As per case facts, the Plaintiff initiated a suit seeking specific performance of a flat sale agreement from January 1977 with Defendant No.1. During the proceedings, it came to light ...
No Acts & Articles mentioned in this case
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.171 OF 2010
IN
SUIT NO.1642 OF 1984
WITH
INTERIM APPLICATION [LODGING] NO.8008 OF 2026
IN
APPEAL NO.171 OF 2010
Kanchan G. Rohira ...Appellant
Versus
Nirman Constructions Pvt. Ltd. …Respondent
…..
WITH
APPEAL NO.490 OF 2010
IN
SUIT NO.1642 OF 1984
Suresh Bhagwandas Dhoot ...Appellant
Versus
Kanchan Gopal Rohira
and others …Respondents
-----
Mr. Shailesh Shah, Senior Advocate a/w. D. Banerji, Niranjan Jagtap i/b. M/s.
Niranjan Jagtap & Co. for the Appellant in Appeal No.171/2010
Mr. Simil Purohit, Senior Advocate a/w. Rubin Vakil, Faran Khan, Manish
Doshi, Anjali Ajmera i/b. Vimadalal & Co. for the Appellant in Appeal
No.490/2010 and for the Respondent No.4 in Appeal No.171/2010.
-----
CORAM : SARANG V. KOTWAL &
SANDESH D. PATIL, JJ.
RESERVED ON : 11
th
MARCH, 2026
PRONOUNCED ON : 02
nd
APRIL, 2026
JUDGMENT: [Per Sarang V. Kotwal, J.]
1. Both these Appeals are decided by this common
judgment because they arise out of the same judgment and decree
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dated 14.1.2010 passed in Suit No.1642/1984. For convenience,
the parties are referred to by their original status in the Suit.
Appeal No.171/2010 is preferred by the original Plaintiff Kanchan
Rohira and Appeal No.490/2010 is preferred by the original
Defendant No.4 Suresh Dhoot.
2. The Suit was filed by the Plaintiff for specific
performance of the agreement dated 9.1.1977 executed between
the Plaintiff and the Defendant No.1 Nirmal Constructions Private
Limited. Initially, the suit was filed only against the Defendant
No.1. However, during pendency of the Suit, the Defendant No.1
had informed the Plaintiff that the flat which was the subject
matter of the agreement was already sold by the Defendant No.1 to
the Defendant No.3 M/s. Ravi Overseas Corporation by an
agreement for sale dated 18.11.1981. The Defendant No.2 Girish
Jalani had informed that he was an employee of the Defendant
No.3 and was in occupation of the said flat in that capacity. The
Defendant No.3, in turn, sold the said flat to the Defendant No.4
vide agreement for sale dated 12.5.1986.
3. The Suit was filed by the Plaintiff for specific
performance of the agreement for sale dated 9.1.1977. The
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learned Judge partly decreed the suit. The prayer for specific
performance was dismissed but the decree was passed in terms of
prayer clauses (d) and (e) which read as follows :
“(d) that in the alternative to prayer (c) above and
in the event of this Hon'ble Court not granting
specific performance as prayed for, the 1st
Defendant be ordered and decreed to pay to
the Plaintiff a sum of Rs.1,52,250/- as and by
way of damages in lieu of the specific
performance as per particulars of damage
hereto annexed and marked Exhibit 'H'.
(e) that in the alternative to prayer (c) and (d)
above and in the event of this Hon'ble Court
not granting specific performance or damages
as prayed for, the 1st Defendant be ordered and
decreed to pay to the Plaintiff the sum of
Rs.10,500/- being the sum already paid by the
Plaintiff to the 1ª Defendant as advance
towards the price of the said flat with interest
at the rate of 12% per annum from the date of
payment till return of the same as per
particulars hereto annexed and marked Ex. 'I'.”
On the amount of Rs.1,52,250/- interest was
directed to be payable @ 6% P.A. from the date of decree till
realisation.
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4. Aggrieved by the refusal to grant decree of specific
performance, the Plaintiff has preferred Appeal No.171/2010
whereas the Defendant No.4 has challenged the finding recorded
by the learned Judge on the first three issues where the learned
Judge has held that the Plaintiff has proved that she was always
ready and willing to perform her part of the obligation under the
agreement of sale dated 9.1.1977; that she had proved that the
notice of termination dated 30.9.1981 is illegal and bad in law; and
that the Defendant Nos.3 and 4 had failed to prove that they were
bonafide purchasers without notice.
5. Heard Mr. Shailesh Shah, learned Senior Counsel for
the Appellant in Appeal No.171/2010, Mr. Simil Purohit, learned
Senior Counsel for the Appellant in Appeal No.490/2010 & for the
Respondent No.4 in Appeal No.171/2010.
6. The case of the Plaintiff, as mentioned in the Plaint, in
short is as follows :
i. The Defendant No.1 was a Company incorporated under the
Companies Act, 1956 having its registered office at Samuel
Street, Mumbai. They were in the business of contractors,
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dealers etc.. The Defendant No.3 was a Partnership Firm
registered under the Indian Partnership Act, 1932 having its
office at Warden Road, Mumbai.
ii. It is mentioned in the plaint that the Defendant No.4 was an
individual who had allegedly purchased Flat No.15 in
building No.11, on Plot ‘G’, Rani Sati Nagar, Chincholi,
Malad, Mumbai (hereinafter referred to as the ‘said flat’). It
was further mentioned in the plaint that by an agreement for
sale dated 9.1.1977 executed between the Plaintiff and the
first Defendant, the Plaintiff agreed to purchase the said flat
from the Defendant No.1, as per the terms and conditions set
out in the said agreement, for the price of Rs.26,000/- to be
paid in the manner set out in that agreement. Said agreement
of sale was duly registered under the Indian Registration Act,
1908.
iii.The plaint then referred specifically to Clause Nos.3, 4 and 38
of the said agreement. Clause (3) mentions the schedule of
payment, Clause (4) mentions the date of 30.5.1977 on
which the possession was to be handed over to the purchaser,
and clause (38) provided for the consequences if terms and
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conditions were not complied with. Since these three clauses
are important, they are reproduced hereinbelow:
3. The Buyer/s hereby agree/s to acquire Flat No. 15th on the
4th Floor of the said building No. 11 (…………...) as per
the plans and specifications seen and approved by
him/her/them with the amenities set out in the list hereto
annexed and marked Exhibit 'B' at or for the price of
Rs.26,000/- (Rupees Twenty Six Thousand only) which
shall be paid in the manner given below:
(a) By the payment of Rs.5000/- (Rupees Five Thousand only)
as earnest on the execution of this Agreement;
(b) The Balance of the purchase price in the manner indicated
below within seven days (time being essence of the
contract) from the date specified herein:-
Rs.5500/- (Rupees Five Thousand Five Hundred only) already
paid;
Rs.5000/- (Rupees Five Thousand only) on or before the 7th day
of February, 1977;
Rs.5000/- (Rupees Five Thousand only) on or before the 7th day
of March, 1977;
Rs.5000/- (Rupees Five Thousand only) on or before the 7th day
of April, 1977;
and the balance of Rs.500/- (Rupees Five Hundred only)
against delivery of possession of the said
Flat/shop/stall/garage/godown/ open space (time being of
the essence of the contract)."
“4. The Sellers agree to handover the possession of the said
flat/shop/stall/ garage /open space to the Buyer/s on or
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before the day of 30.5.77 subject to the availability of
cement, steel or other building materials as also subject to
any act of God such as earthquake, floods or any other
natural calamity, and of enemy war or any other cause
beyond the control of the Sellers. Garage in this Agreement
shall mean open or covered car-parking place.”
“38. If the Buyer/s neglect/s omit/s or fail/s for any reason
whatsoever to pay to the Sellers any of the amounts dues
and payable by the Buyer/s under the terms and conditions
of this Agreement whether before or after delivery of
possession within the time herein contained or referred to
the Sellers shall be entitled to enter upon and resume
possession of the said flat/shop/stall/godown/garage and
open space and everything whatsoever therein and this
Agreement shall cease and stand terminated and the earnest
money and all other amounts already paid by the Buyer/s
to the Seller/s shall stand absolutely forfeited to the Sellers
and the Buyer/s shall have no claim for refund or
repayment of the said earnest money and/or the said other
amounts already paid by the Buyer/s or any part thereof
and the Buyer/s hereby agree/s to forfeit all his/her/their
rights, title and interest in the said flat/shop/stall/
godown/garage and open space and all amounts already
paid and in such event the Buyer/s shall also be liable to
immediate ejectment as tresspasser but the right given by
this cause to sellers shall be without prejudice to any other
rights, remedies and claims whatsoever at law or under this
Agreement of Sellers against the Buyer/s”
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iv.It is the further the case of the Plaintiff in the plaint that
between 12.9.1976 and 13.10.1976, the Plaintiff had paid
Rs.10,500/- to the first Defendant by two cheques as advance
amount towards the purchase price of the said flat. The first
Defendant had passed three receipts of Rs.5,000/- and
Rs.500/- both dated 12.9.1976; and of Rs.5,000/- dated
13.10.1976.
v.The Plaint further mentions that after execution of the said
agreement, some disputes arose in different groups of the
first Defendant; and some of the share holders filed a
Company Petition No.355/1977 in this Court on 10.6.1977
under Sections 397, 398, 402 and 403 of the Companies Act.
On 4.3.1980, the consent terms were filed in the said
Company Petition. Those consent terms mentioned the list of
agreements for sale entered into between the first defendant
and various purchasers. In those consent terms, the said flat
concerning the Plaintiff was also mentioned but the purchase
price was wrongly mentioned as Rs.31,000/- instead of
Rs.26,000/-. After this settlement, the Plaintiff approached
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the first Defendant enquirying about the probable date of
handing over the possession and the new schedule of
payment of the balance purchase price. The first Defendant
wrongfully demanded additional amount of Rs.10,000/- out
of which Rs.5,000/- was asked to be paid in cash and the
Plaintiff was told that unless the additional amount was paid,
the first Defendant would not accept any other amount and
would terminate the agreement for sale.
vi. According to the Plaintiff, on several occasions, she offered to
pay the agreed balance purchase price but the first Defendant
refused to accept it.
vii.On 7.10.1981, the Plaintiff received a letter dated 30.9.1981
sent by the first Defendant alleging that the Plaintiff had
failed and neglected to pay the balance purchase price and to
take possession of said flat and vide the same letter
unilaterally terminated the said agreement and forfeited the
amount of Rs.10,500/- which was already paid by the
Plaintiff.
viii. The Plaintiff responded to this letter vide her
Advocate’s letter dated 18.11.1981 pointing out that there
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was no progress in the construction and, therefore, the
payment of balance amount did not arise. The Defendant
No.1’s right to terminate the agreement was challenged. The
Plaintiff enclosed a cheque of Rs.5,000/- towards the
purchase price of the said flat along with said letter dated
18.11.1981.
ix. The Defendant No.1 then responded by its letter dated
26.11.1981 mentioning that the building was completed and
possession of all other flats was taken by the respective
buyers. It was also mentioned that the flat was already sold
to another buyer. The first Defendant returned the cheque of
Rs.5,000/- by enclosing it with the said letter.
x.Vide her Advocate’s letter dated 3.12.1981, the Plaintiff again
pointed out that that the first Defendant could not have
unilaterally terminated the agreement. She demanded the
name and address of the purchaser of the said flat and other
details. She also enclosed a cheque for Rs.15,500/- as
balance purchase price of the said flat.
xi.The first Defendant through its Advocate’s letter dated
15.3.1982 returned said cheque of Rs.15,500/- and informed
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that the said flat was sold to somebody else.
xii.After that the Plaintiff repeatedly requested the Defendant to
comply with the terms and conditions of the said agreement
for sale. Since there was no compliance by the first Defendant
she had filed the suit. During pendency of the Suit, the first
Defendant had informed her that the said flat was sold to the
third Defendant and then subsequently to the fourth
Defendant. And, therefore, the plaint was amended to
incorporate the pleadings against the third Defendant and the
fourth Defendant. The amended plaint then mentions the
subsequent developments during pendency of the suit and as
to how the Defendant Nos.1 and 3 entered into agreement in
respect of the said flat taking advantage of pendency of the
Suit and the Notice of Motion. It was the case of the Plaintiff
in her plaint that the transfer of the said flat by the third
Defendant to the fourth Defendant was a sham and bogus
transaction and has been concocted by the Defendants in
collusion only to deprive the Plaintiff of her right and
interest in the said flat. It was her specific case that the
fourth Defendant all along had knowledge of the
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proceedings pending in the Court and had taken possession
of the said flat being fully aware of the consequences of his
actions and, therefore, the agreement for sale dated
12.5.1986 in favour of the Defendant No.4 was illegal and
not binding upon the Plaintiff. It was her case that the third
Defendant did not have a valid title to the said flat and,
therefore, could not have transferred the said flat to the
fourth Defendant.
7. Based on these pleadings, the Plaintiff filed the Suit
with various prayers including the prayer for declaration that
termination of the agreement for sale dated 9.1.1977 was illegal,
bad in law and not binding on the Plaintiff; for declaration that the
agreement for sale dated 9.1.1977 was valid, subsisting, and
binding on the first Defendant and the main prayer for specific
performance against the first Defendant directing him to perform
the agreement for sale dated 9.1.1977.
8. In the alternative, as mentioned hereinabove, the
Plaintiff has sought sum of Rs.1,52,250/- by way of damages in lieu
of the specific performance; and in addition; directions to the first
Defendant to pay a sum of Rs.10,500/- with interest @ 12% per
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annum from the date of payment till its return as it was the amount
paid by the Plaintiff to the first Defendant.
9. By other prayers, the Plaintiff sought declaration that
all the subsequent agreements between the Defendant Nos.1, 3 & 4
to be declared as sham and bogus.
10. The Defendant Nos.1, 2 & 3 did not file any written
statement. The Defendant No.4 contested the Suit. He filed the
written statement. It is his case in the written statement that the
Defendant No.4 was a bonafide purchaser of the said flat, without
notice by sale deed executed on 12.5.1986 for consideration of
Rs.1,40,000/-. It was paid by two cheques i.e. (i) cheque
Nos.037121 & 037222 dated 12.5.1986 both drawn on State Bank
of Indore, Fort Branch for total amount of Rs.1,30,000/- and (ii)
cheque No.037123 for Rs.10,000/- dated 12.7.1986 drawn on
State Bank of Indore, Fort Branch, Mumbai. On 28.5.1986, he filed
the necessary forms under Section 269AB(2) of the Income Tax Act,
1961 with the agreement for sale to the Income Tax Department.
On 22.6.1986, he performed
vastu shanti. On 11.8.1986 the
defendant No.3 addressed a letter to the Secretary of the Society
intimating sale of the flat and for transfer of the share certificate in
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the name of the Defendant No.4. The share certificate was initially
in the name of the Defendant No.3 and it was transferred in the
name of the Defendant No.4. The sale deed was duly stamped on
8.9.1986 by paying stamp duty of Rs.14,000/- and it was registered
with the Sub-Registrar on 10.9.1986. He was asked to pay the
additional stamp duty of Rs.1995/ on 11.1.1996. The sale deed
was duly registered and copy of the Index-II was also received from
the Sub-Registrar.
11. It was further the case of the Defendant No.4 in the
written statement that the suit was barred by limitation. It was also
averred that the Plaintiff had failed to perform her part of the
performance of the agreement between the Plaintiff and the
Defendant No.1. According to the Defendant No.4, the Plaintiff was
aware that the share certificate was in the name of the Defendant
No.3 and, therefore, if the Plaintiff had any objection she should
have raised dispute under the Maharashtra Co-operative Societies
Act.
12. It was the specific case of the Defendant No.4 that he
was a bonafide purchaser and was in use and occupation of the
said flat after getting possession on 12.5.1986. He got married on
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15.12.1986 and in the invitation card also the Defendant No.4’s
address was mentioned in respect of the said flat. The Defendant
No.4 annexed copies of the relevant documents to his written
statement.
13. On 4.12.2007, when the Suit was listed on board for
settlement of issues, an Application was made orally on behalf of
the first Defendant for permission to file the written statement.
That Application was rejected and the court proceeded to settle the
issues which read thus :
“1) Whether the Plaintiff proves that she was always ready and
willing to perform her part of the obligations under the
Agreement for Sale dated 9th January 1977?
(2) Whether the Plaintiff proves that the notice of termination
dated 30th September, 1981 is illegal and bad in law as
alleged in para 13 of the Plaint?
(3) Whether Defendant Nos.3 and 4 prove that they are bonafide
purchasers without notice?
(4) Whether Defendant No.4 proves that this Honourable Court
has no jurisdiction for the reasons alleged in para 7 of his
written statement?
(5) Whether the suit agreement is registered as alleged in
paragraph 2 of the Plaint?
(6) What reliefs is the Plaintiff entitled to?
(7) What order?”
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14. After the issues were framed, the evidence of the
Plaintiff was recorded. She was cross-examined and then the
Defendant No.4 also adduced evidence. He was also cross-
examined.
15. The Plaintiff led her evidence through her affidavit-in-
chief. It was in consonance with her plaint. The important
documents viz. the agreement for sale dated 9.1.1977 and other
documents were produced on record. Some further questions were
asked in examination-in-chief and then the Plaintiff was cross-
examined on behalf of the Defendant No.4. In the cross-
examination, the Plaintiff stated that the said agreement was
signed by one Muralilal Madanlal Jalan and he had mentioned to
her that he was a Director at that time, but, she did not ask for any
Board Resolution. She was shown a receipt dated 2.9.1976. She
accepted that the payment was towards the flat No.15. She further
stated that the advance was paid in respect of Flat No.11, but
subsequently she decided to change the flat to flat No.15 which
was a bigger flat and was informed that the Defendant No.1 would
make necessary adjustment. It was orally agreed. The receipt
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dated 2.9.1976 was seemingly signed by Mr. Madanlal Jalan and
the receipt dated 12.9.1976 was probably signed by Mr. Muralilal
Jalan. The receipt dated 13.10.1976 was signed by Mr. Muralilal
Jalan. Rs.5,000/- was paid on 13.10.1976. It was paid before
signing the agreement but the Plaintiff was told that the agreement
would be prepared. She was asked whether she had made any
payment after 13.10.1976. She answered that she went to offer
payment but she was told that there were some internal disputes
and there was nobody to receive the payments. She denied the
suggestion that she did not make the balance payment because she
did not have the sufficient money to make those payments. Then
she was cross-examined as to whether she addressed any letter
when the Defendant No.1 refused to accept the cheques. She
answered that she went on the due dates and offered the cheques.
She did not expect any dispute to be dragged to the Court.
16. She was asked about whether her Advocate had
advised her to file
lis pendens in respect of the Suit. She stated
that she did not know what
lis pendens was.
17. These are some of the relevant highlights from her
cross-examination.
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18. The Defendant No.4 led his evidence through his
affidavit in the nature of examination-in-chief. It was also on
similar lines as that of his written statement. He was cross-
examined on behalf of the Plaintiff. He was asked whether he had
taken any search in the land records maintained by the Sub-
Registrar. He answered that he had checked through a Clerk at the
Sub-Registrar’s office whether any
lis pendens was pending and
the answer was no. He was asked whether he took search of the
land records to verify whether there were verified documents
relevant/relating to the said flat. He answered that he had a
cheque receipt dated 17.3.1982 regarding registration in favour of
Ravi Overseas Corporation and was informed that the receipt was
genuine and correct.
19. The sale deed on behalf of Ravi Overseas Corporation
was signed by Ravi Dalmia and the registered sale deed was signed
by Ravi Dalmia and Shashi Dalmia.
He was also asked if the market
value of the property was Rs.3,39,500/- but the price was paid for
Rs.1,40,000/-. He stated that what was mentioned in the
document stood as it is; and that he had paid the stamp duty of
Rs.14,000/- as he was told to pay that stamp duty but he did not
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remember as to who had told him to pay Rs.14,000/- as stamp
duty. He clarified that he paid Rs.1,30,000/- through cheques on
12.5.1986. However, the third cheque was dated 12.7.1986. They
were as follows :
i. Cheque No.37121 for Rs.90,000/- dated 12.5.1986
ii. Cheque No.37122 for Rs.40,000/- dated 12.5.1986
iii. Cheque No.37123 for Rs.10,000/- dated 12.7.1986 They were
drawn on State Bank of Indore, Fort Branch, Bombay.
20. These are some of the highlights from his cross-
examination. Both these parties had produced their respective
documents in their evidence.
21. After considering the evidence and the submissions
made by the learned counsel for the contesting parties, the learned
Judge recorded the findings. The learned Judge referred to the
dispute between the two groups of Directors of the Defendant No.1
resulting in the Company Petition. As per the consent terms filed in
those proceedings the list of flat purchasers were attached to the
consent terms. They were filed on 4.3.1980. Thus, according to the
learned Judge at least on that date the suit agreement was
subsisting and on that day it was obvious that the construction was
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not completed. The letter dated 15.3.1982 sent by the Advocate for
the defendant No.1 addressed to the Advocate for the Plaintiff
contended that the building was completely constructed by
January, 1981 and the occupation certificate was granted on
22.7.1981. The learned Judge observed that the suit agreement for
sale related to the immovable property and, therefore, normally the
time was not essence of the contract. The conduct of the first
Defendant Company showed that the time was never intended to
be the essence of the contract. In those circumstances by giving
notice dated 30.9.1981, the first Defendant could not have
straightway terminated the suit agreement. The learned Judge
further observed that the first Defendant ought to have first issued
a notice making the time essence of the contract and calling upon
the Plaintiff to pay the balance consideration within the time
stipulated in the notice. Observing thus, the learned Judge held
that the Plaintiff had proved that the notice of termination dated
30.9.1981 was illegal and bad in law.
22. As far as the issue of readiness and willingness was
concerned, the learned Judge observed that the first Defendant did
not come out with the case in the letter dated 30.9.1981 that the
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flat was ready for possession and at any time the Plaintiff was
called upon to take the possession. The learned Judge observed
that the Plaintiff had offered to pay the balance amount of
Rs.15,500/- by cheque sent along with letter dated 3.12.1981 and
that it was true that the balance amount could have been
forwarded earlier but considering these reasons, the learned Judge
held that the Defendant No.4 had failed to prove that the Plaintiff
had not shown readiness and willingness to perform her part of the
agreement.
23. As far as the question whether the Defendant Nos.3 & 4
were the bonafide purchasers, the learned Judge observed that no
evidence was adduced by the Defendant No.3 and it was not
proved that the third Defendant was a bonafide purchaser.
24. According to the learned Judge, the Defendant No.4
had not specifically stated that a search was caused to be taken in
the office of the Registrar of Assurances before entering into the
agreement for sale with the third Defendant and though notice of
lis pendens was not registered; but since the suit agreement was
registered, the Defendant No.4 had constructive notice of the said
agreement between the Plaintiff and the Defendant No.1. It was
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observed that the Defendant No.4 had not taken precautions which
any prudent purchaser ought to have taken and, therefore, that
particular issue was held in favour of the Plaintiff meaning thereby
the Defendant No.4 had failed to prove that he was a bonafide
purchaser without notice.
25. As far as the issue regarding the jurisdiction was
concerned, it was observed that the said objection was not pressed
by the learned counsel for the Defendant No.4 and, therefore, it
was answered against the Defendant No.4 meaning thereby that
the learned Judge has jurisdiction to decide the Suit.
26. The issue No.5 was whether the suit agreement was
registered. There was no dispute on this aspect as well and,
therefore, it was held that the suit agreement was registered. Thus,
all these issues from 1 to 5 were held in favour of the Plaintiff but
the decree of specific performance was not granted in her favour by
the learned Judge by exercising discretion under Section 20 of the
Specific Relief Act. The learned Judge observed that the Defendant
No.4 established that under the sale deed dated 12.5.1986 he had
purchased suit flat for consideration of Rs.1,30,000/-. The payment
was proved through the certificate issued by the State Bank of
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Indore. On 12.7.1992, the share certificate in respect of the said
flat was transferred in favour of the Defendant No.4. On 8.9.1986,
he had paid the deficit stamp duty. He had submitted a statement
to the Income Tax Authorities regarding such payment. The
invitation card at Exhibit-D11 showed that with effect from
22.6.1986 the Defendant No.4 had occupied the said flat after
performing the religious ceremony. There were number of
documents, such as, the receipts issued by the Co-operative
Housing Society, the bills of purchase of television, refrigerator etc.
on record. He got married on 15.12.1986. The marriage invitation
card at Exhibit-D17 also showed the address of the said flat for the
Defendant No.4. In his employment with a College, his residential
address was shown in respect of the said flat. The Exhibits-D22 to
D27 showed the correspondence received by Defendant No.4 from
July, 1986 onward at the address of the said flat. The electricity bill
was produced at Exhibit-D28. The ration card was taken at the
same address. Thus, it was observed that there were voluminous
documents to show that from May 1986 the Defendant No.4 was
in possession of the said flat which was purchased by him for
valuable consideration of Rs.1,30,000/-. The learned Judge
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observed that as against this background, the Plaintiff offered to
pay the balance consideration of Rs.10,500/- two months after the
notice of termination was served on the Plaintiff. In this
background, the learned Judge observed that this was a case where
discretion under Section 20 had to be exercised in favour of the
fourth Defendant by not granting a decree for specific performance.
27. However, the learned Judge considered the alternate
prayer for specific performance. The Plaintiff had shown that the
market value of the flat in the locality was Rs.350/- per square feet
when the Suit was filed. The area was 435 sq. ft. and, therefore,
she had sought decree in the sum of Rs.1,52,250/- as the
alternative. In addition, the Plaintiff had also prayed for return of
consideration of Rs.10,500/- with interest @ 12% per annum. Both
these claims made by the Plaintiff were accepted and the impugned
decree was passed.
Submissions of learned Senior Counsel Shri Shah appearing for the
Plaintiff :
28. Shri Shah submitted that the learned Judge erred in not
granting the decree for specific performance in favour of the
Plaintiff. The evidence shows that even the discretion was not
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properly exercised. The electricity bills in favour of the Defendant
No.4 were only upto the year 2000 and thereafter upto 2009 there
was no consumption of electricity which meant that the Defendant
No.4 was not residing in said flat and, therefore, the learned Judge
ought to have held that the Plaintiff had suffered more hardship
than the Defendant No.4. The evidence shows that the price of the
flat was much higher, but it was sold only at the half price as
distress sale to the Defendant No.4.
29. Shri Shah submitted that the learned Judge has not
given cogent reasons for exercising his discretion in favour of the
Defendant No.4. The Defendant No.4 was aware of the past
transactions but if it is held that he was not knowing about the past
transaction he was not diligent and, therefore, this transaction
lacks bonafide. If it was held that he ought to have enquired in the
Sub-Registrar’s office about the registered document for agreement
for sale it would mean that he deliberately did not do so because
he knew about the existence of the earlier transaction between the
Plaintiff and the Defendant No.1.
30. Shri Shah submitted that the learned Judge erred in
holding that the discretion had to be exercised in favour of the
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Defendant No.4. It was overlooked that the Defendant No.4 had
not pleaded hardship neither he had led any evidence in that
behalf. Shri Shah relied on the observations of the Hon’ble
Supreme Court in the case of A. Maria Angelena (Dead) and others Vs.
A.G. Balkis Bee
1
in support of his contention. He also relied on the
observations of the Hon’ble Supreme Court in the case of Prakash
Chandra Vs. Narayan
2
wherein it was observed that in the case
where no issue relating to the hardship was framed and, therefore,
though in a case of specific performance hardship is a good
defence, the benefit can be given to the Defendant provided such
defence is taken by the Defendant and evidence in support of such
defence is brought on record.
31. Shri Shah also relied on the judgment of the Hon’ble
Supreme Court in the case of Sunkara Lakshminarasamma (Dead) by
Legal Representatives Vs. Sagi Subba Raju and others
3
wherein it was
observed that when the hardship was neither pleaded nor proved
and when no issues were raised relating to the hardship before the
trial Court it cannot be allowed to be raised for the first time before
the Appellate Court.
1 (2002) 9 SCC 597
2 (2012) 5 SCC 403
3 (2019) 11 SCC 787
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32. Shri Shah submitted that the Defendant No.4 cannot
be termed as a bonafide purchaser without notice. Burden of
proving this defence squarely rested on the shoulder of such
subsequent transferee as the Defendant No.4. In support of this
contention, Shri Shah relied on the observations of the Hon’ble
Supreme Court in the case of Jagan Nath Vs. Jagdish Rai and others
4
.
33. Shri Shah submitted that the Hon’ble Supreme Court in
the case of Prakash Chandra Vs. Angadlal and others
5
had observed
that ordinarily the specific performance should be granted; it ought
to be denied only when equitable considerations point to its refusal
and the circumstances show that damages would constitute an
adequate relief. In the present case granting damage of
Rs.1,52,000/- can hardly be described as an adequate
compensation.
34. Shri Shah submitted that the Defendant No.4 was
neither a bonafide purchaser nor it can be said that he was without
notice. He relied on the definition of the phrase “a person who is
said to have notice” as mentioned under Section 3 of the Transfer
of Property Act, 1882 which was the interpretation clause. Shri
4 (1998) 5 SCC 537
5 (1979) 4 SCC 393
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Shah submitted that as per that interpretation, the Defendant No.4
had constructive notice of the agreement between the Plaintiff and
the Defendant No.1 because it was a registered document.
35. Shri Shah referred to Section 114 of the Evidence Act,
and in particular to illustration (c), to submit that the Court may
presume that judicial and official acts have been regularly
performed. Hence there was a presumption that all the steps while
registering the suit agreement were completed by the Registrar’s
office.
Submissions of learned Senior Counsel Shri Simil
Purohit, appearing for the Defendant No.4 :
36. Shri Purohit submitted that the Plaintiff had not shown
readiness and willingness to perform her part of the contract. She
had not offered to make the balance payment within the time
schedule. The agreement itself mentions that time was essence of
contract. He submitted that when the termination notice was
received by the Plaintiff, even at that time she did not offer to pay
the entire balance amount but offered only Rs.5,000/- and after
about two months she offered to pay the balance amount. Hence, it
cannot be said that there was readiness and willingness on her part
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to perform her part of the agreement.
37. Shri Purohit relied on the judgment of the Hon’ble
Supreme Court in the case of K.S. Vidyanandam and others Vs.
Vairavan
6
wherein it was observed that in the case of agreement of
sale relating to immovable property, time is not of the essence of
the contract unless specifically provided to that effect; and in the
present case it was specifically provided so in the suit agreement.
38. Shri Purohit submitted that there was legal bar in
granting decree of specific performance in view of Section 19(1) of
the Specific Relief Act. He submitted that the Defendant No.4 was a
bonafide purchaser without notice. The learned Judge himself had
observed that the Defendant No.4 had paid the consideration of
Rs.1,30,000/- for the flat and was in possession of the said flat
since May, 1986. The share certificates were transferred in his
name. There was no mention of the Plaintiff’s name in the share
certificates or in the record of the co-operative housing society.
There was sufficient evidence on record to show that he had
occupied the flat from 1986 onwards. He submitted that though for
some period he could have resided in a different accommodation
that does not mean that he was not a bonafide purchaser of the
6 (1997) 3 SCC 1
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flat.
39. Shri Purohit submitted that he could not be said to
have had constructive notice of the suit agreement. There was
nothing on record to show that the requirements mentioned under
Section 3 of the Transfer of Property Act and in particular its
proviso regarding the notice was satisfied. There is nothing to
show that the registration of agreement for sale between the
Plaintiff and the Defendant No.1 was entered into in Index-II.
Admittedly the
lis pendens notice was not registered and,
therefore, there was no way for the Defendant No.4 to have known
about the said contract.
40. Shri Purohit submitted that the Defendant No.4 was
entitled to contend that he was a bonafide purchaser without
notice to contest the said issue held in favour of the Plaintiff;
without filing a formal document in the nature of cross-objection.
41. In support of this contention, he relied on the judgment
of the Hon’ble Supreme Court in the case of Ravinder Kumar
Sharma Vs. State of Assam and others
7
and S. Nazeer Ahmed Vs. State
Bank of Mysore and others
8
7 (1999) 7 SCC 435
8 (2007) 11 SCC 75
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42. Shri Purohit submitted that the three conditions
mentioned in the proviso of clause (3) ‘a person is said to have
notice’ under the Transfer of Property Act has to be fulfilled before
it is held that the Defendant No.4 had constructive notice. He
relied on the judgment of the Single Judge Bench of the Allahabad High
Court in the case of Dinesh Chandra Vs. Santosh Kumar and others
9
. He
submitted that the SLP filed against that judgment was dismissed.
43. Shri Purohit also relied on the observations of the
Hon’ble Supreme Court in this behalf in the judgment of
Dattatreya Shanker Mote and others Vs. Anand Chintaman Datar and
others
10
44. Shri Purohit submitted that Section 20 of the Specific
Relief Act is in two parts. Sub-section (1) is wider. Sub-section (2)
gives illustrations but they are not exhaustive and, therefore, the
discretion envisaged under Section 20(1) is much wider and that
discretion is not limited by illustrations under Section 20(2).
Therefore, though it is laid down that the hardship had to be
pleaded and proved and issues had to be framed, all that relates
only to Section 20(2) of the Specific Relief Act.
9 Decided on 8.5.2024 in Second Appeal No.350/2024 (Allahabad High Court)
10 (1974) 2 SCC 799
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45. He submitted that the observations of the Hon’ble
Supreme Court in the case of Azhar Sultana Vs. B. Rajamani and
others
11
are applicable to the present case. It was observed that it
was a well settled principle of law that, not only the original
vendor but also the subsequent purchaser would be entitled to raise
a contention that the Plaintiff was not ready and willing to perform
his part of the contract. It was also observed that grant of decree
for specific performance of contract was discretionary. In that case
before the Hon’ble Supreme Court, the Respondents were living in
the property for quite some time in their own right and, therefore,
the Hon’ble Supreme Court had declined to pass the order forcing
them to vacate the property. In the present case, the Defendant
No.4 is in occupation of the said flat from 1986 and it would not be
proper to pass an order asking him to vacate the premises.
46. Shri Purohit submitted that the field occupied by
Section 20(1) is unoccupied by the three cases mentioned in the
illustrations. In support of this submission, he also relied on the
observations of the Hon’ble Supreme Court in the case of
Mademsetty Satyanarayana Vs. G. Yelloji Rao and others
12
11 (2009) 17 SCC 27
12 1964 SCC OnLine SC 33
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47. Shri Purohit submitted that in an Appeal, the scope for
interference with the exercise of discretion is limited. He relied on
the observations of the Hon’ble Supreme Court in the case of
Mysore State Road Transport Corporation Vs. Mirja Khasim Ali Beg and
another
13
. The view taken in the present case is a plausible view
insofar as the exercise of discretion is concerned. The damages, as
prayed for in the suit, were fully granted.
48. In response, Shri Shah reiterated his stand taken in the
main arguments. In addition, he submitted that no pleading was
taken about the registered suit agreement not being entered in the
Index-II Register. The fact that the Registrar had returned the
original documents would indicate that requirement of Sections 52
to 60 of the Registration Act were complied with. He further
submitted that the observations made in the judgments cited by
Shri Purohit were distinguishable on facts.
Reasons and conclusions :
49. Based on the above discussion and the submissions
made by both learned counsel, following points arise for our
determination :
13 (1977) 2 SCC 457
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i. Whether the Plaintiff proved that she was always ready and
willing to perform her part of the obligations under the
agreement for sale dated 9.1.1977.
ii. Whether the finding recorded that the Plaintiff has proved
that the notice of termination dated 13.9.1981 was illegal
and bad in law; is correct.
iii.Whether Defendant No.4 is a transferee for value, who has
paid his money in good faith and without notice of the
original contract, and whether Defendant No.4 can raise an
objection to a finding to the contrary without filing a formal
memo of cross-objection.
iv. Whether the discretion exercised in favour of the Defendant
No.4 while denying the relief for specific performance of the
agreement for sale dated 9.1.1977 to the Plaintiff is proper.
v. Whether the decree needs to be interfered with.
50. At the outset, it must be noted the three issues framed
and answered during the suit do not survive anymore. The issue
No.3 was whether the Defendant Nos.3 & 4 proved that they were
bonafide purchasers without notice. The Defendant No.3 had not
contested the suit and, therefore, the finding recorded against
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Defendant No.3 cannot be interfered with. The issue No.4 was
regarding the jurisdiction of the Court to try the Suit was held in
favour of the Plaintiff . That issue is not seriusly challenged before
us. Issue No.5 was whether the suit agreement was registered.
There was no dispute about the suit agreement having been
registered. Therefore, these issues need not be considered in the
present Appeals.
51. The first point needs to be determined as to whether
the Plaintiff proved that she was always ready and willing to
perform her part of obligation under the agreement for sale dated
9.1.1977. Learned Senior Counsel for the Defendant No.4
submitted that she had not paid the installments within the time
schedule. Clause (3) of the agreement mentions the schedule of
payment of the purchase price. The agreement mentions that the
price of the flat was fixed at Rs.26,000/-, out of which payment of
Rs.5000/- as earnest money and payment of Rs.5,500/- were
accepted as already paid. Thus, the Plaintiff had paid Rs.10,500/-.
The next payment was due on 7.2.1977 for Rs.5000/-, Rs.5000/-
on 7.3.1977, Rs.5000/- on or before 7.4.1977 and balance of
Rs.500/- against possession of the flat. Said clause mentions that
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time was essence of the contract. Shri Purohit, therefore,
submitted that the Plaintiff had not made the payment of the
balance amount within the time schedule and hence she has not
proved that she was ready and willing to perform her part of the
agreement. He further submitted that at the first instance when the
letter of termination was given to the Plaintiff in 1981 even then
she had not offered to make the entire balance amount. She had
sent a cheque of only Rs.5000/-. Only on the second occasion, she
had sent a cheque of the balance amount as per her own case.
Therefore, her case that she was ready and willing to perform her
part of the agreement cannot be accepted by the Court. As against
these submissions, Shri Shah had pointed out that there was
litigation in the form of Company Petition because of the dispute
inter se between the Directors of the first Defendant Company.
There was nobody to accept the balance payment. The time in the
schedule was meaningless because possession was also not given
on the scheduled date.
52. Having considered the evidence on record, we are
inclined to agree with the submissions made by Shri Shah that it
was not the Plaintiff’s fault that the balance payment was not paid
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to the Defendant No.1. The said agreement itself mentions that
the possession of the flat was to be delivered on 30.5.1977. It is an
accepted fact that by that time there was a dispute between the
Directors and the correspondence shows that construction
ultimately was completed only in the year 1981. The evidence is
led by the Plaintiff that when she went to the office of the
Defendant No.1 for making the balance payment nobody accepted
it. Her case finds support from the circumstances and the evidence
on record.
53. Shri Purohit relied on the judgment of the Hon’ble
Supreme Court in the case of K.S. Vidyanadam to support his
contention. In the said judgment, the Hon’ble Supreme Court has
observed that it had been consistently held by the Courts in India
that in the case of agreement of sale relating to immovable
property, time is not of the essence of the contract unless
specifically provided to that effect. Shri Purohit submitted that in
the present case clause (3) specifically provided that time was the
essence of the agreement. However, as discussed above, the
Defendant No.1 also did not adhere to the schedule and, therefore,
by the conduct of the parties it was clear that the schedule to make
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payment had lost its significance. In this background, it cannot be
said that since the Plaintiff did not make payment as per the
schedule mentioned in the contract she failed to prove that she was
ready and willing to perform her part of the agreement. Hence, we
are of the view that the Plaintiff has proved that she was ready and
willing to perform her part of the agreement. The finding to that
effect is correctly recorded in the impugned judgment. On the
same reasoning the learned Judge has rightly decided the issue
No.2 that the Plaintiff has proved that the notice of termination
dated 30.9.1981 is illegal and bad in law. We do not find any
reason to take a contrary view on this issue.
54. The next question which needs to be decided is
whether the Defendant No.4 proved that he is a bonafide purchaser
of the said flat by paying value and without notice of the prior
agreement. This issue is important because the Defendant No.4 is
claiming protection under Section 19 sub-section (b) of the Specific
Relief Act, 1963 which provides that the specific performance of a
contract may be enforced against either party to the contract or any
person claiming under him by a title arising subsequently to the
contract, except a transferee for value who has paid his money in
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good faith and without notice of the original contract.
55. Shri Shah relying on the observations of the Hon’ble
Supreme Court in the case of Jagan Nath submitted that the
burden to prove that the Defendant No.4 was a bonafide purchaser
for value without notice of the suit agreement squarely rested on
the shoulder of such subsequent transferee. However, in the same
judgment the Hon’ble Supreme Court has further observed that
once the evidence is led by both the sides, the question of initial
onus of proof pales into insignificance and the Court will have to
decide the question in controversy in the light of the evidence on
record.
56. Therefore, it is necessary to decide whether the
Defendant No.4 falls in such category to claim protection from
enforcement of specific performance of the suit agreement. The
first hurdle which the Defendant No.4 will have to cross is to show
whether he can raise such contention without there being a specific
cross-objection made in that regard.
57. The Defendant No.4 has filed his own Appeal i.e.
Appeal No.490/2010 against the same impugned judgment and
order. In any case the Defendant No.4 was entitled to attack an
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adverse finding in the impugned judgment and order without filing
cross-objection. The position in law is made clear by the Hon’ble
Supreme Court in the case of Ravinder Kumar Sharma. In
paragraph-23, the Hon’ble Supreme Court has specifically held
thus:
“23. …….. We hold that the respondent-defendant in an
appeal can, without filing cross-objections attack
an adverse finding upon which a decree in part has
been passed against the respondent, for the
purpose sustaining the decree to the extent the
lower court had dismissed the suit against the
defendant-respondent. The filing of cross-
objection, after the 1976 Amendment is purely
optional and not mandatory. ……..”
. In the present case, therefore, Shri Purohit is right in
submitting that an adverse finding that the Defendant No.4 is not a
bonafide purchaser without notice can be attacked by the
Defendant No.4 before us. This position is further clarified in the
case of S. Nazeer Ahmed in paragraph-7 as follows :
“7. The High Court, in our view, was clearly in error in
holding that the appellant not having filed a memorandum
of cross-objections in terms of Order 41 Rule 22 of the
Code, could not challenge the finding of the trial court that
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the suit was not barred by Order 2 Rule 2 of the Code. The
respondent in an appeal is entitled to support the decree of
the trial court even by challenging any of the findings that
might have been rendered by the trial court against
himself. For supporting the decree passed by the trial
court, it is not necessary for a respondent in the appeal, to
file a memorandum of cross- objections challenging a
particular finding that is rendered by the trial court against
him when the ultimate decree itself is in his favour. A
memorandum of cross-objections is needed only if the
respondent claims any relief which had been negatived to
him by the trial court and in addition to what he has
already been given by the decree under challenge. We
have therefore no hesitation in accepting the submission of
the learned Counsel for the appellant that the High Court
was in error in proceeding on the basis that the appellant
not having filed a memorandum of cross-objections, was
not entitled to canvass the correctness of the finding on the
bar of Order 2 Rule 2 rendered by the trial court.”
58. In this background, we can consider whether there is
evidence to show that the Defendant No.4 was a bonafide
purchaser and had paid value for the flat and was without notice of
the suit agreement.
59. The learned Judge has held that the Defendant No.4
failed to take necessary precautions to find out registration of the
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suit agreement. In paragraph-20 of the impugned judgment, the
learned Judge observed that the suit agreement was lodged for
registration on 14.3.1977 and it was registered on 15.12.1978. It
was further observed that the Defendant No.4, in his evidence, had
not specifically stated that search was caused to be taken in the
office of the Registrar of Assurances before entering into an
agreement for sale with the Defendant No.3. The Defendant No.4,
in his cross-examination, had answered that he had checked up
with the Clerk of Sub-Registrar’s office whether any
lis pendens
was registered and the answer was in the negative and when he
was asked as to whether he had taken any search of the land
records to verify whether there were any registered documents
executed relating to the said flat, his answer was that he had
checked the receipt dated 17.3.1982 regarding registration of the
agreement for sale in favour of the Defendant No.3 and he had
found the receipt to be genuine. The learned Judge observed that
while it was true that the notice of
lis pendens was not registered
but since the suit agreement was registered, the Defendant No.4
had constructive notice of the suit agreement and that it was not
the case of the Defendant No.4 that he had caused regular search
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to be taken in the office of the Sub-Registrar of Assurances. The
learned Judge observed that the Defendant No.4 had not taken
precautions which any prudent purchaser ought to have taken.
And, therefore, it was held that he was not a bonafide purchaser.
Shri Shah supported those observation and relied on the
observations of the Hon’ble Supreme Court in the judgments in the
cases of Ram Niwas (Dead) through L.Rs. Vs. Bano and others
14
and
Suraj Lamp and Industries Private Limited through Director Vs. State of
Haryana and another
15
. He relied on Section 3 of the Transfer of
Property Act, 1882 defining the term “a person is said to have
notice”. Shri Shah submitted that in Ram Niwas’s case, the
Hon’ble Supreme Court had observed that the notice could be (i)
actual, (ii) constructive, or (iii) imputed. In the present case,
according to Shri Shah the Defendant No.4 had constructive notice.
60. Shri Shah further relied on the observations of the
Hon’ble Supreme Court in the case of Suraj Lamp & Industries
Private Limited and in particular paragraphs-17 & 18 therein, which
read thus:
“17. Section 49 of the said Act provides that no document
required by Section 17 to be registered shall, affect
14 (2000) 6 SCC 685
15 (2009) 7 SCC 363
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any immovable property comprised therein or received
as evidence of any transaction affected such property,
unless it has been registered. Registration of a
document gives notice to the world that such a
document has been executed.
18. Registration provides safety and security to
transactions relating to immovable property, even if
the document is lost or destroyed. It gives publicity
and public exposure to documents thereby preventing
forgeries and frauds in regard to transactions and
execution of documents. Registration provides
information to people who may deal with a property,
as to the nature and extent of the rights which persons
may have, affecting that property. In other words, it
enables people to find out whether any particular
property with which they are concerned, has been
subjected to any legal obligation or liability and who is
or are the person/s presently having right, title, and
interest in the property. It gives solemnity of form and
perpetuate documents which are of legal importance or
relevance by recording them, where people may see
the record and enquire and ascertain what the
particulars are and as far as land is concerned what
obligations exist with regard to them. It ensures that
every person dealing with immovable property can
rely with confidence upon the statements contained in
the registers (maintained under the said Act) as a full
and complete account of all transactions by which the
title to the property may be affected and secure
extracts/copies duly certified.”
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61. In this context it is necessary to see what is meant by “a
person is said to have notice” as per the Transfer of Property Act,
1882, which provides thus :
3. Interpretation clause
In this Act, unless there is something repugnant in the
subject or context,--
xxxxxx
xxxxxx
“a person is said to have notice" of a fact when he actually
knows that fact, or when, but for wilful abstention from an
enquiry or search which he ought to have made, or gross
negligence, he would have known it.
Explanation I--Where any transaction relating to immovable
property is required by law to be and has been effected by a
registered instrument, any person acquiring such property or
any part of, or share or interest in, such property shall be
deemed to have notice of such instrument as from the date
of registration or,
where the property is not all situated in
one sub-district, or where the registered instrument has been
registered under sub-section (2) of section 30 of the Indian
Registration Act, 1908 (16 of 1908), from the earliest date
on which any memorandum of such registered instrument
has been filed by any Sub-Registrar within whose sub-
district any part of the property which is being acquired, or
of the property wherein a share or interest is being acquired,
is situated:
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Provided that--
(1) the instrument has been registered and its registration
completed in the manner prescribed by the Indian.
Registration Act, 1908 (16 of 1908) and the rules made
thereunder,
(2) the instrument or memorandum has been duly entered or
filed, as the case may be, in books kept under section 51 of
that Act, and
(3) the particulars regarding the transaction to which the
instrument relates have been correctly entered in the indexes
kept under section 55 of that Act.
Explanation II.--Any person acquiring any immoveable
property or any share or interest in any such property shall
be deemed to have notice of the title, if any, of any person
who is for the time being in actual possession thereof.
Explanation III.--A person shall be deemed to have had
notice of any fact if his agent acquires notice thereof whilst
acting on his behalf in the course of business to which that
fact is material:
PROVIDED that, if the agent fraudulently
conceals the fact, the principal shall not be charged with
notice thereof as against any person who was a party to or
otherwise cognizant of the fraud.”
62. Admittedly, when the Defendant No.4 entered into a
transaction with the Defendant No.3, the Plaintiff was not in
possession of the said flat. Therefore, she cannot be said to have
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had constructive notice as per Explanation II.
63. As far as Explanation I is concerned, the proviso to that
explanation is important. There are three different definite steps
mentioned in that proviso. The first requirement is that the
instrument has to be registered, the second requirement is that the
registration is completed in the books kept under Section 51 of that
Act, and the third requirement is that the particulars regarding the
transaction to which the instrument relates have been correctly
entered in the relevant book under Section 55 of the said Act.
64. In the present case, the Plaintiff has proved only the
first requirement that the suit agreement was registered but the
other two requirements are not proved. They needed to be proved
separately. The same view is taken by a Single Judge Bench of the
Allahabad High Court in the case of Dinesh Chandra. Paragraphs-
26, 27 and 28 of the said judgment read thus:
“26. It is pertinent to note that Explanation-I is attracted
only when the conditions stipulated in First Proviso to
the Explanation-I are complied with, which are:-
(1) the instrument has been registered and its
registration has been completed in the manner
prescribed by the Indian Registration Act, 1908 and
the rules made thereunder;
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(2) the instrument or memorandum has been duly
entered or filed, as the case may be in books kept
under Section 51 of that Act and
(3) the particulars regarding the transaction to which
the instrument relates have been correctly entered in
the indexes kept under Section 55 of that Act.
27. In the present case, the first condition enumerated in
the proviso i.e. registration of agreement to sell has
been completed in the manner provided by the
Registration Act and the Rules framed thereunder are
complied with. Condition Nos. 2 and 3 enumerated in
First Proviso are not fulfilled in the instant case as is
evident from the perusal of the plaint since the Plaint
reveals that the pleading in the plaint is silent in
respect to the compliance of condition Nos. 2 and 3
enumerated in the First Proviso to Explanation-I.
Fulfilment of the above three conditions is necessary
to seek the benefit of Explanation-I to the expression
"a person is said to have notice". In other words, to
seek the benefit of the expression "a person is said to
have a notice", the plaintiff has to establish that the
above three conditions enumerated in the proviso to
Explanation-I have been fully complied with.
28. There is no pleading in the plaint that the instrument or
memorandum had been duly entered and filed in the
books kept under Section 51 of the Registration Act,
and particulars of the transaction to which the
instrument relates have been correctly entered in the
indexes kept under Section 55 of the Registration Act.
Unless three conditions enumerated in the First
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proviso to Explanation-I are complied with and
established on record that after the due registration of
the instrument, the entries have been made as
contemplated under Sections 51 and 55 of the
Registration Act, no benefit of the expression "a
person is said to have notice" in the interpretation
clause defined in Section 3 of the Act 1882, in the
opinion of the Court, can be extended to a party that
on registration of an instrument, a person is supposed
to have notice about such fact. Thus, for the aforesaid
reason, the submission of the counsel for the appellant
regarding Explanation -I to the expression "a person is
said to have notice" is devoid of merits and is
rejected.”
65. Similar view is taken by the Hon’ble Supreme Court in
the case of Dattatreya Shanker Mote. The relevant portion from
Paragraph-5 of the said judgment reads thus :
“5. ………. The Explanation in Section 3 of the Act which
provides for fixing a party with constructive notice in
respect of registered transactions, contains a proviso to
Explanation I that in order to amount to constructive
notice, it is necessary that (1) the instrument has been
registered and its registration completed in the manner
required by the Registration Act and the Rules made
thereunder, (2) the instrument has been duly entered or
filed in books kept under Section 51 of the Registration
Act, and (3) the particulars regarding the transaction to
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which the instrument relates have been correctly
entered in the indices kept under Section 55, of that Act.
It further- observed that though in some cases by legal
fiction, constructive notice may be imputed to a party,
in the case before it, it cannot be imputed to the plaintiff
(respondent 14),. since the third condition required for
the purpose was not satisfied. We would, therefore,
accept the finding of both the Courts that respondent
No.,14 had no notice of the prior charge created by the
decree.”
66. In the present case before us also the requirement
Nos.2 & 3 are not proved to be fulfilled by the Plaintiff and hence it
is not possible to hold that the Defendant No.4 had constructive
notice. To that extent, the finding recorded by the learned Judge is
required to be set aside.
67. The evidence shows that the Defendant No.4 has paid
amount of Rs.1,30,000/-. There is no dispute about such payment.
The Defendant No.4’s name was entered into the records of the
society subsequent to the entry in the name of the Defendant No.3.
The evidence shows that right from the year 1986, he was
continuously in possession of the said flat, at least till 2000. His
wedding card and other correspondence shows the same address.
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He had shown payment for the said flat in his Income Tax records.
Thus, the Defendant No.4 has proved that he is a transferee for
value who has paid his money in good faith and without notice of
the earlier contract. It is of course undisputed that the Plaintiff had
not registered the
lis pendens notice.
68. The next question is whether the learned Judge has
properly exercised his discretion. Shri Shah submitted that the
learned Judge erred in holding all the points in favour of the
Plaintiff, but, not granting decree of specific performance by
exercising his discretion under Section 20 of the Specific Relief Act.
To consider this submission, it is necessary to refer to the
observations in the impugned judgment in that behalf. The learned
Judge observed that there was voluminous documentary evidence
to show that from May, 1986 the Defendant No.4 was in
possession of the said flat which was purchased for valuable
consideration of Rs.1,30,000/- and as against that the Plaintiff had
offered balance consideration after two months from the date on
which the notice of termination of the suit agreement was served
on the Plaintiff. The Defendant No.4 was in possession of the said
flat since 1986 onwards after payment of Rs.1,30,000/- and,
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therefore, on these reasonings the learned Judge observed that the
discretion under Section 20 will have to be exercised in favour of
the Defendant No.4 by not granting decree of specific performance.
Shri Shah submitted that the learned Judge erred in exercising the
discretion in favour of the Defendant No.4 and not in favour of the
Plaintiff. He submitted that the Defendant No.4 had not pleaded
hardship at all and no issue was framed and, therefore, it was not
permissible to exercise the discretion on that basis in favour of the
Defendant No.4. In support of this contention, Shri Shah relied on
the observations of the Hon’ble Supreme Court in the cases of A.
Maria Angelena and Prakash Chandra Vs. Narayan.
69. As against that, Shri Purohit submitted that Section 20
sub-sections (1) & (2) operate in different fields. Whereas Section
20(2)(b) refers to hardship for which pleadings and issues may be
necessary. However, sub-section (1) of Section 20 is wider and is
not bound by the illustrations under sub-section (2). In support of
its case, he referred to the observations of the Hon’ble Supreme
Court in the case of Sardar Singh Vs. Krishna Devi and another
16
.
70. To test both these rival contentions, it is necessary to
16 (1994) 4 SCC 18
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consider the provisions of Section 20 of the Specific Relief Act,
1963. Section 20 before amendment reads thus:
“20. Discretion as to decreeing specific performance.—(1)
The jurisdiction to decree specific performance is
discretionary, and the court is not bound to grant such
relief merely because it is lawful to do so; but the
discretion of the court is not arbitrary but sound and
reasonable, guided by judicial principles and capable of
correction by a court of appeal.
(2) The following are cases in which the court may properly
exercise discretion not to decree specific performance:—
(a) where the terms of the contract or the
conduct of the parties at the time of entering into the
contract or the other circumstances under which the
contract was entered into are such that the contract, though
not voidable, gives the plaintiff an unfair advantage over
the defendant; or
(b) where the performance of the contract would
involve some hardship on the defendant which he did not
foresee, whereas its non-performance would involve no
such hardship on the plaintiff; or
(c) where the defendant entered into the contract
under circumstances which though not rendering the
contract voidable, makes it inequitable to enforce specific
performance.
Explanation 1.—Mere inadequacy of
consideration, or the mere fact that the contract is onerous
to the defendant or improvident in its nature, shall not be
deemed to constitute an unfair advantage within the
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meaning of clause (a) or hardship within the meaning of
clause (b).
Explanation 2.—The question whether the
performance of a contract would involve hardship on the
defendant within the meaning of clause (b) shall, except in
cases where the hardship has resulted from any act of the
plaintiff subsequent to the contract, be determined with
reference to the circumstances existing at the time of the
contract.
(3) The court may properly exercise discretion to decree
specific performance in any case where the plaintiff
has done substantial acts or suffered losses in
consequence of a contract capable of specific
performance.
(4) The court shall not refuse to any party specific
performance of a contract merely on the ground that
the contract is not enforceable at the instance of the
party.”
71. The Hon’ble Supreme Court in the case of Sardar Singh
makes distinction between sub-section (1) and sub-section (2) of
the Section 20 of the Specific Relief Act. Paragraph-14 of that
judgment reads thus :
“14. The next question is whether the courts below were
justified in decreeing the suit for specific performance.
Section 20(1) of the Specific Relief Act, 1963 provides
that the jurisdiction to decree specific performance is
discretionary, and the court is not bound to grant such
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relief, merely because it is lawful to do so; but the
discretion of the court is not arbitrary but sound and
reasonable, guided by judicial principles and capable of
correction by a court of appeal. The grant of relief of
specific performance is discretionary. The circumstances
specified in Section 20 are only illustrative and not
exhaustive. The court would take into consideration the
circumstances is each case, the conduct or the parties
and the respective interest under the contract.”
72. In this case, we find that the learned Judge has
properly exercised his discretion in favour of the Defendant No.4
and, therefore, it would not be proper to substitute our discretion
at this stage. We may note here that even in our opinion, it would
not be proper to pass the decree thereby evicting the Defendant
No.4 from the said flat which he is occupying since 1986.
73. A similar view was expressed by the Hon’ble Supreme
Court in the case of Azhar Sultana. While deciding the Appeal on
17.2.2009, the Hon’ble Supreme Court observed that grant of
decree for specific performance of contract is discretionary. The
contesting Respondents were living in the property since 1981 in
their own right. There was absolutely no reason as to why they
should be forced to vacate the said property at that juncture.
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In the present case also, as mentioned earlier, the
Defendant No.4 is occupying said flat since May, 1986.
74. In the case of Mysore State Road Transport Corporation,
the Hon’ble Supreme Court observed that it was only if the
discretion not having been exercised by the lower Court in the
spirit of the statue or fairly or honestly or according to the rules of
reason and justice, that the order passed by the lower Court can be
reversed by the superior Court. In the present case, we do not have
any such reason to reverse the discretion exercised by the learned
Judge in favour of the Defendant No.4.
75. As far as the damages to the Plaintiff are concerned, we
see no reason to interfere with that part of the decree. Those
damages are given based on the sound reasoning.
76. Hence, we answer the points for determination as
follows :
i. The Plaintiff has proved that she was always ready and willing to
perform her part of the obligations under the agreement for sale
dated 9.1.1977.
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ii. The Plaintiff has proved that the notice of termination dated
13.9.1981 was illegal and bad in law.
iii. The Defendant No.4 is a transferee for value, who has paid his
money in good faith and without notice of the original contract,
and Defendant No.4 could raise an objection to a finding to the
contrary without filing a formal memo of cross-objection.
iv. The discretion exercised in favour of the Defendant No.4 while
denying the relief for specific performance of the agreement for
sale dated 9.1.1977 to the Plaintiff is proper.
v.The decree needs no interference.
77. With the result, the decree passed by the learned Judge
dated 14.1.2010 passed in Suit No.1642/1984, is confirmed. No
order as to costs. The decree be drawn accordingly.
78. Appeal No.171/2010 is dismissed and Appeal
No.490/2010 is disposed of in the aforesaid terms.
(SANDESH D. PATIL, J.) (SARANG V. KOTWAL, J.)
Deshmane (PS)
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79. At this stage, learned Senior Counsel appearing for the
Appellant in Appeal No.171/2010 submits that the interim order
dated 29.3.2010 be continued for a period of six weeks. Learned
counsel for the Respondent No.4 opposes this prayer. However,
considering that the interim relief was operating for a number of
years, we are inclined to accept that request. Therefore, the interim
order granted vide order dated 29.3.2010 is extended by a further
period of six weeks from today.
(SANDESH D. PATIL, J.) (SARANG V. KOTWAL, J.)
Deshmane (PS)
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PRADIPKUMAR
PRAKASHRAO
DESHMANE
Digitally signed
by
PRADIPKUMAR
PRAKASHRAO
DESHMANE
Date:
2026.04.02
16:19:37
+0530
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