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1971 Supreme(Cal) 120

HIGH COURT OF CALCUTTA
Amaresh Roy, A. K. De
SUKUMAR BYSACK - Appellant
Versus
SUSHIL KANTA BANERJEE - Respondent
Second Appeal 520  Of  1967
Decided On : MAY 07, 1971

Advocates Appeared:
BANKIM CHANDRA BANERJI, DEBA PRASAD MUKHERJI, ISWARI PRASAD AGRAWAL, LALA HEMANTA KUMAR, PARESH NATH BHATTACHARYA

Oral evidence is admissible to show the real nature of a transaction, even if it contradicts the terms of a written contract, and the court has discretion to refuse specific performance of a contract if the bargain is unconscionable.

Headnote:

SPECIFIC PERFORMANCE - AGREEMENT FOR SALE - ADMISSIBILITY OF ORAL EVIDENCE - SECTIONS 91 AND 92 OF EVIDENCE ACT - DISCRETION OF COURT - SECTION 20 READ WITH SECTION 22 OF SPECIFIC RELIEF ACT.

Fact of the Case:

Plaintiff sued for specific performance of an agreement for sale of immovable properties. Defendant contested the suit, contending that the transaction was a loan and the document Ex. 1 was executed as a security for that loan.

Finding of the Court:

Both the courts below held that oral evidence to show real nature of the transaction was admissible and is not barred by the provisions in Sections 91 and 92 of Evidence Act. The trial court held that real transaction was one of a loan of Rs. 2232/- at an interest of 6 percent, per annum and Ex. 1 was executed as security for that loan. The appellate Court agreed with the findings of facts arrived at by the trial court.

Issues: 1. Whether oral evidence is admissible to show that the real nature of the transaction was a loan and not an agreement for sale of immovable property? 2. Whether the court has discretion to refuse specific performance of a contract?

Ratio Decidendi: 1. Sections 91 and 92 of Evidence Act do not preclude the defendant from showing by evidence that though the document was executed in the form of an agreement for sale, the real nature of transaction was a loan for which the document was a security. 2. Section 20 read with Section 22 of Specific Relief Act gives discretion to Court not to enforce specific performance in cases where bargain appears to be so hard as to be unconscionable, so that its actual performance would in the circumstances be inequitable.

Final Decision: The appeal was dismissed without costs, with the modification that if the plaintiff deposits Rs. 15,000/- in the trial court by 30th June 1971 to be paid to the defendant, there shall be a decree for specific performance of the agreement for sale against the defendant and in favour of the plaintiff. If the said amount is not deposited by the plaintiff within the stipulated time, the decree passed in the suit shall stand affirmed.

AMARESH ROY, J.

( 1 ) THIS appeal is by the Plaintiff in a suit for specific performance of a contract alleged to be a contract for sale of immovable properties. Plaintiff had also prayed in the suit for possession of the disputed properties by evicting the defendant therefrom and other ancilary reliefs. Plaintiffs lost in the original court of Subordinate Judge and also in the appeal. Hence this Second Appeal has been preferred in this Court.

( 2 ) PLAINTIFF's case was that defendant was the owner of the disputed properties and he had agreed to sell those to the plaintiff for a consideration of Rs. 8000/ -. On 23-12-1958 an agreement for sale was executed and registered between the parties, the plaintiff having paid Rs. 3. 500/- as earnest money. It was agreed that defendant shall make out a good and marketable title, deliver the title deeds and connected papers within two days from the date of registration of the agreement, clear the mortgage of the property created by him in favour of Government of West Bengal within 21 days from the date of agreement by paying up the dues of the mortgagee out of the earnest money and complete the transaction of sale within 30 days from the date of delivery of title deeds. Plaintiff alleged that he was ready and willing to pay the balance consideration and made repeated demands on the defendant to comply with the terms of the agreement but the defendant failed to do so. At the same time plaintiff also alleged that the defendant not having disclosed or paid up the dues of Government under the mortgage and also monies due to the Municipality and Calcutta Electric Supply Corporation, the plaintiff is entitled to withhold a portion of the consideration money for clearing those liabilities.

( 3 ) DEFENDANT contested the suit. His case is that plaintiff really advanced a sum of Rs. 2232/- as loan at a time the defendant was in urgent need of money for maintaining his big family. The document in the form of agreement for sale was executed as security for the said loan and plaintiff gave assurances that the transaction shall be treated as a loan and security for that loan. Defendant contended that the plaintiff at best can claim refund of the earnest money with 6 per cent, interest thereon.

( 4 ) AT the trial evidence was given on both sides. While on the plaintiff's side reliance was placed mainly on the registered document proved in evidence and marked Ext. 1 and a bunch of letters marked Ex. 2 series; on the side of the defendant also reliance was placed on some of the clauses in Ex. 1 and contents of letters Ex. 2 series by examining several witnesses to show the real nature of the transaction and the surrounding circumstances in which the transaction was entered into in support of the defendant's case that the transaction was really a loan and the document Ex. 1 was executed as a security for that loan. Some of those witnesses are persons who were present at the transaction and attested the document Ex. 1.

( 5 ) FACTS brought out in evidence and accepted by both the Courts below are that defendant came to India as a refugee from East Bengal leaving all his property in that country. He has a large family to maintain and look after. He purchased the land in suit measuring about 2 cottas 9 chittaks at a consideration of Rs. 6250/ -. Then he took a loan from Government of an amount of Rupees 3250/- for building a house on that land. The property at the time of the transaction evidenced by Ex. 1 consisted of an one storied building having three bed rooms, one Verandah, one C. I. roofed room and sanitary privy and a ringwell. Defendant testified that he spent about Rs. 15,000/- for those structures. Value of the property at the relevant time according to the estimate of D. W. 1 who is an Engineer and expert would not be less than Rs. 21,000/ -. Correspondence by letters Ex. 2 series shows that plaintiff's definite case was that the defendant had failed to make out good marketable title and had









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