Sale, Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part consideration of Rs.15,000/-, and the submission made by the learned counsel for the defendants, it would be just and proper for this Court to award a sum of Rs.6,00,000/- by lump-sum amount of compensation to the plaintiffs within 3 months from the date of receipt of a copy of this judgment as provided under Section 22 of the Specific Relief Act.=
the suit schedule property is self
acquired property by late Pemmada Venkateswara Rao as he had
purchased the said property vide Sale-Deed Document No.5174 of 1970
dated 24.11.1970 from his vendors.
It is also an undisputed fact that the
said property is intestate property. He is survived by his wife, 3 sons and
3 daughters.
The said property devolved upon them in view of Section 8 of
Chapter 2 of the Hindu Succession Act as the defendants are class I legal
heirs in the suit schedule property.
Undisputedly, the Agreement of Sale-
Ex.-A1 is executed only by defendant Nos. 1 and 2.
The 3rd son, mother and
3 sisters who have got equal shares in the property have not executed the
Agreement of Sale.
In view of the matter, the Agreement of Sale executed by
defendant Nos. 1 and 2 who have no absolute right to property in question
cannot confer any right whatsoever upon the plaintiffs for grant of decree
of specific performance of Agreement of Sale in their favour.
Whether the plaintiffs are entitled for the decree for specific
performance of the Agreement of Sale (Ex.-A1)
when Agreement of
Sale entered between the plaintiffs and defendant Nos. 1 and 2
who do not have absolute title to the property?
Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the
other defendants/co-sharers is it valid, even assuming that Agreement of
Sale is valid, there is breach of terms and conditions of the Contract on
the part of the plaintiffs in not paying the sale consideration amount of
Rs. 1,70,000/- within 10 days from the day of vacating the tenants,
Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before
30.3.1994 to the defendants and plaintiffs are entitled for decree of
specific performance of the Agreement of Sale?
Whether the plaintiffs are entitled for discretionary relief of specific
performance under Section 20(2) of the Specific Relief Act when it has not
approached the court with clean hands?
What relief?
Answer to Point No. 1
29. It is an undisputed fact that the suit schedule property is self
acquired property by late Pemmada Venkateswara Rao as he had
purchased the said property vide Sale-Deed Document No.5174 of 1970
dated 24.11.1970 from his vendors.
It is also an undisputed fact that the
said property is intestate property. He is survived by his wife, 3 sons and
3 daughters.
The said property devolved upon them in view of Section 8 of
Chapter 2 of the Hindu Succession Act as the defendants are class I legal
heirs in the suit schedule property.
Undisputedly, the Agreement of Sale-
Ex.-A1 is executed only by defendant Nos. 1 and 2.
The 3rd son, mother and
3 sisters who have got equal shares in the property have not executed the
Agreement of Sale.
In view of the matter, the Agreement of Sale executed by
defendant Nos. 1 and 2 who have no absolute right to property in question
cannot confer any right whatsoever upon the plaintiffs for grant of decree
of specific performance of Agreement of Sale in their favour.
The said
agreement is not enforceable in law in view of Section 17 of the Specific
Relief Act in view of right accrued in favour of defendant Nos. 3 to 6
under Section 8 of the Hindu Succession Act. The provisions of Section 17
of the Specific Relief Act in categorical term expressly state that a
Contract to sell or let any immovable property cannot be specifically
enforced in favour of a vendor or lessor who does not have absolute title
and right upon the party.
It is worthwhile to extract Section 17 of the
Specific Relief Act,1963 here :-
“17.-Contract to sell or let property by one who has no title, not
specifically enforceable.- A contract to sell or let any immovable property
cannot be specifically enforced in favour of a vendor or lessor;
(a) who, knowing not to have any title to the property, has contracted to
sell or let the property
(b) who, though he entered into the contract believing that he had a good
title to the property, cannot at the time fixed by the parties or by the
court for the completion of the sale or letting, give the purchaser or
lessee a title free from reasonable doubt.”
In view of the aforesaid provisions of the Specific Relief Act, the
Agreement of Sale entered between the plaintiffs and some of the co-sharers
who do not have the absolute title to the suit schedule property is not
enforceable in law. This aspect of the matter has not been properly
appreciated and considered by both the First Appellate Court and the Second
Appellate Court. Therefore, the impugned judgment is vitiated in law.
30. Even assuming for the sake of argument that the agreement is valid,
the names of three sons are mentioned in Agreement of Sale, out of whom the
agreement is executed by defendant Nos. 1 and 2 and they assured that they
would get the signatures of the 3rd brother namely, Srinivasa Rao and also
the remaining 3 sisters. At the time of execution of this agreement
signatures were not obtained. Therefore, the agreement is not executed by
all the co-sharers of the property which fact is evident from the recitals
of the document itself. Hence, the plaintiffs are not entitled for specific
performance decree.
This vital factual and legal aspect has been ignored by
both the First Appellate Court and the Second Appellate Court.
Therefore,
the impugned judgment is vitiated both on facts and law. Accordingly, the
point No. 1 is answered in favour of the defendants.
Answer to Point No. 2
31. The second point is also required to be answered against the
plaintiffs for the following reasons:-
As could be seen from the Agreement of Sale document marked as Ex.-A1 and
the pleadings of the parties payment of sale consideration was agreed to be
paid to the defendant Nos. 1 and 2 as per following terms of the agreement
:-
“…
(i) an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within
10 days from the day of vacating the tenants in the property,
(ii) Rs.
50,000/- shall be paid on 30.11.1993.,
(iii) the remaining sale
consideration of Rs.1,50,000/- shall be paid on or before 30.3.1994.”
32. It is an undisputed fact that except payment of Rs.5,000/- and
Rs.10,000/- paid by the purchaser-plaintiff No.1 to the defendant Nos. 1
and 2 according to the Agreement of Sale, the remaining installment i.e. an
amount of Rs.1,70,000/- which was to be paid to the Vendors within 10 days
from the day of vacating the tenants in the property was not paid.
Even
assuming that the amount could have been paid had the tenants vacated the
schedule property then the remaining part of the sale consideration agreed
to be paid as notified under clauses (ii) and (iii) as per aforesaid
paragraph of the Agreement of Sale undisputedly not paid to the defendant
Nos. 1 and 2.
Therefore, there is breach of contract on the part of the
plaintiffs as could be seen from the agreement of sale regarding the
payment of part sale consideration amount.
For this reason itself
plaintiffs are not entitled for a decree of specific performance.
Answer to the Point Nos. 3
33. Point No. 3 is also answered in favour of the defendants for the
following reasons:-
It is an undisputed fact that the plaintiffs have not approached the Trial
Court with clean hands.
It is evident from the pleadings of the Agreement
of Sale which is produced for the decree for specific performance of
Agreement of Sale as the plaintiffs did not obtain the signatures of all
the co-sharers of the property namely, the mother of the defendants, the
third brother and 3 sisters.
Therefore, the agreement is not enforceable in
law as the persons who have executed the sale deed, did not have the
absolute title of the property.
Apart from the said legal lacuna, the terms
and conditions of the Agreement of Sale for payment of sale consideration
agreed to be paid by the first plaintiff in installments within the period
stipulated as indicated above were not paid.
The First Appellate Court and
the High Court have not exercised their power under Section 20(2) of the
Specific Relief Act which by itself is the substantial question of law
which fell for consideration before the High Court as the First Appellate
Court failed to consider this important aspect of the matter and exercised
its power while determining the rights of the party, particularly, in the
light of the unenforceable contract between the plaintiffs against the
defendants as all of them are not parties to the Agreement of Sale document
(Ex.-A1) and the executants viz. defendant Nos. 1 and 2 have not acquired
absolute title to the property in question. Therefore, the impugned
judgment is vitiated and liable to be set aside.
Answer to Point No. 4
34. Though we have answered the questions of law framed in this appeal in
favour of the defendants, the learned counsel for the defendants during the
course of arguments, has offered some monetary compensation in favour of
the plaintiffs if this Court set aside the impugned judgment and decree of
specific performance granted in their favour. Though, the defendants on
merits have succeeded in this case for the reasons recorded by us on the
substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and
circumstances of the case particularly, the execution of Agreement of Sale,
Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part
consideration of Rs.15,000/-, and the submission made by the learned
counsel for the defendants, it would be just and proper for this Court to
award a sum of Rs.6,00,000/- by lump-sum amount of compensation to the
plaintiffs within 3 months from the date of receipt of a copy of this
judgment as provided under Section 22 of the Specific Relief Act.
35. Since, we have answered point Nos. 1 to 4 in favour of the defendants
and against the plaintiffs, the appeal of the defendants must succeed.
Accordingly, the impugned judgment and decree passed by the High Court in
affirming the judgment and decree of the First Appellate Court, is set
aside. The judgment and decree of the Trial Court is restored with
modification that the defendants shall pay a sum of Rs.6,00,000/- to the
plaintiffs as lump-sum compensation within 3 months from the date of
receipt of copy of this order. The appeal is allowed in the above said
terms. No costs.
2014- Aug. Part – http://judis.nic.in/supremecourt/filename=41856
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7835 OF 2014
(Arising out of SLP(C) NO. 24653 OF 2012)
PEMMADA PRABHAKAR & ORS. …APPELLANTS
Vs.
YOUNGMEN’S VYSYA ASSOCIATION & ORS. …RESPONDENTS
J U D G M E N T
V.GOPALA GOWDA, J.
Leave granted.
2. This appeal has been filed against the judgment and final order dated
04.11.2011 passed in the Second Appeal No. 815 of 2011 by the High Court of
Judicature of Andhra Pradesh at Hyderabad, whereby the High Court has
dismissed the Second Appeal.
3. Certain relevant facts are stated for the purpose of appreciating the
rival legal contentions urged on behalf of the parties with a view to
examine the correctness of the findings and reasons recorded by the High
Court in the impugned judgment.
For the sake of brevity and convenience, the parties are referred to in
this judgment as per the rank assigned to them in the original suit
proceedings.
4. The property bearing Door No. 20/42-1-9 with land measuring about 657-
1/3rd sq. yards situated to the west of Vallabhai Street, Cinema Road,
Kakinada (hereinafter, referred to as the ‘suit schedule property’) was the
self acquired property of one Pemmada Venkateswara Rao. He died intestate
and survived by wife Syama Sundari, three sons and three daughters (the
defendant Nos. 1 to 6).
5. The plaintiffs-the Youngmen’s Vyasa Association (who are the
respondents herein), instituted O.S.No.267 of 1995 for the specific
performance of Agreement of Sale dated 03.05.1993 against the defendants
(the appellants herein). The plaintiffs alleged that the defendant Nos. 1
and 2, who are managing the suit schedule property, agreed to sell the same
to plaintiff No. 1.
6. According to the plaintiffs, the defendant Nos. 1 and 2 executed the
Agreement of Sale dated 03.05.1993 in favour of plaintiff No. 1 agreeing to
sell the suit schedule property at the rate of Rs.575/- per sq. yard, the
total consideration of which was to be fixed later after taking the actual
measurement. Later on, the total land value was fixed at Rs.3,77,967/- for
657-1/3 sq. yards. The defendant Nos. 1 and 2 received advance amount of
Rs.5000/- and Rs.10,000/- also. Under the Agreement the plaintiff No. 1
agreed to pay Rs.1,70,000/- to the defendants within 10 days from the day
of vacating the tenants from the suit schedule property. Rs.50,000/- was to
be paid on 30.11.1993 and that the balance amount of Rs.1,50,000/- was to
be paid by 30.3.1994. The defendant Nos. 1 and 2 agreed that they would
obtain the signatures of their 3rd brother-the defendant No. 3 by
9.05.1993. Defendant Nos. 7 and 8 are the tenants in the sheds situated in
the suit schedule property. The defendant Nos.1 & 2 stated that their
sisters were married long ago therefore, they had no interest in the suit
schedule property, and that they would also get the sisters’ signatures on
the agreement.
7. The 2nd Addl. Senior Civil Judge, Kakinada (the Trial Court) by his
judgment dated 12.7.2006 dismissed O.S. No 267/95, in so far as the main
relief for the specific performance of sale is concerned. The Trial Court
has directed the defendants to refund Rs.5000/- with interest at the rate
of 12% p.a. from 5.03.1993 till the date of realization and Rs.10,000/-
with the interest rate at 12% p.a. from 6.08.1993 till the date of
realization.
8. The Trial Court after considering the oral and documentary evidence
on record, observed that as the suit schedule property is adjacent to the
plaintiff’s property, taking advantage of the financial difficulties of
defendant Nos. 1 and 2, the plaintiffs attempted to grab the suit schedule
property and dragged the defendants to the court of law.
9. The Trial Court further held that the Agreement of Sale was not valid
as the defendant Nos.3 to 6 and their mother did not give consent to sell
the suit schedule property to the plaintiffs. Accordingly, the main relief
for specific performance was rejected and the defendants were directed to
refund the amount of advance sale consideration to the plaintiffs with
interest at the rate of 12% p.a.
10. Being aggrieved by the judgment and decree dated 12.7.2006 of the
Trial Court, the plaintiffs filed an appeal being A.S. No. 269 of 2006
before the Court of 3rd Additional District Judge, Kakinada, the First
Appellate Court.
11. On 28.04.2010 the First Appellate Court allowed the appeal partly,
directing the defendant Nos. 1, 2, 4 and 5 to execute the registered sale
deed in favour of the plaintiff’s Association in respect of their 1/6th
share each i.e. 4/6th share by receiving their respective shares of the
balance sale consideration from the plaintiffs and modified the decree for
specific performance of Agreement of Sale.
12. The First Appellate Court vide its order dated 28.4.2010 held that
the transaction between the parties is real sale transaction and not mere
money transaction and the sale agreement is valid and binding between the
parties and the plaintiffs are entitled for the first main relief of
specific performance and directed defendant Nos. 1, 2, 4 and 5 to execute
sale deed in respect of their 4 shares of the suit schedule property after
receiving proportionate sale price.
13. Being aggrieved by the judgment and decree dated 28.04.2010 of the
First Appellate Court, the defendants preferred Second Appeal being S.A.
No. 815 of 2011 before the High Court of Judicature of Andhra Pradesh at
Hyderabad whereby the High Court vide order dated 4.11.2011 dismissed the
Second Appeal which is impugned in this appeal.
14. The High Court held that the approach of the First Appellate Court in
granting the relief of specific performance directing defendants 1, 2, 4
and 5 to execute sale deed in respect of their shares, i.e. 4/6th share of
the suit schedule property in favour of the plaintiffs on receipt of their
respective balance consideration which stood deposited in the court, cannot
be faulted with.
15. It was further held by the High Court that the mother of the
defendants was alive when the suit was instituted in 1995 and she died on
29.09.2005. She had one share and after her death, the property would be
divided into 6 shares and the agreement was held as binding on the
defendants 1, 2, 4 and 5. Therefore, the High Court upheld the decision of
the First Appellate Court and moulded the relief in the above terms while
granting decree of specific performance of the Agreement of Sale by
executing the sale deed of their share in the property in favour of the
plaintiffs.
16. The following submissions were made by the learned counsel for both
the parties in support of their claim and counter claim.
17. On behalf of the defendant Nos.1 & 2, it is contended that their
father Pemmada Venkateswara Rao was engaged in lathe works which incurred
heavy loss and he was allegedly indebted to various creditors. They
approached one Murali Krishna (who had acquaintance with them) who was the
Secretary of the plaintiff Association to borrow some money. Taking
advantage of their situation, the Secretary and the President of the
Plaintiff Association obtained the signatures of defendant Nos. 1 and 2 on
a blank sheet of paper and gave Rs.5000/- on 3.5.1993 and Rs.10,000/- on
6.8.1993 to them.
18. It was further contended by the learned counsel that the defendants
never intended to sell the suit schedule property and the transaction with
the plaintiffs Association was only money transaction and was not a sale
transaction with it. A separate written statement was filed by the 4th
defendant to the same effect.
19. It was further contended by defendant Nos. 1 to 6 that even on the
date of execution of Agreement of Sale their mother was very much alive
and, therefore in the absence of execution of Agreement of Sale by all the
seven co-sharers of the suit schedule property the suit for specific
performance does not lie. The learned counsel for the defendants placed
reliance on the decisions of Andhra Pradesh High Court and this Court in
the cases of Kommisetti Venkatasubbayya v. Karamestti Venkateswarlu[1] and
Lourdu Mari David & Ors. v. Louis Chinnaya Arogiaswamy & Ors.[2] in support
of their claim.
20. Further, they placed reliance upon the case of this Court in
Rameshwar & Ors. v. Jot Ram & Anr.[3]. In the said authority it has been
held as follows:
“9…First, its bearing on the right of action, second, on the nature of the
relief and third, on its impotence to create or destroy substantive rights.
Where the nature of the relief, as originally sought, has become obsolete
or unserviceable or a new form of relief will be more efficacious on
account of developments subsequent to the suit or even during the appellate
stage, it is but fair that the relief is moulded, varied or reshaped in the
light of updated facts. Patterson illustrates this position. It is
important that the party claiming the relief or change of relief must have
the same right from which either the first or the modified remedy may flow.
Subsequent events in the course of the case cannot be constitutive of
substantive rights enforceable in that very litigation except in a narrow
category (later spelt out) but may influence the equitable jurisdiction to
mould reliefs. Conversely, where rights have already vested in a party,
they cannot be nullified or negated by subsequent events save where there
is a change in the law and it is made applicable at any stage. Lachmeshwar
Prasad Shukul v. Keshwar Lal Chaudhuri falls in this category. Courts of
justice may, when the compelling equities of a case oblige them, shape
reliefs — cannot deny rights — to make them justly relevant in the updated
circumstances. Where the relief is discretionary, courts may exercise this
jurisdiction to avoid injustice. Likewise, where the right to the remedy
depends, under the statute itself, on the presence or absence of certain
basic facts at the time the relief is to be ultimately granted, the Court,
even in appeal, can take note of such supervening facts with fundamental
impact…”
(Emphasis supplied)
21. The High court held that defendants pleaded falsehood at the time of
execution of the Agreement of Sale by stating that their mother had
predeceased their father. The agreement and the endorsement thereon made by
defendant Nos.1 and 2 had swayed discretion of the High Court in favour of
the plaintiffs which is an Association engaged in the welfare of the
community.
22. The High Court further held that the suit schedule property was not
purchased for unlawful gain of an individual and that the First Appellate
Court considered the entire evidence on record and exercised its sound
jurisdiction and modified the judgment of the Trial Court by granting a
decree of specific performance as per the terms stipulated therein.
23. The High Court dismissed the second appeal without adverting to the
substantial questions of law that were framed in the second appeal at the
admission stage itself stating that there is no substantial question of
law for its adjudication. The First Appellate Court and the Second
Appellate Court committed serious error in law in not noticing the relevant
important findings of fact recorded by the Trial Court on the contentious
issues on proper appreciation of pleadings and evidence on record with
reference to the legal submission made on behalf of the parties. The Trial
Court after proper appreciation of evidence on record, particularly, Ex.-
A1, the Agreement of Sale, has held that it is not a valid agreement and no
rights can flow from it in favour of the plaintiffs in the light of the
fact that the signatures of defendant Nos. 1 and 2 were obtained on
different dates on blank papers as they were in financial crisis and that
fact is proved by producing Exs.-B1 to B-8 to show that the entire family
(defendant Nos. 1 to 6) were in financial crisis and they were forced to
pay the debts to their creditors. Therefore, they were in urgent need of
money and they approached the PW-1 for financial help, who obtained the
signatures of defendant Nos. 1 and 2 on blank paper and the same was
fabricated as a receipt. The said receipt was not signed by defendant Nos.
3 to 6. The mother of the defendant Nos. 1 and 2 is one of the co-sharers
of the suit schedule property as a class-I legal heir to succeed to the
intestate property of her deceased husband, which was his self acquired
property left by him, as he had purchased the same vide Sale-Deed document
No. 5174/1970 dated 24.11.1970 from his vendors. In fact, there is a
reference made in this regard in the Agreement of Sale executed by
defendant Nos. 1 and 2 to the effect that after demise of Pemmada
Venkateswara Rao, the father of defendant Nos. 1 to 6, the property
devolved upon them jointly and they are enjoying with absolute rights. As
per Section 8 of the Hindu Succession Act, 1956 the general rules of
succession would be applicable in the case of a male Hindu dying
intestate, relevant portion of which reads as under :-
“8. General rules of succession in the case of males.- The property of a
male Hindu dying intestate shall devolve according to the provisions of
this Chapter-
Firstly, upon the heirs, being the relatives specified in class I of the
Schedule;
XXX XXX XXX”
In the Schedule of the said Act, class I heirs are son, daughter, widow,
mother and others. In view of the enumeration of the class I heirs in the
Schedule, the mother and sisters of the defendant Nos. 1 and 2 are also co-
sharers of the property left intestate by the deceased Pemmada
Venkateswara Rao. As could be seen from the Agreement of Sale-Ex.-A1
undisputedly, the third brother and 3 sisters, (defendant Nos. 3 to 6) and
their mother have not executed the Agreement of Sale in favour of the
plaintiffs. Therefore, the same is not enforceable under Section 17 of the
Specific Relief Act, 1963. The mother lived upto September, 2005, the
aforesaid legal heirs of deceased Pemmada Venkateswara Rao got equal shares
in the suit schedule property.
24. It is further contended on behalf of the defendants that the First
Appellate Court and the High Court have failed in not applying the legal
principle laid down by this Court in the case of Lourdu Mari David & Ors.
(supra), wherein this Court held that the party who seeks to avail of the
equitable jurisdiction of a court and specific performance decree being
equitable relief must come to the court with clean hands. In other words,
the party who makes false allegations against the defendants does not come
with clean hands and therefore, it is not entitled to the equitable relief
of specific performance decree from the court.
25. Another legal contention urged on behalf of the defendants is that
the High Court has erroneously come to the conclusion on facts and evidence
on record and it has affirmed the divergent findings of fact recorded by
the First Appellate Court without examining and answering the substantial
questions of law framed in the Second Appeal and it has erroneously
dismissed the appeal holding that the suit schedule property was not
purchased by the plaintiffs for unlawful gain of an individual. The said
property is probably purchased by the plaintiffs to put it to use for the
purpose of the community. The High Court without considering the legal
submissions urged on behalf of the defendants adjudicated the rights of the
parties ignoring certain facts, evidence on record and legal contentions
urged. It has erroneously held that the plaintiffs are entitled for the
relief of specific performance while the Agreement of Sale is not
enforceable under Section 17 of the Specific Relief Act, 1963, in view of
the fact that all the legal heirs of the deceased Pemmada Venkateswara Rao
are not parties to the Agreement of Sale and the defendant Nos. 1 and 2 do
not have absolute title and right upon the entire suit schedule property.
Even assuming for the sake of argument that the Agreement of Sale is valid,
the same could not have been enforced against the defendants as the
plaintiffs have committed breach of the contract as agreed upon by them as
per clause 2 of the penultimate paragraph Nos. 2 and 3 of the Agreement of
Sale. The plaintiffs gave a sum of Rs.5,000/- & Rs. 10,000/- as an advance
amount towards sale consideration and the remaining sale consideration,
i.e.(i)an amount of Rs.1,70,000/- which was to be paid within 10 days from
the day of vacating the tenants in the property, (ii) Rs.50,000/- to be
paid on 30.11.1993 and the remaining sale consideration of Rs.1,50,000/- to
be paid on or before 30.3.1994 was not paid to the defendant Nos. 1 and 2.
26. It is also contended by the learned counsel that the First Appellate
Court and the Second Appellate Court have not exercised their discretionary
powers as required under Section 20(2) of the Specific Relief Act for
decreeing the specific performance in favour of the plaintiffs, even
though, the defendants have made out a case before the Trial Court that
the plaintiffs are not entitled for the decree for specific performance.
Therefore, the First Appellate Court and the Second
Appellate Court have gravely erred in not exercising their discretionary
power under Section 20(2) of the Specific Relief Act at the time of passing
decree for specific performance in favour of the plaintiffs, which is not
only erroneous in law but also vitiated in law and therefore, the same is
liable to be set aside.
27. On the contrary, the learned counsel for the plaintiffs has
sought to justify the impugned judgment contending that the Second
Appellate Court in exercise of its appellate jurisdiction after examining
the facts and evidence on record has held that the substantial questions of
law framed by the defendants in the second appeal, on the divergent
findings of fact recorded by the First Appellate Court would not arise.
Decreeing the suit by the First Appellate Court as prayed by the plaintiffs
is correct as it has set aside the decree of the Trial Court. It is further
urged that the High Court is right in dismissing the second appeal and
therefore, the same does not call for interference by this Court as there
is no substantial question of law which would arise for consideration.
Therefore, the learned counsel for the respondent-plaintiffs prayed for
dismissal of this civil appeal as the same is devoid of merit.
28. With reference to the above said rival contentions, the following
points would arise for our consideration :-
Whether the plaintiffs are entitled for the decree for specific
performance of the Agreement of Sale (Ex.-A1) when Agreement of
Sale entered between the plaintiffs and defendant Nos. 1 and 2
who do not have absolute title to the property?
Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the
other defendants/co-sharers is it valid, even assuming that Agreement of
Sale is valid, there is breach of terms and conditions of the Contract on
the part of the plaintiffs in not paying the sale consideration amount of
Rs. 1,70,000/- within 10 days from the day of vacating the tenants,
Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before
30.3.1994 to the defendants and plaintiffs are entitled for decree of
specific performance of the Agreement of Sale?
Whether the plaintiffs are entitled for discretionary relief of specific
performance under Section 20(2) of the Specific Relief Act when it has not
approached the court with clean hands?
What relief?
Answer to Point No. 1
29. It is an undisputed fact that the suit schedule property is self
acquired property by late Pemmada Venkateswara Rao as he had
purchased the said property vide Sale-Deed Document No.5174 of 1970
dated 24.11.1970 from his vendors. It is also an undisputed fact that the
said property is intestate property. He is survived by his wife, 3 sons and
3 daughters. The said property devolved upon them in view of Section 8 of
Chapter 2 of the Hindu Succession Act as the defendants are class I legal
heirs in the suit schedule property. Undisputedly, the Agreement of Sale-
Ex.-A1 is executed only by defendant Nos. 1 and 2. The 3rd son, mother and
3 sisters who have got equal shares in the property have not executed the
Agreement of Sale. In view of the matter, the Agreement of Sale executed by
defendant Nos. 1 and 2 who have no absolute right to property in question
cannot confer any right whatsoever upon the plaintiffs for grant of decree
of specific performance of Agreement of Sale in their favour. The said
agreement is not enforceable in law in view of Section 17 of the Specific
Relief Act in view of right accrued in favour of defendant Nos. 3 to 6
under Section 8 of the Hindu Succession Act. The provisions of Section 17
of the Specific Relief Act in categorical term expressly state that a
Contract to sell or let any immovable property cannot be specifically
enforced in favour of a vendor or lessor who does not have absolute title
and right upon the party. It is worthwhile to extract Section 17 of the
Specific Relief Act,1963 here :-
“17.-Contract to sell or let property by one who has no title, not
specifically enforceable.- A contract to sell or let any immovable property
cannot be specifically enforced in favour of a vendor or lessor;
(a) who, knowing not to have any title to the property, has contracted to
sell or let the property
(b) who, though he entered into the contract believing that he had a good
title to the property, cannot at the time fixed by the parties or by the
court for the completion of the sale or letting, give the purchaser or
lessee a title free from reasonable doubt.”
In view of the aforesaid provisions of the Specific Relief Act, the
Agreement of Sale entered between the plaintiffs and some of the co-sharers
who do not have the absolute title to the suit schedule property is not
enforceable in law. This aspect of the matter has not been properly
appreciated and considered by both the First Appellate Court and the Second
Appellate Court. Therefore, the impugned judgment is vitiated in law.
30. Even assuming for the sake of argument that the agreement is valid,
the names of three sons are mentioned in Agreement of Sale, out of whom the
agreement is executed by defendant Nos. 1 and 2 and they assured that they
would get the signatures of the 3rd brother namely, Srinivasa Rao and also
the remaining 3 sisters. At the time of execution of this agreement
signatures were not obtained. Therefore, the agreement is not executed by
all the co-sharers of the property which fact is evident from the recitals
of the document itself. Hence, the plaintiffs are not entitled for specific
performance decree. This vital factual and legal aspect has been ignored by
both the First Appellate Court and the Second Appellate Court. Therefore,
the impugned judgment is vitiated both on facts and law. Accordingly, the
point No. 1 is answered in favour of the defendants.
Answer to Point No. 2
31. The second point is also required to be answered against the
plaintiffs for the following reasons:-
As could be seen from the Agreement of Sale document marked as Ex.-A1 and
the pleadings of the parties payment of sale consideration was agreed to be
paid to the defendant Nos. 1 and 2 as per following terms of the agreement
:-
“… (i) an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within
10 days from the day of vacating the tenants in the property, (ii) Rs.
50,000/- shall be paid on 30.11.1993., (iii) the remaining sale
consideration of Rs.1,50,000/- shall be paid on or before 30.3.1994.”
32. It is an undisputed fact that except payment of Rs.5,000/- and
Rs.10,000/- paid by the purchaser-plaintiff No.1 to the defendant Nos. 1
and 2 according to the Agreement of Sale, the remaining installment i.e. an
amount of Rs.1,70,000/- which was to be paid to the Vendors within 10 days
from the day of vacating the tenants in the property was not paid. Even
assuming that the amount could have been paid had the tenants vacated the
schedule property then the remaining part of the sale consideration agreed
to be paid as notified under clauses (ii) and (iii) as per aforesaid
paragraph of the Agreement of Sale undisputedly not paid to the defendant
Nos. 1 and 2. Therefore, there is breach of contract on the part of the
plaintiffs as could be seen from the agreement of sale regarding the
payment of part sale consideration amount. For this reason itself
plaintiffs are not entitled for a decree of specific performance.
Answer to the Point Nos. 3
33. Point No. 3 is also answered in favour of the defendants for the
following reasons:-
It is an undisputed fact that the plaintiffs have not approached the Trial
Court with clean hands. It is evident from the pleadings of the Agreement
of Sale which is produced for the decree for specific performance of
Agreement of Sale as the plaintiffs did not obtain the signatures of all
the co-sharers of the property namely, the mother of the defendants, the
third brother and 3 sisters. Therefore, the agreement is not enforceable in
law as the persons who have executed the sale deed, did not have the
absolute title of the property. Apart from the said legal lacuna, the terms
and conditions of the Agreement of Sale for payment of sale consideration
agreed to be paid by the first plaintiff in installments within the period
stipulated as indicated above were not paid. The First Appellate Court and
the High Court have not exercised their power under Section 20(2) of the
Specific Relief Act which by itself is the substantial question of law
which fell for consideration before the High Court as the First Appellate
Court failed to consider this important aspect of the matter and exercised
its power while determining the rights of the party, particularly, in the
light of the unenforceable contract between the plaintiffs against the
defendants as all of them are not parties to the Agreement of Sale document
(Ex.-A1) and the executants viz. defendant Nos. 1 and 2 have not acquired
absolute title to the property in question. Therefore, the impugned
judgment is vitiated and liable to be set aside.
Answer to Point No. 4
34. Though we have answered the questions of law framed in this appeal in
favour of the defendants, the learned counsel for the defendants during the
course of arguments, has offered some monetary compensation in favour of
the plaintiffs if this Court set aside the impugned judgment and decree of
specific performance granted in their favour. Though, the defendants on
merits have succeeded in this case for the reasons recorded by us on the
substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and
circumstances of the case particularly, the execution of Agreement of Sale,
Ex. A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part
consideration of Rs.15,000/-, and the submission made by the learned
counsel for the defendants, it would be just and proper for this Court to
award a sum of Rs.6,00,000/- by lump-sum amount of compensation to the
plaintiffs within 3 months from the date of receipt of a copy of this
judgment as provided under Section 22 of the Specific Relief Act.
35. Since, we have answered point Nos. 1 to 4 in favour of the defendants
and against the plaintiffs, the appeal of the defendants must succeed.
Accordingly, the impugned judgment and decree passed by the High Court in
affirming the judgment and decree of the First Appellate Court, is set
aside. The judgment and decree of the Trial Court is restored with
modification that the defendants shall pay a sum of Rs.6,00,000/- to the
plaintiffs as lump-sum compensation within 3 months from the date of
receipt of copy of this order. The appeal is allowed in the above said
terms. No costs.
……………………………………………………………………J.
[DIPAK MISRA]
……………………………………………………………………J.
[V. GOPALA GOWDA]
New Delhi,
August 20,2014
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[1] A.I.R. 197?
