C.S. VENKATESH versus MURTHY (D) BY LRS. & ORS. on 7 February 2020

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SUPREME COURT REPORTS

[2020] 2 S.C.R.

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C.S. VENKATESH

v.

A.S.C. MURTHY (D) BY LRS. & ORS.

(Civil Appeal No. 8425 of 2009)

BFEBRUARY 07, 2020

[S. ABDUL NAZEER AND DEEPAK GUPTA, JJ.]

Specific Relief Act, 1963 – s.16(c) – Plaintiff (since deceased)alleged that site in question was allotted in his favour – Hecommenced construction of building thereon – Since he did notChave sufficient funds, defendants advanced money on condition ofpayment of interest – Plaintiff failed to pay it except for two months– Since the defendants were in need of accommodation, the plaintiffput them in possession of the schedule property by executingmortgage deed – As plaintiff could not pay the interest regularly,Ddefendants asked him to execute a nominal sale deed – Plaintiffexecuted sale deed dated 23.04.1975 in favour of the defendantsfor Rs.35,000/- – After defendants having received Rs.35,000/-advanced by them, the plaintiff demanded that the defendantsexecute reconveyance deed in terms of the agreement ofreconveyance dated 23.04.1975 – However, the defendants failedEto execute sale deed – Plaintiff filed suit against defendants interalia for specific performance of agreement of reconveyance dated23.04.1975 in respect of the schedule property – Dismissed by trialcourt negativing plaintiff’s claim that sale deed was a nominal oneobtained as a security for the amount advanced by the defendantsF– High Court allowed plaintiff’s appeal – Held: Real character ofthe transaction has to be ascertained from the provisions of thedocuments viewed in the light of surrounding circumstances – Sincetwo documents were executed on the same day, the transaction cannotbe a mortgage by way of conditional sale in view of the expressprovisions contained in s.58(c) of the 1882 Act – Perusal of recitalsGcontained in the sale deed shows that the property was agreed to besold absolutely for Rs.35,000/- – Since the execution of thereconveyance deed has already been established, question ofholding the sale deed to be nominal cannot be accepted – Plaintiffalleged that he was ready to pay Rs.35,000/- and called upon the H

defendants to execute the re-conveyance deed – However, in para11 of the plaint it is pleaded that the plaintiff was running contractbusiness wherein he suffered heavy loss and as such he gave up thebusiness – Mere plea that he is ready to pay the consideration,without any material to substantiate this plea, cannot be accepted –Judgment of High Court set aside and that of trial court is restored– Transfer of Property Act, 1882 – s.58(c).

Allowing the appeal, the Court

HELD: 1.1 A reading of the sale deed marked at ExhibitP-8, along with other surrounding circumstances, would clearlyindicate that it is an outright sale. The real character of thetransaction has to be ascertained from the provisions of thedocuments viewed in the light of surrounding circumstances.Since two documents were executed on the same day, thetransaction cannot be a mortgage by way of conditional sale inview of the express provisions contained in Section 58(c) of theTransfer of Property Act, 1882. A perusal of the recitals containedin the sale deed at Exhibit P-8 shows that the property was agreedto be sold absolutely for a total consideration of Rs.35,000/-. Thelanguage employed in this document is plain and unambiguousand the intention of the parties is also very clear from its recitals.Even the evidence led by the parties does not indicate to thecontrary. The intention of the parties was to make the transactiona sale. Since the execution of the reconveyance deed has alreadybeen established, question of holding the sale deed to be nominalcannot be accepted. [Paras 12-13][682-G-H; 683-A-B, D-E]

1.2 The words ‘ready and willing’ imply that the plaintiffwas prepared to carry out those parts of the contract to theirlogical end so far as they depend upon his performance. Thecontinuous readiness and willingness on the part of the plaintiffis a condition precedent to grant the relief of performance. If theplaintiff fails to either aver or prove the same, he must fail. Toadjudge whether the plaintiff is ready and willing to perform hispart of contract, the court must take into consideration theconduct of the plaintiff prior, and subsequent to the filing of thesuit along with other attending circumstances. The amount whichhe has to pay the defendant must be of necessity to be proved tobe available. Right from the date of the execution of the contract AB

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Atill the date of decree, he must prove that he is ready and willingto perform his part of the contract. The court may infer from thefacts and circumstances whether the plaintiff was ready and wasalways ready to perform his contract. The plaintiff alleged that hewas ready to pay Rs.35,000/- to the defendants and called uponthem to execute the re-conveyance deed. However, in para 11 ofBthe plaint it is pleaded that the plaintiff was running contractbusiness wherein he suffered heavy loss and as such he gave upthe business. It is also pleaded that at present the plaintiff has nobusiness or profession and has no source of income. He has noproperty, either movable or immovable. Mere plea that he is readyCto pay the consideration, without any material to substantiate thisplea, cannot be accepted. It is not necessary for the plaintiff toproduce ready money, but it is mandatory on his part to provethat he has the means to generate the consideration amount.Except the statement of PW-1, there is absolutely no evidenceto show that the plaintiff has the means to make arrangementsDfor payment of consideration under the reconveyance agreement.The trial court rightly held that the plaintiff was not ready andwilling to perform his part of the contract. The High Court wasnot justified in reversing the well-reasoned judgment of the trialcourt. [Paras 15, 20, 23][683-G-H; 684-A-B; 685-F-H; 686-A-B,E-F]EN.P. Thirugnanam (Dead) by LRs. v. Dr. R. Jagan MohanRao and Others (1995) 5 SCC 115 : [1995] 2 Suppl.SCR 53; Pushparani S. Sundaram and Others v. PaulineManomani James (deceased) and Others (2002) 9 SCC582; Umabai and Anr. v. Nilkanth Dhondiba ChavanF(Dead) by LRs. and Anr. (2005) 6 SCC 243 : [2005] 3SCR 521 – relied on.

Manjunath Anandappa URF Shivappa Hanasi v.Tammanasa and Others (2003) 10 SCC 390 : [2003] 2SCR 1068; Pukhraj D. Jain and Others v. G.GGopalakrishna (2004) 7 SCC 251 : [2004] 1 Suppl.SCR 324 – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8425of 2009.

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From the Judgment and Order dated 21.08.2006 of the High Courtof Karnataka at Bangalore in Regular First Appeal No. 626 of 2001.

S. N. Bhat, Adv. for the Appellant.

Trideep Pais, Ms. Sanya Kumar, N.K. Verma, Ms. AnjanaChandrashekar, Advs. for the Respondents.

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The Judgment of the Court was delivered by

S. ABDUL NAZEER, J.

1. This appeal is directed against the judgment and decree in RFANo.626 of 2001 dated 21.08.2006 passed by the High Court of Karnatakaat Bangalore, whereby the High Court has allowed the appeal and setaside the judgment and decree in O.S. No. 3308 of 1988 passed by theCivil Judge, Bangalore City.

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2. A.S.C. Murthy was the plaintiff in the suit. He died during thependency of the suit. Therefore, his wife Smt. Jayashree was broughton record as his legal representative. She is the first respondent in thisappeal. C.S. Venkatesh, the appellant herein, was defendant No.2 in thesuit. C. Sethurama Rao, was the defendant No.1 in the suit. He alsodied during the pendency of the suit, therefore, his wife Smt. C.S.Lalithamma was brought on record as his legal representative. She isarrayed as respondent No. 2A in this appeal. Defendant Nos. 3 and 4are respondent Nos. 3 and 4 in this appeal. The parties are hereinafterreferred to in their respective capacities before the trial court.

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3. The subject matter of the suit was the property situated at SiteNo. 522, 17[th] Main Banashankari, I Stage, First Block, Srinagar, Bangalore– 560 050 (hereinafter referred to as ‘the schedule property’).

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4. A.S.C. Murthy had filed the above suit against defendants forspecific performance of the agreement of reconveyance dated 23.04.1975in respect of the schedule property and alternatively to declare that thesale deed dated 23.04.1975 executed by him in favour of the defendants H

Ais null and void. It was alleged in the plaint that the City ImprovementTrust Board, Bangalore (for short ‘CITB’) had allotted the site in questionin favour of the plaintiff. Thereafter, he commenced construction of thebuilding on the said site. Since he did not have sufficient funds, heapproached the defendants for certain financial assistance. Accordingly,the defendants advanced a sum of Rs.2,000/- as loan. Subsequently, aBfurther sum of Rs.10,000/- was advanced on the condition of paymentof interest at the rate of 18% p.a. However, the plaintiff failed to pay theinterest on the said sum as agreed, except for a period of two months.Since the defendants were in need of accommodation, the plaintiff putthem in possession of the schedule property by executing a deed ofCmortgage dated 11.10.1973. According to the plaintiff, the defendantshave advanced, in all, a sum of Rs.29,000/-. As the plaintiff could notpay the interest regularly, the defendants asked the plaintiff to execute anominal sale deed in order to ensure prompt payment of interest.Accordingly, the plaintiff executed a deed of sale dated 23.04.1975 in favour of the defendants for a sale consideration of Rs.35,000/- byDreceiving Rs.6000/-, the difference in the sale price. It was alleged thatthe sale deed was executed as a security for the amount advanced bythe defendants. It was contended that the defendants executed anagreement of reconveyance in respect of the schedule property dated23.04.1975 in favour of the plaintiff. It was also agreed that the defendantsEwere put in possession of the schedule property on the understandingthat they need not pay rent and the plaintiff need not pay interest on theamount advanced by them to the plaintiff. After the expiry of five yearsand the defendants having received the sum of Rs.35,000/- advanced bythem, the plaintiff demanded that the defendants execute a reconveyancedeed in terms of the agreement of reconveyance dated 23.04.1975.FHowever, the defendants have failed to execute sale deed.

5. The second defendant filed the written statement admitting theexecution of the mortgage deed dated 11.10.1973 and borrowing of asum of Rs. 29,000/- by the plaintiff. It was contended that the defendants

agreed to reconvey the property and executed the reconveyanceGagreement prior to the execution of the sale deed. However, the plaintiffdid not agree for reconveyance. The plaintiff gave up his demand forreconveyance and executed the sale deed. It was contended that evenotherwise the reconveyance agreement was not to be acted upon. Itwas further contended that the plaintiff had borrowed the loan from theHbank on different occasions by mortgaging the title deeds of the property.

As the plaintiff failed to discharge his debt to the bank, the defendantspaid the said dues in order to save the schedule property from auction.It was also contended that there was no plea or proof regarding readinessand willingness to perform the plaintiff’s part of the contract as requiredunder Section 16(c) of the Specific Relief Act, 1963 (for short ‘the Act’).It was denied that the sale deed dated 23.04.1975 was nominal and wasexecuted for the purpose of security for the loan advanced by thedefendants.

6. On the basis of the pleadings of the parties, the trial court framedthe relevant issues. In support of the suit claim, wife of the deceasedplaintiff was examined as PW-1 and exhibited documents P-1 to P-19 inher evidence. The second defendant was examined as DW-1 and exhibitsD-1 to D-15 were marked in his evidence. On consideration of theevidence of the parties and materials on record, the trial court came to aconclusion that the plaintiff has established the execution of agreementof reconveyance. The Court also came to a conclusion that the saledeed dated 23.04.1975 was not a nominal one, as contended by theplaintiff. The Court recorded a finding that the plaintiff has averred inthe plaint that there was sufficient plea in relation to readiness andwillingness of the plaintiff to perform his part of the contract. However,it was held that the plaintiff had failed to prove that he was ready andwilling to perform the contract. Consequently, the trial court dismissedthe suit.

7. The plaintiff filed R.F.A. No. 626 of 2001, challenging thejudgment and decree of trial court. The High Court on consideration ofthe rival contentions of the parties held that the sale deed executed bythe plaintiff in favour of the defendants was security for the loan advancedby the defendants. Consequently, the High Court allowed the appeal.The defendants were directed to execute a deed of reconveyance inrespect of the schedule property in favour of the plaintiff.

8. Appearing for the appellant/defendant No.2, Shri S.N. Bhat,learned counsel submits that the suit filed by the plaintiff was for specificperformance of an agreement to reconvey. Therefore, he has to pleadand prove his readiness and willingness to pay the consideration amountto the defendants. In this case, the plaintiff has failed to plead and provehis readiness and willingness. He had no financial capacity to pay theconsideration amount. He did not discharge the earlier debt owed byhim to Sri Thyagaraja Co-operative Bank and the defendants had to pay A

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Aoff the debt in order to save the property. He had no capacity to pay theconsideration amount. It is further argued that the sale deed dated23.04.1975 was not a nominal sale deed, as contended. The High Courtinstead of upholding the well-reasoned judgment of the trial court hasset aside the said judgment and decreed the suit.

B9. On the other hand, Ms. Sanya Kumar, learned advocateappearing for the respondent-plaintiff has sought to justify the impugnedjudgment and decree of the High Court.

10. We have carefully considered the submissions of the learnedcounsel made at the Bar.

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11. The suit filed by the plaintiff was for specific performance ofthe agreement of reconveyance dated 23.04.1975. Alternatively, he hadalso sought for a declaration that the sale deed dated 23.04.1975 wasnull and void and not binding on the plaintiff. On appreciation of thematerials on record, the trial court has held that the plaintiff has provedDthe existence and execution of agreement of reconveyance. It hasnegatived the plaintiff’s claim that the sale deed was a nominal one.However, the High Court has held that the plaintiff had executed thesale deed in favour of the defendants as security for the loan advancedby the defendants and that it cannot be considered a sale. Further, theHigh Court has directed specific performance of the agreement ofEreconveyance. Therefore, the first question for consideration is whetherthe sale deed dated 23.04.1975 executed by the plaintiff in favour of thedefendants is a nominal sale deed obtained as security for the loanadvanced by the defendants.

12. Execution of the sale deed and the deed of reconveyance areFnot in dispute. According to the plaintiff, he could not pay the interestexcept for two months after the execution of the sale deed and that theunderstanding between the parties was that the defendants need notpay any rent and plaintiff need not pay the interest on the amountadvanced by them to the plaintiff. It was contended that sale deed wasGexecuted to ensure prompt payment of the amounts. But a reading ofthe sale deed marked at Exhibit P-8, along with other surroundingcircumstances, would clearly indicate that it is an outright sale.

13. It is settled that the real character of the transaction has to beascertained from the provisions of the documents viewed in the light ofsurrounding circumstances. Since two documents were executed on theH

same day, the transaction cannot be a mortgage by way of conditionalsale in view of the express provisions contained in Section 58(c) of theTransfer of Property Act, 1882. A perusal of the recitals contained in thesale deed at Exhibit P-8 shows that the property was agreed to be soldabsolutely for a total consideration of Rs.35,000/-. The plaintiff has alsostated that since possession has already been delivered earlier under adeed of mortgage, delivery of possession under this document does notarise. It was further stated that henceforth neither himself nor his heirshave any right, title or interest in the property and that the plaintiff isentitled to water, air, right of easement, etc. concerning the propertytogether with all rights, title and interest and right of disposal of theproperty. The defendant, his son and grandson, etc. unto posterity areentitled to enjoy the property without any obstruction or trouble either bythe plaintiff or from anyone claiming under him. He has delivered thepossession certificate issued by the CITB and Khata certificate fortransfer of Khata from Bangalore City Corporation. Thus, the languageemployed in this document is plain and unambiguous and the intention ofthe parties is also very clear from its recitals. Even the evidence led bythe parties does not indicate to the contrary. Thus, a careful perusal ofall the clauses of the sale deed and the evidence on record would clearlyshow that the intention of the parties was to make the transaction a sale.We are also of the view that since the execution of the reconveyancedeed has already been established, question of holding the sale deed tobe nominal cannot be accepted.

14. The next question for consideration is in relation to complianceof Section 16(c) of the Act by the plaintiff. Though a question was raisedbefore the trial court that there are no pleadings as regards the plaintiff’sreadiness and willingness to perform the contract, the trial court hasrightly held that there is sufficient compliance of Section 16(c) of theAct to the extent of pleadings. Therefore, the question to be consideredis whether the plaintiff was ready and willing to perform his part of thecontract.

15. The words ‘ready and willing’ imply that the plaintiff wasprepared to carry out those parts of the contract to their logical end sofar as they depend upon his performance. The continuous readiness andwillingness on the part of the plaintiff is a condition precedent to grantthe relief of performance. If the plaintiff fails to either aver or prove thesame, he must fail. To adjudge whether the plaintiff is ready and willing AB

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Ato perform his part of contract, the court must take into considerationthe conduct of the plaintiff prior, and subsequent to the filing of the suitalong with other attending circumstances. The amount which he has topay the defendant must be of necessity to be proved to be available.Right from the date of the execution of the contract till the date of decree,he must prove that he is ready and willing to perform his part of theBcontract. The court may infer from the facts and circumstances whetherthe plaintiff was ready and was always ready to perform his contract.

16. In N.P. Thirugnanam (Dead) by LRs. v. Dr. R. JaganMohan Rao and Others[1], it was held that continuous readiness andwillingness on the part of the plaintiff is a condition precedent to grant ofCthe relief of specific performance. This circumstance is material andrelevant and is required to be considered by the court while granting orrefusing to grant the relief. If the plaintiff fails to either aver or prove thesame, he must fail. To adjudge whether the plaintiff is ready and willingto perform his part of the contract, the court must take into considerationDthe conduct of the plaintiff prior to and subsequent to the filing of the suitalong with other attending circumstances. The amount of considerationwhich he has to pay to the defendant must necessarily be proved to beavailable.

17. In Pushparani S. Sundaram and Others v. PaulineEManomani James (deceased) and Others[2], this Court has held thatinference of readiness and willingness could be drawn from the conductof the plaintiff and the totality of circumstances in a particular case. Itwas held thus:

“So far these being a plea that they were ready and willing toFperform their part of the contract is there in the pleading, we haveno hesitation to conclude, that this by itself is not sufficient to holdthat the appellants were ready and willing in terms of Section16(c) of the Specific Relief Act. This requires not only such pleabut also proof of the same. Now examining the first of the twocircumstances, how could mere filing of this suit, after exemptionGwas granted be a circumstance about willingness or readiness ofthe plaintiff. This at the most could be the desire of the plaintiff tohave this property. It may be for such a desire this suit was filed 1 1995 (5) SCC 115H2 2002 (9) SCC 582

C.S. VENKATESH v. A.S.C. MURTHY (D) BY LRS. & ORS.[S. ABDUL NAZEER, J.]

raising such a plea. But Section 16(c) of the said Act makes itclear that mere plea is not sufficient, it has to be proved.”

18. Similar view has been taken by this Court in ManjunathAnandappa URF Shivappa Hanasi v. Tammanasa and Others[3]andPukhraj D. Jain and Others v. G. Gopalakrishna[4].

19. The judgment of this Court in Umabai and Anr. v. NilkanthDhondiba Chavan (Dead) by LRs. and Anr.,[5] is almost similar to thecase at hand where the plaintiff had filed a suit for specific performanceof the agreement to re-convey property. The plea of the plaintiff wasthat the transaction was one of mortgage and the sale stood redeemedand the plaintiff was discharged from the debt and he was ready to paythe defendant the amount for the property only in the alternative that theplea of mortgage was not accepted by the Court, would show that hisreadiness was conditional. The plaintiff did not have any income andcould not raise the amount required for re-purchase of the property. Inthe totality of the circumstances, it was held that the plaintiff was notready and willing to perform the contract. The conditions laid for thespecific performance of the contract are in para 30, which is as under:

“30. It is now well settled that the conduct of the parties, with aview to arrive at a finding as to whether the plaintiff-respondentswere all along and still are ready and willing to perform their partof contract as is mandatorily required under Section 16(c) of theSpecific Relief Act must be determined having regard to the entireattending circumstances. A bare averment in the plaint or astatement made in the examination-in-chief would not suffice.The conduct of the plaintiff-respondents must be judged havingregard to the entirety of the pleadings as also the evidences broughton records”.

20. In the instant case, the plaintiff has alleged that he was readyto pay Rs.35,000/- to the defendants and called upon them to executethe re-conveyance deed. However, in para 11 of the plaint it is pleadedthat the plaintiff was running contract business wherein he suffered heavyloss and as such he gave up the business. It is also pleaded that atpresent the plaintiff has no business or profession and has no source of 3 2003 (10) SCC 390

4 2004 (7) SCC 251

5 (2005) 6 SCC 243

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Aincome. He has no property, either movable or immovable. Mere pleathat he is ready to pay the consideration, without any material tosubstantiate this plea, cannot be accepted. It is not necessary for theplaintiff to produce ready money, but it is mandatory on his part to provethat he has the means to generate the consideration amount. Except thestatement of PW-1, there is absolutely no evidence to show that theBplaintiff has the means to make arrangements for payment of considerationunder the reconveyance agreement.

21. It is relevant to state here that before filing the suit, the plaintiffhad filed an application before the competent authority under theKarnataka Debt Relief Act seeking extinguishment of the debt andCdelivery of the property back to him. No doubt, the application wasdismissed by the authority. But the fact remains that the intention of theplaintiff was not to pay the amount as per the re-conveyance agreement.

22. The deed of re-conveyance, contains a clause for payment ofinterest on the consideration amount of Rs.35,000/-. However, the plaintiffDhas pleaded that there is no agreement to pay the interest. This showsthat the plaintiff was not ready to perform his part of the obligation asper the agreement. Further, the plaintiff had mortgaged the propertywith the bank and the bank had obtained an award against the plaintiff.When the suit property was put up for auction, the defendants paid theEentire amount to the bank which was payable by the plaintiff under thisaward. This aspect also indicates the conduct of the plaintiff.

23. Taking an overall view of the matter, the trial court has rightlyheld that the plaintiff was not ready and willing to perform his part of thecontract. The High Court, in our view, was not justified in reversing theFwell-reasoned judgment of the trial court.

24. In the result, this appeal succeeds and it is accordingly allowed.The judgment of the High Court in R.F.A. No.626 of 2001 dated21.08.2006 is set aside and the judgment and decree passed by the trialcourt in O.S. No.3308 of 1988 dated 12.04.2001 is restored.

G25. There will be no order as to costs.

Divya Pandey

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