A.Jayalakshmi & Ors. v. M.Ramalingam

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED 19.12.2009CORAM:THE HONOURABLE MS.JUSTICE R.MALAS.A.No.595 of 20031.A.Jayalakshmi2.A.Sakthivel3.A.Subramanian @ Balasubramanian4.Sumathi @ Kolanchi .. Appellants/Defendants 2-5vs.M.Ramalingam .. Respondent/PlaintiffSecond Appeal filed against the judgment and decree of thePrincipal District Court, Perambalur dated 11.10.2002 in A.S.No.131of 2002, against the judgment and decree of the Sub-Court, Ariyalurdated 17.09.2001 in O.S.No.210 of 1994.For appellants: Mr.S.Parthasarathy, Senior Counsel for M/s.Sarvabhauman Associates For respondent: Mr.T.R.RajaramanJUDGMENTThe Second Appeal is filed by the defendants 2 to 5, against thejudgment and decree of the Principal District Court, Perambalur,dated 11.10.2002 in A.S.No.131 of 2002, against the judgment anddecree of the Sub-Court, Ariyalur dated 17.09.2001 in O.S.No.210 of1994.2. The averments in the plaint are as follows:The suit properties absolutely belong to the first defendant. Heentered a sale agreement on 03.04.1994 to sell the properties to theplaintiff for Rs.1,69,000/- and also received Rs.5,000/- in advance.He agreed to receive the balance amount of Rs.1,64,000/- on or before30.07.1994 and execute the sale deed in favour of the plaintiff. Itwas also agreed that if the first defendant fails to make the saledeed in favour of the plaintiff by receiving the balance amount, hehas to repay, the advance amount of Rs.5,000/-. Apart from that, hehas to give Rs.25,000/- as damages to the plaintiff and failing to doso, the plaintiff can go to the court and collect the same. Since the https://hcservices.ecourts.gov.in/hcservices/ first defendant was not ready to execute the sale deed, the plaintiffissued notice on 26.04.1994. He received the reply notice dated03.05.1994 with false and frivolous allegations. The first defendanthas also given a complaint before the Sub-Inspector of Police,Perambalur as if the plaintiff fabricated the sale agreement. Afterenquiry, the Police directed to settle the matter as per theagreement in the village. The alleged settlement deed in favour ofthe defendants 2 to 4 is not true and genuine and it was fabricated.Hence, the plaintiff was constrained to implead the defendants 2 to 4as parties to the proceedings, since the settlement deed in theirfavour, is fabricated and to avoid future litigation and multiplicityto proceedings. He was constrained to file the suit for specificperformance and for other reliefs.3. The gist and essence of the written statement filed by thefirst defendant is as follows:The execution of the sale agreement is not true and genuine. Theplaintiff has not executed any sale agreement. The value of theproperties on the date of agreement is more than Rs.3,00,000/- and atthe time of the filing of the suit, one acre land value isRs.2,00,000/-. The first defendant never agreed for selling theproperties. He does not possess any other properties except the suitproperties on the date of agreement. The first defendant is not theowner of the suit properties. The first defendant has executedsettlement deed in favour of the defendants 2 to 4, which has beenduly executed, validly attested, accepted and acted upon. Theaverment that the settlement deed ante-dated is frivolous. The firstdefendant has leased out the suit properties to his brotherShanmugham for one year from 10.03.1993. After expiry of the leaseperiod, Shanmugham refused to handover the possession. There wasenmity between the first defendant's brother Shanmugam and oneNallathambi. So, Nallathambi has given assurance that he will evictShanmugham and obtained the signature in the stamp papers. That hasbeen concocted as the sale agreement in favour of the plaintiff, whois the maternal uncle of the said Nallathambi. The first defendantdoes not know the plaintiff. Hence, he prayed for the dismissal ofthe suit.4. The gist and essence of written statement filed by the thirddefendant is as follows:The sale agreement is not true and genuine. The value of theproperty is more than Rs.3,00,000/-. Since the first defendant wasaged, he want to give something to his wife and children. So, heexecuted the settlement deed on 11.03.1994. It was duly executed,validly attested, accepted and acted upon. So, the defendants 2 to 4are the owners of the properties. So on the date of sale ofagreement, first defendant is not the owner of the properties. Thesale agreement is not true and genuine. Nallathambi has obtained https://hcservices.ecourts.gov.in/hcservices/ signature from the first defendant in Stamp papers. He used the Stamppaper in favour of his maternal uncle, i.e. the plaintiff andconcocted the sale agreement. Hence, he prayed for the dismissal ofthe suit.5. The learned Subordinate Judge, Ariyalur, after consideringthe averments of the plaint and the written statement, has framed 5issues and considered the oral evidence of P.Ws.1 and 2 and D.Ws.1 to3, Exhibits A-1 to A-9, Exhibits B-1 to B-5 and Exhibits X-1 and X-2,and decreed the suit as prayed for in the plaint, granting one monthtime for depositing the amount. Against that, the defendants havepreferred appeal in A.S.No.131 of 2002 on the file of PrincipalDistrict Court, Perambalur. The learned first appellate Judge hasframed four points for determination and considering the arguments ofboth the counsel, concurred with the findings of the trial Court anddismissed the appeal. Against that, the present Second Appeal hasbeen preferred by the defendants 2 to 5. 6. At the time of admission of the Second Appeal, the followingsubstantial question of law was framed for consideration:"Whether on a construction of Ex.A.1 agreement theCourt below is correct in law in holding that theplaintiff is entitled to specifically enforce the sameespecially when the agreement stipulates that in the eventof breach the purchaser will be entitled to onlyliquidated damages?"7. The respondent as plaintiff, filed the suit for specificperformance stating that as per Ex.A-1, the first defendant is theowner of the suit properties. He executed the sale agreement, but toexecute the sale, he created ante-dated settlement deed in favour ofthe appellants-defendants 2 to 5 in the suit. After issuance ofnotice, showing his readiness and willingness to perform his part ofthe contract, the plaintiff has come forward with the suit forspecific performance.8. The appellants as defendants 2 to 5 raised the contentionthat on the date of Ex.A-1 sale agreement, the first defendant is theowner of the properties and he has already executed the settlementdeed in favour of his wife and children, who are the appellants. Itis further contended that the first defendant has not executed anysale agreement. He signed the blank stamp papers to evict his brotherShanmugam, who was in possession of the properties as a lessee.Hence, the appellants-defendants 2 to 5 prayed for dismissal of thesuit.9. The trial Court has framed necessary issues and consideredthe oral and documentary evidence and decreed the suit and grantedone month time to deposit the sale consideration. Against that, the https://hcservices.ecourts.gov.in/hcservices/ appellants-defendants have preferred appeal. The first appellateCourt concurred with the findings of the trial Court and dismissedthe appeal. Against that, the present Second Appeal has beenpreferred by the appellants-defendants 2 to 5.10. The only argument advanced by the learned counsel for theappellants is that in Ex.A-1 agreement, there was no clause that ifthe first defendant refuses to execute the sale deed, the respondent-plaintiff or the intended purchaser is only entitled to Rs.25,000/-as damages and also the advance amount paid by the plaintiff and ifhe has not paid the amount, he is entitled to proceed before Courtof law. Learned counsel for the appellants-defendants 2 to 5 reliedupon Section 23 of the Specific Relief Act and submitted that thereis no specific clause for liquidation of damages in the saleagreement and so, the respondent-plaintiff is not entitled for thedecree of specific performance. Learned counsel for the appellantsalso relied upon the decisions of the Supreme Court reported in 1999(8) SCC 416 (Dadarao Vs. Ramrao) and 2004 (6) SCC 649 (P.D'Souza Vs.Shondrilo Naidu) and prayed for allowing the Second Appeal.11. Per contra, learned counsel for the respondent-plaintiffwould submit that the main aim of the first defendant is not toexecute the sale deed and he has gone to the extent of creating asettlement deed in favour of his wife and children, as per Ex.B-5. Acursory reading of Ex.B-5 would clearly prove that it has beencreated with ante-date and it has been written in plain paper, butregistered after Ex.A-1 sale agreement came into existence. Eventhough both the Courts below have accepted that Ex.B-5 is not trueand the same has not been accepted and acted upon, granted decree.The appellants-defendants 2 to 5 have not raised a plea that as perclause in Ex.A-1, the respondent-plaintiff is entitled only fordamages as mentioned in Ex.A-1 and also return the advance amount andwithout pleading, no relief can be granted. So, the substantialquestion of law now raised is without any pleading. Learned counselfor the respondent-plaintiff relied upon the decision of the SupremeCourt reported in 2006 (1) SCC 729 (Saraswati Devi Gupta Vs. HarNarain Johari) and the decision of this Court reported in 2001 (1)CTC 451 (Govindappa Naidu Vs. Srinivasalu Naidu) and submitted thatboth the Courts below have come to the correct conclusion and thereis no perversity or material irregularity in the judgment and decreepassed by both the Courts below and hence, under Section 100 C.P.C.,in the Second Appeal, there is no need to interfere with the findingsof both the Courts below. Learned counsel for the respondent-plaintiff further relied upon the decision of this Court reported inAIR 1991 MADRAS 163 (Ramani Ammal Vs. Susilammal) and argued thateven if there is a provision of payment of damages in the saleagreement, the same is not a bar to pass the decree for specificperformance. Learned counsel for the respondent-plaintiff furthersubmits that as per the decision of the Supreme Court reported in2004 (6) SCC 649 (cited supra), the respondent is entitled to https://hcservices.ecourts.gov.in/hcservices/ specific performance and this decision only favours the respondent-plaintiff and not the appellants. Hence, the learned counsel for therespondent-plaintiff prayed for dismissal of the Second Appeal. 12. It is true that in the written statement, the appellants-defendants have not pleaded that as per Ex.A-1, the respondent-plaintiff is entitled to damages of Rs.25,000/- and return of advanceamount of Rs.5,000/-. Per contra, in paragraph 2 of the writtenstatement filed by the first defendant, he has specifically deniedthe execution of Ex.A-1 sale agreement with the respondent-plaintiff.In paragraph 3, he has stated that the value of the suit propertiesis more than what was mentioned in the sale agreement. The firstdefendant in his written statement also pleaded that on the date ofagreement of sale, he was not the owner of the properties and that healready settled the properties in favour of his wife and children,i.e. the appellants-defendants 2 to 5. In paragraph 4 of the writtenstatement, the first defendant has pleaded as to under whatcircumstances, Ex.A-1 came into existence. In the abovecircumstances, there is no pleading that as per Ex.A-1, therespondent-plaintiff is entitled to only damages and also return ofthe advance money. 13. At this juncture, it is appropriate to consider the decisionreported in 2006 (1) SCC 729 (cited supra), wherein, the Apex Courtheld as follows:"6. The judgment of the High Court clearly indicatesthat the respondent did not raise any question in respectof that and in view of this matter the contention raisedhere for the first time cannot be considered. ...."Following the ratio-decidendi in the said decision of theSupreme Court, new plea raised at the Second Appeal stage cannot beconsidered.14. Section 23 of the Specific Relief Act reads as follows:"Section 23. Liquidation of damages not a bar to specificperformance:(1) A contract, otherwise proper to be specificallyenforced, may be so enforced, though a sum be named in itas the amount to be paid in case of its breach and theparty in default is willing to pay the same, if the Court,having regard to the terms of the contract and otherattending circumstances, is satisfied that the sum wasnamed only for the purpose of securing performance of thecontract and not for the purpose of giving, to the partyin default an option of paying money in lieu of specificperformance. https://hcservices.ecourts.gov.in/hcservices/ (2) when enforcing specific performance under thissection, the court shall not also decree payment of thesum so named in the contract."15. Learned counsel for the appellants-defendants 2 to 5 reliedupon the decision of the Supreme Court reported in 1973 (2) SCC 515(M.L.Devender Singh Vs. Syed Khaja), wherein, in paragraph 20, theSupreme Court held as follows:"20. The fact that the parties themselves haveprovided a sum to be paid by the party breaking thecontract does not, by itself, remove the strong presumptioncontemplated by the use of the words "unless and until thecontrary is proved". The sufficiency or insufficiency ofany evidence to remove such a presumption is a matter ofevidence. The fact that the parties themselves specified asum of money to be paid in the event of its breach is, nodoubt, a piece of evidence to be considered in decidingwhether the presumption has been repelled or not. But, inour opinion, it is nothing more than a piece of evidence.It is not conclusive or decisive."16. In the decision reported in 2004 (6) SCC 649 (cited supra),the decision reported in 1999 (8) SCC 416 (cited supra) has beendiscussed and in paragraph 34 of the decision reported in 2004 (6)SCC 649, the decision in 1999 (8) SCC 416 has been mentioned as "perincuriam" and paragraph 34 reads as follows: "34. In Dadarao (1999 (8) SCC 416) whereupon Mr Bhatplaced strong reliance, the binding decision of M.L.DevenderSingh (1973 (2) SCC 515 = 1974 (1) SCR 312) was not noticed.This Court furthermore failed to notice and consider theprovisions of Section 23 of the Specific Relief Act, 1963.The said decision, thus, was rendered per incuriam."17. Hence, I am not in a position to consider the decisionreported in 1999 (8) SCC 416. But while considering the decisionrelied upon by the learned counsel for the appellants-defendants 2 to5, reported in 2004 (6) SCC 649 (cited supra), as the agreementprovided for damage clause in terms thereof, the first defendant hasoption to pay the liquidated damages, and the distinction betweenliquidated damages and penalty, may be important in common law, butas regards equitable remedy, the same does not play any significantrole. In the said decision reported in 2004 (6) SCC 649, in paragraph36, it has been held as follows:"36. Apart from the fact that the agreement of saledid not contain a similar clause, Dadarao (1999 (8) SCC416) does not create a binding precedent having not https://hcservices.ecourts.gov.in/hcservices/ noticed the statutory provisions as also an earlierbinding precedent. (See Govt. of W.B. v. Tarun K.Roy(2004 (1) SCC 347 = 2004 SCC (L & S) 225) (SCC para26) )."18. It is well settled that in cases of contract of sale ofimmovable properties, the grant of relief of specific performance isa rule and its refusal an exception based on valid and cogentgrounds. Further, the first defendant cannot take advantage of hisown wrong and then plead that the decree for specific performancewould be an unfair advantage to the respondent-plaintiff. Therespondents-plaintiff has always been ready and willing to performhis part of the contract at all stages and he has not taken anyadvantage of his own wrong. The respondent-plaintiff is no wayresponsible for the delay at any stage of the proceedings. It is thefirst defendant who was always not willing to perform his part of thecontract. The first defendant cannot take advantage of his own wrongand then plead that the grant of decree for specific performancewould amount to unfair advantage to the respondent-plaintiff. Buthere, considering the citations, as per Section 23 of the SpecificRelief Act, which specifically mentions that the liquidation ofdamages is not a bar to specific performance, it clearly shows thatthe respondent-plaintiff is entitled to a decree for specificperformance. So, the first defendant has not raised such a plea inthe written statement. He neither raised such a plea in the writtenstatement, nor in the grounds of appeal before the first appellateCourt. At this juncture, applying the dictum laid down by the SupremeCourt in the decision reported in 2006 (1) SCC 729 (cited supra), itis seen that the first defendant did not raise such a plea before thetrial Court and the first appellate Court and raised the same for thefirst time before this Court in the Second Appeal stage, which cannotbe considered.19. Learned counsel for the respondent-plaintiff relied upon thedecision of this Court reported in AIR 1991 MADRAS 163 (cited supra)and submitted that even if default clause provided for cancellationof contract, there is no bar for grant of specific performance. Inthe said decision reported in AIR 1991 MADRAS 163 (cited supra), aDivision Bench this Court held as follows:"13. It was next contended by the learned counsel forthe appellant that the trial Court was not justified ininvoking default clause mentioned in the agreement andnegativing the claim for specific performance whilegranting the alternative relief of payment of the amountpaid by the plaintiff. Even factually the trial Court isnot correct in observing that in the sale agreement thereis no clause empowering the plaintiff to cancel the saleagreement by paying any amount by way of damages to thedefendant. On the other hand, it is said that in event of https://hcservices.ecourts.gov.in/hcservices/ not performing the agreement of sale, the defendant couldhave the sale agreement cancelled provided the defendantgives the plaintiff a sum of Rs.5,001/- in addition to thesum of Rs.5,001/- already received from the plaintiff. Itis to be noted that default clause is provided in respectof the default committed both by the plaintiff and thedefendant in the agreement, that is, in case the defendantcommitted default, he is liable to return the money withanother sum of Rs.5,001/- and if the plaintiff commitsdefault, she has to forfeit the advance paid and that itcannot be said that the default clause is only in the caseof the default committed by the defendant and not by theplaintiff. Now let us consider the effect of the defaultclause provided under the agreement. The learned counselfor the appellant submitted that in view of S.23 of theSpecific Relief Act, the default clause is not a bar to thegrant of the relief of specific performance and in supportof his contentions, he submitted case-laws: Section 23 ofthe Specific Relief Act reads as follows:"Liquidation of damages not a bar to specificperformance--(1) A contract, otherwise proper to bespecifically enforced, may be so enforced, though asum be named in it as the amount to be paid in case ofits breach, and the party in default is willing to paythe same, if the Court having regard to the terms ofthe contract and other attending circumstances, issatisfied that the sum was named only for the purposeof securing performance of the contract and not forthe purpose of giving to the party in default of anoption of paying money in lieu of specificperformance." In Kandasami Chettiar v. Shanmugha Thevar, (1948) 2 Mad LJ356 : 61 Mad LW 642 : (AIR 1949 Mad 302), it was pointedout that the default clause in the contract provided, interalia, that "the individual who commits the default shallpay the other individual Rs.100/- as damages, and inaddition this contract shall become void". In that case itwas held:"The clause merely states the disability of thedefaulting party who claims specific performance ofthe contract under S.24(b) of the Specific Relief Actand does not extend the disability to enforce thecontract to the other party and further that theparty who brought about the default cannot takeadvantage of his own wrong and prevent the otherparty from claiming specific performance." https://hcservices.ecourts.gov.in/hcservices/ Thus, in view of the specific provision of S.23 of theSpecific Relief Act (Section 24 is the correspondingprovision in the Old Act) and the ratio laid down in theabove decision, the relief of specific performance cannotbe negatived."20. Hence, I am of the view that in the trial Court and thefirst appellate Court, the appellants herein have not raised such aplea and new plea has been raised before this Court and it will notbe considered as per the dictum laid down by the Supreme Court in thedecision reported in 2006 (1) SCC 729 (cited supra). 21. Considering the averments in both the plaint and the writtenstatement, both the Courts below came to the correct conclusion thatthe respondent-plaintiff is entitled for decree of specificperformance. I do not find any irregularity in the judgment anddecree passed by the Courts below. Hence, the Second Appeal is liableto be dismissed. 22. Accordingly, the Second Appeal is dismissed. The judgmentand decree of both the Courts below are confirmed. It is pertinent tonote that in view of the decree passed by the trial Court, therespondent-plaintiff has already deposited the entire saleconsideration in the Court. Time for execution of sale deed is twomonths. No costs.Sd/-Asst. Registrar//true copy//Sub Asst.RegistrarcsTo1. The Principal District Judge, Perambalur.2. The Subordinate Judge, Ariyalur.3.The Section Officer, V.R. Section, High Court, Madras.1 cc to M/s.Sarvabhauman Associates, Advocate, Sr.No.69857Judgment inS.A.No.595 of 2003GV {CO}TP/11.1.2010.