Kerala High Court · 2012

HARUN-UL-RASHID, J.------------------------A.S.Nos.615/2001, 517/2002 and 518/2002----------------------Dated this the 3rd day of July, 2012.J U D G M E N TThe appeals are directed against the common judgment anddecree dated 18.8.2001 in O.S.Nos.303/1992, 523/1995 &525/1995 on the file of the Sub Court, Palakkad.O.S.Nos.303/1992, 523/1995 & 525/1995 were jointly tried anddisposed of by the common judgment dated 18.8.2001. Theappellant in all the three appeals is Radhamani. Radhamani isthe plaintiff in O.S.Nos.303/1992 and 523/1995. She is thedefendant in the third suit, namely, O.S.No.525/1995.O.S.No.303/1992 is the main case. The said suit was filed forspecific performance and for setting aside Ext.B3 assignmentdeed dated 25.3.1992 which relates to plaint 'B' scheduleproperty executed by the 1st defendant in favour of the 2nddefendant. O.S.No.523/1995 (originally filed asO.S.No.154/1992 before the Munsiff Court, Chittur) was filed bythe plaintiff in O.S.No.303/1992 against the very same defendantseeking permanent injunction against trespass.O.S.No.525/1995 (originally filed as O.S.No.202/1992 before the ::2::A.S.Nos.615/01, 517/02 & 518/02Munsiff Court, Chittur) was filed by the President of thePayyamkode Rubber Production Society against the plaintiff inO.S.No.303/1992 for injunction restraining the defendant thereinfrom making any permanent construction of the building andfrom committing any waste. The court below decreedO.S.No.303/92 in part. A decree for specific performance isgranted regarding 40 cents of plaint 'A' schedule propertydirecting the 1st defendant to execute the sale deed in favour ofthe plaintiff. The court further ordered that the 1st defendant isliable to return the excess amount of Rs.6,000/- to the plaintiff.O.S.No.523/95 filed by the plaintiff in O.S.No.303/92 wasdismissed. The connected suit, namely, O.S.No.525/95 wasdecreed. The plaintiff therein was granted a permanentinjunction restraining the defendant therein (plaintiff inO.S.No.303/92) and their men from interfering with the plaintiff'speaceful possession of the plaint schedule property (20 cents)and also from trespassing into the said property. The abovethree appeals were filed challenging the decrees and judgmentsin the three suits to the extent it went against the appellant.O.S.Nos.523/95 and 525/95 were originally filed before the ::3::A.S.Nos.615/01, 517/02 & 518/02Munsiff Court, Chittur, in 1992 and transferred to the Sub Court,Palakkad for joint trial along with O.S.No.303/1992. The partieshereinafter are referred to as the plaintiff and defendants asarrayed in O.S.No.303/1992.2.The extent of plaint 'A' schedule property is 60 cents.Plaint 'B' schedule property is 20 cents. Plaint 'B' scheduleproperty is the southern 20 cents of plaint 'A' schedule property.The 1st defendant Babu is the owner of the said 60 cents of land.As per Ext.B3 dated 25.3.1992, plaint 'B' schedule property waspurchased by Payyamkode Rubber Production Society, aregistered Society represented by the President. The President isthe 2nd defendant in the suit. Defendants 3 & 4 were the twodirectors of the Society. The plaintiff is claiming relief in respectof plaint 'A' schedule property on the basis of an agreement ofsale, marked as Ext.A1 dated 31.8.1991, executed between the1st defendant Babu and the plaintiff, Radhamani. The plaintiff'scase is that plaint 'A' schedule property was agreed to be sold tothe plaintiff by the 1st defendant for a centage value of Rs.850/-per cent on 31.8.1991. The 1st defendant Babu receivedRs.5,000/- as advance and on 4.10.1991 the 1st defendant ::4::A.S.Nos.615/01, 517/02 & 518/02received Rs.35,000/- towards balance sale consideration. Thereceipt of Rs.35,000/- on 4.10.1991 was endorsed on the backpage of Ext.A1 agreement and that the period fixed for executionof the sale deed was extended up to 10.4.1992. The said factwas also endorsed on the back page of Ext.A1 on 4.10.1991.The plaintiff further alleges that on payment of Rs.35,000/- on4.10.1991 to the 1st defendant, the plaintiff was put in possessionof plaint 'A' schedule property. It is also alleged that when the 1stdefendant attempted to trespass into the plaint scheduleproperty, the plaintiff filed the connected suit O.S.No.154/1992before the Munsiff Court, Chittur, renumbered as 523/1995before the Sub Court, Palakkad, for injunction against trespass.It is averred that in violation of the order of temporary injunctiongranted in the connected suit for injunction, the 1st defendantsold plaint 'B' schedule property (20 cents) on 25.3.1992 to the2nd defendant Society (plaintiff in O.S.No.525/95) against theterms of agreement executed between the 1st defendant Babuand the plaintiff Radhamani. According to the plaintiff, the 1stdefendant has no right to execute the sale deed in respect of ::5::A.S.Nos.615/01, 517/02 & 518/02portions of plaint 'A' schedule property when the agreement forsale of entire property is in force. 3.In the written statement filed by the 1st defendant it iscontended that plaint 'A' schedule property is owned by the 1stdefendant and that he is in possession of the property. Hedenied the execution of the agreement dated 4.10.1991 and thesubsequent transactions between the plaintiff and the 1stdefendant. It is stated that the transaction was done by thehusband of the plaintiff, namely, P.K.Narayanan, as VicePresident of the defendant Society, that the 1st defendantaccepted Rs.5,000/- from P.K.Narayanan and that no agreementwas executed between the plaintiff and the 1st defendant.According to the 1st defendant, the agreement was executedbetween himself and the Society and the plaintiff's husband wasacting for and on behalf of the Society. It is also stated that the1st defendant is in possession of plaint 'A' schedule propertyexcluding plaint 'B' schedule property, that plaint 'B' scheduleproperty was agreed to be sold to the defendant Society, that theplaintiff's husband P.K.Narayanan had mediated the transactionand that he, using his position as the Vice President of the ::6::A.S.Nos.615/01, 517/02 & 518/02Society, without disclosing the correct state of affairs, manage toexecute an agreement for sale in the name of his wife instead ofexecuting the agreement in the name of the defendant Society.It is stated that the defendant Society had constructed a shed inplaint 'B' schedule property, that the Society is in possession ofplaint 'B' schedule property and that the defendant Society isenjoying the property by virtue of the sale deed in their favour.In the joint written statement filed by defendants 2 to 4representing the Society, it is inter alia contended that theagreement for sale was executed between the plaintiff and the 1stdefendant for the purpose of defeating the rights of the Societyand that is not binding on the Society. The allegation of trespasswas denied. Originally, the Society has decided to purchaseplaint 'A' schedule property and due to paucity of funds, laterdecided to purchase 20 cents out of plaint 'A' schedule property.Thus, the Society contended that plaint 'B' schedule property waspurchased by paying the entire sale consideration and that fromthe date of execution of sale deed, the Society is in possessionand enjoyment of the property. The Society had constructed ashed in plaint 'B' schedule property and is also transacting certain ::7::A.S.Nos.615/01, 517/02 & 518/02business in the shed situated in plaint 'B' schedule property. Itis also contended that the decision of the Society for thepurchase of plaint 'B' schedule property from 1st defendant wasknown to the husband of the plaintiff and that when the plaintifftried to trespass into plaint 'B' schedule property, the Society wasconstrained to file O.S.No.525/95 to restrain the plaintiff fromcommitting trespass. The Society is a bona fide purchaser forvalue and therefore, there is no reason for setting aside the saledeed in favour of the Society.4.Plaint 'A' schedule property is 60 cents of propertyadmittedly belonging to the 1st defendant Babu. Plaint 'B'schedule property is a portion of plaint 'A' schedule propertyhaving an extent of 20 cents. Plaint 'B' schedule property waspurchased by the defendant Society as per Ext.B3 sale deeddated 23.5.1992. The plaintiff is seeking relief of specificperformance based on Ext.A1 agreement entered into betweenthe plaintiff and the 1st defendant Babu. As per Ext.A1agreement the plaint 'A' schedule property was agreed to be soldto the plaintiff by 1st defendant Babu for a centage value ofRs.850/- per cent. He received Rs.5,000/- as advance on the ::8::A.S.Nos.615/01, 517/02 & 518/02date of agreement i.e., 31.8.1991. It is the case of the plaintiffthat thereafter, on 4.10.1991, the 1st defendant receivedRs.35,000/- and endorsement was effected on the back of Ext.A1agreement for sale. According to the plaintiff, the agreementwas extended up to 10.4.1992 and she was given possession ofthe entire property.5.The 1st defendant was examined as DW1. According tohim it was his intention to sell the entire property to defendantSociety for which Ext.A1 agreement was executed by PW3,husband of the plaintiff who is the Vice President of the Society.As DW1, he testified that there was transaction between him andPW3 regarding the sale of plaint 'A' schedule property to theSociety, that husband of the plaintiff obtained signed stamppapers from the 1st defendant and that Ext.A1 agreement waswritten in the said stamp papers. Therefore, according to the 1stdefendant Ext.A1 is not a genuine document executed betweenthe plaintiff and 1st defendant and is vitiated by fraud. Accordingto him, he is not bound to execute a sale deed in respect of 60cents as claimed in the plaint. It is also contended that he isready to return Rs.40,000/- received from the husband of the ::9::A.S.Nos.615/01, 517/02 & 518/02plaintiff. The 1st defendant also testified as DW1 that he hadnever handed over possession of the plaint schedule property tothe plaintiff and that he had sold plaint 'B' schedule property afteraccepting Rs.40,000/-as consideration and executed Ext.B3 saledeed on 25.3.1992. Plaint 'B' schedule property was put inpossession of the transferee, namely, the defendant Society.Defendants 2 to 4 on behalf of the Society contended that theSociety entrusted its Vice President, PW3, husband of theplaintiff, to negotiate with the 1st defendant for the purchase of60 cents. They have produced Ext.B2 minutes book dated12.2.1990, the entries therein indicate that PW3 was authorisedto initiate talks. Later, plaint 'B' schedule property waspurchased by the Society for the construction of a building afterpaying Rs.40,000/- as consideration. According to them, theSociety and its directors were not aware of Ext.A1 agreement,that they have paid full consideration for plaint 'B' scheduleproperty, that they are bona fide purchasers for value andtherefore, entitled to protection under Section 19(b) of theSpecific Relief Act. It is also pointed out that 20 cents was gotseparated from the rest of the properties and on getting ::10::A.S.Nos.615/01, 517/02 & 518/02possession from the owner, they have constructed a shed,obtained building number from the Panchayath and materialswere loaded for the purpose of construction. O.S.No.525/95 wasinstituted when the plaintiff and her men attempted to trespassinto plaint 'B' schedule property. The court below afterappreciating the oral and documentary evidence believed theversion of the plaintiff that the plaintiff paid Rs.40,000/- to the 1stdefendant and got endorsement on the back page of Ext.A1. Thecourt believed the oral evidence tendered by PWs 1 & 2. Thecommissioner inspected the property and filed Ext.C1 report andC1(a) plan. The commissioner reported that in plaint 'B' scheduleproperty there is a shed constructed by the Society and activitiesof the Society was going on in the premises. The court below onevidence found that the defendant as DW1 admitted theacceptance of Rs.5,000/- on 31.8.1991 from PW3, Narayanan,and subsequent receipt of Rs.35,000/- on 4.10.1991 towardsbalance sale consideration. The contention of the 1st defendantthat Ext.A1 is a manipulated document by plaintiff and herhusband, who is the Vice President of the Society and that Ext.A1was created for the purpose of defeating the rights of the Society ::11::A.S.Nos.615/01, 517/02 & 518/02was not accepted. The trial court examined the question as towhether Ext.A1 is a properly executed document or not. The trialcourt noticed that in the written statement filed by the 1stdefendant Babu in O.S.No.523/95 the execution of Ext.A1 wasadmitted by him. The trial court observed that negotiation forthe sale of 20 cents was done by PW3 on behalf of the Societywith the 1st defendant Babu and Babu had agreed to sell theproperty to the Society also. The court held on evidence that 1stdefendant Babu is a consenting party to the sale of the propertyin favour of the plaintiff. The court observed that the receipt ofadvance amount from Narayanan on behalf of the Society ishighly improbable and unbelievable and that the case put forwardby the plaintiff that she paid Rs.5,000/- on the date of agreementis more believable than the story put forward by the 1st defendantBabu. The court also placed reliance on the endorsement madeon the back page of Ext.A1 on 4.10.1991 which is also admittedby Babu. After considering the facts, circumstances andresolutions in Ext.B2 minutes book maintained by the Society,the trial court observed that in a case like the present one,considering the fact that Ext.A1 agreement was executed ::12::A.S.Nos.615/01, 517/02 & 518/02between the plaintiff and the 1st defendant, the further fact thatthe 1st defendant sold plaint 'B' schedule property to the Societyafter accepting full consideration and executed Ext.B3 sale deedin favour of the Society and that the Society purchased theproperty in good faith and full consideration without theknowledge of Ext.A1, the plaintiff is entitled to a decree forspecific performance in respect of 40 cents of property out of 60cents.6.The decree for specific performance is a discretionaryrelief. The court below granted the relief of specific performancein respect of 40 cents out of 60 cents. The relief is declined inrespect of 20 cents finding that the Society purchased plaint 'B'schedule property in good faith and for proper consideration andtherefore, the Society is entitled to protection as envisaged underSection 19(b) of the Specific Relief Act. The court also took intoconsideration the totality of the circumstances and held that theplaintiff is entitled to specific performance of plaint 'A' scheduleproperty excluding plaint 'B' schedule property. The appellantchallenges the denial of relief to her in so far as it relates toplaint 'B' schedule property. Therefore, the short question for ::13::A.S.Nos.615/01, 517/02 & 518/02consideration is as to whether the denial of relief of specificperformance in so far as it relates to plaint 'B' schedule propertyis just and proper and as to whether the defendants 2 to 4 arebona fide purchasers in good faith and for valuable considerationentitled to protection as envisaged under Section 19(b) of theSpecific Relief Act.7.The learned senior counsel for the appellant contendedthat the Society had notice regarding the execution of Ext.A1agreement and that the burden to prove that they are bona fidepurchasers for valuable consideration without notice is on theSociety and that they have not discharged the burden. Thelearned senior counsel drew the attention of this Court on thecommentaries in Sohoni's Law of Specific Relief 3rd Edition andcontended that the onus to prove that the defendants are bonafide purchasers without notice lies upon them. It is settledprinciples of law that for invoking protection under Section 19(b)of the Specific Relief Act, the subsequent purchaser should haveentered into a bona fide transaction, paid the entire considerationand that he had no notice. These ingredients had to beestablished by the subsequent purchaser and onus lies on him. ::14::A.S.Nos.615/01, 517/02 & 518/028.The learned counsel appearing on behalf of the Societysubmits that the Society purchased plaint 'B' schedule propertyas per Ext.B3 sale deed dated 23.5.1992 without notice of Ext.A1agreement, in good faith and for proper consideration. Ext.B2 isthe minutes book of the Society prepared and kept in the Societyshowing everyday transactions of the Society. Page 19 of Ext.B2relates to the executive committee meeting held on 21.7.1991.The Society by resolution dated 21.7.1991 directed PW3,P.K.Narayanan, husband of the plaintiff to negotiate with the 1stdefendant Babu for the purchase of plaint 'A' schedule property(60 cents) and to enter into an agreement with Babu and to giveadvance. The said meeting was presided over by Narayanan,who is the Vice President of the Society. Item No.3 at page 19 ofExt.B2 minutes book deals with the said resolution. Again, theSociety, by resolution dated 3.10.1991 (item No.2 at page 21)directed PW3, Narayanan, to take steps to purchase 60 cents ofland from the 1st defendant Babu finding that no steps have beentaken so far. It is to be noted that long before passing of theresolution dated 3.10.1991, Ext.A1 agreement dated 31.8.1991was executed between the plaintiff and the 1st defendant. It is ::15::A.S.Nos.615/01, 517/02 & 518/02clear that at the time of considering the matter and passingresolution dated 3.10.1991 as stated above, the Society has noidea about Ext.A1 agreement. Page 25 of Ext.B2 minutes bookcontains the details of General Body Meeting held on 20.12.1991.On that day, the General body authorised the Director Board topurchase the property from the 1st defendant. Plaintiff'shusband, P.K.Narayanan was present in that meeting also. Thesaid resolution passed on 20.12.1991 also indicates that theSociety has no idea or knowledge about execution of Ext.A1agreement. Page 29 of Ext.B2 minutes book contains the detailsof executive committee held on 15.3.1992. PW3, Narayanan wasalso present in the meeting. The executive committee resolvedon that day to pay advance to the 1st defendant Babu for thepurchase of the property. Thus, all the resolutions dated21.7.1991, 3.10.1991, 20.12.1991 and 15.3.1992 indicate thatthe Society had decided to purchase the plaint schedule propertyfrom the 1st defendant Babu and directed Narayanan, its vicePresident, who is the husband of the plaintiff, to negotiate for thepurchase of the property. Thereafter, on 25.3.1992, Ext.B3 saledeed was got executed in favour of the Society. The sale is ::16::A.S.Nos.615/01, 517/02 & 518/02limited to 20 cents. The Society purchased the property afterpaying Rs.40,000/-. The centage value is Rs.2,000/-. It ispointed out by the Society that due to paucity of funds thepurchase is limited to 20 cents. From the facts stated above, it isclear that the Society people should not have agreed to purchasethe property if they have knowledge about Ext.A1 agreementbetween the plaintiff and the 1st defendant. The 1st defendant asDW1 also deposed that he sold the 20 cents after accepting theconsideration. He got higher value for the 20 cents of land. Thatmight have prompted him to execute the sale deed in favour ofthe Society. From the facts, it is seen that the Vice president,instead of negotiating with the 1st defendant for the sale of theproperty in the name of the Society, negotiated the sale in thename of his wife and executed Ext.A1 agreement on 31.8.1991.Without noticing execution of Ext.A1 agreement, the Societypassed resolutions, one after the other directing its Vice Presidentto negotiate the purchase and to give advance to the 1stdefendant. When examined the plaintiff as PW1 also did nothave a case that the Society purchased plaint 'B' scheduleproperty with the knowledge of Ext.A1. The final decision was ::17::A.S.Nos.615/01, 517/02 & 518/02taken by the society for the purchase of 20 cents as seen frompage No.36 in Ext.B2 minutes book and thereafter by Ext.B3 saledeed 20 cents was purchased without noticing the fact that theVice president of the Society had already negotiated and enteredinto an agreement for sale in the name of his wife. The abovesaid facts and circumstances were discussed by the court belowin detail. The court below reached the conclusion that Ext.B3sale deed was executed without noticing the execution of Ext.A1agreement. 9.In Durga Prasad and another v. Smt.Lilawati andanother (AIR 1972 Allahabad 396) the court held as follows:“It is true that the initial burden is always on thevendee to show that he had no knowledge of theagreement. But the vendee has only to discharge thisburden by leading a negative evidence. The negativeevidence can only consist of his own statement denyingthe fact that he had knowledge of the of the same. Assoon as the vendee denies knowledge of the notice, theburden is discharged and then the burden shifts on thevendor to prove that the vendee had the notice of theearlier agreement”. It is more profitable to read the decision reported in KanshiRam and another v. Ishwardas and another (AIR 1923 ::18::A.S.Nos.615/01, 517/02 & 518/02Lahore 108) wherein the court considered the question as towhether it is proved that the defendants were transferees forvalue who paid money in good faith and without notice of theoriginal contract. The court held that the three essentialstherefore, are that payment of full consideration must be proved,good faith must be established and also ignorance of the originalcontract at the time the sale was effected. Going by the saiddecision it is for the transferee to show that he purchased theproperty in ignorance of the previous contract and in good faith.It was also held that where the consideration is paid in full andthe vendee is ignorant of the original contract, good faith must bepresumed in the absence of evidence to the contrary. In the lightof the legal principles above noticed and in the facts andcircumstances of the case, the Society by positive evidenceproved the fact that they had no knowledge about the executionof Ext.A1 agreement. It is also proved that they have paid thefull consideration for the purchase and that they have acted ingood faith. It is proved beyond doubt that the Society is a bonafide purchaser. The relief of specific performance is adiscretionary remedy. The discretion should be exercised on ::19::A.S.Nos.615/01, 517/02 & 518/02sound principles of law. The evidence on record shows that theSociety got possession of 20 cents on the date of Ext.B3 saledeed. The evidence further shows that pursuant to the sale intheir favour they have put up a shed and started activities of theSociety in the property. The court below also considered thefacts and circumstances leading to the execution of Ext.B3 saledeed, the possession of the property by the Society, the activitiescarried on in the property by the Society and concluded that theplaintiff is entitled to discretionary relief of specific performanceonly for 40 cents out of 60 cents. Considering the totality of thecircumstances, the court below found that the plaintiff is entitledto get a decree for specific performance for plaint 'A' scheduleproperty excluding plaint 'B' schedule property. In the facts andcircumstances of the case, the exclusion of 20 cents is justified.Therefore, I confirm the findings of the trial court that thedefendant Society is entitled to protection under Section 19(b) ofthe Specific Relief Act.In the result, the appeals fail and accordingly dismissed. Noorder as to costs. HARUN-UL-RASHID, Judge.bkn/-