REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 8425 OF 2009

C.S. VENKATESH … APPELLANT  

VERSUS

A.S.C. MURTHY (D) BY LRS. & ORS.         … RESPONDENTS

J U D G M E N T

 S. ABDUL NAZEER, J.

1. This appeal is directed against the judgment and decree in RFA No.626 of

2001 dated 21.08.2006 passed by the High Court of Karnataka at Bangalore,

whereby the High Court has allowed the appeal and set aside the judgment and

decree in O.S. No. 3308 of 1988 passed by the Civil Judge, Bangalore City. 2. A.S.C. Murthy was the plaintiff in the suit.  He died during the pendency

of the suit.  Therefore, his wife Smt. Jayashree was brought on record as his

legal representative. She is the first respondent in this appeal. C.S. Venkatesh,

the appellant herein, was defendant No.2 in the suit.  C. Sethurama Rao, was the

defendant  No.1  in  the  suit.  He  also  died  during  the  pendency  of  the  suit,

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therefore, his wife Smt. C.S. Lalithamma was brought on record as his legal

representative.  She is arrayed as respondent No. 2A in this appeal.  Defendant

Nos.  3  and 4  are  respondent  Nos.  3  and 4  in  this  appeal.   The  parties  are

hereinafter referred to in their respective capacities before the trial court.   3. The subject matter of the suit was the property situated at Site No. 522,

17th Main Banashankari, I Stage, First Block, Srinagar, Bangalore – 560 050

(hereinafter referred to as ‘the schedule property’). 4. A.S.C. Murthy had filed the above suit  against defendants for specific

performance of the agreement of reconveyance dated 23.04.1975 in respect of

the  schedule  property  and  alternatively  to  declare  that  the  sale  deed  dated

23.04.1975 executed by him in favour of the defendants is null and void.  It was

alleged in the plaint  that  the City Improvement  Trust  Board,  Bangalore (for

short  ‘CITB’)  had  allotted  the  site  in  question  in  favour  of  the  plaintiff.

Thereafter, he commenced construction of the building on the said site.  Since

he  did  not  have  sufficient  funds,  he  approached  the  defendants  for  certain

financial assistance.  Accordingly, the defendants advanced a sum of Rs.2,000/-

as  loan.   Subsequently,  a  further  sum  of  Rs.10,000/-  was  advanced  on  the

condition of payment of interest at the rate of 18% p.a.  However, the plaintiff

failed to pay the interest on the said sum as agreed, except for a period of two

months.  Since the defendants were in need of accommodation, the plaintiff put

them in possession of the schedule property by executing a deed of mortgage

dated 11.10.1973.  According to the plaintiff, the defendants have advanced, in

all, a sum of Rs.29,000/-.  As the plaintiff could not pay the interest regularly,

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the defendants asked the plaintiff to execute a nominal sale deed in order to

ensure prompt payment of interest.  Accordingly, the plaintiff executed a deed

of sale dated 23.04.1975 in favour of the defendants for a sale consideration of

Rs.35,000/-  by receiving Rs.6000/-,  the difference in  the sale  price.   It  was

alleged that the sale deed was executed as a security for the amount advanced

by the defendants.  It was contended that the defendants executed an agreement

of reconveyance in respect of the schedule property dated 23.04.1975 in favour

of the plaintiff.  It was also agreed that the defendants were put in possession of

the schedule property on the understanding that they need not pay rent and the

plaintiff need not pay interest on the amount advanced by them to the plaintiff.

After the expiry of five years and the defendants having received the sum of

Rs.35,000/-  advanced  by  them,  the  plaintiff  demanded  that  the  defendants

execute a reconveyance deed in terms of the agreement of reconveyance dated

23.04.1975.  However, the defendants have failed to execute sale deed. 5. The second defendant filed the written statement admitting the execution

of the mortgage deed dated 11.10.1973 and borrowing of a sum of Rs.29,000/-

by the plaintiff.  It was contended that the defendants agreed to reconvey the

property and executed the reconveyance agreement prior to the execution of the

sale deed.  However, the plaintiff did not agree for reconveyance.  The plaintiff

gave  up  his  demand  for  reconveyance  and  executed  the  sale  deed.   It  was

contended that even otherwise the reconveyance agreement was not to be acted

upon.  It was further contended that the plaintiff had borrowed the loan from the

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bank on different occasions by mortgaging the title deeds of the property.  As the

plaintiff failed to discharge his debt to the bank, the defendants paid the said

dues in order to save the schedule property from auction.  It was also contended

that there was no plea or proof regarding readiness and willingness to perform

the plaintiff’s part of the contract as required under Section 16(c) of the Specific

Relief Act, 1963 (for short ‘the Act’).  It was denied that the sale deed dated

23.04.1975 was nominal and was executed for the purpose of security for the

loan advanced by the defendants. 6. On the basis of  the pleadings of  the parties,  the trial  court  framed the

relevant issues.  In support of the suit claim, wife of the deceased plaintiff was

examined as PW-1 and exhibited documents P-1 to P-19 in her evidence.  The

second defendant was examined as DW-1 and exhibits D-1 to D-15 were marked

in his evidence.  On consideration of the evidence of the parties and materials on

record, the trial court came to a conclusion that the plaintiff has established the

execution of agreement of reconveyance.  The Court also came to a conclusion

that the sale deed dated 23.04.1975 was not a nominal one, as contended by the

plaintiff.  The Court recorded a finding that the plaintiff has averred in the plaint

that  there  was sufficient  plea  in  relation to  readiness  and willingness  of  the

plaintiff  to  perform his  part  of  the  contract.   However,  it  was  held  that  the

plaintiff  had  failed  to  prove  that  he  was  ready  and  willing  to  perform  the

contract.  Consequently, the trial court dismissed the suit.  7. The plaintiff filed R.F.A. No. 626 of 2001, challenging the judgment and

decree of trial court.  The High Court on consideration of the rival contentions

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of the parties held that the sale deed executed by the plaintiff in favour of the

defendants was security for the loan advanced by the defendants.  Consequently,

the High Court allowed the appeal.  The defendants were directed to execute a

deed  of  reconveyance  in  respect  of  the  schedule  property  in  favour  of  the

plaintiff. 8. Appearing  for  the  appellant/defendant  No.2,  Shri  S.N.  Bhat,  learned

counsel submits that the suit filed by the plaintiff was for specific performance

of an agreement to reconvey.  Therefore, he has to plead and prove his readiness

and willingness to pay the consideration amount to the defendants.  In this case,

the plaintiff has failed to plead and prove his readiness and willingness.  He had

no financial capacity to pay the consideration amount.  He did not discharge the

earlier  debt  owed  by  him  to  Sri  Thyagaraja  Co-operative  Bank  and  the

defendants had to pay off the debt in order to save the property.  He had no

capacity to pay the consideration amount.  It is further argued that the sale deed

dated 23.04.1975 was not a nominal sale deed, as contended.  The High Court

instead of upholding the well-reasoned judgment of the trial court has set aside

the said judgment and decreed the suit.   9. On the other hand, Ms. Sanya Kumar, learned advocate appearing for the

respondent-plaintiff has sought to justify the impugned judgment and decree of

the High Court. 10. We have  carefully  considered  the  submissions  of  the  learned  counsel

made at the Bar.  11. The  suit  filed  by  the  plaintiff  was  for  specific  performance  of  the

agreement of reconveyance dated 23.04.1975.  Alternatively, he had also sought

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for a declaration that the sale deed dated 23.04.1975 was null and void and not

binding on the plaintiff.  On appreciation of the materials on record, the trial

court  has  held  that  the  plaintiff  has  proved  the  existence  and  execution  of

agreement of reconveyance.  It has negatived the plaintiff’s claim that the sale

deed was a nominal one.  However, the High Court has held that the plaintiff

had executed the sale deed in favour of the defendants as security for the loan

advanced by the defendants and that it cannot be considered a sale.   Further, the

High  Court  has  directed  specific  performance  of  the  agreement  of

reconveyance.  Therefore, the first question for consideration is whether the sale

deed dated 23.04.1975 executed by the plaintiff in favour of the defendants is a

nominal sale deed obtained as security for the loan advanced by the defendants. 12. Execution  of  the  sale  deed  and  the  deed  of  reconveyance  are  not  in

dispute.   According to the plaintiff, he could not pay the interest except for two

months after the execution of the sale deed and that the understanding between

the parties was that the defendants need not pay any rent and plaintiff need not

pay  the  interest  on  the  amount  advanced  by  them  to  the  plaintiff.   It  was

contended  that  sale  deed  was  executed  to  ensure  prompt  payment  of  the

amounts.   But a reading of the sale deed marked at Exhibit P-8, along with

other surrounding circumstances,  would clearly indicate that it  is an outright

sale.   13. It is settled that the real character of the transaction has to be ascertained

from  the  provisions  of  the  documents  viewed  in  the  light  of  surrounding

circumstances.   Since  two  documents  were  executed  on  the  same  day,  the

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transaction cannot be a mortgage by way of conditional  sale  in view of the

express provisions contained in Section 58(c) of the Transfer of Property Act,

1882.  A perusal of the recitals contained in the sale deed at Exhibit P-8 shows

that the property was agreed to be sold absolutely for a total consideration of

Rs.35,000/-.  The plaintiff has also stated that since possession has already been

delivered earlier under a deed of mortgage, delivery of possession under this

document does not arise.  It was further stated that henceforth neither himself

nor his heirs have any right, title or interest in the property and that the plaintiff

is entitled to water, air, right of easement, etc. concerning the property together

with  all  rights,  title  and  interest  and  right  of  disposal  of  the  property.  The

defendant,  his son and grandson, etc. unto posterity are entitled to enjoy the

property  without  any  obstruction  or  trouble  either  by  the  plaintiff  or  from

anyone claiming under him.  He has delivered the possession certificate issued

by the CITB and Khata certificate for transfer of Khata from Bangalore City

Corporation.   Thus,  the  language  employed  in  this  document  is  plain  and

unambiguous and the intention of the parties is also very clear from its recitals.

Even the evidence led by the parties does not indicate to the contrary.  Thus, a

careful perusal of all the clauses of the sale deed and the evidence on record

would clearly show that the intention of the parties was to make the transaction

a sale.  We are also of the view that since the execution of the reconveyance

deed  has  already  been  established,  question  of  holding  the  sale  deed  to  be

nominal cannot be accepted.

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14.  The  next  question  for  consideration  is  in  relation  to  compliance  of

Section 16(c) of the Act by the plaintiff.  Though a question was raised before

the trial court that there are no pleadings as regards the plaintiff’s readiness and

willingness to perform the contract, the trial court has rightly held that there is

sufficient compliance of Section 16(c) of the Act to the extent of pleadings.

Therefore, the question to be considered is whether the plaintiff was ready and

willing to perform his part of the contract.    

15. The words ‘ready and willing’ imply that the plaintiff was prepared to

carry out those parts of the contract to their logical end so far as they depend

upon his performance.  The continuous readiness and willingness on the part of

the plaintiff is a condition precedent to grant the relief of performance.  If the

plaintiff fails to either aver or prove the same, he must fail.  To adjudge whether

the plaintiff is ready and willing to perform his part of contract, the court must

take into consideration the conduct of the plaintiff prior, and subsequent to the

filing of the suit along with other attending circumstances.  The amount which

he has to pay the defendant must be of necessity to be proved to be available.

Right from the date of the execution of the contract till the date of decree, he

must prove that he is ready and willing to perform his part of the contract.  The

court  may  infer  from the  facts  and circumstances  whether  the  plaintiff  was

ready and was always ready to perform his contract.

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16. In N.P. Thirugnanam (Dead) by LRs. v. Dr. R. Jagan Mohan Rao and

Others1, it was held that continuous readiness and willingness on the part of the

plaintiff is a condition precedent to grant of the relief of specific performance.

This circumstance is material and relevant and is required to be considered by

the court while granting or refusing to grant the relief.  If the plaintiff fails to

either aver or prove the same, he must fail.  To adjudge whether the plaintiff is

ready and willing to perform his part of the contract, the court must take into

consideration the conduct of the plaintiff prior to and subsequent to the filing of

the suit along with other attending circumstances.  The amount of consideration

which he has to pay to the defendant must necessarily be proved to be available.  17. In Pushparani S. Sundaram and Others v. Pauline Manomani James

(deceased)  and Others2,  this  Court  has held that  inference of  readiness and

willingness could be drawn from the conduct of the plaintiff and the totality of

circumstances in a particular case.  It was held thus: “So far these being a plea that they were ready and willing to perform their part of the contract is there in the pleading, we have no hesitation to conclude, that this by itself is not sufficient to hold that the appellants were ready and willing in terms of Section 16(c) of the Specific Relief Act. This requires not only such plea but also proof of the same. Now examining  the  first  of  the  two circumstances,  how could mere filing of this suit,  after exemption was granted be a circumstance about willingness or readiness of the plaintiff. This at the most could be the desire of the plaintiff to have this property. It may be for such a desire this suit was filed raising such a plea. But Section 16(c) of the said Act makes it clear that mere plea is not sufficient, it has to be proved.”

1 1995 (5) SCC 115 2 2002 (9) SCC 582

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  18. Similar view has been taken by this Court  in  Manjunath Anandappa

URF Shivappa Hanasi v. Tammanasa and Others3 and Pukhraj D. Jain and

Others v. G. Gopalakrishna4. 19. The judgment of this Court in Umabai and Anr. v. Nilkanth Dhondiba

Chavan (Dead) by LRs. and Anr.,5 is almost similar to the case at hand where

the plaintiff had filed a suit  for specific performance of the agreement to re-

convey property.  The plea of the plaintiff was that the transaction was one of

mortgage and the sale stood redeemed and the plaintiff was discharged from the

debt and he was ready to pay the defendant the amount for the property only in

the alternative that the plea of mortgage was not accepted by the Court, would

show that his readiness was conditional.  The plaintiff did not have any income

and could not raise the amount required for re-purchase of the property.  In the

totality of the circumstances, it was held that the plaintiff was not ready and

willing to perform the contract.  The conditions laid for the specific performance

of the contract are in para 30, which is as under: “30. It is now well settled that the conduct of the parties, with a view to arrive at a finding as to whether the plaintiff- respondents were all along and still are ready and willing to perform  their  part  of  contract  as  is  mandatorily  required under  Section  16(c)  of  the  Specific  Relief  Act  must  be determined  having  regard  to  the  entire  attending circumstances. A bare averment in the plaint or a statement made  in  the  examination-in-chief  would  not  suffice.  The conduct of the plaintiff-respondents must be judged having

3 2003 (10) SCC 390 4 2004 (7) SCC 251  5 (2005) 6 SCC 243

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regard to the entirety of the pleadings as also the evidences brought on records”.

20. In  the  instant  case,  the  plaintiff  has  alleged that  he  was ready to  pay

Rs.35,000/-  to  the  defendants  and  called  upon  them  to  execute  the  re-

conveyance  deed.   However,  in  para  11  of  the  plaint  it  is  pleaded  that  the

plaintiff was running contract business wherein he suffered heavy loss and as

such he gave up the business.  It is also pleaded that at present the plaintiff has

no business or profession and has no source of income.  He has no property,

either  movable  or  immovable.  Mere  plea  that  he  is  ready  to  pay  the

consideration, without any material to substantiate this plea, cannot be accepted.

It is not necessary for the plaintiff to produce ready money, but it is mandatory

on his part to prove that he has the means to generate the consideration amount.

Except the statement of PW-1, there is absolutely no evidence to show that the

plaintiff  has  the  means  to  make  arrangements  for  payment  of  consideration

under the reconveyance agreement. 21. It is relevant to state here that before filing the suit, the plaintiff had filed

an application before the competent authority under the Karnataka Debt Relief

Act seeking extinguishment of the debt and delivery of the property back to him.

No doubt, the application was dismissed by the authority.  But the fact remains

that  the  intention  of  the  plaintiff  was  not  to  pay  the  amount  as  per  the  re-

conveyance agreement.   22. The deed of re-conveyance, contains a clause for payment of interest on

the consideration amount of Rs.35,000/-.  However, the plaintiff has pleaded that

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there is no agreement to pay the interest.  This shows that the plaintiff was not

ready to perform his part of the obligation as per the agreement.  Further, the

plaintiff had mortgaged the property with the bank and the bank had obtained an

award against the plaintiff.  When the suit property was put up for auction, the

defendants paid the entire amount to the bank which was payable by the plaintiff

under this award.  This aspect also indicates the conduct of the plaintiff.  23. Taking an overall view of the matter, the trial court has rightly held that

the plaintiff was not ready and willing to perform his part of the contract.  The

High  Court,  in  our  view,  was  not  justified  in  reversing  the  well-reasoned

judgment of the trial court.   24. In  the  result,  this  appeal  succeeds  and  it  is  accordingly  allowed.  The

judgment of the High Court in R.F.A. No.626 of 2001 dated 21.08.2006 is set

aside and the judgment and decree passed by the trial court in O.S. No.3308 of

1988 dated 12.04.2001 is restored.   25. There will be no order as to costs.

  …………………………J.    (S. ABDUL NAZEER)

                                                     .…………………………J.   (DEEPAK GUPTA)

New Delhi; February 07, 2020.

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