Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(Mad) 2733

IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SUBRAMANIAN, R. KALAIMATHI, JJ.
G. Nagaraj – Appellant
Versus
R.J. Anandmul & Another – Respondents
A.S. No. 643 of 2016 & CMP Nos.18565 & 6801 of 2022
Decided On : 29-08-2023

Advocates appeared:
For the Appellant:P. Subba Reddy, Advocate. For the Respondent:R. Subramanian for D. Nagesh Babu, Advocates.

The admissibility of oral evidence to contradict the terms of a written agreement under Section 92 of the Evidence Act and the requirement of continuous readiness and willingness in specific performance cases.

Headnote:
specific performance - agreement of sale - Section 92 of the Evidence Act - Kamireddi Sattiaraju and others v. Kandamuri Boolaeswari - Ayillyath Yadunath Nambiar v. P. Sreedharan - readiness and willingness - Saradamani Kandappan v. S.Rajalakshmi & Ors. - Smt. Katta Sujatha Reddy & Anr. V. Siddamsetty Infra Projects Pvt. Ltd. & Ors - K.S.Vidyanadam and Others v. Vairavan
Fact of the Case:

The plaintiff sought specific performance of an agreement of sale for a land in Chennai. The defendant resisted the suit, claiming that the agreement was not intended to be an agreement of sale but as security for a loan transaction. The trial court decreed the suit, but the defendant appealed.
Finding of the Court:

The court found that the defence that the agreement was not intended to be acted upon as an agreement of sale was probable, and the plaintiff was not continuously ready and willing to perform his part of the contract.
Issues: The issues included whether the agreement was intended to be acted upon as an agreement of sale and whether the plaintiff was continuously ready and willing to perform his part of the contract.
Ratio Decidendi: The court relied on Section 92 of the Evidence Act and various legal precedents to determine the admissibility of oral evidence to contradict the terms of the written agreement. It also considered the conduct of the parties and the concept of readiness and willingness in specific performance cases.
Final Decision: The court allowed the appeal, set aside the judgment and decree of the trial court, and dismissed the suit in OS No.12852 of 2010.

Judgement Key Points

Certainly. Based on the provided legal document, here are similar citations from Madras and Supreme Court decisions, referencing the principles discussed:

The scope of Section 92 of the Evidence Act regarding the admissibility of oral evidence to contradict, vary, or add to the terms of a written agreement has been considered by the courts, emphasizing that oral evidence is generally inadmissible to alter the terms of a formal written contract, except under specific provisos such as proving fraud, coercion, or a subsequent agreement (!) (!) (!) (!) (!) .
The courts have clarified that when a document is intended to be a complete and final expression of the parties’ agreement, oral evidence cannot be used to contradict its terms, but evidence related to the existence of a separate oral agreement, or to prove that the written document was not intended to be acted upon, may be admissible under the exceptions outlined in Section 92 of the Evidence Act (!) (!) (!) .
The principle that conduct of the parties and surrounding circumstances can be considered to determine the true intention behind an agreement, especially when there is a suspicion that a written document was not meant to be acted upon, has been upheld by the courts. This includes examining the timing of payments, demands for performance, and other conduct to assess readiness and willingness (!) (!) (!) (!) (!) .
The importance of framing proper issues relating to the readiness and willingness of a plaintiff in specific performance cases has been underscored, with courts emphasizing that failure to do so can adversely affect the entitlement to equitable relief. The courts have also reiterated that mere payment of consideration does not automatically establish readiness and willingness (!) (!) (!) .
Judicial decisions have reinforced that the delay in demanding performance and the conduct of the parties are relevant factors in assessing whether the plaintiff was always ready and willing to perform the contract, which is a necessary condition for granting specific performance (!) (!) (!) .
Both the Madras High Court and Supreme Court have consistently held that the burden of proving that an agreement was not intended to be acted upon rests on the party asserting that the document was a sham or executed merely as security, and that surrounding circumstances and conduct are critical in such determinations (!) (!) (!) .
The courts have also emphasized that the existence of a formal written agreement, coupled with conduct indicating otherwise, can lead to the conclusion that the agreement was not intended to be acted upon, especially when the consideration paid is significantly below the market value, or when there are unexplained delays in demanding performance (!) (!) (!) .

These principles reflect the consistent judicial approach in both Madras and Supreme Court decisions regarding the interpretation of written agreements, the admissibility of oral evidence, and the assessment of readiness and willingness in specific performance cases.

JUDGMENT

(Prayer: This appeal is filed under Section 96 of the Code of Civil Procedure and Order 41 Rule of C.P.C., to set aside the judgement and decree dated 22.07.2016 in O.S.No.12852 of 2010 passed by the VI Additional Judge, City Civil Court, Chennai.)

R. Subramanina, J.

1. The defendant who suffered a decree for specific performance in OS No.12852 of 2010 is the appellant. The said suit was laid by the plaintiff seeking specific performance of an agreement of sale dated 31.01.2005.

2. According to the plaintiff, the defendant agreed to convey an extent of 23,393 sq.ft of land in the outskirts of Chennai for a consideration of Rs.25,00,000/-. On the date of the agreement an advance of Rs.15,00,000/- was paid and 21 months time was fixed for the payment of balance. The plaintiff would claim that he has paid a sum of Rs.10,00,000/- on 17.03.2005. It is also claimed that the plaintiff was put in possession of the property as a caretaker. Since the defendant did not come forward to execute the Sale Deed, despite repeated demands made by the plaintiff, the plaintiff caused a legal notice to be issued on 10.11.2006. The said notice was returned un-served.

3. Claiming that the defendant is attempting to alienate the property, the plaintiff filed a suit for permanent injunction restraining the defendant from alienating the property on 04.07.2007. Care was taken by the plaintiff to take leave under Order II Rule 2 of the Code of Civil Procedure. The said suit came to be decreed exparte on 26.03.2008. Thereafter, the plaintiff laid the instant suit seeking specific performance on 21.08.2008. The plaintiff would aver that he was always ready and willing to perform his part of the contract.

4. The defendant resisted the suit contending that the suit agreement was not intended to be an agreement of sale, according to him it was executed as a security for the borrowing. It was also pointed out that the guideline value of the property as on the date of the agreement was about rupees One Crore. The defendant would point out the fact that substantial part of the sale consideration was paid on the date of the agreement, the remaining amount was also paid within a period of one and half months (1½) from the date of the agreement and the plaintiff demanded specific performance only after about a year and 8 months and the suit itself came to be filed nearly 2 years after the legal notice to justify his claim. According to the defendant, the above facts would point to the conclusion that the agreement was not intended to be acted upon as an agreement of sale. It was also contended that the suit is barred under Order II Rule 2 of the Code of Civil Procedure as well as limitation.

5. At trial the plaintiff was examined as P.W.1 and one Mr.V.Govindaraj, was examined as P.W.2 and Exhibits A1 to A9 were marked. The defendant was examined as D.W.1 and one Mr.S.Paulraj an officer from the office of the Sub Registrar was examined as C.W.1. An extract of the Guideline Register was marked as Ex.C1

6. On the above pleadings the learned Trial Judge framed the following issues:

a) Whether the suit is barred by limitation.

b) Whether the suit is barred under Order II Rule 2 of CPC.

c) Whether the Court Fee paid is correct.

d) Whether the transaction between the plaintiff and defendant is not a sale agreement e) Whether the plaintiff is entitled for specific performance as prayed for.

f) To what reliefs.

7. On the issue relating to the Bar under Order II Rule 2 of the Code of Civil Procedure the trial court held that, since the defendant had taken leave to file the suit in IA No.10497 of 2007 even when he instituted the injunction suit in OS No.4095 of 2007, the present suit cannot be said to be barred under Order II Rule 2 of the Code of Civil Procedure. The learned Trial Judge after referring to Article 54 of the Limitation Act held that the suit cannot be said to be barred by lim