Pemmada Prabhakar Vs Youngmen's Vysya Association .

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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7835 OF 2014

(Arising out of SLP(C) NO. 24653 OF 2012)

PEMMADA PRABHAKAR & ORS. …APPELLANTS Vs.

YOUNGMEN’S VYSYA ASSOCIATION & ORS. …RESPONDENTS

J U D G M E N T

V.GOPALA GOWDA, J.

Leave granted.

2. This appeal has been filed against the judgment

and final order dated 04.11.2011 passed in the Second

Appeal No. 815 of 2011 by the High Court of

Judicature of Andhra Pradesh at Hyderabad, whereby

the High Court has dismissed the Second Appeal.

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3. Certain relevant facts are stated for the purpose

of appreciating the rival legal contentions urged on

behalf of the parties with a view to examine the

correctness of the findings and reasons recorded by

the High Court in the impugned judgment.

For the sake of brevity and convenience, the

parties are referred to in this judgment as per the

rank assigned to them in the original suit

proceedings.

4. The property bearing Door No. 20/42-1-9 with land

measuring about 657-1/3rd sq. yards situated to the

west of Vallabhai Street, Cinema Road, Kakinada

(hereinafter, referred to as the ‘suit schedule

property’) was the self acquired property of one

Pemmada Venkateswara Rao. He died intestate and

survived by wife Syama Sundari, three sons and three

daughters (the defendant Nos. 1 to 6).

5. The plaintiffs-the Youngmen’s Vyasa Association

(who are the respondents herein), instituted

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O.S.No.267 of 1995 for the specific performance of

Agreement of Sale dated 03.05.1993 against the

defendants (the appellants herein). The plaintiffs

alleged that the defendant Nos. 1 and 2, who are

managing the suit schedule property, agreed to sell

the same to plaintiff No. 1.

6. According to the plaintiffs, the defendant Nos. 1

and 2 executed the Agreement of Sale dated 03.05.1993

in favour of plaintiff No. 1 agreeing to sell the

suit schedule property at the rate of Rs.575/- per

sq. yard, the total consideration of which was to be

fixed later after taking the actual measurement.

Later on, the total land value was fixed at

Rs.3,77,967/- for 657-1/3 sq. yards. The defendant

Nos. 1 and 2 received advance amount of Rs.5000/- and

Rs.10,000/- also. Under the Agreement the plaintiff

No. 1 agreed to pay Rs.1,70,000/- to the defendants

within 10 days from the day of vacating the tenants

from the suit schedule property. Rs.50,000/- was to

be paid on 30.11.1993 and that the balance amount of

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Rs.1,50,000/- was to be paid by 30.3.1994. The

defendant Nos. 1 and 2 agreed that they would obtain

the signatures of their 3rd brother-the defendant

No. 3 by 9.05.1993. Defendant Nos. 7 and 8 are the

tenants in the sheds situated in the suit schedule

property. The defendant Nos.1 & 2 stated that their

sisters were married long ago therefore, they had no

interest in the suit schedule property, and that they

would also get the sisters’ signatures on the

agreement.

7. The 2nd Addl. Senior Civil Judge, Kakinada (the

Trial Court) by his judgment dated 12.7.2006

dismissed O.S. No 267/95, in so far as the main

relief for the specific performance of sale is

concerned. The Trial Court has directed the

defendants to refund Rs.5000/- with interest at the

rate of 12% p.a. from 5.03.1993 till the date of

realization and Rs.10,000/- with the interest rate at

12% p.a. from 6.08.1993 till the date of realization.

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8. The Trial Court after considering the oral and

documentary evidence on record, observed that as the

suit schedule property is adjacent to the plaintiff’s

property, taking advantage of the financial

difficulties of defendant Nos. 1 and 2, the

plaintiffs attempted to grab the suit schedule

property and dragged the defendants to the court of

law.

9. The Trial Court further held that the Agreement

of Sale was not valid as the defendant Nos.3 to 6 and

their mother did not give consent to sell the suit

schedule property to the plaintiffs. Accordingly, the

main relief for specific performance was rejected and

the defendants were directed to refund the amount of

advance sale consideration to the plaintiffs with

interest at the rate of 12% p.a.

10. Being aggrieved by the judgment and decree dated

12.7.2006 of the Trial Court, the plaintiffs filed an

appeal being A.S. No. 269 of 2006 before the Court of

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3rd Additional District Judge, Kakinada, the First

Appellate Court.

11. On 28.04.2010 the First Appellate Court allowed

the appeal partly, directing the defendant Nos. 1, 2,

4 and 5 to execute the registered sale deed in favour

of the plaintiff’s Association in respect of their

1/6th share each i.e. 4/6th share by receiving their

respective shares of the balance sale consideration

from the plaintiffs and modified the decree for

specific performance of Agreement of Sale.

12. The First Appellate Court vide its order dated

28.4.2010 held that the transaction between the

parties is real sale transaction and not mere money

transaction and the sale agreement is valid and

binding between the parties and the plaintiffs are

entitled for the first main relief of specific

performance and directed defendant Nos. 1, 2, 4 and 5

to execute sale deed in respect of their 4 shares of

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the suit schedule property after receiving

proportionate sale price.

13. Being aggrieved by the judgment and decree dated

28.04.2010 of the First Appellate Court, the

defendants preferred Second Appeal being S.A. No. 815

of 2011 before the High Court of Judicature of Andhra

Pradesh at Hyderabad whereby the High Court vide

order dated 4.11.2011 dismissed the Second Appeal

which is impugned in this appeal.

14. The High Court held that the approach of the

First Appellate Court in granting the relief of

specific performance directing defendants 1, 2, 4 and

5 to execute sale deed in respect of their shares,

i.e. 4/6th share of the suit schedule property in

favour of the plaintiffs on receipt of their

respective balance consideration which stood

deposited in the court, cannot be faulted with.

15. It was further held by the High Court that the

mother of the defendants was alive when the suit was

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instituted in 1995 and she died on 29.09.2005. She

had one share and after her death, the property would

be divided into 6 shares and the agreement was held

as binding on the defendants 1, 2, 4 and 5.

Therefore, the High Court upheld the decision of the

First Appellate Court and moulded the relief in the

above terms while granting decree of specific

performance of the Agreement of Sale by executing the

sale deed of their share in the property in favour of

the plaintiffs.

16. The following submissions were made by the

learned counsel for both the parties in support of

their claim and counter claim.

17. On behalf of the defendant Nos.1 & 2, it is

contended that their father Pemmada Venkateswara Rao

was engaged in lathe works which incurred heavy loss

and he was allegedly indebted to various creditors.

They approached one Murali Krishna (who had

acquaintance with them) who was the Secretary of the

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plaintiff Association to borrow some money. Taking

advantage of their situation, the Secretary and the

President of the Plaintiff Association obtained the

signatures of defendant Nos. 1 and 2 on a blank sheet

of paper and gave Rs.5000/- on 3.5.1993 and

Rs.10,000/- on 6.8.1993 to them.

18. It was further contended by the learned counsel

that the defendants never intended to sell the suit

schedule property and the transaction with the

plaintiffs Association was only money transaction and

was not a sale transaction with it. A separate

written statement was filed by the 4th defendant to

the same effect.

19. It was further contended by defendant Nos. 1 to 6

that even on the date of execution of Agreement of

Sale their mother was very much alive and, therefore

in the absence of execution of Agreement of Sale by

all the seven co-sharers of the suit schedule

property the suit for specific performance does not

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lie. The learned counsel for the defendants placed

reliance on the decisions of Andhra Pradesh High

Court and this Court in the cases of Kommisetti

Venkatasubbayya v. Karamestti Venkateswarlu1 and

Lourdu Mari David & Ors. v. Louis Chinnaya

Arogiaswamy & Ors.2 in support of their claim.

20. Further, they placed reliance upon the case of

this Court in Rameshwar & Ors. v. Jot Ram & Anr.3.

In the said authority it has been held as follows:

“9…First, its bearing on the right of action, second, on the nature of the relief and third, on its impotence to create or destroy substantive rights. Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments subsequent to the suit or even during the appellate stage, it is but fair that the relief is moulded, varied or reshaped in the light of updated facts. Patterson illustrates this position. It is important that the party claiming the relief or change of relief must have the same right from which either the first or the modified remedy may flow. Subsequent events in the course of the case cannot be

1 A.I.R. 1971 AP 279 2 (1996) 5 SCC 589 3 (1976) 1 SCC 194

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constitutive of substantive rights enforceable in that very litigation except in a narrow category (later spelt out) but may influence the equitable jurisdiction to mould reliefs. Conversely, where rights have already vested in a party, they cannot be nullified or negated by subsequent events save where there is a change in the law and it is made applicable at any stage. Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri falls in this category. Courts of justice may, when the compelling equities of a case oblige them, shape reliefs — cannot deny rights — to make them justly relevant in the updated circumstances. Where the relief is discretionary, courts may exercise this jurisdiction to avoid injustice. Likewise, where the right to the remedy depends, under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the Court, even in appeal, can take note of such supervening facts with fundamental impact…” (Emphasis supplied)

21. The High court held that defendants pleaded

falsehood at the time of execution of the Agreement

of Sale by stating that their mother had predeceased

their father. The agreement and the endorsement

thereon made by defendant Nos.1 and 2 had swayed

discretion of the High Court in favour of the

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plaintiffs which is an Association engaged in the

welfare of the community.

22. The High Court further held that the suit

schedule property was not purchased for unlawful gain

of an individual and that the First Appellate Court

considered the entire evidence on record and

exercised its sound jurisdiction and modified the

judgment of the Trial Court by granting a decree of

specific performance as per the terms stipulated

therein.

23. The High Court dismissed the second appeal

without adverting to the substantial questions of law

that were framed in the second appeal at the

admission stage itself stating that there is no

substantial question of law for its adjudication. The

First Appellate Court and the Second Appellate Court

committed serious error in law in not noticing the

relevant important findings of fact recorded by the

Trial Court on the contentious issues on proper

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appreciation of pleadings and evidence on record

with reference to the legal submission made on behalf

of the parties. The Trial Court after proper

appreciation of evidence on record, particularly,

Ex.-A1, the Agreement of Sale, has held that it is

not a valid agreement and no rights can flow from it

in favour of the plaintiffs in the light of the fact

that the signatures of defendant Nos. 1 and 2 were

obtained on different dates on blank papers as they

were in financial crisis and that fact is proved by

producing Exs.-B1 to B-8 to show that the entire

family (defendant Nos. 1 to 6) were in financial

crisis and they were forced to pay the debts to their

creditors. Therefore, they were in urgent need of

money and they approached the PW-1 for financial

help, who obtained the signatures of defendant Nos. 1

and 2 on blank paper and the same was fabricated as a

receipt. The said receipt was not signed by defendant

Nos. 3 to 6. The mother of the defendant Nos. 1 and 2

is one of the co-sharers of the suit schedule

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property as a class-I legal heir to succeed to the

intestate property of her deceased husband, which

was his self acquired property left by him, as he had

purchased the same vide Sale-Deed document No.

5174/1970 dated 24.11.1970 from his vendors. In fact,

there is a reference made in this regard in the

Agreement of Sale executed by defendant Nos. 1 and 2

to the effect that after demise of Pemmada

Venkateswara Rao, the father of defendant Nos. 1 to

6, the property devolved upon them jointly and they

are enjoying with absolute rights. As per Section 8

of the Hindu Succession Act, 1956 the general rules

of succession would be applicable in the case of a

male Hindu dying intestate, relevant portion of which

reads as under :-

“8. General rules of succession in the case of males.- The property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter-

(a) Firstly, upon the heirs, being the relatives specified in class I of the Schedule;

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XXX XXX XXX”

In the Schedule of the said Act, class I heirs are

son, daughter, widow, mother and others. In view of

the enumeration of the class I heirs in the Schedule,

the mother and sisters of the defendant Nos. 1 and 2

are also co-sharers of the property left intestate

by the deceased Pemmada Venkateswara Rao. As could be

seen from the Agreement of Sale-Ex.-A1 undisputedly,

the third brother and 3 sisters, (defendant Nos. 3 to

6) and their mother have not executed the Agreement

of Sale in favour of the plaintiffs. Therefore, the

same is not enforceable under Section 17 of the

Specific Relief Act, 1963. The mother lived upto

September, 2005, the aforesaid legal heirs of

deceased Pemmada Venkateswara Rao got equal shares in

the suit schedule property.

24. It is further contended on behalf of the

defendants that the First Appellate Court and the

High Court have failed in not applying the legal

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principle laid down by this Court in the case of

Lourdu Mari David & Ors. (supra), wherein this Court

held that the party who seeks to avail of the

equitable jurisdiction of a court and specific

performance decree being equitable relief must come

to the court with clean hands. In other words, the

party who makes false allegations against the

defendants does not come with clean hands and

therefore, it is not entitled to the equitable relief

of specific performance decree from the court.

25. Another legal contention urged on behalf of the

defendants is that the High Court has erroneously

come to the conclusion on facts and evidence on

record and it has affirmed the divergent findings of

fact recorded by the First Appellate Court without

examining and answering the substantial questions

of law framed in the Second Appeal and it has

erroneously dismissed the appeal holding that the

suit schedule property was not purchased by the

plaintiffs for unlawful gain of an individual. The

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said property is probably purchased by the plaintiffs

to put it to use for the purpose of the community.

The High Court without considering the legal

submissions urged on behalf of the defendants

adjudicated the rights of the parties ignoring

certain facts, evidence on record and legal

contentions urged. It has erroneously held that the

plaintiffs are entitled for the relief of specific

performance while the Agreement of Sale is not

enforceable under Section 17 of the Specific Relief

Act, 1963, in view of the fact that all the legal

heirs of the deceased Pemmada Venkateswara Rao are

not parties to the Agreement of Sale and the

defendant Nos. 1 and 2 do not have absolute title

and right upon the entire suit schedule property.

Even assuming for the sake of argument that the

Agreement of Sale is valid, the same could not have

been enforced against the defendants as the

plaintiffs have committed breach of the contract as

agreed upon by them as per clause 2 of the

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penultimate paragraph Nos. 2 and 3 of the Agreement

of Sale. The plaintiffs gave a sum of Rs.5,000/- &

Rs. 10,000/- as an advance amount towards sale

consideration and the remaining sale consideration,

i.e.(i)an amount of Rs.1,70,000/- which was to be

paid within 10 days from the day of vacating the

tenants in the property, (ii) Rs.50,000/- to be paid

on 30.11.1993 and the remaining sale consideration of

Rs.1,50,000/- to be paid on or before 30.3.1994 was

not paid to the defendant Nos. 1 and 2.

26. It is also contended by the learned counsel that

the First Appellate Court and the Second Appellate

Court have not exercised their discretionary powers

as required under Section 20(2) of the Specific

Relief Act for decreeing the specific performance in

favour of the plaintiffs, even though, the

defendants have made out a case before the Trial

Court that the plaintiffs are not entitled for the

decree for specific performance. Therefore, the

First Appellate Court and the Second Appellate Court

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have gravely erred in not exercising their

discretionary power under Section 20(2) of the

Specific Relief Act at the time of passing decree for

specific performance in favour of the plaintiffs,

which is not only erroneous in law but also vitiated

in law and therefore, the same is liable to be set

aside.

27. On the contrary, the learned counsel for

the plaintiffs has sought to justify the impugned

judgment contending that the Second Appellate Court

in exercise of its appellate jurisdiction after

examining the facts and evidence on record has held

that the substantial questions of law framed by the

defendants in the second appeal, on the divergent

findings of fact recorded by the First Appellate

Court would not arise. Decreeing the suit by the

First Appellate Court as prayed by the plaintiffs is

correct as it has set aside the decree of the Trial

Court. It is further urged that the High Court is

right in dismissing the second appeal and therefore,

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the same does not call for interference by this Court

as there is no substantial question of law which

would arise for consideration. Therefore, the learned

counsel for the respondent-plaintiffs prayed for

dismissal of this civil appeal as the same is devoid

of merit.

28. With reference to the above said rival

contentions, the following points would arise for our

consideration :-

(1) Whether the plaintiffs are entitled for the decree for specific performance of the Agreement of Sale (Ex.-A1) when Agreement of Sale entered between the plaintiffs and defendant Nos. 1 and 2 who do not have absolute title to the property?

(2) Whether in the absence of execution of the Agreement of Sale-Ex.-A1 by the other defendants/co-sharers is it valid, even assuming that Agreement of Sale is valid, there is breach of terms and conditions of the Contract on the part of the plaintiffs in not paying the sale

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consideration amount of Rs. 1,70,000/- within 10 days from the day of vacating the tenants, Rs.50,000/- on 30.11.1993 and an amount of Rs.1,50,000/- on or before 30.3.1994 to the defendants and plaintiffs are entitled for decree of specific performance of the Agreement of Sale?

(3) Whether the plaintiffs are entitled for discretionary relief of specific performance under Section 20(2) of the Specific Relief Act when it has not approached the court with clean hands?

(4) What relief?

Answer to Point No. 1

29. It is an undisputed fact that the suit

schedule property is self acquired property by late

Pemmada Venkateswara Rao as he had purchased the

said property vide Sale-Deed Document No.5174 of

1970 dated 24.11.1970 from his vendors. It is also

an undisputed fact that the said property is

intestate property. He is survived by his wife, 3

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sons and 3 daughters. The said property devolved

upon them in view of Section 8 of Chapter 2 of the

Hindu Succession Act as the defendants are class I

legal heirs in the suit schedule property.

Undisputedly, the Agreement of Sale-Ex.-A1 is

executed only by defendant Nos. 1 and 2. The 3rd

son, mother and 3 sisters who have got equal

shares in the property have not executed the

Agreement of Sale. In view of the matter, the

Agreement of Sale executed by defendant Nos. 1 and

2 who have no absolute right to property in

question cannot confer any right whatsoever upon

the plaintiffs for grant of decree of specific

performance of Agreement of Sale in their favour.

The said agreement is not enforceable in law in

view of Section 17 of the Specific Relief Act in

view of right accrued in favour of defendant Nos. 3

to 6 under Section 8 of the Hindu Succession Act.

The provisions of Section 17 of the Specific Relief

Act in categorical term expressly state that a

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Contract to sell or let any immovable property

cannot be specifically enforced in favour of a

vendor or lessor who does not have absolute title

and right upon the party. It is worthwhile to

extract Section 17 of the Specific Relief Act,1963

here :-

“17.-Contract to sell or let property by one who has no title, not specifically enforceable.- A contract to sell or let any immovable property cannot be specifically enforced in favour of a vendor or lessor;

(a) who, knowing not to have any title to the property, has contracted to sell or let the property

(b) who, though he entered into the contract believing that he had a good title to the property, cannot at the time fixed by the parties or by the court for the completion of the sale or letting, give the purchaser or lessee a title free from reasonable doubt.”

In view of the aforesaid provisions of the Specific

Relief Act, the Agreement of Sale entered between the

plaintiffs and some of the co-sharers who do not have

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the absolute title to the suit schedule property is

not enforceable in law. This aspect of the matter has

not been properly appreciated and considered by both

the First Appellate Court and the Second Appellate

Court. Therefore, the impugned judgment is vitiated

in law.

30. Even assuming for the sake of argument that the

agreement is valid, the names of three sons are

mentioned in Agreement of Sale, out of whom the

agreement is executed by defendant Nos. 1 and 2 and

they assured that they would get the signatures of

the 3rd brother namely, Srinivasa Rao and also the

remaining 3 sisters. At the time of execution of this

agreement signatures were not obtained. Therefore,

the agreement is not executed by all the co-sharers

of the property which fact is evident from the

recitals of the document itself. Hence, the

plaintiffs are not entitled for specific performance

decree. This vital factual and legal aspect has been

ignored by both the First Appellate Court and the

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Second Appellate Court. Therefore, the impugned

judgment is vitiated both on facts and law.

Accordingly, the point No. 1 is answered in favour of

the defendants.

Answer to Point No. 2

31. The second point is also required to be answered

against the plaintiffs for the following reasons:-

As could be seen from the Agreement of Sale

document marked as Ex.-A1 and the pleadings of the

parties payment of sale consideration was agreed to

be paid to the defendant Nos. 1 and 2 as per

following terms of the agreement :-

“… (i) an amount of Rs.1,70,000/- shall be paid by Vendee to Vendors within 10 days from the day of vacating the tenants in the property, (ii) Rs. 50,000/- shall be paid on 30.11.1993., (iii) the remaining sale consideration of Rs.1,50,000/- shall be paid on or before 30.3.1994.”

32. It is an undisputed fact that except payment of

Rs.5,000/- and Rs.10,000/- paid by the purchaser-

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plaintiff No.1 to the defendant Nos. 1 and 2

according to the Agreement of Sale, the remaining

installment i.e. an amount of Rs.1,70,000/- which was

to be paid to the Vendors within 10 days from the day

of vacating the tenants in the property was not paid.

Even assuming that the amount could have been paid

had the tenants vacated the schedule property then

the remaining part of the sale consideration agreed

to be paid as notified under clauses (ii) and (iii)

as per aforesaid paragraph of the Agreement of Sale

undisputedly not paid to the defendant Nos. 1 and 2.

Therefore, there is breach of contract on the part of

the plaintiffs as could be seen from the agreement of

sale regarding the payment of part sale consideration

amount. For this reason itself plaintiffs are not

entitled for a decree of specific performance.

Answer to the Point Nos. 3

33. Point No. 3 is also answered in favour of the

defendants for the following reasons:-

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It is an undisputed fact that the plaintiffs have

not approached the Trial Court with clean hands. It

is evident from the pleadings of the Agreement of

Sale which is produced for the decree for specific

performance of Agreement of Sale as the plaintiffs

did not obtain the signatures of all the co-sharers

of the property namely, the mother of the defendants,

the third brother and 3 sisters. Therefore, the

agreement is not enforceable in law as the persons

who have executed the sale deed, did not have the

absolute title of the property. Apart from the said

legal lacuna, the terms and conditions of the

Agreement of Sale for payment of sale consideration

agreed to be paid by the first plaintiff in

installments within the period stipulated as

indicated above were not paid. The First Appellate

Court and the High Court have not exercised their

power under Section 20(2) of the Specific Relief Act

which by itself is the substantial question of law

which fell for consideration before the High Court as

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the First Appellate Court failed to consider this

important aspect of the matter and exercised its

power while determining the rights of the party,

particularly, in the light of the unenforceable

contract between the plaintiffs against the

defendants as all of them are not parties to the

Agreement of Sale document (Ex.-A1) and the

executants viz. defendant Nos. 1 and 2 have not

acquired absolute title to the property in question.

Therefore, the impugned judgment is vitiated and

liable to be set aside.

Answer to Point No. 4

34. Though we have answered the questions of law

framed in this appeal in favour of the defendants,

the learned counsel for the defendants during the

course of arguments, has offered some monetary

compensation in favour of the plaintiffs if this

Court set aside the impugned judgment and decree of

specific performance granted in their favour. Though,

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the defendants on merits have succeeded in this case

for the reasons recorded by us on the substantial

questions of law that have been framed by us on

appreciation of facts and legal evidence on record,

having regard to the peculiar facts and circumstances

of the case particularly, the execution of Agreement

of Sale, Ex. A-1 by defendant Nos. 1 and 2 on

3.5.1993, after receiving part consideration of

Rs.15,000/-, and the submission made by the learned

counsel for the defendants, it would be just and

proper for this Court to award a sum of Rs.6,00,000/-

by lump-sum amount of compensation to the plaintiffs

within 3 months from the date of receipt of a copy of

this judgment as provided under Section 22 of the

Specific Relief Act.

35. Since, we have answered point Nos. 1 to 4 in

favour of the defendants and against the plaintiffs,

the appeal of the defendants must succeed.

Accordingly, the impugned judgment and decree passed

by the High Court in affirming the judgment and

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decree of the First Appellate Court, is set aside.

The judgment and decree of the Trial Court is

restored with modification that the defendants shall

pay a sum of Rs.6,00,000/- to the plaintiffs as lump-

sum compensation within 3 months from the date of

receipt of copy of this order. The appeal is allowed

in the above said terms. No costs.

……………………………………………………………………J.

[DIPAK MISRA]

……………………………………………………………………J. [V. GOPALA GOWDA] New Delhi, August 20,2014

PEMMADA PRABHAKAR Vs YOUNGMEN'S VYSYA ASSOCIATION .

PEMMADA PRABHAKAR Vs YOUNGMEN'S VYSYA ASSOCIATION .