REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.5517 OF 2007

Nadiminti Suryanarayan Murthy(Dead) through LRs.  ….Appellant(s)

VERSUS

Kothurthi Krishna Bhaskara Rao & Ors.                …Respondent(s)

J U D G M E N T

Abhay Manohar Sapre, J.

1. This appeal is filed by original defendant No.6

against  the  final  judgment  and  order  dated

11.07.2003 passed by the High Court of Judicature

of Andhra Pradesh at Hyderabad in L.P.A. No. 121

of  1998  whereby  the  High  Court  set  aside  the

judgment and order dated 02.02.1996 in Appeal No.

2061 of 1989 and upheld the judgment and decree

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dated 13.09.1989 passed by the subordinate Judge,

Amalapuram  in  O.S.  No.50  of  1983  thereby

decreeing  the  plaintiff’s  (respondent  No.1  herein)

suit  against  defendant  No.6  (original  appellant

herein)  for  specific  performance  of  agreement  in

relation to the suit house.

2. In order to appreciate the controversy raised in

the appeal, it is necessary to state the relevant facts

hereinbelow.

3. Nadiminti  Suryanarayan  Murthy-the  original

appellant herein (since dead and represented now

by  the  present  appellants  as  his  legal

representatives)  was  defendant  No.6  whereas

respondent No.1 herein is the plaintiff and original

respondent No.2 (defendant No.1),  since dead and

represented through legal heirs (defendant Nos.2-3)

whereas Respondent Nos.3-4 are defendant Nos. 4

and 5 in the suit out of which this appeal arises.

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4. One Surya Narayana was the owner of a house

situated in village Amalapuram in Andhra Pradesh

(described  in  detail  in  schedule  appended  to  the

plaint - hereinafter referred to as "suit house"). He

died  in  1980  leaving  behind  his  wife  (defendant

No.1) and daughters (defendant Nos. 2 and 3) and

grand children (defendant Nos. 4 and 5). He left a

will in favour of his wife giving her life interest. She,

therefore,  got  the  suit  house.  These  defendants

claiming to be the co-owners of the suit house then

let out the suit house to defendant No. 6 in 1981 on

monthly rent of Rs.150/-.

5. On 18.01.1983, defendant Nos. 1 to 5 entered

into  an  agreement  with  the  plaintiff  (respondent

No.1)  for  sale  of  the  suit  house  in  favour  of  the

plaintiff  for  a  sum  of  Rs.46,000/-.  The  plaintiff

accordingly  paid  Rs.1000/-  as  advance  money  to

defendant Nos. 1 to 5 and the balance amount was

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to be paid by the plaintiff to defendant Nos. 1 to 5 at

the time of the registration of the sale deed, which

was to be executed within six months. The plaintiff

(respondent  No.  1)  accordingly  arranged  for  the

balance money.  However,  defendant Nos. 1 to 5, on

the other hand, went on promising the plaintiff  to

execute the sale deed in his favour as agreed upon

between them as per agreement dated 18.01.1983

and  on  the  other  hand,  defendant  Nos.  1  to  5,

instead  of  executing  a  sale  deed  in  favour  of  the

plaintiff,  executed the sale deed on 09.02.1983 in

favour of defendant No. 6 for Rs.45000/-.   

6. This gave rise to filing of the civil suit by the

plaintiff  (respondent No. 1) on 14.07.1983 against

all the six defendants in the Court of Subordinate

Judge, Amalapuram out of which this appeal arises.

The suit was for specific performance of agreement

dated  18.01.1983  and  in  alternate  for  refund  of

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consideration paid by the plaintiff and also for the

damages sustained by the plaintiff.  

7.  The plaintiff inter alia averred that he was and

has always been ready and willing to perform his

part  of  the agreement and,  in fact,  performed his

part  by  paying  advance  amount  of  Rs.1000/-  in

terms of the agreement to defendant Nos. 1 to 5 and

was/is always ready and willing to pay the balance

consideration  at  the  time  of  registration  of  sale

deed. It was averred that even before expiry of six

months’ period, which was to expire in July 1983,

defendant  Nos.  1  to  5  sold  the  suit  house  to

defendant  No.  6  on  09.02.1983  itself  and  thus

committed  breach of  agreement  dated  18.01.1983

by not  performing their  part  of  the  agreement  by

executing  the  sale  deed  in  plaintiff's  favour  and

hence  the  suit  to  seek  specific  performance  of

agreement  dated  18.01.1983  for  execution  of  the

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sale  deed  in  relation  to  the  suit  house  and,  in

alternative, for refund of money paid to defendant

Nos. 1 to 5 and for damages for the loss suffered.

8. Defendant  Nos.  1  to  5  filed  their  common

written statement whereas defendant No. 6 filed his

written statement. So far as defendant Nos. 1 to 5

are concerned, they came out with a case that they

had first entered into an agreement on 04.01.1983

with  defendant  No.  6  to  sell  the  suit  house  for

Rs.45,000/-.  However,  the  plaintiff,  on  coming  to

know of the transaction, approached defendant Nos.

1 to 5 and requested them to sell the suit house to

him and said that he will persuade defendant No. 6

to withdraw from the deal and instead allow him to

purchase  the  suit  house.  It  was  averred  that  the

plaintiff  further assured to defendant Nos.  1 to 5

that in case, if for any reason, he fails to persuade

defendant No. 6 to withdraw from the transaction

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then he will back out to which defendant Nos. 1 to 5

agreed and accordingly entered into an agreement

with the plaintiff on 18.01.1983. Defendants (1 to 5)

then averred the background as to why they agreed

to sell the suit house to defendant No. 6. According

to  them, Late  Surayanarayna had borrowed some

money  (Rs.1400/-  and  Rs.1200/-)  during  his

lifetime from one creditor (Smt. M. Venkatalakshmi)

but  before  he  could  repay the  loan,  he  died.  The

creditor, therefore, went on pressing defendant Nos.

1  to  5  for  its  repayment  and  it  is  with  this

background defendant Nos. 1 to 5 entered into the

sale agreement with defendant No. 6 on 04.01.1983

for  sale  of  suit  house  to  defendant  No.  6.  The

defendants  also  gave  some more  details  to  justify

the prior agreement with defendant No. 6.

9. So far as defendant No. 6 is concerned, while

denying the plaintiff’s claim more or less reiterated

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the  stand  taken  by  defendant  Nos.  1  to  5.  He

defended the sale in his favour being made for valid

consideration  with  bona  fide intention.   He  also

alleged that  his agreement being prior  in point  of

time to the plaintiff’s agreement, the same was legal

and valid.

10. Parties adduced evidence. The Trial Court, by

judgment dated 13.09.1989, decreed the plaintiff's

suit. The Trial Court held that the agreement dated

04.01.1983  with  defendant  No.  6  for  sale  of  suit

house was not genuine and bona fide agreement. It

was also held that the sale deed dated 09.02.1983

executed  pursuant  to  such  agreement  was  not  a

genuine sale deed and no consideration was passed

between defendant Nos. 1 to 5 and defendant No. 6

for  sale  and  purchase  of  the  suit  house.  It  was

further held that the agreement dated 18.01.1983

between the plaintiff and defendant Nos. 1 to 5 was

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a  genuine  agreement  which  was  also  acted  upon

pursuant  to  which  defendant  Nos.  1  to  5  had

received part payment from the plaintiff. It was then

held that the plaintiff was willing to perform his part

of the agreement but it were the defendant Nos. 1 to

5, who committed the breach. The Trial Court, with

these  findings,  decreed  the  suit  against  the

defendants  and  passed  the  decree  for  specific

performance in relation to the suit house directing

the defendants to execute the sale deed in plaintiff’s

favour on accepting Rs.45,000/- from the plaintiff.

11. Felt  aggrieved,  defendant  No.  6  filed  first

appeal  before  the  High Court.  The  learned  Single

Judge  allowed  defendant  No.  6's  appeal  and  set

aside the judgment/decree of the Trial Court and, in

consequence,  dismissed  the  plaintiff's  suit.  Felt

aggrieved,  the  plaintiff  filed  letters  patent  appeal

before  the  Division  Bench  of  the  High  Court.  By

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impugned  order,  the  Division  Bench  allowed  the

plaintiff's  appeal  and  while  setting  aside  of  the

judgment of  the Single Judge restored that of  the

Trial  Court.  As  a  result,  the  plaintiff's  suit  stood

decreed  against  the  defendants  in  relation  to  the

suit  house,  which  directed  performance  of  the

agreement  dated  18.01.1983  in  plaintiff’s  favour.

Felt aggrieved, defendant No. 6 has filed the present

appeal by way of special leave before this Court.

12. Heard Ms. Manjeet Kirpal, learned counsel for

the appellant and Mr. Sri Harsha Peechara, learned

counsel for the respondents.

13. Having  heard  the  learned  counsel  for  the

parties and on perusal of the record of the case, we

find no merit in the appeal.

14. The  main  question  involved  in  this  case  is

which agreement is bona fide and genuine - the one

dated  04.01.1983  between  defendant  Nos.  1  to  5

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and defendant No. 6 or the other dated 18.01.1983

between defendant Nos. 1 to 5 and the plaintiff? The

other  question  is  whether  the  plaintiff  was  ready

and  willing  to  perform his  part  of  the  agreement

dated  18.01.1983  and  secondly,  whether  he  was

able  to  prove  the breach committed by  defendant

Nos.  1  to  5  in  not  performing  their  part  of  the

agreement?  This  question  would  arise  only  if  the

agreement dated 18.01.1983 is held  bona fide and

genuine  and  the  other  dated  04.01.1983  is  held

bogus.

15. In our  opinion,  the  Trial  Court  and Division

Bench  were  right  in  holding  that  the  agreement

dated  18.01.1983  was  a  genuine  and  bona  fide

agreement with defendant Nos. 1 to 5 whereas the

agreement  dated  04.01.1983 set  up  by  defendant

Nos. 1 to 6 claiming to be prior in point of time as

against the plaintiff's agreement a bogus agreement

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brought  into  existence  only  to  somehow  avoid

execution of the agreement dated 18.01.1983 of the

plaintiff.  

16.  In our view, the reasoning and the conclusion

arrived  at  by  the  Division  Bench  is  proper  and

reasonable.   It  is based on proper appreciation of

evidence  and  hence  does  not  call  for  any

interference in our appellate jurisdiction.  This we

say for the following reasons.

17. On perusal of the pleadings and the evidence,

it is also evident to us that defendant Nos. 1 to 5, in

clear  terms,  admitted  the  execution  of  the

agreement with the plaintiff which they had entered

into on 18.01.1983. They further admitted its part

performance  when  they  accepted  advance  money

from the plaintiff. In the light of these material facts,

if  they had already entered into an agreement on

04.01.1983 with defendant  No.  6 then where was

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any occasion for them to have entered into another

agreement  thereafter  much less on 18.01.1983 to

sell  the  same property  to  the  plaintiff.  Indeed,  in

such  circumstances,  they  should  have  simply

expressed their inability to sell the suit house to the

plaintiff telling him about their prior agreement with

defendant No. 6. In other words, in such situation,

they could have simply informed the plaintiff that he

was late in approaching them and it is not possible

for  them  to  sell  the  suit  house  to  him.   They,

however, did not do so.

18. The conduct of  defendant Nos. 1 to 5 and 6

was, in our opinion, clear. They somehow wanted to

avoid  execution  of  the  plaintiff's  agreement  and

wanted  to  sell  the  suit  house  to  defendant  No.6.

This  they  could  achieve  only  by  creating  an

agreement which was prior to that of the plaintiff's

agreement.  

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19. Both the Courts, on appreciating the evidence,

therefore,  rightly  concluded  that  the  agreement

dated  04.01.1983  between  defendant  Nos.  1  to  5

and defendant No.  6 was a bogus agreement and

was  created  to  scuttle  the  execution  of  plaintiff’s

agreement  dated  18.01.1983.  It  was  rightly  held

that  they  even  got  the  sale  deed  executed  on

09.02.1983 before the expiry of six months’ period

to avoid performance of plaintiff’s agreement dated

18.01.1983.

20. Once  we  affirm  the  findings  of  the  Courts

below  (Trial  Court  and  Division  Bench)  that  the

agreement  dated  18.01.1983  was  a  bona  fide

agreement whereas the agreement dated 04.01.1983

was a bogus agreement, the next question arises for

consideration is whether the plaintiff has proved the

necessary  ingredients  of  Section  16  (C)  of  the

Specific  Reliefs  Act  so  as  to  enable  him to  claim

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specific performance of his agreement. In  other

words, the next question is whether the plaintiff was

able  to  prove  that  he  was  ready  and  willing  to

perform his part of the agreement and that he has

always been ready and willing to perform his part of

the agreement and has, in fact, performed his part

and  secondly,  whether  defendant  Nos.  1  to  5

committed the breach in not performing their part

and, if so, its effect?

21. On going through the record, we are inclined

to concur with the findings of the two courts (Trial

Court and Division Bench)  on these issues as,  in

our  opinion,  both  the  Courts  below were  right  in

recording  the  findings  in  plaintiff’s  favour  for  the

following reasons.

22. It  is  not  in  dispute  that  the  plaintiff  did

perform his part when he paid advance money of

Rs.1000/- to defendant Nos. 1 to 5 in terms of the

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agreement  dated  18.01.1983.  It  is  also  not  in

dispute that the sale deed was to be executed within

6 months,  i.e.,  up to July 1983. It  is  also not  in

dispute that defendant Nos. 1 to 5 executed the sale

deed in favour of defendant No. 6 on 09.02.1983. So

the breach on the part of defendant Nos. 1 to 5 was

apparent inasmuch as nothing more was required

to be proved by the plaintiff once these facts became

undisputed.   In  spite  of  that,  the  plaintiff  sent  a

notice (Ex-A-2) calling upon defendant Nos. 1 to 5 to

execute the sale deed in his favour but it was not

adhered to by the defendants.

23. In our considered opinion, the story set up by

both  the  sets  of  defendants  in  their  respective

written  statements,  as  to  in  what  circumstances,

the  agreement  dated  04.01.1983  came  to  be

executed  between  defendant  Nos.  1  to  5  and

defendant  No.  6  was wholly  unrealistic,  irrelevant

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and  cooked  up  one.  The  two  Courts  below  (Trial

Court  and  Division  Bench),  therefore,  rightly

disbelieved  it  and  we  fully  concur  with  their

reasoning.  

24. Indeed, if the main intention of defendant Nos.

1 to 5 was to sell the suit house and to liquidate the

debts of the family and we accept their story to that

extent for the sake of argument, yet, in our view, the

said  purpose  could  have  been  achieved  by  the

defendants by sale of suit house to the plaintiff also.

The sale consideration agreed with the plaintiff was

rather more (Rs.46,000/-) as against defendant No.

6,  who  purchased  it  for  Rs.  45,000/-.  In  other

words, if the intention of defendant Nos. 1 to 5 was

to liquidate the debt by sale of suit house then such

purpose could be achieved by selling the suit house

to  the  plaintiff  as  well  and  there  was  no  special

reason to sell  it  only to defendant  No.  6.   It  was

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rather clear that he was keen to purchase the suit

house at any cost because being a tenant of the suit

house, he was in its occupation.  

25. So far  as the other  story that  how and why

Late Surya Narayana took loan and from whom he

took  etc.  was  of  no  relevance  for  deciding  the

question of specific performance between the parties

for the simple reason that it was an internal matter

of  defendant  Nos.1-5,  Surya  Narayana  and  his

creditor.  Both  the  Courts  below  (Trial  Court  and

Division Bench), therefore, rightly rejected this part

of story pleaded by the defendants as being wholly

irrelevant.

26. In the light of foregoing discussion, we are of

the considered opinion that both the Courts below

were right in decreeing the plaintiff's suit for specific

performance  of  the  agreement  dated  18.01.1983

against the defendants and we uphold this finding.

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27. Now coming  to  another  question  though  not

pressed in service by the parties but, in our view, it

does arise in the case as a result of the plaintiff's

suit  being  decreed  against  the  defendants  by  the

Trial Court and affirmed by the Division Bench of

the High Court and lastly by this Court.

28. The  question  arose  before  this  Court  in  the

case of  Durga Prasad & Anr. Vs. Deep Chand &

Ors.,  AIR 1954 SC 75 as to  what  form of  decree

should be passed in the case of specific performance

of contract where the suit property is sold by the

defendant,  i.e.,  the  owner  of  the  suit  property  to

another  person  and  later  he  suffers  a  decree  for

specific  performance  of  contract  directing  him  to

transfer the suit property to the plaintiff in term of

contract.

29. The  learned  Judge-Vivian  Bose,  J.  examined

this  issue  and  speaking  for  the  Bench  in  his

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inimitable style of writing, held as under:

“Where there is a sale of the same property in favour of  a  prior and subsequent transferee and the subsequent transferee has, under the conveyance  outstanding  in  his  favour,  paid the purchase-money to the vendor, then in a suit for specific performance brought by the prior  transferee,  in  case  he  succeeds,  the question  arises  as  to  the  proper  form  of decree in such a case.  The practice of the Courts  in  India  has  not  been  uniform  and three  distinct  lines  of  thought  emerge. According to  one point  of  view,  the proper form of decree is to declare the subsequent purchase void as against the prior transferee and direct conveyance by the vendor alone. A  second  considers  that  both  vendor  and vendee should join, while a third would limit execution  of  the  conveyance  to  the subsequent  purchaser  alone.   According  to the Supreme Court, the proper form of decree is  to  direct  specific  performance  of  the contract  between  the  vendor  and  the  prior transferee  and  direct  the  subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the prior  transferee.   He  does  not  join  in  any special  covenants  made  between  the  prior transferee and his vendor; all  he does is  to pass on his title to the prior transferee.”

30. The question, in this case, arises this way. The

effect  of  the  decree  now  is  that  the  plaintiff  is

required to  pay  the  balance  sale  consideration  to

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defendant Nos.1 to 5 in terms of agreement dated

18.01.1983 and, in turn, defendant Nos.1 to 5 have

to  execute  the  sale  deed  of  the  suit  house  in

plaintiff's  favour  and  give  possession  of  the  suit

house  to  the  plaintiff.  Since,  in  the  meantime,

defendant Nos.1 to 5 have sold the suit  house to

defendant No.6, vide sale deed dated 09.02.1983 for

Rs.45,000/- such sale would not bind the plaintiff.

Indeed  the  sale  deed  dated  09.02.1983  now  has

become  bad  in  law  and  the  transaction  of  sale

between defendant Nos.1 to 5 and defendant No.6

has failed.  In such circumstances,  the seller,  i.e.,

(defendant Nos.1 to 5) has no right to retain the sale

consideration  of  Rs.45,000/-  which  they  received

from defendant No.6 or any part thereof, as the case

may be, and has to, therefore, refund the same to

the  buyer  (defendant  No.6).   In  other  words,

whatever amount which defendant Nos.1-5 received

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from defendant  No.6 (whether  Rs.45,000/- or any

part  thereof),  the  same  has  to  be  refunded  by

defendant  Nos.1-5  to  defendant  No.6-(see  Section

65  of  the  Contract  Act).   Nevertheless,  defendant

No.6  would  join  in  execution  of  sale  deed  in

plaintiff’s  favour  along  with  defendant  Nos.1-5  as

held  by  this  Court  in  Durga  Prasad  (supra) for

conveying  the  valid  title  of  the  suit  house  to  the

plaintiff.

31. We, therefore, consider it just and proper and

with a view to end this litigation between the parties

which is  pending since  last  more than 3 decades

and to balance the equities amongst the parties to

the suit/appeal, direct that defendant Nos. 1 to 5

would  return  to  defendant  No.6  a  sum  of

Rs.45,000/-  or  whatever  amount  which  they

(defendant  Nos.1-5)  received  as  part  of  sale

consideration from defendant No.6.  This direction

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we give to the defendants by taking recourse to our

powers  under  Article  142  of  the  Constitution  of

India to do complete justice because we do not want

another  round  of  litigation  to  go  on  for  years  in

future between the defendants  inter se for recovery

of this amount.  

32. We may here clarify that in case any dispute

arises  between  defendant  Nos.1-5  and  defendant

No.6 in relation to exact amount paid by defendant

No.6  to  defendant  Nos.1-5  by  way  of  sale

consideration  for  execution  of  sale  deed  dated

09.02.1983,  the  executing  Court  will  hold  limited

enquiry on this question and record its finding after

giving  an opportunity  to  the  parties  to  prove  this

fact  and  then  parties  will  accordingly  pay  the

decided amount.

33. It  was brought to our notice that during the

pendency of this litigation, some more transactions

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took place in relation to suit house.  Suffice it  to

say,  such  transactions  are  directly  hit  by  the

principle  of  lis  pendence, as  contemplated  under

Section 52 of the T.P. Act and, therefore, it is of no

consequence so far as this litigation is concerned. In

other words, these transactions are not binding on

the  parties  to  the  Lis much less  on the  plaintiff.

Such parties would be, therefore, at a liberty to now

work out their inter se rights in accordance with law

as a fall out of this judgment.

34. In the light of foregoing discussion and subject

to  modification  as  directed  above,  the  appeal  is

accordingly finally disposed of.

35. Let the compliance of this judgment including

execution of decree of the Trial Court be made by

the  parties  within  three  months  from the  date  of

receipt of this judgment.

               ………...................................J.

[R.K. AGRAWAL]             

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                        …... ……..................................J. [ABHAY MANOHAR SAPRE]

New Delhi; October 09, 2017  

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