Devalsab
Vs. Ibrahimsab F.Karajagi & Anr [2005] Insc 153 (4 March 2005)
Ashok
Bhan & A.K. Mathur A.K. Mathur, J.
This
appeal is directed against an order passed by learned Single Judge of the High
Court of Karnataka at Bangalore in Regular Second Appeal No.68 of 1994 whereby
learned Single Judge by his order dated October 17,1997 has allowed the second
appeal of the defendant No.1 and set aside the order passed by the trial court
and the first appellate court and dismissed the suit filed by the plaintiff for
specific performance but decreed the suit of the plaintiff for the alternative
relief for refund of the purchase money of Rs.15,000/- with future interest and
the court costs from Defendant No.1. Aggrieved against this order the Special
Leave Petition was filed by the plaintiff.
Brief
facts for disposal of this appeal are that the Defendant No.1 was the owner of
the suit property which is a house bearing HDMC No.715 comprised in CTS
No.1529/16-C situated at Hubli. Defendant No.1 agreed to sell the suit property
to the plaintiff on March 13, 1981 for a sum of Rs.15,500/- and received an
advance of Rs.2,000/- and executed an agreement for sale agreeing to execute
the sale deed within two months after obtaining necessary permission. The
plaintiff assisted the Defendant No.1 in obtaining necessary permission from
the competent authority. But Defendant No.1 after getting necessary permission
for sale failed to execute the sale deed accepting the balance consideration
money of Rs.13,500/- from the plaintiff. Defendant No.1 took the plaintiff to
the Sub- Registrar's Office on February 23, 1982 and persuaded him to purchase
the stamp paper but Defendant No.1 escaped from the Office of the Sub-Registrar
when the sale deed was about to be registered. The plaintiff was ready and
willing to perform his part of the contract according to the terms and
conditions of the agreement of sale on March 13, 1981. In spite of requests by the
plaintiff, Defendant No.1 did not execute the registered sale deed receiving
the balance amount. Hence, the suit was filed for specific performance of the
agreement by the plaintiff and in the alternative the plaintiff also prayed if
the court were to come to the conclusion that specific performance cannot be
granted then a decree for refund of the earnest money including the cost of
registration and damages to the plaintiff should be awarded. The plaint was
subsequently amended on account of the new facts coming to the light that
Defendant No.1 has executed another agreement for sale in favour of Defendant
No.2 on March 8,1982.
The
plaintiff got a news item published in Vishwavani daily on March 24, 1982 about the earlier transactions
between himself and Defendant No.1 with respect to the suit property. But
defendant Nos. 1 & 2 with an intention to defeat and defraud the plaintiff
filed another collusive suit being O.S.No.101 of 1983 before the Munsif, Hubli
and obtained a compromise decree. By virtue of the said compromise decree
Defendant No.2 obtained the sale deed from Defendant No.1 in respect of the
suit property. Therefore, the plaintiff amended the plaint and impleaded
Defendant No.2 and prayed that the collusive decree obtained by Defendant Nos.1
& 2 is illegal, void and not binding on the plaintiff. It was further
prayed that Defendant No.2 was also bound to execute the sale deed along with
Defendant No.1 and hand over possession of the suit property.
A
written statement was filed by Defendant No.1. He denied the allegation in the
plaint but subsequently Defendant No.1 did not contest the suit. Defendant No.2
i.e. the subsequent purchaser was impleaded as a party by amendment of the
plaint carried on November
21, 1986 and assisted
the suit by filing the written statement. He denied the allegation about the
agreement of sale executed in favour of the plaintiff. It was also pointed out
that he was a tenant in the suit premised under Defendant No.1 since long time.
It was contended that Defendant No.1 agreed to sell the suit property and
entered into an agreement for sale on March 8,1982. It was further contended that
Defendant No.2 was not aware of the previous transaction between the Plaintiff
and Defendant No.1. Since Defendant No.1 avoided to execute the sale deed,
therefore, he filed the suit i.e. O.S.No.101 of 1983 for specific performance
which was decreed by compromise and Defendant No.1 subsequently executed the
sale deed in his favour. It was pointed out that Defendant No.1 did not reveal
previous transaction between himself and the plaintiff to him. It was further
pointed out that he was a bona fide purchaser for the value of the suit
property. It was contended by Defendant No.2 that the sale between the
plaintiff and Defendant No.1 was not binding on him.
On the
pleadings of the parties, eleven issues were framed by the trial court. Both
the parties led necessary evidence.
Learned
Munsif after hearing the parties and considering the relevant evidence came to
the conclusion that Issue Nos.1 to 4 regarding agreement of sale executed in favour
of the plaintiff and also the ready and willingness of the plaintiff in
affirmative. He also answered Issue No.5 in negative. It was held that the sale
agreement was not taken for security of the loan and the parties never intended
to act upon it. Issue No.6 was also answered in negative and the contention of
Defendant No.2 that the agreement of sale between the plaintiff and Defendant
No.1 as a sham document. With regard to Issue No.7, that Defendant No.2 is a
bona fide purchaser, it was answered in negative and it was held that the sale
deed executed in favour of Defendant No.2 was illegal. Therefore, the learned Munsif
decreed the suit of the plaintiff for specific performance of the contract.
Aggrieved
against the said judgment and decree passed by the trial court, Defendant No.2
i.e. the second purchaser filed an appeal before the first appellate court
though Defendant No.1 did not prefer any appeal against the said order of the
trial court. The decree passed against Defendant No.1 was not challenged by him
but since the decree affected the rights of Defendant No.2, he filed an appeal
contending that he was a bona fide purchaser of the suit property for
consideration and he had no knowledge about the plaintiff's interest in it,
agreement of sale executed in favour of the plaintiff by Defendant No.1 was not
binding on him. But the first appellate court did not agree and dismissed the
appeal filed by Defendant No.2 and affirmed the judgment and decree passed by
the trial court.
Aggrieved
against the said order Defendant No.2 preferred a second appeal being
R.S.A.No.68 of 1994 before the High Court.
The
High Court framed two substantial questions of law which are reproduced as under
:
"1.
Whether the two courts below have proceeded to grant decree for specific
performance without bearing in mind that it is a discretionary relief and have
granted the relief only because it is lawful to do so?
2.
Whether in view of undisputed tenancy of the appellant, the two courts below
were right in directing him in the present proceeding to put the plaintiff in
actual physical possession of the property in question? The High Court after
hearing the parties found that the view taken by both the Courts below is
correct but it was held that Defendant No.2 was not aware of the transactions
between the plaintiff and Defendant No.1, he cannot be held to be bona fide
purchaser for value as the matter was pending before the trial court and it was
lis pendence. It was also held that the compromise decree obtained by Defendant
Nos.1 & 2 was a collusive one as on the same day the suit was filed &
the compromise decree was obtained. But the learned Single Judge of the High
Court held that both the courts below have not committed any error but they did
not advert to Section 20 of the Specific Relief Act. Section 20 of the Specific
Relief Act lays down that the grant of relief of specific performance is
discretionary and the Courts should keep in view the hardship which is likely
to cause to the other party while exercising this discretionary power. Learned
Single Judge of the High Court after taking into consideration the hardship
which is likely to cause to Defendant No.2 that he is in possession of the suit
property prior to the agreement of sale by Defendant No.1 in favour of the
plaintiff and if he is evicted from the suit premises he would lose money as
well as long possession, therefore, considering the hardship to Defendant No. 2
declined to confirm the decree granted by both the courts below but directed
that the plaintiff is entitled to the alternative relief as claimed by him i.e.
refund of money with costs. Hence the present appeal by the plaintiff.
In
fact, so far as the questions of fact are concerned, all the three Courts are
unanimous that the plaintiff entered into an agreement for purchase of the suit
premises first in point of time, that the plaintiff had already issued
advertisement in the press which was published in the daily newspaper that the
suit property has been purchased by him. The Courts below have also held
against Defendant No.2 that it cannot be said that Defendant No.2 was not aware
of the transactions between the plaintiff and Defendant No.1.
It has
also been held that Defendant No.2 cannot be treated as a bona fide purchaser
for value. But learned Single Judge of the High Court has invoked Section 20 of
the Specific Relief Act,1963 and held that it will be more harsh to Defendant
No.2 as he has already paid the consideration and he is residing in the very
premises for a very long time and the suit premises are in his possession,
therefore, it would be more harsh to him than to the plaintiff-appellant
herein.
Therefore,
instead of granting decree for specific performance of the agreement to sell
against Defendant No.1, learned Single Judge of the High Court6 modified the
decree and denied relief of specific performance of the agreement being
discretionary remedy and directed the Defendant No.1 for refund of the purchase
money for a sum of Rs.15,500/- with future interest and costs and dismissed the
suit of the plaintiff for possession of the suit schedule property.
Learned
counsel for the plaintiff-appellant submitted that in fact exercise of
discretionary relief in favour of Defendant No.2 is not correct as this kind of
discretion if exercised in favour of Defendant No.2 then it is likely to lay down
a bad precedent. This will give premium to unethical transaction and a bona
fide purchaser will be left high and dry. Learned counsel for the defendants
submitted that it is true that Section 20 of the Specific Relief Act is a
discretionary remedy that is not always necessary to grant a decree for
specific relief if it appears to be inequitable and causes hardship to the
other side. But looking to the facts of the present case we are of opinion that
it will be unfair and inequitable not to grant a decree for specific relief in favour
of the plaintiff-appellant herein because he is a bona fide purchaser and he
has done everything which is possible, that he has purchased the stamp paper
and was ready and willing to perform his part of the contract, that he went
along with Defendant No.1 to the Sub-Registrar's Office for registration but
some how Defendant No.1 sneaked away from that place as he had already entered
into another agreement to sell the present premises, so much so that a sham
suit was got filed by Defendant No.2 against Defendant No.1 and on the same day
a compromise decree was obtained. These facts go to show that there is not much
equity left in favour of Defendant No.2 as it appears that the suit by
Defendant No.2 was a pre-arranged affair with connivance with Defendant No.1.
Otherwise
the suit would not have been filed on the same day and a compromise decree
would not have been obtained the very same day. This shows that there was a
pre-conceived agreement between Defendant Nos.1 & 2 in order to cheat the
plaintiff- appellant herein.
Therefore,
we are of opinion that the discretionary power exercised by learned Single
Judge of the High Court was not correct. In fact, it appears that Defendant
No.2 has purchased the litigation and therefore, there is no equity in his favour.
Hence,
in the result of our above discussion, we allow this appeal and set aside the
impugned order of the learned Single Judge of the High Court of Karnataka
passed in R.S.A. No.68 of 1994, affirm the decree of the trial court as well as
the first appellate court and grant a decree for specific performance of the
agreement to sell against Defendant No.1. However, so far as the question of
granting possession of the suit premises is concerned, that order we are not
passing for the reason that Defendant No.2 is in possession of the premises for
a long time and the plaintiff- appellant herein has to execute a formal
agreement of purchase with Defendant No.1.
However,
it would be open for the plaintiff to take appropriate proceedings for eviction
of Defendant No.2 and take possession of the suit premises in accordance with
law. It will be open to Defendant No. 2 to file a suit against Defendant No. 1
to recover his money in accordance with law. There shall be no order as to costs.
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