PETITIONER: S.V.R. MUDALIAR (DEAD) BY LRS. & ORS. Vs. RESPONDENT: MRS. RAJABU F. BUHARI (DEAD) BY LRS. & ORS. DATE OF JUDGMENT17/04/1995 BENCH: HANSARIA B.L. (J) BENCH: HANSARIA B.L. (J) RAMASWAMY, K. MANOHAR SUJATA V. (J) CITATION: 1995 AIR 1607 1995 SCC (4) 15 JT 1995 (3) 614 1995 SCALE (2)720 ACT: HEADNOTE: JUDGMENT:
HANSARIA, J.
1. This litigation is about three and half decades old by
now inasmuch the suit for specific performance for
reconveyance
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of the property sold by the plaintiff was filed in 1962. It
was decreed by the trial court (a single Judge of the Madras
High Court) on 10.11.65. The letters Patent Bench, however,
on appeal being preferred, set aside the decree on 10.5.72.
Hence this appeal by special leave by the plaintiff. As the
plaintiff died in 1990, his legal representatives have
pursued the appeal. It may also be stated that during the
pendency of this appeal the appellants assigned their right
to two outsiders sometime in September, 1988. We would
have, therefore, to see, in case we were to agree with the
plaintiff regarding there having been a contract for
reconveyance, which is the real bone of contention between
the parties, whether in view of the aforesaid assignment, a
decree for specific relief is still called for, keeping in
view the fact that such a relief is discretionary.
2. We may note relevant facts. These are that the
original plaintiff, SV Ramakrishna Mudaliar, was a man of
means at one point of time, to run into rough weather, which
required mortgage of some of his properties. It is to repay
the mortgage debt that the plaintiff sold two of his
properties ostensibly to Mrs. Rajabu Fathima Buhari (Mrs.
Buhari) described in Schedules ‘A’ and ‘B’ of the plaint.
The sale deeds in respect of these properties were executed
on 26.3.59 (Ex.P 2) and 31.3.59 (Ex.P.3); both were,
however, registered on 31.3.1959. The plaintiff’s case is
that before these properties had been sold there was a
‘gentleman’s understanding’ between him and Mr. Buhari,
husband of Mrs Buhari, on 24.3.59 that in case the purchase
amounts as per the sale deeds were repaid within three
years, the properties would be reconveyed, when in addition
to sale price, 10% thereof shall be paid as solatium of the
actual amount spent on improvement, if any. This
understanding was put in writing subsequently under the
title “Record of fact”, which was exhibited during the
course of the trial as Ex.P1. Plaintiff’s another case was
that though the sale deeds were in the name of Mrs. Buhari,
the real purchaser was Mr. Buhari. To put it differently,
Mrs. Buhari was only an ostensible owner. The third
important facet of the plaintiff’s case was that Ex.P1 had
been signed by one Kamal as an agent of the couple, who were
impleaded as defendants in the suit. As, however, of the
two properties sold, only one, styled as ‘Serles Garden’ was
reconveyed in May, 1960, the suit was filed for seeking a
decree for the reconveyance of the second property,
described in Schedule ‘A’ to the plaint.
3. As already noted the trial court decreed the suit,
which decree came to be reversed in appeal by the Letters
Patent Bench. The following questions are to be answered to
dispose of the appeal:-
(1)Whether Ex.P1 is a genuine document. This needs
determination because the Letters Patent Bench has allowed
the appeal of the defendants principally on the ground that
this document is a result of fabrication.
(2)If the aforesaid document be genuine, whether Kamal who
is said to have signed the same was an agent of the de-
fendants.
(3)Whether the understanding given by Mr. Buhari, could be
enforced against Mrs. Buhari. This would also require
determination of the question whether Mrs. Buhari was a name
lender.
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(4)In case the factual basis of the plaintiff’s case be
correct, the legal question to be decided would be whether
in the facts and circumstances of the case, more
particularly the assignment of the right by the successors-
in-interest of the plaintiff in favour of third persons,
granting of the relief of specific performance is called
for, which the statute has left to the discretion of the
Court.
GENUINENESS OF EX.P1
4. The Letters Patent Bench of the High Court regarded
Ex.P1 not as a genuine document mainly because Exs.P.2 and 3
do not contain a stipulation regarding the reconveyance of
the properties sold by the plaintiff. Not only this, even
Ex.P. 15, by which Selers Garden was resold, does not
mention about the same having been done pursuant to any
contract of reconveyance. This apart, as in support of
proof of Ex. P. 1, the plaintiff had examined, apart from
himself, his agent Narayana lyer, the appellate court did
not fell satisfied about there being credible evidence in
this regard. It may be mentioned that when the trial began,
another signatory to P.1, Shri VS Rangachari, who had played
prominent part throughout, having died was not available for
examination. The only other signatory to Ex.P. 1 is
aforesaid Kamal, who could not be examined by the trial
Judge even as a Court witness.
5. Shri Vaidyanathan, learned counsel representing Mrs.
Buhari, has, apart from mentioning about silence of Exs.P.2,
3 and 15 relating to any agreement of reconveyance, urged
that the evidence adduced in the case by the plaintiff would
itself show that P. 1 had not seen the light of the day on
24.3.59. The basic submission in this regard is that his
document was described by PW 1 Narayana in his evidence as
‘letter’. We do not think if we should go by labels,
because even if it was a letter which came into existence
that shows that something in writing had been put on record;
and it may because of this that P. 1 was described as
‘record of fact’ and it being on a letterhead of the plain-
tiff, might have loosely described as “letter” of PW 1.
6. As to why in Exs.P.2,3 and 15 no mention was made about
P.1, has been sufficiently explained by PW2 (the plaintiff)
in his evidence, whose purport is that Shri Rangachari who
had played a vital role in the entire episode, had advised
accordingly. The evidence clearly shows that Rangachari was
a legal advisor both to the plaintiff and Mr. Buhari. On
PW2 being specifically asked as to why Exs.P2 and P3 did not
contain the recital about reconveyance, his answer was:
” I wanted it to be included in the sale deed.
Rangachari told that the gentleman’s agreement
is binding on Mr. Buhari to reconvey the
property and so need not be included in the
sale deed”.
7. Shri Salve, appearing for Mr. Buhari, puts his weight
(and he has enough of it) to the submissions of Shri
Vaidyanathan and asks why is it that P. 1 was not signed by
Buhari; and why is it that the plaintiff himself did not
sign the same? The queries do not stop here as, the fulcrum
senior lawyer asks why was the sale not in the nature of
conditional sale? When first two questions were put to the
plaintiff his short, simple and unsophisticated answer was
that the confidence-inspiring advocate Rangachari had stated
that signing by the two agents in the presence of the two
principals would meet the requirement of law. And it does,
as acts done by agents within the permitted field do bind
the principals. The first two questions raised by Shri
Salve may be answered also by pointing out that we have seen
lesser mortals signing big inter-country agreements in
presence of higher-ups. The third poser is no doubt
pertinent, but as there are many ways of getting a thing
done, all concerned might have thought that instead of
making the sales conditional, for reasons not quite known,
the situation demanded that the arrangement of the type
gone into was better suited. All important question is
whether parties were ad idem; if so, how did they express
their meeting of mind is not material. And on their
agreeing as recorded in P. 1, we are in no doubt.
8. The case of the plaintiff in this regard receives
support from P.28 which is a letter from the plaintiff to
Mr. Buhari, dated 1st Feb. 1961, which mentions about the
understanding in question. Though the Division Bench of the
High Court has held that Ex.P.28 is also fabricated
document, we find ourselves unable to agree with it on this
point. There is some force in the case of the plaintiff
that the defendants challenged about the understanding in
question after the death of Rangachari.
9. According to us, therefore, it would not be correct
to doubt the existence of P. 1 because of non-mentioning
about any stipulation to reconvey in Exs. P2 and 3 and for
that matter for Ex.P. 15 having not mentioned about it- nor
do the questions raised by Shri Salve take away the ring of
,truth, the plaintiff’s case has in this regard. So, we
hold that P. 1 is a genuine document, as opined by the trial
Judge.
WHETHER KAMAL WAS AN AGENT OF THE DEFENDANTS
10.We come to the role played by Kamal. According to the
plaintiff full name of Kamal who had signed Ex.P1 is MH.
Kamal, son of MS Mohammed Hasan, who at the relevant time
was residing at Nos.5/ and 58, 3rd Main Road, Gandhi Nagar.
As per the second defendant, who alone appeared in the
witness box, there were many Kamals in his employment and
the signature appearing in P. 1 is not MH Kamal, who at some
point of time was in employment of the defendants.
11.The trial Judge has dealt with this aspect in detail and
to find out the truth as to whether ME Kamal has signed PI,
he even wanted to examine this Kamal as a court witness;
but, according to him, Kamal was kept out by the defendants,
because of which some adverse inference has been drawn
against them by him.
12.Mr. Parasaran, appearing for the appellants, fully
supports the finding of the trial Judge in this regard and,
according to him, law permits an adverse inference to be
drawn, where a party in possession of best evidence
withholds the same, even if the onus of proving the fact in
question were not to be on him. To support him on the legal
submission, the learned counsel has relied on a three-Judge
Bench decision of this Court in Gopalakrishnaji v. Mohammed
Hazi Latiff, AIR 1968 SC 1413. In that case this Court
while stating as above observed that a party cannot rely
on abstract doctrine of onus.
13. According to the learned counsel for the respondents,
the case of the defendants on this score finds support from
none
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other than aforesaid Kamal, if what has been stated by him
in his affidavit filed before this Court is borne in mind.
That affidavit is a part of IA No.2, in which the prayer Is
to direct examination of MH Kamal as a witness in the
appeal. Shri Salve has drawn our attention to the account
of salary and batta paid to Kamal, as mentioned in the
enclosure to the affidavit, according to which, for the year
31.3.63 batta paid was Rs. 124 and salary was Rs. 525. The
learned counsel brings to our notice that in earlier years
the batta had ranged about four times more and the salary
more than that, which would go to show that after 31.3.62
Kamal was in the service not upto 31.3.63, but for a few
months after 31.3.62, as in the case of the defendants.
There seems to be some force in this contention.
14. We, therefore, do not propose to decide this fact by
drawing any adverse inference against the respondent- but
would do so on the basis of evidence led by the plaintiff As
already stated, this evidence has received better treatment
at the hand of trial Judge, who, while holding that Kamal
had acted as an agent of the defendants, referred to many
circumstances also. Shri Parasaran has submitted that
though the appellate court is within its right to take a
different view on a question of fact, that should be done
after adverting to the reasons given by the trial Judge in
arriving at the finding in question. Indeed, according to
Shri Parasaran an appellate court should interfere with the
Judgment under appeal not because it is not right, but when
it is shown to be wrong, as observed by three-Judge Bench of
this Court in Dollar Co. v. Collector of Madras, 1975 Supp.
SCR 403. As to this observation, the contention of Shri
Vaidyanathan is that what was stated therein was meant to
apply when this Court examines a matter under Article 136.
We do not, however, think if this meaning can be ascribed to
what was observed.
15.There is no need to pursue the legal principle, as we
have no doubt in our mind that before reversing a finding of
fact, the appellate court has to bear in mind the reasons
ascribed by the trial court. This view of ours finds
support from what was stated by the Privy Council in Rani
Hemant Kumari v. Maharaja Jagadhindra Nath, 10 CWN 630,
wherein, while regarding the appellate judgment of the High
Court of Judicature at Fort William as “careful and able”,
it was stated that it did not “come to close quarters with
the judgment which it reviews, and indeed never discusses or
even alludes to the reasoning of the Subordinate Judge.”
16.Shri Salve has taken pains to satisfy us that it is not
quite correct to submit that the Division Bench did not take
note of circumstantial evidence noted by the trial Judge.
To satisfy us in this regard, our attention has been invited
to what was stated by the Bench at page 291 of Vol. 11. As
perusal of this part of the appellate judgment shows that
two circumstances mentioned by the trial Judge were
traverssed, but all were not. This apart, first circum-
stance was not regarded as connecting Kamal with the
defendants mainly because the Bench was not satisfied if
Kamal who had taken part in the documents marked as Ex. P9,
10, 64 and 65, and the Kamal referred in PI are the same.
We do not, however, think that this view is sound because
though the defendants might have had many Kamals as
employees but they had only one employee, named MH. Kamal,
622
son of Mohammad Hasan, and it is this Kamal who had signed
Ex.P. 1. As to the second circumstance relatable to issuance
of Ex.P.28, we have already observed that we do not agree
with the view of the Division Bench qua this.
WHETHER MRS. BUHARI WAS A BENAMIDAR OF MR. BUHARI
17.The trial Judge has answered this question in favour of
the plaintiff-, the Division Bench has observed that it is
not necessary to advert to this aspect of the case of the
plaintiff. We also propose to traverse the path taken by
the appellate court and resist from giving our finding on
this aspect of the case. We have taken this stand because
we are satisfied about the genuineness of Ex.P. 1; so also
about Kamal who had signed the same as being an agent of the
defendants, because of which the understanding recorded in
Ex.P. 1 has to be regarded as binding on the defendants.
For the sake of completeness, we may also observe that the
understanding having had consent of Mr. Buhari, and there
being evidence a-galore about Mr. Buhari acting as an agent
of Mrs. Buhari, there is nothing to doubt that the
understanding given by Mr. Buhari has to be regarded as
bindIng on Mrs. Buhari. The leading role played by Mr.
Buhari in the entire episode is writ large and there is no
escape from the conclusion that the consent of Mr. Buhari
has to be regarded as a consent given by Mrs. Buhari.
18.We, therefore, conclude that there did exist an
understanding to reconvey two properties as recorded in the
document executed on 24.3.59. This conclusion of ours
receives support from reconveyance of ‘Serles Garden’ within
the period of 3 years as stipulated in Ex.P.1 and that too
at the added solatium of 10%. Ibis property having been
sold at Rs.85,000, 10% of the same comes of Rs. 8,500/- and
Ex.P. 1 5 evidences the sale at Rs. 95,000/-Though it is
correct that Rs.85,000/- and 10% of that comes to Rs.
93,500/-, it may as well be at this figure was rounded to
Rs.95,000/ In this context Shri Vaidyanathan’s submission,
however, is that ‘Serles Garden’ was sold back, not pursuant
to the agreement to reconvey, but because Mrs. Buhari could
not get a lessee despite advertisement having been put in
‘The Hindu’ and ‘The Mail’, as evidenced by Exs. D 1 to D4.
Though this contention has some cutting edge, we were
inclined to think, on the totality of facts, that the
transfer of Serles Garden back to the plaintiff was in
discharge of the legal obligation contained in P. 1, as both
the period during which it was transferred and for the sum
it was so done, fit in well with the terms embodied in P. 1.
IS A CASE FOR SPECIFIC PERFORMANCE MADE OUT IN LAW?
19.Being satisfied that the parties had agreed as recorded
in Ex.P 1, the question to be examined is whether the
agreement of the type at hand, described as ” gentlemen’s
understanding” in Ex.P.1, permitted the plaintiff to seek a
decree for specific performance. According to learned
counsel for the respondents, the agreement has created no
legal obligation and as such is not agreement, even if en-
forceable, can be so done only against the executable of the
original contract. The final submission is that the remedy
of specific performance being discretionary, the same may
not be granted at this length of time; more so, when the
appellants have
623
assigned their interest to some outsiders.
20. So far as the first submission is concerned, we agree
that it is a valid and enforceable contract which is the
basis for the jurisdiction to order specific performance, as
pointed out in Mayawanti v. Kaushalya Devi, 1990 (3) SCC 1.
The point for determination is whether the agreement as
recorded in Ex.P1 is enforceable. It has been contended on
behalf the respondents that while agreeing as embodied in
the document the parties had no intention to create any
legal interest, because of which the agreement cannot be
enforced. Strong reliance has been placed, in support of
this submission, on the decision of House of Lords in Rose
and Frank Co. v.J.R. Crompton & Bros. Ltd., 1924 All
E.L.R.(Reprint) 245. In that case, after noting what had
been agreed upon, the House of Lords came to the conclusion
that the parties had not intended that the document should
be legally enforceable.
21. As the aforesaid decision was arrived at on the basis
of what was contained in the document, it would be pertinent
to note the clause in question, which read as below:
“This arrangement is not entered into, nor is
this memorandum written, as a formal or legal
agreement, and shall not be subject to legal
jurisdiction in the law courts either of the
United States or England, but it is only a
definite expression and record of the purpose
and intention of the three parties concerned,
to which they each honourably pledge
themselves with the fullest confidence based
on past business with each other that it
would be carried through by each of the three
parties with mutual loyalty and friendly co-
operation. ”
22. The decision being on the facts of the case cannot
apply to facts here which a different; and we do think that
what agreed upon in the present case is much different, as
would appear from Ex.P 1 which reads as below:
“Record of fact
This is to record the gentleman’s under-
standing between Mr. S.V.R. and Mr. A.M.
Buhari that Mr. Buhari will see to it that in
case the purchase amounts as per the sale
deeds in favour of Mrs. A.M.B. Buhari is
repaid within 3 years from this date, the
properties will be reconveyed to Mrs. S.V.R.
who will also have to pay in addition to sale
price 10 per cent thereof as solatium of the
actual amount spent on improvement if any.”
23. The aforesaid shows that though what has been recorded
was described as “gentlemen’s understanding”, according to
us, the understanding was such which was meant to be acted
upon. We have taken this view because terms and conditions
of reconveyance have been clearly mentioned and document was
executed by the agents of both the sides. It was, there-
fore, intended to create legal obligation. In this context,
Shri Parasaran has brought to our notice a decision of this
Court rendered in Commissioner of Wealth Tax, Bhopal v.
Abdul Hussain Mulla Mohammad Ali, (dead) by LRs., 1988 (3)
SCC 562, in which after referring to the decision of the
House of Lords in the aforesaid case and some other
decisions, as well as what has been stated in legal
treatise, it was observed in para 24 that the proposition
that in addition to the existence of an agreement and the
presence of consideration, there is also a third element in
the form of intention of parties to create legal
624
relations, is one which has not passed unchallenged. The
Bench observed that it is not possible to accept the
argument that an agreement will not, by itself, yield legal
obligations unless it is one which can reasonably be
regarded as having been made between the parties in
contemplation of legal consequences. From the averments
made in Ex.P 1 and the legal position being what has been
noted in this case, we are satisfied that an enforceable
contract had come into existence on the parties executing
Ex.Pl. According to us, they were ad idem and the plaintiff
was within his rights to seek specific performance of the
same.
24. On the second legal question raised, we may not spend
much time because the prop of this submission being what was
held by this Court in Annapoorani Ammal v. G. Thangapalam,
1989 (3) SCC 287, whose facts were entirely different, the
ratio of that decision cannot be called in aid by the
respondents. In that case the mother of the appellant who
had allegedly executed the ‘yadast’ was not the owner of the
property because of which it was held that the suit against
the appellant filed for reconveyance of the property on the
basis of ‘yadast’ could not have been decreed. In our case
Ex.P 1 had been executed by Kamal as an agent of the
defendants and what had been agreed upon by him has to bind
the principals.
25. We now come to the main legal submission, which is that
the relief of specific performance being discretionary, we
may not grant the same for two reasons in the main: (1)
lapse of about 33 years after filing of the suit during
which period price of the property has gone up enormously;
and (2) the plaintiff’s legal representatives having
assigned their right of repurchase. the assignees are the
real person interested in getting back the property, and we
may not allow the same, as what they had purchased was not
the property as such, but litigation, which could be said to
be akin to champerty.
26.Shri Parasaran contends that the relief of specific
performance is said to be discretionary only in the sense
that the court may not act arbitrarily and nothing beyond
this, and while exercising the discretion judicial
conscience and judicial statesmanship alone are the guiding
facts. That this is the legal position is sought to be sus-
tained by referring to sub-section (1) of section 20 of the
Specific Relief Act, 1963, in which, it has been stated that
the jurisdiction to decree the specific performance is
discretionary, but the discretion is not arbitrary; it is
sound and reasonable and is to be guided by judicial
principles. As to when the court may not exercise discre-
tion to grant the decree for specific performance has been
mentioned in sub-section (2); whereas subsection (3) states
as to when the court may properly exercise its discretion to
decree specific performance. No doubt what has been stated
in these two sub-sections is not exhaustive, but is
illustrative, yet the intention of the legislature has been
well reflected, both as regards the granting of the relief
and nongranting of the same. Clause(c) of subsection (2)
states that if granting of specific performance would make
it “inequitable”, the court may not grant the relief It is
this part of the statutory provision which is sought to be
relied by the learned counsel for the respondents by
contending that it would be inequitable to grant specific
performance for the aforesaid two reasons.
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27.In so far as the delay in the disposal of the case and
the rise in prices during interregnum, Shri Parasaran urges
that the delay not having been occasioned by any act of the
plaintiff, he may not be punished for the same on the
principle of ‘ actus curiae neminem gravabit” an act of the
court shall prejudice no man. As regards the rise in
prices,, the submission is that it should not weigh with the
court in refusing the relief if otherwise due, as opined in
S. V. Sankaralinga Nagar v. P.I.S. Ratnaswami Nadar, AIR
1992 Madras 389, which decision was cited with approval in
Mr. Abdul Hakeem Khan v. Abdul Menon Khadri, AIR 1972 Andhra
Pradesh 178. We are in agreement with this view because of
the normal trend of price in prices of properties situate
especially in metropolitan city like Madras, where the
property in question is situate. If merely because the
prices have risen during the pendency of litigation, we were
to deny the relief of specific performance if otherwise due,
this relief could hardly be granted in any case, because by
the time the litigation comes to an end sufficiently long
period is likely to elapse in most of the cases. This
factor, therefore, should not normally weigh against the
suitor in exercise of discretion by a court in a case of the
present nature.
28.The final onslaught is on the ground that the plaintiffs
successors-in-interest having assigned the right to third
parties in the meantime, we may not grant the relief because
the assignees have, as already noted, purchased litigation
and so the transaction could be described as champertous.
Shri Parasaran, however, contends that all assignments
pendente lite cannot be regarded as champertous; the same
would depend on the facts of each case. It is also urged
that an assignee has the right to pray for specific
performance because he is one who has to be regarded as
“representative-in-interest”, of which mention has been made
in clause (b) of section 15 of the aforesaid Act dealing
with the persons who may obtain specific performance. ‘Mat
an assignee would be such a person was accepted by this
Court in T.M. Balakrishna Mudaliar v. M. Satyanarayana Rao,
1993 (2) SCC 740.
29.We are of the view that if in a case the act of the third
party could be regarded akin to champertous, the relief of
specific performance may be refused; indeed, should be
refused. In the present case, however, we find that the
assignees themselves applied to this Court for impleading
them as appellants and put on record the deeds of
assignment, a perusal of which shows that the need for
assignment was It for pressing reasons. There has been no
hide an seek with the court and the legal representatives of
the original plaintiff having received a sum of about Rs. 13
lacs pursuant to the contract of assignments entered between
September to November ‘1988, we do not think if we would be
justified in refusing the relief of specific performance, if
the conduct of the respondents is also borne in mind, about
which one could say that the same is tainted inasmuch as
they departed from truth to bolster their case and went to
the extent of not complying with the desire of the trial
judge in allowing aforesaid Kamal to be examined even as a
court witness. Such parties who pay foul with equity cannot
be allowed to use the shield of equity to protect them.
30.The result of the foregoing discussions is that we allow
the appeal, set aside
626
the impugned judgment of the Letters Patent Bench and
restore that of the trial Judge and decree the suit for
specific performance. The respondents or their successors-
in- interest would reconvey the property mentioned in
Schedule ‘A’ of the plaint within a period of 1 month,
failing which it would be open to the trial Judge to execute
the required document(s). In the facts and circumstances of
the case, the parties are left to bear their own costs
throughout.
[A. Nos.], 2 & 5 of 1994
31.I.A. Nos. 1 and 2 are dismissed. I.A. No.5 is allowed;
the cause title may be amended accordingly.