Anand Byrareddy, J.@mdashThese appeals are heard and disposed of by this common judgment, as they are preferred against the same judgment and decree. The appeal in RFA 908/2009 is preferred by the legal representatives of the deceased defendant No. 1 and the appeal in RFA 1201/2009 is preferred by defendant Nos. 2 and 3.
The parties are referred to by their ranking before the trial court.
2. It was the case of the plaintiff that defendant No. 1 was the absolute owner of premises bearing No. 30, I Main Road, Palace Guttahalli, Bangalore comprising of a sital area of 45 X 55 feet, with a built up area of 2475 square feet. The same was more fully described in the Schedule to the plaint.
The said defendant is said to have purchased the property under a sale deed dated 12.2.1970.
The plaintiff is said to have entered into an agreement of sale in respect of the said property under an agreement dated 1.6.1994, and is said to have paid an advance of Rs. 3 lakh, against the agreed price of Rs. 8.25 lakh.
It was claimed that the plaintiff had paid additional sums of money from time to time, towards the sale price as follows:
"Rs. 50,000/- on 3-7-1994
Rs. 1,50,000/- on 12-10-1994
Rs. 50,000/- on 8-2-1995
Rs. 1,30,000 on 14-3-1995"
And thus claimed to have paid a total sum of Rs. 6.80 lakh.
At the time of the agreement, it is said that the property had been mortgaged with the Karnataka State Finance Corporation, vide a Memorandum of Deposit of Title deeds, dated 23.5.1986. The same is said to have been discharged and all original papers pertaining to the said charge was said to have been delivered to the plaintiff
It was also claimed that the original sale deed was said to have been lost.
Defendant No. 2 is said to be the wife and defendant No. 3 the son of Defendant No. 1, respectively. Both those defendants are said to have joined defendant No. 1 in executing the agreement of sale. The defendant No. 1 is said to have represented that the suit property was being sold in order to discharge the loan with KSFC and other loans with private financiers and also to meet the cost of construction of a house premises at 67, Hosahalli, Gollarahatti, Magadi Main Road, Bangalore.
In terms of the said agreement of sale, the defendants were said to be required to obtain Income Tax Clearance certificate from the competent authority and also produce other documents pertaining to the property.
It is the allegation of the plaintiff that the defendants were not keen on completing the transaction. This was evident from the fact that the defendants are said to have locked up the suit premises and were unavailable for communication. And in a further design to prevent the sale, a collusive suit for partition is said to have been got preferred through the eldest son of the defendants 1 and 2, in O.S. No. 3557/1995. However, the plaintiff had managed to accost the defendants and when called upon to execute the sale deed, he is said to have been promised that the sale would be effected by November 1996. The plaintiff is said to have parted with a further sum of Rs. 25000, in arriving at such a compromise.
However, the defendants are alleged to have negated their promise and failed to complete the transaction. Hence the suit for specific performance of contract. The plaintiff claimed that he was ever ready and willing to complete the transaction.
Defendant Nos. 2 and 3 had entered appearance through counsel and filed written statement to contend that defendant No. 1 was not the absolute owner of the suit property. It was denied that there was a sale agreement in respect of the suit property. It was denied that there were any advance amounts paid. The defendants generally denied the plaint allegations.
It was asserted that the said defendants were acquainted with one Nirmal, who was a jeweler and also was a money lender, who lent money against the security of jewels. Defendant No. 3 is said to have approached him in the year 1994 to borrow Rs. 4 lakh. And had offered the suit property as security for the due repayment of the money. Since the defendant No. 3 and his parents had total confidence in Nirmal, as they had borrowed money from him on several occasions, they had permitted him to prepare the necessary documents in respect of the above loan. It was claimed that the defendants 1 to 3 were illiterate and had readily affixed their signatures to the documents prepared by Nirmal, without any inkling that the document was in effect an agreement of sale. At that point of time defendant No. 1 was admitted in hospital as his leg had to be amputated. It was claimed that Nirmal had deducted Rs. 80,000/-, towards interest on Rs. 4 lakh and had lent Rs. 3.20 lakh. It was denied that a sum of Rs. 6.80 lakh was paid as claimed by the plaintiff.
It was claimed that the said Nirmal was familiar with all the family members of the first defendant including his first wife and her son Ramu. They had no transaction with the plaintiff, they had not seen him before 1996. It was claimed that they had later learnt that the plaintiff was the brother-in-law of Nirmal. It was also revealed that he had got the agreement made out in the name of the plaintiff as he, Nirmal, was suffering from a terminal illness and was not sure whether he would live long.
It is claimed that defendant No. 1 had died and all attempts at an amicable settlement having failed, it is claimed that the suit had been filed. It was asserted that the agreement of sale was intended merely as security for repayment of money, which was evident from the fact that there was no attempt to obtain any of the statutory clearances necessary to complete the transaction, nor was there a demand made in that regard. The property it was claimed was worth over Rs. 35 lakh, even in the year 1995 and the value indicated in the agreement of sale is a paltry sum, which is another indication that it was not to be acted upon. And since the defendants had no absolute right over the property, they were not competent to convey the property.
On the death of defendant No. 1, other legal representatives of defendant No. 1, as apparently he had married two women, had entered appearance and had also filed written statement to contend that defendant had ancestral property at Mandya. With the aid of funds out of ancestral property, defendant No. 1 is said to have established several flour mills in Bangalore, which were being run jointly by the family members. It is claimed that it is out of those earnings that he had purchased the suit schedule property. Hence, it was contended that it was not the self acquired property of defendant No. 1.
The said defendants denied the plaint averments. It is asserted that there was a suit for partition filed by the eldest son of defendant No. 1 and the said suit was decreed holding that the plaintiff therein was entitled to 1/3rd share in the suit property. The plaintiff herein was also said to be a party to the suit for partition, but was deleted later. The judgment and decree in that suit is said to have been challenged in appeal in RFA 134/2005 and that the said appeal had ended in a compromise, whereby the other legal representatives had agreed to receive a lesser share. It is hence asserted that the suit property could not be treated as the property of defendant No. 1 and the judgment and decree affirmed in RFA 134/2005 was binding on the plaintiff.
The legal representatives of Defendants 4 and 5 had also entered appearance through counsel and had filed written statement to reiterate the same defence as set up by the other defendants.
3. On the basis of the above pleadings, the trial court had framed the following issues:
"1. Does the plaintiff prove that the first defendant executed an agreement of sale dated 1.6.1994 in his favour and agreed to sell the schedule property to him for a total sale consideration of Rs. 8,25,000/-?
2. Does the plaintiff prove that he paid in all Rs. 6,80,000/- to the defendants as advance of sale consideration, on different dates as stated in the plaint?
3. Does the plaintiff prove that he has always been ready and willing to perform his part of the contract?
4. Does the plaintiff prove that he is entitled for a decree of specific performance?
5. What order or decree?
Additional Issues:
1. Do the legal representatives D1 (a) and (b) prove that the judgment and decree in RFA 134/2005 is binding on the plaintiff?
2. Do the legal representatives D1 (a) and (b) prove that the agreement dated 1.6.1994 does not bind their share in the suit property?"
The trial court answered Issue Nos. 1 to 4 in the affirmative, Issue No. 5 as per the final order and Additional issues 1 and 2 in the negative and decreed the suit of the plaintiff Hence the appeals.
4. Smt. K.K Thayamma, the learned counsel appearing for the appellants in the appeal in RFA.908/2009 has raised the following contentions, namely, that the defendants 1 to 3 were illiterate and the several circumstances pleaded to contend that they only intended to borrow money and had executed a deed in the belief that it was merely a document acknowledging receipt of the loan and agreeing to repay the same. And that they had no inkling that it was an agreement of sale and that the defendants had no intention to sell the property and were not even competent to do so, as they could not claim absolute right to the property.
That the defendants had no track with the plaintiff and they did not know him before the year 1996, till after the dispute arose. There was no agreement entered into with him. It was significant that he was not even a signatory to the so called agreement of sale. Hence the examination of the attesting witnesses was imperative. The court below has however, proceeded on the footing that as an agreement of sale did not require to be attested, there was no need to examine the attesting witnesses. Thereby completely overlooking the need for the plaintiff to have dispelled any such doubt cast on the bona fides of the transaction, especially when the defendants were at a disadvantage in not being able to read and write.
Further, it is contended, as the defendants had vehemently disputed the receipt of the several sums of money said to have been paid to them pursuant to the agreement. It was incumbent on the plaintiff to have demonstrated that these alleged sums paid by way of cash had indeed changed hands, by disclosing his sources and the payments being reflected in his income tax returns. The trial court had not thought it fit to hold such non-disclosure against the plaintiff.
That the transaction was a mere money lending transaction was also apparent from the paltry sum shown as the sale consideration, when the real value of the property was more than Rs. 35 to 40 lakh at the relevant point of time.
It is also sought to be pointed out that defendant No. 1 is claimed to have affixed his signature to the disputed document in the plaintiffs office, where as it is borne out from the record that the said defendant was an inpatient in hospital for the amputation of his leg as on the relevant date. And hence the execution of the document is shown to be dubious and manipulated.
5. Shri Shanmukhappa, the learned counsel appearing for the appellants in the appeal in RFA 1201/2009 has also canvassed identical grounds in questioning the correctness of the judgment of the trial court. In addition, it is contended that the agreement of sale even if accepted, did provide for liquidated damages and therefore, it was not open for the appellant to seek specific performance of contract.
Further, the plaintiff had, on the face of it, failed to demonstrate his readiness and willingness to complete the sale transaction, even assuming that there was such an agreement. The terms of the alleged agreement clearly specified the date for completion of the transaction. The plaintiff had not even issued a notice calling upon the defendants to complete the transaction -prior to filing the suit. And the suit itself having been filed long after the time to complete the transaction had elapsed, certainly did not indicate his readiness and willingness to complete the sale transaction.
Firstly, in addressing the question whether the plaintiff had proved whether the agreement of sale had been executed by the defendants has been held in favour of the plaintiff on the strength of the admission by D.W. -1 of the signatures of the defendants appearing on Exhibits P-1 to P-6, which are the agreement of sale and receipts for having received advance amounts from time to time.
Only, it was sought to be contended by the defendant that he only believed that they same were loan documents and never intended as an agreement of sale and receipts for advance payment of price. However, the trial court has drawn attention to the admission made by the defendants in a partition suit filed by the other family members, where defendants 2 and 3 have acknowledged that there was an agreement of sale. The finding that the agreement of sale had been proved by the plaintiff hence cannot be faulted.
The contention that the agreement of sale had not been signed by the purchaser and therefore was not valid has been addressed by the Supreme court in the case of
"5) The defendant submitted that a contract for sale, like any other contract, is bilateral in nature under which both vendor and the purchaser have rights and obligations. It is submitted that an agreement for sale being a contract for sale, creating a right in the purchaser to obtain a deed of conveyance in terms of the agreement under which, the vendor agrees to convey to the purchaser, and the purchaser agrees to purchase, the subject-matter of the agreement for an agreed consideration, subject to the terms and conditions stipulated in the said agreement, it is bilateral. It is therefore contended that an agreement of sale is neither complete nor enforceable unless it is signed by both parties.
6) Certain amount of confusion is created on account of two divergent views expressed by two High Courts. In S.M. Gopal Chetty v. Raman [AIR 1998 Madras 169], a learned Single Judge held that where the agreement of sale was not signed by the purchaser, but only by the vendor, it cannot be said that there was a contract between the vendor and the purchaser; and as there was no contract, the question of specific performance of an agreement signed only by the vendor did not arise. On the other hand, in Md Mohar Ali v. Md. Mamud Ali [AIR 1998 Gauhati 92], a learned Single Judge held that an agreement of sale was an unilateral contract (under which the vendor agreed to sell the immovable property to the purchaser in accordance with the terms contained in the said agreement), that such an agreement for sale did not require the signatures of both parties, and that therefore an agreement for sale signed only by the vendor was enforceable by the purchaser.
7) We find that neither of the two decisions have addressed the real issue and cannot be said to be laying down the correct law. The observation in Md. Mohar Ali (supra) stating that an agreement of sale is an unilateral contract is not correct. An unilateral contract refers to a gratuitous promise where only party makes a promise without a return promise. Unilateral contract is explained thus by John D. Calamari and Joseph M. Perillo in The Law of Contracts (4th Edition Para 2-10(a) at pages 64-65):
"If A says to B, If you walk across the Brooklyn Bridge I will pay you $ 100,'' A has made a promise but has not asked B for a return promise. A has asked B to perform, not a commitment to perform. A has thus made an offer looking to a unilateral contract. B cannot accept this offer by promising to walk the bridge. B must accept, if at all, by performing the act. Because no return promise is requested, at no point is B bound to perform. IfB does perform, a contract involving two parties is created, but the contract is classified as unilateral because only one party is ever under an obligation."
All agreements of sale are bilateral contracts as promises are made by both - the vendor agreeing to sell and the purchaser agreeing to purchase. On the other hand, the observation in S.M. Gopal Chetty (supra) that unless agreement is signed both by the vendor and purchaser, it is not a valid contract is also not sound. An agreement of sale comes into existence when the vendor agrees to sell and the purchaser agrees to purchase, for an agreed consideration on agreed terms. It can be oral. It can be by exchange of communications which may or may not be signed. It may be by a single document signed by both parties. It can also be by a document in two parts, each party signing, one copy and then exchanging the signed copy as a consequence of which the purchaser has the copy signed by the vendor and the vendor has a copy signed by the purchaser. Or it can be by the vendor executing the document and delivering it to the purchaser who accepts it. Section 10 of the Act provides all agreements are contracts if they are made by the free consent by the parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void under the provisions of the Contract Act. The proviso to section 10 of the Act makes it clear that the section will not apply to contracts which are required to be made in writing or in the presence of witnesses or any law relating to registration of documents. Our attention has not been drawn to any law applicable in Bihar at the relevant time, which requires an agreement of sale to be made in writing or in the presence of witnesses or to be registered. Therefore, even an oral agreement to sell is valid. If so, a written agreement signed by one of the parties, if it evidences such an oral agreement will also be valid. In any agreement of sale, the terms are always negotiated and thereafter reduced in the form of an agreement of sale and signed by both parties or the vendor alone (unless it is by a series of offers and counter-offers by letters or other modes of recognized communication). In India, an agreement of sale signed by the vendor alone and delivered to the purchaser, and accepted by the purchaser, has always been considered to be a valid contract. In the event of breach by the vendor, it can be specifically enforced by the purchaser. There is, however, no practice of purchaser alone signing an agreement of sale."
In so far as the contention that the transaction was also doubtful as defendant No. 1 was said to have been an inpatient in hospital when the agreement at Exhibit P-1 was said to have been signed by defendant No. 1 at the office of the respondent, has been addressed by the trial court to note that except Exhibit D-1, the discharge summary of defendant No. 1, there was no other document produced by the defendants as regards the non-execution of the agreement. On the other hand, the signature of Defendant No. 1 on Exhibits P-4 to P-6 has not been denied, which are of dates subsequent to discharge from hospital of defendant No. 1 and there is no explanation as to how and why he had affixed his signatures thereto, if he had never signed the agreement.
The trial court has drawn an adverse inference against the defendants also on the ground that when they had expressed complete confidence in Nirmal Kumar, from whom they are said to have borrowed the loan, it was incumbent on them to have summoned him as a witness, to advance their case, especially as they had entrusted Exhibits P-1 to P-6 to him. It was also significant that the defendants had not stated anything about such a loan having been raised, in the suit in OS 3557/1995, but on the other hand had admitted the agreement of sale for a total consideration of Rs. 6.80 lakh.
In so far as the incompetence of defendant No. 1 to bind the interest of other family members in having executed an agreement of sale, even if it could be accepted as such, the trial court has observed that defendant No. 1 could in his capacity as the kartha of the family was competent to enter into the transaction for the family necessity. And such a necessity was clearly present even according to the defendants, in allegedly having sought a loan from Nirmal Kumar.
In so far as the contention as to time being of essence to the contract and that the time for completion having been fixed etc., it is found that the defendants have received further advance payments much after the expiry of the date fixed for completion of the transaction, while not having complied with an obligation cast on them to obtain statutory clearances, which clearly indicated that they did not treat the time as being of essence.
And by the same token of reasoning, the plea of the suit being barred by limitation has also been negated.
The contention that when the contract specifies liquidated damages for breach of contract, the claim for specific performance of contract is unavailable has been negatived, following the judgment of the Supreme Court in the case of
In so far as the contention that the plaintiff had not demonstrated his readiness and willingness is concerned, the trial court having found that when he had paid almost 80% of the price reserved, the plaintiff had adequately demonstrated his readiness and willingness, finds support in several judgments of the Supreme Court and hence the contention is not tenable.
The finding of the trial court that the decision in the partition suit, which stood compromised in an appeal before this court in RFA 1201/2009 would not bind the plaintiff, for two reasons, namely, though the plaintiff was a party to the suit in the first instance, for reasons best known to the defendants, he was deleted from the array of parties. Secondly, the agreement of sale was admitted in the suit and the same was executed by the Kartha, for an admitted legal necessity. These reasons assigned by the trial court are indeed justified.
Hence, the appeals do not merit consideration on any of the several grounds urged. However, there is one aspect of the matter which warrants consideration. The agreement of sale is of the year 1995. The escalation of the price of land has been phenomenal in the past two decades. Though the defendants are shown to have received a substantial part of the consideration at the earliest point of time, the money value by way of interest on the consideration does not match the property value and is wholly disproportionate. In other words, the benefit that accrues to the plaintiff is substantial and hence in the opinion of this court it would be appropriate if the plaintiff should pay and additional amount towards the sale price to compensate the appellants, provided that the appellants do not raise a dispute in the partition suit as regards the entitlement of the plaintiff to the suit property. In the opinion of this court the just and fair amount to be paid by the plaintiff, in addition to the balance price directed to be paid by the trial court is in a sum of Rs. 25 lakh, which amount shall be paid within a period of three months. Hence the appeals are allowed in part with the above modification as to the balance of the price to be paid by the plaintiff for the defendants to comply with the judgment and decree, within a period of eight weeks thereafter.
