REPORTABLE

  IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NO. 5382 OF 2007

MADHUKAR NIVRUTTI JAGTAP & ORS. …APPELLANT(S)

                                        VS.

SMT. PRAMILABAI CHANDULAL PARANDEKAR & ORS.           …RESPONDENT(S)

JUDGMENT

Dinesh Maheshwari, J.

1. This appeal by special leave arises out of a civil suit (No. 83 of 1968)

for specific performance of agreement for sale of agricultural land in Survey

No. 64 admeasuring 50 acres and 39 gunthas, situated at village Gulvanchi,

Taluka - North Solapur1. In its judgment and decree dated 13.04.1984, the

Trial Court declined the relief of specific performance but decreed the suit

for  the  alternative  relief  of  money  recovery.  On  30.11.1987,  the  First

Appellate  Court,  while  dismissing  the  contesting  plaintiffs’  appeal  (Civil

Appeal No. 546 of 1984), affirmed the decree of the Trial Court. However,

the  High  Court  of  Judicature  at  Bombay  allowed  the  second  appeal

1 Hereinafter referred to as ‘the suit property’ or ‘the land in question’.

1

preferred by the contesting plaintiffs (Second Appeal No. 176 of 1988) by its

impugned judgment and decree dated 01.08.2007 and decreed the suit for

the  principal  relief  of  specific  performance,  albeit  on  enhanced  sale

consideration with reference to the market value of the land in question.

2. In order to appreciate the relevant features of this case, essentially

pertaining to the reliefs claimed under the Specific Relief  Act, 19632,  the

status and capacity of parties to this litigation may be taken note of at the

outset and as follows: -

2.1. In  the  suit  for  specific  performance  leading  to  this  appeal,  the

respondent No. 1 and the respondent No. 6 had been the plaintiff Nos. 2

and 3 respectively.  The suit was filed by them jointly with the plaintiff No. 1-

late  Shri  Chandulal  Balaprasad  Parandekar,  who  was  the  husband  of

plaintiff  No.  2  (respondent  No.  1  herein)  and  who  expired  during  the

pendency of suit. After the demise of plaintiff No. 1, the daughter of plaintiff

Nos. 1 and 2 was taken on record as plaintiff No. 4. She is respondent No. 2

in this appeal. Therefore, respondent Nos. 1, 2 and 6 of this appeal were

standing in the capacity of plaintiffs (vendees).  

2.2.  On the other hand, the respondent Nos. 3 to 5 of this appeal had

been  the  original  defendant  Nos.  1  to  3  in  the  suit  in  question.  The

defendant  No.  1  (respondent  No.  3)  having  expired,  his  legal

representatives are joined as respondent Nos. 3a to 3d in this appeal. The

agreements forming the subject-matter of this litigation were executed by

2 Hereinafter also referred to as ‘the Act of 1963’.

2

the defendant Nos. 1 to 3 (vendors) in favour of the plaintiff  Nos. 1 to 3

(vendees).

2.3 The appellants of this appeal were subsequently joined as defendant

Nos.  4  to  6 in  the suit  in  question,  as  being the purchasers  of  the suit

property after filing of the suit.3

2.4. It  may also be noticed that an application (IA No.  3 of  2010) was

moved in this appeal pointing out demise of respondent No. 1 (plaintiff No.

2), respondent No. 4 (defendant No. 2), and respondent No. 6 (plaintiff No.

3) with the submissions that the legal representative of the respondent No.

1 was already on record as respondent No. 2; and the legal representatives

of  deceased  respondent  Nos.  4  and  6  may  be  substituted  on  record.

However, this application was rejected on 24.02.2012. On the other hand,

other  applications  (IA  Nos.  5  &  6  of  2013)  for  substitution  of  legal

representatives of deceased respondent No. 5 (defendant No. 3) and for

condonation of delay were granted on 05.08.2013. Be that as it may, the

estate  of  the  original  contesting  plaintiffs  (plaintiffs  Nos.  1  &  2)  is  duly

represented by their daughter (plaintiff  No. 4 - respondent No. 2 herein);

and  the  contest  in  this  litigation  is  essentially  between  her  and  the

appellants (subsequent purchasers).

3. Briefly  put,  the  relevant  background  aspects  of  the  matter  and

respective stands of the parties had been as follows: -

3 As far as feasible, the parties have been referred in this judgment as per their status in the suit.

3

3.1.  The  plaintiffs  filed  the  suit  aforesaid  with  the  averments  that  the

defendant Nos. 1 to 3 had executed an agreement dated 20.09.1965 for

sale of the suit property for a consideration of Rs. 22,951/-; and that a sum

of Rs. 3,500/- was paid as earnest money. It was further averred that crops

were standing on the suit property and hence, possession to the extent of

half portion thereof was to be handed over by the end of the year of 1965;

and that in part performance of agreement, the plaintiffs made payment of a

further sum of Rs. 2,000/- to the defendant Nos. 1 to 3 on 24.09.1965 and

the said defendants handed over possession of  25 acres of  the land in

question to the plaintiffs on 14.11.1965. The plaintiffs further averred that

they  served  a  notice  on  the  defendant  Nos.  1  to  3  on  05.04.1966  for

performance of the agreement in question and, on receipt of this notice, the

said  defendants  executed  a  supplementary  agreement  for  sale;  they

accepted an additional  amount  of  Rs.  500/-  from the plaintiffs;  and they

handed over possession of the remaining part of the land in question to the

plaintiffs. The plaintiffs also averred that in this manner, a sum of Rs. 6,000/-

was paid to the defendant Nos. 1 to 3 as part payment of the total sale

consideration  and  the  remaining  sale  consideration  was  settled  at  Rs.

11,951/-,  after  deducting  Rs.  5,000/-  towards  encumbrances;  and  on

payment of this amount, the defendant Nos. 1 to 3 were liable to execute

the sale deed in their favour within a time span of 15 days. The plaintiffs

averred that they were ready to perform their part of the contract but the

defendant  Nos.  1  to  3  failed  to  execute  the  sale  deed  for  the  land  in

4

question. With these averments, the plaintiffs sought the relief of specific

performance of the agreement for sale and in the alternative, also prayed

for recovery of earnest money with interest and for damages. The reliefs

claimed in the plaint, being relevant for present purposes, may be take note

of as follows: -

“10) The Plaintiffs pray that,

A)  The Defendants may be ordered to execute the sale- deed in respect of the land described in plaint paragraph 1,  by  accepting  Rs.16,951/-  from the plaintiffs  and to mention in the sale-deed that, in case, the Defendants can not ward off the charges on the land, being the sum of  Rs.  5,000/-,  before  the  execution  of  the  sale-deed then the said amount may be deducted from the sale price  and the  plaintiffs  shall  obtain  assurance for  the same and the defendant Nos. 1 to 6 may be ordered to join the defendant No.1 to 3, in execution of the sale- deed. B)  If it is proved that, perhaps the possession of the land  received  by  the  Plaintiffs  by  way  of  part performance,  is  taken  by  the  Defendants  and  the possession  is  of  the  Defendants  only,  then  the Defendants may be ordered to hand over the land. C) In case, if it happens that, for any reason sale-deed pertaining to the suit land can not be executed in favour of the plaintiffs, then the defendants may be ordered to pay to the plaintiffs the sum accepted by the defendants towards  the  earnest  money  Rupees  6,000/-  and damages thereon at the rate of Rs. 2% p.a.   And the sum of Rupees 15,000/- towards the losses on account of breach of Agreement by the Defendants and it may also be ordered that the encumbrances in respect of the said amount has been placed on the suit land. D)   The  Defendants  may  be  ordered  to  pay  to  the plaintiffs the entire cost, including advocates fee, of the present suit. E)  Other just and proper orders may be passed.”

5

3.2. In their written statement, the defendant Nos. 1 to 3 (vendors) though

admitted  the  execution  of  agreement  dated  20.09.1965  as  also

supplementary agreement dated 28.04.1966 but then, claimed that the said

agreements were executed only as collateral security for a loan advanced

by the plaintiff  No. 1 and not for the sale of  property.  These defendants

asserted that the plaintiff No. 3 had introduced them to the plaintiff Nos. 1

and 2, who in turn, had advanced the loan to them. They further asserted

that though the agreement was originally executed only in favour of plaintiff

No.  1,  the  names  of  other  plaintiffs  were  incorporated  at  the  behest  of

plaintiff No.3; and that they had never parted with possession of the land in

question.  

3.3. The defendant Nos. 4 and 5 were subsequently impleaded in the said

suit as they had purchased 25 acres of the land in question by way of a sale

deed dated 10.07.1978, which was executed by the defendant No. 1. The

defendant  No.  6  was also impleaded as a subsequent  purchaser of  the

remaining portion of the land in question, by way of another sale deed dated

18.09.1968.  These  defendants  contended  that  they  were  bona  fide

purchasers  having  no  knowledge  of  the  aforementioned  transaction

between the plaintiffs and defendant Nos. 1 to 3.  

4. On completion of pleadings of parties, the Trial Court framed as many

as 20 issues for determination of the questions involved in the matter. After

taking the evidence and having heard the parties, the Trial Court proceeded

to dismiss the suit for specific performance while recording the basic finding

6

to the effect that the documents in question (the alleged agreement for sale

as also the supplementary agreement) were, in fact, executed as security

for loan and not for sale of the suit property to the plaintiffs. The Trial Court,

inter  alia,  observed  that  the  sale  consideration  of  Rs.  22,951/-  was  a

peculiar  one,  because  in  the  normal  course,  the  parties  do  not  fix  the

consideration amount in such an odd figure and even the rate of Rs. 450/-

per  acre  did  not  match  with  the  consideration  amount  stated  in  the

agreement. The Trial Court also held that the plaintiffs had failed to prove

that they were handed over possession of the suit property in pursuance of

the  agreements  in  question.  In  view  of  its  finding  on  the  nature  of

transaction, the Trial Court observed that the issue regarding readiness and

willingness of the plaintiffs did not survive for consideration. The Trial Court,

of course, held that the transactions effected in favour of defendant Nos. 4

to 6 were hit by the doctrine of lis pendens as per Section 52 of the Transfer

of Property Act, 18824; and that the defendant Nos. 4 to 6 were not  bona

fide purchasers of suit property. However, in view of its findings on material

issues, the Trial Court held that the plaintiffs were not entitled for specific

performance and recovery of possession but then, directed that the amount

paid  by  the  plaintiffs  i.e.,  the  sum of  Rs.  6,000/-,  be  returned  to  them,

together with interest at the rate of 6% per annum from the date of decree

until payment.

4 Hereinafter also referred to as ‘the T.P. Act’.

7

5.    Aggrieved by the judgment and decree of the Trial Court, the plaintiff

Nos. 1, 2 & 4 preferred the first appeal that was considered and dismissed

by III Addl. District Judge, Solapur by way of the judgment and decree dated

30.11.1987.  The  First  Appellate  Court,  on  re-appreciation  of  evidence,

affirmed the principal findings of the Trial Court on the nature of transaction,

while observing that  the plaintiffs had failed to prove that  the amount in

question was not that of a loan advanced, as contended by the defendant

Nos. 1 to 3. In regard to this question relating to the nature of transaction,

the First appellate Court specified the circumstances being relied upon by it

in paragraph 17 of its judgment as follows:-

" 17.  Following are the circumstances which reveal that the documents on which the Plaintiffs have relied upon that the Defendants Nos. 1 to 3 had agreed to sell the suit land, were for the purpose of collateral security to the loan advanced and the intention of the parties to them was not to sell  the land as mentioned in those documents.  

(i)    As compared to the total price for the land agreed to be sold, a partly sum was paid towards the advance payment of the price. (ii)    The possession of the land was never delivered to the Plaintiffs in pursuance of the agreement of sale. (iii) The Plaintiff Nos. 1 and 2 must not be interested in purchasing the land. (iv)  The  notice  dated  5.4.1966  was  issued  by  the Plaintiffs asking the Defendants Nos. 1 to 3 to execute the  sale-deed  and,  therefore,  after  this  notice  the Plaintiffs ought to have got the sale deed executed if at all the Defendants Nos. 1 to 3 had no objection to do so, instead of getting an agreement of sale executed."

5.1. The First  Appellate Court  also held that  the plaintiffs  had failed to

prove their continuous willingness and readiness to perform their part of the

8

contract,  particularly for the reason that despite stating the availability of

sufficient consideration with them, the plaintiffs got executed supplementary

agreement rather than the sale deed. The First Appellate Court decided this

question against the plaintiffs while observing as under:-

   “(24) As discussed above, according to the terms of the  agreement  of  sale,  the  sale-deed  was  to  be executed on or about Chaitra Shubha 1, Shake 1888 means on 23rd March, 1966 according to the Gregorian Calender.  The  Plaintiffs  issued  the  notice  asking  the Defendant  Nos.  1  to  3  to  execute  the  sale-deed  on 5.4.1966 means after the date on which the sale deed was  got  to  be  executed  according  to  the  terms  laid down in the agreement of  sale.  The Notice (Exb. 87) issued  by  the  plaintiffs  being  after  the  period  before which  the  sale  deed  was  to  be  executed  cannot  be used  for  proving  that  the  Plaintiffs  were  ready  and willing  to  perform  their  part  of  the  contract.  It  was necessary for the Plaintiffs to prove that before Chaitra Shudha 1, Shake 1888 means 23rd March, 1966 they were ready and willing to get the sale-deed executed in terms of the agreement of sale but there is no evidence to prove that before Chaitra Shudha 1, Shake 1888 the Plaintiffs were ready and willing to perform their part of contract.  When  the  Plaintiffs  had  sufficient consideration  in  their  hand  to  make  payment  of  the entire price of the land and when there was not difficulty for the Defendants Nos. 1 to 3 to dispose of the, it is not explained why the supplementary agreement was got executed  instead  of  getting  the  sale-deed  executed. The  postponement  of  the  sale-deed  to  which  the Plaintiffs gave consent clearly suggests that the parties were in fact not intending to execute the sale-deed. The Plaintiffs have, thus failed to prove that they were ready and willing to perform their part of contract of getting the sale-deed executed within the time limit proving in the earlier agreement of sale."

5.2. The First Appellate Court affirmed the finding that the defendant Nos.

4 to 6 were not bona fide purchasers while observing that even if they had

9

alleged want of knowledge about the agreement in question, given the size

of the village and the population thereof, they were aware of the pending

litigation. However, the First Appellate Court observed that even though the

transactions  with  defendant  Nos.  4  to  6  were  hit  by  the  doctrine  of  lis

pendens, but the same would not affect the validity of sale deeds executed

in  their  favour,  as  the  alleged  agreements  were  executed  only  for  the

purpose of collateral security for the loan advanced. 5.3.  In view of its findings, the First Appellate Court affirmed the decree of

the  Trial  Court  and  dismissed  the  appeal.  Aggrieved  by  the  decree  so

passed by the Trial  Court  and affirmed by the First  Appellate Court,  the

plaintiff Nos. 1, 2 & 4 preferred second appeal before the High Court.

6.    The second appeal so filed by the contesting plaintiffs was admitted by

the High Court while formulating the following substantial questions of law

for consideration:-

“(a)  Whether,  in  a  suit  for  specific  performance  of agreement,  in  order  to  establish  the  readiness  and willingness,  the  plaintiff  has  to  give  notice  to  the defendant  before  the  last  date,  specified  in  the agreement  or  after  the  last  date  specified  in  the agreement but within reasonable time thereafter?  

(b)  What  is  the  true  nature  of  suit  transaction,  viz. Whether  it  is  an  agreement  of  sale  or  whether  it  is security agreement?”  

10

6.1. During  the  course  of  hearing,  the  High  Court  found  yet  another

substantial  question  of  law  arising  for  consideration  and  formulated  the

same as follows:-

“(c)  If  the  sale  transactions  executed  in  favour  of defendant nos.4 to 6 during the pendency of the suit were hit by the doctrine of lis pendente lite, could the transfer of the suit land to defendant nos.4 to 6 be held to be illegal and void ab initio?”

7.     The High Court, in its impugned judgment dated 01.08.2007, examined

the contentions of the parties and upturned the findings of the subordinate

Courts on the question of nature of transaction as also the finding of First

Appellate Court on the question of readiness and willingness on the part of

the plaintiffs to perform their part of the contract.  

7.1. The High Court observed that both the agreements were silent about

any loan transaction between the plaintiffs and the defendant Nos 1 to 3

and  came  to  the  conclusion  that  the  agreements  in  question  were  not

executed as security  against  any loan advanced to the defendants.  The

High Court referred to the decision of this Court in the case of Umabai and

another v.  Nilkanth Dhondiba Chavan (Dead) by LRS.  and another.:

(2005) 6 SCC 243 and held as under:-

“The  agreement  at  Exh.85  was  signed  on  20/9/1965 and in its preamble it is stated that the suit property had become the personal  property of  the vendors i.e.  the present defendant nos.1 to 3 by way of the order dated 16/8/1963 passed by the Mamlatdar of North Solapur. It proceeded  to  state  that  the  said  property  was  being

11

offered to  the plaintiffs  by way of  sale  at  the rate  of Rs.450/- per acre.  By way of  advance, an amount of Rs.3,500/- was received and the remaining amount of Rs.19,451/-  would be paid  at  the time of  signing the sale  deed.  The defendants  had agreed that  the  sale deed will be signed by Chaitra Shudha 1 Shake 1888 or around  that  time.  The  agreement  for  sale  would  be binding on the successor of the vendors. Out of the total land  of  50  acres  39  gunthas,  25  acres  of  land  was having  the  crops  of  groundnuts  and  toor  and  those crops  would  be  harvested  and  possession  would  be given by the end of November, 1965. The possession of the  remaining  land  would  be  handed  over  to  the plaintiffs  on  execution  of  the  sale  deed.  In  this document there is no mention of any security for any loan transaction. The document did not even whisper about  the  loan  being  given  by  the  plaintiffs  at  the request of the defendant nos.1 to 3. At the end of this document  there  is  an  endorsement  made  on 24/11/1965 to the effect  that  an additional  amount  of Rs.2000/- was received by the defendant nos.1 to 3 on that day as the amount was required to be paid for the acquisition of house plot and purchase of buffaloes. It was further  stated that  the said  amount  of  Rs.2000/- would be adjusted against the balance of Rs.19,451/- and  the  remaining  amount  of  Rs.17,451/-  would  be given while executing the sale deed and the sale deed would be executed within the time originally specified. Coming to the supplementary agreement at Exh.86 and signed  on  28/4/1966,  there  is  no  whisper  about  any loan transaction  or  a  security  for  such a  transaction. The  document  is  clearly  titled  as  a  supplementary agreement for sale. It  further states that the suit land had  an  encumbrances  of  additional  Rs.5000/-  which was  to  be  discharged  by  the  plaintiffs  and  balance amount of Rs.11,951/- was to be paid by the plaintiffs at the time of execution of the sale deed. By no stretch of imagination these two agreements at Exhs.85 and 86 could be termed as and by way of security for a loan transaction. This defence was taken by way of an after thought  when the suit  was filed and beyond the oral statement made in the depositions of defendant no.1, there is not even an iota of evidence to hold that these agreements  were  by  way  of  security  for  a  loan transaction. As observed by their Lordships in the case of  Umabai  (Supra)  and  as  is  the  well  established

12

position in law that the agreements have to be read as it is  and  if  so  read  it  is  clear  that  the  agreements  at Exhs.85 and 86 were the agreements for sale and the concurrent findings recorded by both the courts below that  they  were  by  way  of  security  against  loan transaction are unsustainable. It is a perverse finding by both the courts below.”

7.2. On the question of readiness and willingness of the plaintiffs, the High

Court  analysed  the  chronology  of  events,  being  that,  as  per  the  terms

mentioned in the first agreement, the sale deed was to be executed by or on

23.03.1966;  and on the  vendors’ failure  to  execute the  sale  deed,  legal

notice  dated  05.04.1966  was  issued,  which  led  to  the  execution  of

supplementary agreement dated 28.04.1966. With reference to these facts

and events, the High Court was of opinion that the plaintiffs were always

ready  and  willing  to  perform  their  part  of  the  contract.  The  High  Court

observed and held as under:-

“…..Admittedly,  as  per  the  agreement  for  sale  at Exh.85, the sale deed was to be executed by 23/3/1966 and obviously if it was not so done on account of any reason attributable to any of the parties, the question of one party  calling upon the other  unwilling party  by  a legal  notice would arise and there  would  not  be any occasion to issue the legal notice by any of the parties before  23/3/1966  and  in  the  instant  case  the supplementary  agreement  for  sale  at  Exh.86  was signed on 28/4/1966. As the agreement was not singed by  23/3/1966  the  plaintiffs  have  issued  legal  notice dated 5/4/1966 to the defendant nos.1 to 3 calling upon them to execute the sale deed which indicated that the notice was issued at the earliest after the dead-line for signing the sale deed was over. In response to the said notice the defendant nos.1 to 3 held fresh negotiations with the plaintiffs and the supplementary agreement for sale at Exh.86 was signed on 28/4/1966 and, therefore, the findings recorded by the Lower Appellate Court are

13

manifestly erroneous. In the instant case, the plaintiffs were  required  to  give  notice  after  23/3/2006 and not before that and such a notice was given on 5/4/1966. The notice was not required to give before the last date fixed  for  signing  the  sale  deed  i.e.  23/3/1966.  The cause of action to issue the notice will arise only when either of the parties failed to execute the sale deed by the  date  mentioned  in  the  agreement  for  sale.  The substantial  question framed at (a) in para 1 above is answered  accordingly.  It  is,  therefore,  held  that  the plaintiffs have proved that they were always ready and willing  to  perform  their  part  of  the  contract  with  the defendant  nos.1  to  3  for  signing  the  sale  deed consequent to the agreements for sale at Exh.85 and 86.”

7.3.  As regards the defendant Nos. 4 to 6 (appellants herein), the High

Court upheld the findings of the subordinate Courts that they were not bona

fide purchasers; and also observed that the sale transactions in their favour

were made only in order to defeat the claim of the plaintiffs and hence, the

said sale deeds were required to be held illegal. The High Court referred to

a decision of this Court in the case of Sarvinder Singh v. Dalip Singh and

Ors.: (1996) 5 SCC 539 and held, inter alia, as under:-

“8.…….It  is  clear  that  the  sale  transactions  by defendant nos.1 to 3 in favour of defendant nos.4 to 6 were intended to defeat the claim of the plaintiffs in the suit  and  the  suit  property  could  not  have  been transferred in favour of defendant nos.4 to 6 during the pendency of the suit filed by the plaintiffs. The finding recorded  by  the  Lower  Appellate  Court  that  the defendant nos.4 to 6 were not aware of the agreements between the plaintiffs on one hand and the defendant nos.1  to  3  on  the  other  hand,  cannot  be  accepted having regards to the oral evidence of DW 1 and DW 6. The  Lower  Appellate  Court  was  not  right  in  turning down the findings on this  issue recorded by the  trial court. Even otherwise, during the pendency of the suit the  defendant  nos.1  to  3  were  estopped  from

14

transferring  the  suit  land  in  view  of  the  embargo  of Section 52 of the Transfer of Property Act, 1882 and, therefore, the sale deeds in favour of defendant nos.4 and 5 and defendant no.6 executed by defendant nos.1 to 3 are required to be held as illegal…..”

7.4. After  the  findings  aforementioned,  the  High  Court  examined  the

question of relief to be granted. In this regard, the High Court referred to: (a)

the alternative relief  of  money recovery  as claimed in the plaint;  (b)  the

decree as passed by the Trial Court; (c) the fact that the defendant Nos. 4 to

6 were cultivating the land in question for about 40 years; (d) the location of

the  land  in  question  at  about  20  kilometres  from  Solapur  Municipal

Corporation area; and (e) the horticulture growth of the area in question.

With reference to these factors, the High Court considered it appropriate to

fix the market value of the land in question at Rs. 10,000/- per acre.

7.5. On the basis  of  the findings and observations aforesaid,  the High

Court proceeded to decree the suit  for specific performance but with the

stipulations that the plaintiffs would be entitled to receive possession of the

land in question from defendant Nos. 4 to 6 on making payment at the rate

of Rs. 10,000/- per acre, whereafter, all the defendants shall jointly and/or

severally execute the sale deeds in favour of the plaintiffs. The High Court

further ordered that on failure of the plaintiff to make the requisite payment

within a period of  two months,  the defendant  Nos.  4 to 6 shall  pay Rs.

10,000/- per acre to the plaintiffs ‘so as to confirm their title and ownership

over the suit land’. The High Court also directed that the said land shall be

15

used for the purpose of self-cultivation or horticulture. The operative part of

the judgment impugned reads as under:-

“12.  In  the  premises,  the  second  appeal  is  hereby allowed and the decree of the trial court as confirmed by the  Lower  Appellate  Court  is  hereby  substituted  as under:-  

(a) The suit is decreed. The plaintiffs are entitled to get the  decree  of  specific  performance  of  the  contract (Sathe  Khat  dated  20/9/1965  and  the  Supplementary Sathe Khat dated 28/4/1966) executed in their favour.  

(b)  By  way  of  specific  performance  of  contract  the plaintiffs at the first instance shall be entitled to receive the possession of the suit land from defendant nos. 4 to 6  by  paying  them  a  compensation  at  the  rate  of Rs.10,000/-  per  acre  and the  said  defendants  in  turn shall execute the sale deeds jointly and/or severally in favour  of  the  plaintiffs  immediately  on  receipt  of  the compensation  amount.  The  plaintiffs  shall  pay  the compensation within two months from today.  

(c)  In case the plaintiffs jointly and/or  severally fail  to pay  the  compensation  of  Rs.10,000/-  per  acre  to  the defendant nos. 4 to 6 within the stipulated period of two months,  the  said  defendants  shall  pay  an  amount  of Rs.10,000/- per acre to the plaintiffs within a period of two months therefrom so as to confirm their ownership over the suit land.  

(d)  The  land  shall  be  used  for  self  cultivation  or horticulture.  

(e) Costs in cause.  

Fresh decree be drawn in the above terms by the Registry and forward the same to the trial court for its execution.”  

8. Assailing  the  judgment  of  the High  Court,  learned counsel  for  the

appellants-defendant  Nos.  4  to  6  has  strenuously  argued  that  the  High

Court  could  not  have  re-appreciated  the  evidence  on  record  while

16

exercising jurisdiction under Section 100 of the Code of Civil Procedure and

could not have upset the concurrent findings of the subordinate Courts; and

as there was no substantial question of law involved, the second appeal

ought  to  have  been  dismissed.  Learned  counsel  would  submit  that  the

question as to whether the agreements in question were agreements for

sale or were only executed towards security, had been of fact and there was

no  occasion  for  the  High  Court  to  upturn  the  concurrent  findings  of

subordinate Courts that were returned after due appreciation of evidence.

Further, according to the learned counsel, readiness and willingness of the

plaintiffs  has  to  be  demonstrated  during  the  period  specified  in  the

agreement for execution; and the High Court  has erred in assuming the

readiness  and  willingness  on  part  of  the  plaintiffs  even  contrary  to  the

evidence on record. Further, with reference to the fact that at the time of

executing supplementary agreement, an amount of Rs. 500/- was paid by

the plaintiffs  whereas a sum of  Rs.  5,500/-  was earlier  paid  as  earnest

money as against the total sale consideration of Rs. 22,951/-, the learned

counsel  has  contended  that  such  payment  being  wholly  inadequate  as

against the alleged sale consideration, the plaintiffs could not have been

considered ready and willing to perform their part of contract.  

8.1. The learned counsel has elaborated on the submission that even the

notice seeking performance was sent by the plaintiffs only on 05.04.1966

i.e., thirteen days after 23.03.1966, which was the last date prescribed by

the agreement for execution of the sale deed; and even at the later stage

17

after the notice dated 05.04.1966, the vendees settled for a supplementary

agreement and did not seek specific performance, which clearly shows want

for readiness and willingness on their part to perform their obligations under

the agreement. The learned counsel would submit that even if time is not of

the essence of agreement, the vendees ought to have claimed performance

within reasonable time whereas in the present case, there is no evidence as

to the steps taken by the vendees, including verbal or written demands for

performance, for a period of two years after the supplementary agreement

and  until  institution  of  the  suit  on  24.08.1968.  This  delay,  according  to

learned counsel, ought to be considered fatal to the case of the plaintiffs.

The learned counsel has referred to and relied upon the decisions in Azhar

Sultana v. B. Rajamani and Ors.: (2009) 17 SCC 27; Veerayee Ammal v.

Seeni Ammal:  (2002) 1 SCC 134, and  Pushparani S. Sundaram and

Ors. v. Pauline Manomani James (deceased) and Ors.: (2002) 9 SCC

582.

8.2. Learned counsel for the appellants-defendant Nos. 4 to 6 has further

submitted that the High Court has erroneously held that the sale made by

the vendors to the subsequent purchasers is ‘illegal’ though the law remains

settled that the sale to the subsequent purchaser is not illegal or  void ab

initio. The learned counsel has referred to the decision in A. Nawab John

and Ors. v. V.N. Subramaniyam: (2012) 7 SCC 738. The learned counsel

has  contended  that  the  appellants  had  been  the  bona  fide purchasers

having no knowledge about any previous transaction, and on the facts and

18

in the circumstances of this case, decree for specific performance ought not

to have been granted where the plaintiffs failed to prove the execution of the

document as also their possession over the suit land; and where, after a

lapse of 40 years since the execution of alleged agreement, the relief of

specific performance would provide undue advantage to the plaintiffs. The

learned counsel would submit that now, the appellants are in possession of

the  suit  property  for  the  past  50  years  and  have  made  improvements

thereupon; and at this late stage, it would be inequitable to sustain a decree

for  specific  performance,  especially  when  the  Trial  Court  and  the  First

Appellate Court refused this relief. The learned counsel has referred to the

decision in V. Muthusami (Dead) by LRs. v. Angammal and Ors.: (2002)

3 SCC 316. The learned counsel has also submitted that the market value

of the suit land was wrongly calculated by the High Court inasmuch as the

value  for  unirrigated  land in  the  area  in  question  was  Rs.  70,000/-  per

hectare and that of irrigated one was Rs. 1,40,000/- per hectare.

9. Per  contra,  learned  counsel  for  the  contesting  respondent  has

strenuously  argued  that  proper  construction  of  the  agreement  dated

20.09.1965 and supplementary agreement dated 28.04.1966, after reading

them  in  entirety,  would only  lead  to  the  conclusion  that  they  were

agreements for sale and not for security inasmuch as therein, neither there

is any provision for payment of interest nor for re-payment; and there is no

expression  in  the  documents  to  show  that  there  was  any  security

arrangement. The learned counsel has also argued that the plaintiffs had

19

specifically pleaded their readiness and willingness to perform their part of

the  contract  and  such  pleadings  were  not  specifically  denied  by  the

defendants.  Further,  according  to  the  learned  counsel,  the  contesting

plaintiff’s  specific  assertion  in  the  deposition  about  readiness  and

willingness  has  remained  unshaken  in  the  cross-examination.  Learned

counsel  would  submit  that  with  the  repeated  payments  made  by  the

plaintiffs show their readiness and willingness to perform their part of the

contract without any doubt and continuous readiness and willingness could

well be deduced from the conduct of plaintiffs. Therefore, according to the

learned counsel,  the perverse finding of  the First  Appellate Court  in  this

regard has rightly been set aside by the High Court. The learned counsel

has also argued that the appellants had not been bona fide purchasers of

the suit property and their sale transaction is clearly hit by the doctrine of lis

pendens as per Section 52 of the T.P. Act; and, for want of  bona fide, the

appellants are not entitled for any equitable relief. The learned counsel has

referred to and relied upon the decision in Guruswamy Nadar v. P. Lakshi

Ammal (Dead) through LRs and Ors.: 2008 (5) SCC 796.  The learned

counsel has also argued that the High Court has justifiably proceeded to

balance  the  equities  by  directing  the  plaintiff  to  pay  enhanced  sale

consideration and hence, no interference is called for in this appeal.  

10. We have bestowed anxious consideration to  the rival  submissions

and have scanned through the material placed before us for perusal.

20

11. On the submissions made by the learned counsel for the parties and

in  the  given  set  of  fact  and  circumstances,  the  principal  point  for

determination in this appeal is as to whether the High Court was justified in

entertaining the second appeal; and in upsetting the judgment and decree

impugned?  Three–fold  basic  questions  need  to  be  addressed  to  for

determination of this point. The first question is as to whether the agreement

dated  20.09.1965  and  supplementary  agreement  dated  28.04.1966  had

been for sale and had not been the documents executed towards security

for a loan taken by the defendant Nos. 1 to 3? If the answer to the first

question is in favour of the plaintiffs and the agreements in question are

held to be those for sale of property, the second question would be as to

whether the plaintiffs were always ready and willing to perform their part of

the contract and no personal bar operates against them so as to enforce the

specific performance of the agreement in question. For effective disposal of

this matter, the third question would be as to whether the appellants had not

been bona fide purchasers and the sale transactions in their favour relating

to the property in question are hit by the doctrine of lis pendens? However,

as  shall  be  noticed  hereafter  later,  even  if  the  questions  foregoing  are

answered  in  favour  of  the  plaintiffs,  another  point  would  still  arise  for

determination as to whether, on the facts and in the circumstances of this

case,  the  decree  passed  by  the  High  Court,  for  the  relief  of  specific

performance on enhanced market value of the suit property, is justified or if

any other form of relief shall meet the ends of justice?

21

Nature of transaction between the plaintiffs and defendant Nos. 1 to 3

12. As regards the question concerning the nature of transaction under

the  agreements  in  question,  as  noticed,  the  Trial  Court  and  the  First

Appellate Court held that such agreements had been towards security and

not for sale.  The High Court  has, however,  disagreed and has held that

such findings by the subordinate Courts suffered from perversity and the

documents in question were not towards security for any loan transaction;

neither the documents say so nor there was any evidence on record to hold

that  these  agreements  were  executed  by  way  of  security  for  a  loan

transaction.  

12.1.  We  have  minutely  examined  the  translated  copies  of  the  said

agreements  dated  20.09.1965  and  28.04.1966,  as  placed  before  us  for

perusal.  In  the  initial  agreement  dated  20.09.1965,  after  mentioning  the

area, survey number and boundaries of the land in question, the vendors

had stated as under:-

" The land accordingly within the boundaries, including stones, earth , well, trees, shrubs, etc.

  This land agreed to be sold at the rate of Rs. 450/- per acres, area 50 Acres, 39 Gs. for total price of Rs. 22951/-  Rs. Twenty-two thousand,  Nine Hundred and fifty  one.  This  agreement  is  accordingly  made.  Today and earnest amount of Rs. 3500/- Rs. three Thousand, five hundred. The remaining amount or Rs. 19451 is to be paid at the time of sale deed. The sale transaction would be completed on Chaitra Sud I, Shake 1, 1888 or thereabout.  

   The expense to be incurred for  sale-deed are to borne by you. The sale deed is to be executed by us

22

and to be taken by you. This agreement is accordingly executed, for execution of sale deed. All our heirs shall sign  the  sale  deed.  The  encumbrances  shall  be extinguished  or  Havala  shall  be  given  and  the  said amounts shall be deducted at the time of execution of sale deed and thus the land would be free from any charge. Out of the land, there is crop of groundnut and Toor.  After same would be reaped, actual  possession would be delivered at the time of sale deed by the end of November of 1965. The remaining whole land would be  actually  delivered  to  you  by  completing  the  sale transaction.  Accordingly,  subject  to  fulfilling  the abovementioned conditions, the sale transaction would be completed within limit prescribed. If anybody would commit  breach  of  conditions  he  will  take  action  and expenditure shall be borne by him. The earnest amount of Rs. 3500 Rs. Three thousand and five hundred) is received.

   This  Sathekhat  given  in  writing  on  20.09.1965. Dastur Bhagwa-n Vaman Palaskar resident of Solapur. The sa-le deed of the transactions.

   Note: The sale deed of the dealings (property) shall be  executed  in  your  name or  in  the  names  of  other persons suggested by you.

   The sale deed would be executed –in your name or in the names others suggested by. The earnest amount of earnest of Rs. 3500 received. No complaint.  

  This  Sathekhat  dt.  20.09.1965.  Dastur  Bhagwan Vaman Palaskar, resident of Solapur."

12.1.1.    As noticed,  another  payment  of  Rs.  2,000/-  was made by the

plaintiffs to the defendant No. 1 and an endorsement for adjustment of such

payment  against  the  sale  price  was  made  on  this  very  document  on

24.11.1965 as follows:-

"  I  have  purchased  the  house  building  and  also purchased she-buffalos. For that, I  have received Rs. 2000  in  cash  from  you.  That  amount  should  be

23

deducted  being  paid.  The  remaining  amount  of  Rs. 17451  would  be  received  from  you  and  as  per  the conditions  of  the  Sathekhat,  the  transaction  of  sale would be completed. Sd/-. Date :24.11.1965"

12.1.2.  In  the  supplementary  agreement  dated  28.04.1966,  the  vendors

acknowledged that they had received Rs. 6,000/- from the plaintiffs under

the agreement dated 20.09.1965; and also stated that they had delivered

possession of a part of the land in question on 14.11.1965 and that they had

delivered the possession of entire land to the vendees in part performance.

The  vendors  also  stated  that  there  was  a  charge  of  approximately  Rs.

5,000/- on the land in question and, therefore, after deducting in all a sum of

Rs. 11,000/-, the vendees shall pay the remaining amount of Rs. 11,961/-

and the sale deed would be executed in their favour.  

12.2. There had not been even a remote suggestion in the documents in

question  that  there  was  any  loan  or  borrowing  transaction  between  the

parties and the said documents were being executing towards security. On

the contrary, the recitals and stipulations in the said agreements had only

been in  affirmation of  the agreement  for  sale  and of  the receipt  of  part

payment  from  time  to  time  against  the  sale  consideration.  Of  course,

defendant No. 1, while deposing as DW1 attempted to suggest that he had

approached the plaintiff No. 3 seeking loan to the tune of Rs. 5000-5500/-

through a broker; and, at the instance of the plaintiff No. 3, executed the

document in question as security while taking loan at the interest rate of 1

per cent per month. This defendant also admitted having obtained another

24

sum of Rs. 2,000/- from the plaintiff No. 1 and having put an endorsement

on the document  in  question.  He,  however,  denied having received any

other  amount  or  having  delivered  possession  of  the  suit  property.  The

evidence on the part of the defendants in this case remains rather vague

and sketchy; and it is difficult to accept the oral assertions of defendant No.

1 as against the recitals in the agreements.  

12.3. It is also noticed that the subordinate Courts proceeded to doubt if the

transaction was at all intended to be of sale while questioning as to why the

parties fixed the consideration in odd figures i.e., Rs. 22,951/-; and while

observing that when as per the documents, the land was being sold @ Rs.

450/- per acre, the total consideration for the land in question would come to

Rs. 22,938.75 and not Rs. 22,951/-.  The Trial Court also raised doubts on

the suggestion of the plaintiffs that possession of the land in question was

handed  over  to  them.  The  First  Appellate  Court  even  observed  that  as

against the sale consideration, only a paltry amount was paid in advance

and questioned as to why the supplementary agreement was executed after

serving of notice. On the other hand, the High Court minutely examined the

evidence on record and observed that there was not even a whisper about

the loan transaction; and that as per the endorsement made on 24.11.1965,

another amount of Rs. 2,000/- was received by the defendant Nos. 1 to 3.

As regards the supplementary agreement dated 28.04.1966, the High Court

again found that there was no whisper about any loan transaction or any

security for such a transaction and the document was clearly executed as

25

being  the  supplementary  agreement  for  sale  while  even referring  to  the

encumbrances of Rs. 5,000/-, which were to be discharged. The High Court

observed that by no stretch of imagination these two agreements could be

termed as and by way of security for a loan.  

12.4.  Having examined the matter in its totality, we have no hesitation in

upholding the findings of the High Court that have been returned after due

consideration  of  the  material  on  record  and  with  reference  to  the  law

applicable to the case. It is plain and obvious that the Trial Court and the

First Appellate Court proceeded on entirely irrelevant and rather baseless

considerations while failing to consider that such findings on the nature of

transaction evidenced by the agreements in question could not have been

rendered on surmises and conjectures.  

12.4.1.  As to whether the possession of the land in question was delivered

to the plaintiffs or not, could not have been taken as a factor decisive as

regards nature of transaction.  Moreover, execution of the supplementary

agreement  after  notice  dated  05.04.1966  and  after  receiving  further  an

amount  of  Rs.  500/-  by  the defendant  Nos.  1  to  3  could  only  show re-

affirmation  of  the  intention  of  the  parties  towards  the  sale  transaction.

Significantly,  in  the  supplementary  agreement,  the  defendants  not  only

acknowledged the receipt of part consideration to the tune of Rs. 6,000/- but

further agreed for adjustment of  Rs. 5,000/-  towards encumbrances and,

therefore, agreed to receive remaining Rs. 11,921/- at the time of execution

of the sale deed. In our view, looking to the dealings of the parties, this

26

circumstance  about  execution  of  the  supplementary  agreement  only

strengthens the case of the plaintiffs rather than operating against them.  

12.4.2. The  other  observations  of  the  subordinate  Courts  as  regards

quantum of consideration are difficult to be appreciated. Such hair-splitting

exercise by the Trial Court, that on the agreed rate, sale consideration ought

to  have  been  Rs.  22,938.75  and  as  to  why  the  parties  agreed  for  Rs.

22,951/-, had been entirely baseless, rather unwarranted. The observation

of the Trial Court as to why the sale consideration was in odd figures is itself

of  such  oddity  that  any  finding  on  that  basis  could  only  meet  with

disapproval.  Rounding up of the amount of consideration and addition of

one rupee in the last  is not unknown to such transactions. In fact,  quite

contrary  to  what  was  observed  by  the  Trial  Court,  the  figure  of  sale

consideration rather fortifies the deduction that the intention of the parties

had only been towards the transaction of sale. In the ultimate analysis, we

are  satisfied  that  the  High  Court  has  rightly  disapproved  the  baseless

findings of the subordinate Courts and has rightly held that the agreements

in  question  were  executed  for  the  sale  of  suit  property.   Thus,  the  first

question is answered in favour of the plaintiffs.

Readiness and willingness of the plaintiffs to perform their  part of

contract

13. When the agreements in question were for the sale of suit property,

the  plaintiffs  were  entitled  to  take  up  the  action  seeking  specific

performance. However, in order to succeed in their claim, the plaintiffs were

27

required  to  aver  and  prove  that  they  were  always  ready  and  willing  to

perform their part of the contract.  As noticed, the Trial Court chose not to

answer this question in view of its finding on the nature of transaction.  The

First  Appellate  Court  though adverted to this  question but  answered the

same against the plaintiffs, essentially for the reasons that they had failed to

prove if before the stipulated date of execution of sale document, they were

ready  and  willing  to  get  the  sale  deed  executed  and  there  was  no

explanation as to why supplementary agreement was got executed. On this

question, again, the High Court examined the record with reference to the

law applicable and disapproved the finding of the First Appellate Court while

observing that when as per the first agreement, the sale deed was to be

executed by 23.03.1966, there was no occasion for any party to call upon

the other for performance before that date. The High Court also found that

the plaintiffs issued notice on 05.04.1966, calling upon defendants Nos. 1 to

3 to execute the sale deed and,  obviously,  fresh negotiations were held

thereafter  and  hence,  the  supplementary  agreement  was  executed.  The

High Court found the approach of the Appellate Court erroneous and held

that the plaintiffs had proved their readiness and willingness to perform their

part of the contract.   

13.1.  It has been vehemently argued on behalf of the appellants that the

plaintiffs paid only Rs. 500/- while executing the supplementary agreement

dated 28.05.1966 which goes to show that the plaintiffs were not having the

capacity to pay the remaining sale consideration and they were never ready

28

and willing to perform their part of the contract. It has also been argued that

after supplementary agreement dated  28.05.1966 and until filing of the suit

in the year 1968, there was complete silence on the part of the plaintiffs. It

has also been pointed out that the plaintiff No. 3, while deposing as PW1,

stated having relinquished his right to purchase the land in favour of the

plaintiff Nos. 1 and 2 but then, the plaintiff No. 2, while deposing as PW2,

only made a passing statement that she was ready and willing to perform

her part of the contract but there was no indication of her source of funds

and on the contrary, her statement had been that she was a widow and was

having no other source of income.  

13.2.  The question as to whether the plaintiff seeking specific performance

has been ready and willing to perform his part of the contract is required to

be examined with reference to all the facts and the surrounding factors of

the given case. The requirement is not that the plaintiff should continuously

approach  the  defendant  with  payment  or  make  incessant  requests  for

performance. For the relief of specific performance, which is essentially a

species of equity but has got statutory recognition in terms of the Specific

Relief Act, 19635, the plaintiff must be found standing with the contract and

the plaintiff’s conduct should not be carrying any such blameworthiness so

as  to  be  considered  inequitable.  The  requirement  of  readiness  and

willingness of  the plaintiff  is  not  theoretical  in  nature but  is  essentially  a

question  of  fact,  which  needs  to  be  determined  with  reference  to  the

5  Its forerunner being the Specific Relief Act, 1877

29

pleadings and evidence of parties as also to all the material circumstances

having bearing on the conduct of parties, the plaintiff in particular. In view of

the contentions urged, we have scanned through the record to examine if

the finding of the High Court in this regard calls for any interference.  

13.3.  It is noticed that plaintiffs pleaded in paragraphs 6 and 7 of the plaint

that they were ready to get the sale deed executed as per the conditions in

the agreement for sale and also stated that they served the notice, then

supplementary  agreement  was executed;  and then,  on many  occasions,

they asked the defendant to execute the sale deed. The defendant No. 1 in

his written statement merely stated a bald denial that such averments were

false  and  were  ‘not  agreeable  to  the  defendants’.  In  fact,  the  entire

emphasis  of  the  written  statement  had  been  on  the  assertion  that  the

agreement in question was not for sale and was obtained by the plaintiffs

towards security against the amount borrowed by the defendant No. 1.6 The

plea of the plaintiffs as regards their readiness to perform the contract as

per its conditions did not meet with categorical denial from the defendants.

This apart, and as noticed, even at the time of entering into the agreement,

the  plaintiffs  made  payment  of  a  sum  of  Rs.  3,500/-  against  the  sale

consideration of  Rs.  22,951/-.  Moreover,  and much before the stipulated

date of execution of sale deed, they made another payment of Rs. 2,000/-

against the sale consideration. When the sale deed was not executed by

23.03.1966,  the  plaintiffs  served  notice  on  05.04.1966.  The  vendors

6 This plea of the defendants as regards nature of transaction stands rejected for what has been  discussed in paragraphs 12 and its sub-paragraphs hereinbefore.  

30

thereafter executed the supplementary agreement and the plaintiffs made

payment of yet another sum of Rs. 500/- while it was also agreed by the

vendors that the property carried encumbrance to the tune of Rs. 5,000/-,

which was to  be adjusted against  the sale  consideration.  Therefore,  the

plaintiffs were left to make payment of about half of the sale consideration.

The recitals  in  the supplementary  agreement  even suggested about  the

vendors  having  delivered  possession  of  the  property  in  question.  The

plaintiffs have alleged that they lost possession later on. Though the factum

of delivery of possession is disputed by the defendants but such a dispute

does not carry any adverse impact on the rights of the plaintiffs to seek

specific performance.   

13.4.  The  admission  of  plaintiff  No.  3  that  she  was  not  possessed  of

sufficient funds cannot be read in isolation and it cannot be concluded that

she  was  not  possessed  of  sufficient  means  to  pay  the  remaining  sale

consideration. Her statement is required to be visualised in the backdrop of

the  fact  that  her  husband,  plaintiff  No.  1,  had  expired  and  she  had

succeeded to his estate. Her statement, with reference to her understanding

of the matter, could only be interpreted to mean that at the given moment,

she was not off-hand in possession of the money to make payment but such

an expression in her statement cannot lead to the conclusion that making

payment of the remaining sale consideration was beyond her capacity or

that she was not willing to perform her part of the contract. In the ultimate

analysis, we are satisfied that the question of readiness and willingness on

31

the part of the plaintiffs was approached by the First Appellate Court from

an  altogether  wrong  angle  and  was  decided  against  the  plaintiffs  on

irrelevant considerations.  

13.5. So  far  the  period  between  the  year  1966  to  the  year  1968  is

concerned, when the plaintiffs had the limitation of three years for filing the

suit  for  specific  performance,  it  cannot  be said that  during the aforesaid

period, the plaintiffs were required to show overt act by them in furtherance

of the agreement in question. The principles stated in the decisions in Azhar

Sultana, Veerayee Ammal  and Pushparani S. Sundaram (supra), as relied

upon by the learned counsel  for the appellants,  are not of  any doubt or

debate but each of the said cases had proceeded on its own facts. We may

also observe that in the case of  Azhar Sultana,  the Court  found that as

against the agreement dated 04.12.1978, the suit for specific performance

was filed on 07.12.1981, after the property was sold on 31.10.1981; and

that  the  plaintiff  failed  to  show  that  she  was  not  having  notice  of  the

subsequent sale. However, in the said case, the Court directed monetary

payment  to  the  tune  of  twice  the  amount  advanced  by  the  plaintiff.  In

Veerayee Ammal,  this  Court  pointed out  that  the expression ‘reasonable

time’  for  performance  on  the  part  of  plaintiff  would  depend  on  the

circumstances of the case, including the terms of contract. In Pushparani S.

Sundaram,  the basic requirements of Section 16 of the Act of 1963 were

reiterated. In contrast to what is suggested on behalf of the appellants, we

may point out that recently, in the case of R Lakshmikantham  v. Devaraji:

32

Civil  Appeal No. 2420 of 2018, decided on 10.07.2019, this Court has

again explained that when the suit for specific performance is filed within the

period of limitation, delay cannot be put against the plaintiff.  This Court has

said:-

“….In the aforesaid circumstances, the High Court was also incorrect in putting a short delay in filing the Suit against the plaintiff to state that he was not ready and willing.  In India, it is well settled that the rule of equity that exists in England, does not apply, and so long as a Suit for specific performance is filed within the period of limitation, delay cannot be put against the plaintiff -  See Mademsetty  Satyanarayana   v.  G.Yelloji  Rao  and Others AIR 1965 Supreme Court  1405 (paragraph 7) which reads as under:-

“(7)  Mr. Lakshamaihan cited a long catena of English  decisions  to  define  the  scope  of  a Court’s discretion.  Before referring to them, it is  necessary  to  know  the  fundamental difference between the two systems- English and  Indian-qua  the  relief  of  specific performance.  In England the relief of specific performance pertains to the domain of equity; in India,  to that of  statutory law.  In England there is no period of limitation for instituting a suit  for  the  said  relief  and,  therefore,  mere delay  –  the  time  lag  depending  upon circumstances  –  may  itself  be  sufficient  to refuse  the  relief;  but,  in  India  mere  delay cannot be a ground for refusing the said relief, for  the  statute  prescribes  the  period  of limitation.   If  the  suit  is  in  time,  delay  is sanctioned by law; if it is beyond time, the suit will be dismissed as barred by time; in either case, no question of equity arises."”

13.6.   In the present case too, when the plaintiffs had the limitation of three

years for filing the suit and have indeed filed the suit well within limitation;

33

and looking to the overall  circumstances of the case, no aspect of delay

operates against them.

13.7.   Having  examined  the  matter  in  its  totality  and  in  the  light  of

applicable  principles,  we  are  satisfied  that  the  given  set  of  facts  and

circumstances of  this  case lead only  to the conclusion that  the plaintiffs

have shown their  readiness  and willingness  to  perform their  part  of  the

contract and there does not operate any personal bar against their claim for

specific performance. Therefore, the second question is also answered in

favour of the plaintiffs.

Operation of the doctrine of   lis pendens: Section 52 T.P. Act

14. The third question as regards the sale transactions in favour of the

present appellants (the subsequent purchasers) need not detain us longer,

except to correct an error on the part of High Court where it is observed that

such sale deeds are to be treated as illegal.  

14.1.  The  suit  in  question  was  filed  on  26.08.1968.  So  far  the  sale

transaction in favour of the defendant Nos. 4 & 5 (the appellant Nos. 1 & 2

herein), in relation to 25 acres of land out of the suit property, is concerned,

the same was effected by way a sale deed registered only on 10.07.1978

i.e.,  nearly 10 years after filing of the suit.  So far the sale transaction in

favour of the defendant No. 6 (the appellant No. 3 herein), in relation to

other 25 acres of land out of the suit property, is concerned, though it is

suggested that  there  had been an  agreement  (dated 08.05.1968)  in  his

34

favour before filing of the suit but then, admittedly, the sale transaction was

effected by way of a sale deed registered only on 18.09.1968, that had also

been after filing of the suit. The suggestion about want of knowledge of the

subsequent  purchasers  about  the  transaction  of  the  vendors  with  the

plaintiffs  and  about  the  pendency  of  the  suit  has  been  considered  and

rejected by the High Court  and even by the subordinate Court after due

appreciation of evidence on record; and we are unable to find any infirmity

in  these  findings.  Both  the  sale  transactions  in  favour  of  the  present

appellants,  purporting  to  transfer  the  suit  property  in  part,  having  been

effected after filing of the suit, are directly hit by the doctrine of lis pendens,

as embodied in Section 52 of the Transfer of Property Act, 1882 that reads

as under: -

“52.   Transfer  of  property  pending  suit  relating thereto. ----  During the pendency in any Court having authority within the limits of India excluding  the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceedings which  is  not  collusive  and  in  which  any  right  to immoveable  property  is  directly  and  specifically  in question,  the  property  cannot  be  transferred  or otherwise  dealt  with  by  any  party  to  the  suit  or proceedings so as to affect the rights of any other party thereto under any decree or order which may be made therein, except under  the authority of the Court and on such terms as it may impose.

Explanation.----  For  the  purposes  of  this  section,  the pendency of a suit or proceeding shall  be deemed to commence  from  the  date  of  the  presentation  of  the plaint or the institution of the proceeding in a Court of competent jurisdiction, and to continue until the suit or proceedings has been disposed of by a final decree or order  and complete  satisfaction  or  discharge of  such

35

decree  or  order  has  been  obtained,  or  has  become unobtainable by reason of the expiration of any period of limitation prescribed for the execution thereof by any law for the time being in force.”

14.2.   In  the case of Guruswamy Nada (supra),  this  Court  has held  as

under: -   “13. Normally, as a public policy once a suit has been

filed pertaining to any subject-matter of the property, in order  to  put  an  end  to  such  kind  of  litigation,  the principle of lis pendens has been evolved so that the litigation may finally terminate without intervention of a third party.  This is because of public policy otherwise no litigation will come to an end.  Therefore, in order to discourage that same subject-matter of property being subjected to subsequent sale to a third person, this kind of transaction is to be checked.  Otherwise, litigation will never come to an end.”

14.3.    The aforesaid observations in no way lead to the proposition that

any transaction on being hit by Section 52 ibid., is illegal or void ab initio, as

assumed by the High Court. In Sarvinder Singh (supra), as relied upon by

the High Court, the subsequent purchasers sought to come on record as

defendants and in that context, this Court referred to Section 52 of the T.P.

Act  and  pointed  out  that  alienation  in  their  favour  would  be  hit  by  the

doctrine of  lis pendens.  The said decision is not an authority on the point

that every alienation during the pendency of the suit is to be declared illegal

or void. The effect of doctrine of lis pendens is not to annul all the transfers

effected by the parties to a suit but only to render them subservient to the

rights of the parties under the decree or order which may be made in that

suit. In other words, its effect is only to make the decree passed in the suit

36

binding on the transferee, i.e., the subsequent purchaser. Nevertheless, the

transfer remains valid subject, of course, to the result of the suit. In the case

of A. Nawab John (supra), this Court has explained the law in this regard,

and we may usefully reiterate the same with reference to the following:-

“18.  It  is  settled  legal  position  that  the  effect  of Section 52 is not to render transfers effected during the pendency of a suit by a party to the suit void; but only to render such transfers subservient  to the rights of  the parties to such suit, as may be, eventually, determined in the suit.   In other words, the transfer remains valid subject, of course, to the result of the suit.  The pendent lite purchaser would be entitled to or suffer the same legal  rights  and obligations of  his  vendor  as  may be eventually determined by the court.”  

14.4.   Hence, the effect of Section 52 ibid., for the purpose of the present

case  would  only  be  that  the  said  sale  transactions  in  favour  of  the

appellants shall have no adverse effect on the rights of the plaintiffs and

shall remain subject to the final outcome of the suit in question. However,

the  High  Court,  while  holding  that  the  said  transactions  were  hit  by  lis

pendens, has proceeded to observe further that the sale deeds so made in

favour of the present appellants were illegal. These further observations by

the High Court cannot be approved for the reasons foregoing.  

High Court not in error in entertaining second appeal  

15. For  what  has  been  discussed  hereinabove,  the  basic  point  for

determination, i.e., as to whether the High Court was justified in entertaining

the second appeal stands answered in the affirmative because, as noticed,

37

the findings of the subordinate Courts on the nature of transaction and as

regards readiness and willingness of  the plaintiffs,  which are of  material

bearing on the final determination, suffered from perversity and were based

on irrelevant considerations.   The second appeal  before the High Court,

obviously, involved substantial questions of law and the High Court cannot

be faulted in entertaining the second appeal and in deciding the questions in

favour of  the plaintiffs.   However,  the observations of  the High Court  as

regards operation of doctrine of  lis pendens are partly incorrect and stand

modified as above.  

What should be the relief?

16. The determination foregoing is not the end of the matter. Even when

the agreements in question are held to be for sale and the plaintiffs are held

being ready and willing to perform their part thereof; and the transactions in

favour of the present appellants are hit by  lis pendens, the point that still

remains for determination is as to whether the plaintiffs are entitled to the

relief of specific performance, or granting of alternative relief would be just

and proper disposal of this litigation?  

16.1. It is noticed that the High Court though proceeded to mould the relief

in  the manner  that  specific  performance was granted on enhanced sale

consideration  and  it  was  also  directed  that  if  the  plaintiffs  fail  to  make

payment  within  two  months,  the  present  appellants  (subsequent

38

purchasers) would make payment of same amount to the plaintiffs so as to

‘confirm  their  ownership  over  the  suit  land’.  However,  in  regard  to  this

crucial aspect of the matter, it appears that the High Court overlooked the

other relevant provisions of the Act of 1963 and omitted to examine if the

alternative mode of relief would meet the ends of justice.  

16.2. In our view, after it  was found that granting the decree for specific

performance in the very terms of the agreement/s in question may not be

appropriate  because  of  myriad  factors,  the  matter  ought  to  have  been

examined with reference to the stand of the parties and the provisions of

Sections 21 and 22 of the Act of 1963. For ready reference, we may extract

the  said  provisions  as  were  existing  at  the  time  of  filing  of  the  suit  in

question as under:-

“21. Power  to  award  compensation  in  certain cases.—

(1) In a suit for specific performance of a contract, the plaintiff  may  also  claim  compensation  for  its  breach, [either  in  addition  to,  or  in  substitution  of]7,  such performance.

(2) If,  in any such suit,  the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the  defendant,  and  that  the  plaintiff  is  entitled  to compensation for that breach, it shall award him such compensation accordingly.

(3) If,  in any such suit,  the court decides that specific performance  ought  to  be  granted,  but  that  it  is  not sufficient  to  satisfy  the  justice  of  the  case,  and  that some compensation for breach of the contract should

7 The expression “either in addition to, or in substitution of” was substituted by the expression “in addition to” by Act No.18 of 2018.

39

also be made to the plaintiff,  it  shall  award him such compensation accordingly.

(4) In  determining  the  amount  of  any  compensation awarded under this section, the court shall be guided by the  principles  specified  in  section  73  of  the  Indian Contract Act, 1872 (9 of 1872).

(5) No  compensation  shall  be  awarded  under  this section  unless  the  plaintiff  has  claimed  such compensation in his plaint:  

Provided that where the plaintiff  has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.  

Explanation.—The circumstance that  the contract  has become  incapable  of  specific  performance  does  not preclude  the  court  from  exercising  the  jurisdiction conferred by this section.

22. Power to grant relief for possession, partition,  refund of earnest money, etc.—

(1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908 (5 of 1908), any person suing for the specific performance of a contract for  the  transfer  of  immovable  property  may,  in  an appropriate case, ask for— (a) possession, or partition and separate possession, of the property, in addition to such performance; or (b)  any  other  relief  to  which  he  may  be  entitled, including the refund of any earnest money or deposit paid  or  made  by  him,  in  case  his  claim  for  specific performance is refused.

(2)  No  relief  under  clause  (a)  or  clause  (b)  of  sub- section (1) shall be granted by the court unless it has been  specifically  claimed:  Provided  that  where  the plaintiff has not claimed any such relief in the plaint, the court shall, at any stage of the proceeding, allow him to amend  the  plaint  on  such  terms  as  may  be  just  for including a claim for such relief.

40

(3)  The power of the court to grant relief under clause (b) of sub-section (1) shall  be without prejudice to its powers to award compensation under section 21.”

16.3. We may refer to some of the relevant factors having bearing on the

question  of  appropriate  relief  in  this  matter.  First,  the  agreements  in

question  were  executed  way  back  on  20.09.1965  and  28.04.1966.

Secondly, the plaintiffs had paid an amount of Rs. 6,000/- as on 28.04.1966

against  the  sale  consideration  of  Rs  22,951/-  when  the  supplementary

agreement was executed. Thirdly, though the plaintiffs alleged delivery of

possession of the land in question to them, the evidence on record shows

that  vendors  and  thereafter,  the  subsequent  purchasers  remained  in

effective possession thereof. Fourthly, the High Court has taken note of the

fact  that  as  on  the  date  of  its  decision  (01.08.2007),  the  subsequent

purchasers were in possession of the land in question for about 40 years.

Fifthly,  the High Court  has found that  the land in question carried much

higher valuation at the time of passing of the judgment in second appeal

and  hence,  enhanced  the  sale  consideration  to  Rs.  10,000/-  per  acre.

Sixthly, the plaintiffs, even while seeking specific performance, consciously

prayed for the alternative reliefs of recovery of amount paid by them with

interest and compensation to the tune of Rs 15,000/-. Seventhly, the plaintiff

No. 3 had categorically deposed before the Court as PW1 that he was not

entitled to the land in question for being not an agriculturist  and he had

relinquished his  rights in favour of  the plaintiff  Nos.  1 & 2.  Eighthly,  the

41

plaintiff No. 1 had expired during the pendency of suit and the plaintiff No. 2

had expired during the pendency of this appeal; though the heir and legal

representative of the said plaintiff Nos. 1 & 2 is on record as plaintiff No. 4

(respondent No.  2 herein).  Ninthly,  the plaintiff  No. 2,  while deposing as

PW2 had stated that in case specific performance was not granted, she

‘may be granted alternative relief and compensation with interest’.  

17. In view of the above, on the point as to whether the decree passed by

the High Court is justified or any other form of relief shall meet the ends of

justice, we are of the view that instead of specific performance, awarding of

monetary compensation to the respondent No. 2 shall  meet  the ends of

justice. In this regard, we may observe that the appellants themselves have

filed  a  so-called  valuation  report  suggesting  that  the  market  value  of

unirrigated land was Rs. 70,000/- per hectare whereas that of the irrigated  

land  was  Rs.  1,40,000/-  per  hectare.  The  fact  also  remains  that  the

appellants have been enjoying the land in question for a long length of time.

Further, it gets reiterated that the predecessors of respondent No. 2 made

payment of the sum of Rs. 6,000/- to the vendors in the years 1965-1966;

and  the  plaintiffs  had  claimed  alternative  relief  of  recovery  of  the  said

amount  together  with  interest  as  also  of  compensation.   Taking  all  the

relevant factors into account, we are of the view that awarding a lump sum

of  Rs.  15,00,000/-  (Rupees  fifteen  lakh)  to  the  respondent  No.  2  as

compensation in lieu of specific performance and in lieu of any other claim

qua the land in question shall meet the ends of justice.

42

CONCLUSION

18. Accordingly,  this  appeal  is  partly  allowed to  the extent  and in  the

manner that the impugned judgment and decree dated 01.08.2007 stand

modified  and  the  relief  of  specific  performance  of  the  agreements  in

question is set aside. In lieu of specific performance and in lieu of any other

claim  qua the land in question, the plaintiff-respondent No. 2 is awarded

compensation in the sum of Rs.15,00,000/- (Rupees fifteen lakh), payable

within  two  months  from today  by  the  defendants,  including  the  present

appellants,  jointly  and  severally.  Upon  the  expiry  of  the  period  of  two

months, the amount shall carry interest @ 6% per annum until payment or

realization. The plaintiff-respondent No. 2 shall also be entitled to withdraw

the amount of Rs. 5,10,000/- (Rupees five lakh ten thousand) deposited in

terms  of  the  decree  of  High  Court,  if  not  already  withdrawn.   In  the

circumstances  of  the  case,  the  parties  are  left  to  bear  their  own  costs

throughout.  

...............................................J.   (ABHAY MANOHAR SAPRE)

      ...............................................J.  (DINESH MAHESHWARI)     1

New Delhi, Date:  13th  August, 2019.

43