Full Judgment Text
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CASE NO.:
Appeal (civil) 6925 of 2000
PETITIONER:
P.S. Ranakrishna Reddy
RESPONDENT:
M.K. Bhagyalakshmi and Anr
DATE OF JUDGMENT: 20/02/2007
BENCH:
S.B. Sinha & Markandey Katju
JUDGMENT:
J U D G E M E N T
S.B. SINHA,J.
Defendant No. 1 in the suit is Appellant before us. He was
admittedly owner of a residential house admeasuring 40 ft. x 30 ft bearing
No. 148 (New Plot No. 78), 8th Cross, N.R. Colony, Bangalore. Respondent
No. 1 has been in possession of the suit property as a tenant on a monthly
rent of Rs. 115/-. The appellant admittedly had taken loan from Respondent
No. 1 herein from time to time, the details whereof are as under :
"23.4.79 Rs. 8000
27.4.79 Rs. 4000
10.5.79 Rs. 2900
11.5.79 Rs. 100"
Admittedly, the parties entered into an agreement for sale on
11.05.1979. The aforementioned sum of Rs. 15,000/- received by the
appellant was treated to be the amount of advance paid out of the amount of
consideration fixed in the said agreement of sale i.e Rs. 45,000/-. The
relevant terms of the said agreement are as under :
"Whereas the first party is the absolute owner of
house bearing No. 148, 8th cross N.R. colony, Bangalore-
19 more fully described in the schedule hereunder,
having acquired the same under registered gift deed,
executed by Mrs. B.N. Vijaya Deva.
Whereas the second party has offered to buy and
the first party has agreed to sell to the second party the
schedule property for a sum of Rs. 45,000/- (Rupees
fourty five thousand only.)
The first party hereby agreed to sell the schedule
property to the second party on the following terms and
conditions.
a) A sum of Rs. 15,000/- (Rupees fifteen thousand
only) has been paid this day by the second party to the
first party which he hereby acknowledges out of the said
price of Rupees Forty Five thousand.
b) A further sum of Rs. 5,000/- (Rupees five thousand
only) in respect of the balance of the price shall be paid
by the second party to the first party within one year from
this date, i.e., 11-5-79.
c) The remaining balance of the consideration for the
sale, i.e., Rs. 25,000/- (Rupees twenty five thousand
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only) shall be paid by the second party to the first party
within five years from this date.
On payment of the full consideration of Rs.
45,000/- to the first party by the second party in the
manner aforesaid the first party shall execute a registered
deed of sale in favour of the second party conveying the
schedule property to the second party. The expenses for
conveyance for stamp and registration shall be borne by
the second party only but the first party shall apply to the
competent authorities for permission to sell the property
to the second party and take other steps necessary for the
purpose.
xxx xxx xxx
The first party shall notify the tenants in the
property of the fact of sale at the time the sale deed is
executed in the manner mentioned above and call upon
them to vacate the property and render all assistance and
help to the second party to obtain in vacant possession of
the schedule property.
In case the first party shall commit breach of the
agreement, he shall, besides refunding the sum he has
received under this agreement, to the second party, shall
in addition pay a sum of rupees ten thousand as damages.
In case the second party commits breach of this
agreement she shall forfeit a sum of Rs. ten thousand out
of the amounts paid."
Although a period of five years was fixed for execution of the sale
deed on payment of the balance sum, admittedly, the appellant herein has
received a further sum of Rs. 5,000/- from Respondent No. 1.
It is furthermore not in dispute that the respondents served a notice
upon the appellant on or before 29.5.1981 alleging that he had been making
attempts to sell the property to third parties.
Appellant was called upon to execute a registered deed of sale on
receipt of the balance amount and as he did not agree thereto, the respondent
No. 1 filed a suit for specific performance of the said agreement of sale
dated 11.05.1979.
The said suit was decreed by the learned Trial Judge by a judgment
and decree dated 05.04.1989. A first appeal preferred thereagainst by the
appellant has been dismissed by the High Court by reason of the impugned
judgment.
Mr. G.V. Chandrashekhar, learned counsel appearing on behalf of the
appellant, submitted that the learned Trial Judge as also the High Court
committed a serious error in construing the said document as an agreement
for sale in stead and place of an agreement for loan. It was urged that
having regard to the fact that diverse amounts had been taken by the
appellant from the respondents as also the fact that similar agreements for
sale were entered into by and between the appellant and other persons
categorically demonstrate that he had merely borrowed some amount and the
purported agreement for sale was not meant to be acted upon. The learned
counsel urged that in view of the default clauses contained in the agreement,
the same could not have been construed to be an agreement for sale. Strong
reliance in this behalf has been placed on Dadarao and Another v. Ramrao
and Others [(1999) 8 SCC 416].
In any event, it was urged that it is not a fit case where the Courts
below should have exercised their discretionary jurisdiction under Section
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20 of the Specific Relief Act, 1963.
Mr. S.N. Bhat, learned counsel appearing on behalf of the
respondents, on the other hand, supported the judgment.
Original relationship of the parties as landlord and tenant is not in
dispute. The fact that the appellant intended to convey his right, title and
interest in respect of the said property is also not in dispute. As noticed
hereinbefore, he entered into more than one agreement in respect of the self-
same property and took advances in respect thereof from more than one
person.
The agreement in question has been described as an agreement for
sale. Appellant admittedly was owner of the property. The agreement shows
that there had been negotiations between the parties as a result whereof the
respondent herein had offered to buy and the appellant had agreed to sell the
said property for a sum of Rs. 45,000/-. The terms and conditions stipulated
therein were arrived at as a result of the negotiations between the parties.
No part of the agreement supports the contention of Mr.
Chandrashekhar that the same was not meant to be acted upon. It was
signed by the parties. Two witnesses who had attested the signature of the
parties to the agreement were examined before the Trial Court. It may be
that despite the said agreement, Respondent No. 1 was allowed to continue
to remain in possession of the premises in question as a tenant and not in
part performance of the said agreement for sale, but it was not necessary for
the parties to adopt the latter course only. The parties, on a plain reading of
the agreement, apparently intended to continue their relationship as landlord
and tenant till a regular deed of sale was executed.
A document, as is well known, must be read in its entirety. The
intention of the parties, it is equally well settled, must be gathered from the
document itself. All parts of the deed must be read in their entirety so as to
ascertain the nature thereof.
The purported default clause, to which our attention has been drawn
by Mr. Chandrashekhar, does not lead to the conclusion that the same was a
contract of loan. By reason thereof, the respective liabilities of the parties
were fixed. In the event, the provisions of the said contract were breached,
the damage which might have been suffered by one party by reason of act of
omission or commission on the part of the other in the matter of performance
of the terms and conditions thereof had been quantified. The quantum of
damages fixed therein was the same for both the parties. The submission of
Mr. Chandrashekhar that in view of the fact that parties had agreed that in
the event of breach on the part of the appellant, the respondent would be
entitled to claim damages for a sum of Rs. 10,000/- only and, thus, the said
agreement for sale was not meant to be acted upon cannot be accepted. If
the said contention is accepted, the damages quantified in the event of any
breach on the part of Respondent No. 1 cannot be explained. It is clear that
in the event of commission of any breach on the part of respondent, the
appellant was entitled to forfeit the entire amount of advance. The very fact
that the parties intentionally incorporated such default clause clearly goes to
show that they intended to lay down their rights and obligations under the
contract explicitly. They, therefore, knew the terms thereof. They
understood the same. There is no uncertainty or vagueness therein.
The decision of this Court in Dadarao (supra), whereupon reliance has
been placed by Mr. Chandrashekhar is wholly misplaced. The term of the
agreement therein was absolutely different. We need not dilate on the said
decision in view of the fact that in a subsequent decision of this Court in
P.D’ Souza v. Shondrilo Naidu [(2004) 6 SCC 649], it has been held to have
been rendered per incuriam, stating:
"34. In Dadarao whereupon Mr Bhat placed strong
reliance, the binding decision of M.L. Devender
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Singh4 was not noticed. This Court furthermore
failed to notice and consider the provisions of
Section 23 of the Specific Relief Act, 1963. The
said decision, thus, was rendered per incuriam.
35. Furthermore, the relevant term stipulated in
Dadarao was as under: (SCC p. 417, para 2)
Tukaram Devsarkar, aged about 65, agriculturist,
r/o Devsar, purchaser (ghenar) Balwantrao
Ganpatrao Pande, aged 76 years, r/o Dijadi, Post
Devsar, vendor (denar), who hereby give in
writing that a paddy field situated at Dighadi
Mouja, Survey No. 7/2 admeasuring 3 acres
belonging to me hereby agree to sell to you for Rs
2000 and agree to receive Rs 1000 from you in
presence of V.D.N. Sane. A sale deed shall be
made by me at my cost by 15-4-1972. In case the
sale deed is not made to you or if you refuse to
accept, in addition of earnest money an amount of
Rs 500 shall be given or taken and no sale deed
will be executed. The possession of the property
has been agreed to be delivered at the time of
purchase. This agreement is binding on the legal
heirs and successors and assigns.(emphasis
supplied)
Interpreting the said term, it was held: (SCC p.
418, paras 6-7)
6. The relationship between the parties has to be
regulated by the terms of the agreement between
them. Whereas the defendants in the suit had taken
up the stand that the agreement dated 24-4-1969
was really in the nature of a loan transaction, it is
the plaintiff who contended that it was an
agreement to sell. As we read the agreement, it
contemplates that on or before 15-4-1972 the sale
deed would be executed. But what is important is
that the agreement itself provides as to what is to
happen if either the seller refuses to sell or the
purchaser refuses to buy. In that event the
agreement provides that in addition to the earnest
money of Rs 1000 a sum of Rs 500 was to be
given back to Tukaram Devsarkar and that no sale
deed will be executed. The agreement is very
categorical in envisaging that a sale deed is to be
executed only if both the parties agree to do so and
in the event of any one of them resiling from the
same there was to be no question of the other party
being compelled to go ahead with the execution of
the sale deed. In the event of the sale deed not
being executed, Rs 500 in addition to the return of
Rs 1000, was the only sum payable. This sum of
Rs 500 perhaps represented the amount of
quantified damages or, as the defendants would
have it, interest payable on Rs 1000.
7. If the agreement had not stipulated as to what is
to happen in the event of the sale not going
through, then perhaps the plaintiff could have
asked the Court for a decree of specific
performance but here the parties to the agreement
had agreed that even if the seller did not want to
execute the sale deed he would only be required to
refund the amount of Rs 1000 plus pay Rs 500 in
addition thereto. There was thus no obligation on
Balwantrao to complete the sale transaction.
36. Apart from the fact that the agreement of sale
did not contain a similar clause, Dadarao does not
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create a binding precedent having not noticed the
statutory provisions as also an earlier binding
precedent."
We may furthermore notice that recently in Jai Narain Parasrampuria
(Dead) and Others v. Pushpa Devi Saraf and Others [(2006) 7 SCC 756], this
Court categorically opined that a stipulation in regard to payment of
damages by one party of the contract to the other does not establish that the
same was not an agreement for sale stating:
"59. One of the learned Judges of the High Court also
held that the said agreement dated 12-6-1984 was in fact
an agreement for obtaining loan. There was no warrant
for such a proposition. Clause 7 of the agreement on the
basis whereof such a finding was arrived at reads as
under:
"(7) That it is further agreed that in case any
defect in the right or title of the parties of the first
part or the said Company is found or any other
encumbrance or legal hurdle is found in respect of
the said house property then in both the
circumstances the second party shall have option
for the refund of advance money of Rs. 10 lakhs
together with interest @ 18% per annum."
60. It is interesting to note that the sale deed
dated 24-2-1979 whereby Sarafs purchased the property
also contains an identical clause. Such types of clauses
normally are found in the agreement so as to enable the
vendee to protect his interest against the defects in the
vendor’s title, if any. The agreement records the
valuation of property at Rs. 11 lakhs. The respondents
relying on or on the basis of another purported agreement
dated 4-6-1984 executed by Sarafs in favour of their son-
in-law, Original Defendant 5, S.K. Mittal stated that the
property was worth Rs. 25 lakhs. The trial court, in our
opinion, correctly arrived at an opinion that the said
agreement was a sham one. Original Defendant 5 did
not file any suit for specific performance of contract.
The said agreement for sale had not been acted upon by
the parties. Reliance placed on the said agreement by a
learned Judge of the High Court was, therefore,
unwarranted."
The contention of the appellant has been rejected both by the learned
Trial Judge as also by the High Court upon assigning sufficient and cogent
reasons. The agreement has been held to have been executed by the parties
in support whereof large number of witnesses had been examined. The High
Court, in particular in its judgment, has categorically opined that when the
respondents served a notice upon the appellant on 29.05.1981, it was
expected of the appellant to raise a contention that the said agreement was a
sham one or nominal one and was not meant to be acted upon but it was not
done. Failure on the part of the appellant to do so would give rise to an
inference that the plea raised in the suit was an afterthought.
The findings of facts by both the Courts are concurrent ones and in
our opinion no case has been made out to interfere therewith by this Court.
Submission of Mr. Chandrashekhar to the effect that having regard to
the rise in price of an immovable property in Bangalore, the Court ought not
to have exercised its discretionary jurisdiction under Section 20 of the
Specific Relief Act is stated to be rejected. We have noticed hereinbefore
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that the appellant had entered into an agreement for sale with others also.
He had, even after 11.5.1979, received a sum of Rs. 5,000/- from the
respondent. He with a view to defeat the lawful claim of Respondent No. 1
had raised a plea of having executed a prior agreement for sale in respect of
self-same property in favour of his son-in-law who had never claimed any
right thereunder or filed a suit for specific performance of contract. The
Courts below have categorically arrived at a finding that the said contention
of the appellant was not acceptable. Rise in the price of an immovable
property by itself is not a ground for refusal to enforce a lawful agreement of
sale. [See P.D’ Souza (supra) and Jai Narain Parasrampuria (supra)]
For the reasons aforementioned, there is no merit in this appeal which
is dismissed accordingly. In the facts and circumstances of this case,
however, there shall be no order as to costs.