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B.C. Dominic v/s Surya Samudra Holiday Resorts (P) Ltd., & Others

    RFA. No. 806 of 2014

    Decided On, 28 July 2016

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE K. ABRAHAM MATHEW

    For the Petitioner: O. Balanarayanan, B.N. Shivsankar, Dhanya Palan, Tinu T. Joseph, Megha Mukundaswar, Advocates. For the Respondents: R1, M. Gopikrishnan, Nambiar, P. Gopinath, P. Benny Thomas, K. John Mathai, Joson Manavalan, Kuryan Thomas, R2, R4 to R6, Mathew John, DOMSON J. Vattakuzhy, Mathew K. John Caveator, Advocates



Judgment Text

1. This appeal arises from a decree by which the trial court disallowed the prayer for specific performance of an agreement for sale, but allowed refund of the prepaid purchase price. The plaint schedule property having an extent of 92 cents belongs to the third respondent, who was the second defendant in the suit and who died pending this appeal and whose legal representatives are additional respondents 4 to 6. On 01.11.2007 the appellant, who was the third defendant, entered into an agreement with the first respondent for sale of the plaint schedule property representing that he had been authorized by the third respondent/plaintiff to enter into such a transaction and received from the first respondent `1 lakh towards the sale consideration. In response to a notice issued to him by the appellant, the third respondent denied the claim of the appellant that he had been authorized to enter into a transaction as alleged Page numbers by him and he refused to execute a sale deed in favour of the first respondent. The first respondent instituted the suit for specific performance; it also prayed for the alternative relief of refund of the prepaid sale consideration. The trial court found that the allegation of the appellant is false and the agreement for sale entered into between him and the first respondent cannot be enforced and accordingly, it refused to grant the prayer for specific performance, but allowed the the first respondent to recover from the appellant `1 lakh deposited towards the sale price in advance. It directed the appellant to pay the costs not only of the first respondent/plaintiff but of the third respondent/second defendant also.

2. Though the first respondent/plaintiff does not challenge the decree which only allows recovery of the prepaid purchase price, for the determination of the points raised in the appeal it is necessary to discuss the evidence adduced by the appellant to prove his allegation that he had been authorized by the third respondent to enter into an agreement for sale of the plaint schedule property.

3. The allegation of the appellant was that on 07.12.2006 an agreement was entered into between him and the third respondent by which the latter authorized the former to sell the plaint schedule property for a consideration of `6,93,75,000/- and the transaction was reduced into writing and signed by both parties, which they called a memorandum of understanding. The third respondent allegedly kept the original document with him and handed over a photocopy of it, which was marked Ext B1 in the suit. The specific contention of the third respondent was that he never authorized the appellant to sell the plaint schedule property, but on the other hand, he entered into an agreement with the appellant for sale of the plaint schedule property for `10 crores on 13.11.2006; the appellant agreed to pay ` 1 crore in advance towards the sale consideration; on 16.11.2006 he sent an agreement for sale prepared on a stamp paper to the office of the third respondent, but he did not turn up to sign it or to pay the money. As he could not pay the amount agreed to be paid in advance towards the consideration, the transaction did not take place. The appellant again approached the third respondent for the same purpose. The third respondent agreed that the property would be sold to the appellant at the rate of `12,95,000/- per cent if `1 crore was paid and `2 crores was paid on 01.03.2007 in advance towards the sale price and the balance on 10.06.2007, which was the date fixed for execution of the sale deed. This was reduced into writing. The appellant issued a cheque for `30 lakh and on behalf of him one Manual John issued a cheque for `50 Lakh in favour of the third respondent. The appellant paid the third respondent `20 lakh in cash, which he got from one Jose Antony. The cheque for `30 lakh was encashed but, the cheque for `50 lakh was dishonoured, the third respondent contended.

4. Unless the first respondent/plaintiff proved that the appellant had been authorized by the third respondent to enter into the transaction, the first respondent was not entitled to a decree. The burden was on the appellant to prove that he had been authorized by the third respondent to sell the property. The first respondent has no knowledge about the transaction between the appellant and the third respondent.

5. The original document allegedly executed by the third respondent has not been produced in the case. He allegedly retained the original document with him and handed over a photocopy to the appellant. Ext B1 is said to be the photocopy. The third respondent denied execution of such a document. Ext B1 being a photocopy it was necessary for the appellant to lay the foundation for reception of secondary evidence as laid by the Supreme Court in Laxmipat Choraria Vs State of Maharashtra (AIR 1968 SC 938), Ashok Dulichand Vs Madhavlal Dube and Another (AIR 1975 SC 1748) and Smt. J. Yashoda Vs Smt.Shobha Rani (AIR 2007 SC 1721). The party who proposes to adduce secondary evidence is bound (1) prove execution of the original document (2) explain the nonavailability of the original 3) satisfy the court that the copy sought to be produced in evidence is a secondary evidence which satisfies the requirements of Section 63 of the Evidence Act and that it is the kind of secondary evidence mentioned in the second part of Section 65 of the Evidence Act.

6. As provided in Section 67 of the Evidence Act execution of a document can be proved only by proving the signature or handwriting of the executant. In his examination-in-chief the appellant, who was examined as DW1, made a bald statement that a memorandum of understanding (MOU) was executed between him and the third respondent, and the latter kept the original with him and handed over a copy to him, which is Ext B1; but there is no mention that he saw the third respondent signing the document. DW2, who was an agent of the appellant, is said to be a witness to the transaction. In his examination-in-chief execution of the original of Ext B1 was brought out asking leading questions only. If a material fact is brought in examination in chief by asking leading question the inference is that if leading question had not been put, the witness would not have given the same answer. In other words, his evidence is not voluntary. It is only to be ignored as held by the Supreme Court in Varkey Joseph Vs State of Kerala (1993(2) KLT 617).

7. The next witness examined by the appellant to prove execution of the document was DW3, who is none other than the son of the third respondent. It was allegedly in his presence the transaction took place and the document was executed. He was summoned as a witness by the appellant. But in his examination-in-chief no question was put to him as to the execution of the document. Moreover, in the cross-examination he denied execution of a document as alleged by the appellant. In his re-examination the appellant could have asked for permission of the court to put to him questions which might be asked in cross-examination as provided in Section 154 of the Evidence Act. But that was not done. Moreover, that would not have served any purpose because of the failure of the appellant to put to him any question as to the execution of the document. The appellant is bound by the evidence of DW3.

8. In the cross-examination of the third respondent (DW4) it was not even suggested to him that he executed such a document though he denied it in his examination-in-chief. The failure of a party to put his case to the opposite party while the latter is in the witness box amounts to his acceptance of that evidence as true. The following observation of the Calcutta High Court in A.E.G Carapiet Vs A.Y.Derderian (AIR 1961 Cal 359) has been approved by the Supreme Court in Swaram Singh Vs State of Punjab (AIR 2002 SC 3652) and M.B.Ramesh Vs K.M. Veeraji Urs and Others ((2013) 7 SCC 490).

'.....Wherever the opponent has declined to avail himself of the opportunity to put his essential and material case in cross examination, it must follow that he believed that the testimony given could not be disputed at all..... It is a rule of essential justice.'

In Ashok Dulichand (supra) the apex court held that if photocopy is not above suspicion it cannot be permitted to be tendered in evidence. The trial court rightly came to the conclusion that there is no evidence to prove that a document was executed as alleged by the appellant. It follows that Ext B1 cannot be acted upon.

9. Under Rule 33 A of the Kerala Manufacture and Sale of Stamp Rules it is mandatory that a stamp paper issued from the treasury shall contain its seal with the date of issue at its bottom. But surprisingly this is not seen in Ext B1. There is no explanation how the stamp paper on which the document was written was obtained. The probability is that it was not obtained in the ordinary course of business. Having regard to the facts of the case it is not necessary for me to examine the nature of the document for the purposes of the Stamp Act. But I may observe that if the original document is inadmissible in evidence, its secondary evidence also is inadmissible. The decision of the Supreme Court in Smt.J.Yashoda Vs Shobha Rani

10. The appellant (DW1) disowned his statement that the transaction took place at the office of the second defendant at Alappuzha when the latter deposed that he did not know whether the office of the third respondent was at Alappuzha or Cherthala, which speaks volumes. The evidence of DW3 that the office is situated at Alappuzha was not challenged by anyone. The evidence of DW2 that the office is situated between and Alappuzha and Cherthala is false.

11. DW1 and DW2 have made conflicting statements about the date on which the stamp paper for preparing the document in dispute was purchased. According to DW1(the appellant) the stamp paper was purchased two days before the execution of the document. But the version of DW2, who is none other than his agent, is that on the date of the transaction the third respondent sent one of his staff to the stamp vendor to buy the stamp paper.

12. The appellant produced Exts B2 to B43 photocopies of documents relating the plaint schedule property which were allegedly handed over to him by the third respondent on 10.11.2006 in the presence of one Manual John. This is absolutely false, which is clear from the fact that Ext B6 is a document bearing date 15.11.2006 and Ext B1 04.12.2006. His testimony that Exts B12 to B43 were handed over to him by the third respondent immediately after the transaction was entered into on 07.12.2006 is also equally false. Exts B37, B38 and B40 bear the date 03.02.2007, Ext B9, 05.02.2007 and B41, B44 and B43 01.02.2007.

13. The appellant denied the third respondent's contention that they entered into an agreement for sale of the plaint schedule property. Still the former would say that he paid `30 lakh in advance towards sale consideration to the latter. If he was authorized only to sell the property on behalf of the third respondent, why should he pay `30 lakh in advance towards sale consideration. There is no explanation for this.

14. The discussion made above takes me to the conclusion that the allegation of the appellant that he had been authorized by the third respondent to sell the property on behalf of the latter is false.

15. There is evidence to prove the third respondent's case that on 07.12.2006 the appellant agreed to purchase the plaint schedule property and to pay `1 crore in advance towards the sale consideration. Ext B50, genuineness of which is not disputed, clearly proves it. The appellant issued a cheque for `30 lakh and one Manual John `50 lakh. The appellant got `20 lakh from Jose Antony and handed it over to the third respondent. Only the cheque for `30 lakh was encashed . The other cheque was dishonoured for want of sufficient fund in the account. It is not necessary for me to discuss the other evidence regarding this transaction as I have already found that the appellant's case that he had been authorized to sell the property is not true. The learned Sub Judge rightly refused to pass a decree for specific performance.

16. Learned counsel for the appellant submitted that the prayer for refund of the prepaid purchase price should not have been granted because there is no foundation in the pleadings. There is no doubt that a relief can be sought for only on the basis of the pleadings. In other words, in the absence of pleadings with regard to a relief prayed for, it cannot be granted. To put it differently, relief is no substitute for pleadings. But to a case in which an alternative relief is prayed for, this principle may not be applicable. Ordinarily, the principal relief and the alternative relief are based on the same pleadings. In such cases it is sufficient for the party to state that if the principal relief is not granted, the alternative relief may be granted. In exceptional cases alternative relief may be based on different facts. Only in such cases the principle that relief is no substitute for pleadings is applicable.

17. In the plaint there is a specific averment that the appellant received from it `1 lakh towards the sale price and it is admitted by him. This is sufficient for the first respondent to make a claim for the alternative relief. The decree for refund of the amount cannot be interfered with.

18. The rate of interest allowed on the amount to be refunded is 12% per annum from the date of the transaction till realization. The available evidence proves that it was in connection with his business the appellant entered into the transaction. So the trial court committed no illegality in directing the appellant to pay interest at 12% per annum till the date of realization of the amount.

19. The appellant is aggrieved by the direction of the trial court that he should pay costs of the first respondent as well as the third respondent. The costs awarded to the first respondent is `83,88,601/- and to the third respondent is `45/-. Section 35 of the Code of Civil Procedure empowers the court to award costs in suits. It is extracted below.

'35. Costs- (1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.

(2) Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing.'

20. The party who should pay the costs and the extent to which it should be paid are left to the discretion of the court by the legislature. But it is judicial discretion to be exercised on legal principles and not by caprice. In Lala Hakim Rai Vs Lala Ganga Ram (AIR 1942 PC 61) was a case in which there was cross appeal. Both appeal and cross appeal were dismissed. The privy counsel ordered the plaintiff to pay one half of the defendants' costs in the two appeals. In Wasudev Ramachandra Vs National Savings Bank Ltd. (AIR 1953 Bombay 209) it is observed that the court may order the unsuccessful defendant to pay in addition to the costs payable by him to the plaintiff the costs of the successful defendants in appropriate cases. The subject matter of the proceedings in Chaturbhuj Pande and Others Vs Collector, Raigarh (AIR 1969 SC 255) was acquisition of land under the Land Acquisition Act . Observing that the claim made by the claimants was a highly exaggerated one and the bulk of the evidence adduced by them was unacceptable the Supreme Court refused to award them costs in the proceedings.

21. In this case it has already been found that though the appellant had not been authorized to enter into a transaction on behalf of the third respondent in respect of the plaint schedule property he made a false representation to the first respondent and executed an agreement for sale with it and that the evidence adduced by him to prove the transaction alleged by him is false. There is no reason why he should not pay costs to the third respondent.

22. The trial court directed the appellant to pay the costs of the first respondent/plaintiff also. The amount is `83,88,601/- . The specific contention of the third respondent is that there is collusion between the appellant and the third respondent. Ext A13 is the agreement executed between the appellant and the first respondent. In it there is no mention about execution of a document by the third respondent authorizing the appellant to enter into such a transaction. It is also not disclosed that the appellant handed over to the other party a copy of the document allegedly executed by the third respondent authorizing him to enter into such a transaction. The extent of the property is 92 cents. In Ext A13 there is no stipulation for measurement of the property before the ex

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ecution of the sale deed, which appears to be very strange. The appellant did not hand over copies of the title deeds of the third respondent to the first respondent. The copies which were allegedly handed over to it were copies of prior title deeds and other documents relating to the property. It cannot be believed that a reasonable man would enter into an agreement for sale which involves `10 crores even without seeing the title deeds of the vendor. 23. Assuming that the first respondent had seen a copy of the document allegedly executed by the third respondent authorizing the appellant to sell the property, I shall consider whether the first respondent had reason to believe that the appellant had such authority. The rule of interpretation is that a document should be read as a whole. When Ext B1 is read as a whole, it is clear that the authorization was only to find prospective buyers for the plaint schedule property. There was no authorization to enter into a contract on behalf of the third respondent. In fact, in his evidence the appellant (DW1) stated that the agreement only allowed him to get a prospective purchaser and 'he can act as his agent for the same.' The first respondent is a private limited company. It was one of its directors who executed Ext 13 agreement for sale on its behalf and gave evidence for it as DW1; he is not an illiterate man, but a chartered accountant. It had no reason to believe that the appellant had been authorized to enter into an agreement for sale of the plaint schedule property. These facts compel me to hold that the first respondent should not have been awarded its costs in the proceedings. In the result, the appeal is allowed in part. The direction in the decree for payment of costs by the appellant to the first respondent is set aside. In all other respects the decree is confirmed. Respondents 4 to 6 are entitled to their costs in this appeal.
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