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Joseph Thomas @ Thampi Kannanthanam & Others v/s Molly George @ Molamma


Company & Directors' Information:- A V THOMAS AND CO LTD [Active] CIN = U51109KL1935PLC000024

Company & Directors' Information:- J THOMAS & CO PVT LTD [Active] CIN = U51909WB1947PTC015276

Company & Directors' Information:- THOMAS AND COMPANY PRIVATE LIMITED [Active] CIN = U45201DL1997PTC085284

Company & Directors' Information:- JOSEPH AND CO PVT LTD [Active] CIN = U01211KL1954PTC000507

Company & Directors' Information:- E R JOSEPH & CO PVT LTD [Strike Off] CIN = U28920WB1955PTC022404

Company & Directors' Information:- A V GEORGE AND CO PRIVATE LTD [Active] CIN = U51109KL1937PTC000027

Company & Directors' Information:- A V GEORGE AND CO INDIA PVT LTD [Active] CIN = U74999KL1946PTC001390

    RFA. Nos. 287 of 2008 & 250 of 2008- A

    Decided On, 19 June 2019

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE SATHISH NINAN

    For the Appearing Parties: K. Gopalakrishna Kurup, K. Jayakumar, S.V. Balakrishna Iyer, Sr. Advocate, Manu. M. Thomas & Deepthi S. Menon, Manu Vyasan Peter, P.B. Krishnan, P.B. Subramanyan, P.M. Neelakandan, Sabu George, Unnikrishnan V. Alappat, Geetha P. Menon, R. Suraj Kumar, Sabu George, Anuroopa Jayadevan, Advocates.



Judgment Text

1. These appeals are by the plaintiff and the defendant respectively, in a suit for specific performance of an agreement for sale. The trial court decreed the suit granting the alternate relief of refund of the advance sale consideration.

2. Ext.A1 agreement dated 16.12.04 was executed between the plaintiff and the defendant where under the plaint 'A' schedule property having an extent of 1.90 acres was agreed to be conveyed by the defendant to the plaintiff for a total consideration of Rs. 7,60,000/-, at the rate of Rs. 4 lakhs per acre. An amount of Rs. 2,75,000/- was paid towards advance sale consideration. It was stipulated that a further amount of Rs. 2,60,000/-shall be paid by the plaintiff to the defendant on or before 05.01.05. The entire balance consideration was to be paid on or before 16.02.05, i.e. within a period of sixty days from the date of Ext.A1. As evidenced by Ext.A2 receipt dated 11.01.05, the plaintiff paid an amount of Rs. 3,45,000/- towards the loan account of the defendant with the Meenachil East urban co-operative Bank Ltd. The balance amount that remained payable under Ext.A1 agreement was Rs. 1,40,000/-.

3. While so, Ext.A3 agreement for sale dated 25.01.05 was entered into between the parties whereunder the defendant agreed to convey the plaint 'B' Schedule property also along with plaint 'A' schedule on payment of Rs. 30,15,000/- which include the balance sale consideration of Rs. 1,40,000/- payable for the plaint 'A' schedule. From out of the said amount, Rs. 23 lakhs was reserved to be paid by the plaintiff towards discharge of the loan availed by the defendant from the Bank. The balance payable by the plaintiff was Rs. 7,15,000/- out of which U. lakh is stated to have been paid on the date of Ext.A3, thus making the balance amount payable by the plaintiff to the defendant at 26,15,000/-.

4. According to the plaintiff, pursuant to Ext.A3 agreement, an amount of Rs. 1 lakh was paid on 17.02.05 as per Ext.A4 receipt, an amount of Rs. 1,50,000/- was paid on 14.03.05 as per Ext.A5 receipt and further amount of 11,05,000/- was paid on 06.05.05 as per Ext.A6 receipt. There was a stipulation in Ext.A3 agreement that another item of property having an extent of 2 acres, which is referred to by the parties as "chotti Property", which was also mortgaged to the Bank by the defendant along with plaint 'B' schedule was to be got released by the plaintiff from the Bank on or before 25.03.03 i.e. within a period of 60 days from the date of Ext.A3. The plaintiff alleges that due to the non co-operation of the defendant, the same could not be got released resulting in impossibility of performance of Ext.A3. Accordingly, the plaintiff has filed this suit seeking specific performance of Ext.A1 agreement and for return of the advance sale consideration paid for the 'B' schedule property under Ext.A3 agreement.

5. The trial court held that Ext.A1 agreement has been superseded by Ext.A3 agreement and directed return of the amounts paid by the plaintiff to the defendant. The plea of the defendant regarding damages consequent to the breach was negatived in the absence of any evidence.

6. Heard learned senior counsel sri. S.V.Balakrishna Iyer on behalf of the plaintiff and learned senior counsel Sri.K.Gopalakrishna Kurup on behalf of the defendant.

7. The plea of the defendant is one of novation. According to the defendant, on execution of Ext.A3 agreement, Ext.A1 agreement ceased to exist. Hence, Ext.A1 cannot be specifically enforced.

8. Before I go into the factual aspect, it would be necessary to refer to the law relating "novatio". section 62 of the Indian Contract Act deals with novation, recession and alteration of contracts. The section reads thus:

"62. Effect of novation, rescission, and alteration of contract-If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed."

9. In chitty on contracts, referring to Scarf v. Jardine (1882) 7 App.cas.345 it is stated, "Novation is a generic term which signifies that there being a contract in existence, some new contract is substituted for it....the consideration mutually being the discharge of the old contract." Regarding Rescission, in chitty on contract it is observed thus, "If a rescission is effected the contract is extinguished; if only a variation, it continues to exist in an altered form...Rescission will be presumed when the parties enter into a new agreement which is entirely inconsistent with the old, or, if not entirely inconsistent with it, inconsistent with it to an extent that goes to the very root of it. The change must be fundamental and the question is whether the common intention of the parties was to 'abrogate', 'rescind', 'supersede' or 'extinguish' the old contract by a 'substitution' of a 'completely new' or 'self-subsisting' agreement'. on variation and alteration chitty on contract states, "If the changes do not go to the very root of the contract, there is merely a variation".

10. In H.B. Basavaraj (D) by Lrs. Anr. v. canara Bank & ors. [2009 (13) SCALE 474] referring to Late construction Ltd. v. Dr. Rameshchandra & Anr. [(2000) 1 SCC 586], it was held that if the rights under the original contract were kept alive even after the second agreement is entered into, and the rights under the original agreement had not been rescinded, then there is no substitution of contracts and hence no novation. It was held that the basic principle behind the concept of novation is substitution of a contract by a new one. when there is alteration as to a term of the contract, it falls for determination as to whether the parties are relieved of the obligations under the original contract. what is to be looked into is as to whether the original contract is altered in such a manner that performance under the same i s at an end. The alterations or the modifications, unless it goes to the root of the original contract, does not take away the obligations under the original contract. It would be apposite to refer to the judgment of the Apex court in chrisomar corpn. v. MJR steels (P) Ltd. [(2018) 16 scc 117] wherein at paragraph 37 it was held thus:-

"37. It is clear that where parties to a contract agree to substitute a completely different contract for the first, or to rescind a contract, the performance under the original contract and /or rescinded contract comes to an end. When parties to a contract "alter" a contract. the question that has to be answered is as to whether the original contract is altered in such a 'limner that performance under it is at an end."

11. In Juggilal Kamlapat v. N.V. internationale credit-En-Handels Vereeninging 'Rotterdam' [AIR 1955 cal. 65], it was held that, if the modifications do not go to the very root of the first contract and do not change its essential character, it does not amount to effacing the original contract.

12. In chrisomar corpn. v. MJR Steels (P) Ltd. (supra), the Apex court further held:-

"In order that a contract that is altered in material particulars fall under Section 62, it must be clear that the alteration must go to the very root of the original contract and change its essential character. so that the modified contract must be read as doing away with the original contract."

13. Therefore, if the second agreement does not do away with the original contract, but merely brings in some modifications which does not go to the root of the original contract and does not change its essential character, there is no novation, recession or alteration within the scope of section 62 of the Indian Contract Act sweeping off the original contract in its entirety. The original contract and its terms continue with the modifications made under the second agreement. In other words, the original agreement with the modifications as made in the subsequent agreement subsists and is capable of being enforced.

14. coming to the case at hand, Ext.A3 contract acknowledges Ext.A1 contract. Ext.A3 acknowledges the agreement to convey plaint 'A' schedule property as incorporated in Ext.A1. In Ext.A3, there is no variation regarding the extent of the plaint 'A' schedule property from that as included in Ext.A1. In Ext.A3, there is no variation in price of plaint 'A' schedule from that as fixed in Ext.A1. The fact that in terms of Ext.A1 agreement and from out of the total sale consideration fixed under Ext.A1, portion has been paid and that the balance outstanding towards sale consideration is Rs. 1,40,000/-, is admitted and acknowledged in Ext.A3. The only variation in Ext.A3 is that, as per Ext.A1, the entire balance consideration is to be paid before 16.02.05 whereas in terms of Ext.A3, the sale deed regarding 'A' schedule is to be executed on payment of N. lakhs. As noticed, it is acknowledged in Ext.A3 that the balance consideration payable for the plaint 'A' schedule property is only 11,40,000/-. Therefore, the excess amount of Rs. 3,60,000/- is part of the consideration payable for the sale of plaint 'B' schedule. None of the material terms of Ext.A1 have been modified. In view thereof, it can only be concluded that there is no novation or recession or alteration of Ext.A1 contract attracting section 62 of the Indian Contract Act. The term under Ext.A1 regarding performance has to be read as modified in Ext.A3. I am unable to agree with the finding of the court below that by execution of Ext.A3 agreement there is novation under section 62 and Ext.A1 agreement ceased to exist. setting aside the said finding, I hold that, Ext.A1 as modified by Ext.A3, could be specifically enforced.

15. Merely because a contract is capable of specifically enforced, does not mean that the contract shall be specifically enforced. The relief for specific performance being one emanating under the law of equity, various factors like readiness and willingness of the plaintiff, whether on the facts discretion is to be exercised to decree specific performance, are all matters to be considered.

16. on the entire materials available, I notice various circumstances which dissuade me to grant a decree for specific performance regarding plaint 'A' schedule :-

(a) There is no prayer in the suit seeking specific performance of Ext.A1 agreement as modified by Ext.A3. what is sought for is specific performance of Ext.A1 agreement as it is.

(b) The rights and obligations under Ext.A1 regarding plaint 'A' schedule which was acknowledged in Ext.A3 is sought to be shuffled by the parties with the sale of plaint 'B' schedule property also. Facts indicate that the defendant wanted to wipe off his debts and for that he wanted to convey both 'A' and 'B' schedule properties. It is in that background that Ext.A3 was executed.

(c) Ext.A3 agreement related to taking over of the liabilities of the defendant with the Bank, the mode of its discharge and also the time of conveyance of both plaint 'A' and 'B' schedule properties. Though going by the terms of Ext.A3 sale of plaint 'A' schedule alone could be performed, it is evident that the parties intended conveyance of both plaint 'A' and 'B' schedule properties.

(d) Though Ext.A3 agreement acknowledges that the balance consideration payable for the sale of Plaint 'A' schedule property was only Rs. 1,40,000/-, it is a term of Ext.A3 that for execution of sale deed regarding the plaint 'A' schedule, the plaintiff has to pay Rs. 4 lakhs. Though the balance amount after deducting the sum of Rs. 1,40,000/- is towards the sale consideration of the plaint 'B' schedule, the fact that amounts in respect of 'B' schedule is also required to be paid for conveyance of plaint 'A' schedule, indicates that the parties intended conveyance of both the items.

(e) on 10.08.05, the plaintiff filed os 111/05 against the defendant for a prohibitory injunction against alienating the plaint schedule properties to strangers. At that time, though the plaintiff was entitled to seek for conveyance of plaint 'A' schedule property in terms of Ext.A1 agreement as modified by Ext.A3, the plaintiff did not choose to do so. A reading of the plaint in os 111/05, marked as Ext.B1, indicates that the parties intended conveyance of both the items of properties.

(f) In os 111/05, the plaintiff had filed an application for an interim injunction against alienation of the properties by the defendant. The learned Munsiff granted an order of injunction on condition that the plaintiff deposits Rs. 25 lakhs. The plaintiff did not comply with the condition. The suit was dismissed as withdrawn. This tells upon the readiness and willingness of the plaintiff and also on the bona fides of his contention regarding non-performance of Ext.A3 agreement.

(g) As per the judgment dated 26.09.06 in FAO 157/06, this court had appointed the plaintiff as a party receiver of the plaint 'A' schedule property with a direction to deposit Rs. 50,000/- annually towards the net income from the plaint 'A' schedule property. Even going by the plaintiff's case, till date they have deposited only 250,000/- in total, since the said judgment.

(h) Though the plaintiff alleges that the non-performance of Ext.A3 is due to the non co-operation of the defendant in persuading the Bank to get the "chotti Property" released, there is absolutely no evidence to show that the plaintiff had taken any step with the Bank in the said regard.

(i) The defendant alleges interpolation in Exts.A5 and A6 receipts at the instance of the plaintiff after its issuance by the defendant. The interpolation alleged with respect to Ext.A6 receipt is the inclusion of a statement to the effect that the plaintiff is given the right to take income from the plaint 'B' schedule. The interpolation alleged with regard to Ext.A6 receipt is the inclusion of a clause extending the time for performance. one mr.cheriyan who is known to both the parties is stated to be the scribe of the said receipts. Having sought for the equitable relief for specific performance, the plaintiff ought to have examined the said scribe and proved the genuineness of the said writings in Exts.A5 and A6 rather than banking upon the theory of burden of proof.

(j) Admittedly the plaint 'A' schedule is part of a larger extent of property of 11.30 acres. The defendant has raised a contention regarding the identity of the property. There is no survey plan identifying the 1.90 acres covered under Ext.Al.

(k) The plaintiff is none other than the defendant's brother's wife. Essentially this is a dispute between the siblings. The agreements were entered into at a point of time when the defendant was in penury.

(1) Ext.A1 agreement is of the year 2004. Now we are in 2019. Though mere lapse of time by itself is not a ground to deny the relief for specific performance, on the circumstances as noticed above, and in view of the fact that the relief for specific performance was declined by the trial court, the long efflux of time also could go into the zone of consideration.

17. On the factual circumstances as noticed above, I concur with the court below in having refused to grant a decree for specific performance. The court below was right in exercising its discretion by declining specific performance and directing refund of the advance sale consideration.

18. coming to the total amounts paid by the plaintiff under Exts.A1 and A3 agreements, there is dispute between the parties regarding the payment of Rs. 1 lakh evidenced by Ext.A4 receipt dated 17.02.2005. The defendant claims that, though Exhibit A3 recites that Rs. 1 lakh was paid on the date of Ext.A3 in fact there was no such payment and the payment was made only on the date of Ext.A4. Ext.A4 receipt really represents the payment of U. lakh mention

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ed in Ext.A3 to have been paid on date of Ext.A3, is the contention. In the absence of any evidence to substantiate the same and on the face of the statements in Exts.A3 and A4, I am unable to accept the defence contention. Thus, the total amounts paid under Exts.A1 and A3 agreements is Rs. 10,75,000/-. 19. The court below has declined interest on the advance amount for the reason that the plaintiff is in possession of the plaint 'A' schedule property. However, the fact remains that he has been appointed as receiver with the liability to pay 150,000/- per annum. Therefore, the court below was not right in declining interest on the advance amount. considering the prevailing rate of interest, the plaintiff shall be entitled to interest at the rate of 12% per annum since the date of suit till realisation. 20. As noticed supra, this court had appointed the plaintiff as receiver of the plaint 'A' schedule property. Admittedly the plaintiff has not complied with the direction to deposit 250,000/-per year, except towards the initial year. The defendant shall be entitled to have the balance amounts payable by the plaintiff under the said head appropriated from the advance amount returnable by the defendant to the plaintiff. 21. R.F.A 287 of 2008 arises from the dismissal of the defendant's claim for damages. As rightly noticed by the trial court, there is no proper pleadings or evidence to substantiate the claim. The court below was right in rejecting the claim for damages. In the result, R.F.A.287 of 2008 will stand dismissed and R.F.A 250 of 2008 will stand allowed granting interest on the advance sale consideration as mentioned above. The decree and judgment of the trial court will stand modified accordingly. No costs.
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19-12-2019 Cochin Port Trust, Willingdon Island, Kochi, Represented by Its Chairman, Jacob Thomas & Others Versus Parisons Roller Flour Mills Private Limited, Calicut & Others High Court of Kerala
19-12-2019 Joseph Tajet Versus State of Kerala Represented by Chief Secretary To Government, Government Secretariat, Thiruvananthapuram High Court of Kerala
19-12-2019 Suja Merine Thomas Versus Krishna Pillai High Court of Kerala
18-12-2019 C.G. George, Managing Partner, M/s. Srilakshmi Stone Crusher, Kannur Versus The State of Kerala Represented by Its Chief Secretary, Government Secretariat, Thiruvananthapuram & Others High Court of Kerala
18-12-2019 C.A. George Versus State of Kerala Represented by Secretary to Government, Public Works Department, Government Secretariat, Thiruvananthapuram High Court of Kerala
18-12-2019 Benny Thomas Versus Sub Inspector of Police Njarakkal Police Station, Ernakulam High Court of Kerala
18-12-2019 Thomas Versus State of Kerala, Represented by Circle Inspector of Police, Palarivattom Police Station, by Public Prosecutor, Ernakulam & Another High Court of Kerala
16-12-2019 K.M. Thomas, Idukki Versus K.M. Thomas, Kottayam & Another High Court of Kerala
16-12-2019 C.V. Berlin Versus T.A. George & Another High Court of Kerala
12-12-2019 Nobby M. George, Changanassery Tlauk, Rep. by Power of Attorney holder his mother Alice George, Changanassery Versus Jossy Joseph, Kuttanad Taluk, Now Staying With Her Sister Raji Joseph, Erskine Court, Nanuet 10954, New York, USA High Court of Kerala
10-12-2019 Joseph Charles & Others Versus State, Rep. by Inspector of Police, All Women Police Station-South, Madurai & Another Before the Madurai Bench of Madras High Court
06-12-2019 P.T. Joseph, Proprietor, Cheryl Enterprises, Elamakkara, Ernakulam Versus Kabeer Husain Minanna & Others High Court of Kerala
05-12-2019 Thomas Thoonattu Versus State of Kerala High Court of Kerala