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IN THE HIGH COURT OF BOMBAY
Paranjpe L.M.
Appellants: Abdul Kayum Ahmad and Ors.
Vs.
Respondent: Damodhar Paikaji Kinhekar and Anr.
Appeal No. 153 of 1957
Decided On: 06.12.1962
SPECIFIC PERFORMANCE - SALE AGREEMENT - DISCRETION OF COURT - ADEQUATE RELIEF - BONA FIDE PURCHASER - NOTICE OF PRIOR AGREEMENT - EQUITIES - SECTION 12(C) AND SECTION 21(A) OF THE SPECIFIC RELIEF ACT - SALE PENDENTE LITE - ORDER 21, RULE 92 OF THE CODE OF CIVIL PROCEDURE - The court's discretion in granting specific performance is not arbitrary and must be exercised judiciously and on proper grounds. Specific performance may be granted even if pecuniary compensation would be an adequate remedy, considering the equities between the parties and the subject matter of the agreement. Subsequent purchasers with notice of a prior agreement cannot claim the benefit of provisions intended to protect the promisor. Bona fide purchasers must act in good faith and cannot take advantage of a prior agreement to acquire the property at a lower price. A sale pendente lite, before the auction sale is set aside, does not affect the rights of a prior agreement holder. The court considered the relevant provisions of the Specific Relief Act, including Section 12(c) and Section 21(a), in determining the appropriateness of specific performance.
Fact of the Case:
The plaintiff entered into an agreement to purchase a house from the defendant No. 1 for Rs. 2000/- in 1952. The defendant No. 1 later sold the house to the defendants Nos. 2 to 4 despite the prior agreement. The plaintiff sued for specific performance of the agreement, and the lower courts granted the decree. The defendants Nos. 2 to 4 appealed, arguing that a decree for monetary compensation would have been a more appropriate remedy.
Finding of the Court:
The court found that the defendants Nos. 2 to 4 were not bona fide purchasers for value without notice of the plaintiff's right. The court also found that the defendants Nos. 2 to 4 had acted in collusion with the defendant No. 1 to deprive the plaintiff of his right to the property.
Issues: 1. Whether specific performance was an appropriate remedy in the circumstances of the case. 2. Whether the defendants Nos. 2 to 4 were bona fide purchasers for value without notice of the plaintiff's right. 3. Whether the defendants Nos. 2 to 4 had acted in collusion with the defendant No. 1 to deprive the plaintiff of his right to the property.
Ratio Decidendi: 1. The court held that specific performance was an appropriate remedy in the circumstances of the case, as the defendants Nos. 2 to 4 were not bona fide purchasers for value without notice of the plaintiff's right and had acted in collusion with the defendant No. 1 to deprive the plaintiff of his right to the property. 2. The court held that the defendants Nos. 2 to 4 were not bona fide purchasers for value without notice of the plaintiff's right, as they had purchased the property with knowledge of the prior agreement between the plaintiff and the defendant No. 1. 3. The court held that the defendants Nos. 2 to 4 had acted in collusion with the defendant No. 1 to deprive the plaintiff of his right to the property, as they had taken the sale deed behind the plaintiff's back and without informing him about it.
Final Decision: The appeal was dismissed with costs.
2. On 26-12-1952, the defendant No. 1, who owned the house in suit, entered into an agreement with the plaintiff to sell that house to the plaintiff for a consideration of Rs. 2000/-. The sale deed was to be executed within two years. That agreement was registered and Rs. 1000/- out of the agreed price of Rs. 2000/- were paid as earnest money before the Sub-Registrar, the balance of Rs. 100/- being payable at the time of the registration of the sale deed, In the meantime, a creditor of the defendant No. 1 attached the suit house in execution of a decree in Civil Suit No. 46-B of 1946 and the plaintiff got that house released from attachment on 18-11-1953 by depositing the decretal amount of Rs. 186-10-0 for and on behalf of the judgment-debtor. It was agreed between the plaintiff and the defendant No. 1 that Rs. 100- out of this deposit of Rs. 186-10-0 was to be appropriated towards the balance of the price of the suit house. On 26-12-1054, the defendant No. 1 wrote a letter to the plaintiff to extend the time for executing the sale deed till 21-4-1955 and the plaintiff granted that extension. In the meantime, the house in suit was again attached by the mother of the present appellants-defendants NOS. 2 to 4 on 9-8-1954 in execution of her decree in Civil Suit No. 115-A of 1953. That house was put to sale and was auctioned by the executing Court on 18-3-1955. the auction being knocked in favour of the decree-holder who had bid with the permission of the Court. On 15-4-1955 the plaintiff gave the notice (Exhibit P-7) to the defendant No. 1 to remind him that the sale in his favour was to be executed by 21-4-1955 and to say that it would not be possible to execute that sale as per the agreement dated 26-12-1953 unless the auction sale was set aside in the meantime. He also said in that notice that, in case, the auction stood and was confirmed, the plaintiff will have no alternative but to demand back the consideration for the sale. On 16-4-1955, the defendant No. 1, who was a judgment-debtor, deposited the decretal amount plus 5 per cent thereof as per Order 21, Rule 89, of the Code of Civil Procedure in order to get the sale set aside. On 28-4-1955, the plaintiff gave another notice to the defendant No. 1 to call upon him to execute the sale in his favour as per the agreement dated 26-12-1952. The plaintiff also gave one notice, dated 30-4-1955, to the defendant No. 2 to intimate to him his prior agreement with the defendant No. 1 for the purchase of the suit house and to tell him not to take a sale Of that house because of the subsisting agreement, dated 26-12-1952. However, these notices were disregarded by the defendants and the defendant No. 1 executed the sale deed (Exhibit P-4) in favour of the defendants Nos. 2 to 4 with respect to the suit house for a consideration of Rs. 2200/-. The executing Court had not passed an order setting aside the sale in favour of the decree-holder on that day but that order was passed on 1-7-1955. These facts were found by the Courts below and cannot be questioned in this second appeal.
3. The plaintiff had sued for specific performance of his agreement on the allegation that he had performed his part of the contract by paying the full consideration, but the defendant No. 1 had not, carried out his part and had instead sold the house to the defendants Nos. 2 to 4 despite their having knowledge about the prior agreement in favour of the plaintiff. The defendant No. 1 had contested the suit first by denying that he had received Rs. 1900/- at the time of the agreement and by further alleging that the agreement, dated 26-12-1952, was collusivel
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