Specific Relief Act, 1963: Nature of transaction between the plaintiffs and defendant nos.1 to 3 – Suit for specific performance of agreements for sale of agricultural land and in the alternative for recovery of earnest money with interest – Case of plaintiffs was that defendant 1 to 3 had executed agreement dated 20.9.1965 for sale of suit land for a consideration of Rs.22,951 and that Rs.3,500 was paid as earnest money; that plaintiffs further paid Rs.2,000 on 24.9.1965 and took possession of 25 acres of land – Plaintiff further averred that defendants executed a supplementary agreement for sale and accepted an additional sum of Rs.500 from plaintiffs and handed over the remaining portion of land to plaintiffs and the remaining sale consideration was settled at Rs.11,951 after deducting Rs.5,000 towards encumbrances and on payment of this amount defendants 1 to 3 were liable to execute the sale deed in their favour – Case of defendants 1 to 3 (vendors) was that the said agreements were executed only as collateral security for a loan advanced by plaintiff no.1 and not for sale of property – Held: There was not even a remote suggestion in the agreements that there was any loan or borrowing transaction between the parties and the said agreements were being executing towards security – On the contrary, the recitals and stipulations in the agreements were only in affirmation of the agreement for sale and of the receipt of part payment from time to time against the sale consideration – As to whether the possession of the land in question was delivered to the plaintiffs or not, could not have been taken as a factor decisive as regards nature of transaction – Moreover, execution of the supplementary agreement after notice and after receiving further an amount of Rs. 500/- by defendant Nos. 1 to 3 could only show re-affirmation of the intention of the parties towards the sale transaction – In the supplementary agreement, the defendants not only acknowledged the receipt of part consideration to the tune of Rs. 6,000/- but further agreed for adjustment of Rs. 5,000/- towards encumbrances and, therefore, agreed to receive remaining Rs. 11,921/- at the time of execution of the sale deed – In view of the dealings of the parties, this circumstance about execution of the supplementary agreement only strengthened the case of the plaintiffs. Specific Relief Act, 1963: Specific performance – Readiness and willingness of plaintiff to perform his part of the contract – The plaintiffs pleaded in the plaint that they were ready to get the sale deed executed as per the conditions in the agreement for sale and also stated that they served the notice, then supplementary agreement was executed; and then, on many occasions, they asked the defendant to execute the sale deed – Defendant No.1 in his written statement merely stated a bald denial that such averments were false and were ‘not agreeable to the defendants’ – The entire emphasis of the written statement was on the assertion that the agreement in question was not for sale and was obtained by the plaintiffs towards security against the amount borrowed by defendant No.1 – Held: The plea of the plaintiffs as regards their readiness to perform the contract as per its conditions did not meet with categorical denial from the defendants – This apart, even at the time of entering into the agreement, the plaintiffs paid Rs. 3,500/against the sale consideration of Rs. 22,951/- – Moreover, and much before the stipulated date of execution of sale deed, they made another payment of Rs. 2,000/- against the sale consideration – When the sale deed was not executed within stipulated time, the plaintiffs served notice – Defendants thereafter executed the supplementary agreement and the plaintiffs made payment of yet another sum of Rs. 500/- while it was also agreed by the vendors that the property carried encumbrance to the tune of Rs. 5,000/-, which was to be adjusted against the sale consideration – Therefore, the plaintiffs were left to make payment of about half of the sale consideration – The plaintiffs showed their readiness and willingness to perform their part of the contract and there did not operate any personal bar against their claim for specific performance. Transfer of Property Act, 1882: s.52 – Doctrine of lis pendens – Both the sale transactions in favour of the appellants, purporting to transfer the suit property in part, having been effected after filing of the suit, were directly hit by the doctrine of lis pendens, as embodied in s.52 of the Act, 1882 – Specific Relief Act, 1963.
Transfer of Property Act, 1882: s.52 – Effect of doctrine of lis pendens – Held: Is not to annul all the transfers effected by the parties to a suit but only to render them subservient to the rights of the parties under the decree or order which may be made in that suit – Its effect is only to make the decree passed in the suit binding on the transferee, i.e., the subsequent purchaser – Nevertheless, the transfer remains valid subject, of course, to the result of the suit – Hence, the effect of s.52, for the purpose of the instant case would only be that the said sale transactions in favour of the subsequent purchasers shall have no adverse effect on the rights of the plaintiffs and shall remain subject to the final outcome of the suit in question – However, the High Court, while holding that the said transactions were hit by lis pendens, proceeded to observe further that the sale deeds so made in favour of the subsequent purchasers were illegal – These observations by the High Court not approved.
Specific Relief Act, 1963: Requirement to prove readiness and willingness of plaintiff to perform his part of the contract is not that the plaintiff should continuously approach the defendant with payment or make incessant requests for performance – For the relief of specific performance, which is essentially a species of equity but has got statutory recognition in terms of the Specific Relief Act, the plaintiff must be found standing with the contract and the plaintiff ’s conduct should not be carrying any such blameworthiness so as to be considered inequitable.
Specific Relief Act, 1963: Limitation – When the plaintiffs had the limitation of three years for filing the suit for specific performance, it cannot be said that during the said period, the plaintiffs are required to show overt act by them in furtherance of the agreement in question – In the instant case, when the plaintiffs had the limitation of three years for filing the suit and have indeed filed the suit well within limitation, no aspect of delay operates against them –Limitation – Delay/Latches.
Specific Relief Act, 1963: ss.21 and 22 – Grant of relief – Agreements in question were executed way back on 20.09.1965 and 28.04.1966 – The evidence on record showed that vendors and thereafter, the subsequent purchasers remained in effective possession thereof – High Court took note of the fact that as on the date of its decision, the subsequent purchasers were in possession of the land in question for about 40 years – High Court found that land in question carried much higher valuation at the time of passing of the judgment in second appeal and hence, enhanced the sale consideration to Rs. 10,000/- per acre – Plaintiffs, even while seeking specific performance, prayed for the alternative reliefs of recovery of amount paid by them with interest and compensation to the tune of Rs 15,000/- – Plaintiff No. 1 expired during the pendency of suit and plaintiff No. 2 expired during the pendency of this appeal; though legal representative of plaintiff Nos. 1 and 2 was on record as plaintiff No.4 (respondent No. 2) – Plaintiff No.2, while deposing as PW2 had stated that in case specific performance was not granted, she ‘may be granted alternative relief and compensation with interest’ – In view of this, instead of specific performance, awarding of monetary compensation to respondent No. 2 would meet the ends of justice – Subsequent purchasers themselves filed valuation report suggesting that the market value of unirrigated land was Rs. 70,000/- per hectare whereas that of the irrigated land was Rs. 1,40,000/- per hectare – The fact also remained that the appellants have been enjoying the land in question for a long length of time – Further, the predecessors of respondent No. 2 made payment of the sum of Rs. 6,000/- to the vendors in the years 19651966; and the plaintiffs had claimed alternative relief of recovery of the said amount together with interest as also of compensation – Taking all the relevant factors into account, a lump sum of Rs. 15,00,000/- is awarded to respondent No. 2 as compensation in lieu of specific performance – Equity.
Partly allowing the appeal, the Court
HELD: 1. Nature of transaction between the plaintiffs and defendant Nos. 1 to 3
1.1 There had not been even a remote suggestion in the documents in question that there was any loan or borrowing transaction between the parties and the said documents were being executing towards security. On the contrary, the recitals and stipulations in the said agreements had only been in affirmation of the agreement for sale and of the receipt of part payment from time to time against the sale consideration. The subordinate Courts proceeded to doubt if the transaction was at all intended to be of sale while questioning as to why the parties fixed the consideration in odd figures i.e., Rs. 22,951/-; and while observing that when as per the documents, the land was being sold @ Rs. 450/- per acre, the total consideration for the land in question would come to Rs. 22,938.75 and not Rs. 22,951/-. The Trial Court also raised doubts on the suggestion of the plaintiffs that possession of the land in question was handed over to them. The First Appellate Court even observed that as against the sale consideration, only a paltry amount was paid in advance and questioned as to why the supplementary agreement was executed after serving of notice. On the other hand, the High Court minutely examined the evidence on record and observed that there was not even a whisper about the loan transaction; and that as per the endorsement made on 24.11.1965, another amount of Rs. 2,000/- was received by defendant Nos. 1 to 3. As regards the supplementary agreement dated 28.04.1966, the High Court again found that there was no whisper about any loan transaction or any security for such a transaction and the document was clearly executed as being the supplementary agreement for sale while even referring to the encumbrances of Rs. 5,000/-, which were to be discharged. The High Court observed that by no stretch of imagination these two agreements could be termed as and by way of security for a loan. Trial Court and First Appellate Court proceeded on entirely irrelevant and rather baseless considerations while failing to consider that such findings on the nature of transaction evidenced by the agreements in question could not have been rendered on surmises and conjectures. [Paras 12.2, 12.3, 12.4][59-C-D; F-H; 60-A-C, D]
1.2 As to whether the possession of the land in question was delivered to the plaintiffs or not, could not have been taken as a factor decisive as regards nature of transaction. Moreover, execution of the supplementary agreement after notice dated 05.04.1966 and after receiving further an amount of Rs. 500/- by the defendant Nos. 1 to 3 could only show re-affirmation of the intention of the parties towards the sale transaction. In the supplementary agreement, the defendants not only acknowledged the receipt of part consideration to the tune of Rs. 6,000/- but further agreed for adjustment of Rs. 5,000/- towards encumbrances and, therefore, agreed to receive remaining Rs. 11,921/- at the time of execution of the sale deed. In view of the dealings of the parties, this circumstance about execution of the supplementary agreement only strengthened the case of the plaintiffs rather than operating against them. [Para 12.4.1] [60-E-G]
1.3 The other observations of the subordinate Courts as regards quantum of consideration is also not convincing. Such hair-splitting exercise by the Trial Court, that on the agreed rate, sale consideration ought to have been Rs. 22,938.75 and as to why the parties agreed for Rs. 22,951/-, had been entirely baseless, rather unwarranted. The observation of the Trial Court as to why the sale consideration was in odd figures is itself of such oddity that any finding on that basis could only meet with disapproval. Rounding up of the amount of consideration and addition of one rupee in the last is not unknown to such transactions. In fact, quite contrary to what was observed by the Trial Court, the figure of sale consideration rather fortifies the deduction that the intention of the parties had only been towards the transaction of sale. [Para 12.4.2] [60-G-H; 61-A]
2. Readiness and willingness of the plaintiffs to perform their part of contract
2.1 The requirement to prove readiness and willingness of plaintiff to perform his part of the contract is not that the plaintiff should continuously approach the defendant with payment or make incessant requests for performance. For the relief of specific performance, which is essentially a species of equity but has got statutory recognition in terms of the Specific Relief Act, 1963, the plaintiff must be found standing with the contract and the plaintiff ’s conduct should not be carrying any such blame worthiness so as to be considered inequitable. [Para 13.2] [62-D-F]
2.2 The plaintiffs pleaded in the plaint that they were ready to get the sale deed executed as per the conditions in the agreement for sale and also stated that they served the notice, then supplementary agreement was executed; and then, on many occasions, they asked the defendant to execute the sale deed. The defendant No. 1 in his written statement merely stated a bald denial that such averments were false and were ‘not agreeable to the defendants’. In fact, the entire emphasis of the written statement had been on the assertion that the agreement in question was not for sale and was obtained by the plaintiffs towards security against the amount borrowed by defendant No. 1. The plea of the plaintiffs as regards their readiness to perform the contract as per its conditions did not meet with categorical denial from the defendants. This apart, even at the time of entering into the agreement, the plaintiffs made payment of a sum of Rs. 3,500/- against the sale consideration of Rs. 22,951/-. Moreover, and much before the stipulated date of execution of sale deed, they made another payment of Rs. 2,000/- against the sale consideration. When the sale deed was not executed by 23.03.1966, the plaintiffs served notice on 05.04.1966. The vendors thereafter executed the supplementary agreement and the plaintiffs made payment of yet another sum of Rs. 500/- while it was also agreed by the vendors that the property carried encumbrance to the tune of Rs. 5,000/-, which was to be adjusted against the sale consideration. Therefore, the plaintiffs were left to make payment of about half of the sale consideration. The recitals in the supplementary agreement even suggested about the vendors having delivered possession of the property in question. [Para 13.3] [62-G-H; 63-A-E]
2.3 The admission of plaintiff No. 3 that she was not possessed of sufficient funds cannot be read in isolation and it cannot be concluded that she was not possessed of sufficient means to pay the remaining sale consideration. Her statement is required to be visualised in the backdrop of the fact that her husband, plaintiff No. 1, had expired and she had succeeded to his estate. Her statement, with reference to her understanding of the matter, could only be interpreted to mean that at the given moment, she was not off-hand in possession of the money to make payment but such an expression in her statement cannot lead to the conclusion that making payment of the remaining sale consideration was beyond her capacity or that she was not willing to perform her part of the contract. The question of readiness and willingness on the part of the plaintiffs was approached by the First Appellate Court from an altogether wrong angle and was decided against the plaintiffs on irrelevant considerations. [Para 13.4] [63-F-H; 64-A]
2.4 So far the period between 1966 to 1968 is concerned, when the plaintiffs had the limitation of three years for filing the suit for specific performance, it cannot be said that during the aforesaid period, the plaintiffs were required to show overt act by them in furtherance of the agreement in question. In this case too, when the plaintiffs had the limitation of three years for filing the suit and have indeed filed the suit well within limitation; and looking to the overall circumstances of the case, no aspect of delay operates against them. The plaintiffs have shown their readiness and willingness to perform their part of the contract and there does not operate any personal bar against their claim for specific performance. [Paras 13.5-13.7] [64-B; 65-D-E] R Lakshmikantham v. Devaraji (2019) 8 SCC 62
– relied on.
Azhar Sultana v. B. Rajamani and Ors. (2009) 17 SCC
27 : [2009] 2 SCR 537 – distinguished.
3. Operation of the doctrine of lis pendens : Section 52 T.P. Act
3.1 The suit in question was filed on 26.08.1968. So far the sale transaction in favour of the defendant Nos. 4 & 5 (appellant Nos. 1 & 2), in relation to 25 acres of land out of the suit property, is concerned, the same was effected by way a sale deed registered only on 10.07.1978 i.e., nearly 10 years after filing of the suit. So far the sale transaction in favour of the defendant No. 6 (appellant No. 3), in relation to other 25 acres of land out of the suit property, is concerned, though it is suggested that there had been an agreement (dated 08.05.1968) in his favour before filing of the suit but then, admittedly, the sale transaction was effected by way of a sale deed registered only on 18.09.1968, that had also been after filing of the suit. The suggestion about want of knowledge of the subsequent purchasers about the transaction of the vendors with the plaintiffs and about the pendency of the suit has been considered and rejected by the High Court and even by the subordinate Court after due appreciation of evidence on record; and there is no nfirmity in these findings. Both the sale transactions in favour of the appellants, purporting to transfer the suit property in part, having been effected after filing of the suit, are directly hit by the doctrine of lis pendens, as embodied in Section 52 of the Transfer of Property Act, 1882. [Para 14.1] [65-G-H; 66-A-CE]
3.2 The effect of doctrine of lis pendens is not to annul all the transfers effected by the parties to a suit but only to render them subservient to the rights of the parties under the decree or order which may be made in that suit. Hence, the effect of Section
52 for the purpose of the present case would only be that the said sale transactions in favour of the appellants shall have no adverse effect on the rights of the plaintiffs and shall remain subject to the final outcome of the suit in question. However, the High Court, while holding that the said transactions were hit by lis pendens, has proceeded to observe further that the sale deeds so made in favour of the appellants were illegal. These further observations by the High Court cannot be approved. [Paras 14.3, 14.4] [67-H; 68-A-B]
4. What should be the relief?
4.1 The High Court though proceeded to mould the relief in the manner that specific performance was granted on enhanced sale consideration and it was also directed that if the plaintiffs fail to make payment within two months, the appellants (subsequent purchasers) would make payment of same amount to the plaintiffs so as to ‘confirm their ownership over the suit land’. However, after it was found that granting the decree for specific performance in the very terms of the agreement/s in question may not be appropriate because of myriad factors, the matter ought to have been examined with reference to the stand of the parties and the provisions of Sections 21 and 22 of the Act of 1963. [Paras 16, 16.1, 16.2] [68-G-H; 69-A-B]
4.2 Some of the relevant factors having bearing on the question of appropriate relief in this matter. First, the agreements in question were executed way back in 1965 and 1966. Secondly, the plaintiffs had paid Rs. 6,000/- as on 28.04.1966 against the sale consideration of Rs. 22,951/- when the supplementary agreement was executed. Thirdly, though the plaintiffs alleged delivery of possession of the land in question to them, the evidence shows that vendors and thereafter, the subsequent purchasers remained in effective possession thereof. Fourthly, the High Court took note of the fact that as on the date of its decision, the subsequent purchasers were in possession of the land in question for about 40 years. Fifthly, the High Court found that the land in question carried much higher valuation at the time of passing of the judgment in second appeal and hence, enhanced the sale consideration to Rs. 10,000/- per acre. Sixthly, the plaintiffs, even while seeking specific performance, consciously prayed for the alternative reliefs of recovery of amount paid by them with interest and compensation to the tune of Rs 15,000/-. Seventhly, plaintiff No. 3 had categorically deposed before the Court as PW1 that he was not entitled to the land in question for being not an agriculturist and he had relinquished his rights in favour of the plaintiff Nos. 1 & 2. Eighthly, the plaintiff No. 1 had expired during the pendency of suit and the plaintiff No. 2 had expired during the pendency of this appeal; though the heir and legal representative of the said plaintiff Nos. 1 & 2 is on record as plaintiff No. 4 (respondent No. 2). Ninthly, the plaintiff No. 2, while deposing as PW2 had stated that in case specific performance was not granted, she ‘may be granted alternative relief and compensation with interest’. In view of this, instead of specific performance, awarding of monetary compensation to respondent No.2 shall meet the ends of justice. Taking all the relevant factors into account, a lump sum of Rs. 15,00,000/- is awarded to respondent No. 2 as compensation in lieu of specific performance. [Paras 16.3, 17] [70-F-H; 71-A-G] Umabai and another v. Nilkanth Dhondiba Chavan (Dead) by LRS. and another (2005) 6 SCC 243 : [2005]
3 SCR 521 ; Sarvinder Singh v. Dalip Singh and Ors. (1996) 5 SCC 539 : [1996] 4 Suppl. SCR 271 ; Veerayee Ammal v. Seeni Ammal (2002) 1 SCC 134 : [2012] 6 SCR 369 ; Pushparani S. Sundaram and Ors. v. Pauline Manomani James (deceased) and Ors. (2002) 9 SCC
582 ; A. Nawab John and Ors. v. V. N. Subramaniyam (2012) 7 SCC 738 : [2012] 6 SCR 369 ; V. Muthusami (Dead) by LRs. v. Angammal and Ors. (2002) 3 SCC
316 : [2002] 2 SCR 37 ; Guruswamy Nadar v. P. Lakshi Ammal (Dead) through LRs and Ors. (2008) 5 SCC
796 : [2008] 7 SCR 435 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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