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REPORTABLE  

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6049 OF 2007

SIRDAR K.B. RAMACHANDRA RAJ URS. (DEAD) THROUGH LRS.                 ..APPELLANT(S)

VERSUS

SARAH C. URS & ORS.                         ..RESPONDENT(S)

WITH

CIVIL APPEAL NO.6050 OF 2007

J U D G M E N T

ARUN MISHRA, J.

1. The appeals are preferred against the judgment and order dated

13.8.2007 passed by the High Court, affirming the judgment and order

of the trial  court decreeing the suit filed by the plaintiff for specific

performance of an agreement of sale.  

2. The plaintiffs filed the suit concerning suit scheduled property

inherited by Princess Leelavathi, wife of late K. Basavaraja Urs.   She

had adopted the defendant No.1 and died during the year 1958­59.

The suit scheduled property along with adjoining properties devolved

on late K. Basavaraja Urs, father of K.B. Ramachandra Raj Urs,

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defendant No.1, in terms of section 15 of the Hindu Succession Act,

1956. The Plaintiff Nos.1 and 2 were the close relatives and friend of

the family of late K. Basavaraja Urs and the 2nd  plaintiff apart from

being a close relative and friend of Defendant No.1, was also a Legal

Advisor and Advocate of late K. Basavaraja Urs.

3. The property was let out to plaintiff No.2 in the year 1969 by late

K. Basavaraja Urs and defendant No.1.   Late K. Basavaraja Urs and

defendant  No.1  sold the  adjoining property to  various  persons  vide

registered sale deeds.   Late K. Basavaraja Urs offered to sell the suit

scheduled property to the plaintiffs.  On 24.4.1979, late K. Basavaraja

Urs, represented by his son, i.e., defendant No.1 as power of attorney,

entered into an agreement to sell with the plaintiffs for a consideration

of Rs.1,50,000/­ out of which a sum of Rs.1,00,000/­ was received on

the same day. The defendant No.1 agreed to obtain a clearance

certificate under section 230­A of the Income Tax Act as also under the

provisions of the Urban Land Ceiling Act.   The plaintiffs continued to

have the possession of suit property in part performance of the

agreement dated 24.04.1979 and stopped paying rent.

4. The defendant No.1 always ensured the plaintiffs to execute the

registered sale deed in terms of suit agreement  after obtaining a

clearance certificate from the Income Tax Department and under the

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Urban Land  Ceiling  Act.  On 1.6.1993,  defendant  No.1 received the

balance sale consideration of Rs.50,000/­ from 2nd  plaintiff and

executed a stamped receipt in favour of the plaintiffs with an

undertaking to execute the deed of conveyance.

5. The defendant No.1, made the correspondence with the Income

Tax  Department to  obtain the Income Tax  clearance.  However, the

need to seek permission under the Urban Land Ceiling Authority

vanished as per the decision of this Court concerning section 27 of the

said Act as defendant No.1 was postponing to execute the registered

sale deed on one pretext or the other.   A legal notice dated 5.6.1990

was served, and after that, the suit had been filed on 19.9.1990

seeking specific performance.

6. Defendant Nos.1, 2, and 4 in their written statements contended

that the 2nd plaintiff claimed to be a close relative of late K. Basavaraja

Urs.   He was his lawyer and self­assumed  trustee. He obtained the

signatures of defendant no.1 on blank papers, which has been

misused by the 2nd plaintiff to create the agreement in question dated

24.4.1979.  It was assured that agreement was obtained as a collateral

document to secure professional charges, which, according to the

plaintiff, remained unpaid.

7. The defendants denied the receipt of the sale consideration on

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24.4.1979 and 1.6.1993 and also the subsequent correspondence

between plaintiff  No.2 and defendant No.1 and his Tax Consultant.

The 2nd  plaintiff  was never permitted to put up construction on the

property by the defendant No.1.   After the demise of Princess

Leelavathi, the suit property devolved on late K. Basavaraja Urs and

defendant No.1.  The 1st defendant has not conveyed his interest in the

suit  property  in  favour of  plaintiffs.  Defendants contended that no

agreement was entered into with the plaintiffs. The suit is barred by

time.

8. Defendant No.5, in his written statement, took the plea that the

property being ancestral could not have been sold by defendant No.1 to

the detriment of the 5th defendant.  There was no legal necessity to sell

the property.  

9. The trial court decreed the suit and recorded a finding that the

agreement has been executed on 24.4.1979. The defendant No.1 has

admitted his signatures on the suit agreement dated 24.4.1979 and

receipt dated 1.6.1983.  Defendant No.1 for himself and as a power of

attorney holder of late K. Basavaraja Urs, executed the suit agreement

and,  therefore,  he cannot be permitted to contend that he  is not a

party to the  suit  agreement in  his individual capacity.  They  were

required to obtain an income tax clearance certificate and after that to

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execute the registered sale deed,  in which they have failed.  Late K.

Basavaraja Urs owned vast landed and house properties at Bangalore

and Mysore. They were statutorily bound to obtain a clearance

certificate from  the Income  Tax  Department, and  as they failed to

obtain it, they cannot be permitted to contend that suit is barred by

limitation. The High Court has affirmed the findings of the trial court.   

10. The High Court  has disbelieved the case set up by defendant

No.1 that he had put his signatures on blank paper.  Plaintiff No.2 was

appointed as Judge of the High Court during September 1978;

therefore, on 24.4.1979, there was no fiduciary relationship between

them.  Plaintiffs have also produced the original stamped receipt dated

1.6.1983 (Exhibit P­19) admitting the receipt of remaining Rs.50,000

by defendants No.1 in which a sum of Rs.42,000 was paid in cash and

Rs.8,000 was paid by cheque. Defendant No.1 had admitted his

signatures on Exh. P­19.   Defendant No.1 also admitted that he had

encashed the cheque. The plea of the 1st defendant is false and thus

cannot be accepted.  The High Court  has also referred  to the order

passed by the Income Tax Appellate Tribunal wherein the claim of 2nd

plaintiff for exemption of Rs.50,000 under the Income Tax Act, paid to

1st defendant towards the remaining sale consideration was allowed in

terms of section 54(F) of Income Tax Act.

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11. The High Court has further found that the defendant has taken

an  inconsistent  and contrary  stand.  The defendant  was visiting 2nd

plaintiff all along insisting on obtaining Income Tax Clearance

Certificate, which was postponed by the defendant No.1 on one pretext

or the other. The consideration has been paid under the agreement

dated 24.4.1979.

12. The High Court has found that defendant No.1 has executed the

agreement not only as power of attorney for his father but also as a

son of late K. Basavaraja Urs.   The stand of defendant No.1 is

inconsistent.  Defendant  No.1,  allowed the  plaintiffs to  put  up the

construction in the suit property. Thus, he was precluded from

contending that he was not a party to the agreement.  The High Court

has also held that defendant No.1 has entered into the agreement and

the entire consideration has been received, it is not considered

appropriate to grant the liquidated damage or penalty for the breach of

contract. The High Court has also held that the property was held by

Princess Leelavathi, wife of late K. Basavaraja Urs, and after her death,

the suit property devolved on late K. Basavaraj Urs and defendant No.1

under section 15 of Hindu Succession Act, 1956.

13. It was submitted by the learned counsel appearing on behalf of

the appellants that  plaintiff  No.2,  M.P.  Chandrakanta Raj  Urs,  was

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elevated as Judge of the High Court.  Earlier, he was the Legal Advisor

of the late K. Basavaraja Urs. Thus, he could not have purchased the

property.  The agreement was not duly executed,  and the suit  was

barred by limitation.   The findings have been recorded that property

was inherited by K.B. Ram Chandra Raj Urs, i.e., defendant No. 1 from

Princess Leelavathi.   The agreement was with late K. Basavaraja Urs

and not with defendant No.1.   Defendant No.1 did not execute

agreement of his share.  The Courts below erred in decreeing the suit

in toto. The suit could have been decreed to the extent of the shares of

the late K. Basavaraja Urs.   

14. Learned senior counsel appearing on behalf of the respondents

has supported the judgment and decree passed by the courts below.  It

is further submitted that no case for interference is made out in the

appeals given the concurrent findings of facts recorded by the courts

below. The appeals deserve to be dismissed.  

15. We deem it appropriate to place on record that learned counsel

for the parties had taken time to file the compromise, if reached. We

have been informed that no compromise could be arrived at between

the parties.  Be that as it may.  We proceed to decide the appeals on

merits.

16. The concurrent findings are recorded as to receipt of

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consideration and execution of the  agreement to  sell.  There is  no

doubt about  it that M.P. Chandrakanta Raj Urs  (Plaintiff  No.2) was

earlier a counsel and legal advisor to K. Basavaraja Urs, but when the

agreement  had been executed,  he  was  not  a lawyer  and became a

Judge of the High Court. There are concurrent findings recorded

concerning the execution of the agreement,  and  it  has been rightly

found established that signatures were not obtained on blank papers.

There is concurrent finding recorded by the courts below that

consideration has been paid.   Thus, no case for interference is made

out in the aforesaid findings.

17. The courts below have found that correspondence was made by

defendants No.1 to obtain Income Tax clearance.   The suit has been

held  not to  be  barred  by limitation.  Given the facts  and material

placed on record, no interference is called for with those findings also.

18. Learned senior counsel submitted that agreement to sell dated

24.4.1979 was between “late K. Basavaraja Urs and “Smt. Sarah C.

Urs', wife of M.P. Chandrakantaraj Urs and P. Chandrakantaraj Urs,

son of Late R. Putturaj Urs”. There was no dispute concerning ½ share

of K.B. Ram Chandra Raj Urs, which he had inherited from Princess

Leelavathi.  Thus, the suit could not have been decreed in toto; it could

have been decreed only to the extent of the share of late K. Basavaraja

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Urs in the property.  In support of his contention, he has relied upon

the decision of this Court in  R.S. Madanappa (deceased) v.

Chandramma & Anr., AIR 1965 SC 1812.

19. The statement of plaintiff No. 2 has been pointed out, indicating

that he was aware that there were equal shares of K. Basavaraja Urs

and K. B. Ramchandra Raj Urs (defendant No.1) in the property.

Thus, plaintiff No.2 cannot plead that they were induced by erroneous

belief while entering into agreement, by the conduct of defendant No.1.

The plea of estoppel is, thus, not attracted.   There is no proper

foundation in the pleading regarding the plea of estoppel. The

submission raised by learned counsel on behalf of respondent is that

defendant No.1 acted as power of  attorney holder of  his  father and

received the sale consideration also.  As such he is bound by the plea

of estoppel to contend to the contrary.

20. It is  necessary to consider the  agreement.  The  agreement is

extracted hereunder:

“THIS AGREEMENT TO SELL is made on 24th day of April 1979 BETWEEN SRI K.  BASAVARAJ URS,  son of  Late  Sri  Muddaraj Urs, aged about 84 years, residing at 1-A (old No.5), Palace Road, Bangalore – 560 001 (hereinafter referred to as the “VENDOR” which expression  shall  unless  the  context  otherwise  required  include  the heirs, assigns, administrators, successors and legal representatives of the VENDOR) of the one part AND SMT. SARAH C. URS, the wife of Sri M.P. Chandrakantaraj Urs and SRI P CHANDRAKANTARAJ URS,  son  of  late  Sri  R Putturaj  Urs,  residing  at  1B Palace  Road, Bangalore – 560001, (hereinafter called the "PURCHASERS" which expression shall unless the context otherwise requires to include their heirs, assigns, administrators, successors and legal representatives of

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the other part. WHEREAS the VENDOR is the absolute owner of the property at

1B, Palace Road, Bangalore – 560001, an whereas the VENDOR is desirous of disposing of the said house together with the plot of land, fixtures,  fittings,  etc.  of  Rs.1,50,000/-  (Rupees  One  Lakh  Fifty Thousand only) and the PURCHASERS are agreeable to buy the same at the said price. NOW THEREFORE, THIS DEED/ WITNESSETH AS FOLLOWS:

(1) That the VENDOR shall  free from encumbrances the said property situated  at  q-B  Palace  Road,  Bangalore  –  560  001,  and  the PURCHASER  shall  buy  the  same  at  the  said  prices  and  on  the conditions hereinafter mentioned;

(2) That  the said property consists  of a single-storeyed house with the following boundaries:- On the EAST: No.1-C On the WEST: Vacant land of VENDOR On the NORTH: Storm Drain On the SOUTH: By Common Road

(3) That the consideration of the house shall be payable as follows:- A sum of Rs.1,00,000/- (Rupees One Lakh Only) paid on the date of this  agreement  and  the  balance  of  Rs.5,40,000/-  (Rupees  Fifty Thousand only payable on or before 23.4.1984.

(4) The VENDOR has delivered possession of the house,  which is  the subject matter of this agreement to the PURCHASERS on this day.

(5) This agreement shall subject to permission, express or implied, being granted under the Urban Land (Ceiling and Regulation) Act. In the event  such permission is  not granted,  the advance of  Rs.1,00,000/- (Rupees One Lakh only) paid shall be refunded to the PURCHASERS by the VENDOR:

(6) That in the event of the sale not materializing through the default of the VENDOR, the amount of Rs.1,00,000/- (Rupees One Lakh Only) shall be refunded to the PURCHASERS with interest at 10 percent per annum from the date hereof to the date of refund;

(7) That in the event of the sale not materializing through the default of the PURCHASERS, 10 percent of the consideration money shall be forfeited as earnest money and the balance refunded by the VENDOR to the PURCHASERS out of the advance of Rs.1,00,000/-  (Rupees One lakh only) received by the former;

(8) VENDOR or his Power of Attorney shall cause all licences etc., to be sanctioned for any additions or alterations to be made to the premise before the actual transfer of title in terms of this agreement. IN WITNESS where of the parties have set their hands the day and the year first above mentioned.

Sd/- SELLER

WITNESSES: 1. Sd/- 2. Sd/-

PURCHASERS”

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A bare reading of the agreement described above makes it clear

that agreement is between late K. Basavaraja Urs through power of

attorney, K.B. Ramchandra Raj Urs.  The “Vendors” is mentioned as K.

Basavaraja Urs and not K.B. Ramchandra Raj Urs.  Thus, it cannot be

said that K.B. Ramchandra Raj Urs had executed the agreement on his

behalf,  concerning his  share in the  property.  There is  no  whisper

about the same in the agreement.  The position mentioned above may

indicate that plaintiffs were misled by the Power of  Attorney holder

that only late K. Basavaraja Urs was the exclusive owner of the

property.   When we consider the statement of M.P Chandrakanta Raj

Urs (Plaintiff No.2), it clearly indicates that he was well aware of the

fact that Princess Leelavathi owned the property and upon her death

the property devolved upon, in equal shares and he was aware of the

other sale deeds executed (Exhs. P 43, P­44, P­45, P­46).   It is clear

that plaintiff No.2 was aware as to the extant title of K.B. Ram

Chandra Raj Urs in the property and also the fact that it was a joint

family property.  In the plaint, the plaintiffs have not taken the plea of

estoppel, and now the case was set up that property had been sold by

defendant No.1 in his capacity without any such plea in the plaint.

Thus, plaintiff No.2 was well aware of the fact as to the title of K.B.

Ramchandra Raj Urs in the property and that late K. Basavaraja Urs

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did not exclusively own the property.

21. The plea of estoppel  in view the decision of  this court  in  R.S.

Madanappa (deceased) v. Chandramma & Anr., (supra) is not attracted,

in which the Court has held that estoppel by conduct could not arise

when a person concerned knew the right position relating to the title in

property in his possession, he could not plead that he was induced to

hold an erroneous belief because of the conduct of real owner of that

property.  This court has observed thus:  

“6. We will consider the question of estoppel first. The conduct of the first defendant from which the learned counsel wants us to draw the inference  of  estoppel  consists  of  her  attitude when she was served with a notice by the plaintiff, her general attitude respecting Bangalore properties as expressed in the letter dated 17th January 1941, written by her to her stepmother and the attestation by her and her husband on 3rd  October  1944,  of  the  will  executed  on  25th  January  1941  by Maddanappa. In the notice dated 26th January 1948, by the plaintiff’s lawyer to the first defendant it was stated that the plaintiff and the first defendant  were  joint  owners  of  the  suit  properties  which  were  in possession of their father and requested for the cooperation of the first defendant in order to effect the division of the properties. A copy of this notice was sent to Maddanappa, and he sent a reply to it to the plaintiff's lawyers. The first defendant, however, sent no reply at all. We find it difficult to construe the conduct of the first defendant in not replying  to  the  notice  and  is  not  cooperating  with  the  plaintiff  in instituting  a  suit  for  obtaining  possession  of  the  properties  as justifying  the  inference  of  estoppel.  It  does  not  mean  that  she impliedly admitted that she had no interest in the properties. It is true that in Ex. 15, which is a letter sent by her on 17th January 1941, to her stepmother she has observed thus:

“I  have  no  desire  whatsoever  in  respect  of  the  properties which are at Bangalore. Everything belongs to my father. He has the  sole  authority  to  do  anything….  We  give  our  consent  to anything done by our father. We will not do anything.” But even these statements cannot assist the appellants because admittedly,  the father  knew the true legal  position.  That is  to say;  the  father  knew  that  these  properties  belonged  to Puttananjamma and that he had no authority to deal with these properties. No doubt, in his written statement, Maddanappa had

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set up a case that the properties belonged to him by virtue of the declaration made by Puttananjamma at the time of her death, but that case has been negatived by the courts below. The father’s possession  must,  therefore,  be  deemed  to  have  been,  to  his knowledge,  on  behalf  of  the  plaintiff  and the  first  defendant. There was thus no possibility of an erroneous belief about his title being created in the mind of Maddanappa because of what the first defendant had said in her letter to her stepmother.

7. Insofar as the attestation of the will is concerned, the appellants’ position is no better. This “will” purports to make a disposition of the suit properties along with other properties by Maddanappa in favour of Defendants 3 to 8. The attestation of the will by the first defendant and her husband, would no doubt affix them with the knowledge of what Maddanappa was doing, but it cannot operate as estoppel against them  and  in  favour  of  Defendants  3  to  8  or  even  in  favour  of Maddanappa.  The  will  could  take  effect  only  upon  the  death  of Maddanappa  and,  therefore,  no  interest  in  the  property  had  at  all accrued to Defendants 3 to 8, even on the date of the suit. So far as Maddanappa  is  concerned,  he,  as  already  stated,  knew  the  true position and, therefore, could not say that an erroneous belief about his title to the properties was created in his mind by reason of the conduct  of  the  first  defendant  and  her  husband  in  attesting  the document. Apart from that, there is nothing on the record to show that by reason of the conduct of the first defendant Maddanappa altered his position to his disadvantage. 8. Mr.  Venkatarangaiengar,  however,  says  that  subsequent  to  the execution  of  the will,  he had effected  further  improvements  in  the properties and for this purpose, spent his own moneys. According to him, he would not have done so in the absence of assurance like the one given by the first defendant and her husband to the effect that they had no objection to the disposition of the suit properties by him in any way he chose to make it. The short answer to this is that Maddanappa, on his own allegations, was not only in possession and enjoyment of these properties ever since the death of Putananjamma but had made improvements in the properties even before the execution of the will. In these circumstances, it is clear that the provisions of Section 115 of the  Indian  Evidence  Act,  which  contain  the  law  of  estoppel  by representation, do not help him.”

22. Thus, it is clear that there was no possibility of erroneous beliefs

in the mind of the plaintiffs as to title position in the property.   No

doubt about it that defendant No.1 has acted as a power of attorney,

but at the same time, did not act in his capacity as the owner of the

property.   The ownership of K.B. Ramchandra Raj Urs was known to

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the plaintiffs. In spite of that the plaintiffs have not set up the case to

bind the share of K.B. Ramchandra Raj Urs.  They have not pleaded in

the plaint that K.B Ramchandra Raj Urs owned the property. There is

no whisper as to the title of K.B. Ramchandra Raj Urs in the plaint.

They needed to plead the facts to attract the plea of estoppel. That has

not been done.  Thus, the agreement which had been executed was not

concerning share of defendant No.1, but of late K. Basavaraja Urs as

his power of attorney.  

23. In view of the agreement and the admission made by the

plaintiffs, we are of the opinion that it would be appropriate to modify

the decree passed by the courts below to the extent of 50 per cent of

the shares of the deceased late K. Basavaraja Urs and to set it aside

with respect to the remaining ½ share of K.B. Ramchandra Raj Urs

(defendant No.1) in the property,  since the property devolved under

section 15 of the Hindu Succession Act.

24. Thus, we hold that the plaintiffs to be entitled only to the extent

of ½ share in the suit property. The decree to the remaining extent is

set aside.   The plaintiffs would not be entitled to refund of any

consideration as by now the worth of property has increased manifold.

25. We  direct the trial court to divide the  property in two equal

proportions and it be given to the parties.  Let the division be carried

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out within four months by the Trial Court.  The appeals are allowed to

the extent mentioned above.  No costs.

.................................J.                [ ARUN MISHRA ]  

.................................J.                [ S. ABDUL NAZEER ]  

NEW DELHI; OCTOBER 24, 2019.