Raj Kumar vs Rathina Jothi And Ors

Aggrieved over the judgment of the First Appellate Court reversing the judgment of the trial Court and dismissing the suit filed for specific performance, the present second appeal came to be filed.

For the sake of convenience, the parties are referred to herein, as per their rank before the Trial Court.

3.The brief facts, leading to the filing of this Appeal Suit, are as follows:-

The first defendant is the owner of the suit property. He has executed an agreement for selling the suit property in favour of the plaintiff on 29.08.1980 for a total consideration of Rs.3,000/- and received an advance amount of Rs.500/- on the same date. Time stipulated in the agreement to complete the sale is one month. The plaintiff was always ready and willing to perform his part of contract. As the first defendant evaded to execute the sale deed, the plaintiff issued a legal notice on 26.09.1980 calling upon the first defendant to execute the sale and hand over the possession to the plaintiff. However, the said notice was refused. The plaintiff had also purchased stamp papers to the value of Rs.330/- on 24.09.1980. While so, on 22.09.1980, the first defendant and her sisters had executed a sale deed in favour of the second defendant in respect of the plaint schedule property along with another 6 cents. Despite such sale, the possession of the property was continued to be with the first defendant. The sale in favour of the second defendant is not supported by any consideration. Hence, the plaintiff submitted that the document is created by the first defendant. The second defendant is fully aware of the agreement, dated 29.08.1980 and he is only a tool in the hands of the first defendant to cheat the plaintiff. The first defendant colluded with the second defendant and defrauded the plaintiff. Hence, the suit.

Before the trial Court, on the side of the plaintiff P.W.1 to P.W.3 were examined and Exs.A1 to A8 were marked and on the side of the defendants D.W.1 and D.W.2 were examined and Exs.B1 to B3 were marked, further Exs.C1 to C4 were marked.

The first defendant denying the agreement, took a stand that the original title deed was handed over to the plaintiff in order to sell the property to the third parties. The plaintiff has promised to return the same, within two days. But, the plaintiff did not do so. As the first defendant was in dire need of funds, he approached the second defendant for money. The second defendant has purchased the property for a consideration of Rs.3,000/-. Though the second defendant asked the first defendant to produce the original documents, the first defendant explained the matter to the second defendant. The allegations that the sale deed is created by the first and second defendants are also denied.

Disputing the agreement dated 29.08.1980, the second defendant filed a statement to the effect that the said agreement is concocted. On 19.09.1980, the second defendant approached the first defendant for purchase of the property and enquired about the original also. The first defendant explained that the plaintiff did not return the original documents as promised. However, the second defendant has purchased the property. Hence, the second defendant contended that he is the bona fide purchaser for valuable consideration without notice. The alleged collusion between the defendants is also denied. The suit is filed only to harass the defendants. Hence, prayed for dismissal of the appeal.

Based on the above pleadings, the trial Court has framed the following issues:-

(1) Whether the alleged agreement dated 29.08.1980 in favour of the plaintiff is genuine one?

(2) Was the plaintiff ready to perform his part of contract?

(3) Whether the second defendant is a bonafide purchaser of the plaint schedule property from the first defendant for valuable consideration without notice of the agreement dated 29.08.1980?

(4) To what relief is the plaintiff entitled to?

The trial Court on appreciation of record has found that the second defendant is not a bona fide purchaser for valuable consideration without notice of earlier agreement and granted decree for specific performance. The First Appellate Court, however reversed the findings of the trial Court. As against which, the present second appeal is filed.

While admitting the second appeal the following substantial questions of law have been framed:-

Whether the judgement and decree of the lower Appellate is not committed error in wrongly casting the burden upon the appellant especially, when the application of the second defendant in the suit to prove that he is a bonafide purchaser for valuable consideration?

Whether the lower Appellate Court ought not to verify the conduct of the second defendant, particularly when he had admitted of having knowledge of the sale deed lying with the appellant's father and no explanation had been adduced as to why no steps are taken to retrieve the same?

It is also relevant to note that on earlier occasion, the First Appellate Court has confirmed the finding of the trial Court and when the second appeal was filed as against the concurrent findings before this Court in S.A.No.2049 of 1985, this Court set aside the findings of the First Appellate Court and remanded the matter once again to the First Appellate Court to consider both the questions of bona fide on the part of the plaintiff as well as whether the purchase made by the second defendant was for valuable consideration or not and with the knowledge of the agreement. In all other aspects, execution of the agreement by the first defendant was accepted by this Court.

The learned counsel appearing for the appellant vehemently contended that the evidence of P.W.1 to P.W.3 and pleadings of the defendants make it very clear that the second defendant was aware of the earlier contract and he has purchased the property with the notice. Therefore, he is not a bona fide purchaser. The First Appellate Court has wrongly cast the burden on the plaintiff to prove the negative, which is against the well settled position of law, instead of shifting the burden on the subsequent purchaser. The evidence available on record clearly show that the second defendant is not a bona fide purchaser. The readiness and willingness on the part of the plaintiff was not even denied in the entire written statement. The suit has been filed immediately, and the plaintiff has also purchased stamp papers within the time stipulated in the agreement. Therefore, now the only question that has to be seen in this appeal is whether the second defendant is a bona fide purchaser for value and without notice to the earlier contract. Hence, submitted that the First Appellate Court has simply dismissed the suit without appreciating the entire evidence, which is perverse and erroneous. Hence, prayed for allowing this appeal.

In respect of his submissions, he has relied upon the following judgements:-

(1) B.Nemi Chand Jain and another vs. G.Ravindran and others [2010 (2) CTC 751]

(2) R.K.Mohammed Ubaidullah and others vs. Hajee C.Abdul Wahab (D) LRs. and others [(2000) 6 SCC 402].

The learned counsel appearing for the respondents mainly submitted that mere truncated admission and solitary statement in the evidence cannot be a ground to assess the bona fideness on the part of the parties. However, the evidence of P.W.3 makes it very clear that the second defendant was not aware of the earlier contract. Unless there is a strong evidence to show that the subsequent purchaser has knowledge of the earlier contract, merely on the basis of the truncated admission, inference cannot be drawn against the subsequent purchaser. The First Appellate Court has rightly decided the issue. P.W.2 in his evidence, stated that the defendants were not aware of the previous agreement. Further, the plaintiff has not positively pleaded in the plaint that the second defendant is not a bona fide purchaser.

The main contention of the defendants is that the plaintiff under the pretext of selling the property, took the original documents from the first defendant. However, he has not returned the same, which has been clearly explained to the second defendant. The circumstances cannot be pitched against the second defendant. It is the further contention that the plaintiff has assailed the entire document as void at the first instance. Thereafter, he sought amendment to include the prayer for a direction to the second defendant to executes the agreement and the same was negatived by the Court. Therefore, as long as there is no positive assertion, the truncated statement of the second defendant cannot be put against him. Hence, the trial Court has rightly found that the second defendant is a bona fide purchaser for value without notice to the earlier contract. Hence, prayed for dismissal of the appeal.

In respect of his submission, he has relied upon the following judgements:-

(1) Boramma vs. Krishna Gowda and others [(2000) 9 SCC 214]

(2) Saygo Bai vs. Chueeru Bajrangi [(2010) 13 SCC 762]

(3) Chikkam Koreswara Rao vs. Chikkam Subra Rao and others [1970 (1) SCC 558]

The suit has been filed for enforcing the contract in Ex.A1 dated 29.08.1980 executed by the first defendant for sale of the property for a total consideration of Rs.3,000/- and R.500/- has been paid as an advance. One month time was stipulated to complete the sale. Though agreement was denied in the written statement in an evasive manner, execution of the agreement has been clearly established by the plaintiff. P.W.3 also supported the execution and the Courts have also concurrently found that the agreement was voluntarily executed.

It is to be noted that it is the contention of the plaintiff that at the time of entering into an agreement, the original title deed was also handed over to the plaintiff. Handing over of the original documents to the plaintiff has not been disputed by the first defendant. However, he stated that the original documents were handed over to the plaintiff for selling the property to the third party. Such defence appears to be an afterthought. Once an agreement is proved in accordance with law, the contention of the defendants that the originals have been handed over to the plaintiff for selling the property to some other buyer is highly impermissible and it cannot be countenanced. Therefore, this Court has to necessarily hold that the original sale deeds have been handed over to the plaintiff at the time of execution of Ex.A1 and execution of Ex.A1 is also clearly established. There are no other circumstances available on record to disbelieve Ex.A1. Now the plaintiff has also pleaded that he was always ready and willing to perform his part of contract. Readiness and willingness pleaded in the plaint was not denied in the written statement filed by the first defendant.

Be that as it may, now the point to be urged and decided in this appeal is:

(1) Whether the second defendant is a bona fide purchaser of the property, when the earlier agreement was in existence between the first defendant and the plaintiff?

On perusal of the statement filed by the second defendant, it is clear that the main contention of the second defendant is that he is a bona fide purchaser for valuable consideration. Therefore, the suit has to be dismissed. The entire pleadings in the written statement is in evasive manner and there is no specific denial with regard to the agreement and readiness and willingness on the part of the plaintiff. The fact remains that on the date of his purchase on 22.09.1980, second defendant was also aware of the fact that the original documents namely, title deed of the property, is with the plaintiff. The evidence of D.W.1 also makes it very clear that she has also informed about the original documents of the property to the second defendant. Therefore, from the pleadings of the defendants, it can be safely concluded that the second defendant was aware of the fact that the title deed of the property is with the plaintiff.

These facts coupled with the other evidences, particularly, evidence of P.W.2, when carefully seen, P.W.2 has stated that he is a classmate of the second defendant and the second defendant has met him in his house and sought his help to make the plaintiff to withdraw his agreement. Though P.W.2 has stated that the second defendant was not aware of the earlier agreement, the fact remains that the entire evidence of P.W.2 when carefully scanned, P.W.2 has clearly spoken that the second defendant was aware of the earlier contract between the plaintiff and the first defendant. The entire chief examination of P.W.2 was not challenged by the second defendant in the cross examination. Though the first defendant has questioned the evidence of P.W.2, the second defendant has not even challenged the same except putting some suggestions.

It is also admitted by both sides that the suit property is situated just adjacent to the property of the plaintiff. Therefore, he has entered into and agreement to purchase the property. This submission is more probable and quite acceptable one. The second defendant having known that the title deed is with the plaintiff and purchased the property on 22.09.1980, he cannot contend that he has made a reasonable enquiry as to the nature of the property and purchased for value without notice to the earlier contract. When the person, who is aware of the fact that the title deed of the property sought to be purchased is already with the third party, his normal conduct would be to make enquiry as to how the title deed came into possession of the third party. No such enquiry whatsoever was made in this regard. The evidence of P.W.2 also makes it very clear that he has met the plaintiff on 20.01.1980. However, he has stated that he did not know about the earlier contract on the particular date. The evidence of D.W.1 that he has met the plaintiff and enquired him coupled with the evidence of P.W.2 that the second defendant has met him in his house and asked to speak to P.W.1 to withdraw the agreement, clearly probabilise the case of the plaintiff that the second defendant is not a bona fide purchaser for value. It is also relevant to note that the plaintiff has immediately sent a legal notice within time, which was also replied. This also shows that the plaintiff was always ready and willing to perform his part of contract.

The stamp papers purchased by the plaintiff were marked as Ex.A8. The title deed of the property was also marked as Ex.A3. Sale deed under Ex.A2, said to be purchased by the second defendant makes it very clear that the consideration of the land for more than 20 cents is only Rs.3,000/-. It is to be noted that the suit property is measuring about 14 1/2 cents and it is agreed to be sold for Rs.3,000/-. Whereas, under sale deed in Ex.A2, the suit property and another six cents said to be belonged to the sister of the first defendant were sold for the same Rs.3,000/-. This also creates serious doubt about the bona fide transaction. The evidence available on record makes it very clear that the second defendant did not even discharge his burden to establish that he is a bona fide purchaser for value without notice.

In a judgment in the case of R.K.Mohammed Ubaidullah and others vs. Hajee C.Abdul Wahab (D) LRs. and others [(2000) 6 SCC 402], the Hon'ble Supreme Court has held that unless the purchaser made an appropriate inquiry, he cannot establish his bona fideness. It is also held that if such inquiry is not made, it would mean that the purchaser wilfully refrained himself from making the inquiry or grossly neglected to do so and such purchaser cannot establish bona fides as a purchaser in good faith.

It is admittedly established in this case that the suit property is adjacent to the property of the plaintiff and receipt of advance amount and an agreement, said to have been executed by the first defendant to the plaintiff to sell the property, were also established. Within one month as stipulated in the agreement, the plaintiff has shown his readiness and willingness. This fact also was not seriously disputed. The second defendant was also aware of the fact that the title deed is with the plaintiff and he has also met the plaintiff before his purchase as per his evidence coupled with the evidence of P.W.2 to the effect that the second defendant has met P.W.2 and requested him to ask the plaintiff to withdraw the earlier agreement. That apart, the value of the property set out in the subsequent sale deed for a larger extent also clearly indicates that the transaction is made hurriedly with the knowledge of the earlier contract. These aspects were not taken note of the by the First Appellate Court. Hence, this Court is of the view that the First Appellate Court has erred in dismissing the suit placing the burden on the appellant herein. Accordingly, the points are answered.

Though an application seeking amendment to include a direction to the second respondent to execute the sale is dismissed in the second appeal stage, this Court is of the view that merely because of such amendment petition is dismissed on the ground that the amendment petition has been filed after three decades, it cannot be stated that the second defendant is not liable to execute the sale.

In this regard, it is relevant to refer the judgment in Lala Durga Prasad and another vs. Lala Deep Chand and others [1954 AIR 75], in which the Hon'ble Supreme Court has held as follows:-

"In our opinion, the proper form of decree is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his title to the plaintiff."

This Court in Durga Prasad vs. Deep Chand [S.A.No.1030 of 2019], has also held as follows:-

"the proper form of decree is to direct specific performance of the contract between the vendor and the prior transferee and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the prior transferee. He does not join in any special covenants made between the prior transferee and his vendor; all he does is to pass on his title to the prior transferee."

In the result, the judgment of the First Appellate Court is hereby set aside and the second appeal is allowed and the decree and judgment of the trial Court is restored with further direction that both the defendants are liable to execute the sale deeds. No costs.