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Andhra Pradesh High Court
Judges : G.RADHA KRISHNA RAO, MOTILAL B.NAIK
Baratam Manmadha Rao - Appellant
Versus
Raja Rao Rangamannar Krishna Ranga Rao, Zamindar of Kirlampudi - Respondent
Decided On : 07-30-92
SPECIFIC PERFORMANCE - SALE AGREEMENT - LEASE - VALIDITY - SPECIFIC RELIEF ACT, 1963 - SECTION 16(C) - TRANSFER OF PROPERTY ACT, 1882 - SECTION 55(1) - INTERPRETATION - COURT ANALYSIS AND CONCLUSION - In a suit for specific performance of a sale agreement, the court held that the lease deeds set up by the defendants were false and invented for the purpose of defeating the right of the plaintiff. The court also held that the plaintiff was ready and willing to perform his part of the contract from the date of the agreement and also continues to be so till the hearing of the suit provided physical possession of the theatre excluding the 2nd defendant has been given. Since the 1st defendant and the 2nd defendant have created hurdles and prevented the plaintiff from obtaining physical delivery of the theatre, the defendants are at fault. The plaintiff approached the court with clean hands. The plaintiff shall continue defendants 3 to 5 in service but exclude 2nd defendant who shall be taken back by the 1st defendant into his own services.
Fact of the Case:
The plaintiff entered into an agreement to purchase the defendant's cinema theatre. The agreement included a clause that the defendant would take back the manager of the theatre, the 2nd defendant, into his own service. The defendant later executed lease deeds in favor of defendants 2 to 5, claiming that the theatre was leased to them. The plaintiff filed a suit for specific performance of the sale agreement, while the defendants contended that the plaintiff was not entitled to specific performance as he had failed to comply with the terms of the agreement and that the lease deeds were valid and binding on the plaintiff.
Finding of the Court:
The court held that the lease deeds set up by the defendants were false and invented for the purpose of defeating the right of the plaintiff. The court also held that the plaintiff was ready and willing to perform his part of the contract from the date of the agreement and also continues to be so till the hearing of the suit provided physical possession of the theatre excluding the 2nd defendant has been given. Since the 1st defendant and the 2nd defendant have created hurdles and prevented the plaintiff from obtaining physical delivery of the theatre, the defendants are at fault. The plaintiff approached the court with clean hands. The plaintiff shall continue defendants 3 to 5 in service but exclude 2nd defendant who shall be taken back by the 1st defendant into his own services.
Issues: 1. Whether the lease deeds set up by the defendants were valid and binding on the plaintiff? 2. Whether the plaintiff was ready and willing to perform his part of the contract? 3. Whether the defendants were at fault in preventing the plaintiff from obtaining physical delivery of the theatre?
Ratio Decidendi: 1. The court held that the lease deeds set up by the defendants were false and invented for the purpose of defeating the right of the plaintiff. The court relied on the following factors: a. The lease deeds were executed after the sale agreement was entered into. b. The terms of the lease deeds were suspicious and did not reflect the true intention of the parties. c. The defendants failed to produce any evidence to support the existence of the lease deeds. 2. The court held that the plaintiff was ready and willing to perform his part of the contract. The court relied on the following factors: a. The plaintiff obtained a draft for the entire sale consideration within a short time. b. The plaintiff had the financial capacity to raise the funds required for the purchase. c. The plaintiff was willing to take possession of the theatre subject to the condition that the 2nd defendant be excluded from the management. 3. The court held that the defendants were at fault in preventing the plaintiff from obtaining physical delivery of the theatre. The court relied on the following factors: a. The defendants executed the lease deeds in order to defeat the plaintiff's rights under the sale agreement. b. The defendants refused to deliver physical possession of the theatre to the plaintiff, even after the plaintiff had complied with the terms of the agreement.
Final Decision: The court allowed the plaintiff's appeal and decreed the suit for specific performance. The court directed the defendant to execute and register the sale deed in favor of the plaintiff within three months. The court also directed the plaintiff to continue defendants 3 to 5 in service, but to exclude the 2nd defendant.
( 1 ) THIS is an appeal preferred against the judgment and decree dated 24th april, 1982 passed by the learned Subordinate Judge, Parvathipuram, in o. S. No. 56 of 1978 on his file. The plaintiff is the appellant. His suit for specific performance of agreement to sell dated 16-11-1977 (Ex. A-1), after full trial, was dismissed by the trial Court.
( 2 ) THE case of the plaintiff is that the 1st defendant agreed to sell the plaint schedule property, viz. , Sri Venugppal Talkies, to the plaintiff. The terms were settled between the plaintiff and the 1st defendant in the presence of P. W. 2, varanasi Eswara Rao and the terms agreed to between the parties are that the plaintiff should pay a price of Rs. 3,01,111/- that the 1st defendant should take back the 2nd defendant into his own service and that the plaintiff should employ the rest of the staff. The 1st defendant s plea is that he was in dire necessity for money as the theatre was attached by four decrees and that it was subjected to many mortgages and so he entered into the suit agreement but he could not deliver physical possession of the theatre as it was subjected to lease given in favour of defendants 2 to 5 even prior to the execution of the agreement to sell.
( 3 ) THE 1st defendant relied upon Ex. B-1 leasedeed executed by him in favour of defendants 2 to 5 agreeing to give the cinema theatre on lease. Under the said lease deed Ex. B-1, among other conditions, defendants 2 to 5 have agreed to pay a net income of Rs. 150/- every day by way of rent to the 1st defendant. Ex. B-2 is confirmatory agreement dated 29-10-1976 executed by the 1st defendant in favour of defendants 2 to 5 and Ex. B-3 is agreement of lease or rent note dated 17-8-1977 executed by the 1st defendant in favour of defendants 2 to 5 in respect of out-houses, covered by confirmatory agreement Ex. B-2 dated 29-10-1976, for a monthly rent of Rs. 100/ -.
( 4 ) THE case of defendants 2 to 5 is that the cinema theatre was given on lease in their favour under Ex. B-1 lease deed and subsequently the out-houses were also given to them under Exs. B-2 to B-3, that they are statutory tenants in respect of the cinema theatre including the out-houses and even after expiry of the lease, defendants 2 to 5 have been continuing as tenants holding over and that their tenancy rights have to be protected.
( 5 ) IN effect, the contention of the 1st defendant as well as defendants 2 to 5 is that the plaintiff is entitled to only symbolical delivery of the theatre in question, subject to the lease subsisting in favour of defendants 2 to 5 and not physical possession.
( 6 ) THE plaintiff s case is that the lease was invented and created by the 1st defendant with the active assistance of defendants 2 to 5 with a view to coerce the plaintiff to resile from the sale agreement entered into between him and the 1st defendant, that the lease set up by the defendants is not correct and that he is entitled for physical delivery of possession of the cinema theatre excluding the 2nd defendant from the management.
( 7 ) THE sequence of events are as follows:- On 16-11-1977 the plaintiff negotiated with the 1st defendant in the presence of Varanasi Eswara Rao (P. W. 2) for the purchase of Sri Venugopal Talkies. Accordingly the 1st defendant executed Ex. A-1 letter dated 16-11-1977 stating that he has agreed to sell the cinema theatre for a sum of Rs. 3,01,111/- and to take back the Manager, P. Satyam, 2nd defendant in the suit, into his own service. After the execution of ex. A-1 letter, the 1st defendant wrote Ex. X-1 letter dated 28-11-1977 to P. W. 2 explaining that the removal of the Manager, referred to in Ex. A-1, is not possible and so Ex. A-1 should stand cancelled. Thereupon, the plaintiff met the 1st defendant and was informed about the situation. The 1st defendant wrote ex. X-2 letter dated 1-12-1977 to P. W. 2 asking him to get back Ex. A-1 letter signed by him on 16-11-1977. Subsequently the plaintiff i
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