R. Banumathi, J.@mdashBeing aggrieved by the dismissal of his Suit for Specific Performance in O.S. No. 2 of 2010, unsuccessful Plaintiff has preferred A.S. No. 291 of 2011. Being aggrieved by the direction of the Trial Court to pay costs to the Plaintiff, the Defendants 1 to 3 have preferred Appeal in A.S. No. 472 of 2011. For convenience, the parties are referred as per their array in the Suit. Defendants 1 to 3 are the owners of the suit property in Kallakurichi village. The suit property is a vacant land measuring a total extent of 3.16 acres in Survey Nos. 63/3 (35 cents), 63/4 (45 cents), 63/6 (57 cents), 63/7 (1.401/2 acres), 63/8 (8 cents), 63/9 (19 cents) & 63/10 (7 cents) and path way to an extent of 41/2 cents respectively in Porpadakurichi village Panchayat in Kallakurichi panchayat Union. The suit property was allotted to the 1st Defendant through a family Settlement Deed dated 25.6.2008. The Defendants 1 to 3 agreed to sell the suit property to the Plaintiff and paid an advance of Rs. 1,00,000/-. The total sale consideration was agreed at Rs. 42,66000/-. On 13.7.2009, Defendants 1 to 3 have entered into Ex. A.1-Agreement of Sale and on the same day paid further amount of Rs. 24,00,900/- towards sale consideration. Balance amount of Rs. 47,66,000/- has to be paid within a period of 21/2 months i.e., before 30.9.2009.
2. Case of Plaintiff is that in spite of the specific undertaking of the Defendants 1 to 3 to execute the Sale Deed, when the Plaintiff approached the Defendants 1 to 3 for execution of the Sale Deed, the Defendants 1 to 3 were evasive. Plaintiff came to know from reliable sources that the Defendants 1 to 3 are trying to alienate the suit property to some third parties. Stating that in spite of his oral demands calling upon the Defendants 1 to 3 to execute the Sale Deed in favour of the Plaintiff by receiving the balance sale consideration of Rs. 17,66,000/-, the Defendants 1 to 3 were evading to execute the Sale Deed. Hence, the Plaintiff filed the Suit for Specific Performance and also for permanent injunction restraining the Defendants 1 to 3 from alienating the suit property. Even at the time of filing of the Suit, the Plaintiff has deposited the balance sale consideration of Rs. 17,66,000/- into the Court. The Sub-Registrar, Kallakurichi was also shown as 4th Defendant and Plaintiff has sought for permanent injunction restraining the Sub-Registrar, Kallakurichi from registering the Sale Deed by Defendants 1 to 3 in respect of the suit property.
3. Admitting the execution of Agreement of Sale on 13.7.2009 [Ex. A1] and admitting receipt of advance amount of Rs. 1,00,000/- and also Rs. 24,00,000/-, Defendants 1 to 3 filed the Written Statement. According to Defendants 1 to 3, at the time of execution of agreement, it was orally agreed that the Plaintiff would draw a lay out plan for 72 plots by the end of July, 2009 and that the Plaintiff would allot six plots to the Defendants 1 to 3, and that a Sale Deed would be executed in favour of the Plaintiff barring those six plots. The Defendants 1 to 3 believed the promise made by the Plaintiff and subscribed their signature in Ex. A.1 - Agreement of Sale. Further case of Defendants 1 to 3 is that Plot Nos. 112, 3, 31, 32 and 33 were identified by the Defendants 1 to 3 and the Plaintiff had also agreed to exclude those items when the Sale Deed was executed by the Defendants 1 to 3. According to Defendants 1 to 3, the Plaintiff had given an advertisement that all the plots are available for sale and that the Plaintiff had not excluded the six plots identified by the Defendants 1 to 3 and contrary to the agreement, the Plaintiff started entering into agreements with the third parties and thereby, he was raising funds for the balance of sale consideration. Stating that the Plaintiff did not have the wherewithal to pay the balance sale consideration and that his intention was only to sell plots at huge price and from out of the sale of plots to pay the balance consideration and the Plaintiff was not possessed of sufficient funds to pay the balance sale consideration. According to Defendants 1 to 3, the Plaintiff was never ready and willing to perform his part of the contract and that he can not enrich himself at the cost of the Defendants 1 to 3 and therefore, prayed for dismissal of the Suit.
4. Oct the above pleadings, relevant Issues were framed. The Plaintiff examined himself as PW1 and Agreement of Sale was marked as Ex. A.1. 2nd Defendant was examined as DW1 and witness to Ex. A.1 - Agreement of Sale was examined as DW2. Agreement of Sale executed by the Plaintiff with one Veerasamy for selling one of the plot in the suit property was marked as Ex. B.1.
5. Upon consideration of oral and documentary evidence, the Agreement of Sale, the parties have agreed that the Plaintiff should allot six plots to the Defendants 1 to 3. The Trial Court held that the Plaintiff did not have the money to pay the balance sale consideration and that he was not ready and willing to perform his part of the contract. The Trial Court further held that since the possession was said to have been handed over to the Plaintiff and Ex. A.1 - Agreement of Sale, being unregistered, is not a valid one in view of Sections 17(1-A) & 49 of the Indian Registration Act. On those findings, the Trial Court held that the Plaintiff is not entitled to the relief of specific performance.
6. Being aggrieved by the dismissal of the Suit, Plaintiff has preferred Appeal in A.S. No. 291 of 20111. Being aggrieved by the direction of the Trial Court to pay costs to the Plaintiff, the Defendants 1 to 3 have preferred Appeal In A.S. No. 472 of 2011.
7. Mr. N. Manoharan, learned Counsel for Plaintiff [Appellant in A.S. No. 291 of 2011] has contended that even though Defendants 1 to 3 have admitted the execution of Ex. A1 - Agreement of Sale and receipt of advance amount of Rs. 25 lakhs, Trial Court committed an error in rejecting the relief of Specific Performance. It was contended that Trial Court failed to note that Plaintiff was always ready and willing to perform his part of the contract and that Defendants 1 to 3 alone evaded to execute the Sale Deed after the receipt of balance sale consideration. Trial Court failed to understand that it is not as if all the agreements for sale referring to the instance of delivery of possession shall compulsorily be registered u/s 17(1-A) of Indian Registration Act and that agreement to be registered only to claim the benefit u/s 53-A of Transfer of Property Act. Learned Counsel for Plaintiff would contend that no clause was incorporated about allotment of six plots to the Defendants 1 to 3 in Ex. A1 - Agreement of Sale. In support of his contentions, learned Counsel for Plaintiff inter alia placed reliance upon
8. Mr. G. Arul Murugany learned Counsel appearing for Defendants 1 to 3 [Appellants In A.S. No. 472 of 2011] contended that Trial Court rightly held that Plaintiff was never ready and willing to perform his part of the contract and that be is not entitled to the discretionary relief of specific performance. It was argued that when the Plaintiff claimed benefit from Ex. A1 - Agreement of Sale, it ought o have been compulsorily registered u/s 17(1-A) of Indian Registration Act. Learned Counsel for Defendants 1 to 3 would submit that as per Ex. A1-Agreement of Sale, Plaintiff agreed to allot six plots to Defendants 1 to 3. Learned Counsel for Defendants 1 to 3 would contend that while dismissing the Suit flied by the Plaintiff, Trial Court erred In awarding costs of, Rs. 3,65,651/- payable by the Defendants 1 to 3 to the Plaintiff and the said finding of the Trial Court is unsustainable and liable to be set aside.
9. We have also heard Mr. P. Pasupatheeswaran, learned Special Government Pleader (AS) appearing for the Sub Registrar, Kallakurichi. He would contend that Sub-Registrar was an unnecessary party to the Suit.
10. We have carefully perused the pleadings, evidence and materials on record and the impugned judgment of the Trial Court. Upon consideration of oral and documentary evidence and the rival contentions, the following points arise for determination in these Appeals:
(1) Whether the Trial Court was right in holding that Plaintiff was not ready and willing to perform his part of the contract?
(2) Whether the oral evidence adduced to establish the defence plea that Plaintiff agreed to allot six plots is hit by Section 92 of Indian Evidence Act?
(3) Whether the defence plea of Plaintiff agreeing to allot six plots is substantiated?
(4) Whether the Trial Court was right in saying that Ex. A1-Agreement of Sale is invalid for want of registration?
(5) Whether the judgment of the Trial Court directing the Defendants to pay costs is erroneous?
(6) To what relief, the parties are entitled to?
11. Point No. 1: It is not in dispute that Ex. A1-Agreement of Sale dated 13.7.2009 was entered into by the Plaintiff with Defendants 1 to 3 for a total consideration of Rs. 42,66,000/-. Payment of advance of Rs. 1,00,000/- on 27.6.2009 and Rs. 24,00,000/- on the date of agreement [13.7.2009] is also not in dispute. As per the agreement, balance amount of Rs. 17,66,000/- is to be paid within a period of 21/2 months and that the Sale Deed is to be executed on or before 30.9.2009. Case of Plaintiff is that in spite of his oral request, Defendants 1 to 3 have evaded the execution of Sale Deed and that they were indifferent and changed their mind to sell the properties to third parties. In his evidence, PW1-Manoharan (Plaintiff) has stated that he is always ready and willing to perform his part of the contract to get the Sale Deed executed on payment of balance sale consideration of Rs. 17,66,000/-. Suit was filed on 21.8.2009 i.e. even before the expiry of 21/2 months stipulated for performance of the contract. Even at the time of filing of the Suit on 21.8.2009, Plaintiff has deposited the balance sale consideration of Rs. 17,66,000/- into the Court.
12. Case of Defendants 1 to 3 is that Plaintiff has to form a layout and that Plaintiff has to allot six plots and take the Sale Deed; but the Plaintiff was not ready to allot six plots and performed his part of the contract. Further case of Defendants 1 to 3 is that even though the said arrangement of allotting six plots was not written in Ex. A1-Agreement of Sale, at the time of execution of Ex. A1-Agreement of Sale, parties have so agreed that Plaintiff has to allot six plots.
13. Readiness and Willingness - Section 16(c) of Specific Relief Act lays down that specific performance of a contract cannot be enforced in favour of a person who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the Defendant. Explanation-II to sub-section (c) of Section 16 provides that Plaintiff must aver performance of, or readiness and willingness to perform the contract according to its true construction. An averment of "readiness and willingness" in the Plaint is not a mathematical formula which should only be in specific words. If the averments in the Plaint as a whole do clearly indicate the readiness and willingness of the Plaintiff to fulfil his part of the obligations under the contract which is subject matter of the Suit the fact they are differently worded will not militate against the readiness and willingness of the Plaintiff in a Suit for Specific Performance of contract for sale.
14. Plaintiff has to prove his continuous readiness and willingness to perform his part of the contract from the date of contract till the date of hearing. Mere pleading is not enough; Plaintiff has to state during trial that he is still ready and willing to perform his part of the contract. In order to prove readiness, Plaintiff has to prove that he had the necessary means from the date of contract till the date of filing of the Suit to pay the balance sale consideration.
15. Considering the scope "readiness and willingness" in Section 16(c) of Specific Relief Act, in
22. The words "ready" and "willing" imply that the person was prepared to carry out the terms of the contract. The distinction between "readiness" and "willingness" is that the former refers to financial capacity and the latter to the conduct of the plaintiff wanting performance. Generally, readiness is backed by willingness.
23. In
5. Section 16(c) of the Act envisages that the Plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which he has been prevented or waived by the Defendant. The continuous readiness and willingness on the part of the Plaintiff is a condition precedent to grant 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-4 the 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 of consideration which he has to pay to the Defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract. As stated, the factum of his readiness and willingness to perform his part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the Plaintiff was ready and was always ready and willing to perform his part of the contract.
24. In
19. It is indisputable that in a Suit for Specific Performance of contract the Plaintiff must establish his readiness and willingness to perform his part of contract. The question as to whether the onus was discharged by the Plaintiff or not will depend upon the facts and circumstances of each case. No straitjacket formula can be laid down in this behalf.
21.........The readiness and willingness on the part of the Plaintiff to perform his part of contract would also depend upon the question as to whether the Defendant did everything which was required of him to be done in terms of the Agreement for Sale.
25. Section 16(c) of the Specific Relief Act, 1963 mandates "readiness and willingness" on the part of the Plaintiff and it is a condition precedent for obtaining relief of grant of Specific Performance. It is also clear that in a Suit for Specific Performance, the Plaintiff must allege and prove a continuous "readiness and willingness" to perform the contract on his part from the date of the contract. The onus is on the Plaintiff.
26. It has been rightly considered by this Court in
16. In the light of the above well settled principles, let us consider whether the Plaintiff has established his case. Admittedly, at the time of execution of Ex. A1-Agreement of Sale, possession of the suit property was handed over to the Plaintiff which is incorporated in Ex. A1-Agreement of Sale itself. Of course, Plaintiff did not issue any notice, but has stated that he has been repeatedly asking the Defendants 1 to 3 to execute the Sale Deed on receipt of the balance sale consideration of Rs. 17,66,000/-. When Defendants 1 to 3 evaded to execute the Sale Deed, Plaintiff filed the Suit on 21.8.2009 by depositing the balance sale consideration of Rs. 17,66,000/-.
17. Out of the total sale consideration of Rs. 42,66,000/-, Plaintiff Paid Rs. 1,00,000/- plus Rs. 24,00,000/-, totalling Rs. 25,00,000/- i.e. Plaintiff has paid more than 56% of the total sale consideration. The balance sale consideration of Rs. 17,66,000/- was deposited into the Court even on the date of filing of the Suit i.e. on 21.8.2009. As per the written terms in Ex. A1-Agreement of Sale, Plaintiffs only obligation was to pay the balance sale consideration. In the Plaint, Plaintiff has categorically averred his readiness and willingness to pay the balance sale consideration and to get the Sale Deed executed. In his evidence, PW1-Manoharan has reiterated the same. His readiness and willingness is substantiated by deposit of balance sale consideration of Rs. 17,66,000/- into the Court at the time of filing of the Suit. In such circumstances, Trial Court was not right in saying that Plaintiff was not ready and willing to perform his part of the contract.
18. Even before getting the Sale Deed in his favour, Plaintiff has entered into an Agreement of Sale [Ex. B1] with one Veerasamy. Plaintiff has admitted having entered into Sale Agreements with few others also. In their evidence, DWs. 1 & 2 have stated that after Plaintiff was permitted to form a layout and that before execution of Sale Deeds, Plaintiff has no right to enter into an agreement with third parties. They have further stated that Plaintiff can enter into an Agreement of Sale only after getting the Sale Deed executed from Defendants 1 to 3. Trial Court held that Plaintiff did not have the money to pay the balance sale consideration and get the Sale Deed executed; but raised money only by entering into an Agreement of Sale with others for selling away the plots from out of the layout formed in the suit property. In our considered view, Merely because Plaintiff has entered into an Agreements of Sale with third parties, it cannot be concluded that Plaintiff was not ready and willing to get the Sale Deed executed.
19. Trail Court recorded a finding that Plaintiff did not have the money and stated that Plaintiff entered into an agreement with third parties for paying the balance sale consideration. On the date of Agreement of Sale [Ex. A1] with Defendants 1 to 3, possession of the suit property has been handed over to the Plaintiff. The relevant recitals in Ex. A1-Agreement of Sale reads as under:
When the possession was so handed over to the Plaintiff to form a layout, Plaintiff cannot be faulted for entering into an agreement with third parties and raising money. Absence of "readiness and willingness" cannot be attributed to the Plaintiff merely because he entered into an Agreement of Sale [Ex. B1] with one Veerasamy and others.
20. Amount of consideration which the Plaintiff has to pay to the Defendants 1 to 3 must be proved to be available. It is enough if the Plaintiff had either cash or establish credit at his command. Assuming that Plaintiff has raised money by so entering into an agreement with third parties, Plaintiff cannot be faulted. Plaintiff having paid an advance of Rs. 25,00,000/-, it cannot be said that he was not "ready and willing" to perform his part of contract. Finding of the Trial Court that Plaintiff was not "ready and willing" to perform his part of the contract is liable to be reversed.
21. Point Nos. 2 & 3:
Case of Defendants 1 to 3 is that after forming a layout, Plaintiff has to allot six plots to the Defendants 1 to 3 and only on that understanding, Defendants 1 to 3 have agreed to execute the Sale Deed on receiving the balance sale consideration. Further case of Defendants 1 to 3 is that after Plaintiff prepared a layout for 72 plots by the end of July 2009, it was shown to the Defendants) to 3 for identification of the plots and Defendants 1 to 3 have identified Point Nos. 1, 2, 3, 31, 32 & 33 and Plaintiff had also agreed to exclude those items when the Sale Deed was executed. In his evidence, DW1- Gunasekaran (2nd Defendant) stated that originally the sale price was fixed at Rs. 15,000/- per cent and because it was agreed that Plaintiff has to allot six plots, the sale price was reduced to Rs. 13,500/- per cent. DW1 further stated that as per the oral agreement, Plaintiff did not allot six plots; but had advertised for sale of all the plots including six plots to be allotted to the Defendants 1 to 3.
22. To substantiate the defence plea of such an oral agreement to allot six plots by the Plaintiff; Defendants examined DW2-Ravikumar who signed as witness in Ex: A1-Agreement of Sale. In his evidence, DW2 stated that after forming a layout; Plaintiff agreed to allot six plots to the Defendants 1 to 3 and parties have supplemented Ex. A1-Agreement of Sale by such an oral agreement of Plaintiff allotting six plots to Defendants 1 to 3. In his evidence, DW2 further stated that even though such oral agreement was made, the same was not incorporated In Ex. A1-Agreement of Sale. DW2 who signed as witness in Ex. A1-Agreement of Sale is a natural and probable witness about such contemporaneous oral agreement between the parties.
23. Per contra, Plaintiff has denied such oral agreement of allotment of plots to the Defendants 1 to 3. To disprove the defence plea, Plaintiff has not examined another witness who signed in Ex. A1-Agreement of Sale. Evidence of DW2 remains uncontroverted
24. Placing reliance upon
25. In all those cases, defence plea was that the real transaction was a loan transaction by way of security for repayment of loans. Since the defence urged was contradictory to the nature of transaction, in all those decisions, Court held that Defendants cannot lead evidence to contradict the terms of written agreement. Those decisions may not be applicable to the case on hand, since in the present case Defendants 1 to 3 have adduced evidence regarding the oral agreement supplemented to Ex. A1-Agreement of Sale.
26. When the terms of transaction which reduced into writing, it is not possible to lead evidence to contradict its terms in view of Section 91 of Indian Evidence Act. As per Section 92 of Indian Evidence Act, extrinsic parol evidence contradicting, varying adding to or subtracting from the terms of a solemn written instrument is inadmissible. This is because the parties have reduced into writing their agreement, it must be presumed that they have put into writing all that they considered necessary to give full expression to their meaning yard intention. As between parties to an instrument oral of intention is not admissible for the purpose either of construing deeds or of proving the intention of the parties.
27. Even though no extrinsic evidence is admissible in substitution for the written document, there are exceptions to the Rule in Section 92 of Indian, Evidence Act. Proviso (2) to Section 92 of Indian Evidence Act reads as under:
Proviso (2), - The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this Proviso applies, the Court shall have regard to the degree of formality of the document.
Thu as per Proviso (2) to Section 92 of Indian Evidence Act, if there is contemporaneous nor prior separate oral agreement as to any matter which is not inconsistent with its terms may be proved. The separate-agreement should be on a distinct collateral matter although it may form part of the same transactions, the test being that it should not vary or contradict the terms of the written contract.
28. In the light of the above principles, we need to analyse the evidence of DWs. 1 & 2 and consider whether they would fall within the Proviso (2) to Section 92 of Indian Evidence Act. As pointed out earlier, DWs. 1 & 2 have stated that at the time of entering into an Agreement of Sale (Ex. A1), parties have agreed that Plaintiff has to allot six plots and on that understanding; the price was reduced to Rs. 13,500/- per cent. On such agreement between the parties, it was agreed at the time of entering into Ex. A1-Agreement of Sale. Evidence adduced as to the oral agreement between the parties for allotting six plots to the Defendants 1 to 3 is no way contradicting, varying the terms of Ex. A1-Agreement of Sale. Therefore, the evidence adduced to establish the oral agreement between the parties to allot six plots to the Defendants 1 to 3 by the Plaintiff is admissible in evidence and not hit under Sections 91 & 92 of Indian Evidence Act.
29. The question thus falling for consideration is which of the six plots to be allotted to the Defendants. Though the layout plan [Amman Nagar-Kallakurichi] was stated to be attached with Ex. B1-Agreement of Sale entered by the Plaintiff with one Veerasamy, the same does not contain the layout plan.
30. C.M.P. No. 1 of 2012 in A.S. No. 291 of 2011 - In the Appeal preferred by the Plaintiff (A.S. No. 291 of 20110); Defendants 1 to 3 have filed C.M.P. No. 1 of 2012 under Order 41, Rule 27, C.P.C. to receive the lay out-plan as additional document.
31. Learned Counsel for Plaintiff raised a strong objection for receiving the layout plan as additional document. There could be no valid objection for receiving the layout plan as additional document for the reason being Plaintiff himself admitted forming of a layout and also entering into an agreement with the third persons for selling the plots. That apart, it is clearly mentioned in Ex. A1-Agreement of Sale that possession of the property was handed over to the Plaintiff for the purpose of forming a layout. Ex. B1 is the Agreement of Sale entered by the Plaintiff with one Veerasamy agreeing to sell Plot No. 12. The recitals in Ex. A1-Agreement of Sale and in view of admission by the Plaintiff and also in order to do complete justice between the parties, the layout plan filed in C.M.P. No. 1 of 2012 is ordered to be received as document in this Appeal and the same is marked as "Ex. B2".
32. In the Written Statement, it is averred that Defendants 1 to 3 have identified Plot Nos. 1, 2, 3, 31, 32 & 33 and Plaintiff also agreed to exclude those items when the Sale Deed was executed by the Defendants 1 to 3. Even though in the Written Statement the number of plots alleged to be agreed to be given as 1, 2, 3, 31, 32 & 33, in his evidence DW1 has not spoken about the plot numbers; but has only stated that Plaintiff has orally agreed to allot six plots and that the sale deed has to be executed only in respect of the remaining property. Defence plea raised in the written statement as to the allotment of Plot Nos. 1, 2, 3, 31, 32 & 33 remains unsubstantiated. Plot Nos. 1, 2, 3, 31, 32 & 33 are situated even at the entry point from the street. That is three plots on the northern side and three plots on the southern side. Those six plots being valuable properties, it is highly improbable that Plaintiff would have agreed to allot those six plots.
33. In his evidence DW2, who signed as witness in Ex. A1-six plots. In his evidence, DW2 has stated that Plaintiff has orally agreed to allot two plots in the beginning; two plots in the middle and two plots at the end portion. The relevant portion of evidence of DW2 reads as under:
Evidence of DW2 allotting two plots in the beginning; two plots in the middle and two plots in the end appears to be more probable.
34. Upon consideration of evidence of DWs. 1 & 2 and also by perusal of the layout plan (Ex. B2), in our considered view the Defendants 1 to 3 be entitled to Plot Nos. 1, 2, 9, 10, 16 & 17. It would be appropriate to direct the Defendants 1 to 3 to execute the Sale Deed excluding the above said Plot Nos. 1, 2, 9, 10, 16 & 17 which were allotted to them in the oral arrangement.
35. Point No. 4:
In Ex. A1-Agreement of Sale, there is a clause to the effect that possession had been handed over to the Plaintiff for forming a layout. Trial Court held that since possession was handed over to the Plaintiff, Ex. A1-Agreement of Sale need to be registered for claiming benefit under the said agreement. On those findings, Trial Court held that Ex. A1-Agreement of Sale is not a valid agreement for want of registration. The above observation of the Trial Court is erroneous and cannot be endorsed with.
36. Section 53-A of the Transfer of Property Act, 1882 would read that where a person agrees to transfer for consideration any immovable property in writing signed by him and in pursuance of the agreement where the transferee has taken possession of the property, the owner of the property or any person claiming under him is debarred from claiming against the agreement holder any right in respect of the property which the transferee has taken possession of the property. Of course, the said provision shall not affect the right of a transferee for consideration who has no notice of the contract or of the part performance thereof. As per Section 17(1-A) of the Registration Act, an Agreement for Sale relating to any immovable property, for reaping the benefits of Section 53-A of the Transfer of property Act, 1882, shall be registered. In other words, an intending purchaser, who enters into an Agreement for Sale with the owner of the property and got delivery of possession of the property, cannot claim the benefits u/s 53-A of the Transfer of Property Act unless the Deed of Agreement for Sale which contemplates such delivery of possession is registered.
37. It is not as if all the agreements for sale referring to instance of delivery of possession shall be compulsorily registered u/s 17(1-A) of Indian Registration Act. Only when the Agreement for Sale which speaks about delivery of possession is filed to claim benefit of "part performance" as contemplated u/s 53-A of Transfer of Property Act, Court will have to find out whether the document was registered or not. If such document was not registered, then the benefit of Section 53-A of Transfer of Property Act cannot be claimed by the prospective purchaser of the property. [Vide
38. In the case on hand, Plaintiff is not seeking for protection or claiming benefit u/s 53-A of Transfer of Property Act. Plaintiff has only sought for permanent injunction restraining the Defendants 1 to 3 from in any way alienating the property. Such relief sought for is an independent of the clause of handing over possession to the Plaintiff. That being so, there is no embargo for the Plaintiff to rely upon Ex. A1-Agreement of Sale. Trial Court must construe the provisions of Section 17(1-A) of Indian Registration Act.
Finding of the trial Court that Ex. A1-Agreement of Sale is invalid is liable to be set aside.
39. Point No. 5:
40. While directing the Defendants 1 to 3 to pay 725,00,000/- along with interest to the Plaintiff, Trial Court directed the Defendants to pay cost of Rs. 3,65,651/- to the Plaintiff. Being aggrieved by the direction to pay cost of Rs. 3165,651/- to the Plaintiff, Defendants 1 to 3 have preferred A.S. No. 472 of 2011.
41. Learned Counsel for Defendants 1 to 3 has contended that when the Trial Court declined the relief of specific performance, Trial Court ought to have awarded costs only to the Defendants and the Trial Court erred in directing the Defendants 1 to 3 to pay costs to the Plaintiff. It was further submitted that Trial Court failed to give any valid reason for directing the Defendants 1 to 3 to pay costs to the Plaintiff.
42. Section 35, C.P.C. confers a wide discretion on the Court in the matter of costs, but such discretion must be exercised, judicially. The general rule is that successful party is entitled to costs unless he is guilty of misconduct, negligence or omission or unless there is some other cause for not allowing the costs. The meaning of expression "costs shall abide the event" is that the successful party must get the costs. In this case, Trial Court directed the Defendants 1 to 3 to return back the advance amount of Rs. 25,00,000/- along with interest. Plaintiff was constrained to file the Suit because of refusal of the Defendants 1 to 3 to execute the Sale Deed. In exercise of its discretion, Court has directed the Defendants 1 to 3 to pay costs to the Plaintiff. When the Trial Court has exercised its discretion, Appellate Court will not lightly interfere on the question of allowing/ disallowing the costs.
43. Elaborately considering the scope of Sections 35 & 35A of C.P.C., and observing that the Courts ought to develop practice of awarding costs in accordance with Section 35 of C.P.C., in
7. ...
7.1. In Salem Advocates Bar Association, 2002 (4) CTC 504 (SC), this Court held:
Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded on the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In large number of cases, such an order is passed despite Section 35(2) of the Code. Such a practice also encourages filing of frivolous Suits. It also leads to taking up of frivolous defences. Further wherever costs are awarded; ordinarily the same are not realistic and are nominal. When Section 35(2) provides for cost to follow the event, it is implicit that the costs have to be those which are reasonably incurred by a successful party except in those cases where the Court in Its discretion may direct otherwise by recording reasons thereof. The costs have to be actual reasonable costs including the cost of the time spent by the successful party, the transportation and lodging, if any or any other incidental cost besides the payment of the Court fee, lawyer''s fee, typing and other cost in relation to the litigation. It is for the High Courts to examine these aspects and wherever necessary make requisite rules, regulations or practice direction so as to provide appropriate guidelines for the subordinate Courts to follow.
7.2. In
One view has been that the provisions of Sections 35 & 35-A, CPC do not in any way affect the wide discretion vested in by High Court in exercise of its inherent power to award costs in the interests of justice in appropriate Civil cases. The more sound view however is that though award of costs is within the discretion of the Court, it is subject to such conditions and limitations as may be prescribed and subject to the provisions of any law for the time being in force; and where the issue is governed and regulated by Sections 35 & 35-A of the Code, there is no question of exercising inherent power contrary to the specific provisions of the Code. Further, the provisions of Section 35-A seems to suggest that even where a Suit or litigation is vexatious, the outer limit of exemplary costs that can be awarded in addition to regular costs, shall not exceed Rs. 3,000/-. It is also to be noted that huge costs of the order of ?Fifty thousand or Rs. One lakhs, are normally awarded only in Writ proceedings and public interest litigations, and not in Civil litigation to which Sections 35 & 35-A are applicable. The principles and practices relating to levy of costs in administrative law matters cannot be imported mechanically in relation to Civil litigation governed by the Code.
7.3. In Vinod Seth, 2010 (4) CTC 546 (SC) : 2010 (8) SCC 11, this Court observed as under:
48. The provision for costs is intended to achieve the following goals:
(a) It should act as a deterrent to vexatious, frivolous and speculative litigations or defences. The specter of being made liable to pay actual costs should be such, as to make every litigant think twice before putting forth a vexatious, frivolous or speculative claim or defence.
(b) Costs should ensure that the provisions of the Code, Evidence Act and other laws governing procedure are scrupulously and strictly complied with and that parties do not adopt delaying tactics or mislead the Court.
(c) Costs should provide adequate indemnity to the successful litigant for the expenditure Incurred by him for the litigation. This necessitates the award of actual costs of litigation as contrasted from nominal or fixed or unrealistic costs.
(d) The provision for costs should be an incentive for each litigant to adopt Alternative Dispute Resolution (ADR) processes and arrive at a settlement before the trial commences in most of the cases. In many other jurisdictions, in view of the existence of appropriate and adequate provisions for costs, the litigants are persuaded to settle nearly 90% of the Civil Suits before they come up to trial.
(e) The provisions relating to costs should not however obstruct access to Courts and justice. Under no circumstances the costs should be a deterrent, to a citizen with a genuine or bona fide claim, or to any person belonging to the weaker sections whose rights have been affected, from approaching the Courts.
At present these goals are sought to be achieved mainly by Sections 35, 35-A & 35-B read with the relevant Civil Rules of Practice relating to taxing of costs.
49. Section 35 of the Code vests the discretion to award costs in the Courts. It provides that normally the costs should follow the event and Court shall have full power to determine by whom or out of what property, and to what extent such costs are to be paid. Most of the costs taxing rules, including the rules in force in Delhi provide each party should file a bill of cost immediately after the judgment is delivered setting out; (a) the Court fee paid; (b) process fee spent; (c) expenses of witnesses; (d) Advocate''s fee; and (e) such other amount as may be allowable under the rules or as may be directed by the Court as costs. We are informed that in Delhi, the Advocate''s fee in regard to Suits the value of which exceeds Rs. 5 lakhs is Rs. 14,500/- plus 1% of the amount in excess of Rs. 5 lakhs subject to a ceiling of Rs. 50,000/-. The prevalent view among litigants and members of the bar is that the costs provided for in the Code and awarded by Court neither compensate nor indemnify the litigant fully in regard to the expenses incurred by him.
50. The English Civil Procedure Rules provide that a Court in deciding what order, if any, to make in exercising its discretion about costs should have regard to the following circumstances:
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment made into Court or admissible offer to settle made by a party which is drawn to the Courts attention
''Conduct of the parties'' that should be taken note by the Court includes:
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(d) whether the claimant who has succeeded in his whole or in part, exaggerated his claim. Similar provisions, with appropriate modifications may enable proper and more realistic costs being awarded.
51. As Section 35 of the Code does not impose any ceiling the desired object can be achieved by the following:
(i) Courts levying costs, following the result, in all cases (non-levy of costs should be supported by reasons); and
(ii) appropriate amendment to Civil Rules of Practice relating to taxation of costs, to make it more realistic in commercial litigation.
52. The provision relating to compensatory costs (Section 35-A of the Code) in respect of false or vexatious claims or defences has become virtually infructuous and ineffective, on account of inflation. Under the said Section, award of compensatory costs in false and vexatious litigation, is subject to a ceiling of Rs. 3,000/-. This requires a realistic Revision "keeping in view, the observations in Salem Advocates Bar Association (supra). Section 35-B providing for costs for causing delay in seldom invoked. It should be regularly employed, to reduce delay.
53. The lack of appropriate provisions relating to costs has resulted in a steady increase in malicious, vexatious, false, frivolous and speculative Suits, apart from rendering Section 89 of the Code ineffective. Any attempt to reduce the pendency or encourage alternative dispute Resolution processes or to streamline the Civil Justice System will fail in the absence of appropriate provisions relating to costs. There is therefore an urgent need for the legislature and the Law Commission of India to re-visit the provisions relating to costs and compensatory costs contained in Sections 35 & 35-A of the Code
...
13. The discretion vested in the Courts in the matter of award of costs is subject to two conditions, as is evident from Section 35 of the Code:
(i) The discretion of the Court is subject to such conditions and limitations as may be prescribed and to the provisions of law for the time being in force [vide sub-section (1)].
(ii) Where the Court does not direct that costs shall follow the event, it shall state the reasons in writing [vide sub-section (2)]. The mandate of sub-section (2) of Section 35 of the Code that "where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing" is seldom followed in practice by Courts. Many Courts either do not make any order as to costs or direct the parties to bear their respective costs without assigning or recording the reasons for giving such exemption from costs. Unless the Courts develop the practice of awarding costs in accordance with Section 35 (that costs following the event) and also give reasons where costs are not awarded, the object of the provision for costs would be defeated. Prosecution and defence of cases is a time consuming and costly process. A Plaintiff/Petition/ Appellant, who is driven to the Court, by the illegal acts of the Defendant/ Respondent, or denial of a right to which he is entitled, if he succeeds, to be reimbursed of his expenses in accordance with law. Similarly a Defendant/ Respondent who is dragged to Court unnecessarily or vexatiously, if he succeeds, should be reimbursed of his expenses in accordance with law. Further, It is also well recognised that levy of costs and compensatory costs is one of the effect ways of curbing false or vexatious litigations.
The ratio of the above decision squarely applies to the case on hand. Plaintiff was driven to the Court by the refusal of the Defendants 1 to 3 to execute the Sale Deed. Even though there was oral arrangement for allotment of plots to Defendants 1 to 3, we do not think on that ground the costs has to be disallowed and the Appeal (A.S. No. 472 of 2011) preferred by the Defendants 1 to 3 challenging awarding of costs to the Plaintiff is liable to be dismissed.
44. Point No. 6:
Trial Court has not properly appreciated the evidence adduced by the Plaintiff and readiness and willingness on the part of the Plaintiff. Plaintiff has established his readiness and willingness by deposit of balance sale consideration of Rs. 17,66,000/- into the Court on the date of filing of the Suit itself. Trial Court has not properly appreciated the evidence adduced and erred in declining the relief of specific performance Trial Court ought to have properly analyse in identifying six plots and directed the Defendants 1 to 3 to execute the Sale Deed leaving six plots.
In the result, the judgment and decree in O.S. No. 2 of 2010 [28.2.2011] on the file of Fast Track Court No. 3, Kallakurichi is set aside and the Appeal A.S. No. 291 of 2011 preferred by the Plaintiff is allowed in part. Defendants 1 to 3 are directed to execute the Sale Deed in favour of Plaintiff excluding Plot Nos. 1, 2, 9, 10, 16 & 17 within a period of eight weeks from today. Defendants 1 to 3 are permitted to withdraw the balance sale consideration of Rs. 17,66,000/- deposited by the Plaintiff along with accrued interest lying in the credit of O.S. No. 2 of 2010 on the file of Fast Track Court No. 3, Kallakurichi. Since the possession of the suit property is stated to be with the Plaintiff, Plaintiff is directed to hand over possession of Plot Nos. 1, 2, 9, 10, 16 & 17 to Defendants 1 to 3. Defendants 1 to 3 shall have the same amenities on part with the other plot owners.
In view of the above conclusion and also the reasonings stated in Paragraph (41), A.S. No. 472 of 2011 filed by the Defendants 1 to 3 is dismissed.
C.M.P. No. 1 of 2012 in A.S. No. 291 of 2012 filed by Defendants 1 to 3 is allowed and the layout plan filed along with the Petition is ordered to be marked as Ex. B2.
Both parties are directed to bear their respective Costs in the Appeals.
Consequently, connected M.Ps. are closed.
