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IN THE HIGH COURT OF JUDICATURE AT MADRAS
TEEKAA RAMAN, J.
G. Kaleeswaran - Appellant
Versus
P. Balakrishnan - Respondent
A.S. No. 23 of 2023, C.M.P. Nos. 467, 8053, 27909 of 2023
Decided On : 05-06-2024
Specific Performance - Sale Agreement - Sections 16, 20 of the Specific Relief Act, 1963 - The court held that the sale agreement was not intended to be a genuine sale agreement but was executed only as a security for a loan transaction. The plaintiff was not entitled to the main relief of specific performance, but was granted the alternative relief of refund of the advance amount of ₹11 lakhs paid by the plaintiff's father.
Fact of the Case:
The plaintiff filed a suit for specific performance of a sale agreement dated 05.09.2018 executed between the parties. The defendant contended that the agreement was not a genuine sale agreement but was executed only as a security for a loan transaction. The trial court rejected the plaintiff's claim for specific performance and granted the alternative relief of refund of ₹8 lakhs. The plaintiff appealed against the rejection of the main relief.
Finding of the Court:
The appellate court held that the sale agreement was not intended to be a genuine sale agreement but was executed only as a security for a loan transaction. The plaintiff was not entitled to the main relief of specific performance, but was granted the alternative relief of refund of the advance amount of ₹11 lakhs paid by the plaintiff's father.
Issues: 1. Whether the sale agreement dated 05.09.2018 was true, valid and genuine. 2. Whether the sale agreement was legally enforceable. 3. Whether the sale agreement was obtained by deception and misrepresentation. 4. Whether the sale agreement was entered as a security for a loan transaction. 5. Whether the plaintiff was ready and willing to perform his part of the contract. 6. Whether the plaintiff was entitled to the relief of specific performance. 7. Whether the plaintiff was entitled to the alternative relief of refund of the advance amount.
Ratio Decidendi: The court held that the sale agreement was not intended to be a genuine sale agreement but was executed only as a security for a loan transaction. The plaintiff was not entitled to the main relief of specific performance as he was not ready and willing to perform his part of the contract. However, the plaintiff was entitled to the alternative relief of refund of the advance amount of ₹11 lakhs paid by the plaintiff's father.
Final Decision: The appeal was partly allowed. The rejection of the main relief of specific performance was confirmed, but the alternative relief of refund of ₹11 lakhs was granted instead of ₹8 lakhs as ordered by the trial court.
JUDGMENT :
TEEKAA RAMAN, J.
1. The plaintiff is the appellant herein.
2. For the sake of convenience, the parties are referred according to their ranking before the trial Court.
3. The plaintiff filed in O.S.No.21 of 2020 before the learned District Judge of the Nilgiris, Udagamandalam for specific performance of the Ex.A1 suit sale agreement dated 05.09.2018 and to deliver vacant physical possession or, in the alternative, to refund the advance amount of Rs.11 lakhs with 12% interest from the date of the agreement.
4. The plaint proceeds on the basis that on 05.09.2018, the parties agreed to sell the suit property for a sale consideration of Rs.11,60,000/- and executed a sale agreement on 05.09.2018. The plaintiff paid a sale advance of Rs.11 lakhs, and it was registered as Doc.No.16 of 2018 before the Sub Register, Kotagiri. The period to complete the transaction is 1-1/2 years and, the plaintiff is ready and willing to perform his contract. Issued Ex.A3 copy of Legal Notice and Reply Notice is Ex.A5. Statement of account is Ex.A6, and certified copy of Mortgage Deed and Discharge Receipt are Exs.A7 and A8.
5........
(a) The case of the defendant is that he admitted the signature and execution of Ex.A1 sale deed agreement. However, he could contend that due to domestic affairs, he wants to raise the amount and hence, the defendant mortgage the property with "Swaranapragati Housing Micro Finance Private Limited" on 02.12.2016 and executed a simple mortgage deed in favour of the said company under registered Doc.No.2309 of 2016 on the file of SRO, Kotagiri. Since he is unable to release the property from the mortgage, he borrowed cash to an extent of Rs.8 lakhs at the rate of 30%, and accordingly, worked out the amount to the existing loan of Rs.8 lakhs with interest with Rs.3,60,000/- thus arrived at Rs.11,60,000/-.
(b) The sale agreement was executed for the security purpose, showing the payment as Rs.11,60,000/- wherein a sum of Rs.11,00,000/- advance was shown for nominal purpose. The plaintiff's father has been known to the defendant for the past 20 years, and the entire money transaction was carried out with the defendants confidence. He has obtained the agreement of sale in favour of a son, who is only a college student. This is the reply statement.
6. On the above pleadings, the trial Court has formulated the necessary issues has framed on 09.11.2021.
(i) Whether the sale agreement dated 05.09.2018 was obtained by deception and misrepresentation?
(ii) Whether the sale agreement dated 05.09.2018 was entered as security towards financial transaction between the plaintiff's father and the defendant?
(iii) Whether the sale agreement was true, valid and genuine?
(iv) If so, whether the plaintiff was ready and willing to perform his part of contract?
(v) Whether the plaintiff is entitled for relief of specific performance?
(vi) In alternate whether the plaintiff is entitled of the refund of the advance amount as prayed for?
(vii) For what order relief the plaintiff entitled for?
7. At the time of the trial, the plaintiff was examined as P.W.1 by proof affidavit and through him Ex.A1 to Ex.A8 were marked. On behalf of the defendant, the defendant was examined as D.W.1 by proof affidavit. Through the cross of examination of D.W.1, Ex.B1 to Ex.B3 were marked.
8. On consideration of both oral and documentary evidence, the trial Court has come to the conclusion that Ex.A1 is not a sale agreement, it is only a security for the purpose of money transaction between the parties and also relied upon Ex.B3 marked during the cross-examination of P.W.1, wherein P.W.1 admitted that the signature and writing signature Ex.B3 statement of account are that of the plaintiff. It was held that, since the document is not an agreement of sale, the plaintiff is not entitled to the main relief of specific performance. Based on Ex.B3, it was held that only Rs.8 lakhs have been paid by the plaintiff, and accordingly, the suit was decreed by granting the alternative r
The court applied the principles of Sections 16 and 20 of the Specific Relief Act, 1963 to determine the enforceability of the sale agreement and the plaintiff's entitlement to the relief of specific....
The court reaffirmed that in specific performance cases, the burden of proof lies on the defendant to substantiate claims regarding the advance amount and contract genuineness, ultimately determining....
Point of law: Absence of any material, that the plaintiff had exercised undue influence in obtaining the sale agreement from the defendant at the time of the alleged loan transaction.
The duty to rebut the recitals of a registered document and the inadmissibility of evidence to disprove a sale agreement.
High Court second appeal under S.100 CPC confined to substantial questions of law; cannot re-appreciate evidence or reverse findings on genuineness, readiness for specific performance.
A Sale Agreement deemed sham when proven to be only for securing a loan, allowing recovery of funds over specific performance.
The court upheld that the Plaintiff failed to demonstrate readiness and willingness to perform a contract for specific performance due to vague property description and explicit stipulations regardin....
The plaintiff's failure to prove willingness to perform the contract led to the grant of the alternate relief of refund of the advance money.
The court ruled that mere proof of signature does not establish the execution of a sale agreement if fabrication is probable, thus denying specific performance.
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