Full Judgment Text
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PETITIONER:
KALLATHIL SREEDHARAN A ANR.
Vs.
RESPONDENT:
KOMATH PANDYALA PRASANNA & ANR.
DATE OF JUDGMENT: 08/08/1996
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
G.B. PATTANAIK (J)
CITATION:
JT 1996 (8) 40 1996 SCALE (6)311
ACT:
HEADNOTE:
JUDGMENT:
O R D E R
Leave granted.
These appeals by special leave arise from the judgment
and order dated August 10, 1995 of the Kerala High Court
made in A.S. Nos.147 and 303 of 1987. The appellants were
the plaintiffs. The first respondent and her son Sailesh
were defendants in 0.5. No.56/80 for partition between the
co-parceners. Therein Prabha Cinema Theatre situated in
Cannanore was allotted to them in a compromise decree,
subject to their paying a sum of Rs.1,55,000/- each to the
plaintiff and the second defendant therein within three
months from the date of the compromise decree dated
22.10.30. Since the amount could not be paid, the theatre
was brought to sale at a court auction dated June 24, 1982
and was sold for a sum of Rs.5,44.000/-. The auction was to
be confirmed on or before July 25, 1982. Since she was not
in a position to pay the amount, she had through her
brother, DW-2 approached the appellant. In furtherance of
the understanding, the appellant was to deposit Rs.
2,10.391/- in the court before confirmation of the sale
towards the 1/3rd of the amount deposited plus 5% of the
founding fees. Accordingly. the appellant had lent that
amount with a condition that the respondent and her son
would sell the theatre to the appellant, the later agreeing
to pay a further sum of Rs.2 lakhs. In other words, he had
agreed to purchase the theatre for 5,44.000/- and 2 lakhs.
It is the case of the appellant that the contract came to be
executed on July 22, 1982 and the sale was set aside on
deposit of the amount advanced by the appellant.
When he issued a notice to the respondent to get the
sale deed executed in furtherance of the agreement, she
pleaded that it was not intended to be executed; rather, it
was by way of security for loan. Consequently, the appellant
laid the suit for specific performance. Therein the
appellant prayed for decree for specific performance and in
the alternative for refund of the amount advanced by him,
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namely, Rs.2,10,391/-. The trial Court noticing that the
appellant had not had the sanction of the civil Court under
Section 8 of the Hindu Minority and Guardianship Act, 1956
held that the agreement of sale to the extent of half share
of the minor was not valid in law. However, since the
respondent had executed the agreement decreed to the extent
of her half share in the theatre a decree for specific
performance was granted subject to the appellant depositing
a sum of Rs.1,61,609 towards the half share of the first
respondent. Both the appellant as well as the respondents
file the appeals against the decree of the trial Court. The
High Court in the impugned judgment reversed the decree of
the trial Court even to the extent of granting the decree
for specific performance against the first respondent and
granted alternative relief of refund of the amount advanced
by the appellant. Thus, these appeals by special leave.
Though the first respondent had pleaded in her written
statement and an issue was raised that due to her
impecunious circumstances the appellant and her brother DW-2
Premarajan had a dominating influence over the first
respondent and, therefore, the agreement of sale was
vitiated by undue influence, that plea was negatived by the
trial Court as well as the appellate Court. Therefore, it is
not necessary to dwell at length on this issue though the
learned counsel for the respondent sought to press the same
for our consideration. Shri Venugopal, learned senior
counsel for the appellants has strenuously contended that in
view of the findings concurrently recorded by the High Court
as well as the trial Court that the agreement is not
vitiated by either fraud or undue influence and the first
respondent having received the consideration to discharge
the decree debt to set aside the sale, the High Court was
not right in reversing the decree of the trial Court and
granting the decree of refund of the amount advanced by the
appellant. In view of the admitted finding that she was not
in a position to discharge the compromise decree debt and
when the theatre was brought to sale at her instance the
appellant had advanced the money and agreed to purchase the
theatre for a sum of Rs.7,44,000/-. In the partition suit,
the parties valued the theatre at around Rs.8 lakhs and,
therefore, the consideration shown in adequate. Since the
agreement was found to be voluntarily executed by the
respondent, though the Court had discretion in granting or
refusing to grant specific performance, the High Court has
committed error of law in refusing to grant specific
performance of the agreement.
Shri Nair, learned counsel for the respondent, on the
other hand contended that the evidence discloses that the
respondent was in hard up circumstances to discharge the
decree debt; when she approached the respondent, it would be
obvious that the agreement was for lending the money with an
intention to pay back the amount but not for enforcement of
the agreement; even though it is now found to be valid
agreement, due to the evidence adduced by the respondent
that the value of the theatre even as on the date of the
agreement was more than Rs.24 lakhs the consideration shown
in the agreement was inadequate; considering the impecunious
situation in which the respondents came to be placed and the
value of the property, the High Court had properly exercised
its discretion; this Court may not interfere under Article
136 of the Constitution with the discretion exercised by the
High Court since the appellant was recompensated by refund
of the earnest money with interest as decreed by the High
Court; the discretion was exercised by the High Court on
sound principles and, therefore, it is not a case warranting
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interference.
Having regard to the respective contentions, the
question that arises for consideration is: whether the
agreement dated July 22, 1982 for sale of the cinema theatre
is to be specifically enforced? When the special leave
petitions were filed, the appellants had filed an affidavit
seating that they are not claiming specific performance as
regards half share of the second respondent minor. it would
be obvious that since the mandatory requirement of sanction
from the Court for alienating the property of the minor, as
required under Section 8 of the Hindu Minority and
Guardianship Act, had not been obtained, the contract of
sale to the extent of the half share of the minor is void
and it does not bind the minor. The courts have rightly
declined to exercise discretion on sound principle of law to
protect the estate of the minor.
The question then is: whether the High Court committed
any error of law warranting interference by refusing to
exercise discretion? The High Court after elaborate
consideration and appreciation of the evidence recorded the
findings as under:
"Obviously, the irresistible
inference is that the defendant did
not what to part with the property
and did not intend to get the
auction sale set aside solely for
the benefit of a third party,
namely, the plaintiffs. We are of
the view that taking advantage of
the situation in which the
defendants as judgment-debtors were
placed, the plaintiffs tried to
secure for themselves the
properties, not negotiations for
them on equal terms. There can be
no dispute that the price obtained
at the Court auction was not the
fair market price of the
properties. The valuation of the
property for Rs.26,13,415/- given
by DW3, a retired Assistant
Executive Engineer, PW2, is of
course disputed on the ground that
the plaintiffs has no notice when
he valued the property; not was he
appointed by the Court to do the
same. Of course, there is some
force in this objection.
Nevertheless, the property,
according to us, cannot be valued
at less then Rupees 15 lakhs. It is
true that, that by itself is no
ground to refuse the enforcement of
the contract. But, this has some
significance when it is taken along
with other factors, namely, the
situation in which he defendants
were placed, that is to say, unless
they could find the necessary money
for depositing into court to set
aside the auction sale and to
conduct the proceeding for this
purpose, they had no prospect of
regaining title to the properties.
Hence we hold that it would not be
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just and proper to direct the
defendants to execute the sale deed
in pursuance of Ext. A1 agreement.
Point No.3 is, therefore, answered
in favour of the defendants.
But, however, the plaintiffs would
be entitled to claim the
alternative relief asked for in the
plaint. This consists of the return
of Rs.2,10,391/- gives an advance
with interest at 6% per annum.
Since admittedly the defendants
regained the property on payment of
the aforesaid amount by the
plaintiffs treating the same as
advance towards the price of the
property agreed to be sold, the
defendants are bound to refund the
same to the plaintiffs."
The High Court thus, on appreciation of evidence, has
concluded that the value of the property would be at least
Rs.15 lakhs. Though that circumstance itself may not be a
ground to refuse enforcement of the contract, the Court has
taken into consideration the impecunious circumstances in
which the contract came to be executed by the respondents
and since the first respondent-woman was in hard up
circumstances, the agreement was held to be not specifically
enforceable.
Section 20 of the Specific Relief Act, 1963 deals with
discretion and jurisdiction to the Court, It says that the
Court is bound to grant such relief merely because it is
lawful to do so, but at the same time it enjoins that the
discretion of the Court should not be arbitrary but sound
and reasonable, guided by judicial principles and capable of
correction by a court of appeal. It would thus be seen that
the discretion given to the Court of equity is required to
be exercised not arbitrarily but on sound and reasonable
basis guided by judicial principles,
It is seen that the appellant had himself admitted in
the cross-examination that he was not particular to have the
agreement enforced with the respondent for the purchase of
Prabhat Cinema Theatre since he was already having theaters
in Cannanore itself. He says that "if Premarajan had asked
me to give two lakhs or more to pay the Prabhat theatre, I
would not have purchased it on that day. I have no idea of
purchasing the Prabhat theatre." But finding the situation
in which the first respondent was situated, he was willing
to purchase the property on paying an additional sum of Rs.2
lakhs towards the respondent-judgment debtors’ share and
tried to secure the theatre for the judgment-debtors. It
would, thus, be seen that the appellant was already having
the theatres. He was not serious about purchasing the
theatre. But since she had offered to sell the theatre to
him, he had agreed to purchase the property, It is seen that
the cinema theatre is a joint property between the first
respondent and her minor son. Considered from this
perspective and in view of the finding recorded by the High
Court on appreciation of the evidence, we are of the view
that the High Court has not committed any error of law in
declining to exercise the discretion in favour of the
appellant by granting decree for specific performance.
Instead, it granted decree for refund of the amount advanced
by the appellant to discharge the decree debt which she owed
to salvage the theatre from being confirmed in the Court
auction. Considered from this perspective, we are of the
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opinion that the discretion exercised by the High Court is
on sound principles and, therefore, it does not warrant
interference.
The appeals are accordingly dismissed. No costs.