Jagan Nath
Vs. Jagdish Rai & Ors [1998] INSC 253 (28 April 1998)
S.B.
Majmudar, M. Jagannadha Rao. S.B. Majmudar, J.
ACT:
HEAD NOTE:
This
appeal on grant of special leave to appeal under Article 136 of the
Constitution of India is moved by the original plaintiff whose suit for
specific performance of the suit agreement came to be decreed by the Trial
Court but got dismissed by a learned Single Judge of the High Court and which
dismissal in turn was confirmed by a Letters Patent Bench of the High Court. We
will refer to the appellant as plaintiff and the respondents concerned as
defendants, for the sake of convenience, in the latter part of this judgment.
We may also mention that pending this appeal original defendant no.2 has sold
the suit property to one Yash Pal, son of Shri Hans Raj who is sought to be
joined as party respondent no.4 by I.A. No. 3 moved by the plaintiff. Similar
application is moved by the said purchaser being I.A. No.4. Both these I.As are
granted.
Consequently
the subsequent purchaser has become respondent no.4 in this appeal. He will be
treated as defendant no.4.
A few
relevant facts leading to this appeal are required to be noted at the outset
with a view to appreciating the grievance of the plaintiff.
Background
Facts The suit house consisting of 5 rooms, a verandah and courtyard measuring
7 marlas out of the entire property consisting of 14 marlas situated at Moga
town earlier falling within the district of Faridkot and now included in the
newly formed Moga District in the State of Punjab belonged to defendant no.1 Jagdish
Rai. The said property was mortgaged by defendant no.1 in favour of one Rajinder
Singh by a registered usufructuary mortgage deed Ex. D-3 dated 25th July 1973
for a sum of Rs. 5,000/-. Thereafter defendant no.1 entered into the suit
agreement Ex.P-1 dated 28th
September 1973 in favour
of the plaintiff. As per the said suit agreement defendant no.1 agreed to sell
his right, title and interest in the suit property for a sum of Rs.60.000/-. In
the said agreement it was provided that defendant no.1 will execute the
registration deed by 30th
December 1973 in favour
of the plaintiff. The said agreement recited that defendant no.1 was the sole
owner of the house which was in his exclusive possession and that it was free
from all encumbrances of Government agreement dated 26th December 1973 defendant no.1 Jagdish Rai got the time for execution of
the sale deed under the suit agreement extended upto 30th June 1974. The said extension agreement is
Ex. P- 2. It was recited therein that under the agreement of 28th September 1973 the date of execution of the
registration of the house was fixed upto 30th December 1973. But because he was unable to get
the sale deed executed by 30th December 1973 the date of the execution of the sale deed was extended by mutual
agreement upto 30th
June 1974. Thereafter
defendant no.1 Jagdish Rai entered into a sale deed for Rs.20,000/- conveying
his right, title and interest in one half of the suit property which in turn
was a part of 14 marlas and which was joint with his brother, in favour of Jagir
Singh, son of Kapur Singh. The said sale deed is at Ex. D-1 dated 23rd January 1974. The said sale deed recited that
the entire house consisted of 14 marlas. It was joint with his brother and
consequently one half share of defendant no.1 consisted of 7 marlas which was
earlier mortgaged for Rs.5,000/-= Out of that one half share of defendant no.1
further one half thereof, that is, 1/4th of the entire house to the extent of
3-1/2 marlas was being sold to Jagir Singh for a sum of Rs. 20,000/-. The
document recited that out of Rs. 10,000/- earnest money of Rs. 5,000/- was
received by defendant no.1 and the balance of Rs. 5,000/- was retained by the
purchaser for paying off the mortgagee and the balance of Rs. 10,000/- would be
received by defendant no.1 at the time of execution of the document before Sub-
Registrar, Moga. Said Jagir Singh was joined as defendant no.3 in the suit from
which the present proceedings arise.
Defendant
no.3 Jagir Singh in turn sold the 1/4th share in the entire house of 14 marlas,
which he had purchased from defendant no.1, by entering into sale deed in favour
of defendant no.2 on 27th March 1974 for a sum of Rs. 21,000/-.
Said
document is Ex. D-4. Thus by the said sale deed defendant no.2 purchased 1-1/2 marlas
out of the suit property from defendant no.3. As noted earlier, the suit
agreement is favour of the plaintiff covered 7 marlas being 1/2 share of
defendant no.1 in the entire house originally consisting of 14 marlas. The
remaining 3-1/2 marlas of the suit property was subsequently purchased by
defendant no.2 from defendant no.1 by a registered sale deed dated 02nd April
1974 for a consideration of Rs. 30,000/-. Said document is Ex.D-2. It was
thereafter that the plaintiff filed Civil Suit No. 211 of 1974 in the court of
Sub Judge, 1st Class, Moga for specific performance of the suit agreement
joining defendant no.1 Jagdish Rai the original owner of the property of 7 marlas
being his 1/2 interest in the entire house. He joined defendant no.2 who had by
then become the full owner of entire 7 marlas of defendant no.1's share in the
suit house and which came to be conveyed to him by two documents Ex. D-4 and
D-2 respectively. As noted earlier, the intermediate purchaser of 1/4th share
of defendant no.1 admeasuring 3-1/2 marlas of the suit property was joined as
defendant no.3 and the present purchaser of the entire right, title an d
interest of defendant no.2 in the suit property pending this appeal and who is
joined as respondent no.4 herein is to be treated as defendant no.4.
In the
aforesaid suit the plaintiff contended that he was ready and willing to perform
his part of the suit agreement and, therefore, defendant no.1 was bound to
convey all 7 marlas of the suit property covered by the agreement in favour of
the plaintiff by executing appropriate sale deed and by putting the plaintiff
in possession of the suit property. It was also contended that defendant no.2
and defendant no.3 were not bonafide purchasers for value without notice and,
therefore, appropriate decree for specific performance was required to be
passed also against them, especially against defendant no.2 who was by the time
of the suit representing the entire interest of defendant no.1 in the suit
property which was passed on to him pursuant to the aforesaid intermediate
transactions of sale prior to the suit. It was alternatively prayed that a
decree for Rs. 10,000/- as damages be passed in favour of the plaintiff and
against the defendant.
The
suit was contested by the defendants. Defendant no.2 being a minor was
represented by his guardian Kishan Chand, his father who contested the suit on
his behalf. The learned Trial Judge after framing issues and recording evidence
came to the conclusion that defendant no.1 had agreed to sell the house in
dispute to the plaintiff on the terms given in the agreement Ex.P-1, that the
plaintiff was ready and willing to perform his part of the agreement and that
defendant no.2 was not a bona fide purchaser of the suit property for value without
notice and that the plaintiff was entitled to specific performance of the
agreement. The learned Trial Judge, therefore, decreed the plaintiff's suit for
specific performance of the agreement against defendant nos.1 and 2. In
addition to the aforesaid decree for specific performance defendant no.1 was
also called upon to pay to the plaintiff Rs. 10,000/- as damages as stipulated
in the agreement Ex. P-1, as according to the learned Trial Judge defendant
no.1 had gone back upon the agreement and had not executed the sale deed
according to the terms of the agreement. Defendant no.1 was also asked to bear
the cost of the suit.
The
aforesaid decree passed by the Trial Court in favour of the plaintiff on 21st October 1976 resulted in two appeals before the
High Court of Punjab and Haryana at Chandigarh. One appeal was moved by defendant no.1 while another companion appeal
was moved by defendant no.2. The learned Single Judge of the High Court noted
in paragraph 3 of his judgment that the main controversy between the parties in
these appeals was as to whether Lalit Mohan, defendant no.2, was a bona fide
purchaser without notice or not and whether the plaintiff was entitled to the
relief for specific performance of the agreement to sell or not. The findings
of the Trial Court on other issues in favour of the plaintiff were not
challenged by the appellants in the High Court. So far as the aforesaid point
for determination was concerned the learned Single Judge of the High Court came
to the conclusion on re-appreciation of the evidence that defendant no.2 was a
bona fide purchaser for value without notice and hence specific performance
could not be granted against him. However, the decree for damages of Rs.
10,000/- as passed by the Trial Court against defendant no.1 was required to be
confirmed. Accordingly both the appeals were allowed. Judgment and decree of
the Trial Court were set aside and the plaintiff's suit was decreed against
defendant no.1 Jadgish Rai for recovery of Rs. 10,000/- as damages only.
Interest was awarded to the plaintiff on the aforesaid amount at 6% p.a. from
the date of the decree of the Trial Court till its realisation. The aforesaid
decision was rendered by the learned Single Judge of the High Court on 31st October 1985. The plaintiff carried the matter
in Letters Patent Appeal before a Division Bench of the High Court. The
Division Bench of the High Court by its order dated 03rd April 1986 held that no case for interference was made out by the
plaintiff and hence appeal was dismissed.
That
is how the dissatisfied plaintiff has filed the present appeal on grant of
special leave by this Court.
Rival
Contentions Learned senior counsel Shri Rajinder Sachar appearing for the
plaintiff vehemently contended that the burden of proof was very heavy on
defendant no.2 for showing that he was a bona fide purchaser for value without
notice and that burden was not legally discharged by him. That the evidence on
record clearly indicated that with a view to frustrate the plaintiff's
agreement and in full know thereof defendant no.2 had entered into the
transactions of sale in his favour and, therefore, the solitary contention
canvassed in appeal by these contesting defendants should have been answered by
the learned Single Judge against the defendants and in favour of the plaintiff
and the decree passed by the Trial Court ought to have been confirmed. In
support of his contentions Shri Sachar took us through the relevant documentary
and oral evidence on record of this case to which we will make a reference hereinafter.
He also invited out attention to one decision of this Court and two decisions
of Privy Council to which also we will make a reference at an appropriate stage
in the latter part of this judgement.
Refuting
these contentions Shri M.L. Verma, learned senior counsel appearing for the
newly added respondent defendant no.4, who in substance is the only contesting
party at the present stage as he is the owner of the suit property having
purchased the same pending these proceedings, submitted that his predecessor-interest
defendant no.2 was rightly held as bona fide purchaser for value without notice
by the learned Single Judge of the High Court and that finding was rightly
upheld by the Division Bench of the High Court. That the finding is based on pure
appreciation of evidence and is not perverse or uncalled for and hence in
exercise of our powers under Article 136 of the Constitution of India we may
not interfere with the said pure finding of fact. He further submitted that he
has purchased this property pending this appeal when there was no injunction
against the original defendants especially defendant no.2 restraining him from
dealing with his property or disposing it off. He, however, fairly stated that
as the transaction is pending this appeal on the principle of 1st penance he
would be liable to answer the claim of the plaintiff and to satisfy the claim
of the plaintiff if ultimately plaintiff succeeds on merits.
However,
Shri Verma submitted that defendant no.4 has purchased the property by parting
with hard earned money of Rs. 1,20,00/- and odd in 1993. That according to him
situation in Punjab at that time was very uncertain due
to terrorism. That defendant no.4 had purchased the property in question after
making inquiries from the present appellant who agreed that he had no interest
in the property as the litigation had already taken 20 years. This submission
was made on the basis of the averments made in paragraph 6 of I.A. No.4 moved
by him for being joined as party in this appeal invoking provisions of O. XXII
R.10. Code of Civil Procedure. Shri Verma submitted that though the copy of
this I.A. was served on the learned counsel for the appellant no counter has
been filed. He next submitted, placing reliance on relevant aspects of t he
evidence both documentary and oral to which eh invited our attention, that in
any case defendant no.4's predecessor-in-interest defendant no.2 was clearly
shown to be a bona fide purchaser for value without notice of the plaintiff's
agreement. That the learned Single Judge of the High Court had held on
appreciation of evidence that defendant no.2's father was a sitting tenant and
as he had purchased t he suit property in two instalments there was no occasion
for him to enter into this transaction if he had known about the suit
agreement. He lastly contended that in any case this being equity jurisdiction
the plaintiff who is in a very affluent condition as seen from the evidence and
having number of immovable properties in the town while defendant no.4 is
having the only suit house for his residential purposes which he is occupying
since more than five years, this Court may not exercise powers under Article
136 of the Constitution of India for upsetting the decision of the High Court
in favour of his predecessor-in-interest defendant no.2. Shri Sachar, learned
senior counsel for the plaintiff in rejoinder reiterated his contentions in
support of the appeal.
Points
for determination In the light of the aforesaid rival contentions the following
points arise for our consideration :
1.
Whether the decision of the learned Single Judge of the High Court as confirmed
by its Division Bench in Letters Patent Appeal to the effect that defendant
no.2 was a bona fide purchaser for value without notice, is erroneous and
liable to be set aside.
2.
Even if the finding on Point No. 1 is against the contesting defendants whether
the plaintiff is entitled to a decree for specific performance in the facts and
circumstances of the case.
3.
What final order ? We shall deal with these points seriatim.
Point
No. 1 The aforesaid resume of facts makes it very clear that the real question
in controversy between the parties which now survives for consideration is
whether defendant no.4's predecessor-in-interest defendant no.2 was a bona fide
purchaser for value without notice of the suit agreement. If the answer to this
question is in the affirmative nothing further would survive in this appeal.
In
order to appreciate the rival contentions centering round this limited
controversy it is necessary to note the well settled legal position governing
the same. Section 19 of the Specific Relief Act, 1963 lays down that, `except
as otherwise provided by this Chapter, specific performance of a contract may
be enforced against - (a) either party thereto; (b) any other person claiming
under him by a title arising subsequently to the contract, except a transfer
for value who has paid his money in good faith and without notice of the
original contract;'. We are not concerned with other sub-clauses of Section 19.
It is not in dispute between the contesting parties that defendant no.2 was
partly claiming through defendant no.1 who is a party to the suit agreement and
was partly through defendant no.3 who in his turn was claiming through
defendant no.1 who was admittedly party to the suit agreement. As ultimately
the entire suit property came to be vested in defendant no.2 prior to the date
of the suit, the moot question examined by the Trial Court as well as by the
Appellate Court as to whether defendant no.2 was a transferee for value without
notice of the original contract requires resolution in the light of the
evidence on record. It is well settled that the initial burden to show that the
subsequent purchaser of suit property covered by earlier suit agreement was a
bona fide purchaser for value without notice of the suit agreement squarely
rests on the shoulders of such subsequent transferee. In the case of Bhup Narain
Singh v. Gokul Chand Mahraj and Others [Air 1934 PC 68] the Privy Council
relying upon earlier Section 27 of the Specific Relief Act of 1877 which is in Pari
Materia with Section 19(1)(b) of the present Act, made the following pertinent
observations at page 70 of the Report in this connection ;
"Section
27 lays down a general rule that the original contract may be specifically
enforced against a subsequent transferee, but allows an exception to that
general rule, not to the transferor, bu to the transferee, and therefore it is
for the transferee to establish the circumstances which will allow him to retain
the benefit of a transfer which prima facie, he h ad no right to get :"
However, it has to be kept in view that once evidence is led by both the sides
the question of initial onus of proof pales into insignificance and t he Court
will have do decide the question in controversy in the light of the evidence on
record. Even this aspect of the matter is well settled by a decision of Privy
Council in the case of Mohammad Aslam Khan and Others v. Neraze Shah [AIR 1932
PC 228] wherein it was observed with reference to the very same question
arising under Section 27(b) of the earlier Specific Relief Act of 1877 that `it
is not necessary to enter upon a discussion in the case is before the Court and
it has no difficulty arriving at a conclusion in respect thereof.
Where
a transferee has knowledge of such facts which would put him on inquiry which
if prosecuted would have disclosed a previous agreement, such transferee is not
a transferee without notice of the original contract within the meaning or the
exception in Section 27(b).' Under these circumstances, therefore, it becomes
necessary for us to quickly glance through the relevant evidence on record both
oral and documentary, which was considered by the Trial Court in the first
instance and which was re-considered by the first Appellate Court of learned
Single Judge of the High Court subsequently in the appeals moved by the
contesting defendants. We have already noted the sequence of events reflated by
the relevant documents on record dealing with the suit property from time to
time. We have to keep in view the salient fact that defendant no.1's one half interest
in the suit property consisting of 7 marlas was already subjected to a usufructuary
mortgage in favour of Rajinder Singh as per Ex. D-3 dared 26th July 1973. When
this registered usufructurary mortgage deed was executed by defendant no.1 in favour
of the mortgagee the suit agreement had not seen the light of the day. The said
mortgage document clearly recites that defendant no.1 had mortgaged one half
share in the entire suit house of 14 marlas, meaning thereby, entire 7 marlas
which subsequently got covered by the suit agreement in favour of the
plaintiff. The usufructuary mortgage was for a consideration of Rs. 5,000/-/.
It is interesting to note that though the suit property was subjected to usufructuary
mortgage and it was clearly recited in the mortgage deed that possession was
handed over to the mortgagee from the date of the document, when we turn to the
suit agreement Ex. P-1 we find that the very same mortgagor Jagdish Rai,
defendant no.1 while entering into the suit agreement in favour of the
plaintiff and agreeing to sell his right, title and interest in the suit
property for Rs. 60,000/-, had the cheek to mention that the house was free
from all encumbrances and mortgages and he was the sole owner of the house
which was in his exclusive possession. It is, therefore, clear that in order to
lure the plaintiff to agree to purchase the house for a consideration of Rs.60,000/-
defendant no.1 made a wrong statement in the said agreement. Shri Sachar,
learned senior counsel for the plaintiff was right in his submission that the
suit agreement never informed the plaintiff that the suit house was already
burdened by way of usufructuary mortgage in favour of Rajinder Singh only two
months back. He was also right when he contended that a recital was made
therein that defendant no.1 was in exclusive possession thereof, meaning
thereby, the fact that the very same suit property was under usufructuary
mortgage with the mortgagee Rajinder Singh was suppressed from the plaintiff by
defendant no.1. Be that as it may, Shri Sachar submitted that he does not
dispute the burden of said mortgage on the suit property and was prepared to
stand by the suit agreement even subject to the burden of the said mortgage.
However, that will not be the end of the matter. It becomes almost at once
clear that recital in the agreement to sell to the effect that defendant no.1
was in exclusive possession at the time of the suit agreement in favour of the
plaintiff was clearly a false recital. So far as the plaintiff is concerned he
also cannot get away from the fact that on the very same suit property which
was agreed to be sold to him under the suit agreement there was a burden of usufructuary
mortgage as per Ex. D-3 which was a registered document and which would
obviously visit the plaintiff with the notice of such encumbrances. It is this
agreement which came to be extended by mutual consent because defendant no.1
was not in a position to execute the sale deed by 30th December 1973 and
consequently the time for execution of the sale deed was extended upto 30th
June 1974 as seen from Ex. P-2.
It is
in the light of the aforesaid events that we have to see as to what happened
after Ex.P-2 was executed. The documentary evidence shows that defendant no.1 who
had got time upto 30th June 1974 to execute the sale deed and get the balance
of money from the plaintiff pursuant to the suit agreement appeared to be in
great financial need and wanted early money. That resulted in his entering into
two transactions by which he sold the very same suit property of 7 marlas in
two instalments. Firstly he sold 3-1/2 marlas for Rs. 20,000/- by Ex. D-1 in favour
of defendant no.3 Jagir Singh. This defendant no.3 by earning a profit of
Rs.1,000/- sold the very same 3-1/2 marlas purchased by him from defendant no.1
to defendant no.2 on 27th March 1974, as seen from Ex. D-4. Defendant no.1 on
his part sold the remaining 3-1/2 marlas consisting of the other 1/4th interest
in the suit property, which had remained with him, to defendant no.2 by sale
deed Ex. D-2 for Rs. 30,000/- on 02nd April 1974. Thus it appears that before the time limit of 30th June
1974 for executing the sale deed as per the suit agreement Ex. P-1 read with
Ex. P-2 expired defendant no.1 who appeared to be in great need of money sold
off in two instalments the very same suit property for a total amount of Rs.
50,000/- thus, suffering a loss of Rs.10,000/- in the bargain. The learned
Single Judge of the High Court rightly placed strong reliance on this
circumstance to show that as defendant no.1 had sold the property in two instalments
which ultimately came in the hands of defendant no.2 as the full owner who had
parted with the total consideration of Rs. 51,000/-. In the process defendant
no.1 suffered a loss of Rs. 10,000/-. Had defendant no.1 stood by the suit
agreement he would have got Rs. 50,000/-, instead he sold the property earlier
in two instalments getting only Rs. 50,000/-. Learned senior counsel Shri Sachar
for the plaintiff submitted that it is easy to visualise that the sale price
mentioned in the document may not reflect the real amount and there may be some
under-hand dealing between the parties. It is difficult to appreciate this contention
for the simple reason that to none of the witnesses examined in the case was
such a case put up. Even that apart, such contention was never canvassed before
any of the courts below. Therefore, such a contention based on pure imagination
or supposition of the learned senior counsel not backed up by any evidence on
record cannot be countenanced. We must, therefore, proceed on the basis that
defendant no.1 after having entered into suit agreement in favour of the
plaintiff in September 1973 and having got the time for execution of the sale
deed thereunder extended upto 3-th June 1974 was in such a great need of money
that he had tp part with the suit property in two instalments by selling it off
having suffered a loss of Rs. 10,000/- in the bargain. When such was the dire
necessity and need of defendant no.1 it is obvious that he would see to it that
no whisper about the suit agreement would eve be made to the prospective
purchaser-parties to Ex. D-2w and D-1. It become at once probable to visualise
that if defendant no.1 had ever whispered about the suit agreement the
prospective purchasers would have backed out being scared of the future
litigation which they would have been required to undergo.
Therefore
on the broad test of probabilities in the light of the aforesaid events duly
reflected by the relevant documents on record it becomes clear that the first
purchased from defendant no.1, namely, Jagir Singh defendant no.3 as per Ex.
D-1 and also defendant no.2 who purchased the other half of the suit property
from defendant no.1 as per Ex. D-2 entered into these sale transaction with
defendant no.1 without knowing that the suit property which they were
purchasing was subject to any subsisting prior agreement to sell in favour of
the plaintiff. The conclusion to which the learned Single Judge of the High
Court reached as aforesaid remain well sustained on the touchstone of
probabilities on the record of the case and calls for no interference in the
present proceedings.
But
leaving aside this documentary evidence which has the aforesaid tell-tale
effect let us new turn to the oral evidence with a view to finding out whether
the appreciation there of by the learned Single Judge of the High Court and as
confirmed by the Division Bench of the High Court in Letters Patent Appeal
suffers from any gross error which requires to be rectified in the present
proceedings. In order to prove the execution of the suit agreement plaintiff
witness no.1 Nahur Chand, Advocate was examined by the plaintiff. As there is
not dispute regarding the execution of the suit agreement the evidence of the
said witness is not of much relevance so far as the present dispute is
concerned. The second witness examined by the plaintiff was Amrit Lal son of Sadhu
Ram, P.W.2. He was an attesting witness to the suit agreement. Evidence of this
witness also falls in line with the evidence of P.W.1 and concerns the
execution of the suit agreement. Therefore, it is equally irrelevant for
deciding the present controversy. Bharat Mittal, P.W.3 is a witness for proving
the extension of the period for execution of the sale deed as per Ex. P-2. In
his cross-examination it has been brought about that there was a dispute
between defendant no.1 and his brother regarding the property in dispute and as
such the date for execution of the sale deed was extended. The evidence of this
witness shows that defendant no.1 was not in a position to execute the sale
deed in favour of the plaintiff pursuant to the suit agreement within the time
limit. i.e., December 1973 because of the dispute with his brother as his
brother was having 1/2 undivided share in the entire house of 14 marlas cut of
which defendant no.1 was having ownership of 7 marlas which was covered by the
suit agreement Ex. P-1. Evidence of this witness, therefore, justifies the
subsequent conduct of defendant no.1 in trying to dispose off the suit property
and get ready money as soon as possible so that he could dispose off his 1/2
undivided interest in the property and walk away with the cash consideration of
at least Rs.50,000/- even after suffering a loss of Rs. 10,000/- may not
waiting to comply with the suit agreement till June 1974.
Subsisting
dispute between defendant no.1 and his brother might have prompted defendant
no.1 to hurriedly sell off his undivided interest in the suit property without
waiting till 30th June 1974. P.W.4 Shri Jagan Nath, Advocate was an attesting
witness to the extension document Ex. P-2. In cross-examination the witness
stated t hat Kishan Chand, guardian of minor defendant no.2 was not present at
the time of the execution of agreement Ex.P-2. He had no talk with Kishan Chand
regarding the execution of agreement Ex. P-2.
This
supports the case of defendant no.2's guarding Kishan Chand that he never knew
about the suit agreement or its extension Ex.P-2. Plaintiff's next witness is Surinder
Kumar P.W.5 who was scribe of suit agreement Ex.P-1. In his cross- examination
he stated that he did not remember if Kishan Chand, guardian of minor defendant
no.2 was present at the time of execution of agreement Ex. P-1. He could not
say if h e had any talk regarding the execution of agreement Ex. P- 1 with Kishan
Chand. The evidence of P.W.5 runs parallel to t he evidence of P.W.4 and
clearly indicates that guardian of defendant no.2 was not in know of either the
suit agreement Ex. P-1 or the extension agreement Ex. P-2.
Evidence
of P.W.6 Prem Kishan does not throw any light on this moot question. Plaintiff
himself was examined as P.W.7.
In his
examination-in-chief he nowhere stated about defendant no.2 through his
guardian having any knowledge about the suit agreement. Shri Sachar, learned
senior counsel for the plaintiff in this connection submitted that as initial
burden to prove this issue was on defendant no.2 plaintiff could lead only
rebuttal evidence in this connection after defendant no.2's evidence was led on
this aspect. We will refer to the rebuttal evidence later on.
Suffice
it to say that when the plaintiff came to the witness box as P.W.7 in the first
instance nowhere in his examination-in-chief he even whispered about the latter
transactions by defendant no.1 in favour of defendant nos.2 and 3 to have been
entered into by them with knowledge of plaintiff's agreement though he had
joined defendant nos.2 and 4 in the suit on that basis. In this connection it
is interesting to refer to paragraph 3 of the plaint which reads as under :
"8.
Plaintiff has learnt that defendant No. 1 has transferred the house to Shri Lalit
s/o Kishan Chand of Moga Mandi 1/2 share and one Jagir Singh 1/2 share. Then Jagir
Singh transferred 1/2 share purchased by him in favour of Shri Lalit Mohan s/o Kishan
Chand of Moga Mandi defendant No.2. These transactions have been effected
without consideration with notice of the agreement of sale in favour of
plaintiff. Moreover these transactions are fraudulent. Shri Lalit Mohan is
minor, Kishan Chand father of Lalit Mohan was in the run for the purchase of
the house in dispute but he failed and now defendants and Kishan Chand have
conspired to harm the plaintiff." Despite this clear case put up by the
plaintiff in his plaint when he entered the witness box as P.W.7 he did not
think it fit even to whisper about the transaction of defendant nos.2 and 3
being entered into with knowledge of suit agreement to sell in favour of the
plaintiff. In cross- examination plaintiff stated that the house was lying
vacant at the time of the execution of the agreement and that defendant no.1.
This statement of plaintiff in his cross- examination is patently false for the
simple reason that defendant no.1 had already entered into a registered usufructuary
mortgage deed two months prior to the suit agreement and consequently the house
would never have been vacant at the time of the execution of the agreement to
sell as it would have been in possession of either the usufructuary mortgagee
or any tenant on his behalf. But in any case it would never be lying vacant at
the time of the execution of the suit agreement. It must, therefore, be held
that plaintiff tried to make a totally false case in his cross-examination on
this aspect and did not appear to have any regard for truth. It is in that
light that we have to appreciate what he stated in the last four lines of his
cross-examination when he deposed that he did not even talk to anybody regarding
the transaction in dispute. In December 1973 when he had a talk with Kishan Chand
only two persons were present at that time. The said statement of his to say
the least is totally laconic once having said that he did not remember if he
had any talk with anyubody regarding the transaction in dispute, it is
difficult to appreciate how in the next breath he could say that he had a talk
with Kishan Chand. It is also pertinent to note that he had not courage to
mention that the said talk pertained to the suit agreement. But even that apart
in December, 1973 when the extension agreement Ex. P-2 was entered into
defendant no.2's father was not present as clearly admitted by P.W.4 Jagan Nath
in his cross-examination to which we have made a reference earlier. Thus the
plaintiff's aforesaid version regarding the talk with Kishan Chand as revealed
from the last lines of his cross-examination stands completely falsified by his
own witness Jagan Nath P.W.4 and also by his own laconic statement aforesaid.
It is also obvious that his version of the plaintiff does not stand the test of
probability for the simple reason that if that were so defendant no.2 through
his guardian would not have entered into two suit transactions piecemeal as
reflected by the documents to which we have made a reference earlier especially
when it was in the interest of defendant no.1 not to divulge about the suit
agreement to these prospective purchasers as that would have sabotaged his
efforts to sell off his property and to encash his interest in the suit
property even by suffering a loss of Rs, 10,000/-, as noted earlier. Defendant
no.1 was examined as D.W.1. In his cross- examination he stated that a
partition suit was pending between him, his brother and his father and that was
compromised on 2nd or 3rd January 1974. It appears that only thereafter that he
sold off a part of the suit property to Jagir Singh and thereafter another part
to defendant no.2 D.22.1 Vidya Prakash son of Dev Raj was an attesting witness
to sale deed Ex. D-2 by which defendant no.1 sold his remaining 1/2 interest in
the suit property to defendant no.2 for Rs. 30,000/-. Witness stated that at
the time of the document Kishan Chand was in the possession of the house.
Witness denied t he suggestion that he was tendering false evidence on account
of his relationship with Kishan Chand. Witness Jagtar Singh D.2.W.2. was an
attesting witness to Ex.D-1. As these transactions are not in dispute we need
not dilate one evidence of these witnesses. Kishan Chand was examined as D.2.W.5.
He is the guardian of defendant no.2. On the question about his knowledge of
the suit agreement he stated in his examination-in-chief that he was not aware
of any transaction between he plaintiff and defendant no.1. Jagan Nath,
plaintiff or any person never talked to him about agreement of sale in favour
of the plaintiff. This statement of his in his examination-in-chief is not at
all challenged in the cross-examination on behalf of the plaintiff. He had
stated in his examination-in-chief that he had taken the house in dispute
before sale as a tenant. Earlier he took the house from defendant no.1 Jagdish Rai
and later he stated paying rent to mortgagee Rajinder Singh. It has to be kept
in view that Rajinder Singh was the mortgagee in possession under usufructuary
mortgage Ex. D-3 as noted earlier. Therefore, his version that earlier he was a
tenant of defendant no.1 and thereafter started paying rent to the mortgagee in
possession Rajinder Singh stands well corroborated by the registered Mortgage
Deed Ex. D-3. In this cross-examination it was brought out that no rent note
was executed by him in favour of Jagdish Rai, Jagir Singh defendant no.3 or Rajinder
Singh, the mortgage in possession. But he re- affirmed that he used to pay Rs.
500/- as rent, but the payment of rent was not entered in his account books.
Learned
senior counsel Shri Sachar vehemently contended in the light of this evidence
that this witness cannot be believed about his alleged tenancy of the suit
property as he had nothing to show that he h ad paid rent of Rs. 60/- per month
to any o f the aforesaid persons. There was no documentary evidence in this
connection. It h as to b e kept in view that his house was said to be occupied
by the witness Kishan Chand as a residential premises. He was not carrying on
any business in the said premises. No such case is put up by even the
plaintiff. Therefore, merely because he had not entered the payment of Rs. 50/-
in his account books it would not be clinching circumstance for disproving
defendant no.2's father's tenancy. On the contrary in his cross-examination he
reiterated that he used to pay Rs. 50/- to Rajinder Singh as the house was
under mortgage with him.
As
noted earlier, this part of his statement is fully corroborated by the
clinching documentary evidence of usufructuary mortgage Ex. D-2 in favour of Rajinder
Singh which had seen the light of the day months prior to the suit agreement in
favour of the plaintiff. Our attention was invited by Shri Sachar, learned
senior counsel for the plaintiff, to the further evidence in cross-examination
of witness Kishan Chand to the effect that it is correct that he was anxious to
purchase the house prior tot he agreement but he did not know when the
agreement was executed. It is difficult to appreciate how the said statement
contra- indicates his theory of being a tenant of the suit house or that it
visits him with the knowledge of the suit agreement.
When
he h ad clearly stated that he did not know when that agreement tool place, his
statement that he was anxious to purchase the house prior to the agreement only
shows that he was anxious to purchase even prior to the date on which the suit
agreement came to be executed. That has reference to the time of execution of
such agreement and has nothing to do with the knowledge about the suit
agreement with defendant no.2's guardian, as tried to be suggested by Shri Sachar
for the plaintiff. In the light of this evidence, therefore, learned Single
Judge was right in his view that defendant no.2's father was a sitting tenant
of the suit houses and because he was anxious to purchase the house he
purchased the same in two instalments, as seen earlier. Shri Sachar, learned
senior counsel for the plaintiff in this connection submitted that if defendant
no.2 was held to be a sitting tenant of the house it would be obvious, as held
by the Trial Court, that he would come to know about the suit agreement as the
plaintiff had stated that he had visited the suit house at the time of the
execution of the suit agreement. It is difficult to appreciate this contention
for t he simple reason that when the plaintiff stated in his deposition as
P.W.7 that he had visited the house which was lying vacant at the time of the
execution of the agreement, his said version is found to be a false one, as
discussed earlier. It is well established on record that as the suit house was
not vacant by the time suit agreement was executed as it was already under usufructuary
mortgage of Rajinder Singh, plaintiff's version that when he visited the house
it was vacant has to be held to be a concocted one.
Consequently
it must be held that witness Kishan Chand was right when he contended that he
was a sitting tenant of the house who was paying rent earlier to defendant no.1
and thereafter to the usufructuary mortgage Rajinder Singh and that the
statement of the plaintiff that he visited the house at the time of suit
agreement was not believable.
Consequently
there was no occasion for defendant no.2's father to ever come in contact with
the plaintiff prior to his sale transaction. On the contrary his version that
he had no talk with the plaintiff regarding the said transaction not did he
talk about the same prior to his purchase as deposed to in his
examination-in-chief had remained unchallenged in his cross-examination and,
therefore, this version of his was rightly accepted by the learned Appellate
Judge. When we turn to the rebuttal evidence of plaintiff P.W.7 we find that he
has tried to make out a new case which was not deposed to by him even earlier.
In his rebuttal evidence he stated that the day he went to see the house in
dispute it was Jagdish Rai who had the keys with him and had shown the house
after opening the door. This version of his is completely falsified by the fact
that the house was in possession of usufructuary mortgagee or his tenant
defendant no.2 and the keys thereof could never have been with defendant no.1.
It, therefore, becomes clear that the witness had no regard for truth. His
further evidence in rebuttal that he talked three times with Kishan Chand about
having entered into agreement with defendant no.1 regarding purchase of house
is clearly falsified by the fact that earlier when he entered the box he never
whispered about the same. Not only that but in cross-examination at the stage
of rebuttal evidence he stated that he did not remember about his having talk
with his in the plaint nor in his earlier deposition he had ever stated to that
effect. It is difficult to appreciate how he missed to state this vital aspect
of the matter to his advocate earlier when he got his plaint drafted and also
at the stage of his earlier evidence on oath. It, therefore, becomes clear that
at the stage of rebuttal he tried to make out a new case which was neither
pleaded by him nor deposed to earlier and it was clearly an afterthought and a
false version. In the light of the aforesaid oral evidence, therefore, the
conclusion reached by the learned Single Judge of the High Court that defendant
no.2 through his guardian was a bona fide purchaser for value without notice of
the suit agreement, stands well established. The documentary as well as oral
evidence leave no room for doubt that the aforesaid findings are well sustained
on the record of the case and call for no interference in the present appeal.
Learned
senior counsel Shri Sachar for the plaintiff, however, was right when he
contended that the learned Single Judge of the High Court was in error when he
took the view that because Kishan Chand was a sitting tenant he had a better
right to purchase the property. Such a right of pre- emption obviously was not
even pleaded by defendant no.2, nor was it supported by learned senior counsel Shri
Verma for the contesting defendant, defendant no.4. Learned senior counsel Shri
Sachar was also right when he contended that the learned Single Judge was in
error when he took the view that because the time for execution of the sale
deed had expired on 30th
December 1973 there
was nothing wrong in defendant no.1 selling off the property in January, 1974
onwards. Shri Verma, learned senior counsel for the respondents fairly stated
that the said reasoning of the High Court cannot be sustained in the light of
Ex. P-2 extending the time upto 30th June 1974. But the said errors demonstrated by learned senior counsel
Shri Sachar for the plaintiff from the judgment of the learned Single Judge of
the High Court cannot shake the main foundation of the finding reached by the
learned. Appellate Judge, namely, that defendant no.2's father Kishan Chand was
a bona fide purchaser of the suit house without notice of suit agreement.
Learned
senior counsel for the appellant also invited out attention to the written
statement of defendant no.1, especially para thereof, wherein it is stated that
plaintiff had committed breach of contract, market h ad come down and due to
the fact that there was an agreement between the plaintiff third persons were
not willing to pay the market value. As a matter of fact defendant no.1
suffered a loss of Rs. 10,000/- on account of breach of contract on behalf of
the plaintiff. Learned senior counsel for the appellant on the basis of these
averments of defendant no.1 in his written statement, submitted that when
defendant no.1 himself had come with a case that third parties were not willing
to pay market value because of the agreement of defendant no.1 with the
plaintiff it would be obvious that a third party like defendant no.2 must have
knowledge about the agreement. It is difficult to appreciate this contention.
Whatever defendant no.1 might have stated in the written statement, at the
stage of his evidence before the court when defendant no.1 examined himself as
D.W.1 no such case was put to him on behalf of the plaintiff. Not did he state
to that effect in his evidence. Not only that similar case was not even put to
defendant no.2's guardian Kishan Chand when he was examined as D.2.W.5.
Therefore, the bald assertion of defendant no.1 in the written statement merely
remained as such. It was next contended that when defendant no.1 sold a part of
the suit property for Rs. 20,000/- to Jagir Singh as per Ex. D-1 on 23rd
January 1974 it was most unnatural for Jagir Singh to sell the very same
property within two months on 27th March 1974 as per Ex. D-4 to defendant no.2
by getting a profit only of Rs. 1,000/- and, therefore, all these documents
appear to be a part of a common conspiracy to frustrate the plaintiff's
agreement. We fail to appreciate how this contention can at all be advanced by
learned senior counsel for the appellant to foist knowledge of plaintiff's agreement
with defendant no.1 on defendant no.2. Whether Jagir Singh was justified in
selling within two months the property purchased by him by getting profit only
of Rs. 1,000/- or not, is a circumstance which has no bearing on this moot
question. On the contrary it suggests that at the relevant time when defendant
no.2 was a sitting tenant Jagir Singh might have been persuaded to sell off the
property purchased by him by getting profit of only Rs. 1,000/-. That also
indicates that the price of property might not have got higher escalation in
those days and the real estate market appeared to have remained almost steady.
To say the least it is an equivocal circumstance which cannot conclusively
establish that defendant no.2 had knowledge of plaintiff's agreement when he
entered into this transaction with Jagir Singh. It is of course true, as
rightly pointed out by learned senior counsel for the appellant Shri Sachar,
that the time limit for execution of the sale document as per plaintiff's
agreement with defendant no.1 which was to expire on 30th December 1973 was
extended at the request of the vendor defendant no.1 upto June 1974. But that
would not necessarily show that when defendant no.1 entered into sale deed in favour
of defendant no.2 as per document Ex. D-2 dated 02nd April 1974 defendant no.2 must have got knowledge about the
plaintiff's agreement by that time. Nor would it show that defendant no.1 when
he sold the half of its interest in the suit property to Jagir Singh as per Ex.
D-1 on 23rd January 1974 he would have conveyed to Jagir Singh that there was
already an agreement entered into by defendant no.1 with the plaintiff. On the
contrary, as seen earlier, it is probable that he would never convey this fact
either to Jagir Singh or to defendant no.2 as then they would get scared and
would not like to enter into sale transactions and pay consideration money to
defendant no.1 pursuant to those two sale documents.
Consequently
even on the touchstone of broad probabilities it is difficult to appreciate how
it could be said that defendant no.2 must have got knowledge of the suit
agreement when he purchased part of the suit property from defendant no.1 or
that his vendor Jagir Singh had knowledge about the suit agreement when
defendant no.1 sold his half interest in the suit property to said Jagir Singh.
Before
parting with the discussion on this point, we may refer to a decision of this
court in the case of Dr. Govindas and another v. Smt. Shantibai and others [IAR
1972 SC 1520]. In paragraph 14 of the Report Sikri, CJ., while appreciating the
evidence in the said case has made the following observations :
"It
will be noticed that the evidence is contradictory and we have to decide whose
version is more acceptable. The learned counsel for the appellants contended
that the onus of proof was very light on the appellants and they had discharged
it by entering t he witness box and stating that they had no knowledge.
We are
unable to agree with him that in the circumstances of this case the onus was
light on the appellants. The circumstances that tell heavily against the
version of the appellants are these. First, all the parties are residents or
have shops in the same vicinity and in places like this it is not probable that
the appellants of the agreement (Souda Chitthhi) of the plaintiff. Secondly,
the haste with which the sale deed in favour of the appellants was executed was
unusual. It is more usual for an agreement to be executed in such cases rather
than arrive at an oral agreement on one day an d have the sale deed executed
the next day and registered the following day. For some reason the appellants
were in a hurry to get the deed registered.
What
was the reason? In view of all the circumstances we are inclined to accept the
evidence of Ham Raj Chouhan, and corroborated by Hayat, that Goverdhandas knew
of the execution of the agreement with the plaintiff on March 1, 1960." It is difficult to
appreciate how the aforesaid observations of this Court can be of any avail to
the learned senior counsel for the plaintiff in peculiar facts of this case to
which were have made a detailed reference earlier. In the aforesaid case
because the parties were residents and having shops in the same vicinity it was
found not probable that the appellant could not come to know about the
execution of the agreement. It was also observed that the appellant was in
great hurry to sell without an agreement to sell. In the light of the said
evidence before this Court the conclusion was reached that evidence of Hem Raj Chouhan
and corroborated by Hayat that the appellant knew of the execution of the
agreement had to be accepted.
This
Court also placed reliance on the further evidence in that case as noted in
paragraph 15 of the Report that the appellants were seen measuring that shops
and the property in dispute and their denial that they did not measure the
property in dispute was futile. It become at once clear that the aforesaid
decision was rendered by this Court on its own peculiar facts and cannot be of
any universal application.
As we
have noted earlier the facts of this case are entirely different and the
telltale circumstances emerging on record of this case clinchingly point out
against the plaintiff and in favour of defendant no.2 so far as this point is
concerned. Point No.1 is accordingly answered in the negative against the
plaintiff appellant and in favour of the respondents, especially respondent
no.4.
Point
No.2 In view of our finding on Point No.1 against the plaintiff this point does
not survive for consideration.
Point
No. 3 Before parting with this appeal it may be mentioned that Shri Verma,
learned senior counsel for defendant no.4 in order to buy peace and to put an
end to this litigation fairly stated on behalf of defendant no.4 that even
though plaintiff has been awarded damages of Rs. 10,000/- against defendant
no.1 by the learned Single Judge and which decree has been confirmed by the
Division Bench of the High Court, defendant no.4 would not mind in paying an
amount of Rs.1,00,000/- to the plaintiff to avoid heart-burning, if any, for
the plaintiff. We appreciate this fair stand taken by learned senior counsel
for defendant no.4 and accordingly while disposing of this appeal and
confirming the judgement and order passed by the learned Single Judge and the
Division Bench of the High Court, grant additional benefit to
plaintiff-appellant by way of fair concession from defendant no.4 to the effect
that defendant no.4 shall pay an amount of Rs. 1,00,000/- to the plaintiff
towards full and final satisfaction of his claim for damages in the present
case in lieu of decree for specific performance.
This
will be in addition to the decree of Rs. 10,000/- of damages with interest
already awarded to the plaintiff.
Appeal
stands dismissed subject to the modification that the plaintiff's suit will
also stand decreed to the extent of R s. 1,00,000/- against defendant no.4.
Appeal disposed of accordingly. In the facts and circumstances of the case
there will be no order as to costs.
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