High Court

Legal Reasoning

(1) sa-446-2024.odtIN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABADSECOND APPEAL NO.446 OF 2024WITHCIVIL APPLICATION NO.13857 OF 2024INSECOND APPEAL NO.446 OF 20241.Sujit Namdeo ShindeAge- 46 Years, Occ- Agri/Business2.Namdeo Govind Shinde,Age- 84 Years, Occ- Agri/Pensioner3.Sau. Vijaya Namdeo Shinde,Age- 72 Years, Occ- Agri.All R/o. Ganesh Colony, Loni KhurdTal. Rahata, Dist. Ahmednagar..Appellants (Orig. Defendants)VersusBabanrao Vithoba AbujAge- 69 Years, Occ- Agri/PensionerR/o. Ganesh Colony, Loni Khurd,Tal. Rahata, Dist. Ahmednagar...Respondent (Orig. Plaintiff) …Mr. V. D. Hon, Senior Advocate i/by Mr. S. S. Kote, Advocate forthe Appellants.Mr. A. S. Bajaj a/w Mr. H. A. Bajaj, Advocate for Respondent.… CORAM : S. G. CHAPALGAONKAR, J.DATED : 20th DECEMBER, 2024.ORDER:- 1.The appellants / original defendants impugns judgment anddecree dated 19.10.2024, passed by District Judge-1, Sangamner,Dist. Ahmednagar in Regular Civil Appeal No.104/2018, therebyreversing judgment and decree dated 10.10.2018 passed by Civil (2) sa-446-2024.odtJudge, Senior Division, Sangamner in Special Civil SuitNo.22/2012. (Hereinafter, parties are referred to by their originalstatus for the sake of convenience and brevity).2.The respondent/plaintiff instituted a suit for specificperformance of a contract based on agreement to sale dated22.09.2008, contending that the defendants are owners ofagricultural land admeasuring 1H 49R situated at Gut No.455/3.The defendants executed a notarized agreement to sale afterreceiving an earnest amount of Rs.10,00,000/- and agreed to salesuit land to plaintiff for total consideration of Rs.17,20,000/-. Itwas agreed that sale deed would be executed after disposal ofpending court litigation concerning the suit property. According toplaintiff, he was always ready and willing to perform his part of thecontract and pay balance consideration of Rs.7,20,000/- to thedefendants. However, the defendants refused to execute the saledeed. Consequently, plaintiff issued a legal notice dated20.04.2012, calling upon the defendants to remain present inregistrars office 03.05.2012 and execute sale deed. Plaintiff waspresent in office of Sub-Registrar, Sangamner, on given date butdefendants did not turn up. Hence, the cause of action arose to filesuit. The plaintiff specifically pleaded essentials of Section 16(c) ofthe Specific Relief Act in plaint. In the alternative, the plaintiff (3) sa-446-2024.odtclaimed for refund of earnest amount of Rs.12,00,000/- along withinterest at 18% per annum.3.In response, the defendants refuted the plaintiff’s claim,contending that defendant no.1 was facing financial duress, hence,sought financial assistance from plaintiff. The plaintiff advancedRs.10,00,000/- upon execution of the agreement to sale, which wasintended for collateral security towards repayment of loan. Thedefendants offered to refund Rs.10,00,000/-, but the plaintiffdeclined to accept it and raised a false claim.4.The Trial Court framed issues, both parties recorded witnesstestimonies so also relied on documentary evidence. Finally TrialCourt concluded that plaintiff failed to prove agreement to sale orpayment of earnest money to the defendants. Additionally, theplaintiff failed to prove his readiness and willingness to performhis part of the contract. Pertinently Trial Court also rejecteddefendants' case of hand loan transaction and concluded that suitwas barred by limitation. Consequently, the suit was dismissed.Aggrieved, plaintiff filed an appeal before the District Court. Thelearned District Judge reversed the judgment and decree of theTrial Court, upholding plaintiff's claim for specific performance ofcontract based on agreement to sale dated 22.09.2008 and thepayment of earnest money. The Appellate Court found that the suitwas within the limitation period and recorded positive finding on (4) sa-446-2024.odtpoint of plaintiff’s readiness and willingness to perform his part ofthe contract. Consequently, the suit has been decreed, directing thedefendants to execute the sale deed in favor of the plaintiff uponthe deposit of Rs.5,20,000/- alongwith interest at 6% per annumfrom the date of filing of the suit until the deposit of the amount.5.Mr. V. D. Hon, learned Senior Advocate appearing for thedefendants, submits that Trial Court, upon proper appreciation ofevidence, rightly dismissed the plaintiff’s suit. However, theAppellate Court erroneously reversed the decree. According to Mr.Hon, the plaintiff failed to prove his readiness and willingness toperform his part of the contract, and no consideration wastransferred to the defendants under the agreement to sale. Hepoints out that payment was made by Dr. Ashok Tambe from hisaccount and another payment of Rs.2,00,000/- was made throughaccount of Asmita Dairy. Therefore, plaintiff cannot claim specificperformance based on payments made by third parties. Mr. Honfurther argued that Trial Court rightly held that suit was barredby limitation. Hence, Second Appeal deserves to be admitted byframing substantial questions of law on these issues.6.Per contra, Mr. Bajaj, learned Advocate appearing forrespondent, submits that defendants admitted execution ofagreement to sale dated 22.09.2008 but took an inconsistent standthat transaction was that of hand loan. The defendants claimed (5) sa-446-2024.odtthat plaintiff advanced a sum of Rs.10,00,000/- to them uponexecution of document dated 22.09.2008 as security for loan. Mr.Bajaj further submits that, as per Clause No.2 of the agreement tosale, sale deed was to be executed immediately after decision ofRegular Civil Suit No.80/2006 pending before the Civil Judge,Senior Division, Sangamner, and RTS Appeal No.40/2006 pendingbefore the District Collector at Ahmednagar. The RTS AppealNo.40/2006 was decided earlier in favor of the defendants, howeverRegular Civil Suit No.80/2006 was disposed of on 21.09.2010.Thereafter, on demanded of defendants, a sum of Rs.2,00,000/- waspaid on 11.04.2011. Thereafter also plaintiff was ready to pay thebalance amount of Rs.5,20,000/-. On 05.02.2012, plaintiff’s son-in-law, Dr. Ashok Tambe, passed away. Consequently, in April 2012,plaintiff again requested defendants to execute sale deed, but duequoting personal difficulties, defendants delayed execution of thesale deed. Finally, plaintiff issued a notice dated 20.04.2012 to thedefendants for executing the sale deed. On 03.05.2012, the plaintiffwas present in the office of the Sub-Registrar with the balanceamount, but the defendants did not appear. According to Mr.Bajaj, the Trial Court had dismissed suit on untenable grounds,whereas Appellate Court rightly reversed decree. No substantialquestion of law arises for consideration in this Second Appeal. (6) sa-446-2024.odt7.Having considered submissions advanced by the learnedAdvocates appearing for the respective parties and after goingthrough reasoning adopted by Courts below, it can be observed thatexecution of agreement to sale dated 22.09.2008 is undisputed.There is no denial that the amount stipulated as earnest money inthe agreement was received by the defendants. In fact out of thetotal consideration of Rs.17,20,000/-, amount of Rs.5,00,000/- waspaid through cheque and Rs.5,00,000/- was paid in cash. Balanceof Rs.7,20,000/- was to be paid at the time of execution of sale deed.Although defendant No. 1 pleads that agreement to sale wasexecuted towards security for loan, he utterly failed to support thiscontention by leading cogent evidence. Both Courts haveconcurrently held that defendants failed to establish defence ofloan transaction. In that view of the matter it will have to beaccepted that defendants executed agreement to sale in favor ofplaintiff and received Rs.10,00,000/- as earnest money.8.The Trial Court discarded plaintiffs case only on ground thatconsideration has been paid by Dr. Tambe. Undisputedly, Dr.Tambe is plaintiff’s son-in-law. The defendant readily acceptedcheques drawn on Dr. Tambe’s account and acknowledged receiptthereof in agreement. Now plaintiff cannot contend that theconsideration amount paid under cheque drawn on Dr. Tambe’s (7) sa-446-2024.odtaccount was not towards agreement to sale. In this backdrop, thefinding of fact recorded by the Appellate Court, cannot be faulted.9.The second contention raised on behalf of the defendants isthat the plaintiff failed to prove his readiness and willingness toperform his part of the contract. Section 16(c) of the Specific ReliefAct mandates that the plaintiff must aver and prove his readinessand willingness to perform his part of the contract when seekingspecific performance. The Supreme Court of India in case of U. N.Krishnamurthy (Since Deceased) Thr. LRs. Vs. A. M.Krishnamurthy1, observed in paragraph nos.24 and 25 as under:“24. Section 16 (c) of the Specific Relief Act, 1963 bars therelief of specific performance of a contract in favour of aperson, who fails to aver and prove his readiness andwillingness to perform his part of contract. In view ofExplanation (i) to clause (c) of Section 16, it may not beessential for the plaintiff to actually tender money to thedefendant or to deposit money in Court, except when sodirected by the Court, to prove readiness and willingness toperform the essential terms of a contract, which involvespayment of money. However, explanation (ii) says theplaintiff must aver performance or readiness andwillingness to perform the contract according to its trueconstruction. 25.To aver and prove readiness and willingness toperform an obligation to pay money, in terms of a contract,the plaintiff would have to make specific statements in theplaint and adduce evidence to show availability of funds tomake payment in terms of the contract in time. In otherwords, the plaintiff would have to plead that the plaintiffhad sufficient funds or was in a position to raise funds intime to discharge his obligation under the contract. If theplaintiff does not have sufficient funds with him todischarge his obligations in terms of a contract, whichrequires payment of money, the plaintiff would have to1(2023) 11 SCC 775. (8) sa-446-2024.odtspecifically plead how the funds would be available to him.To cite an example, the plaintiff may aver and prove, byadducing evidence, an arrangement with a financier fordisbursement of adequate funds for timely compliance withthe terms and conditions of a contract involving payment ofmoney.”10.Therefore, question is whether plaintiff complied withaforementioned requirements. In paragraphs 5 and 6 of the plaint,the plaintiff specifically averred that he was always ready andwilling to perform his part of the contract. The plaintiff stated thatthe sale deed was to be executed upon the disposal of the pendingcivil cases referred to in the agreement. The RTS AppealNo.40/2006 was decided in favor of the defendants. Thereafter, on21.09.2010, Regular Civil Suit No.80/2006 was withdrawn by thedefendants. As such, impediments to execution of sale deed wereremoved. On 11.04.2011, the plaintiff’s son-in-law Dr. Tambe paidRs.2,00,000/- to defendant no.1 through a cheque, and the plaintiffwas ready with the balance consideration amount of Rs.5,20,000/-.Unfortunately, Dr. Tambe passed away on 05.02.2012. Theplaintiff’s family was in grief. In April 2012, plaintiff offeredbalance consideration amount, but defendants avoided execution ofsale deed. Consequently, a legal notice was issued on 20.04.2012calling upon the defendants to execute sale deed. The plaintiffremained present in the office of Sub-Registrar on 03.05.2012 forthat purpose, but defendants failed to turn up. From pleadings inplaint and legal notice dated 20.04.2012, it is clear that plaintiff (9) sa-446-2024.odtwas always ready and willing to perform his part of the contract,while defendants avoided execution of sale deed. The defendantsdid not claim that the plaintiff lacked funds or unwilling to carryforward transaction. In fact, their defence was entirely different,attributing the transaction to a loan security, which they could notprove. Therefore, the requirements of Section 16(c) of the SpecificRelief Act are clearly satisfied through plaint, legal notice andoral evidence of plaintiff.11.Mr. Hon, learned Senior Advocate, contends that payment ofRs.2,00,000/- was not related to present transaction and thatcheque was issued from account of Asmita Dairy. However, it isundisputed that Dr. Tambe was partner of said firm and signatoryon of cheque. Pertinently defendants have not provided details ofany other transaction with Asmita Dairy. Therefore, reasonableand logical inference is that payment of Rs.2,00,000/- was pursuantto the agreement to sale.12.The third contention raised by Mr. Hon, Senior Advocate, isthat the suit is barred by limitation. The Trial Court held that suitwas barred by limitation on observing that agreement to sale wasexecuted in 2008 and that plaintiff failed to prove the payment ofRs.2,00,000/- on 11.04.2011 pursuant to the agreement. Asdiscussed above, payment of Rs.2,00,000/- was made from theaccount of Asmita Dairy, in which Dr. Tambe, plaintiff’s son-in-law, (10) sa-446-2024.odtwas a partner. Even cheques tendered at the time of the agreementto sale were drawn from his account. Therefore, there is no reasonto disbelieve plaintiff’s claim that this payment was in deference toagreement to sale. Furthermore, under Article 54 of the LimitationAct, limitation period of three years begins from date fixed forexecuting sale deed or from the date when performance of contractis refused to the notice of plaintiff. In this case, agreementstipulates sale deed would be executed on settlement of pendingcivil cases pertaining to suit land. Regular Civil Suit No.80/2006was withdrawn on 21.09.2010. The present suit has been institutedin 2012, i.e. within three years limitation period. Therefore, thecontention that the suit is barred by limitation has no merit.13.The conclusions arrived at by the Appellate Court arebased on a correct appreciation of the material on record. Nosubstantial question of law arises for consideration in this SecondAppeal.14.Consequently, Second Appeal stands dismissed.15.In view of dismissal of Second Appeal, Civil Application doesnot survive and accordingly stands disposed of.(S. G. CHAPALGAONKAR)JUDGEDevendra/December-2024