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Parakunnan Veetill Joseph'S Son Mathew v. Nedumbara Kuruvila'S Son And Others

Supreme Court Of India
Sep 14, 1987
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Case Summary

Factual and Procedural Background

“Kadalat Estate” (≈ 462 acres) was owned by Fakir Mohammed Sait. On 8-6-1962 he agreed to sell it to K. Kasi Chettiar for Rs 24,500 (Agreement Exh. A-1) and received an advance of Rs 5,500, with completion due within two months. The sale deed was never executed, leading to protracted correspondence.

Sait died on 22-12-1963, leaving his widow Sulekha Bai and minor children. On 31-12-1963 they executed a registered lease (Exh. B-43) of 57.83 acres to Mathew, and on the next day an agreement to sell the whole estate to him for Rs 24,500 (Exh. B-44). On 22-11-1965 they completed a sale deed in Mathew’s name (Exh. B-8).

Claiming the B-series documents were benami, Kuruvila (Mathew’s brother-in-law) sued (OS 119/1967) Mathew, his father Varghese and Chettiar for a declaration that he alone was entitled to the estate. Meanwhile, on 22-2-1966 Chettiar assigned his A-1 rights to Varghese for Rs 10,000 (Assignment Exh. A-24), and Varghese and Chettiar filed OS 41/1966 seeking specific performance of Exh. A-1 against Mathew, or in the alternative refund and damages.

The trial court:

  • Dismissed OS 119/1967, holding the B-series transactions genuine and not benami.
  • Refused specific performance in OS 41/1966, instead ordering refund of the advance (Rs 5,500) with damages (Rs 5,625).

The Kerala High Court dismissed Kuruvila’s appeal but, in OS 41/1966, decreed specific performance in Varghese’s favour, directing Mathew to convey the property upon Varghese depositing Rs 19,000. Mathew obtained special leave to appeal to the Supreme Court; no appeal was filed against the dismissal of OS 119/1967.

Legal Issues Presented

  1. Whether Chettiar had waived his contractual rights under the original agreement (Exh. A-1), thereby preventing Varghese, as assignee, from seeking specific performance.
  2. Whether the High Court erred in exercising discretion under Section 20 of the Specific Relief Act, 1963 by compelling specific performance despite the alleged waiver and surrounding equities.

Arguments of the Parties

Appellant (Mathew)

  • Chettiar’s conduct amounted to waiver of rights under Exh. A-1; an assignee (Varghese) cannot claim a better right than the assignor.
  • Given Varghese’s admissions in OS 119/1967, granting him specific performance would be inequitable.

Respondent (Varghese)

  • Supported the High Court’s finding that Mathew took Exh. B-8 with knowledge of Exh. A-1, and that improvements effected by Mathew could not defeat Chettiar’s pre-existing contractual right.
  • Contended the trial court exercised its discretion arbitrarily in refusing specific performance.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Satyanarayana v. G. Yellogi Rao, AIR 1965 SC 1405; (1965) 2 SCR 221 Waiver/abandonment of a contractual right bars specific performance; once waiver is proved, further discretion need not be exercised. Relied on to infer Chettiar’s waiver, thereby defeating Varghese’s claim for specific performance.
Dawson’s Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha, 1935 LR 62 IA 100 Defines “waiver” as a contractual agreement to release or not to assert a right. Cited (through Satyanarayana) to clarify the legal meaning of waiver applicable to Chettiar’s conduct.

Court's Reasoning and Analysis

The Supreme Court examined pleadings in OS 119/1967 and Varghese’s written statement, noting admissions that Exhs. B-43 and B-44 were executed “as a source of strength” for closing Chettiar’s earlier deal, thereby evidencing Chettiar’s consent and waiver. Relying on Satyanarayana, the Court held that once such waiver is established, an assignee cannot enforce specific performance.

Referring to Section 20 of the Specific Relief Act, the Court emphasised that specific performance is discretionary; motives behind the suit and potential oppression must be weighed. The suit was motivated by Kuruvila’s failure to secure the estate and by intra-family disputes, not by any genuine need to enforce Exh. A-1. Granting specific performance would therefore be inequitable.

The High Court’s contrary approach was criticised for ignoring the waiver and for treating Mathew’s possession and improvements as irrelevant. Consequently, the High Court’s decree was characterised as an improper exercise of discretion.

Holding and Implications

APPEAL ALLOWED. High Court decree for specific performance set aside; trial court decree (refund of advance and damages) restored.

Varghese receives only refund and damages; Mathew retains the estate. Each party bears its own costs. The judgment re-affirms principles of waiver and discretionary denial of specific performance, without creating new precedent.

Show all summary ...

K. Jagannatha Shetty, J.— This appeal, by special leave concerns the validity of a decree for specific performance granted by the High Court of Kerala in AS No. 525 of 1971.

2. “Kadalat Estate”, which was the subject-matter of a suit out of which the appeal arises was originally owned by Fakhir Mohammed Sait. By agreement Exhibit A-1 dated 8-6-1962 Sait agreed to sell the estate to Kasi Chettiar for Rs 24,500. Chettiar paid Rs 5500 as advance on the date of agreement and undertook to pay the balance upon executing the sale deed. The sale deed was to be executed within two months from the date of agreement. The deed, however, was not executed and the matter was dragged on by correspondence between the parties. On 22-12-1963 Sait died leaving behind his wife Sulekha Bai and some minor children. In the neighbouring estate there was a lady doctor PW 2. Mathew is her brother. Kuruvila is her husband. Varghese is her father-in-law. The first three appeared to have contacted Sulekha Bai and also took some steps to purchase the estate. Chettiar was not unaware of their efforts and transactions to which we will presently refer.

3. On 31-12-1963 Sulekha Bai and her children executed a registered lease deed Exhibit B-43 in respect of 57.83 acres of the estate in favour of Mathew. The total extent of the estate is about 462 acres. On the next date there was an agreement Exhibit B-44 a gain in favour of Mathew for sale of the entire estate. The price agreed thereunder was Rs 24,500 out of which Rs 1500 was paid in advance. There are conflicting versions from Mathew and Kuruvila in regard to these two transactions. Kuruvila was contending that the agreement Exhibit B-43 and Exhibit B-44 were benami in nature, intended for his benefit and it was for him to purchase the estate. But Mathew has denied that version. He was asserting that those transactions were not benami and pursuant thereto, he alone was entitled to purchase the estate. The fact remains that on 22-11-1965, Sulekha Bai and her children sold the estate to Mathew and executed the sale deed Exhibit B-8 in his name. They received the full consideration from Mathew alone. It was the case of Kuruvila that he was defrauded by his brother-in-law. He appeared to have approached his father for solution. The result was on 22-2-1966 Chettiar assigned his rights under Exhibit A-1 to Varghese for Rs 10,000. The deed of assignment is Exhibit A-24. Varghese paid Rs 7500 in cash and cheques, to Chettiar with a promissory note for balance of Rs 2500. The assignment deed refers to the sale deed obtained by Mathew. It states that the legal representatives of Sait have sold the estate to Mathew who was fully aware of the agreement for sale Exhibit A-1. It further states that Mathew contacted Chettiar for the purpose of ascertaining the nature of the agreement and other details regarding the estate.

4. On 29-3-1966 Varghese armed with the deed of assignment Exhibit A-24 along with Chettiar instituted OS No. 41 of 1966 for specific performance of the agreement Exhibit A-1. The suit was instituted against Mathew and legal representatives of Sait. The alternate relief claimed in the suit was for refund of the advance of Rs 5500 paid under Exhibit A-1 with interest thereon and damages for breach of the agreement. That is not all. On 18-10-1967 Kuruvila instituted OS No. 119/1967 against Mathew, Varghese and Chettiar for declaration that he alone was entitled to all the claims and rights over the Kadalat Estate, as per Exhibit B-43, Exhibit B-44 and Exhibit B-8, and Mathew did not have any claim or right. He has impeached Exhibit B-43, Exhibit B-44 as benami and Exhibit B-8 as fraudulent. In this suit, Kuruvila also disclosed perhaps, unwittingly the purpose of suit OS No. 41 of 1966 filed by his father. He stated:

“It was thought that then at least there would be dawn of wisdom to Defendant 1 and he may adopt the proper course. Accordingly father and Defendant 3 joined together and Defendant 1 and others were made as parties and OS No. 41 of 1966 was filed in this Court for getting compulsory sale deed executed with regard to the said Kadalat Estate.”

5. The case put forward by Kuruvila in OS No. 119 of 1967 was outright rejected by the trial court. The court held that the amounts under Exhibit B-43, Exhibit B-44 were paid by Mathew and not by Kuruvila or his wife. Mathew was put in possession of the estate upon the execution of Exhibit B-43 and Exhibit B-44. The parties never had any intention to treat the transaction under Exhibit B-43 and Exhibit B-44 as benami. The sale deed Exhibit B-8 was not vitiated by fraud or misrepresentation. It was not taken behind the back of Kuruvila. With these and other findings the court dismissed OS No. 119 of 1967. In the other suit, the court said that Chettiar was willing to complete the sale as per Exhibit A-1 even after the death of Sait. After Sait's death the minority of his children and the execution of Exhibit B-43 and Exhibit B-44 by Sulekha Bai to Mathew had created obstacles in the way of completing the sale. The assignment deed Exhibit A-24 was valid and the rights under Exhibit A-1 were assignable in law. The court then observed that Mathew was originally a harmless photographer at a distant place. The estate was thrust upon him by his sister PW 2 and her husband. Mathew was put in possession by virtue of Exhibit B-43, Exhibit B-44 and Exhibit B-8. Since then, he effected improvements with heavy investment. Considering these and other circumstances particularly the conduct of parties, the court concluded that it would be just and fair to all parties concerned if Varghese was given refund of Rs 5500 paid by Chettiar under Exhibit A-1. Accordingly, the court while denying relief of specific performance decreed the suit only for refund of that advance money; in addition to damages in a sum of Rs 5625.

6. Against the judgment of the trial court, the parties appealed to the High Court of Kerala. The High Court found fault with the conclusions reached by the trial court. At one stage of the judgment the High Court seems to have agreed with the contention of Kuruvila that Exhibit B-43 and Exhibit B-44 were benami and Mathew was only a name lender, but in regard to sale deed Exhibit B-8 the High Court said that it was not fraudulent and Kuruvila had no right thereunder. Accordingly the High Court confirmed the dismissal of OS No. 119 of 1967.

7. In OS No. 41 of 1966 the High Court was of opinion that the trial court exercised discretion arbitrarily in refusing specific performance. The High Court held that Mathew obtained the sale deed Exhibit B-8 with knowledge of the existence of Exhibit A-1 and the fact that he expended money for effecting improvements is no ground to deny specific performance of Exhibit A-1. The High Court accordingly, directed Mathew to convey the suit property and transfer possession thereof to Varghese on the latter depositing in court a sum of Rs 19,000.

8. There is no appeal to this Court against the judgment of the High Court affirming the dismissal of OS No. 119 of 1967. That judgment has become final. The appeal before us is only by Mathew against the decree for specific performance granted in OS No. 41 of 1966.

9. Mr S. Padmanabhan learned counsel for the appellant urged that the events indicate that Chettiar had waived his rights under Exhibit A-1 and Varghese as an assignee could not get a better right. He also urged that in view of the stand taken by Varghese in OS No. 119 of 1967, there cannot be a decree for specific performance. Mr G. Vishwanath Iyer, learned counsel for the respondent while supporting the judgment of the High Court referred to us the various aspects of the matter.

10. It seems to us that contentions of Mr Padmanabhan deserve to be accepted. The High Court appears to have missed the crux of the matter. It is not in dispute that Kuruvila, his wife and brother-in-law were moving hand in hand to purchase the estate. They knew that Chettiar had obtained an agreement for sale Exhibit A-1 from Sait. They never wanted to by-pass that transaction. They in fact wanted to close that transaction. Varghese also appeared to have joined in this bargain. It was apparently with the knowledge of all persons, Exhibit B-43 and Exhibit B-44 came to be executed. This much would be clear from the pleadings in OS No. 119 of 1967. This is what Kuruvila as plaintiff stated in para 6 of the plaint:

“The decision taken for executing the lease deed was on the ground that it would be a source of strength for closing the transaction with Defendant 3. The plaintiff told the wife and sister of Sait that if the Karar and lease deed were executed in the name of the plaintiff, it would create difficulty in closing the transaction with Defendant 3 and it would be easy if they are executed in the name of another. He said that the lease deed and Karar may be executed in the name of Defendant 1 who is the brother-in-law of the plaintiff and was having close and friendly relationship with him.”

11. Varghese while admitting all these allegations has gone a step further in his written statement where he said:

“The lease deed and agreement were executed after the death of Sait and they were executed as a support to close the transaction with Defendant 3. It was with the intention of purchasing the properties as per the agreement with Defendant 3, the said lease deed and the agreement with the plaintiff in the name of Defendant 1 were got executed.”
Then he said:
“This defendant did not oppose the contentions made in the plaint. He also admits them. This defendant has no objection in deciding OS No. 41 of 1966 as per the decision of this case.”

12. What do these averments mean? They are suggestive of the fact that Exhibit B-43 and Exhibit B-44 were executed with a view to close the transaction with Chettiar. Those deeds in the name of Mathew would serve as a source of strength for closing the transaction with Chettiar. Those averments also impliedly suggest that Exhibit B-43 and Exhibit B-44 were not obtained to defraud Chettiar from his legitimate rights, if any, under Exhibit A-1. In this context, the case of Varghese put forward in his written statement appears to assume importance. He has stated that the lease deed and agreement [Exhibit B-43 and Exhibit B-44] were executed with the intention of purchasing the property as per the agreement with Chettiar. This is very significant and ought not to be overlooked. It evidently indicates that the lease deed Exhibit B-43 and the agreement for sale Exhibit B-44 were obtained from the owners of the estate after taking Chettiar into confidence. We have no doubt about the implied consent of Chettiar for executing those documents and the parties settling his rights under Exhibit A-1. To put it in other words, Chettiar must have waived his rights to purchase the estate for himself. It is, in our view, plainly to be inferred. There is no escape from this logical assumption, particularly in the absence of evidence of Varghese and Kuruvila. Both of them have kept themselves away from the court.

13. In Satyanarayana v. G Yellogi Rao AIR 1965 SC 1405, (1965) 2 SCR 221 this Court observed:

“But as in England so in India, proof of abandonment or waiver of a right is not a precondition necessary to disentitle the plaintiff to the said relief, for if abandonment or waiver is established, no question of discretion on the part of the court would arise. We have used the expression ‘waiver’ in its legally accepted sense, namely, ‘waiver is contractual, and may constitute a cause of action: it is an agreement to release or not to assert a right’: see Dawson's Bank Ltd. v. Nippon Menkwa Kabushiki Kaisha 1935 LR 62 IA 100. It is not possible or desirable to lay down the circumstances under which a court can exercise its discretion against the plaintiff. But they must be such that the representation by or the conduct or neglect of the plaintiff is directly responsible in inducing the defendant to change his position to his prejudice or such as to bring about a situation when it would be inequitable to give him such a relief.”

14. Section 20 of the Specific Relief Act, 1963 preserves judicial discretion of courts as to decreeing specific performance. The court should meticulously consider all facts and circumstances of the case. The court is not bound to grant specific performance merely because it is lawful to do so. The motive behind the litigation should also enter into the judicial verdict. The court should take care to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff. The High Court has failed to consider the motive with which Varghese instituted the suit. It was instituted because Kuruvila could not get the estate and Mathew was not prepared to part with it. The sheet anchor of the suit by Varghese is the agreement for sale Exhibit A-1. Since Chettiar had waived his rights thereunder, Varghese as an assignee could not get a better right to enforce that agreement. He is, therefore, not entitled to a decree for specific performance.

15. In the result, we allow the appeal, reverse the judgment of the High Court and restore that of the trial court.

16. In the circumstances of the case, the parties to bear their own costs.