Without
valid agreement no specific relief can be sought for any relief of specific performance while the Agreement of Sale is not enforceable under Section 17 of the Specific Relief Act, 1963. The provisions of Section 17 of the Specific
Relief Act in categorical term expressly state
that a Contract to sell or let any immovable
property cannot be specifically enforced in favour
of a vendor or lessor who does not have absolute
title and right upon the party.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7835 OF 2014
(Arising out of SLP(C) NO. 24653 OF 2012)
PEMMADA PRABHAKAR & ORS. …APPELLANTS
Vs.
YOUNGMEN’S VYSYA ASSOCIATION & ORS. …RESPONDENTS
J U D G M E N T: V.GOPALA GOWDA, J.
1. Leave granted.
2.
This appeal has been filed against the
judgment and final order dated 04.11.2011 passed in the
Second Appeal No. 815 of 2011 by the High Court of Judicature of Andhra Pradesh at Hyderabad, whereby the High Court has dismissed the Second Appeal.
3.
Certain relevant
facts are stated for the purpose of appreciating the rival
legal contentions urged on behalf of the parties with a
view to examine the correctness of the findings and
reasons recorded by the High Court in the impugned
judgment.
For the sake of brevity and convenience, the parties
are referred to in this judgment as per the rank assigned
to them in the original suit proceedings.
4.
The property
bearing Door No. 20/42-1-9 with land measuring about 657-1/3rd
sq. yards situated to the west of Vallabhai Street, Cinema
Road, Kakinada (hereinafter, referred to as the ‘suit
schedule property’) was the self acquired property of one Pemmada Venkateswara Rao. He died intestate and survived
by wife Syama Sundari, three sons and three daughters (the
defendant Nos. 1 to 6).
5.
The plaintiffs-the
Youngmen’s Vyasa Association (who are the respondents
herein), instituted O.S.No.267 of 1995 for the specific
performance of Agreement of Sale dated 03.05.1993 against
the defendants (the appellants herein). The plaintiffs alleged that the defendant Nos. 1 and 2, who are managing
the suit schedule property, agreed to sell the same to
plaintiff No. 1.
6.
According to the
plaintiffs, the defendant Nos. 1 and 2 executed the Agreement
of Sale dated 03.05.1993 in favour of plaintiff No. 1
agreeing to sell the suit schedule property at the rate of
Rs.575/- per sq. yard, the total consideration of which
was to be fixed later after taking the actual measurement. Later on, the total land value was fixed at Rs.3,77,967/-
for 657-1/3 sq. yards. The defendant Nos. 1 and 2 received
advance amount of Rs.5000/- and Rs.10,000/- also. Under
the Agreement the plaintiff No. 1 agreed to pay
Rs.1,70,000/- to the defendants within 10 days from the
day of vacating the tenants from the suit schedule
property. Rs.50,000/- was to be paid on 30.11.1993 and
that the balance amount of Rs.1,50,000/- was to be paid by
30.3.1994. The defendant Nos. 1 and 2 agreed that they
would obtain the signatures of their 3rd brother-the
defendant No. 3 by 9.05.1993. Defendant Nos. 7 and 8 are
the tenants in the sheds situated in the suit schedule property. The defendant Nos.1 & 2 stated that their sisters were married long ago therefore, they had no interest in the suit schedule property, and that they would also get the sisters’ signatures on the agreement.
7.
The 2nd Addl.
Senior Civil Judge, Kakinada (the Trial Court) by his
judgment dated 12.7.2006 dismissed O.S. No 267/95, in so
far as the main relief for the specific performance of
sale is concerned. The Trial Court has directed the defendants to refund Rs.5000/- with interest at the rate of 12% p.a. from 5.03.1993 till the date of realization
and Rs.10,000/- with the interest rate at 12% p.a. from
6.08.1993 till the date of realization.
8.
The Trial Court
after considering the oral and documentary
evidence on record, observed that as the suit schedule
property is adjacent to the plaintiff’s property, taking
advantage of the financial difficulties of
defendant Nos. 1 and 2, the plaintiffs
attempted to grab the suit schedule property and
dragged the defendants to the court of law.
9.
The Trial Court
further held that the Agreement of Sale was not
valid as the defendant Nos.3 to 6 and their mother did
not give consent to sell the suit schedule property
to the plaintiffs. Accordingly, the main relief for
specific performance was rejected and the defendants were
directed to refund the amount of advance sale
consideration to the plaintiffs with interest at the
rate of 12% p.a.
10. Being aggrieved by the judgment and
decree dated 12.7.2006 of the Trial Court, the plaintiffs filed an appeal being A.S. No. 269 of 2006 before the Court of 3rd Additional District Judge, Kakinada, the First Appellate Court.
11. On 28.04.2010 the First Appellate
Court allowed the appeal partly, directing the defendant Nos. 1, 2, 4 and 5 to execute the registered sale deed in favour of the plaintiff’s Association in respect of their 1/6th share each i.e. 4/6th share by receiving their respective shares of the balance sale consideration from the plaintiffs and modified the decree for specific performance of Agreement of Sale.
12. The First Appellate Court vide its
order dated 28.4.2010 held that the transaction between the parties is real sale transaction and not mere money transaction and the sale agreement is valid and binding between the parties and the plaintiffs are entitled for the first main relief of specific performance and directed defendant Nos. 1, 2, 4 and 5 to execute sale deed in respect of their 4 shares of the suit schedule property after receiving proportionate sale price.
13. Being aggrieved by the judgment and
decree dated 28.04.2010 of the First Appellate Court, the defendants preferred Second Appeal being S.A. No. 815 of 2011 before the High Court of Judicature of Andhra Pradesh at Hyderabad whereby the High Court vide order dated 4.11.2011 dismissed the Second Appeal which is impugned in this appeal.
14. The High Court held that the
approach of the First Appellate Court in granting the relief of specific performance directing defendants 1, 2, 4 and 5 to execute sale deed in respect of their shares, i.e. 4/6th share of the suit schedule property in favour of the plaintiffs on receipt of their respective balance consideration which stood deposited in the court, cannot be faulted with.
15. It was further held by the High
Court that the mother of the defendants was alive when the suit was instituted in 1995 and she died on 29.09.2005. She had one share and after her death, the property would be divided into 6 shares and the agreement was held as binding on the defendants 1, 2, 4 and 5. Therefore, the High Court upheld the decision of the First Appellate Court and moulded the relief in the above terms while granting decree of specific performance of the Agreement of Sale by executing the sale deed of their share in the property in favour of the plaintiffs.
16. The following submissions were made
by the learned counsel for both the parties in support of their claim and counter claim.
17. On behalf of the defendant Nos.1
& 2, it is contended that their father Pemmada Venkateswara Rao was engaged in lathe works which incurred heavy loss and he was allegedly indebted to various creditors. They approached one Murali Krishna (who had acquaintance with them) who was the Secretary of the plaintiff Association to borrow some money. Taking advantage of their situation, the Secretary and the President of the Plaintiff Association obtained the signatures of defendant Nos. 1 and 2 on a blank sheet of paper and gave Rs.5000/- on 3.5.1993 and Rs.10,000/- on 6.8.1993 to them.
18. It was further contended by the
learned counsel that the defendants never intended to sell the suit schedule property and the transaction with the plaintiffs Association was only money transaction and was not a sale transaction with it. A separate written statement was filed by the 4th defendant to the same effect.
19. It was further contended by
defendant Nos. 1 to 6 that even on the date of execution of Agreement of Sale their mother was very much alive and, therefore in the absence of execution of Agreement of Sale by all the seven co-sharers of the suit schedule property the suit for specific performance does not lie. The learned counsel for the defendants placed reliance on the decisions of Andhra Pradesh High Court and this Court in the cases of Kommisetti Venkatasubbayya v. Karamestti Venkateswarlu (A.I.R. 1971 AP 279) and Lourdu Mari David & Ors. v. Louis Chinnaya Arogiaswamy
& Ors. [ (1996) 5 SCC 589] in support of their claim.
20. Further, they placed reliance upon
the case of this Court in Rameshwar & Ors. v. Jot
Ram & Anr.[(1976) 1 SCC 194]. In the said
authority it has been held as follows:
“9…First, its bearing on the right of action, second, on the nature of the relief and third, on its impotence to create or destroy
substantive rights. Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments
subsequent to the suit or even during the
appellate stage, it is but fair that the
relief is moulded, varied or reshaped in the
light of updated facts. Patterson illustrates this position. It is important that the
party claiming the relief or change of relief must have the same right from which either the first or the modified remedy may flow. Subsequent events in the course of the case cannot be constitutive of substantive rights enforceable in that very litigation except in a narrow category (later spelt out) but may influence the equitable jurisdiction to mould reliefs. Conversely, where rights have already vested in a party, they cannot be nullified
or negated by subsequent events save where there is a change in the law and it is made applicable at any
stage. Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri falls in this
category. Courts of justice may, when the
compelling equities of a case oblige them,
shape reliefs — cannot deny rights — to
make them justly relevant in the updated
circumstances. Where the relief is discretionary, courts may exercise this jurisdiction to avoid injustice. Likewise, where the right to the remedy depends, under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the Court, even in appeal, can take note of such supervening facts with fundamental impact…” (Emphasis supplied)
21. The High court held that defendants
pleaded falsehood at the time of execution of the Agreement of Sale by stating that their mother had predeceasedtheir father. The
agreement and the endorsement thereon made by
defendant Nos.1 and 2 had swayed discretion of the
High Court in favour of the plaintiffs which is
an Association engaged in the welfare of the
community.
22. The High Court further held that the
suit schedule property was not purchased for unlawful gain of an individual and that the First Appellate Court considered the entire evidence on record and exercised its sound jurisdiction and modified the judgment of the Trial Court by granting a decree of specific performance as per the terms stipulated therein.
23. The High Court dismissed the second
appeal without adverting to the substantial questions of law that were framed in the second appeal at the admission stage itself stating that there is no substantial question of law for its adjudication. The First Appellate Court and the Second Appellate Court committed serious error in law in not noticing the relevant important findings of fact recorded by the Trial Court on the contentious issues on proper appreciation of pleadings and evidence on record with reference to the legal submission made on behalf of the parties. The Trial Court after proper appreciation of evidence on record, particularly, Ex.-A1, the Agreement of Sale, has held that it is not a valid agreement and no rights can flow from it in favour of the plaintiffs in the light of the fact that the signatures of defendant Nos. 1 and 2 were obtained on different dates on blank papers as they were in financial crisis and that fact is proved by producing Exs.-B1 to B-8 to show that the entire family (defendant Nos. 1 to 6) were in financial crisis and they were forced to pay the debts to their creditors. Therefore, they were in urgent need of money and they approached the PW-1 for financial help, who obtained the signatures of defendant Nos. 1 and 2 on blank paper and the same was fabricated as a receipt. The said receipt was not signed by defendant Nos. 3 to 6. The mother of the defendant Nos. 1 and 2 is one of the co-sharers of the suit schedule property as a class-I legal heir to succeed to the intestate property of her deceased husband, which was his self acquired property left by him, as he had purchased the same vide Sale-Deed document No. 5174/1970 dated 24.11.1970 from his vendors. In fact, there is a reference made in this regard in the Agreement of Sale executed by defendant Nos. 1 and 2 to the effect that after demise of Pemmada Venkateswara Rao, the father of defendant Nos. 1 to 6, the property devolved upon them jointly and they are enjoying with absolute rights. As per Section 8 of the Hindu Succession Act, 1956 the general rules of succession would be applicable in the case of a male Hindu dying intestate, relevant portion of which reads as under :-
“8. General rules of succession in the case of males.- The property of a male Hindu dying intestate shall devolve according to the
provisions of this Chapter-
(a) Firstly, upon the heirs, being the relatives specified in class I of the Schedule;
XXX XXX XXX”
In the Schedule of
the said Act, class I heirs are son, daughter,
widow, mother and others. In view of the enumeration of
the class I heirs in the Schedule, the mother and
sisters of the defendant Nos. 1 and 2 are also co-sharers
of the property left intestate by the deceased
Pemmada Venkateswara Rao. As could be seen from the
Agreement of Sale-Ex.-A1 undisputedly, the third brother
and 3 sisters, (defendant Nos. 3 to 6) and their mother
have not executed the Agreement of Sale in favour
of the plaintiffs. Therefore, the same is not
enforceable under Section 17 of the Specific Relief
Act, 1963. The mother lived upto September, 2005,
the aforesaid legal heirs of deceased Pemmada
Venkateswara Rao got equal shares in the suit schedule
property.
24. It is further contended on behalf of the defendants that the First Appellate Court and the High Court have failed in not applying the legal principle laid down by this Court in the case of Lourdu Mari David & Ors. (supra), wherein
this Court held that the party who seeks to avail of the equitable jurisdiction of a court and specific performance decree being equitable relief must come to the court with clean hands. In other words, the party who makes false allegations against the defendants does not come with clean hands and therefore, it is not entitled to the equitable relief of specific performance decree from the court.
25. Another legal contention urged on behalf of
the defendants is that the High Court has erroneously come to the conclusion on facts and evidence on record and it has affirmed the divergent findings of fact recorded by the First Appellate Court without examining and answering the substantial questions of law framed in the Second Appeal and it has erroneously dismissed the appeal holding that the suit schedule property was not purchased by the plaintiffs for unlawful gain of an individual. The said property is probably purchased by the plaintiffs to put it to use for the purpose of the community.
The High Court
without considering the legal submissions urged
on behalf of the defendants adjudicated the
rights of the parties ignoring certain facts,
evidence on record and legal contentions urged.
It has erroneously held that the plaintiffs are entitled
for the relief of specific performance while
the Agreement of Sale is not enforceable under
Section 17 of the Specific Relief Act, 1963, in view
of the fact that all the legal heirs of the
deceased Pemmada Venkateswara Rao are not parties to the
Agreement of Sale and the defendant Nos. 1
and 2 do not have absolute title and right upon the
entire suit schedule property. Even assuming for
the sake of argument that the Agreement of Sale
is valid, the same could not have been enforced
against the defendants as the plaintiffs have
committed breach of the contract as agreed upon by them
as per clause 2 of the penultimate paragraph Nos. 2 and 3 of the Agreement of Sale. The plaintiffs gave a sum of Rs.5,000/- & Rs. 10,000/- as an advance amount towards sale consideration and the remaining sale consideration, i.e.(i)an amount of Rs.1,70,000/- which was to be paid within 10 days from the day of vacating the tenants in the property, (ii) Rs.50,000/- to be paid on 30.11.1993 and the remaining sale consideration of Rs.1,50,000/- to be paid on or before 30.3.1994 was not paid to the defendant Nos. 1 and 2.
26. It is also
contended by the learned counsel that the First Appellate
Court and the Second Appellate Court have not
exercised their discretionary powers as required under
Section 20(2) of the Specific Relief Act for
decreeing the specific performance in favour of the
plaintiffs, even though, the defendants have
made out a case before the Trial Court that the
plaintiffs are not entitled for the decree for specific
performance. Therefore, the First Appellate
Court and the Second Appellate Court have gravely erred
in not exercising their discretionary power under Section 20(2) of the Specific Relief Act at the time of passing decree for specific performance in favour of the plaintiffs, which is not only erroneous in law but also vitiated in law and therefore, the same is liable to be set aside.
27. On the contrary, the learned counsel for the plaintiffs has sought to justify the impugned judgment contending that the Second Appellate Court in exercise of its appellate jurisdiction after examining the facts and evidence on record has held that the substantial questions of law framed by the defendants in the second appeal, on the divergent findings of fact recorded by the First Appellate Court would not arise. Decreeing the suit by the First Appellate Court as prayed by the plaintiffs is correct as it has set aside the decree of the Trial Court. It is further urged that the High Court is right in dismissing the second appeal and therefore, the same does not call for interference by this Court as there is no substantial question of law which would arise for consideration. Therefore, the learned counsel for the respondent-plaintiffs prayed for dismissal of this civil appeal as the same is devoid of merit.
28. With reference to the above said
rival contentions, the following points would arise for our consideration :-
(1) Whether the
plaintiffs are entitled for the decree for specific performance of the Agreement of Sale (Ex.-A1) when Agreement of
Sale entered between the plaintiffs and defendant Nos. 1 and 2 who do not have absolute title to the property?
(2) Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the other
defendants/co-sharers is it valid, even assuming that
Agreement of Sale is valid, there is breach of terms and conditions of the Contract on the part of the plaintiffs in not paying the sale consideration amount of Rs. 1,70,000/- within 10 days from the day of vacating the tenants, Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before 30.3.1994 to
the defendants and plaintiffs are entitled for decree of specific performance of the Agreement of Sale?
(3) Whether the plaintiffs are entitled for discretionary relief of specific performance under
Section 20(2) of the Specific Relief Act when it has not approached the court with clean hands?
(4) What relief?
Answer to Point No. 1
29. It is an undisputed fact that the suit schedule property is self acquired property by late Pemmada Venkateswara Rao as he had purchased the said property vide Sale-Deed Document No.5174 of 1970 dated 24.11.1970 from his vendors. It is also an undisputed fact that the said property is intestate property. He is survived by his wife, 3 sons and 3 daughters. The said property devolved upon them in view of Section 8 of Chapter 2 of the Hindu Succession Act as the defendants are class I legal heirs in the suit schedule property. Undisputedly, the Agreement of Sale-Ex.-A1 is executed only by defendant Nos. 1 and 2. The 3rd son, mother and 3 sisters who have got equal shares in the property have not executed the Agreement of Sale. In view of the matter, the Agreement of Sale executed by defendant Nos. 1 and 2 who have no absolute right to property in question cannot confer any right whatsoever upon the plaintiffs for grant of decree of specific performance of Agreement of Sale in their favour. The said agreement is not enforceable in law in view of Section 17 of the Specific Relief Act in view of right accrued in favour of defendant Nos. 3 to 6 under Section 8 of the Hindu Succession Act. The provisions of Section 17 of the Specific Relief Act in categorical term expressly state that a Contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor who does not have absolute title and right upon the party. It is worthwhile to extract Section 17 of the Specific Relief Act,1963 here :-
“17.-Contract to sell or let property by one who has no title, not specifically enforceable.- A contract to sell or let any immovable property cannot be specifically
enforced in favour of a vendor or lessor;
(a) who, knowing not to have any title to the
property, has contracted to sell or let the property
(b) who, though he entered into the contract
believing that he had a good title to the property, cannot at the time fixed by the
parties or by the court for the completion of the sale or letting, give the purchaser or lessee
a title free from reasonable doubt.”
In view of the aforesaid provisions of the Specific Relief Act, the Agreement of Sale entered between the plaintiffs and some of the co-sharers who do not have the absolute title to the suit schedule property is not enforceable in law. This aspect of the matter has not been properly appreciated and considered by both the First Appellate Court and the Second Appellate Court. Therefore, the impugned judgment is vitiated in law.
30. Even assuming for
the sake of argument that the agreement is valid,
the names of three sons are mentioned in
Agreement of Sale, out of whom the agreement is
executed by defendant Nos. 1 and 2 and they assured that
they would get the signatures of the 3rd brother
namely, Srinivasa Rao and also the remaining 3
sisters. At the time of execution of this agreement
signatures were not obtained. Therefore, the agreement is
not executed by all the co-sharers of the property
which fact is evident from the recitals of the
document itself. Hence, the plaintiffs are not
entitled for specific performance decree. This vital
factual and legal aspect has been ignored by both the
First Appellate Court and the Second Appellate
Court. Therefore, the impugned judgment is
vitiated both on facts and law. Accordingly, the
point No. 1 is answered in favour of the defendants.
Answer to Point No. 2
31. The second point is also required to be
answered against the plaintiffs for the following reasons:-
As could
be seen from the Agreement of Sale document marked as Ex.-A1 and the pleadings
of the parties payment of sale consideration was agreed to be paid to the
defendant Nos. 1 and 2 as per following terms of the agreement :-
“… (i) an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within
10 days from the day of vacating the tenants in the property, (ii) Rs. 50,000/-
shall be paid on 30.11.1993., (iii) the remaining sale consideration of
Rs.1,50,000/- shall be paid on or before 30.3.1994.”
32. It
is an undisputed fact that except payment of Rs.5,000/- and Rs.10,000/- paid by
the plaintiff No.1 to the defendant Nos. 1 and 2 according to the Agreement of
Sale, the remaining installment i.e. an amount of Rs.1,70,000/- which was to be
paid to the Vendors within 10 days from the day of vacating the tenants in the
property was not paid. Even assuming that the amount could have been paid had
the tenants vacated the schedule property then the remaining part of the sale
consideration agreed to be paid as notified under clauses (ii) and (iii) as per
aforesaid paragraph of the Agreement of Sale undisputedly not paid to the
defendant Nos. 1 and 2. Therefore, there is breach of contract on the part of the plaintiffs as could be seen from the
agreement of sale regarding the payment of part sale consideration amount. For
this reason itself plaintiffs are not entitled for a decree of specific
performance.
Answer to the Point Nos. 3
33. Point No. 3 is also answered in favour of the defendants
for the following reasons:-
It is an
undisputed fact that the plaintiffs have not approached the Trial Court with
clean hands. It is evident from the pleadings of the Agreement of Sale which is
produced for the decree for specific performance of Agreement of Sale as the
plaintiffs did not obtain the signatures of all the co-sharers of the property
namely, the mother of the defendants, the third brother and 3 sisters.
Therefore, the agreement is not enforceable in law as the persons who have
executed the sale deed, did not have the absolute title of the property. Apart
from the said legal lacuna, the terms and conditions of the Agreement of Sale
for payment of sale consideration agreed to be paid by the first plaintiff in installments
within the period stipulated as indicated above were not paid. The First
Appellate Court and the High Court have not exercised their power under Section
20(2) of the Specific Relief Act which by itself is the substantial question of
law which fell for consideration before the High Court as the First Appellate
Court failed to consider this important aspect of the matter and exercised its power
while determining the rights of the party, particularly, in the light of the
unenforceable contract between the plaintiffs against the defendants as all of
them are not parties to the Agreement of Sale document (Ex.-A1) and the executants
viz. defendant Nos. 1 and 2 have not acquired absolute title to the
property in question.Therefore, the impugned judgment is vitiated and liable to
be set aside.
Answer to Point No. 4
34. Though we have answered the questions of law framed
in this appeal in favour of the defendants, the learned counsel for the defendants
during the course of arguments, has offered some monetary compensation in
favour of the plaintiffs if this Court set aside the impugned judgment and
decree of specific performance granted in their favour. Though, the defendants
on merits have succeeded in this case for the reasons recorded by us on the
substantial questions of law that have been framed by us on appreciation of
facts and legal evidence on record, having regard to the peculiar facts and
circumstances of the case particularly, the execution of Agreement of Sale, Ex.
A-1 by defendant Nos. 1 and 2 on 3.5.1993, after receiving part consideration
of Rs.15,000/-, and the submission made by the learned counsel for the
defendants, it would be just and proper for this Court to award a sum of
Rs.6,00,000/- by lump-sum amount of compensation to the plaintiffs within 3
months from the date of receipt of a copy of this judgment as provided under
Section 22 of the Specific Relief Act.
35. Since, we have answered point Nos. 1
to 4 in favour of the defendants and against the plaintiffs, the appeal of the
defendants must succeed. Accordingly, the impugned judgment and decree passed by
the High Court in affirming the judgment and decree of the First Appellate
Court, is set aside.
The judgment and decree of the Trial Court is restored
with modification that the defendants shall pay a sum of Rs.6,00,000/- to the
plaintiffs as lump sum compensation within 3 months from the date of receipt of
copy of this order.
The appeal is allowed in the above said terms. No costs.
……………………………………………………………………J.
[DIPAK MISRA]
……………………………………………………………………J.
[V. GOPALA GOWDA]
New Delhi,
August 20,2014
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