THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO

SECOND APPEAL NOS. 570, 871, 973 OF 2002; 712 & 713 OF 2003; 792 OF 2004; 178 OF 2005 AND 1065 OF 2012

COMMON JUDGMENT:-

          All the appeals arise out of the four separate suits in O.S.Nos.85 to 87 of 1990 and 80 of 1994 on the file of the court of Senior Civil Judge, Narsapur, which were the suits for specific performance of contract of sale by different plaintiffs against common defendants. The subject matter of the suits is the land in Sy.No.188/3, 4, 6, and 7. 

02.    According to the case of the plaintiff in O.S.No.86 of 1990, the 1^st defendant on his behalf and on behalf of the family, who are defendant Nos.2 to 4, for their benefit have sold an extent of Ac.0.74 cents in Sy.No.188/3 for a consideration of Rs.37,000/- and paid an advance of Rs.30,000/- and registered agreement of sale was executed on 18.08.1887. In spite of repeated demands, the plaintiff has not executed the registered sale deed and, therefore, the suit was filed for enforcement of the agreement of sale and in the alternative for refund of the amount of Rs.30,000/-, which was paid as an advance.

03.    The plaintiff in O.S.No.80 of 1994 filed a suit for specific performance of the contract of sale for a value of Rs.23,000/- to an extent of Ac.0.33 cents in Sy.No.188/6 alleging that a registered agreement of sale was executed on 14.08.1887 and a sum of Rs.15,000/- was paid and in spite of repeated demands, the sale deed was not executed and, therefore, the suit was filed for specific performance or in the alternative for refund of advance amount.

04.    The plaintiff in O.S.No.87 of 1990 claimed purchase of an extent of Ac.0.66 cents in Sy.No.180/4 and 188/5 for a consideration of Rs.33,000/- under an agreement of sale dated 20.08.1987 and also claimed that a consideration of Rs.23,000/- was paid as an advance.  In spite of demands, the sale deed was not executed and hence the suit for specific performance or in the alternative for refund of the advance amount.

05.    The plaintiff in O.S.No.85 of 1990 filed a suit for specific performance of the registered agreement of sale dated 12.08.1987 to an extent of Ac.0.66 cents in Sy.No.188/7 having purchased under registered agreement of sale for a consideration of Rs.46,000/- and payment of advance of Rs.38,000/-. The suit was filed for enforcement of the agreement of sale or in the alternative for refund of the advance amount.

06.    The defence in all the suits is common. The 1^st defendant filed a written statement contending that the agreements of sale were executed nominally and no consideration was received.  The substance of the written statement, in paras.2 to 10, is as follows:-

        “3) During 1979 and 1986 this defendant did wine shop business under the name and style of Kalyani Wines. That business was a joint venture along with Sri Meka Venkata Ramaiah. Defendants are strangers to business; much less were they accustomed to do wine business. Defendants belong to an agriculturist family. Therefore, that business ended in loss to this defendant. In connection with that business this defendant contracted loan of Rs.50,000/- from Sri N.Satyanarayana Murthy of Chinamamidi palli.

4) The creditor N.Satyanarayana Murthy stipulated some conditions for his advancing loan to this defendant. As per those conditions this defendant had to pay interest for the loan at Rs.3/- per month per hundred. To secure that loan this defendant was to execute a promissory note for Rs.20,000/- and two nominal agreements in his favour showing that this defendant and his children agreed to sell their guardian property comprising of the plaint schedule property to the said N.Satyanarayana Murthy under two different agreements of sale each for RS.49,000/- in respect of separate portions of that property. In each of those agreements, an advance payment of Rs.15000/- had to be mentioned.

5) Thus the entire loan of Rs.50,000/- was to be covered by the above said promissory note to the extent of Rs.20,000/- and by the above mentioned two separate sale agreements to the remaining extent of Rs.30,000/-. The loan was to be repaid within one year. Therefore, the time for performance of the agreement was to be mentioned (though nominally) has one year. This defendant being in pressing need for money had acceded to the terms of that bargain.

6) Accordingly in August, 1984 a promissory note for Rs.20,000/- was executed in the first instance by this defendant in favour of the said Nippuleti Satyanarayana Murthy. Later a registered agreement of sale for Rs.49,000/- in respect of Ac.0.33 cents in R.S.No.188/6 and Ac.0.66 cents in R.S.No.188/7 (total Ac.0.99 cents) with date 16-08-1984 and another registered agreement of sale for a similar sum of Rs.49,000/- in respect of Ac.0.38 cents in R.S.No.188/5, Ac.0.28 cents in R.S.No.188/4 and Ac.74 cents in R.S.No.188/3 ( Total Ac.1.40 cents) with date 27-08-1994 in favour of the same person, namely Nippuleti Satyanarayana Murthy, came to be executed by this defendant for himself and as guardian of 2^nd and 3^rddefendants.

7) This defendant could not discharge the above said debt of Rs.50,000/- together with interest thereon within one year as per stipulation. He was also unable to discharge that debt even by the end of the third year. The creditor therefore asked this defendant to execute fresh registered agreements of sale in the name of his nominee. Owing to his vulnerable position this defendant acted as per the dictates of the creditor.

8) The creditor told this defendant that the debt swelled up to Rs.1,04,000/- with interest for three years at 3% per month and that the expenses of stamp duty, registration charges and fees paid to the scribe for fresh agreements would amount of Rs.2,000/-. He therefore, asked this defendant to execute fresh agreements for different sums with the mention of different advance payments amounting to Rs.1,06,000/- in the names of different persons to be named by him in respect of the different portions out of the self-same garden property covered by the earlier two agreements of sale which stood in his name.

9) Thus, in respect of the above said garden properly of Ac.2.39 cents covered by the above said agreements dated 16-08-1994 and 27-08-1984 standing in his name, the creditor Nippuleti Satyanarayana Murthy obtained four registered agreements of sale for different portions in the name of his nominees in the following manner:-

        i) The suit agreement of sale dated 18-03-1987 was obtained in the name of the plaintiff  who is the brother’s son of the creditor, for a sum of Rs.37,000/- with the mention of advance payment of Rs.30,000/- in respect of the plaint schedule property, which is 74 cents in RS.No.188/2 of Chinamamidipalli village.

        ii) The agreement of sale dated 12-08-1987 was obtained in the name of N.Narasimha Murthy who is the elder brother of the creditor for a sum of Rs.46,000/- with the mention of advance payment of Rs.38,000/- in respect of 66 cents in RS.No.188/7 of Chinamamidipali village.

        iii) The agreement of sale dated 14-08-1987 was obtained in the name of N.Durganand who is son-in-law of the elder brother of the creditor for the sum of RS.23,000/- with the mention of advance payment of Rs.15,000/- in respect of 33 cents in RS.No.188/6 of Chinamamidipalli village.

        iv) The agreement of sale dated 20-08-1987 in the name of K.Surya Kumari who is the younger sister of the creditor for the sum of Rs.33,000/- with the mention of advance payment of Rs.23,000/- in respect of 38 cents+28 cents respective in RS.No.188/5, 188/4 of Chinamamidipalli village.

10)  In the execution of the above agreements the 4^th defendant also was joined along with the other defendants. In all those agreements no reference was made to the earlier registered agreements which were subsisting by the date of execution of those four agreements. The scribe of these agreements as also for the earlier agreements was the same person.”     

07.    It was also further pleaded that if the contract of sale is real sale transaction and the substantial amount was paid, there is no reason as to why possession was not given. The market value of the property is higher. Therefore, in view of the above circumstances, the suit is liable to be dismissed.

08.    Defendants 3 and 4 filed written statement which was adopted by the second defendant admitting the relationship with the first defendant, but, contending that the alienations are not for the benefit of the family and they are not true and valid and they cannot be specifically enforced against the defendants.

09.    On the basis of the above pleadings on both sides, common issues have been framed in all the suits.  After considering the evidence adduced on both sides, the trial Court has held that the suit transactions are not sale transactions and accepted the plea of the first defendant and granted the alternative plea of refund of sale consideration to the plaintiff.  It also held that the transactions are not intended to be acted upon for regular sale and it also further held that the contract does not bind Defendant Nos.2 to 4.  Aggrieved by that, the plaintiff in O.S.No.86 of 1990 preferred A.S.No.72 of 1998 and the plaintiff in O.S.No.80 of 1994 preferred A.S.NO.69 of 1998 and the plaintiff in O.S.No.87 of 1990 preferred A.S.No.70 of 1998 and the plaintiff in O.S.No.85 of 1990 preferred A.S.No.73 of 1998 to the Court of the I Additional District Judge, Eluru and the learned I Additional District Judge has allowed all the appeals granting specific performance of the contract against all the defendants.

10.    Consequently, S.A.No.570 of 2002 and 178 of 2005 were preferred by Defendant Nos.1; 2 to 4 separately against the judgment in A.S.No.72 of 1998; against the judgment in A.S.No.69 of 1998 Second Appeal Nos.871 and 973 of 2002 were preferred by the first defendant and Defendant Nos.2 to D.4 separately; as against the judgment in A.S.No.70 of 1998, S.A.No.712 of 2003 and 1065 of 2012 were preferred separately by the Defendant Nos.1, 2 to 4 and against the judgments in A.S.No.73 of 1998 Second Appeal No.713 of 2003 and 792 of 2004 were preferred separately by Defendant Nos.1, 2 to 4.

11.    Second appeals were admitted touching upon the validity of Ex.A.1 contract of sale and the binding nature of the same on the minors and the justification of the granting relief of specific performance by the 1^st appellate Court when the trial Court found that the agreement of sale is not real and it was only a loan transaction.  The substantial questions that have to be determined in all these appeals are:-

1)            Whether the agreements of sale are real transactions of sale or whether they are only relating to loan transactions as contended by the first defendant?

2)            Whether the 1^st appellate Court has not properly dealt with the case in coming to a different conclusion while granting specific performance?

3)       Whether the agreements are not binding on Defendant     Nos.2 to D.4?

3)            Whether the 1^st appellate Court did not apply itself to the real issue and the reason given by the 1^st appellate Court is superfluous?

POINTS:-

12.    In fact, so far as the factum of the execution of contract, which is registered, is concerned, there is no denial.  It is to be mentioned that when parties plead that the sale transaction though registered is not a real transaction of sale but a different transaction, it is for the court to determine the same and find out the intention of the parties. It is needless to say that if once the contract of sale is found to be not a real one, then the relief of specific performance cannot be granted. Further more, it is to be mentioned that it is the trial Court, which decide the question of fact that assess the evidence and the opinion of the trial Court with regard to the nature of the document and the reasoning given by it has to be respected unless it dehors the available evidence or the reasoning is perverse. As can be seen from the judgment of the trial Court, in all the suits, after an elaborate discussions of the facts and circumstances, the Court categorically found that the contracts of sale are only for the earlier debts contracted by the   first defendant and the agreements are obtained for that debts and even if the agreements are true, they are not for contract of the sale, but are only for the debt contracted by the first defendant earlier and they are not intended to act upon for the regular sale.  The court below has given several reasons to support this conclusion. 

13.    As against this, the first appellate Court framed the following points for consideration:

1)                            Whether the appellant is entitled for specific performance of the agreement?

2)                            Whether the Court below went wrong in granting the alternative relief of money decree?

14.    A perusal of the judgment of the lower appellate Court does not show that it has assessed the reasoning given by the trial Court and that the reasoning of the trial Court is erroneous or perverse in holding that the transaction is only a loan transaction. A reading of the judgment of the first appellate Court shows that it has only extracted the pleadings of the parties and the contentions; whereas the trial Court has taken into several circumstances, which in its opinion probablises the defence of the first defendant.  Further more, the grant of the relief of specific performance is a discretionary one and when the trial court has exercised the discretion after having recorded its reasons, when the appellate Court intends to reverse the same, cogent, convincing and compelling reasons shall be given by the appellate Court and it should also be mentioned as to how the refusal of such a relief causes prejudice to the plaintiff when damages were granted. I do not want to deal at length the evidence on record, which has been discussed by the trial Court, but it is suffice for me to say that the judgment of the 1^st appellate court is not in accordance with Order XL1 Rule 33 CPC whereunder necessary points have to be framed and the appellate court before coming to a different conclusion on a question of fact has to discuss the reasons given by the trial Court and thereafter give its own reasons in support of the judgment. A perusal of the judgment of the 1^st appellate Court, therefore, suffers from serious legal infirmity and more so, when the discretion exercised by the trial Court is disturbed.  Therefore,   I feel that it is a fit case where the judgment passed by the         1^st appellate court is not in accordance with law and not based on appreciation of evidence or reasons given by the trial Court and is liable to be set aside.

Accordingly, all the Second Appeals are allowed while setting aside the judgments of the 1^st appellate Court i.e., A.S.Nos.69, 70, 72 and 73 of 2008 and all the Appeal Suits are remanded to the   1^st appellate court for disposal according to law after framing necessary points for consideration touching on the real dispute between the parties. The lower appellate court is directed to dispose of the appeals within the period of six (6) months from the date of receipt of a copy of this judgment. Each party do bear their own costs.

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N.R.L. NĀGESWARA RĀO,J

09-11-2012

TSNR