LAW FOR ALL : It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that the plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties."

Friday, May 20, 2016

It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that the plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties."

It is settled law that even in the absence of specific plea by the opposite party, it is the mandate of the statute that the plaintiff has to comply with Section 16(c) of the Specific Relief Act and when there is non-compliance with this statutory mandate, the Court is not bound to grant specific performance and is left with no other alternative but to dismiss the suit. It is also clear that readiness to perform must be established throughout the relevant points of time. "Readiness and willingness" to perform the part of the contract has to be determined/ascertained from the conduct of the parties."

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 9821-9822 OF 2010

(Arising out of S.L.P. (C) Nos. 14985-14986 of 2010)

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

Versus

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

WITH

CIVIL APPEAL NOs. 9824-9825 OF 2010

(Arising out of S.L.P.(C) Nos. 15008-15009 of 2010)

AND

CIVIL APPEAL NO. 9826 OF 2010

(Arising out of S.L.P.(C) No. 17435 of 2010)

JUDGMENT

P. Sathasivam, J.

1) Leave granted in all the Special Leave Petitions.

2) These appeals seek to challenge the common

judgment and order dated 23.02.2010 passed by the

Division Bench of the High Court of Judicature at Madras

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

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

No. 708 of 2008 confirming the decree for specific

performance granted by the Principal District Court,

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

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

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

23405 of 2009 with certain directions. By a subsequent

order dated 29.04.2010, the High Court dismissed the

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

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

of 2009 preferred by the appellants herein.

Brief facts:-

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

acres 86 cents of land in Senthamangalam Village,

Sriperumbadur Taluk, Kancheepuram District comprised

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

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

owners of the suit property which they acquired under

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

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

financial assistance from the Indian Bank, (hereinafter

referred to as `the Bank') and for the said assistance

Appellant Nos. 1 and 2 herein offered their various

properties including the suit property as security for the

principal as well as interest amount payable by M/s

Anand Agency of which Appellant No. 2 is the sole

proprietor.

(b) On 15.08.2005, the appellants entered into a

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

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

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

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

same day. Balance sale consideration was to be paid

within three months from the date of obtaining

confirmation letter from the Bank.

addressed to the AGM, Indian Bank, Asset Recovery

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

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

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

letter dated 15.10.2005 advising them to revise the offer

with substantial improvement. By letter dated 23.01.2006,

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

any improvement in his One Time Settlement (in short

`OTS') proposal of Rs. 100 lakhs and hence the Bank is

proceeding to enforce its rights under the Securitization

and Reconstruction of Financial Assets and Enforcement

of Security Interests Act, 2002 (hereinafter referred to as

`the Act'). By letter dated 01.02.2006, Appellant No. 2

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

the loans availed by M/s Anand Agency.

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

Agreement with the appellants for purchase of the suit

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

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

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

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

lakhs by way of cheque as further advance to Appellant

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

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

by Respondent No. 1.

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

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

low, the Bank has decided to pursue the recovery

application filed before the Debts Recovery Tribunal,

(hereinafter referred to as `DRT') Chennai for the recovery

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

15.05.2006, the Bank stated that out of court settlement

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

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

outstanding as on 31.03.1993 be made. However, since

the settlement amount was more than the sale

consideration for the suit property, the Appellant No. 2

could not agree to pay the same.

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

to the appellants calling upon them to liquidate the loans

out of the amounts received from him and retrieve the

original documents from the Bank in order to execute the

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

replied to the notice stating that the first respondent had

not paid the balance sale consideration in spite of

repeated requests and raised doubt that the first

respondent is no longer interested to buy the suit

property, therefore, a legal notice was sent calling upon

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

damages.

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

of 2006 before the Principal District Judge, Chengalpet

against the appellants and the Bank. By judgment and

decree dated 30.04.2008, the Principal District Judge,

Chengalpet decreed the suit partly, granting the relief of

specific performance directing appellant Nos. 1 & 2 herein

to specifically perform their part of the obligations arising

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

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

on receipt of the balance sale consideration of Rs.

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

Further the relief in respect of permanent injunction

restraining the appellants from alienating or encumbering

or dealing with the subject property was granted. The

prayer for mandatory injunction for directing the

appellants to discharge the loan in respect of DRT

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

retrieve the documents and deliver the same to

Respondent No. 1 at the time of execution and registration

of sale deed was refused. Challenging the rejection of the

prayer of mandatory injunction and failure to award costs,

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

High Court of Madras along with interim applications

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

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

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

18.04.2009, the Division Bench of the High Court passed

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

1 of 2009 restraining the appellants herein from

alienating, encumbering or dealing with the suit property

pending appeal.

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

withdrawing its OTS offer of Rs. 629.60 lakhs and called

upon the appellants to pay the total amount due along

with future interest, costs and charges. By order dated

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

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

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

Agency. Pursuant to the order, the Recovery Officer

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

2009 and also issued the 1st sale notification dated

23.10.2009 bringing to sale the suit property. The upset

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

fixed as 25.11.2009.

(i) Challenging the decree for specific performance

granted by the Principal Judge, Chengalpet, the

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

Court which was admitted by the Division Bench on

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

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

Court praying for a writ of mandamus for bringing the suit

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

Principal District Judge, Chengalpat in his favour and also

filed Miscellaneous Petition in the aforesaid writ petition

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

of the property covered by the decree dated 30.04.2008

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

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

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

dismissed by the Division Bench.

(j) Questioning the auction sale proposed to be

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

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

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

praying for release of the scheduled property and stay of

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

Chennai dismissed the said applications. On 24.11.2009,

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

this Court challenging the order dated 16.11.2009 passed

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

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

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

the order dated 18.04.2009 passed by the Division Bench

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

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

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

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

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

On 11.12.2009, this Court dismissed the SLPs filed by

Respondent No. 1.

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

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

Respondent No. 1 herein directing him to deposit the

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

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

the appellants herein to execute the sale deed conveying

the subject property to Respondent No. 1 and the Bank

was directed to proceed against the various other

properties of the appellants being the subject matter of

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

The appellants preferred Review Petition No. 37 of 2010

before the High Court which was dismissed on

29.04.2010. Being aggrieved by the impugned judgment

dated 23.02.2010 and order dated 29.04.2010, the

appellants have preferred these appeals by way of special

leave petitions before this Court.

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

Chidambaram, learned senior counsel for the appellants

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

respondent No.1 and Mr. Himanshu Munshi, learned

counsel for respondent No.2-Bank.

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

the appellants after taking us through the pleadings, judgment

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

Court raised the following contentions:

i) The plaintiff has not established "readiness and

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

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

have granted discretionary relief of decree for specific

performance.

ii) Inasmuch as the agreement being a contingent

contract, which is impossible to fulfil and cannot be

implemented, in such circumstance, whether the

Courts below are justified in granting the relief in

favour of the plaintiffs.

iii) Whether the right of marshaling by subsequent

purchaser as provided in Section 56 of the Transfer of

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

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

performance and whether the High Court is justified in

granting such a relief in the absence of any pleading

and issue before the trial Court.

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

petition filed under Art. 226 of the Constitution of

India along with the regular first appeal filed under

Section 96 C.P.C.

v) Whether the High Court is justified in issuing certain

directions to the Bank which are contrary to the orders

passed by the competent forum, namely, Debts

Recovery Tribunal.

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

favour of the plaintiff when the same was rightly

disallowed by the trial Court.

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

counsel for the first respondent, by drawing our attention to

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

appellate Court supported the ultimate decision of the High

Court. He submitted that -

i) The plaintiff has established his readiness and

willingness all along and the same was rightly

accepted by the trial Court and confirmed by the

High Court.

ii) The contract in question is not a contingent

contract in terms of Sections 31 and 32 of the

Indian Contract Act, 1872.

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

larger relief and the trial Court has confined to

lesser relief of decree for specific performance, the

plea of marshaling being a question of law and

taking note of equity and justice, the High Court

rightly applied the said principle and there is no

error warranting interference on this ground.

iv) The subject matter of the appeals and the relief

prayed for in the writ petition were interconnected,

hence the High Court is justified in disposing of the

writ petition along with the appeals.

v) Inasmuch as the plaintiff has succeeded partial

relief at the hands of the trial Court after paying

substantial court fee, the High Court is justified in

awarding cost which was omitted by the trial court.

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

ultimate decision by both the Courts below,

interference by this Court exercising jurisdiction

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

leave, this Court has ample power to dismiss the

appeal without going into all the issues.

7) We have considered the rival contentions and perused all

the relevant materials in the form of oral and documentary

evidence.

Readiness and Willingness

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

personal bars to relief. This provision states that specific

performance of a contract cannot be enforced in favour of a

person,

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

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

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

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

subversion of, the relation intended to be established by the

contract; or

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

been ready and willing to perform the essential terms of the

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

performance of which has been prevented or waived by the

defendant.

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

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

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

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

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

willingness to perform, the contract according to its true

construction."

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

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

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

However, it was later inserted with the recommendations of

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

the person seeking specific performance must prove that he

has performed or has been ready and willing to perform the

essential terms of the contract which are to be performed by

him.

9) The words "ready" and "willing" imply that the person

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

distinction between "readiness" and "willingness" is that the

former refers to financial capacity and the latter to the conduct

of the plaintiff wanting performance. Generally, readiness is

backed by willingness.

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

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

".....Section 16(c) of the Act envisages that plaintiff must

plead and prove that he had performed or has always been

ready and willing to perform the essential terms of the

contract which are to be performed by him, other than those

terms the performance of which has been prevented or

waived by the defendant. The continuous readiness and

willingness on the part of the plaintiff is a condition

precedent to grant the relief of specific performance. This

circumstance is material and relevant and is required to be

considered by the court while granting or refusing to grant

the relief. If the plaintiff fails to either aver or prove the

same, he must fail. To adjudge whether the plaintiff is ready

and willing to perform his part of the contract, the court

must take into consideration the conduct of the plaintiff

prior and subsequent to the filing of the suit alongwith other

attending circumstances. The amount of consideration

which he has to pay to the defendant must of necessity be

proved to be available. Right from the date of the execution

till date of the decree he must prove that he is ready and has

always been willing to perform his part of the contract. As

stated, the factum of his readiness and willingness to

perform his part of the contract is to be adjudged with

reference to the conduct of the party and the attending

circumstances. The court may infer from the facts and

circumstances whether the plaintiff was always ready and

willing to perform his part of the contract."

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

paras 19 and 21, this Court observed:

"It is indisputable that in a suit for specific performance of

contract the plaintiff must establish his readiness and

willingness to perform his part of contract. The question as

to whether the onus was discharged by the plaintiff or not

will depend upon the facts and circumstance of each case.

No strait-jacket formula can be laid down in this behalf....

The readiness and willingness on the part of the plaintiff to

perform his part of contract would also depend upon the

question as to whether the defendant did everything which

was required of him to be done in terms of the agreement for

sale."

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

"readiness and willingness" on the part of the plaintiff and it is

a condition precedent for obtaining relief of grant of specific

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

performance, the plaintiff must allege and prove a continuous

"readiness and willingness" to perform the contract on his part

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

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

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

"readiness and willingness" cannot be treated as a straight

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

the facts and circumstances relevant to the intention and

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

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

mandate of the statute that plaintiff has to comply with Section

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

compliance with this statutory mandate, the Court is not

bound to grant specific performance and is left with no other

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

readiness to perform must be established throughout the

relevant points of time. "Readiness and willingness" to perform

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

the conduct of the parties.

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

the plaintiff has established his case for decree for specific

performance.

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

contended that the plaintiff has miserably failed to prove that

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

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

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

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

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

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

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

Balance sale consideration was to be paid within three months

from the date of obtaining confirmation letter from the second

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

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

AGM, Indian Bank Assets Recovery Management Branch II,

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

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

advising to revise the offer with substantial improvement. By a

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

herein had not made any improvement in his one time

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

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

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

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

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

Agreement with the defendants for purchase of the suit

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

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

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

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

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

15.05.2006, the Bank rejected the one time settlement offer of

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

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

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

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

to pay the same.

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

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

business purpose of the vendors, the appellants have decided

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

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

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

undertaken to discharge the loans and hand over the original

title deeds of the said property to the plaintiff within three

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

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

03.02.2006. The recital also shows that the plaintiff has to

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

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

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

property and hand over the original title deeds for which the

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

18.04.2006, he had paid Rs.50 lakhs.

16) We have already adverted to the initial OTS proposal

dated 01.02.2006 expressing second defendant's willingness to

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

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

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

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

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

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

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

had reiterated and in fact asserted that he was always ready

with the money and duly pursuing the OTS along with

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

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

plea in the plaint about the payment and advance of

substantial amount, he also placed the relevant materials in

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

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

assertion in the form of specific plea in the plaint and

correspondence in the form of letter, his assertion in the

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

arriving at a conclusion that the plaintiff has proved and

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

the Specific Relief Act.

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

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

2) contended that the balance sale consideration has to be

paid within one week of the receipt of Confirmation Letter from

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

plaintiff was ready with the money within the prescribed

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

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

loan and without paying the amount within the prescribed

period, the plaintiff has committed breach of his obligations,

hence, the plaintiff is not permitted to blame the defendant

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

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

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

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

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

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

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

agreement to sell the suit property to discharge loans and

handover the original title deeds has been reiterated both in

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

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

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

and handover the original title deeds to the plaintiff. No

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

required by the vendors to release the documents from the

Bank. The plaintiff has demonstrated by placing oral and

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

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

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

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

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

Indian Overseas Bank, Sowcarpet Branch, Chennai. The

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

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

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

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

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

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

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

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

Bank, Alwarpet Branch, Chennai stating that the plaintiff is

maintaining Savings Bank Account No.726244658 in their

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

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

stating that credit balance of plaintiff's savings bank account

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

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

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

having sufficient cash and financial capacity to complete the

transaction. Further the plaintiff is required to pay the

balance amount of consideration only on the event of a

demand made for payment of further amount by the

defendants on the basis of the confirmation letter to be

obtained from the bank as per the agreement for sale under

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

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

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

intimated that he is prepared to get the sale executed while

perusing the aforesaid bank deposit receipts, it is clearly

revealed that the plaintiff was endowed with the means to pay

the sale consideration and had ever been prepared to do the

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

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

plaintiff did not respond for their request. As rightly pointed

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

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

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

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

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

which is factually incorrect and unacceptable. The only

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

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

account" of second defendant, the plaintiff has surreptitiously

withdrawn the said amount which had upset the settlement

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

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

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

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

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

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

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

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

Bank, the plaintiff has stated that he has deposited

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

Agency and that he has proposed to purchase the property

from them which was mortgaged to the Bank and after

acceptance of the compromise settlement, the amount can be

appropriated towards the compromise arrived. In the same

letter, the plaintiff has also informed that if the compromise

settlement is not materialized, the said deposit may be

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

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

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

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

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

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

lien account" by the plaintiff has no significance since

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

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

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

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

evidence and he also asserted that the same fact was orally

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

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

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

counsel for the first respondent-plaintiff that after receipt of

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

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

lakhs from the plaintiff on 18.04.2006 and made endorsement

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

rightly pointed out and correctly appreciated by the High

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

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

conclusion that the plaintiff had committed breach and was

not ready to perform his part of the contract.

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

oral and documentary evidence as to execution of agreement,

part-payment of sale consideration, having sufficient cash and

financial capacity to execute the sale deed, bank statements as

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

the view that the plaintiff has proved his "readiness" and

"willingness" to perform his part of obligation under the

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

High Court as to readiness and willingness to perform

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

absence of any acceptable contra evidence is to be confirmed.

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

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

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

senior counsel for the appellants.

Contingent Contracts

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

Nalini Chidambaram, learned senior counsel for the appellants

heavily contended that inasmuch as the contract was

depending upon uncertain events of the Indian Bank, agreeing

for OTS, the contract entered is contingent depending on the

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

various clauses insists certain impossible conditions at the

hands of the Indian Bank, the contract entered into between

the plaintiff and defendants become impossible and void.

Though such an argument was advanced before us, there was

no such specific plea in their written statement and the Trial

Court has not framed separate issue and considered the same.

Irrespective of the above position, in view of the assertion

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

our answer.

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

Contingent Contracts. Contingent contract has been defined

in Section 31 and method of enforcement is stated in Section

32 which reads as under:

"31. "Contingent contract" defined.-- A "contingent

contract" is a contract to do or not to do something, if some

event, collateral to such contract, does or does not happen.

32. Enforcement of contracts contingent on an event

happening.-- Contingent contracts to do or not to do

anything if an uncertain future event happens, cannot be

enforced by law unless and until that event has happened.

If the event becomes impossible, such contracts become

void."

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

the contract is impossible, undoubtedly, such contracts

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

events enumerated in the contract, according to Ms. Nalini

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

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

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

documents directly to the plaintiff. While elaborating the said

points, learned senior counsel highlighted that for executing

the sale deed, getting confirmation or clearance letter from the

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

original documents have been emphasized in various clauses

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

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

conditions have been enumerated in the above referred

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

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

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

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

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

Agreement for Sale dated 03.02.2006 is a fresh agreement

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

the parties. We have once again perused various clauses in

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

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

has been specifically pleaded wherein it was highlighted that

the plaintiff sought for performance of contract strictly in

accordance with the original Memorandum of Understanding

(MoU) dated 15.08.2005 as emerged with the agreement for

sale dated 03.02.2006 entered into between the plaintiff and

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

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

the plaintiff in his rejoinder notice dated 31.07.2006

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

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

the same. In those circumstances, we agree with the

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

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

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

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

vendor and defendant Nos. 1 and 2 have undertaken to

discharge their loans and hand over title deeds. The relevant

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

"......3. The balance of sale consideration shall be paid by the

PURCHASER TO THE VENDORS on or before the

Registration of the Deed of Sale.

4. The Vendor undertake to discharge the Loans and hand

over the ORIGINAL TITLE DEEDS relating to Schedule

mentioned properties to the PURCHASER, within three

months from this date for scrutiny of title. HOWEVER, the

purchaser has to pay further advance if any required by the

VENDORS, to release the documents from Bank.

6. The sale shall be completed within six months from the

date of production of ORIGINAL DOCUMENTS by the

VENDORS to the Purchaser....."

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

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

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

cannot be contended that the contract was a contingent

contract and unless and until a letter of confirmation issued

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

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

sell the property but agreed to execute the sale deed after

discharge of the mortgage in favour of the defendants. In

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

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

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

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

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

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

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

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

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

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

advance and after getting the amount from the plaintiff,

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

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

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

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

requiring the plaintiff to make further advance. In the earlier

paragraphs, we have also highlighted the conduct of the

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

account for the purpose of meeting the demand of the

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

discharge the loans of the Bank and handover the original title

deeds to the plaintiff cannot be construed as impossible event

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

particularly, when the plaintiff deposited substantial amount

facilitating the defendant Nos. 1 and 2 to meet their

requirement for fulfilling the contract. As rightly observed by

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

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

termed as a contingent contract.

23) As stated earlier, merely because the contract insist

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

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

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

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

contract is not a contingent contract and undoubtedly, the

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

Obtaining No Objection Certificate (NOC) from the authority

concerned, clearance of NOC from Income Tax Department or

any other State/Central authority, securing title deeds after

clearing certain loans are incidental and implied covenant on

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

agreement.

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

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

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

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

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

considering the amount borrowed by the sister agency of the

Ist defendant and various properties possessed by defendant

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

the sub-urban areas of Chennai.

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

of performance and the contention of the learned senior

counsel for the appellants that it is a contingent contract and

is incapable of performance cannot be accepted. We have

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

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

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

bother to explain all salient features by entering the witness

box in support of their claim. We have already highlighted

that the plaintiff has established that he has partially

performed his part of obligations by paying the advance

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

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

has proved his readiness and willingness and financial ability

to complete the sale transaction. Accordingly, we reject the

second contention also.

Marshalling

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

having secured a decree for specific performance as per

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

Marshalling, directions may be issued to the Bank to exhaust

its remedy from other items of property which are located in

the prime places in Chennai before bringing the properties

covered in the agreement of sale.

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

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

Section 56 of the T. P. Act.

"56. Marshalling by subsequent purchaser.--If the owner

of two or more properties mortgages them to one person and

then sells one or more of the properties to another person,

the buyer is, in the absence of a contract to the contrary,

entitled to have the mortgaged-debt satisfied out of the

property or properties not sold to him, so far as the same will

extend, but not so as to prejudice the rights of the mortgagee

or persons claiming under him or of any other person who

has for consideration acquired an interest in any of the

properties."

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

marshalling securities. The High Court after noting that the

plaintiff had paid substantial amount as advance and secured

decree for specific performance, came to the conclusion that

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

deals with the right of subsequent purchaser to claim

marshalling. It should be contrasted with Section 81 which

refers to marshalling by a subsequent mortgage. The concept

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

81 which applies to mortgages alone.

28) The concept of marshalling by subsequent purchaser can

be explained by the following illustration. Suppose A owns

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

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

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

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

after property Y is exhausted there still remains balance of

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

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

transaction involved in subsequent sale, on the other hand,

Section 81 is applicable only to mortgages. The doctrine of

marshalling rests upon the principle that a creditor who has

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

by the exercise of his right, prejudice another creditor whose

security comprises only one of the funds.

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

which results into decree for specific performance, the plaintiff

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

mortgage debt satisfied out of the properties not sold to the

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

then to proceed against the said suit properties. Learned

senior counsel for the appellants strongly objected the

application of the principle of marshalling by subsequent

purchaser by the High Court when the plea of marshalling was

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

according to them, without taking such plea before the trial

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

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

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

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

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

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

the plaintiff has prayed for the following reliefs.

(i) "directing the Defendant Nos. 1 and 2 to specifically

perform the Agreement for Sale Deed dated 03.02.2006 in

respect of the suit schedule mentioned property which is

more fully described in the schedule hereunder, by

executing a Deed of Sale or Deeds of Sale and register a

valid conveyance in favour of the Plaintiff or his nominee

or nominees on a date to be fixed by this Court and/or in

default, direct the officer of this Court to convey the suit

schedule mentioned property on behalf of the Ist and 2nd

Defendants herein in favour of the plaintiff or his nominee

or nominees on a date to be fixed by this Court on receipt

of the balance sale consideration of Rs. 4,80,48,000/-

payable by the Plaintiff to them.

(ii) For a mandatory injunction directing the 1st and 2nd

Defendants to discharge the loan payable to the 3rd

Defendant Bank in respect of DRT proceedings pending

on the file of DRT, Chennai as per the terms of the

contract dated 03.02.2006 thereby retrieve the

documents and deliver the same to the plaintiff at time of

execution and registration of Sale Deed or Sale Deeds in

favour of the plaintiff or his nominee or nominees either

in one lot or in pieces as the case may be.

(iii) Not pressed, deleted.

(iv) For a permanent injunction restraining the Defendants 1

and 2, their men, servants, agents, or any one claiming

through them or authorized by them in any manner

alienating, encumbering or dealing with the suit schedule

mentioned property either by way of sale, mortgage, lease,

joint-development, or otherwise, or putting up any

construction thereon except in accordance with law.

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

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

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

impression that the trial Court would grant the entire relief as

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

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

counsel appearing for the plaintiff was right in highlighting

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

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

rightly observed by the High Court, the plea of marshalling

being pure question of law based upon the decree obtained for

specific performance, cannot simply be thrown out merely

because the same was not specifically pleaded.

31) Mrs. Nalini Chidambaram strongly contended that in the

absence of any plea the claim of marshalling cannot be applied

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

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

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

evidence or arguments can be looked into or considered in the

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

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

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

Appeal arising from a suit for bare injunction while reversing

the decision of the first Appellate Court, examined various

aspects relating to title and recorded findings and proceeded to

discuss and grant relief in the absence of pleadings and issues

regarding title. Similar view has been expressed in Bachhaj

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

relevant to extract the principles enunciated in para 23 of the

judgment which are as follows.

"23. It is fundamental that in a civil suit, relief to be granted

can be only with reference to the prayers made in the

pleadings. That apart, in civil suits, grant of relief is

circumscribed by various factors like court fee, limitation,

parties to the suits, as also grounds barring relief, like res

judicata, estoppel, acquiescence, non-joinder of causes of

action or parties, etc., which require pleading and proof.

Therefore, it would be hazardous to hold that in a civil suit

whatever be the relief that is prayed, the court can on

examination of facts grant any relief as it thinks fit. In a suit

for recovery of rupees one lakh, the court cannot grant a

decree for rupees ten lakhs. In a suit for recovery possession

of property `A', court cannot grant possession of property `B'.

In a suit praying for permanent injunction, court cannot

grant a relief of declaration or possession. The jurisdiction to

grant relief in a civil suit necessarily depends on the

pleadings, prayer, court fee paid, evidence let in, etc."

In those circumstances, while reiterating the principles laid

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

case on hand.

32) We have already demonstrated the relief prayed in the

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

such circumstance, when a party is able to secure substantial

relief, namely, decree for specific performance with clearance

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

relief so as to render substantial justice between the parties.

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

in granting relief to the plaintiff.

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

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

Debts due to Banks and Financial Institutions Act, 1993 has

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

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

satisfied that by issuing such direction on the application of

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

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

is an admitted fact that the Bank has accepted the impugned

verdict of the High Court and did not challenge the same

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

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

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

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

High Court was conscious and also observed that if sale

proceeds of other items of properties are not sufficient to

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

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

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

cannot be permitted to become a device for destructing the

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

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

its obligations under the contract.

About Writ Petition:

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

appeals before the High Court, the very same plaintiff filed

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

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

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

India, praying for issuance of a writ of Mandamus forbearing

the respondents from bringing the scheduled property forming

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

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

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

Objections were raised by the appellants about the hearing of

the writ petition along with the appeals. We have already

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

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

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

and the same except Union of India against whom the writ

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

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

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

no bar for the Division Bench which has jurisdiction to hear

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

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

the High Court for hearing the writ petition along with the

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

parties have filed special leave petitions against certain interim

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

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

clarification or direction was sought in respect of the said

order passed by this Court.

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

that the writ petitioner has highlighted the applicability of the

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

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

have been highlighted. Since the appellants have seriously

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

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

grounds hereunder:

(j) "When there are other properties belonging to the Judgment

Debtors are available for auction sale for realization of the

D.R.C. issued the suit properties are brought to auction

sale, leaving out the other valuable properties of the

Respondent Nos. 1 & 2 at Chennai and the property covered

by the decree situate at Senthamangalam village are

brought to sale and the said action of the respondents

would defeat and frustrate the decree for specific

performance granted in favour of the petitioner herein.

(k) When there are more than one property belonging to the

borrowers are available leaving out all the properties

including the 3 valuable properties at Chennai are left from

auction sale and the property situate at Senthamangalam

village (forming the decree property) would demonstrate that

the respondent bank with tacit understanding with the

borrowers is attempting to destroy the rights of the Decree

Holder who is holding a decree for specific performance

which has not been stayed by the High Court, Madras and

the respondent bank is not willing to receive the monies

offered by the petitioner on behalf of the Respondents 4, 5

and 6 ever since the inception of the suit in August 2006 till

date which would demonstrate the motive of the bank in

indulging in dilatory tactics, the Respondents 2 and 3 in

collusion and connivance of the respondents 4, 5 and 6 are

bringing the property covered by the decree solely with a

view to frustrate the decree secured by the petitioner

herein."

Though the plea of `marshalling' has not been specifically

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

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

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

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

we have already concurred with the High Court in applying the

said principle considering the larger relief prayed for in the

suit and the plaintiff was having a decree for specific

performance subject to clearance of mortgage loan with the

Bank.

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

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

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

equitable doctrine exists for the benefit of the buyer alone.

Following the said decision of the Lahore High Court, Karam

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

Court at Delhi 477 reiterated the same principle.

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

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

quote:.

"The other submission of learned counsel was that the

learned Judges failed to give effect to the last portion of

Section 56 under which marshalling is not to be permitted

so as to prejudice the rights inter alia of the mortgagees or

other persons claiming under him i.e. under the original

mortgagor. Learned counsel pointed out that the appellant

having proved his mortgage and the fact that it was

subsisting, the learned Judges of the High Court ought to

have held that any direction as to marshalling must

necessarily prejudice him. We are unable to agree that this

follows as any matter of law. The question of prejudice is

purely one of fact which has to be pleaded and the necessary

facts and circumstances established. It is obvious that the

question of prejudice would be intimately connected with the

value of the property against which the mortgagee is directed

to proceed in the first instance. If even after paying off such

a mortgage there is enough left for payment over to the

subsequent encumbrancer referred to in the last portion of

Section 56 it would be manifest that there would be no

question of prejudice. If therefore the appellant desired to

invoke the benefit of the last portion of Section 56 he should

have made some plea as to the value of the property and

shown how it would prejudice his rights as a subsequent

encumbrancer. He however made no such plea and no

evidence was led as to the value of the property. Even at the

stage of the appeal in the High Court the contention that to

allow marshalling in favour of the subsequent purchaser --

Mukhamal would result in prejudice to him was admittedly

never put forward before the learned Judges. As the point is

one not of pure law but springs from the factual inadequacy

of the property mortgaged to him to discharge his debt it is

too late for the appellant to raise such a plea in this Court."

It is clear that the application of the principle of marshalling

may cause prejudice to the other party, but their Lordships

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

depends upon various factors.

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

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

satisfied that the High Court is right in applying the principle

of marshalling in favour of the plaintiff that too by

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

the Bank did not challenge the impugned judgment of the

High Court. Accordingly, we reject the contrary arguments

made in respect of applying the principle of marshalling at the

appellate stage.

Cost

40) Though no serious argument was advanced about the

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

appellants have agitated the award of cost by the High Court

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

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

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

secured a decree for specific performance though he could not

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

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

relief, namely, decree for specific performance subject to

clearance of the mortgage debt. In those circumstances, the

High Court having noticed the payment of substantial court

fee ordered cost payable by the contesting defendant Nos. 1

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

Direction to the Recovery Officer/Tribunal

41) Learned senior counsel for the appellants contended that

the jurisdiction of Recovery officer/Tribunal is exclusive and

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

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

406, State Bank of India vs. Allied Chemical Laboratories

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

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

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

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

Court taking note of the fact that it had considered various

connected issues in respect of the same properties in which

both the Civil Court and the DRT passed several orders and

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

other properties in prime locations at Chennai and other

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

also party to both these proceedings and accepted the

impugned order of the High Court and not filed any appeal

before this Court, we feel that the direction/clarification

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

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

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

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

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

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

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

the said properties.

Interference under Article 136 of the Constitution of India

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

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

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

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

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

view of the concurrent findings by the Trial Court and the

High Court about the decree for specific performance and

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

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

appeals even without assigning any reason.

43) In Balvantrai Chimanlal Trivedi, Manager Raipur

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

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

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

of this Court has concluded:

"5. The question then arises whether we should interfere in

our jurisdiction under Article 136 of the Constitution, when

we are satisfied that there was no failure of justice. In

similar circumstances this court refused to interfere and did

not go into the question of jurisdiction on the ground that

this Court could refuse interference unless it was satisfied

that the justice of the case required it: see A.M. Allison vs.

B.L. Sen, (1957) SCR 359: ((S) AIR 1957 SC 227). On a

parity of reasoning we are of opinion that as we are not

satisfied that the justice of the case requires interference in

the circumstances, we should refuse to interfere with the

order of the High Court dismissing the writ petition of the

appellant. We accordingly dismiss the appeal, but having

regard to the peculiar circumstances of the case which we

have referred to above we order that each party will bear its

own costs of this appeal."

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

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

this Court, while considering the jurisdiction of this Court

under Article 136, has held:

"....It is necessary to remember that wide as are our powers

under Article 136, their exercise is discretionary; and if it is

conceded, as it was in the course of the arguments, that this

Court could have dismissed the appellant's application for

special leave summarily on the ground that the order under

appeal had done substantial justice, it is difficult to

appreciate the argument that because leave has been

granted this Court must always and in every case deal with

the merits even though it is satisfied that ends of justice do

not justify its interference in a given case. In the

circumstances we are of opinion that this Court was not

bound to decide the question of jurisdiction on the facts and

circumstances of this case when it had come to the

conclusion in dealing with an appeal under Article 136 of the

Constitution that there was no failure of justice. The review

application therefore fails and is hereby dismissed with

costs."

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

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

consideration.

"(2) Whether the discretionary power available to this Court

at the time of grant of special leave continues with the Court

even after grant of special leave and when the appeal is being

heard on merits and whether, this Court could declare the

law and yet not interfere or could mould the relief? Or

whether, once the law is declared, this Court is bound to

grant possession and the mandatory injunction?

Their Lordships have held:

15. It is now well settled that though special leave is granted,

the discretionary power which vested in the Court at the

stage of the special leave petition continues to remain with

the Court even at the stage when the appeal comes up for

hearing and when both sides are heard on merits in the

appeal. This principle is applicable to all kinds of appeals

admitted by special leave under Article 136, irrespective of

the nature of the subject - matter. It was so laid down by a

Constitution Bench of five learned Judges of this Court in

Pritam Singh v. State. In that case, it was argued for the

appellant that once special leave was granted and the matter

was registered as an appeal, the case should be disposed of

on merits on all points and that the discretionary power

available at the stage of grant of special leave was not

available when the appeal was being heard on merits.

20. In view of the above decisions, even though we are now

dealing with the appeal after grant of special leave, we are

not bound to go into merits and even if we do so and declare

the law or point out the error -- still we may not interfere if

the justice of the case on facts does not require interference

or if we feel that the relief could be moulded in a different

fashion. We have already referred to the various

circumstances of the case which show that the plaintiff, on

her own admission, had knowledge of the trespass in

December 1967 and did not raise any objection to the

construction of the two rooms though she was the adjacent

neighbour. She gave notice only after 7 years in 1974 and

she filed suit in 1975. These two rooms have been there for

the last 30 years. In those circumstances, we declare the law

by holding that the High Court while dealing with a second

appeal under Section 100 CPC erred in not framing a

substantial question of law and that it also erred in

interfering with a pure question of fact relating to the

genuineness of the agreement. We declare that this was not

permissible in law. Even while so declaring, we hold that in

the peculiar circumstances referred to above, this is not a fit

case for interference and that in exercise of our discretion

under Article 136, -- a discretion which continues with us

even after the grant of special leave, -- the decree passed by

the High Court dismissing the suit for possession need not

be interfered with and the two rooms need not be

demolished. The plaintiff could be adequately compensated

by way of damages......"

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

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

following the principle in Taherakhaton (supra), held:

"42. In any event, even assuming that there is some force in

the contention of the appellants, this Court will be justified

in following Taherakhatoon v. Salambin Mohd. wherein this

Court declared that even if the appellants' contention is right

in law having regard to the overall circumstances of the case,

this Court would be justified in declining to grant relief

under Article 136 while declaring the law in favour of the

appellants.

43. Issuance of a writ of certiorari is a discretionary remedy.

(See Champalal Binani v. CIT) The High Court and

consequently this Court while exercising their extraordinary

jurisdiction under Article 226 or 32 of the Constitution of

India may not strike down an illegal order although it would

be lawful to do so. In a given case, the High Court or this

Court may refuse to extend the benefit of a discretionary

relief to the applicant. Furthermore, this Court exercised its

discretionary jurisdiction under Article 136 of the

Constitution of India which need not be exercised in a case

where the impugned judgment is found to be erroneous if by

reason thereof substantial justice is being done. [See S.D.S.

Shipping (P) Ltd. v. Jay Container Services Co. (P) Ltd.] Such a

relief can be denied, inter alia, when it would be opposed to

public policy or in a case where quashing of an illegal order

would revive another illegal one. This Court also in exercise

of its jurisdiction under Article 142 of the Constitution of

India is entitled to pass such order which will do complete

justice to the parties.

45. This Court said that this principle applies to all kinds of

appeals admitted by special leave under Article 136,

irrespective of the nature of the subject-matter. So even after

the appeal is admitted and special leave is granted, the

appellants must show that exceptional and special

circumstances exist, and that, if there is no interference,

substantial and grave injustice will result and that the case

has features of sufficient gravity to warrant a review of the

decision appealed against on merits. So this Court may

declare the law or point out the lower court's error, still it

may not interfere if special circumstances are not shown to

exist and the justice of the case on facts does not require

interference or if it feels the relief could be moulded in a

different fashion.

46. The observations made in paras 15-20 of Taherakhatoon

can be usefully applied to the facts and circumstances of the

case on hand."

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

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

irrespective of the nature of the subject matter, the appellants

must show that exceptional and special circumstances exists

and if there is no interference by this Court substantial and

grave injustice will result and that the case has features of

sufficient gravity to warrant a decision from this Court on

merits.

Conclusion

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

the factual findings rendered by the trial Court and the

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

specific performance and application of principle of

marshalling under Section 56 of the Transfer of Property Act,

we are in entire agreement with the conclusion arrived by the

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

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

matter of fact, after highlighting the jurisdiction under review,

the Division Bench of the High Court had taken pains to

discuss once again and rendered a finding on all aspects with

which we fully agree. Inasmuch as we are confirming the

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

to refer the affidavit of undertaking filed by the first

respondent herein and the objection raised by the appellants

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

conclusion and ultimate decision of the High Court, we grant

further time of three months from today for deposit of the

balance amount as directed by the High Court in paragraph

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

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

directed to execute the sale deed incorporating all the

directions and observations made in the judgment of the High

Court. Consequently, all the appeals are dismissed as devoid

of any merit with no order as to costs.

..........................................J.

(P. SATHASIVAM)

..........................................J.

(ANIL R. DAVE)

NEW DELHI;

NOVEMBER 22, 2010.

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