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IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH
P.B. Bajanthri, Nataraj Rangaswamy, JJ.
Sri Harish, S/o Tukaram Revenkar - Appellant
Versus
Ramanathsa S/o Tukaramsa Nakoda and Ors. – Respondents
Regular First Appeal No.100172 of 2014 (SP)
Decided On : 05-03-2020
specific performance - agreement of sale - Ex.P1 - The court found that the plaintiff and defendant Nos.1 to 5 had entered into an agreement on 31.01.2011 to sell the leasehold rights of the suit property. The court concluded that the plaintiff was not entitled to the relief of specific performance due to the inchoate nature of the agreement, lack of clarity on the term of the lease, and failure to demonstrate willingness to complete the contract. The court also held that the defendant Nos.6 to 10 were not bona fide purchasers of the leasehold rights from defendant Nos.1 to 5.
Fact of the Case:
The plaintiff sought specific performance of an agreement to sell leasehold rights of the defendant Nos.1 to 5 in the suit property. The plaintiff contended that the defendant Nos.1 to 5 possessed perpetual leasehold rights of the suit property and that they offered to sell the leasehold rights. The plaintiff paid a sum of Rs.60,00,000/- as earnest money to the defendant Nos.1 to 5 and sought for specific performance of the agreement of sale and also to set aside the sale deed dated 25.10.2012.
Finding of the Court:
The court dismissed the suit of the plaintiff, concluding that the plaintiff was not entitled to the relief of specific performance due to the inchoate nature of the agreement, lack of clarity on the term of the lease, and failure to demonstrate willingness to complete the contract. The court also held that the defendant Nos.6 to 10 were not bona fide purchasers of the leasehold rights from defendant Nos.1 to 5. The court directed defendant Nos.1 to 5 to refund a sum of Rs.60,00,000/- to the plaintiff along with interest at the rate of 6% per annum.
Issues: 1. Whether the plaintiff proved the lawful execution of sale agreement -Ex.P1 by the defendant Nos.1 to 5 ? 2. Whether the plaintiff was ready and willing to perform his part of the contract? 3. Whether the defendants 1 to 5 prove that the transaction between them and the plaintiff was a loan transaction in respect of Rs.5,00,000/- and that the plaintiff had misused the signatures of the defendant Nos.1 to 5 obtained by the plaintiff on stamp papers, register etc. ? 4. Whether the defendant Nos.6 to 10 prove that they were the bona fide purchasers of the suit property without notice? 5. Whether the plaintiff is entitled for the relief of specific performance ?
Ratio Decidendi: The court concluded that the plaintiff was not entitled to the relief of specific performance due to the inchoate nature of the agreement, lack of clarity on the term of the lease, and failure to demonstrate willingness to complete the contract. The court also held that the defendant Nos.6 to 10 were not bona fide purchasers of the leasehold rights from defendant Nos.1 to 5.
Final Decision: The court directed defendant Nos.1 to 5 to refund a sum of Rs.60,00,000/- to the plaintiff along with interest at the rate of 6% per annum.
JUDGMENT :
NATARAJ RANGASWAMY J.
This Regular First Appeal is filed assailing the Judgment and Decree dated 14.08.2014 passed by the III Additional Senior Civil Judge, Hubballi, in O.S. No.365/2012 refusing to grant specific performance of an agreement to sell leasehold rights of the defendant Nos.1 to 5 in the suit property.
2. In this Judgment, the parties would be referred to as they were arrayed before the Trial Court. The appellant herein was the plaintiff while the respondents herein were the defendants in the suit.
3. The plaintiff filed O.S. No.365/2012 seeking specific performance of an agreement of sale dated 31.01.2011 executed by the defendant Nos.1 to 5 by which they offered to sell their leasehold rights in the suit property. The plaintiff contended that the defendant Nos.1 to 5 possessed perpetual leasehold rights of the suit property and that they offered to sell the leasehold rights. The plaintiff came to know of such offer and thus approached the defendants 1 to 5 and negotiated to purchase the remainder term of leasehold rights for a total sale consideration of Rs.1,69,00,000/-. Accordingly, the defendant Nos.1 to 5 entered into an agreement of sale dated 31.01.2011 by which day, the plaintiff paid a sum of Rs.60,00,000/- as earnest money to the defendant Nos.1 to 5 and balance consideration of Rs.1,09,00,000/- was to be paid at the time of registration. He contended that the defendant Nos.1 to 5 were required to demarcate the property and intimate the plaintiff and thereafter execute the sale deed. It is also stated that a civil suit bearing O.S. No.235/2010 was pending consideration in respect of the suit property wherein an order of injunction was passed restraining the parties from alienating or creating any charge over the property in question. The plaintiff claimed that an eviction case in RCA No.38/2004 was pending consideration and as such it was agreed that after conclusion of the said cases, the sale deed would be executed. It is alleged that the plaintiff was always ready and willing to perform his part of the contract and was ready with the balance sale consideration and was awaiting the defendant Nos.1 to 5 to complete their part of the contract. The plaintiff alleged that the defendant Nos.1 to 5 dilly dallied the issue and postponed the same on one pretext or the other. Further, the plaintiff came to know through the local real estate agents on 26.10.2012 that the defendant Nos.1 to 5 were attempting at foul play and had executed a sale deed conveying the leasehold rights in favour of defendant Nos.6 to 10. The plaintiff claimed that he verified from the office of the Sub-Registrar and came to know that the defendant Nos.1 to 5 had conveyed the leasehold rights in favour of defendant Nos.6 to 10 at a throwaway price of Rs.45,51,000/- and that they had mentioned in the sale deed that a sum of Rs.51,000/- was paid as consideration and the balance Rs.45,00,000/- was to be paid through post dated cheques. The plaintiff stated that the sale deed executed in favour of defendant Nos.6 to 10 dated 25/26.10.2012 was all fraudulent and in collusion with the defendant Nos.6 to 10 so as to deprive the right of the plaintiff. With this, the plaintiff sought for specific performance of the agreement of sale and also to set aside the sale deed dated 25.10.2012 registered on 26.10.2012 and also sought for an alternate relief for refund of the money of Rs.60,00,000/- along with interest at the rate of 24% per annum.
4. The defendant No.2 filed his written statement. Though it is mentioned in the affidavit accompanying the written statement that the affidavit was filed on behalf of the defendant Nos.1, 3 to 5, the written statement is signed only by the defendant No.2. The defendant No.2 denied the execution of the agreement of sale dated 31.01.2011 and also the receipt of the part of the sale consideration of Rs.60,00,000/-. The defendant No.2 denied the entire case of the plaintiff as set out in the plaint. The de
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