2016 http://judis.nic.in/Judis_Andhra/list_new2.asp?FileName=13729
THE HONBLE SRI JUSTICE A.V.SESHA SAI
A.S.No.262 of 2010
26-9-2016
Sri Raghupathi Venkata Ratnam Naidu Trust, rep. by its Secretary Dr.Y.Veera
Prakash ...Appellant
Karri Veera Swami (died), per L.Rs....Respondents
Counsel for Appellant : Sri V.L.N.G.K.Murthy
Counsel for Respondents: Sri P.Kamalakar & Sri Jitendar Rao
<GIST:
>HEAD NOTE:
? Cases referred:
1.AIR 1970 SC 504
2.(2000) 2 SCC 428
3.(2012) 8 SCC 706
4.(2015) 8 SCC 695
5.(2000) 2 SCC 428
THE HONBLE SRI JUSTICE A.V.SESHA SAI
A.S.No.262 of 2010
JUDGMENT:
Plaintiff in O.S.No.298 of 1995 on the file of the Court of the I
Additional Senior Civil Judge, Kakinada, East Godavari district is the Appellant
in the present Appeal Suit, filed under Section 96 of C.P.C. This Appeal is
directed against the judgment and decree dated 15.4.2008 rendered in the
said suit.
2. The appellant herein instituted the said O.S.No.298 of 1995 for specific
performance of agreement of sale dated 19.8.1989 or in alternative for
refund of advance amount with interest and costs. The plaint schedule
property is an extent of Ac.6-27 cents in Sy.No.88 of Thimmapuram village,
Kakinada Rural Mandal, East Godavari district. Defendants 1 to 26 are the
owners of various extents of lands out of the plaint schedule property and
Defendant No.27 is their General Power of Attorney holder. The defendants/
respondents resisted the suit by filing written statements. Basing on the
pleadings available on record, the learned Senior Civil Judge framed the
following issues and additional issue:
(1) Whether the plaintiff is entitled to seek specific performance of
the suit agreement of sale against the defendants or in the
alternative for refund of the advance amount with interest?
(2) To what relief?
Additional Issue
Whether the suit agreement of sale is binding on Defendant
Nos.36 to 38?
3. During the course of trial, on behalf of the plaintiff, P.Ws.1 to 4 were
examined and Exs.A1 to A30 were marked and on behalf of the defendants,
D.Ws.1 to 3 were examined and Exs.B1 to B39 were marked. The learned
Senior Civil Judge, by way of impugned judgment and decree dated
15.4.2008 dismissed the suit for specific performance and ordered refund of
advance amount with interest. The said decree reads as under:
(i) that the defendants 2, 6 to 27 and 29 to 38 do pay to the plaintiff
trust a sum of Rs.8,61,505/- together with interest @ 12% p.a.
from 24.11.1995 the date of suit till the date of decree and
thereafter @ 6% p.a. till realization on Rs.4,25,000/- being the
amount of advance;
(ii) that a charge be and the same is hereby created on the plaint
schedule property till the payment of decreetal amount by D2, D6
to D27 and D29 to D38 to the plaintiff as directed in Clause(i)
above;
(iii) that the defendants 2, 6 to 27 and 29 to 38 do pay to the plaintiff a
sum of Rs.38,452-00 towards proportionate costs of this suit
bearing their own cosrts;
(iv) that the suit for the relief of specific performance of the agreement
of sale be and the same is hereby dismissed;
(v) A copy of the plaint schedule hereunto annexed.
4. Heard Sri V.L.N.G.K. Murthy, learned counsel for the Appellant and Sri
E.Manohar, learned Senior Counsel and Sri Jitender Rao for Respondents,
apart from perusing the material available before the Court.
5. Submissions/contentions of the learned counsel for the Appellant
(1) The judgment and decree rendered by the trial Court are erroneous,
contrary to law, weight of evidence and probabilities of the case.
(2) The Court below ought to have decreed the suit for the primary relief
in view of Ex.A7 Agreement of Sale dated 19.8.1989 and Exs.A1 to A6 Powers
of Attorneys executed by Defendants 1 to 26 in favour of Defendant No.27.
(3) The Court below failed to see that Defendant No.27 executed Ex.A7
Agreement of Sale in favour of S/Sri Darapureddi Dharma Rao and
Veerabhadra Rao for the benefit of the Plaintiff Trust and received the
amounts also, as such, the Court below ought to have decreed the suit for
primary relief.
(4) The Court below failed to see that the plaintiff was always ready and
willing to perform its part of contract and the delay, if any, was due to the
conduct of the defendants.
(5) The Court below ought to have seen that on receipt of Ex.A14 notice
dated 16.12.1992, Defendant No.27 requested time for completion of process
of execution of sale deed by making Ex.A11 endorsement dated 18.12.1992.
(6) The Court below ought to have seen that by mistake, the name of the
Trust was mentioned as Raghupathi Educational Trust instead of
Raghupathi Venkataratnam Naidu Trust in Ex.A7 Agreement of Sale dated
19.8.1989.
(7) Since the Defendants 1 to 26 received advance amount through
defendant No.27, even after expiry of four months time stipulated in Ex.A7
Agreement of Sale, it cannot be said that the time is the essence of the
contract.
6. Submissions/contentions of learned Senior Counsel Sri E.Manohar
appearing for Sri P.Kamalakar, learned counsel for Respondents and
Sri Jitender Rao
(1) Since there is no privity of contract between the plaintiff trust and the
defendants, the Court below is perfectly justified in dismissing the suit by
refusing to grant primary relief.
(2) Ex.A7 Agreement of Sale dated 19.8.1989 was executed by Defendant
No.27 in favour of S/Sri Darapureddi Dharma Rao and Veerabhadra Rao for
Raghupathi Educational Trust and neither the said individuals nor the said
Trust filed a suit nor they assigned Ex.A7 Agreement in favour of plaintiff
Trust nor the said individuals were examined.
(3) Ex.A14 legal notice dated 16.12.1992 was issued on behalf of
Raghupathi Educational Society and the said Trust is not before the Court.
(4) By the time of Ex.A7 Agreement of Sale dated 19.8.1989, the Plaintiff
Trust was not in existence and the Plaintiff Trust came into being by virtue of
Ex.A12 Trust Deed with effect from 27.9.1989 and the stamp papers for
Ex.A27 were also purchased for Raghupathi Educational Trust on 19.7.1989.
(5) Ex.A7 dated 19.8.1989 stipulated four months time, but the plaintiff
did not adhere to the same and filed the suit on 24.11.1995.
(6) P.W.1 categorically admitted about the non-availability of funds, as
such, no relief can be granted in favour of the plaintiff.
(7) Exs.A1 to A6 Powers of Attorney do not authorize the sale of land
without making them into plots as per the recitals of the same, as such, the
very execution of Ex.A7 is impermissible and as such the transactions flowing
therefrom have no validity.
To bolster his submissions/contentions, the learned Senior Counsel
placed reliance on the following judgments:
(1) J.C.Chacko v. The State Bank of Travancore
(2) Ram Awadh (dead) by LRs and others v. Achhaibar Dubey
and another
(3) Church of Christ Charitable Trust and Educational
Charitable Society, rep. by its Chairman v. Ponniamman
Educational Trust, rep. by its Chairperson/Managing
Trustee
(4) Padmakumari and others v. Dasayyan and others
7. In the above backdrop, the points that emerge for consideration and
determination by this Court are:
(1) Whether the plaintiff proved the existence of privity of contract
between the plaintiff and defendants, which would enable the plaintiff to seek
performance of contract by the defendants?
(2) Whether the plaintiff proved its readiness and willingness for due
performance of the contract?
(3) Whether the judgment and decree impugned in the Appeal warrant
any interference of this Court under Section 96 of C.P.C?
8. The information available before this Court vividly discloses that the
case of the plaintiff is that inadvertently the name of the Plaintiff Trust was
wrongly mentioned as Raghupathi Educational Trust instead of Raghupathi
Venkataratnam Naidu Trust. On the other hand, the case of the defendants
is that the plaintiff trust was not in existence by the time of execution of
Ex.A7 Agreement of Sale dated 19.8.1989 and the plaintiff trust came into
being by virtue of Ex.A12 Trust Deed dated 27.9.1989. There is absolutely
no controversy on the reality that Defendant No.27, GPA holder executed
Ex.A7 Agreement of Sale on 19.8.1989 in favour of S/Sri Darapureddi Dharma
Rao and Veerabhadra Rao for Raghupathi Educational Trust and the stamp
papers were purchased on 19.7.1989 in the name of Raghupathi Educational
Trust only. It is equally a reality that the plaintiff did not examine even Sri
Darapureddi Dharma Rao, despite his availability in whose favour Ex.A7
Agreement of Sale was executed along with Sri Veerabhadra Rao to prove the
assignment of Ex.A7 in favour of plaintiff. No such evidence is placed on
record to show that the existence of such assignment in favour of the
plaintiff. There is also no plausible explanation forthcoming as to why the
said Sri Dharma Rao was not examined. Another significant aspect which
cannot be lost sight off is that even Ex.A14 legal notice dated 16.12.1992 was
issued in the name of Raghupathi Educational Trust, but not in the name of
plaintiff and no valid reason is forthcoming for the same. P.W.1 categorically
admitted during the course of cross-examination with regard to availability of
S/Sri Darapureddi Dharma Rao and Veerabhadra Rao by the date of filing of
the suit. P.W.1 also admitted that Dharma Rao is available. P.W.4, scribe of
Ex.A7 during the course of cross-examination deposed that they used to
maintain the register for the scribe and registered documents and while
saying so he also said that the register maintained by him does not reflect
the suit agreement. He also said that he did not scribe Ex.A7 basing on
Exs.A1 to A6. In the impugned judgment, the learned Senior Civil Judge
considered the scope of Section 19 of the Specific Relief Act and found no
privity of contract between the plaintiff and defendants. The learned Senior
Civil Judge also took note of the crucial fact with regard to absence of any
reference of Ex.A7 either in Ex.A12 Trust Deed or Ex.A.13 Supplementary
Trust Deed. The learned Senior Civil Judge also took note of the issue that
there is no resolution by the Trust accepting Ex.A7 Agreement of Sale and
communication of the same to the defendants. As observed by the learned
Senior Civil Judge, the Plaintiff Trust did not fulfil the conditions as
stipulated
under Section 19(e) of the Specific Relief Act. In this connection, it may be
appropriate to refer to the judgment of the Honble Apex Court in J.C.Chacko
v. The State Bank of Travancore (1 supra). In the said judgment, the
Honble Apex Court at paragraph 9 held as under:
9. The Kottayam Bank not being party to the deal was not bound by the
covenants in the deed, nor could it enforce the covenants. It is settled
law that a person not a party to a contract cannot subject to certain well
recognised exceptions, enforce the terms of the contract : the
recognised exceptions are that beneficiaries under the terms of the
contract or where the contract is a part of the family arrangement may
enforce the covenant. In Krishna Lai Sadhu v. Parmila Bala Dasi I.L.R.
cal. 1315 Rankin, C.J observed :
Clause (d) of Section 2 of the Contract Act widens the definition of
'consideration' so as to enable a party to a contract to enforce the
same in India in certain cases in which the English Law would
regard the party as the recipient of a purely voluntary promise and
would refuse to him a right of action on the ground of nudum
pactum. Not only, however, is there nothing in Section 2 to
encourage the idea that contracts can be enforced by a person
who is not a party to the contract, but this notion is rightly
excluded by the definition of 'promisor' and 'promisee'.
Under the English Common Law only a person who is a party to a
contract can sue on it and that the law knows nothing of a right gained
by a third party arising out of a contract : Dunlop Pneumatic Tyre
Company v. Selfridge and Company [1915] A.C. 847 It has however
been recognised that where a trust is created by a contract, a beneficiary
may enforce the rights which the trust so created has given him. The
basis of that rule is that though he is not a party to the contract his
rights are equitable and not contractual. The Judicial Committee applied
that rule to an Indian case Khwaja Muhammad Khan v. Husaini
Begam (1910) 37 I.A. 152In a later case Jaman Das v. Ram Autar [1911]
39 I.A. 7 the Judicial Committee pointed out that the purchaser's
contract to pay off a mortgage debt could not be enforced by the
mortgagee who was not a party to the contract. It must therefore be
taken as well settled that except in the case of a beneficiary under a
trust created by a contract or in the case of a family arrangement, no
right may be enforced by a person who is not a party to the contract.
9. In the instant case, the plaintiff neither proved the existence of any
privity of contract with the defendants nor it adopted the procedure as
contemplated under clause (e) of Section 19 of the Specific Relief Act. In
view of the above reasons, Point No.1 is answered against the
plaintiff/appellant and in favour of respondents/defendants.
10. POINT No.2
Section 16 of the Specific Relief Act reads as under:
Section 16 - Personal bars to relief
Specific performance of a contract cannot be enforced in favour
of a person--
(a) who would not be entitled to recover compensation for its
breach; or
(b) who has become incapable of performing, or violates any
essential term of, the contract that on his part remains to be
performed, or acts in fraud of the contract, or wilfully acts at
variance with, or in subversion of, the relation intended to be
established by the contract; or
(c) who fails to aver and prove that he has performed or has
always been ready and willing to perform the essential terms of
the contract which are to be performed by him, other than terms
of the performance of which has been prevented or waived by
the defendant.
Explanation.--For the purposes of clause(c),--
(i) where a contract involves the payment of money, it is not
essential for the plaintiff to actually tender to the defendant or to
deposit in court any money except when so directed by the
court;
(ii) the plaintiff must aver performance of, or readiness and
willingness to perform, the contract according to its true
construction.
11. It is evident from a reading of clause (c) of Section 16 of Specific
Relief Act that a person who fails to aver and prove his due performance and
fails to prove his readiness and willingness to perform his/her part of contract
is not entitled for the equitable relief of specific performance of contract of
sale. P.W.1, during the course of cross-examination, in clear terms admitted
the absence of any documentary proof to show the availability of amount in
the credit of the Trust and on the other hand, he categorically stated that he
was not having any documentary evidence to show that the said amount was
available with the Trust. P.W.1 also admitted the non-availability of amount
at present also. It is also not the evidence of P.W.1 that the balance sale
consideration was available. Taking note of all these admissions made by
P.W.1, the learned Senior Civil Judge came to the conclusion that the Plaintiff
Trust was never ready and willing to perform its part of contract and also
observed that the obligation to produce the income tax clearance certificate
by the defendants pleaded in the plaint, for the delay does not find place in
the terms and conditions of Ex.A7. In this connection, it may be appropriate
to refer to the judgment cited by the learned Senior Counsel in Padmakumari
v. Dasayyan (4 supra) and at paragraphs 19 to 22, the Honble Supreme
Court held as under:
19. The said legal contention urged on behalf of Defendant Nos. 12
to 15 has been strongly rebutted by learned Counsel on behalf of the
Plaintiff contending that the question of payment of balance
consideration amount of Rs. 63,000/- within nine months would have
arisen after the terms and conditions of the contract agreed upon by
Defendant Nos. 1 to 11 if they had measured the suit schedule property.
They have not discharged their part of the contract stipulated in the
agreement to sell, therefore, it is urged by him that time was not the
essence of the contract as Defendant Nos. 1 to 11 themselves have
failed to perform their part of the agreement.
20. The said contention urged on behalf of the Plaintiff is unacceptable
to us that the question of taking measurement would not arise before
the Plaintiff perform his part of the contract regarding the balance
consideration within the period stipulated in the agreement.
Undisputedly, that had not been done by the Plaintiff in the instant case
within the stipulated time and the notice was issued by the Plaintiff only
after one year, therefore, the Plaintiff has not adhered to the time which
is stipulated to pay the balance consideration amount to Defendant Nos.
1 to 11 which is very important legal aspect which was required to be
considered by the Courts below at the time of determining rights of the
parties and pass the impugned judgment. The Courts below have
ignored this important aspect of the matter while answering the
contentious Issue Nos. 1 and 2 in favour of the Plaintiff and granted
decree of specific performance in respect of the suit schedule property.
The said finding of fact is contrary to the terms and conditions of the
agreement, pleadings and the evidence on record. Accordingly, we
answer the said issues in favour of Defendant Nos. 12 to 15 after setting
aside the concurrent finding of fact recorded by the High Court.
21. The second important legal contention raised by Defendant Nos.
12 to 15 is that the pleadings of the Plaintiff is not in conformity with
Order 6 Rule 3 Code of Civil Procedure, Clause 3 of Form No. 47 in
Appendix 'A', extracted hereinabove. By a careful reading of paragraph 6
of the plaint makes it very clear that the averment as provided Under
Clause 3 is not in stricto sensu complied with by the Plaintiff. The same
is evidenced from the averments made at paragraph 6 of the plaint
which reads thus:
6. The Plaintiff is ready and willing to perform his part of the
contract by paying the balance of sale consideration of Rs.
63,000/- and take the sale deed in accordance with the provisions
of the agreement deed dated 19.04.1992.
22. Upon a careful reading of the abovesaid paragraph we have to hold
that the Plaintiff has not complied with the legal requirement which is
mandatory as provided Under Section 16(c) of the Specific Relief Act.
Section 16(c) fell for consideration and has been interpreted by this
Court in a number of cases, referred to supra, upon which reliance has
rightly been placed and the said decisions are applicable to the fact
situation in support of Defendant Nos. 12 to 15 and, therefore, we have
to hold that the concurrent finding of fact recorded by the High Court on
Issue No. 1 is erroneous in law and is liable to be set aside.
12. In the instant case also, except advancement of pleading in the written
statement that the plaintiff has always been ready, the plaintiff did not make
any attempt to substantiate its claim by adducing either oral or documentary
evidence. Therefore, in the absence of compliance of mandatory
requirements of Section 16 of Specific Relief Act, the plaintiff trust is not
entitled for any equitable relief of specific performance of agreement of sale.
Therefore, point No.2 is also answered against the plaintiff and in favour of
defendants.
13. Another significant and important aspect which needs mention in this
context is that it is the contention of the learned Senior Counsel that as per
Exs.A1 to A6- powers of attorneys, it is incumbent upon the GPA holder to
get the land divided into plots after getting layout permission and to sell the
same thereafter. In this context, it may be appropriate to refer to the
judgment of the Honble Apex Court in Church of Christ Charitable Trust and
Educational Charitable Society, rep. by its Chairman v. Ponniamman
Educational Trust, rep. by its Chairperson/Managing Trustee (3 supra). In
the said judgment, the Honble Supreme Court at paragraph 19 held as
under:
Next, we have to consider the power of attorney. It is settled
that a power of attorney has to be strictly construed. In order to agree
to sell or effect a sale by a power of attorney, the power should also
expressly authorise the power to agent to execute the sale
agreement/sale deed i.e. (a) to present the document before the
Registrar; and (b) to admit execution of the document before the
Registrar. A perusal of the power of attorney, in the present case,
shows that it only authorises certain specified acts but not any act
authorising entering into an agreement of sale or to execute sale deed or
admit execution before the Registrar.
14. In the instant case, according to Exs.A.1 to A.6, it is incumbent on the
part of the General Power of Attorney i.e., defendant No.27, to secure the
lay-out and to make the land into plots before sale and without being
preceded by the same, Ex.A.7 was executed. Therefore, on that ground also
Ex.A.7 cannot be given any credence.
15. The contention that the subsequent purchasers cannot advance any
contention touching the readiness and willingness on the part of the plaintiff
falls to the ground in view of the language employed in Section 16 (c) of the
Specific Relief Act and the principles laid down in RAM AWADH v.
ACHHAIBAR DUBEY wherein the Honble Apex Court at paragraph No. 6
of the judgment held as under:
6. The obligation imposed by Section 16 is upon the Court
not to grant specific performance to a plaintiff who has not met the
requirements of Clauses (a), (b) and (c) thereof. A Court may not,
therefore, grant to a plaintiff who has failed to aver and to prove
that he has performed or has always been ready and willing to
perform his part of the agreement the specific performance
whereof he seeks. There is, therefore, no question of the plea
being available to one defendant and not to another. It is open to
any defendant to contend and establish that the mandatory
requirement of Section 16(c) has not been complied with and it is
for the Court to determine whether it has or has not been complied
with and, depending upon its conclusion, decree or decline to
decree the suit. We are of the view that the decision in Jugraj
Singh's case AIR 1995 SCW 901 : AIR 1995 SC 945 is erroneous.
16. This Court also finds sufficient force in the submission of the learned
Senior Counsel that D.1 to D.26 did not authorise Defendant No.27 to extend
the period stipulated in Ex.A.7. It is also to be noted that as per the
recitals
in Ex.A.7, balance payment should be made within four months to the
vendors, but not to the G.P.A as pleaded by the plaintiff under Ex.A.11.
17. The compliance of mandatory provisions of Clause (c) of Section 16 of
the Specific Relief Act is a condition precedent for grant of relief in favour
of
the person applying for. In the present case, except pleading that the
plaintiff has always been ready and willing to perform the contract, the
plaintiff did not adduce any cogent and convincing evidence to substantiate
the said pleading. Proof of availability of funds is also an indispensable
factor
which needs to be demonstrated by the person pleading so. In the instant
case, the evidence of PW.1 shows vividly the absence of the same at all
relevant points of time. Solvency of the persons cannot be equated with the
willingness of the parties unless such solvency translates into reality as per
the provisions of Section 16 (c) of the Act.
13. For the aforesaid reasons and having regard to the principles and
parameters laid down in the judgments referred to supra, this Court does not
find any valid reason to meddle with the well considered judgment and
decree rendered by the learned Senior Civil Judge in O.S.No.298 of 1995 on
the file of the Court of the I Additional Senior Civil Judge, Kakinada, East
Godavari district. Accordingly, the Appeal stands dismissed, confirming the
judgment and decree passed by the Court below. As a sequel, the
miscellaneous petitions, if any, shall stand closed. There shall be no order as
to costs.
______________
A.V.SESHA SAI, J
Date: 26.9.2016
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