SUKHWINDER SINGH versus JAGROOP SINGH & ANR. on 28 January 2020

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[2020] 1 S.C.R. 512

SUPREME COURT REPORTS

[2020] 1 S.C.R.

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SUKHWINDER SINGH

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JAGROOP SINGH & ANR.

(Civil Appeal No. 760 of 2020)

BJANUARY 28, 2020

[R. BANUMATHI AND A. S. BOPANNA, JJ.]

Specific Relief Act, 1963 – s.20 – Agreement of sale dtd.03.01.04 executed by defendant no.1 (respondent no.2) in favourof plaintiff (respondent no.1) to sell land – Plaintiff instituted suitCseeking possession by way of specific performance alleging thatthe land was agreed to be sold for Rs.1,40,000/- and he had paidRs.69,500/- as earnest money – Plaintiff also prayed to set asidesale deed dtd.11.06.04 executed by defendant no.1 in favour ofdefendant no.2-appellant (purchaser of the property) and in theDalternative sought for refund of earnest money and damages– TrialCourt decreed the suit – Defendant no.2 filed petition to set asidethe ex parte decree and for retsoration of suit – Dismissed –Eventually, Supreme Court allowed the suit to be proceeded – Reliefof specific performance granted to the plaintiff – On appeal, held:Though the plaintiff examined himself, the document writer and theEwitness to the agreement who stated with regard to the execution ofthe agreement, the evidence to prove readiness and willingness withregard to the resources to pay the balance sale consideration isinsufficient – Plaintiff in any event was not entitled to decree forspecific performance and possession against defendant no.1 –FFurther, despite holding that defendant no.2 is bonafide purchaser,it cannot be lost sight of that defendant no.1 received Rs.69,500/-from the plaintiff as far back as on 03.01.04 and had the transactionwas concluded, the plaintiff would have been entitled to the benefitof the land – There has been considerable appreciation in the marketprice – Though in normal circumstance the return of the advanceGreceived and the compensation for denial of the property was to bepaid by defendant no.1, however the defendant no.1 having lostinterest in the property has not appeared in the instant proceedingsnor is there any material to indicate that he benefited from theappreciation since even as per plaintiff he sold the property for aH

lesser price – In the peculiar facts of the instant case, defendantno.2 who benefited from the property will have to repay the advanceand compensate the plaintiff – Decree granting the relief of specificperformance as affirmed by lower appellate court and High Courtis set aside – Appellant to pay Rs.3,50,000/- only to the plaintiffwithin three months, failing which it shall carry interest at 12% p.a.thereafter – Code of Civil Procedure, 1908 – Or. 9, r.13 and s.115 –Limitation Act, 1963 – s.5.

Partly allowing the appeal, the Court

Conclusion

Partly allowing the appeal, the Court

HELD: 1.1 The suit being the one for specific performanceof the contract on payment of the balance sale consideration, thereadiness and willingness was required to be proved by the plaintiffand was to be considered by the Courts below as a basicrequirement if a decree for specific performance is to be granted.In the present case though the plaintiff examined himself as PW1,as also PW2 and PW3, the document writer, and the witness tothe agreement who stated with regard to the execution of theagreement, the evidence to prove the readiness and willingnesswith regard to the resources to pay the balance sale considerationis insufficient. In the absence of denial by the defendant No.1,even if the payment of Rs.69,500/- and the claim by the plaintiffof having gone to the office of Sub-Registrar on 15.06.2004 isaccepted, the fact as to whether the plaintiff had notified thedefendant No.1 about he being ready with the balance saleconsideration and calling upon the plaintiff to appear before theSub-Registrar and execute the Sale Deed was required to beproved. From among the documents produced and marked asExhibit P1 to P9 there is no document to that effect, moreparticularly to indicate the availability of the balance saleconsideration as on 15.06.2004 and as on the date of filing thesuit. Despite the same, merely based on the oral testimony ofPW1, the Courts below have accepted the case put forth by theplaintiff to be ready and willing to complete the transaction.Instead of arriving at an appropriate conclusion on that aspect,the Trial Court while answering the issues No.1 and 2 hasconcluded that the amount of sale consideration has already beenpaid and the fact that the Civil Suit has been filed by the plaintiffare sufficient to establish that the plaintiff remained ready and AB

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Awilling to perform his part of the contract. On the other hand, it isnoticed that what had been paid as on the date of filing the suitwas only the earnest money and the balance amount was depositedonly on 03.08.2007 after the suit was decreed at the first instanceon 14.06.2007 and not as on the date of filing the suit. Hence theconcurrent conclusion reached by all the three Courts is anBapparent error, the correction of which is necessary. Even if theamount had been deposited as on the date of filing the suit, thereadiness and willingness with possession of the sale considerationas on 15.06.2004 was necessary to be proved, which was not done.Further, in a circumstance where the defendant No.2 hadCcontested the suit and had put forth the contention that he was abonafide purchaser without notice and through his evidence haddeposed that he had no knowledge of agreement entered intobetween the defendant No.1 and defendant No.2, that aspectrequired appropriate consideration. However, the Courts below have on the contrary concluded that the defendants No.1 and 2Dbeing of the same village, the defendant No.2 would haveknowledge of the agreement entered into by the defendant No.1in favour of the plaintiff. Such conclusion is only an assumptionand there is no evidence with regard to the knowledge ofdefendant No.2 even if he was from the same village.E[Paras 9-11] [519-D-H; 520-A-G]

1.2 In the background of the above consideration, theplaintiff in any event was not entitled to a decree for specificperformance and possession of the property against the defendantNo.1. Despite holding that the defendant No.2 is a bonafideFpurchaser, what cannot be lost sight is that the defendant No.1had received a sum of Rs.69,500/- from the plaintiff as far back ason 03.01.2004. That apart if the transaction was concluded at thatstage the plaintiff would have been entitled to the benefit of theland. Even as per the ground at (Para x) raised by the defendant

No.2 in this appeal, it would indicate that there has beenGconsiderable appreciation in the market price. Though in thenormal circumstance the return of the advance received and thecompensation for denial of the property was to be paid by thedefendant No.1, as noted, the defendant No.1 having lost interestin the property has not appeared in the instant proceedings norH

is there any material to indicate that he has benefited from theappreciation since even as per the contention of the plaintiff hehas sold the property for a lesser price. If that be the position,the defendant No.2 who benefited from the property will have torepay the advance and compensate the plaintiff in the peculiarfacts of the instant case. In view of the above, the following order:i) The judgment and decree dated 24.07.2015 passed in CaseNo. 915 of 16.11.2004/17.04.2015 and affirmed by the LowerAppellate Court as also the High Court to the extent of grantingthe relief of specific performance is set aside. ii) The judgmentand decree dated 17.04.2015 in Case No. 915 shall stand modified,and the appellant-defendant No. 2 is directed to pay a sum ofRs.3,50,000/- only to the plaintiff within three months. iii) If theamount is not paid within the time stipulated the same shall carryinterest at 12% per annum thereafter. iv) The plaintiff shall beentitled to withdraw the amount of Rs.70,500/- lying in depositbefore the Trial Court with the interest accrued, if any.[Paras 12, 13] [521-B-F; 522-A-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 760 of2020.

From the Judgment and Order dated 02.07.2018 of the High Courtof Punjab and Haryana at Chandigarh in RSA No. 5240 of 2016.

Rahul Gupta, Adv. for the Appellant.

Rajnish Kumar Jha, Mahendra Kumar, Ilin Saraswat, Ms. SwatiJain, Ms. Neha Jain, Advs. for the Respondents.

The Judgment of the Court was delivered by

A. S. BOPANNA, J. 1. Leave granted.

2. The appellant herein was the defendant No.2 in Case No.915of 16.11.2004/17.04.2015. The respondent No.1 herein was the plaintiffin the suit. The respondent No.2 herein was the defendant No.1 therein.The parties will be referred to in the rank assigned to them in the suit forthe purpose of convenience and clarity. The plaintiff instituted the suitseeking for decree of possession by way of specific performance of theAgreement of Sale dated 03.01.2004 executed by defendant No.1 infavour of the plaintiff agreeing to sell the land measuring 3 Kanals 4

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AMarlas comprised of Khewat No.36/35 Khatauni No.91, Rect. No.63Killa No.2/2 (3-4), situated in village Dulla Singh Wala, Tehsil and DistrictFerozpur.

3. The case of the plaintiff was that the property was agreed tobe sold for the total consideration of Rs.1,40,000/-. Towards the saidBamount the plaintiff had paid the sum of Rs.69,500/- as earnest money.The plaintiff had further prayed in the suit to set aside the Sale Deeddated 11.06.2004 executed by the defendant No.1 in favour of thedefendant No.2 since according to the plaintiff the same was null andvoid and did not bind the plaintiff. In the alternative, the plaintiffhad sought for a decree to recover a sum of Rs.1,40,000/- of whichCRs.69,500/- had been paid as earnest money while the remaining sum ofRs.70,500/- was sought as damages. The defendants at the first instancehad failed to appear and contest the suit. Accordingly, the Trial Court byits judgment dated 14.06.2007 had decreed the suit.

4. Though the defendant No.1 did not make out any grievanceDthereafter, the defendant No.2 who was the purchaser of the propertyfiled a petition under Order 9 Rule 13 of the Civil Procedure Code inMisc. Application No.46 of 23.02.2011 seeking that the ex parte decreebe set aside and the suit be restored for consideration. Since the saidpetition was filed with delay, an application under Section 5 of theELimitation Act was filed seeking condonation of delay. The Trial Courthaving considered the same through its decision dated 07.08.2012dismissed the application seeking condonation of delay, consequentlythe petition under Order 9 Rule 13 of Civil Procedure Code was alsodismissed as barred by Limitation. The defendant No.2 claiming to beaggrieved preferred Civil Revision No.5332/2012 (O&M) before theFHigh Court of Punjab and Haryana at Chandigarh. In the said RevisionPetition filed under Section 115 of Civil Procedure Code read with Article227 of the Constitution of India, the High Court had concurred with thedecision of the Trial Court and dismissed the Revision Petition throughits decision dated 12.09.2012. The defendant No.2 had carried theGsame before this Court in Civil Appeal No.1406/2015. This Court ontaking into consideration that the defendant No.2 who was the appellantin the said Civil Appeal is to be provided an opportunity to contest thesuit, had allowed the appeal by order dated 02.02.2015 subject to paymentof Rs.1,50,000/- as cost. Leave to file the written statement in the suitwas also granted. Pursuant thereto the defendant No.2 having paid theH

cost, filed the written statement and the suit was proceeded in accordancewith law. Pursuant thereto the impugned judgments are passed whichare assailed herein.

5. Mr. Rahul Gupta, the learned counsel for the appellant contendsthat the defendant No.2 is the bonafide purchaser without notice of thealleged agreement between the plaintiff and defendant No.1. He contendsthat the entire transaction was entered into in a bonafide manner and theSale Deed having been registered, the defendant No.2 was put inpossession of the suit schedule property as far back as on 11.06.2004.Nearly 16 years have passed by and the defendant No.2 has carried outconsiderable improvement to the property and is residing in the houseconstructed therein. In that view, at this juncture if the specificperformance as sought by the plaintiff is ordered, greater hardship willbe caused to the defendant No.2. It is pointed out that the plaintiff hadmade the alternate prayer for refund of the earnest money and damageswhich if considered would serve the ends of justice. The learned counselcontends that even to secure leave to file the written statement anddefend the suit the defendant No.2 has already parted with the sum ofRs.1,50,000/- in addition to the sale consideration that was paid todefendant No.1. In that circumstance, the compensation if any, is amatter to be considered by this Court as the grant of specific performanceis not a rule and this Court has the discretion to decline specificperformance in view of the provisions contained under Section 20 of theSpecific Relief Act. It is also his contention that though the defendantNo.1 has not contested the suit, there was an obligation on the plaintiffto establish his case which has not been effectively done by proving thereadiness and willingness. The learned counsel would contend that thoughall the three Courts have held against the defendants, the non-considerationof the relevant facts would amount to a concurrent error committed bythe Courts. It is, therefore, contended that the judgment and decree beset aside and the right accrued to the defendant No.2 under the SaleDeed dated 11.06.2004 be protected.

6. Shri Mahendra Kumar, learned counsel for the plaintiff/respondent No.1 would seek to sustain the judgment passed by the Courtsbelow. It is contended that all the three Courts have concurrently heldagainst the defendants and the reversal of the same is not warranted. Itis his case that the plaintiff had entered into an agreement of sale andhad also paid the part sale consideration of Rs.69,500/-. The suit at the A

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Afirst instance was decreed on 14.06.2007 and the plaintiff had pursuantto the decree deposited the balance sale consideration of Rs.70,500/- on03.08.2007. The learned counsel contends that though the date forexecution of the Sale Deed was stipulated as 15.06.2004, the Sale Deedwas executed by the defendant No.1 in favour of defendant No.2 on11.06.2004 so as to defeat the right of the plaintiff. It is contended thatBthe defendant had connived with each other in that regard and, therefore,the same cannot be considered as a bonafide transaction. The learnedcounsel further contends that though an alternate prayer was made inthe suit for the payment of damages as indicated therein, the property inquestion is highly valuable and as such the plaintiff should have the benefitCof the appreciation as well. It is, therefore, contended that the appeal isliable to be dismissed.

7. In the above background, it is seen that the contention of theplaintiff in the suit was that the defendant No.1 had agreed to sell thesuit schedule property through the Agreement dated 03.01.2004 and theDplaintiff had paid a sum of Rs.50,000/- on the said date and a furthersum of Rs.19,500/- on 29.02.2004. Thus, in all a sum of Rs.69,500/-was paid as earnest money. The date for execution of the Sale Deedwas stipulated as 15.06.2004 on which date the balance sale considerationof Rs.70,500/- was to be paid. The plaintiff contended that he wasready and willing to complete the transaction and as such on 15.06.2004Ei.e. the stipulated date, the plaintiff appeared in the office of Sub-Registrarwith the balance sale consideration and other expenses. According tothe plaintiff the defendant did not turn up but the plaintiff got his presencemarked by moving an application. It is only subsequently the plaintiffcame to know that the defendant No.1 had executed a Sale Deed datedF11.06.2004 in favour of the defendant No.2 in respect of the very suitproperty. It is in that light the plaintiff had sought further relief as notedabove.

8. The defendant No.2 who had availed the opportunity grantedby this Court and filed written statement on payment of cost had deniedGthe execution of the agreement to sell and the receipt of earnest money.The defendant No.2 relying on the Sale Deed dated 11.06.2004 contendedthat having purchased the property he is in possession and enjoyment ofthe same. The defendant No.2, therefore, sought for dismissal of thesuit. The Trial Court framed as many as seven issues for its considerationbased on the pleadings. The plaintiff examined himself as PW1 and alsoH

examined the witnesses as PW2 to PW4. The documents at ExhibitsP1 to P9 were marked. The defendant No.2 examined himself as DW1and examined two witnesses as DW2 and DW3. The Trial Court withreference to the said evidence has decreed the suit. The Lower AppellateCourt has re-appreciated the material on record and concurred with theTrial Court. The High Court though was examining the Second Appealwhere limited scope for reappreciation of the evidence is available, it isnoticed that the High Court has not even adverted to the basicrequirements to arrive at its conclusion. Be that as it may, consideringthat the suit in question was filed seeking for specific performance, theconsideration to that effect as made by the Trial Court and endorsed bythe Lower Appellate Court as also the High Court will have to be noticedcumulatively.

9. The suit being the one for specific performance of the contracton payment of the balance sale consideration, the readiness andwillingness was required to be proved by the plaintiff and was to beconsidered by the Courts below as a basic requirement if a decree forspecific performance is to be granted. In the instant case though thedefendant No.2 had denied the agreement as also the receipt of theearnest money, the same would not be of consequence as the agreementclaimed by the plaintiff is with the defendant No.1 and the contention ofthe defendant No.2 to deny the same is without personal knowledge onthat aspect. However, even in the absence of the defence put forth, theplaintiff was required to prove his readiness and willingness and thataspect of the matter was to be considered by the Courts below. In thepresent case though the plaintiff examined himself as PW1, as also PW2and PW3, the document writer, and the witness to the agreement whostated with regard to the execution of the agreement, the evidence toprove the readiness and willingness with regard to the resources to paythe balance sale consideration is insufficient. In the absence of denialby the defendant No.1, even if the payment of Rs.69,500/- and the claimby the plaintiff of having gone to the office of Sub-Registrar on 15.06.2004is accepted, the fact as to whether the plaintiff had notified the defendantNo.1 about he being ready with the balance sale consideration and callingupon the plaintiff to appear before the Sub-Registrar and execute theSale Deed was required to be proved. From among the documentsproduced and marked as Exhibit P1 to P9 there is no document to thateffect, more particularly to indicate the availability of the balance sale AB

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Aconsideration as on 15.06.2004 and as on the date of filing the suit.Despite the same, merely based on the oral testimony of PW1, the Courtsbelow have accepted the case put forth by the plaintiff to be ready andwilling to complete the transaction.

10. Instead of arriving at an appropriate conclusion on that aspect,Bthe Trial Court while answering the issues No.1 and 2 has concludedthat the amount of sale consideration has already been paid and the factthat the Civil Suit has been filed by the plaintiff are sufficient to establishthat the plaintiff remained ready and willing to perform his part of thecontract. On the other hand, it is noticed that what had been paid as onthe date of filing the suit was only the earnest money and the balanceCamount was deposited only on 03.08.2007 after the suit was decreed atthe first instance on 14.06.2007 and not as on the date of filing the suit.Hence the concurrent conclusion reached by all the three Courts is anapparent error, the correction of which is necessary. It is no doubt truethat as on the date of decision for the second time after restoration, theDamount had been deposited which is not the same as having deposited orpaid prior to or at the time of filing the suit. Even if the amount had beendeposited as on the date of filing the suit, the readiness and willingnesswith possession of the sale consideration as on 15.06.2004 was necessaryto be proved, which has not been done. Hence, in our opinion the Courtsbelow have not appropriately considered this aspect of the matter.

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11. Further, in a circumstance where the defendant No.2 hadcontested the suit and had put forth the contention that he was a bonafidepurchaser without notice and through his evidence had deposed that hehad no knowledge of agreement entered into between the defendantNo.1 and defendant No.2, that aspect required appropriate consideration.FHowever, the Courts below have on the contrary concluded that thedefendants No.1 and 2 being of the same village, the defendant No.2would have knowledge of the agreement entered into by the defendantNo.1 in favour of the plaintiff. Such conclusion is only an assumptionand there is no evidence with regard to the knowledge of defendantGNo.2 even if he was from the same village. In addition, the LowerAppellate Court has concluded that since the defendant No.1 has notcaused appearance in spite of notice having been issued and he notbeing examined as a witness it could be gathered that there is connivanceamongst the defendants to defeat the rights of the plaintiff. Such assumption is also not justified since the defendant No.2 had purchasedthe property for a consideration under a registered document and thedefendant No.2 was also put in possession of the property. In thatcircumstance the defendant No.1 who had lost interest in the property, ifhad not chosen to appear and defend the suit the same cannot be apresumption of connivance in the absence of evidence to that effect.

12. In the background of the above consideration, the plaintiff inany event was not entitled to a decree for specific performance andpossession of the property against the defendant No.1. In thecircumstance the declaration of the Sale Deed dated 11.06.2004 executedby the defendant No.1 in favour of the defendant No.2 to term the sameas null and void as claimed by the plaintiff also did not arise. Despite thesaid position what is necessary to be taken note is that the sale in favourof the defendant No.2 was on 11.06.2004 i.e. subsequent to the date ofthe suit agreement dated 03.01.2004. Despite holding that the defendantNo.2 is a bonafide purchaser, what cannot be lost sight is that thedefendant No.1 had received a sum of Rs.69,500/- from the plaintiff asfar back as on 03.01.2004. That apart if the transaction was concludedat that stage the plaintiff would have been entitled to the benefit of theland. Even as per the ground at (Para x) raised by the defendant No.2in this appeal, it would indicate that there has been considerableappreciation in the market price. Though in the normal circumstancethe return of the advance received and the compensation for denial ofthe property was to be paid by the defendant No.1, as noted, the defendantNo.1 having lost interest in the property has not appeared in the instantproceedings nor is there any material to indicate that he has benefitedfrom the appreciation since even as per the contention of the plaintiff hehas sold the property for a lesser price. In that situation the plaintiffcannot be left ‘high and dry’. If that be the position the defendant No.2who has benefited from the property will have to repay the advance andcompensate the plaintiff in the peculiar facts of the instant case. In thatcircumstance the defendant No.2 (the appellant herein) is required to bedirected to pay a sum of Rs.3,50,000/- only which is inclusive of theadvance amount of Rs.69,500/- to the plaintiff (the respondent No.1herein) in full quit of all claims. The said amount is also to be directed tobe paid by the defendant No.2 to the plaintiff within a period of threemonths failing which the same should carry interest at 12% per annumtill payment. The plaintiff should also be entitled to withdraw the amount AB

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Aof Rs.70,500/- stated to have been deposited by him before the TrialCourt.

13. In view of the above, the following order:

i) The appeal is allowed in part. The judgment and decreedated 24.07.2015 passed in Case No. 915 of 16.11.2004/B17.04.2015 and affirmed by the Lower Appellate Court asalso the High Court to the extent of granting the relief ofspecific performance is set aside.

ii) The judgment and decree dated 17.04.2015 in Case No.915 shall stand modified, and the appellant - defendantCNo. 2 is directed to pay a sum of Rs.3,50,000/- only to theplaintiff within three months.

iii) If the amount is not paid within the time stipulated the sameshall carry interest at 12% per annum thereafter.

iv) The plaintiff shall be entitled to withdraw the amount ofRs.70,500/- lying in deposit before the Trial Court with theinterest accrued, if any.

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v) In the facts and circumstances, the parties to bear theirown costs.

EPending application, if any, shall stand disposed of.

Divya Pandey

Appeal partly allowed.

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