Login
  • Bookmark
  • PDF
  • Share
  • CaseIQ

S. Sankaran (Died) And 4 Others v. N.G Radhakrishnan

Madras High Court
Aug 11, 1994
Important Paras
Please sign up to view Important Paras.
Smart Summary (Beta)

Case Summary — Opinion by S.S. Subramani, J.

Factual and Procedural Background

This appeal challenges the judgment and decree dated 20.7.1983 in Original Suit No. 116 of 1982 of the IV Additional Judge, City Civil Court, Madras. The first defendant in the original suit is the appellant in this appeal. Pending the appeal the appellant died and appellants 2 to 5 were impleaded as his legal representatives by order in C.M.P. No. 13164 of 1992 dated 30.8.1992.

The plaintiff alleged that the deceased appellant executed an agreement for sale (Exhibit A-12) dated 1.3.1980 to sell the plaint schedule property (an out-house at No. 10, Nana Rao Street, Madras) for Rs. 60,000/-. The plaintiff claimed payment of Rs. 20,000/- as advance on the date of the agreement, further payments of Rs. 10,000/- within a week and Rs. 15,000/- on 6.8.1980, and possession of the building in part performance. The balance, allegedly Rs. 40,000/-, was to be paid within six months. The plaintiff also asserted an entitlement to adjust a loan (handloan of Rs. 15,000/- taken by the first defendant from K. Narasimhalu Chetty) which the plaintiff claimed by assignment, and claimed interest on advances.

The plaint sought specific performance directing the deceased appellant to execute the sale deed, with consequential reliefs. The plaint was later amended to include an alternative claim for refund of the advance amount with interest and costs. The first defendant filed a written statement admitting execution of Ex. A-12 but contending it was a document evidencing a loan transaction and not an agreement for sale. A second defendant (a creditor) also filed a written statement.

The trial court, by judgment dated 20.7.1983, decreed the suit and directed the plaintiff to pay Rs. 3,450/- more to obtain the sale deed. The first defendant (deceased appellant) appealed against that decision. On appeal the principal issues considered were whether Ex. A-12 could be enforced as an agreement for sale, and whether the plaintiff was ready and willing to perform the contract.

Legal Issues Presented

  1. Whether Exhibit A-12 (dated 1.3.1980) is enforceable as an agreement for sale or is merely a document evidencing a prior money‑lending (loan) transaction.
  2. Whether the plaintiff had shown and proved readiness and willingness, in terms of Section 16 of the Specific Relief Act, 1963, to perform the contract sought to be enforced.
  3. If specific performance is refused, whether the plaintiff is entitled to alternative relief for refund of amounts advanced, and on what terms (including interest and adjustments for rent/arrear claims).

Arguments of the Parties

Plaintiff's (Respondent's) Contentions

  • Exhibit A-12 was an agreement for sale for the out-house at No. 10, Nana Rao Street for Rs. 60,000/-, with Rs. 20,000/- paid as advance on the date of the agreement and further payments made subsequently (Rs. 10,000/- shortly after and Rs. 15,000/- on 6.8.1980).
  • The plaintiff claimed possession of the building and asserted part performance of the agreement for sale.
  • The plaintiff sought specific performance directing execution of the sale deed and, alternatively, refund of advances with interest and costs.
  • The plaintiff claimed an entitlement to adjust a promissory note/debt (the handloan promissory note) assigned to him against the balance sale consideration and claimed interest on advances (figures and rates are asserted in the plaint and appended statement of account).

First Defendant / Appellant's Arguments

  • The first defendant admitted executing Ex. A-12 but contended that it was executed only to evidence an antecedent money‑lending transaction and was not intended to be acted upon as an agreement for sale.
  • He stated that money transactions had occurred long before Ex. A-12 and that as on 1.3.1980 a consolidated interest figure (Rs. 2,000/-) on outstanding sums was agreed; he admitted receipt of Rs. 10,000/- but denied certain payments alleged by the plaintiff (for example the Rs. 1,500/- of 6.8.1980).
  • He pointed out that Ex. A-12 contains no clauses common to agreements for sale (no undertaking to discharge encumbrances, no statement of how title was derived, no provision about actual handing over of possession), and that title deeds were in the custody of a prior creditor (the second defendant) who had a pending suit (Original Suit No. 139 of 1982) to enforce a mortgage over the entire property.
  • The appellant offered to pay (and expressed willingness to deposit) a sum of Rs. 30,000/- with interest, after adjustments for rent and electricity charges, indicating a willingness to settle monetary obligations rather than complete a sale on the plaintiff’s asserted terms.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
K. Krishnan Nair v. K. Parameswaran Pillai and 23 Others (1993 2 L.W. 411) That a plaintiff who has not come to court with clean hands or has put forward a false case is not entitled to specific performance; and that a suit is not maintainable where the plaintiff seeks to enforce a contract different from that entered into between the parties. The court relied on this authority to support the proposition that the plaintiff, having made inconsistent and false claims and seeking enforcement on altered terms, is not entitled to specific performance.
Nallava Gounder and another v. P. Ramaswami Gounder and three others (1993 2 L.W. 86) The rule that a false claim disentitles the plaintiff from obtaining specific performance; underscores the requirement of good faith and honesty in seeking equitable relief. The court cited this decision to reinforce its conclusion that the plaintiff’s false or inconsistent claims disentitled him to specific performance in the present case.

Court's Reasoning and Analysis

The court proceeded in two main strands of analysis: (A) whether Ex. A-12 is an enforceable agreement for sale or merely evidential of a prior loan transaction, and (B) whether the plaintiff had demonstrated readiness and willingness to perform the contract in terms of Section 16 of the Specific Relief Act, 1963.

A. Character of Ex. A-12:

  • The court observed that parties admitted substantial prior money transactions and that the Rs. 20,000/- said to have been received on the date of Ex. A-12 was in fact received in instalments long before that date. The deceased appellant himself admitted receipt of Rs. 20,000/- before Ex. A-12 and agreed to a consolidated interest figure of Rs. 2,000/- as of that date.
  • Original title deeds were in the possession of an earlier creditor (the second defendant) who had instituted a suit to enforce a mortgage over the entire property. Ex. A-12 contains no statement about that mortgage nor a covenant by the deceased appellant to discharge encumbrances prior to sale — a usual covenant in agreements for sale.
  • Ex. A-12 does not record how the deceased appellant derived title or how any derivative title passed to him; possession and relationship changes are not recorded. The plaintiff did not verify title deeds or put evidence before the court about the nature of title.
  • Letters (Exs. A-4 and A-7) and the appended statement of account were held to support the conclusion that Ex. A-12 was executed to evidence an anterior money‑lending transaction rather than as a contract intended to be performed as a sale.
  • On these grounds the court concluded that Ex. A-12 could not be enforced as an agreement for sale.

B. Readiness and Willingness under Section 16:

  • The court applied Section 16 of the Specific Relief Act (requiring allegation and proof of readiness and willingness from the date of the agreement until the date of sale) and found that the plaintiff did not express readiness and willingness to perform the contract "in terms" of Ex. A-12.
  • The plaintiff’s appended statement of account sought various deductions and adjustments (including rent, promissory note debts assigned to him, and large interest claims) not provided for in Ex. A-12. The plaintiff thus sought implementation with significant variations and a settlement of accounts, rather than performance strictly in accordance with the written agreement.
  • The court held that a plaintiff cannot claim specific performance where he seeks to implement the contract on modified terms (i.e., seeking deductions and adjustments not found in the agreement) and where his pleaded willingness was to perform only on such modified terms.

C. Clean Hands and Credibility:

  • The court found instances of inconsistent and, in the court’s view, false assertions by the plaintiff (for example, contradictory statements about his status as owner versus tenant in Ex. A-4 and the plaint), and gaps in evidence (no proof that the Rs. 1,500/- of 6.8.1980 was paid). The court concluded that the plaintiff had not come to court with clean hands.
  • Relying on cited precedent, the court held that false claims and lack of good faith disentitle a plaintiff from equitable relief of specific performance.

D. Consequence on Reliefs:

  • Because Ex. A-12 was held not to be an agreement intended for specific performance and because the plaintiff failed to demonstrate readiness and willingness to perform in terms, the court concluded that specific performance must be refused and the lower court’s decree granting it should be set aside.
  • Nevertheless, since the matter involved admitted monetary transactions (the deceased appellant admitted receipt of Rs. 30,000/-), and to shorten further litigation, the court considered the plaintiff’s alternative monetary claim and the voluntary offer of the appellant’s counsel and proposed a monetary decree on specified terms (interest rates, adjustments for rent, and limitation of liability of legal representatives to inherited assets).

Holding and Implications

Core Ruling: The appellate court set aside the decree of the lower court granting specific performance and refused the relief of specific performance sought by the plaintiff.

Implications and direct consequences for the parties (as ordered by the court):

  • The decree of specific performance passed by the trial court is set aside: the suit is dismissed insofar as specific performance is sought.
  • The court directed that a monetary decree be drafted in favour of the plaintiff in the terms described in the opinion:
    • It is admitted that the deceased appellant received Rs. 30,000/- from the plaintiff. The legal representatives (appellants 2 to 5) are to pay that amount with interest at 24% per annum from 1.3.1980 until the date of the plaint, and thereafter at 6% per annum until realisation.
    • Appellants 2 to 5 are liable only to the extent of assets inherited from the deceased appellant.
    • The plaintiff admitted that he occupies the building as a tenant and agreed to pay rent at Rs. 225/- per month; he has not paid rent after 1.3.1980 and is liable for arrears. Rent arrears are to be adjusted against the amount payable by the appellants; the asserted enhancement of rent to Rs. 325/- was not proved and will not be allowed.
  • The parties were directed to bear their own respective costs throughout the litigation.
  • The appeal was allowed in part: specific performance refused, monetary relief to be awarded as described, and costs to be shared by parties (each bears own costs).

The opinion does not purport to create a new legal precedent; it applies existing equitable principles (including the requirement of clean hands and the requirement of readiness and willingness under Section 16 of the Specific Relief Act) and relies on prior decisions to justify refusal of specific performance. The decree referred to in the opinion is to be drafted consistent with the findings above.

Show all summary ...

S.S Subramani, J.

This appeal is directed against the judgment and decree in Original Suit No. 116 of 1982, 20.7.1983 of the IV Additional Judge, City Civil Court, Madras. The first defendant in the suit is the appellant herein. Pending appeal, the appellant died and appellants 2 to 5 were impleaded as legal representatives as per order in C.M.P No. 13164 of 1992 dated 30.8.1992

2. The material allegations which are relevant are:— As per Exhibit A-12 dated 1.3.1980 deceased appellant executed an agreement for sale in favour of the respondent/plaintiff, agreeing to sell the plaint schedule property. The agreement Ex. A-12 says that the out-house situate at No. 10, Nana Rao Street, Madras will be sold for a total consideration of Rs. 60,000/-. On the date of agreement, a sum of Rs. 20,000/- was paid as advance and the balance amount of Rs. 40,000/- is to be paid within a period of six months. The plaintiff also alleged that in pursuance of the agreement for sale, he is in possession of the building. Originally, he was occupying that portion as its tenant and after the agreement, he became the owner and enjoying the same in part performance of the agreement. It is also averred that a sum of Rs. 10,000/- more was paid within a week after the execution of Ex. A-12 and further, a sum of Rs. 15,000/- was paid on 6.8.1980 The first defendant had taken a handloan of Rs. 15,000/- from one K. Narasimhalu Chetty on 10.6.1979, and the plaintiff has taken an assignment of the same. He claims that he is entitled to adjust the amount due under the loan transaction towards the balance of sale consideration. The plaintiff also claims 24% per annum interest from the date of agreement till date of plaint on the above advance paid by him to the first defendant which according to him is liable to be adjusted in the balance sale consideration. Suit notice was issued on 9.7.1981 as evidenced by Ex. A-4 and a reminder was sent as per Ex. A-7 dated 22.8.1991 The defendant refused to comply with the demand as per his reply dated 3.9.1981 (Ex. A-9) which according to the plaintiff necessitated the filing of the suit. He has prayed for a decree for specific performance directing the deceased appellant to execute the sale deed with consequential reliefs. The plaint was subsequently amended by incorporating an alternative relief claiming the refund of advance amount with interest and also costs of the suit.

3. Both for the original plaint and amended reliefs, the first defendant filed written-state-ments. The second defendant who has some interest in the property, as a creditor of the first defendant also filed a written statement. In the written statement of the first defendant, he has admitted the execution of Ex. A-12 sale agreement. But he has put forward a contention that the same was only to evidence a loan transaction. The document was never intended to be acted upon as an agreement for sale. According to him, the plaintiff advanced funds on several occasions, and on 1.3.1980, the total amount with interest worked out to Rs. 20,000/-. He also admitted receipt of Rs. 10,000/-. According to him, in the agreement nothing was stated about the title or about the handing over possession. The only purpose intended was to create a document regarding money lending transaction. He also states that there is no understanding to vacate the first floor of the building as alleged in the plaint. According to him, the plaintiff was a tenant of the building long before Ex. A-12 on his agreeing to pay a sum of Rs. 225/- towards rent excluding electricity charges and water charges. When the relationship of the plaintiff and the first defendant was very cordial, the plaintiff used to advance amount to the first defendant and it was in that circumstance, Ex. A-12 was executed. As on 1.3.1980, a consolidated amount of Rs. 2,000/- was arrived as/interest payable on the sum of Rs. 20,000/- already outstanding from him to the plaintiff. On the date of agreement there is no money transaction. Simultaneously, the plaintiff also agreed to pay enhanced rent of Rs. 325/- from Rs. 225/- as on 1.3.1980 The said enhanced amount of rent also was not paid by the plaintiff. He is also entitled to interest on that amount. He denied having received any amount of Rs. 1,500/- as alleged in the plaint. He has offered Rs. 30,000/- to the plaintiff and expressed his willingness to deposit the same in Court with interest.

4. Second defendant has stated that he has no knowledge about the dealings between the plaintiff and the first defendant. He stated that he has filed a suit against the first defendant and the same is pending.

5. The trial court, as per judgment dated 20.7.1983 decreed the suit, directing the plaintiff to pay a sum of Rs. 3,450/- more for getting the sale deed executed. The lower court held that the case put forward by the plaintiff is true and amount of interest is also to be added to the advance amount and calculating the amount paid with interest, an amount of Rs. 3,450/- more was found to be due to deceased appellant. Two months' time was given for executing the sale deed. It is against the said decision, the first defendant has filed this appeal.

6. At the time of argument, the main contention that was put forward by the learned counsel for the appellants was whether Ex. A-12 can be enforced as an agreement for sale and whether the finding regarding readiness and willingness of the plaintiff to get specific performance is correct?

7. Certain circumstances were brought to our notice by the learned counsel for the appellants to the effect that Ex. A-12 is not really an agreement for sale, but it is with regard to some transaction not explained therein. Ex. A-12 is the agreement sought to be enforced in this case. We may say that the plaintiff has not come forward before this Court to enforce Ex. A-12 as it is. But he wants to get it enforced in the way which he wants it.

8. It is admitted that the amount of Rs. 20,000/- stated to have been received under Ex. A-12 was not in fact paid on that date. It is in evidence that there was money transaction, long before Ex. A-12 between the parties. Deceased appellant admitted that he has received a sum of Rs. 20,000/- long before the execution of Ex. A-12 in various instalments. He agreed to pay Rs. 2,000/- as consolidated interest as on that date. That is the vital circumstance in favour of the appellant. This fact is also admitted by the plaintiff. Original title deed was in possession of an earlier creditor by name Lakshmanan, the second defendant in the suit. Title deeds were with him and he admitted that he had already filed a suit against the appellant as Original Suit No. 139 of 1982 before the City Civil Court, Madras for enforcing his mortgage. The entire property, inclusive of the property agreed to be sold is the subject matter of the motrgage. In Ex. A-12 we do not find any statement regarding the mortgage in favour of the second defendant. We also do not find any specific clause in Ex. A-12 regarding any undertaking by the deceased appellant to discharge encumbrance, before the sale which is an usual covenant in an agreement for sale.

9. Conspicuously, the passing of derivative title of the appellant, and how he obtained right over the property are absent. Taking into consideration the above circumstances, it can be seen that Ex. A-12, even though it purports to be an agreement for sale, is really not an agreement which the parties would have intended to implement. Letters sent by the plaintiff evidenced by Exs. A-4 and A-7 also will go to show that there was earlier money lending transaction between the parties which resulted in the execution of Ex. A-12. The plaintiff has also not stated in the agreement or in the plaint that he has verified the title deeds of the appellant and there is also no evidence before court as to the nature of the title. We find that there is ample justification in the contention of the first defendant that Ex. A-12 is not really a document intended to be acted upon and the same is executed only to evidence the anterior money transaction between the parties. A statement of account is appended to the plaint which also supports the case of money lending only. In that view we hold that Ex. A-12 cannot be enforced as an agreement for sale.

10. The above finding may be sufficient to non-suit the plaintiff but both parties submitted their arguments on the other point also i.e, whether the plaintiff has expressed his readiness and willigness to enforce Ex. A-12?

11. Section 16 of the Specific Relief Act 1963 mandates that in a suit for specific performance, the plaintiff has to allege his readiness and willingness from the date of agreement to the date of sale and he must also prove the same. The agreement fur which readiness and willingness is pleaded must be the agreement that is sought to be implemented and in terms thereof. When the plaintiff wants an implementation of contract, not according to the terms contained therein, but with modification he deemed proper, and even in the plaint, willingness disclosed was not a willingness to deposit the full balance amount but such balance as remained after making such deductions, he cannot claim to have always been ready and willing to perform his part of the contract.

12. The plaintiff has not expressed in the plaint, that he wanted specific performance “in terms” thereof. A statement of account is appended to the plaint wherein he has stated that a sum of Rs. 4,275/- is liable to be paid by the plaintiff to the defendant by way of rent. The statement of account is prepared by adding various amounts unconnected with the contract. Except two items mentioned in the statement of accounts, all other entries have no relevance in so far as Ex. A-12 is concerned. Item 3 therein is the instalment regarding the payment of Rs. 1,500/- on 6.8.1980 The appellant has denied the receipt of any such amount. Likewise, item 5 is a debt on promissory note which the appellant has incurred in favour of one Narasimhalu Chelty. The plaintiff has taken assignment of the same and wanted that amount also to be adjusted In the balance of sale consideration. Interest is added at 36% for item No. 5 of statement of accounts. The said amount is also included in the account subsequently, item 7 is a lumpsum agreed to be paid as interest on the first advance of Rs. 2,000/- dated 1.3.1980 The same is also included and the plaintiff wants adjustment of that amount also in the suit. Another sum of Rs. 13,230/- is calculated as interest on the advance amount paid by the plaintiff. Agreement Ex. A-12 does not provide for any such deductions. In fact, what the plaintiff wants is a settlement of accounts in a suit for specific performance and we do not find any averment in the plaint expressing his willingness to perform the contract in terms of Ex. A-12. What he wants is a decree for specific performance with variation when it is admitted that Ex. A-12 is not varied by any subsequent contract. The plaintiff wants specific performance on his own terms which goes against Ex. A-12. That also is an added reason to say that the plaintiff is not entitled to get specific performance of Ex. A-12.

13. We, further find that the plaintiff has not come forward with clean hands. He was fully aware of the circumstances under which Ex. A-12 was executed. But in spite of the same, he has come forward to get a decree for specific performance in his own terms. The appellant, even, in his reply, as evidenced by Ex. A-9 has offered to pay the entire amount due from him. In para 13 of Ex. A-9 he has offered to pay Rs. 30,000/- with interest at 24% after adjusting the rent and electricity charges due to him. In that reply he has explained the circumstances under which he had to execute Ex. A-12 deed dated 13.1980 Long thereafter, the plaintiff has instituted the suit insisting on getting specific performance. There is no evidence in this case whether the plaintiff has paid Rs. 1,500/- as alleged by him on 6.8.1980 and we also find that the averments in the notice and the plaint are inconsistent. He says in Ex. A-4, dated 9.7.1981 that he is occupying the portion of the building not as a tenant but as its owner. The said statement even according to the admitted case of the plaintiff, cannot be true. Ex. A-12 does not say anything about the handing over possession of the building or the relationship that existed on that date has changed. The claim that he is the owner of the suit house and that he is not liable to pay rent is false to his own knowledge. The, allegation that the appellant has agreed to hand over possession of the first floor after evicting the tenant (para 7 of the plaint) is also not seen in Ex. A-12. Likewise, there is no evidence in this case to show that the appellant has agreed to pay the amount which he borrowed from one Narasimhalu Chetty. After getting voluntary assignment of the promissory note, the plaintiff wants that case also to be settled. We do not find any justification in granting relief of specific performance especially when the plaintiff has come forward with false claim. It is settled by this Court in K. Krishnan Nair v. K. Parameswaran Pillai and 23 Others (1993 2 L.W 411) that when the plaintiff has not come to. Court with clean hands, but put forward false case, he is not entitled to get specific performance. It is also held therein that the suit is not maintainable if the plaintiff wants to enforce a contract different from what was entered into between the parties. The same is the rule in Nallava Gounder and another v. P. Ramaswami Gounder and three others (1993 2 L.W 86) where it was held that the false claim will disentitle the plaintiff from getting performance. Utmost good faith and honesty is expected from the parties who want the discretion of court to be exercised in his favour. We have meticulously considered 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 the judicial verdict. The court is bound to see that it is not used as an instrument of oppression to have an unfair advantage to the plaintiff. If specific performance is allowed, the plaintiff will be getting an unfair advantage.

14. In view of the above findings we hold that the decree of the lower court has to be set aside and the relief of specific performance is to be refused.

15. The said finding may not be sufficient for a proper disposal in the appeal. The plaintiff has made an alternative claim for refund of the amount due to him. He is claiming the amount of Rs. 60,000/- with future interest at 24% on a sum of Rs. 47,500/- from the date of suit till date of decree and thereafter, at 6% per annum till date of realisation.

16. Once we find that Ex. A-12 is not really an agreement for sale but only a loan transaction, the plaintiff may not be entitled to get any relief. But to shorten the litigation and in view of the voluntary offer by the learned counsel for the appellants, we propose to give a decree in favour or the plaintiff in the manner set out hereunder.

17. It is admitted by deceased appellant that he has received a sum of Rs. 30,000/- from the plaintiff. The said amount is to be paid by the legal representatives of the appellant with 24% interest from 1.3.1980 till date of plaint as agreed to by the deceased appellant in Ex. A-9 and thereafter at 6% till date of realisation. Appellants 2 to 5 are liable only to the extent they have inherited the assets of the deceased.

18. It is admitted by the plaintiff that the building occupied by him belongs to the appellants and he is residing there as a tenant. He has also agreed to pay a sum of Rs. 225/- towards rent. Admittedly, after 1.3.1980, the plaintiff has not paid any rent. He is liable to pay the arrears of rent at that rate. The case of appellants that the rent was enhanced to Rs. 325/- per mensem is not proved. The amount payable by the plaintiff to the appellants from 1.3.1980 is to be adjusted in the amount payable by the appellants. Only balance amount is liable to be paid to the plaintiff. We are told that deceased appellant has filed a suit for recovery of arrears of rent and the same is stayed under Section 10, C.P.C Since the relief claimed therein is allowed in that suit, that suit has become infructuous. Learned counsel for the appellant agrees to withdraw the same. The said submission is recorded.

19. Taking into consideration all the circumstances, we feel that this is a fit case where the parties are directed to bear their respective costs.

20. In the result, we allow this appeal in part. We set aside the decree passed by the lower court granting specific performance and the suit is dismissed in so far as that relief is concerned. A decree Will be drafted regarding the amount payable to the plaintiff, after adjusting the amount mentioned above as on this date. The parties are directed to bear their own costs throughout.

RR/VCS