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1999 Supreme(Mad) 1190

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE E. PADMANABHAN
Nalluswamy Reddiar
Versus
Marammal and Others
S.A. No. 1581 of 1986
Decided On : 18-11-1999

Advocates:
Mr.M.V.Krishnan, Advocate for Appellant. Mr.M.N.Muthukumaran, Advocate for Respondents.

A subsequent transferee can be held liable for specific performance of an agreement to sell only if he had notice of the prior agreement to sell.

Headnote:

SPECIFIC PERFORMANCE - SALE AGREEMENT - NOTICE - KNOWLEDGE - BONA FIDE PURCHASER - SECTION 19 OF THE SPECIFIC RELIEF ACT - Whether the finding of the lower appellate court that the appellant-second defendant is not a holder in due course without a specific pleading to that effect could be sustained.

Fact of the Case:

Plaintiffs filed a suit for specific performance of an agreement to sell and permanent injunction against the defendants from interfering with their possession of the suit property. The first defendant remained ex parte, and the second defendant contested the suit. The trial court dismissed the suit, finding that the plaintiffs' claim of entering into an agreement with the first defendant to sell is not true and that the sale deed in favor of the second defendant is true and valid. The first appellate court reversed the trial court's decision and granted a decree for specific performance as prayed for by the plaintiffs.

Finding of the Court:

The first appellate court erred in reversing the trial court's findings without any pleas by the plaintiffs and misdirected itself in holding that the second defendant had knowledge of the agreement between the first plaintiff and the first defendant. There was no plea that the second defendant was not a bona fide purchaser for value without notice. The judgment and decree of the first appellate court are vitiated and liable to be set aside.

Issues: 1. Whether the findings of the lower appellate court that the appellant-second defendant is not a holder in due course without a specific pleading to that effect could be sustained.

Ratio Decidendi: 1. Without pleadings, no amount of evidence is admissible. 2. The burden of proof is on the first plaintiff to prove that the second defendant had knowledge about the prior agreement to sell. 3. In terms of sub-section (b) of Section 19 of the Specific Relief Act, specific performance of an agreement cannot be enforced against a subsequent transferee unless he had notice of prior agreement to sell. 4. The second defendant being a transferee has no knowledge at all. In the absence of any pleading no amount of evidence could be let in.

Final Decision: The second appeal is allowed, but without costs. The judgment and decree of the first appellate court are set aside, and that of the trial court is restored.

Judgment :

1. Second defendant in O.S. No. 73 of 1983 on the file of the District Munsif Court, Manapparai, who has succeeded before the trial Court and lost before the first appellate Court is the appellant in this second appeal.

2. Heard Mr.M.V.Krishnan, for the appellant and Mr .M.N.Muthukumaran, for Mr.M.N.Padmanabhan, Senior counsel for the respondents 1 to 5.

.3. At the time of admission, the following substantial question of law was framed by this Court:

.WHETHER THE FINDINGS OF THE LOWER APPELLATE COURT THAT THE APPELLANT-SECOND DEFENDANT IS NOT A HOLDER IN DUE COURSE WITHOUT A SPECIFIC PLEADING TO THAT EFFECT COULD BE SUSTAINED.

4. For convenience, the parties will be referred to as arrayed before the trial court.

5. The plaintiffs 1 to 3 instituted the suit in O.S. No. 73 of 1983 against the defendants 1 and 2 seeking the relief of specific performance of an agreement to sell and for permanent injunction for bearing the defendants from interfering with their possession of the suit property. The first plaintiff died pending suit and plaintiffs 4 to 6, who are the children of the first plaintiff, was impleaded apart from the second plaintiff being recorded as also the legal heir of the deceased first plaintiff.

6. According to the plaintiffs, the suit property was originally owned by late Marachi Reddiar that the first defendant is the widow of the said Marachi Reddiar, had been in enjoyment of the suit properties absolutely, that on 29. 1982, the first plaintiff and the first defendant agreed to sell and purchase the suit property for a consideration of Rs. 11,000 by paying an advance of Rs. 2000 that a sale agreement was executed on 29. 1982 that pursuant to the said agreement, the first plaintiff paid another sum of Rs. 4000 and in terms of it an agreement has been concluded between the first plaintiff and the first defendant that the first plaintiff called upon the first defendant to come and execute the deed specifically which the first defendant has been dealing with the first plaintiff caused a legal notice, which the first defendant had evaded to receive that the plaintiffs are always ready and willing to perform their part of the contract that the plaintiffs were ready with the balance of sale consideration of Rs. 5000 that the second defendant is trying to interfere with the plaintiffs possession claiming that he had purchased the suit property from the first defendant that the first defendant had declined to convey the suit property and that the plaintiffs are entitled to the specific performance of the agreement to sell.

7. After the trial when the judgment was reserved, the first plaintiff died and hence his legal representatives were impleaded.

.8. The first defendant remained exparte and the second defendant alone contested the suit.

9. Admitting the title of the first defendant and the enjoyment of the suit property in the hands of the first defendant, the second defendant pleaded that on 4-9-1982 a sale agreement was entered into between the first and second defendant that in terms of the said sale agreement on 25-11-1982, the first defendant conveyed the suit property for a consideration of Rs. 6000, that a sum of Rs. 3,000 out of the sale consideration was utilised for discharge of loan to Purathakkudi Cooperative Society, that since the date of purchase, the second defendant is in possession and enjoyment of the suit property as absolute owner, that after the conveyance, the first defendant had colluded with the first plaintiff with an alterior motive and had created the sale agreement that the sale deeds are false and fabricated, that the alleged sale agreement are not binding on the second defendant, that the entire suit claim is false fabricated and collusive action and that the suit claim is liable to be dismissed.

10. The plaint was amended and the second defendant filed an additional written statement contending that the sale deed in favour of the second defendant will bind the




















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