P. RAMASUBBAMMA versus V. VIJAYALAKSHMI & OTHERS on 11 April 2022

1. Feeling aggrieved and dissatisfied with impugned judgment andorder dated 20.07.2021 passed by the High Court of Karnataka in RegularFirst Appeal No. 100200/2015, by which the High Court has allowed thesaid appeal preferred by respondent Nos. 3 and 4 herein – originaldefendant Nos. 3 and 4 (hereinafter referred to as defendant Nos. 3 and4) and has set aside the judgment and decree passed by the learned TrialCourt granting decree for specific performance of agreement to selldated 12.04.2005, the appellant herein - original plaintiff has preferredthe present appeal.

2. The facts leading to the present appeal in a nutshell are asunder: - 2.1 That the appellant herein – original plaintiff filed the suit forspecific performance of agreement to sell dated 12.04.2005. It was thecase on behalf of the plaintiff that she had entered into an agreementwith respondent No. 1 herein - original defendant No. 1 to purchase thesuit schedule property for a sale consideration of Rs. 29 lakhs. An advanceamount of Rs. 20 lakhs was paid under the said agreement. DefendantNo. 1 had earlier executed a general power of attorney in favour ofrespondent No. 2 herein - original defendant No. 2. However, defendantNo. 2 was present when the plaintiff entered into an agreement to sellwith defendant No. 1. It was the case on behalf of the plaintiff thatthereafter, on 25.03.2008, defendant Nos. 1 and 2 approached the plaintiffand her husband and sought payment of Rs. 6 lakhs. On 25.03.2008, theplaintiff made further payment of Rs. 6 lakhs towards sale considerationand an endorsement was made by defendant No. 1 on the agreement,acknowledging the receipt of Rs. 6 lakhs. According to the plaintiff,thereafter, despite repeated requests and demands, defendant No. 1 didnot execute the sale deed in favour of the plaintiff. They learnt thatdefendant No. 2 by misusing the power of attorney executed by defendantNo. 1 in favour of defendant No. 2, clandestinely executed two saledeeds in favour of defendant Nos. 3 and 4 only to defraud the plaintiff.The plaintiff got served a legal notice to the defendants on 17.06.2010calling upon defendant No. 1 to execute the sale deed in her favour by A

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1006SUPREME COURT REPORTS

Areceiving balance sale consideration of Rs. 3 lakhs. Further, thereafterdefendant No. 1 did not execute the sale deed, the plaintiff filed thepresent suit for specific performance of the contract/agreement to selldated 12.04.2005.

2.2 That original defendant No. 1 filed written statement andBadmitted the execution of agreement to sell and specifically stated thatshe is ready and willing to perform her part of contract. However,defendant Nos. 2 to 4 filed separate written statements and took acommon defence that agreement to sell dated 12.04.2005 is a createddocument. It was contended that power of attorney executed bydefendant No. 1 in favour of defendant No. 2 is a registered documentCand without cancelling the registered power of attorney and without theknowledge of defendant No. 2, defendant No. 1 in collusion with theplaintiff had created the agreement to sell. It was also contended bydefendant Nos. 2 to 4 that agreement to sell dated 12.04.2005 is a bogusdocument and no sale consideration is paid by the plaintiff.

D2.3 The learned Trial Court framed the following issues: - “i)Whether the plaintiff proves that on 12.4.2005defendant No. 1 has executed an agreement ofsale agreeing to sell the suit property for a totalconsideration of Rs. 29 lakhs?

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ii)Whether the plaintiff proves that part saleconsideration of Rs. 26 lakhs has been paid tothe defendant No. 1?

iii)Whether the plaintiff proves that she wasFalways ready and willing to perform her part ofduty towards the contract?

iv)Whether the plaintiff further proves that withmalafide intention and to defeat her rightaccrued through the sale agreement dated12.4.2005 defendant No. 2 had executed saledeeds dated 3.5.2010 in favour of defendantNo. 3 and 4 and those sale deeds are nominalsale deeds?

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v)Whether the defendant No. 2 to 4 prove thatsale agreement dated 12.4.2005 is a created H

document and by virtue of the same noconsideration had been passed?

vi)Whether the plaintiff is entitled for a decree of specific performance of contract?

vii)What order or decree?”

2.4 On behalf of the plaintiff, her husband was examined as PW1and two more witnesses were examined on behalf of the plaintiff. Theplaintiff produced nine documents as documentary evidence as exhibitP1 to P9. Defendant No. 1 was examined as DW1 and defendant No. 2was examined as DW 2.

2.5 On appreciation of evidence on record, the learned Trial Courtdecreed the suit and passed a decree of specific performance. Thelearned Trial Court found that defendant No. 1 being the absolute ownerof the suit schedule property has admitted the execution of agreement tosell in favour of the plaintiff and has also admitted receipt of substantialamount as part of the sale consideration. The learned Trial Court alsoproceeded to hold that the sale deed executed by defendant No. 2 infavour of defendant Nos. 3 and 4 are not binding on defendant No. 1 aswell as the plaintiff and therefore, the plaintiff was entitled to the reliefof specific performance of contract and to get the vacant possession ofthe suit schedule property.

2.6 Feeling aggrieved and dissatisfied with the judgment and decreepassed by the learned Trial Court, the original defendant Nos. 3 and 4only preferred an appeal before the High Court. By the impugnedjudgment and order, the High Court has allowed the said appeal and hasquashed and set aside the decree passed by the learned Trial Courtmainly relying upon and considering Section 20 of the Specific ReliefAct. The High Court has also observed that as there was no prayer or aparticular relief to declare that the sale deed in favour of defendant Nos.3 and 4 is null and void and not binding on the plaintiff and defendant No.1, such a relief could not have been granted by the learned Trial Court.

2.7 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court, the plaintiff preferred the presentappeal.

3. Shri S.N. Bhat, learned Senior Advocate appearing on behalfof the original plaintiff has vehemently submitted that in the facts and A

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Acircumstances of the case, the High Court has committed a grave errorin quashing and setting aside the decree passed by the learned TrialCourt for specific performance of agreement to sell dated 12.04.2005.

3.1 It is further submitted that when the original defendant No. 1– original owner admitted the execution of the agreement and evenBadmitted the payment of substantial amount under the agreement, thelearned Trial Court rightly passed the decree of the specific performanceof the said agreement.

3.2 It is further submitted that even the High Court ought to haveappreciated that apart from the fact that original defendant No. 1 admittedCthe execution of the agreement and receipt of payment of substantialadvance amount, original defendant Nos. 3 and 4 did not even enter intothe witness box. It is further submitted that the High Court has not properlyappreciated and considered the fact that the original of power of attorneydated 28.01.1997 executed by defendant No. 1 in favour of defendantNo. 2, was handed over to the plaintiff at the time of execution ofDagreement to sell, which was produced by the plaintiff in the present suitas exhibit P6.

3.3 It is further submitted that the High Court has also erred inholding that it was necessary for the plaintiff to seek cancellation of saledeeds dated 03.05.2010 executed by defendant No. 2 in favour ofEdefendant Nos. 3 and 4, respectively. It is submitted that in a suit forspecific performance it is not necessary for the agreement holder toseek cancellation of sale deed executed in favour of a subsequentpurchaser and it is sufficient to implead the subsequent purchaser in thesuit and seek relief of specific performance against original owner andFalso seek direction to the subsequent purchaser to join in the executionof the sale deed in order to completely convey title to the agreementholder. Reliance is placed upon the decisions of this Court in the casesof Lala Durga Parsad and Anr. Vs. Lala Deep Chand and Ors.,1954 SCR 360: AIR 1954 SC 75, Soni Lalji Jetha & Ors. Vs. SoniKalidas Devchand & Ors., (1967) 1 SCR 873: AIR 1967 SC 978,GR.C. Chandiok & Anr. Vs. Chuni Lal Sabharwal & Ors. (1970) 3SCC 140: AIR 1971 SC 1238, Dwarka Prasad Singh & Ors. Vs.Harikant Prasad Singh & Ors., (1973) 1 SCC 179 and Rathnavathi& Anr. Vs. Kavitha Ganashamdas, (2015) 5 SCC 223.

3.4 It is further submitted that the High Court has also not properlyHappreciated the fact that the transactions between defendant No.2 and defendant Nos. 3 to 4 were sham transactions, which were by defendantNo. 2 in favour of his own sisters-in-law. It is submitted that even thesale consideration in the transaction between defendant No. 2 anddefendant Nos. 3 to 4 was alleged to have been paid by cash and thattoo, a huge sum of Rs. 26 lakhs was alleged to have been paid by cash.It is submitted that in any case defendant Nos. 3 and 4 never steppedinto the witness box.

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3.5 It is submitted that therefore when the sale deed executed infavour of defendant Nos. 3 and 4 by defendant No. 2 was sham in orderto defeat the right of the plaintiff pursuant to agreement to sell dated12.04.2005 and the same was executed after the agreement to sell infavour of the plaintiff and the plaintiff had paid a substantial advanceamount, the High Court has erred in applying Section 20 of the SpecificRelief Act.

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3.6 Making the above submissions and also relying upon thedecisions of this Court in the case of Vasantha Viswanathan Vs. V.K.Elayalwar, (2001) 8 SCC 133 (para 13) and in the case of Rathnavathi(supra), it is prayed to allow the present appeal and quash and set asidethe impugned judgment and order passed by the High Court andconsequently to restore the decree passed by the learned Trial Court.

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4. Though served nobody has entered appearance on behalf ofdefendant Nos. 2 to 4. Even respondent No. 3 – defendant No. 3 isserved by substituted service, namely, by way of publication in two dailynewspapers. In that view of the matter, this Court has no other alternativebut to proceed further with the appeal ex-parte.

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5. We have gone through the judgment and decree and the findingsrecorded by the learned Trial Court as well as the judgment and orderpassed by the High Court.

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5.1 The learned Trial Court framed the following issues: - “i)Whether the plaintiff proves that on 12.4.2005defendant No. 1 has executed an agreement ofGsale agreeing to sell the suit property for a totalconsideration of Rs. 29 lakhs?

ii)Whether the plaintiff proves that part saleconsideration of Rs. 26 lakhs has been paid tothe defendant No. 1?

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Aiii)Whether the plaintiff proves that she wasalways ready and willing to perform her part ofduty towards the contract?

iv)Whether the plaintiff further proves that withmalafide intention and to defeat her rightBaccrued through the sale agreement dated12.4.2005 defendant No. 2 had executed saledeeds dated 3.5.2010 in favour of defendantNo. 3 and 4 and those sale deeds are nominalsale deeds?

Cv)Whether the defendant No. 2 to 4 prove thatsale agreement dated 12.4.2005 is a createddocument and by virtue of the same noconsideration had been passed?

vi)Whether the plaintiff is entitled for a decree ofDspecific performance of contract?

vii)What order or decree?”

5.2 Considering the fact that original defendant No. 1 – vendor –original owner admitted the execution of agreement to sell dated12.04.2005 and even admitted the receipt of substantial advance saleEconsideration, the learned Trial Court decreed the suit for specificperformance of agreement to sell dated 12.04.2005. Once the executionof agreement to sell and the payment/receipt of advance substantial saleconsideration was admitted by the vendor, thereafter nothing furtherwas required to be proved by the plaintiff – vendee. Therefore, as suchFthe learned Trial Court rightly decreed the suit for specific performanceof agreement to sell. The High Court, was not required to go into theaspect of the execution of the agreement to sell and the payment/receiptof substantial advance sale consideration, once the vendor hadspecifically admitted the execution of the agreement to sell and receiptof the advance sale consideration; thereafter no further evidence and/orGproof was required.

5.3 Now, so far as the sale deeds executed by original defendantNo. 2 in favour of defendant Nos. 3 and 4 and the decree passed by thelearned Trial Court that the sale deeds executed by original defendantNo. 2 in favour of defendant Nos. 3 and 4 are not binding on defendantH

No. 1 as well as on the plaintiff is concerned, at the outset, it is requiredto be noted that issue Nos. 4 and 5, reproduced hereinabove, were inrespect of the sale deeds executed by original defendant No. 2 in favourof defendant Nos. 3 and 4 dated 03.05.2010. Therefore, specific issueswere framed on sale deeds dated 03.05.2010 executed by originaldefendant No. 2 in favour of defendant Nos. 3 and 4. In that view of thematter, the High Court has erred in setting aside the decree passed bythe learned Trial Court by observing that as there was no specific relief/prayer of cancellation of sale deeds dated 03.05.2010 executed by originaldefendant No. 2 in favour of defendant Nos. 3 and 4, therefore, thelearned Trial Court could not have passed the decree that the said saledeeds are not binding on defendant No. 1 and the plaintiff. The HighCourt has not noted the specific issue Nos. 4 and 5 framed by the learnedTrial Court, which were with respect to sale deeds dated 03.05.2010.Therefore, as such, there was a lis between the parties in respect to saledeeds dated 03.05.2005 executed by original defendant No. 2 in favourof defendant Nos. 3 and 4 and even specific issues were framed, whichon appreciation of evidence were held against defendant Nos. 2 to 4.Therefore, the High Court is not justified in quashing and setting asidethe judgment and decree passed by the learned Trial Court declaringthat sale deeds dated 03.05.2010 are not binding on defendant No. 1 andthe plaintiff.

5.4 It is also required to be noted that on appreciation of evidence,the learned Trial Court has specifically given the finding that the allegedsale consideration paid by defendant Nos. 3 and 4 to original defendantNo. 2 for executing sale deeds dated 03.05.2010 have not been establishedand proved by defendant Nos. 2 to 4. Therefore, there was a specificfinding given by the learned Trial Court on appreciation of evidence thatsale deeds dated 03.05.2010 were nominal sale deeds. The High Courthas brushed aside the same on the ground that even in agreement to selldated 12.04.2005, the amount was alleged to have been paid by cash.However, it is required to be noted that so far as receipt of substantialadvance sale consideration mentioned in the agreement to sell dated12.04.2005 has been specifically admitted by defendant No. 1. Therefore,when it was specifically alleged that defendant No. 2 executed saledeeds in favour of defendant Nos. 3 and 4, who are his sisters-in-law,with a view to defeat the rights of the plaintiff and defendant No. 1 andwhen it was alleged that they were nominal sale deeds, thereafter, A

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Adefendant No. 2 was required to prove the receipt of sale considerationmentioned in the sale deeds dated 03.05.2010, which defendant Nos. 2to 4 have failed to do so.

5.5 It is also required to be noted that on appreciation of evidence,learned Trial Court has specifically found that the stamp papers ofBagreement to sell dated 12.04.2005 was purchased in the name ofdefendant No. 2 and therefore defendant No. 2 was aware and in theknowledge of agreement to sell dated 12.04.2005. It is also required tobe noted that even defendants did not reply to the legal notice served bythe plaintiff, which was issued before filing the suit.

C5.6 In light of the aforesaid factual aspects and the findings recordedby the learned Trial Court, the decision of this Court in the case of LalaDurga Prasad & Ors. (supra) is required to be referred to. In paragraph42, it is observed and held as under: -

“42. In our opinion, the proper form of decree is toDdirect specific performance of the contract betweenthe vendor and the plaintiff and direct the subsequenttransferee to join in the conveyance so as to pass onthe title which resides in him to the plaintiff. He doesnot join in any special covenants made between theplaintiff and his vendor; all he does is to pass on hisEtitle to the plaintiff. This was the course followed bythe Calcutta High Court in Kafiladdin v. Samiraddin[AIR 1931 Cal 67] and appears to be the Englishpractice. See Fry on Specific Performance, 6th Edn.,p. 90, para 207; also Potter v. Sanders [67 ER 1057].FWe direct accordingly.”

The aforesaid decision has been subsequently referred to andfollowed by this Court in the subsequent decision in the case ofRathnavathi & Anr. (supra).

5.7 From the impugned judgment and order passed by the HighGCourt, it appears that the High Court has heavily relied upon Section 34of the Specific Relief Act. However, considering the fact that specificissues were framed with respect to sale deeds dated 03.05.2010 executedby original defendant No. 2 in favour of defendant Nos. 3 and 4 and theparties led the evidence also on the aforesaid issues and thereafter, whenthe learned Trial Court had given findings on the said issues and thereafter,H

had granted the declaration that the sale deeds executed by originaldefendant No. 2 in favour of defendant Nos. 3 and 4 are not binding ondefendant No. 1 and the plaintiff and those sale deeds are nominal saledeeds and that defendant Nos. 2 to 4 have failed to prove that agreementto sell dated 12.04.2005 is a created document and by virtue of the sameno consideration has been paid, Section 34 of the Specific Relief Act,upon which the reliance has been placed by the High Court will have noapplication.

5.8 The High Court has set aside the judgment and decree passedby the learned Trial Court on the ground that the relief under Section 20of the Specific Relief Act, is a discretionary relief and therefore, in viewof the fact that original defendant No. 2 had executed sale deeds infavour of defendant Nos. 3 and 4, the learned Trial Court ought not tohave exercised discretion in favour of the plaintiff for passing the decreefor specific performance. However, in the facts and circumstances ofthe case narrated hereinabove and when the learned Trial Courtspecifically gave the findings that defendant No. 1 – vendor specificallyadmitted the execution of agreement to sell dated 12.04.2005 in favourof the plaintiff by accepting a substantial advance consideration and thatdefendant No. 2 was in the knowledge of the agreement to sell anddespite the same, he sold the same in favour of defendant Nos. 3 and 4,who are his sisters-in-law and that too the sale deeds found to be nominalsale deeds, the learned Trial Court as such rightly decreed the suit forspecific performance and also rightly declared that sale deeds dated03.05.2010 executed by original defendant No. 2 in favour of defendantsNo. 3 and 4 are not binding upon the plaintiff and defendant No. 1. TheHigh Court has committed a grave error in reversing the judgment anddecree passed by the learned Trial Court by ignoring the vital facts ofthe case which are either admitted or proved in the instant case.

6. In view of the above and for the reasons stated above, thepresent appeal succeeds. The impugned judgment and order passed bythe High Court is hereby quashed and set aside and the judgment anddecree passed by the learned Trial Court is restored. In the facts andcircumstances of the case, there shall be no order as to costs.

Ankit Gyan and Anurag Bhaskar

Appeal allowed.

(Assisted by : Vrinda Singh, LCRA)

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