( 1 ) THE plaintiffs who are husband and wife have filed this suit seeking decree of (1) specific performance of the agreement to sell dated 6. 6. 1977 executed by defendant No. I in their favour, (2) for possession (of ground floor part) and (3) for damages.

( 2 ) THE case of the plaintiffs is that the defendant No. 1 had executed an agreement to sell dated 6. 6. 1977 of properly No. 227 in Block E, Greater Kailash. New Delhi measuring 208sq. yards in their favour for a consideration of Rs. 2 lakhs (Rupees Two lakhs) and in accordance with the agreed terms a sum of Rs. 1 lakh (Rs. 21,000. 00 as earnest money and Rs. 79,000. 00 as advance part payment) was paid by them to him on 9. 6. 1977 at the time of execution and presentation for registration of the said agreement before the Sub Registrar, New Delhi when the defendant No. 1 had delivered vacant physical possession of the first and second floors of the said properly to them. The sale was to be completed by the defendant within 81 days after obtaining no Objection Certificate from the competent authority under the Urban Land (Ceiling and Regulation) Act (for short "ulcra") and from the Income Tax authorities. This was not done by the defendant No. I and on 15. 11. 1977 sought extension of lime for 90 days for completing the sale which was consented to by the plaintiffs vide their letter dated 19. 11. 1977, but still sale has not been completed.

( 3 ) HE was to furnish the documents as required and agreed to the plaintiffs to enable them to raise loan from the Life Insurance Corporation of India (for short "lic ) whom they had approached for raising loan of Rs. one lakh to pay the balance sale consideration. The defendant No. 1 had agreed to clear the water and electricity dues and properly taxes and to convey to the plaintiffs a clear title free from encumberances/ liabilities whatsoever which also he has failed to discharge. The plaintiffs are and have always been ready and willing to perform their part of the obligations under the Agreement but the defendant No. I has failed to perform his part of the contract and execute the sale deed in spite of a notice dated 13. 2. 1979 and reminder dated I. 8. 1979 sent by them calling upon the defendant No. 1 to complete the sale which were duly served on him. Besides claiming a decree for specific performance, plaintiffs have also claimed damages amounting to Rs. 34,000. 00 :- Rs. 3000. 00 incurred in connection with their application made to LIC for raising lean, Rs. 10,000. 00 on account of Capital Gains Tax payable in respect of sale of their house No. 1157/15 and 16, Rohtas Nagar, Shahdara. Delhi which plaintiff had sold by two sale deeds in October and November, 1977 for Rs. 30,000. 00. each which amount could be paid towards the balance sale price of the suit properly and Rs. 21,000. 00 on account of damages for loss of rent of the ground floor of which they were deprived. Hence this suit.

( 4 ) DEFENDANTS 1 and 2 have filed separate written statements. Defendant No. 2 in its written statement has pleaded that the defendant No. 1 had created an equitable mortgage in their favour in respect of the suit properly for certain credit facilities given to M/s. Anil Industries of which defendant No. 1 and his brother S. K. Sharma arc two partners and there was an outstanding liability amounting to Rs. 12,95,889. 02 as on 31. 12. 1979 towards that facility, that the suit is bad in law, plaintiffs have no locus standi to file the suit and the agreement was null and void and not binding being in violation of the mortgage created in favour of the bank.

( 5 ) PLAINTIFFS in their replication have denied factum and knowledge of such mortgage in favour of defendant No. 2 as the defendant No. 1 had represented at the lime of agreement that except Municipal dues and taxes the property was free from all sorts of encumbrances; that the plaintiffs are bona fide purchasers for valuable consideration without nitice of such encumbra