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Nalluswamy Reddiar vs Marammal And 5 Others on 18 November, 1999

Madras High Court
Nalluswamy Reddiar vs Marammal And 5 Others on 18 November, 1999
Equivalent citations: 2000 (1) CTC 484, (2000) 1 MLJ 621
Bench: E Padmanabhan


ORDER

1. Second defendant in O.S.No.73 of 1983 on the file of the District Munsif Court, Manapparai, who has succeeded before the trial Court and lost before the first appellate Court is the appellant in this second appeal.

2. Heard Mr.M.V.Krishnan, for the appellant and Mr .M.N.Muthukumaran, for Mr.M.N.Padmanabhan, Senior counsel for the respondents 1 to 5.

3. At the time of admission, the following substantial question of law was framed by this Court:

Whether the findings of the lower appellate Court that the appellant-second defendant is not a holder in due course without a specific pleading to that effect could be sustained.

4. For convenience, the parties will be referred to as arrayed before the trial court.

5. The plaintiffs 1 to 3 instituted the suit in O.S.No.73 of 1983 against the defendants 1 and 2 seeking the relief of specific performance of an agreement to sell and for permanent injunction for bearing the defendants from interfering with their possession of the suit property. The first plaintiff died pending suit and plaintiffs 4 to 6, who are the children of the first plaintiff, was impleaded apart from the second plaintiff being recorded as also the legal heir of the deceased first plaintiff.

6. According to the plaintiffs, the suit property was originally owned by late Marachi Reddiar that the first defendant is the widow of the said Marachi Reddiar, had been in enjoyment of the suit properties absolutely, that on 22.9.1982, the first plaintiff and the first defendant agreed to sell and purchase the suit property for a consideration of Rs.11,000 by paying an advance of Rs.2000 that a sale agreement was executed on 22.9.1982 that pursuant to the said agreement, the first plaintiff paid another sum of Rs.4000 and in terms of it an agreement has been concluded between the first plaintiff and the first defendant that the first plaintiff called upon the first defendant to come and execute the deed specifically which the first defendant has been dealing with the first plaintiff caused a legal notice, which the first defendant had evaded to receive that the plaintiffs are always ready and willing to perform their part of the contract that the plaintiffs were ready with the balance of sale consideration of Rs.5000 that the second defendant is trying to interfere with the plaintiffs possession claiming that he had purchased the suit property from the first defendant that the first defendant had declined to convey the suit property and that the plaintiffs are entitled to the specific performance of the agreement to sell.

7. After the trial when the judgment was reserved, the first plaintiff died and hence his legal representatives were impleaded.

8. The first defendant remained exparte and the second defendant alone contested the suit.

9. Admitting the title of the first defendant and the enjoyment of the suit property in the hands of the first defendant, the second defendant pleaded that on 4-9-1982 a sale agreement was entered into between the first and second defendant that in terms of the said sale agreement on 25-11-1982, the first defendant conveyed the suit property for a consideration of Rs.6000, that a sum of Rs.3,000 out of the sale consideration was utilised for discharge of loan to Purathakkudi Cooperative Society, that since the date of purchase, the second defendant is in possession and enjoyment of the suit property as absolute owner, that after the conveyance, the first defendant had colluded

with the first plaintiff with an alterior motive and had created the sale agreement that the sale deeds are false and fabricated, that the alleged sale agreement are not binding on the second defendant, that the entire suit claim is false fabricated and collusive action and that the suit claim is liable to be dismissed.

10. The plaint was amended and the second defendant filed an additional written statement contending that the sale deed in favour of the second defendant will bind the plaintiff that the amendment of the plaint is not only uncalled for but also illegal, that the second defendant was not aware of the alleged agreement between the first plaintiff and the first defendant and that the amendment of the plaint is nothing but a fabricated action.

11. The trial court framed eight issues at the first instance and later framed two additional issues. The plaintiffs marked Exs.A.1 to A.5 while the defendants marked Exs.B.1 to B.4. The plaintiffs examined the first plaintiff as P.W.1, besides two other witnesses, while the second defendant had examined himself as D.W.1.

12. The trial Court by judgment dated 26-10-1964, disbelieved the case of the plaintiffs. The trial Court found that the plaintiffs claim of entering into an agreement with the first defendant to sell is not true. The trial Court also disbelieved the assertion of claim of plaintiffs’ possession and that the first defendant has no authority to sell the property to the first plaintiff and that the sale deed in favour of the second defendant is true and valid. The trial Court found that the second defendant is in possession of the suit property. In the light of the said finding the trial court dismissed the suit in its entirety.

13. Plaintiffs 1 to 5 preferred A.S.No.134 of 1985 on the file of the Subordinate Judge, Tiruchirappalli. The first appellate Court framed six points for consideration and by judgment and decree dated 3-7-1986 allowed the appeal, setting aside the judgment and decree of the trial Court and granted a decree for specific performance as prayed for by the plaintiffs.

14. Being aggrieved, the second defendant had preferred the present second appeal.

15. The counsel for the second defendant/appellant contended that the first appellate Court had acted illegally in reversing the findings when there were no pleas by the plaintiffs and also misdirected itself in holding that the second defendant had knowledge of the agreement between the first plaintiff and the first defendant. It was further contended that there was collusion between the first plaintiff and the first defendant as the counsel who had issued a notice on behalf of the plaintiffs had appeared for the first defendant in the suit.

16. Further, it was pointed out that no where in the plaint the plaintiffs have pleaded that the sale deed in favour of the second defendant by the first defendant was not true, nor was there a plea that the second defendant was not

a bona fide purchaser for value without notice. It is contended that the judgment and decree of the first appellate Court are vitiated and liable to be set aside and that of the trial Court has to be restored.

17. Ex.A.1 is the alleged sale agreement between the first plaintiff and the first defendant, which is dated 22.9.1982. On the same date Ex.A.2 was entered into between the first plaintiff and the first defendant agreeing to sell and purchase. The suit properties which were agreed to be conveyed in favour of the first plaintiff originally belonged to Marachi Reddiar, the first defendant’s deceased husband and that the first defendant was in possession of the suit property after the death of her husband. As per the agreement, the first defendant had received an advance of Rs.2,000 out of the sale consideration of Rs.11,000. It was the further case of the plaintiffs that the balance of Rs.9,000 to be paid within 15 days to the first defendant and a fresh agreement was executed acknowledging further payment of Rs.4,000. It was further agreed between the first plaintiff and the first defendant that the balance amount of Rs.5,000 shall be utilised to discharge the loan availed by the first defendant from the Purathakkudi Cooperative Agricultural society and the balance to be paid within three months.

18. Assuming that Ex.A.3 dated 24-11-1982, the plaintiffs issued a notice calling upon the first defendant to execute the deed of conveyance, but the said notice had been returned back. The first plaintiff who had been examined as P.W.1, deposed that he had been inducted into possession in terms of the sale agreement, but subsequently, the first defendant had refused to execute the deed of conveyance and that the second defendant attempted to interfere with the plaintiffs possession and enjoyment of the suit property.

19. Per contra, it is the case of the second defendant that on 4.9.1982, the first defendant agreed to convey the suit property to the second defendant after receipt of Rs.1000 as advance and the sale deed was executed on 25.11.1982, marked as Ex.A.2, after receipt of the balance of sale consideration. It is the further case of the second defendant that he had been inducted into possession on the date of Ex.B.2 dated 25.11.1982 and since the date of execution, the second defendant is in possession and enjoyment of the suit property. As seen from the sale agreement as well as the sale deed, the first defendant had received Rs.6,000 from the second defendant and Ex.B.1 sale deed dated 4.9.1982 and as per Ex.B.1 sale agreement dated 4.9.1982 Ex.B.2 sale deed dated 25-11-1982 had been executed by the first defendant in favour of the second defendant.

20. It is pointed out by the first appellate Court that in Ex.B.2 sale deed dated 25-11-1982 there is no reference about Ex.B.1 sale agreement dated 4.9.1982. It is further pointed out by the first appellate Court that there is no recital as to the payment of balance of sale consideration of Rs.l,000 in Ex.B.2 sale deed. The discharge of the Cooperative society loan was sought to be established by Ex.B.3 dated 20.12.1982 as well as Ex.B.4 dated 28.6.1984 and in all a sum of Rs.979 has been paid to the said Cooperative society,

whereas the total debt due to the society was a more than Rs.3,000. On that basis the first appellate Court found that the sale deed dated 25.11.1982 had not been executed on the basis of the alleged sale agreement entered between the first defendant and the second defendant.

21. The first appellate court had proceeded on the basis that there is no recital with respect to the alleged payment of the balance of sale consideration of Rs.1,000. The first appellate Court also proceeded on the assumption that there was a valid agreement of sale by the first defendant in favour of the first plaintiff earlier in point of time and a sum of Rs.6,000 has been paid by the first plaintiff to the first defendant as advance. But the trial Court has also proceeded on the assumption that Exs.B.1 and B.2 had been created for the purpose of the present case, with a view to discard the plaintiffs suit claim. On the basis of the alleged agreement, the first appellate Court had further proceeded that the first defendant had no right to convey the suit property in favour of the second defendant and this approach of the first appellate Court is obviously erroneous.

22. The first appellate Court also proceeded on the assumption that the sale deed by the first defendant in favour of the second defendant had been created with a view to defeat the rights of the first plaintiff. The first appellate Court also assumed that the first plaintiff has been inducted into possession even on the date of sale agreement and that the plaintiffs alone are continuing in possession of the suit property. The first appellate Court also held that the plaintiffs are entitled to a decree of specific performance of agreement to sell. Concedingly, after the filing of the written statement, the plaintiffs have not filed a reply. The first appellate Court also found that the member of the bar who had earlier sent a reply on behalf of the first plaintiff had appeared for the first defendant. The first appellate Court also proceeded on the basis that merely because the member of the Bar, who had issued a notice on behalf of the plaintiffs had subsequently appeared on behalf of the first defendant in this suit and he had withdrawn the appearance and therefore, it is not proper to assume collusion and that the first defendant had not contested the proceedings subsequently.

23. The first appellate Court, as rightly pointed out by the learned counsel for the appellant had not considered the original findings let in by either side nor there has been any reference to the oral evidence except making a false assertion that the trial Court had not examined the oral and documentary evidence. A perusal of the judgment of the first appellate court shows that there is no discussion at all in respect of oral evidence let in by either side. The first appellate Court also proceeded on an erroneous assumption that the sale deed by the first defendant in favour of the second defendant was with an object to, defeat the claims of the plaintiffs and such a finding had been rendered even without a plea on behalf of the plaintiffs. There is also no plea that the second defendant with knowledge of the alleged agreement of sale between the plaintiffs and the first defendant had purchased

the suit property. In the absence of such a pleading, the first appellate Court had rendered a finding that the second defendant had purchased the property with the knowledge of the alleged prior agreement to sell entered into between the first plaintiff and the first defendant. Without pleadings, no amount of evidence is admissible. Though, Ex.A.1 sale agreement, is dated 22.9.1982 and on the very same date Ex.A.2 agreement has also been executed, as per Ex.A.1 sale agreement, the sale consideration agreed was Rs.11,000 and a sum of Rs.2,000 has been paid as advance. It was agreed that the first plaintiff will pay the balance of Rs.9,000 and complete the sale within fifteen days. In Ex.A.1 in the schedule portion there are blanks with respect to Survey numbers. Ex.A.2 is another sale agreement of the same date i.e., 22.9.1982. In that the plaintiffs have been granted three months time to complete the sale and that the sale agreement also recites a sum of Rs.6,000 has been paid as advance out of the total consideration of Rs.11,000 within three months, has been stipulated as the period within which the sale has to be completed. Curiously in this agreement, the survey numbers of the suit property do not find a place. The very Ex.A.2 contains a recital that the agreement already entered by paying Rs.2,000 has been cancelled. Ex.A.2 as well as Ex.A.1 agreement are typed in Tamil and Ex.A. 2 the typing was close and it is obvious that the recital regarding Ex.A.1 has been included towards the end of Ex.A.2 agreement. On the face of it Ex.A.2 cannot be accepted and there is no reason at all to execute a fresh agreement to sell on the same date. The first plaintiff’s name is Narayanan, while the stamp papers for the agreement dated 22.9.1982 has been purchased in the name of one Subramaniam of Inampudur, which is a different place. Ex.A.3 dated 24.11.1982 is a notice issued on behalf of the first plaintiff addressed to the first defendant referring to the sale agreement dated 22.9.1982 namely Ex.A.2 alone and not to Ex.A.l.

24. Ex.B.1 is the agreement dated 4.9.1982 entered into between the first defendant and the second defendant, wherein the first defendant agreed to convey the suit property for a consideration of Rs.6000 after receiving Rs.l,000 as advance. Ex.B.1 also provides for the discharge of the loan payable to the Cooperative society by the purchaser.

25. Ex.B.2 is the sale deed dated 25.11.1982 executed by the first defendant in favour of the second defendant, which refers to an earlier agreement entered into between the first defendant and the second defendant and it has been further recited that the balance of sale consideration of Rs.3000 shall be utilised to discharge the loan payable to the Co-operative society. The sale deed Ex.B.2 had been registered on 25.11.1982. Ex.B.3 is the receipt issued by the Cooperative society in favour of the first defendant acknowledging payment towards the loan repayable by the first defendant, so also Ex.B.4. The sale deed Ex.B.2 dated 25.11.1982 is a deed of conveyance executed by the first defendant in favour of the second defendant, wherein payment of full sale consideration had been acknowledged by the first defendant. It will not be correct to contend that the first defendant had not received a sum of Rs.1000 out of the total consideration of Rs.6,000. Ex.A.3

is the notice dated 24.11.1982 issued by the first plaintiff through his counsel Mr.E.Kasthuri to the first defendant while Ex.B.2 came to be executed on 25.11.1982 itself and there is nothing to show that the second defendant was aware of the alleged sale between the first plaintiff and the first defendant. When once the first defendant had conveyed the suit property under Ex.B.2 dated. 25.11.1982 even prior to the despatch of Ex.A.3 notice dated 24.11.1982 and in the absence of any pleadings, the first appellate Court, it is clear, has misdirected itself in assuming and proceeding as if the second defendant had full knowledge and with that knowledge the second defendant had purchased the property. There is neither a plea nor there is any material to assume knowledge on behalf of the second defendant.

26. There is no basis at all nor there is any warrant for the first appellate Court to assume that the second defendant had the knowledge of the alleged prior agreement. The very prior agreement itself has been rightly doubted by the trial court and disbelieved by the first appellate court after considering the oral and documentary evidence. The first appellate Court had failed to consider the oral evidence and this vitiates its conclusions.

27. As already pointed out that there was no plea that the second defendant had knowledge of the alleged sale agreement between the first plaintiff and the first defendant and that the second defendant had purchased the property with full knowledge of the alleged earlier agreement to sell. There is also no pleading that the second defendant with the knowledge of the alleged prior agreement had purchased the suit property. The burden of proof is on the first plaintiff to prove that the second defendant had knowledge about the prior agreement to sell. In terms of sub-section (b) of Section 19 of the Specific Relief Act, specific performance of an agreement cannot be enforced against a subsequent transferee unless he had notice of prior agreement to sell. It has been established in the present case that the second defendant had paid the full consideration for the sale deed before the date of sale and he had no notice or knowledge about the alleged prior agreement. The plaintiff was well aware that the second defendant had purchased the property. There is not even a plea that the second defendant had knowledge of the alleged prior agreement and despite knowledge he had purchased the suit property. There is no plea that the second defendant had notice of the alleged prior agreement to sell. There is neither a notice nor a constructive notice. The second defendant being a transferee has no knowledge at all. In the absence of any pleading no amount of evidence could be let in. Further it is also obvious that the plaintiffs are not in possession of the suit property to impute knowledge or notice.

28. According to Section 19 of the Specific Relief Act, the second defendant, the transferee has to establish ,that his transfer is for a valuable consideration that he had paid the full consideration that his purchase was bona fide and in good faith and his purchase and including payment of money is without knowledge of the alleged contract between the first plaintiff and the first defendant. The first plaintiff had not pleaded that the second

defendant had knowledge of the alleged prior agreement to sell. The plaintiff was very much aware of the sale deed executed by the first defendant in favour of the second defendant, but he had not challenged the same as the purchase of the second defendant was with full knowledge of the prior agreement to sell. The second defendant had also stated that he is a bona fide purchaser for valuable consideration without notice and that the first plaintiff had not only to plead but also to prove that the second defendant had knowledge of the alleged agreement to sell in his favour. In any event, the plaintiff had to plead and prove that the second defendant, subsequent purchaser had notice of the agreement in favour of the first plaintiff. As already pointed out that there is no such plea and consequently no amount of evidence could be looked into. There is material documents to prove that the second defendant has paid full consideration and the execution of the sale deed by the first defendant had been proved. That apart, as already pointed out, the first plaintiff has not proved his possession and as found by the trial court Exs.A.l and A.2 are artificial and they do not deserve acceptance. There is nothing to show that the first plaintiff is in possession of property pursuant to Ex.A.1 or Ex.A.2. There was no want of good faith on the part of the second defendant as the purchaser of the suit property and there is nothing to attribute knowledge or notice of the alleged prior agreement of sale between the first plaintiff and the first defendant.

29. The first appellate Court, as already pointed out, has proceeded on illegal assumptions and surmises, as if the second defendant had knowledge and that he is not a bona fide purchaser. This finding cannot be sustained and the first appellate Court had if ailed to advert and consider the material portion of oral evidence as well as; documents, which were considered elaborately by the trial Court.

30. The substantial question of law framed has to be answered in favour of the second defendant. The second defendant being a purchaser without notice and being a bona fide purchaser, the first plaintiff cannot seek the relief of specific performance against the second defendant. In the circumstances, the judgment and decree of the first appellate court are set aside and that of the trial court restored. Accordingly the second appeal is allowed, but without costs.

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