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K.L. Damodaran v/s Venkatappa Naidu

    S.A. No. 587 of 2008 & M.P. No. 1 of 2008

    Decided On, 20 August 2018

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE R. SUBRAMANIAN

    For the Appellant: K.A. Ravindran, Advocate. For the Respondent: K. Govi Ganesan, Advocate.



Judgment Text

1. The defendant in O.S.No.85 of 2000 has come forward with this appeal challenging the judgment and decree of the Principal District Court, Vellore made in A.S.No.115 of 2003, whereby, the learned Principal District Judge allowed the appeal reversing the judgment and decree of the Sub-Court, Gudiyatham made in O.S.No.85 of 2000 and decreed the suit in O.S.No.85 of 2000 which was filed by the respondent seeking specific performance of the agreement of sale dated 24.03.1997.

2. The case of the plaintiff before the trial Court was that the defendant had agreed to sell the suit property for a consideration of Rs. 35,000/- and had received an advance of Rs. 30,000/- on 24.03.1997. The said agreement was reduced to writing on the same day. It was agreed by the parties that the balance sale consideration of Rs. 5,000/- was to be paid by the plaintiff within a period of three years from the date of the agreement viz., on or before 23.03.2000 and on such payment the defendant would execute a sale deed in favour of the plaintiff. According to the plaintiff, though he was ready and willing to pay the balance sale consideration and get the sale deed executed, the defendant has been avoiding execution of the sale deed on some pretext or the other. Contending that he has been ready and willing to perform his part of the contact throughout, t

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he plaintiff has come forward with the suit seeking specific performance on 20.03.2000.

3. The defendant resisted the suit contending that the claim of the plaintiff that the defendant agreed to sell the property is false. According to the defendant, the suit property is worth more than Rs. 2,00,000/-. It is the further contention of the defendant that the defendant had to pay monies to one Amirtham Finance, which was assigned in favour of the plaintiff by the said Finance. The plaintiff had obtained the signatures of the defendant in stamp papers stating that it is for renewal of the promissory note, the defendant who is an illiterate had signed the document only on the belief that it was a renewal for the promissory note. Therefore, according to the defendant there was no agreement of sale. It was also claimed that the cause of action alleged in the suit itself is false and the suit is barred by limitation.

4. The learned trial Judge who tried the suit framed the following issues at the time of trial:

“TAMIL”

5. At trial, the plaintiff examined himself as PW1 and examined two other witnesses as PWs 2 and 3 and the suit agreement was marked as Ex.A1. The defendant examined himself as DW1 and there was no documentary evidence on the side of the defendant.

6. The trial Court upon a consideration of the evidence on record held that the plaintiff has not established execution of the agreement Ex.A1. Considering the evidence of PW2, the trial Court came to the conclusion that the execution of the document as agreement of sale by the defendant is not established. The trial Court also took note of the evidence of PW3 who claims to have signed as an identifying witness in the Office of the Sub-Registrar. The learned trial Judge also dis-believed the said evidence and came to the conclusion that the very execution of the document viz., Ex.A1 is shrouded in mystery.

7. The learned trial Judge also further concluded that the plaintiff was not ready and willing to perform his part of the contract. The fact that the plaintiff had kept idol for nearly three years from the date of the agreement viz., 24.03.1997 till 20.03.2000, the date of filing of the suit was also taken note of by the learned trial Court to conclude that the plaintiff is not entitled to specific performance. On the aforesaid findings, the learned trial Judge dismissed the suit.

8. Aggrieved the plaintiff filed an appeal in A.S.No.115 of 2003 before the Principal District Court, Vellore. The learned Principal District Judge, upon hearing the arguments framed the following points for determination:

1. Whether the trial Court's conclusion that Ex.A1 came into existence for the purpose of loan transaction is correct?

2. Whether the appellant is entitled to decree for specific performance?

3. Whether the trial Court's judgment and decree is correct?

4. To what relief the appellant is entitled?

9. The lower appellate Court dis-agreed with the findings of the trial Court and concluded that the suit agreement was intended to be a sale agreement, upon such conclusion, the learned District Judge also took note of the evidence of DW1 wherein he had said that if he is unable to pay back the money within 1 year, he would execute a sale deed. On a consideration of the said evidence, the learned Principal District Judge came to the conclusion that the plaintiff has been ready and willing to perform his part of the contract. On such findings the learned Principal District Judge allowed the appeal and decreed the suit for specific performance. Aggrieved, the defendant has come forward with this appeal.

10. I have heard Mr.K.A.Ravindran, learned counsel appearing for appellant and Mr.K.Govi Ganesan, learned counsel appearing for the respondent.

11. After hearing the learned counsel and reserving orders on 06.07.2018, it was found that the appeal was not admitted, as only notice of admission was ordered by this Court on 25.04.2008. Therefore, I had framed the following questions of law:

1. Whether the suit agreement dated 24.03.1997 could be said to be a sale agreement simpliciter or an agreement executed towards security for the finance business that was carried on by the appellant in partnership with the wife of the respondent?

2. Whether the lower Appellate Court was right in concluding that the respondent was always ready and willing to perform his part of the contract overlooking the fact that the suit itself came to be filed just a few days prior to the expiry of the time limit of three years prescribed under the agreement?

12. I had directed the Registry to issue notice to the learned counsel appearing on either side on the questions of law and posted the appeal on 27.07.2018. The learned counsel on either side addressed the arguments on questions of law framed as above.

Question No.1:-

13. The main defence of the defendant is that he never intended to execute the sale agreement or never intended to sell his property. The defendant would claim that he owed money to one Amirtham Finance, the plaintiff had obtained assignment on the said debt, as a security for the payment of the said debt, the plaintiff required the defendant to execute a deed and hence the defendant who was an illiterate had executed Ex.A1 document as security for repayment of the loan which was assigned by Amirtham Finance to the plaintiff.

14. Mr.K.A.Ravindran, learned counsel appearing for the appellant would contend that the very fact that the sale price was fixed at Rs. 35,000/-, the plaintiff is shown to have paid Rs. 30,000/- as advance and the balance remaining was only Rs. 5,000/-, coupled with the fact that unduly long period of three years was fixed for payment of balance of Rs. 5,000/- would show that the agreement was not intended to be a sale agreement.

15. He would also rely upon the judgment of the Division Bench of this court in Kamireddi Sattiaraju v. Kandamuri Boolaeswari reported in 2007(1) LW 309, wherein, the Division Bench had gone into the question as to whether such a plea is open to the defendant in a suit for specific performance. The Division Bench after analysis of the law relating to Sections 91 and 92 of the Evidence Act had held an enquiry into reality of transaction is not excluded merely by availability of a writing reciting the transaction. The Division Bench having concluded that such a claim is not barred under the provisions of Section 91 or 92 of the Evidence Act went on to examine the factual position in that case and concluded that the agreement set up by the plaintiff in the said suit was not intended to be agreement of sale it was only a loan transaction. The said judgment of the Division Bench was followed by another learned Single Judge of this Court in Rajammal v. M.Senbagam reported in 2016 (6) CTC 225, wherein, the learned Single Judge upheld the plea of the defendant that the suit agreement was not intended to be acted upon inasmuch as the same was executed as a security for the loan transaction.

16. The facts of the said case were as follows, the total consideration was Rs. 2,00,000/- and the advance paid was Rs. 1,65,000/- and a period of three years was fixed under the agreement for payment of balance of Rs. 35,000/-. Taking note of the judgment of the Division Bench in Kamireddi Sattiaraju v. Kandamuri Boolaeswari reported in 2007(1) LW 309 and the judgment of the Hon'ble Supreme Court in Roop Kumar v. Mohan Thedani reported in 2003(6) SCC 595 as well as the judgment of this Court in Lakshmamma v. Rathinamma reported in 2011 (5) CTC 543 it was held that the circumstances relied upon would show that the suit agreement was not intended to be acted upon as an agreement of sale, but the same was executed only for the purpose of securing a loan transaction.

17. The learned Principal District Judge had come to the conclusion that the mere fact that fixation of long period for payment of a small amount of money cannot by itself allow the defendant to claim that the agreement was not intended to be acted upon and it was executed as security for a loan transaction.

18. True that the said factor alone cannot be a basis but the entire evidence has to be looked into. The plea of the defendant is that he had executed the document on the premise that it will be as security for the borrowing. In the evidence also the defendant has said that he would repay the money within a year failing which he will sell the property. The plaintiff had not denied the claim of the defendant that he had got the debt payable by the defendant to Amirtham Finance assigned in his favour. It should also be pointed out that there is no pre-suit notice calling upon the defendant to execute the same. The suit itself was filed on 20.03.2000 viz., at the fag end of the date fixed under the agreement.

19. Taking a overall consideration of the evidence, I am of the considered opinion that, the conclusion of the trial Court that the agreement was not intended to be acted upon is more acceptable than that of the conclusion of the lower appellate Court. The lower appellate Court has unfortunately not taken the circumstances that were available to show that the cause pleaded by the defendant would be more plausible than the claim of the plaintiff. In view of the above, the 1st question of law is answered in favour of the appellant holding that the suit agreement is not an agreement of sale but was executed as a security for loan transaction.

Question No.2:-

20. The 2nd question is regarding the readiness and willingness of the plaintiff. It is a settled position of law that the plaintiff in the suit for specific performance has to be always ready and willing to perform his part of the contract. The Hon'ble Supreme Court had time and again reiterated that the readiness and willingness should be right from the date of the contract till the date of execution of the sale. In Saradamani Kandappan v. S.Rajalakshmi reported in 2011 (4) CTC 640, the Hon'ble Supreme Court had held that a suit for specific performance need not be decreed merely because it is filed within the period or within the period fixed under law. It is incumbent on the plaintiff in suit for specific performance to show that he was continuously ready and willing to perform his part of the contract. As already pointed out, the plaintiff had not even issued a legal notice seeking execution of sale deed and the suit came to be filed on 20.03.2000 a few days before the expiry of the period fixed under the agreement.

21. I had an occasion to consider a similar question in S.Kalianna Gounder (Deceased) v. S.Periyasamy and others, where I had pointed out that unless the plaintiff is shown to be ready and willing throughout the period, the discretionary relief for specific performance cannot be granted to them de hors the conduct of the defendant.

22. In the case on hand, though an issue was framed by the lower appellate Court as to, Whether the appellant is entitled to a decree for specific performance? there was no point for determination on the question of readiness and willingness of the appellant. The learned Principal District Judge after having found that Ex.A1 is an agreement of sale and that the plaintiff is entitled for specific performance, straight away in one line observed that the plaintiff was always been ready and willing to perform his part of the contract. Such a one liner that too in a suit for specific performance, in my considered opinion, cannot be upheld by this Court. In view of the above discussions the 2nd question of law is also answered in favour of the appellant and against the respondent.

23. In view of the foregoing discussions, the Second Appeal will stand allowed and the judgment and decree of the lower appellate Court will stand set aside and that of the trial Court is restored. However, in the circumstances there will be no order as to costs. Consequently, the connected Miscellaneous Petition is also closed.
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