explained above, we do not think that this is a fit case to exercise
our discretionary jurisdiction under Article 136 of the Constitution
of India. Three prominent features of this case stare us in the
face. First and foremost, on reading the correspondence between
the parties, we are satisfied that the Plaintiff has throughout been
ready and willing to perform its obligations under the Agreement
to Sell. In particular, a reference may be made to the letters dated
08.04.1986 and 15.04.1987 and the legal notice dated
08.04.1987. The other unique feature of this case is that the suit
property is an island off the coast of Goa which is not readily
capable of valuation – indeed when asked to give us the present
market value, both sides were unable to do so. This fact also
shows that monetary compensation would not suffice and be an
adequate alternative to specific performance.
49. The third unique feature of this case is that, as has been
pointed out hereinabove, the Plaintiff went to the extent of
discharging the mortgage with the Bank by paying a sum of Rs.
17 lakhs which was almost three times the amount of the
consideration mentioned in the agreement, i.e., Rs. 6,50,000/-.
Clause 9 of the Agreement to Sell is set out hereunder:-
“If the Vendor fails and or neglects to
complete the sale after the title being made out as
aforesaid or otherwise to carry out any one or
more of the obligations on his part as herein
contained or enjoyed upon by any law for the time
being in force the Purchaser shall be at liberty to
enforce specific performance of this Agreement or
recover the earnest money with interest at 21%
per annum.”
50. It is clear that Defendants 1 to 6 failed or neglected to
complete the sale even after clear title was made out when the
obstacle of the mortgage was removed. Clause 9 specifically
states that if after the title is made out, the vendor fails and
neglects to complete the sale, and/or to carry out any of the
obligations on his part as contained in the Agreement, the
purchaser shall be at liberty to enforce specific performance of
the Agreement or recover the earnest money with interest at 21
per cent per annum at their option. Having clearly opted
throughout to enforce specific performance, we are of the view
that justice of the case requires that Clause 9 must be applied in
favour of the Plaintiff. After inducing the plaintiff as per PW-1/F
letter to pay Rs.17 lakhs to the cooperative bank to clear the dues
on the clear understanding that the defendants 1 to 8 would
thereafter execute the sale deed, they cannot go back. The clear
title stood made out at that stage and the agreement was
enforceable thereafter.
51. There is also a long line of judgments based on the
equitable principle which states that even if the undivided share
of one of the other heirs of the property cannot be transferred,
the remaining share of the other heirs certainly can be
transferred.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2910 OF 2013
SYSCON CONSULTANTS P. LTD
V
M/S PRIMELLA SANITARY PROD. P. LTD.
Citation:(2016) 10 SCC353
1. These appeals essentially deal with a dispute on the
validity and executability of an agreement for sale and once that
issue is tackled, the rest are practically not of much significance.
The parties are described as they are in the suit for specific
performance No. 88/1987 on the file of the Civil Judge Senior
Division at Margao. The Plaintiff is the first respondent herein.
The Plaintiff had sought for specific performance of the
agreement dated 04.09.1985 made with Defendants 1 to 6 for
conveyance of the suit property known as Conco situated at
village Palolem in Canacona Taluka in the State of Goa. The 7th
Defendant was the Bank where the Defendants had mortgaged
the suit property.
2. In the agreement dated 04.09.1985, the Defendants 1 to 6
claimed that they were the absolute owners of the suit property
and that the property was free from all attachments, charges, etc.
The agreed consideration was Rs.6.5 lakhs and, on the date of
agreement, Rs.50, 000 was given as advance. The relevant
portions of the agreement for sale dated 04.09.1985, are
extracted below:
“3.The Vendor hereby declares that the said
land agreed to be sold is free from any
encumbrance, attachment, charge or other claims,
rights and demands, and is not affected by any
notice or scheme of acquisition or requisition and
that the Vendors have among themselves the full
power and absolute authority to sell and deal with
the said land. The Vendor shall at his own expense
effectually indemnify and keep indemnified the
purchasers from and against all claims, demands,
losses, damages, cost and expenses, if any and
whatsoever, sustained, incurred or suffer by the
Purchaser, on account of any defect in the title of
the Vendor or any change or encumbrance or any
scheme of acquisition or requisition affecting the
land hereby contracted to be sold.
4. The Purchaser has this day paid to the
Vendor the sum of Rs.50,000/- (Rupees fifty
thousand only) as and by way of earnest money
(the payment and receipt whereof the Vendor does
hereby admit and acknowledges) and the balance
of the purchase money amounting to Rs.6 lacs
(Rupees six lacs only) shall be paid at the time of
the completion of the sale. Simultaneously with
the execution of this agreement the Vendor shall
at his own cost furnish to the Purchasers an
abstract of all title deeds and other papers and
writings including copies or extracts from records
of the Talati or Circle Inspector relating to the said
land. The sale shall be completed within one
month from the date of establishment of a good
and marketable title of the Vendor.”
“6. The Vendor hereby agrees to answer all
reasonable requisitions and satisfy all objections
on title to be made by the Purchasers or their
Solicitor or Representatives. If a good and
marketable title is made out and the said land is
found to be free from all encumbrance,
attachments and charges and other rights,
demands and claims and not effected by any
notice or scheme of acquisition or requisition AND
permission and no objection from any Authority or
Authorities, if any, is obtained by the Vendor, the
Vendor will execute a proper conveyance or
conveyance in favour of the Purchasers or their
nominee or nominees or assigns in which the
Vendor shall make the other person or persons, if
any, join, if necessary, to pass and convey an
absolute title unto the Purchaser or his nominee or
nominees or assigns or to redeem any charge or
encumbrances. The Vendor shall bear and pay all
outgoings, expenses and liabilities in respect of
the said land upto and inclusive of the day of the
completion of the sale. The Vendor shall hand over
vacant and peaceful possession to the Purchaser
of the said land at the time of completion of the
sale.”
“8. If a good and marketable title is not made
out or the said land is found to be subject to any
encumbrances charges or attachments or other
claims, rights or demands the Purchaser shall be
at liberty to rescind this Agreement and the
Vendor shall in the event forthwith refund the said
earnest money with interest at 21% per annum.
9. If the Vendor fails and or neglects to
complete the sale after the title being made out as
aforesaid or otherwise to carry out any one or
more of the obligations on his part as herein
contained or enjoyed upon by any law for the time
being in force the Purchaser shall be at liberty to
enforce specific performance of this Agreement or
recover the earnest money with interest at 21 %
per annum.”
(Emphasis supplied)
3. It may be relevant to note that the sale was to be
completed within one month from the date of establishment of a
good and marketable title of the vendor and, if the title was not
made out or in case the said land was found to be subject to any
encumbrance or charges or attachments or other claims, rights or
demands, the Plaintiff was at liberty to rescind the agreement
and, in that event, the Defendants 1 to 6 would refund the
earnest money with interest @ 21 per cent per annum. It was also
agreed between the parties that in case the Defendants 1 to 6 fail
to complete the sale after a good and marketable title is made
out, the Plaintiff was at liberty to enforce the specific performance
of the agreement or recover the earnest money with interest @
21 per cent per annum. It is also significant to note that the
Defendants 1 to 6 had clearly agreed to give a clear title to the
property, if necessary by joining any other person or persons or
even to redeem any charge or encumbrance.
4. Defendants 1 to 6 traced their authority to transfer the
property to a deed of declaration of succession executed by them
on 03.11.1981 before a Notary Public as provided under the
Portuguese Law. It was declared that Vishwanata Purshotam Sinai
Gaitonde and his wife Anandibai Viswanata Gaitonde died
intestate … “leaving their sole and only heirs their three children
…” and “… there does not exist persons, who, according to law,
may have preferential right over the said legal heirs or may
concur with them to the estate.” It was further declared that their
parents … “left no movable properties but only an immovable
property situated at Palolem Canacona known as Conco” (the suit
property).
5. On account of the Portuguese personal law applicable in
Goa, their wives also became heirs and thus the agreement for
sale with the Plaintiff was executed by Defendants 1 to 6.
6. While the steps for the sale were in progress, Smt. Kishori
Nayak daughter of Vishwanata Purshotam Sinai Gaitonde and
Anandibai Viswanata Gaitonde, real sister of Defendants 1, 3 and
5 raised an objection that she was also entitled to succeed to the
estate of her parents and, in particular, she was interested in the
suit property, and therefore, they should not proceed with the
sale.
7. Smt. Kishori Nayak was later impleaded as 7th Defendant
in the suit and her husband as the 8th. According to the 7th
Defendant, she had informed the Plaintiff of her objection. But in
any case, it has come in the evidence of Plaintiff that the 1st
Defendant- Shri Gurudas Gaitonde had informed the Plaintiff
about the objection, by his letter dated 03.04.1987.
8. In the Special Civil Suit No. 88/87/A filed by the Plaintiff in
the court of Civil Judge Senior Division, Margao, the Plaintiff
claimed that the agreement was enforceable at the option of the
Plaintiff-purchaser. To quote paragraph-7 of the plaint:
“7. The Plaintiff submits that the said Agreement
dated 4th September, 1985 is specifically
enforceable at the option of the plaintiff, and the
plaintiff is entitled to purchase of the suit property
on the terms and conditions contained in the said
Agreement. In terms of the said Agreement, the
Defendants no. 1 to 6 are liable to make out a
good and marketable title of the suit property free
from all encumbrances, restrictions, charges,
claims and demands and execute a proper
conveyance by joining other person or persons
thereto, if necessary, to convey an absolute title
thereof to the plaintiff.”
9. At paragraph-14, the Plaintiff has acknowledged the
receipt of letter dated 03.04.1987 from Defendant 1, to treat the
agreement as cancelled. Paragraph-14 reads as follows:
“14. In the meantime, the plaintiff received a
demand draft bearing No. OL/A/85 016341 dated
3-4-1987 drawn on State Bank of India for a sum
of Rs 20,000/- the defendant no. 1 alongwith a
letter expressing the intention of the defendants
no. 1 to 6 to treat the agreement dated 4th
September, 1985 as cancelled.”
10. Contextually, we may refer to the letter dated 03.04.1987
which is Exhibit-PW1/C in the suit. To the extent relevant, the
letter reads as follows:
“Dear Shri Malhotra,
In my letter dated 5.3.87, I have informed
regarding my inability to sale of land at Canacona.
Mr. Bhatnagar called on to me last Thursday. I
have to explain also the position to him. He
advised me to sell the property and forget about
the notice of my sister. He said you are able to
face any action from my sister’s side, to be frank I
am helpless.
I discussed the issue with lawyer I am told
that in any case sale would invite serious litigation
and I would not be left out even if you take over
this responsibility particularly if my sister exercises
her right of preemption.
As you know that I am not keeping well due
to my heart problem and family litigation will
aggravate my health.
I have thought over this aspect seriously and
only you can relieve me from this agony.
As promised in my above letter 5.3.87 I am
sending with this letter a bank draft for
Rs.20,000/-. The balance I shall remit as early as
possible kindly bear with me some time. …”
The Plaintiff, however, did not accept the amount but
insisted on specific performance.
11. The suit originally maintained only the following reliefs:
“
(a) That Your Honour may be pleased to pass a
decree for specific performance of contract
dated 4th September, 1985 made between
the defendants no. 1 to 6 and the plaintiff
and direct the said defendants to execute a
proper deed of Conveyance of the suit
property viz., the property known as
“CONCO” situated at Village Palolem in
Canacona Taluka, registered under No. 14858
and 14859 of Book B-41, F1. 64 (overleaf) in
the Land Registration Office at Margao, Goa
surveyed under Survey No. 119, Sub-Division
no. 1 of Nagarsem-Palolem Village and may
further be pleased to direct the said
defendants to do all acts, deeds and things
for registration of the said Deed of
Conveyance;
(b) That Your Honour may be pleased to direct
defendants no. 1 to 6 to join the defendant no.
7 as a confirming party to the said Deed of
Conveyance and arrange for execution of the
said deed by the defendant no. 7 as a
confirming party;
(c) For a decree of permanent injunction
restraining the defendants from selling,
transferring and/or creating any encumbrance,
interest, charge, restriction, claim or demand
on the said property in favour of any person or
persons other than the plaintiff in any manner
whatsoever;
(d) For interim injunction in terms of prayer (c);
(e) For such other further reliefs as Your Honour
may deem fit and proper;
(f) For costs as Your Honour may deem fit and
proper in the circumstances of the case.”
12. In the written statement filed on 10.02.1988, Defendants
1 to 6 took the stand that the sale as per agreement could be
performed only “if a good and marketable title is made out” and if
not, the agreement was rescindable.
13. The objections on the part of the sister of Defendants 1, 3
and 5 and her husband were also brought out in the written
statement. To quote:
13. “Sometime in the month of Feb. ’87,
sister of defendant No. 1, 3 & 5 and her husband
set up a claim to the ancestral property as a whole
including the suit property. On account of this the
defendants were in a tight corner on the subject of
sale of the suit property. Defendant No. 1
accordingly wrote two letters one after the other
to the plaintiffs informing them of the defendants’
inability to convey title as per the agreement. A
copy of the defendants letter dated 05.03.87 is
annexed hereto marked as Exhibit 5. Thereafter on
03.04.87 defendant No. 1 sent a Bank draft of Rs
20,000/- alongwith a covering letter which is self
explanatory. Annexed hereto and marked exhibit 6
is a copy of the said letter.
Plaintiffs have suppressed these material
facts and as such are disentitled for equitable
relief of specific performance. Plaintiffs have not
approached this Court with clean hands and this
suit therefore has to be dismissed on this ground
alone.”
14. At paragraph-16 of the written statement, it was also
disclosed that the attempt on the part of the Defendants 1, 3 and
5 to purchase peace with their sister did not fructify and that she
had filed a civil suit for injunction. To quote paragraph-16:
“16. Defendants did write to the plaintiff’s lawyer
that detailed reply would be sent as there was
attempt from the defendant’s side to close the
issue with the disputant sister and her husband to
enable the defendants to complete the sale. But
unfortunately, the sister Smt. Kishori P. Nayak and
her husband, Shri Prabhakant R. Nayak did not
11Page 12
settle the issue amicably and filed a civil suit in
the court of the Civil Judge Senior Division at
Margao. The said suit is registered as special civil
suit no. 105/87/A and a civil application filed in the
same is registered as Misc. Application No.
212/87/A. The Honourable Court has passed a
temporary injunction order restraining the
defendants from executing sale deed in respect of
the suit property in favour of the plaintiffs who are
impleaded as Defendant no. 7 in the said suit. The
plaintiffs in the said suit have inter alia challenged
the enforceability and legality of the agreement
dated 4.09.85 which is the subject matter of this
suit also.
Defendants 1 to 6 herein state and submit
that for proper and effective adjudication of this
suit Smt. Kishori Prabhakant Nayak and Shri
Prabhakant R. Nayak should be added in this suit
as defendants as they have leveled a challenge to
the enforceability of the agreement sought to be
specifically enforced in this suit by the plaintiff
herein.”
15. In short, Defendants 1 to 6 wanted the suit to be
dismissed in view of the objection of Smt. Kishori Nayak.
16. It may be noted that Defendant 7 originally was the
Cooperative Bank with whom the suit property had been
mortgaged; but it appears on clearing the loan, the Bank was
deleted and thereafter Smt. Kishori Nayak was impleaded as
12Page 13
Defendant 7 and her husband Shri Prabhakant Ramrai Nayak as
Defendant 8.
17. Special Civil Suit No. 105/1987/A was filed by Smt. Kishori
Nayak, real sister of Defendants 1, 3 and 5 and her husband Shri
Prabhakant R. Nayak before the Civil Judge Senior Division,
Margao against Defendants 1 to 6 and the Plaintiff. It was a suit
for declaration, permanent and temporary injunction. It was
stated in the plaint that apart from the suit property of Civil Suit
No. 88/1987, five other items of property were also left intestate.
It was averred that the agreement of sale of any property without
the sister and her husband is null and void. To quote from
paragraph-7:
“7. Plaintiffs state that the defendants no. 7 is a
company which has entered into an agreement to
sell the suit property with defendant nos. 1 to 6 on
the 4th of September, 1985, which agreement is
impugned herein, ignoring the legal rights of the
plaintiffs to the suit property, in collusion with one
another and are about to execute the deed of
conveyance and as such the plaintiffs are
compelled to file the suit to seek the assistance of
this Hon’ble Court by an appropriate order of
declaration and permanent injunction restraining
the defendant number 1 to 6 from in any manner
alienating and/or executing any deed of
conveyance or any other instrument of transfer of
13Page 14
possession of the suit property to the name of the
defendant no. 7 in pursuance of the impugned
agreement to sell allegedly entered into on 4th
September 1985 declaring that the said
agreement is ab-initio null and void ad hence
unforceable specifically.”
18. Again, at paragraph-9, it has been averred that:
“9. Plaintiffs state that they being co-sharers and
co-owners of the suit property as aforesaid the
defendant nos. 1 to 6 had no authority in law to
negotiate the said deal without their consent and
knowledge with defendant no. 7 and on this count
alone the alleged agreement to sell and/or the
alleged deed of sale dated 4th December 1985 is
ab-initio void and the plaintiff’s are entitled in law
for such a declaration.”
19. At paragraph-14, it was averred that the entire properties,
left intestate being ancestral, the same are to be divided only as
per Portuguese Law of Succession through inventory proceedings.
To quote from paragraph-14:
“14. Plaintiffs state that their share in the
ancestral suit property is undivided and indivisible
till the suit property as well as other ancestral
properties are auctioned in appropriate inventory
proceedings to be initiated under the Portuguese
Law of Succession and till the shares of the heirs
are ascertained and as such the suit property or
14Page 15
any part of the same cannot be sold as
contemplated under the agreement of sale dated
4
th September 1985 in exclusion to them. Plaintiffs
state that even if the inventory proceedings are
initiated and the properties are auctioned amongst
the members of the family, they are entitled to
exercise their right of preemption and under the
prevailing law of succession governing this land.”
20. Though there had been several other developments in
between, it is not necessary to refer to those aspects. Suffice to
note that in the meantime, inventory proceedings were initiated
before the same court of Civil Judge Senior Division at Margao at
the instance of Defendants 7 and 8 namely, Smt. Kishori P. Nayak
and her husband Shri Prabhakant R. Nayak. Paragraphs- 1 to 4 of
the petition being relevant are extracted herein:
“1. The applicants are the daughter and
son-in-law of the Late Visvonata Purxotoma Sinai
Gaitonde and the late Anandibai V. Gaitonde who
died on 26.10.1966 and 25.06.1976 respectively.
Hereto annexed are the death certificates.
2. The deceased left behind their heirs, their
three sons and their daughter, the applicant no. 1
herein.
3. The estate of the deceased has not yet been
partitioned and continues undivided.
4. The son of the deceased, Mr. Ratnakar
Vishwanath Gaitonde, resident of Vishwanath
15Page 16
Sunirti, Super Market, Ponda, Goa is competent to
be appointed as Cabeca de casal, he being the
eldest son of the deceased.”
21. In the inventory proceedings, the auction took place on
01.12.1990. The suit property was auctioned by the 7th
Defendant- Smt. Kishori Nayak and the remaining estate was also
divided amongst the other heirs and the final orders in the
inventory proceedings was passed by the Civil Judge Senior
Division, Margao on 30.01.1991.
22. The Plaintiff, thereafter, filed Civil Suit No. 329/1992
seeking a declaration that inventory proceedings were vitiated by
fraud to the extent of allocation of suit property to the 7th
Defendant Smt. Kishori Nayak and her husband and for setting
aside the inventory proceedings.
23. In the meantime, the Cooperative Bank initiated recovery
proceedings by putting the suit property to public auction. The
Bank obtained an award and published the proclamation for the
sale of the suit property by public auction. On 10.01.1989, the
Defendants 7 and 8, hence, filed a Regular Civil Suit No. 3/1989/B
16Page 17
for injunction restraining the bank from proceeding with the sale.
That suit was decreed as compromised on 23.04.1992. The
relevant paragraphs from the decree read as follows:
“5. In such circumstances, the plaintiff was though
legally not bound, morally feels her obligation not
to put in jeopardy the interest of the Bank,
therefore she guarantees the payment of the debt
to the Bank (defendant no. 2) reserving her right
to recover the amount from defendant no. 1 (Smt.
Sunita Gaitonde)”
xxx xxx xxx xxx
“9. The plaintiff further agrees that in the event
the plaintiff fails to pay the entire liability within a
period of 15 (fifteen) days, the defendant no. 2 is
free to sell the suit property in auction and realize
from the proceeds of the auction sale the amount
of loans, interest and other charges with clear
understanding that the asset value shall not be
less than the amount of principal and interest and
other charges.”
(Emphasis supplied)
24. The Defendants 7 and 8 did not make any payment to the
Bank so as to avert the distress sale of the suit property and
neither did Defendants 1 to 6. The Defendants 7 and 8 in the
compromise decree had gone to the extent of giving up all hopes
by agreeing that in case, they failed to pay the dues, the suit
17Page 18
property could be sold but the only condition was that the sale
amount should cover the entire liability arising out of the loan
including interest and other charges meaning thereby that they
were worried only about saving other assets. It is at that juncture
that the Plaintiff cleared the entire liability on payment of Rs. 17
lakh on 12.05.1993. Thus, the distress sale was averted, the
mortgage was redeemed and the charge on the property was
released
25. The Defendants 7 and 8 filed a writ petition before the
High Court challenging the proceedings of the Assistant Registrar
culminating in redemption of mortgage. The Writ Petition was
disposed of by judgment dated 10.10 1994, stating :
“Respondents Nos. 4 to 10 mortgaged a property to
respondent No.2, Bank and took certain loan. The amount
was not paid by them. Respondent No.2, Bank, obtained
the said certificate and started recovery proceedings in
which the property was put to sale. At the time of the sale,
respondent no.1, claiming interest in the property on the
basis of some Agreement of Sale, allegedly executed by
respondents Nos. 4 to 10 in their favour paid Rs.
17,00,000/- to the Recovery Officer, as a result of which
the Recovery Officer stopped the sale and directed the
redemption of the mortgage in favour of Respondent Nos.
4 to 10.
2. The present petitioners claimed some title to the
property under inventory proceedings in 53/90/A. They
were not parties to the mortgage, nor they are members of
respondent Nos. 2 Bank. They challenged the order passed
by the Recovery Officer on the ground that the amount
tendered by the respondent No.1 could not have been
accepted by the Recovery Officer for the purpose of
passing an order of redemption in favour of the
mortgagors. If at all such an order was wrongly passed by
the Recovery Officer the person to be prejudiced would
have been the Bank. The mortgagors as well as the Bank
did not have any grievance on the point.
3. Grievance is sought to be raised by a third party,
who has hardly any locus standi in a proceeding under Rule
104 because the petitioners had never offered to pay any
amount, nor had they ever paid anything, either to the
Bank, or to the Recovery Officer. Under such
circumstances, we do not think that the impugned order is
against justice, equity and good conscience.
4. Needless to say that if the petitioners claiming mere title
to the property have some rights to the property in
question. They would be at liberty to pursue their rights
according to law. Petition is therefore disposed of.”
(Emphasis supplied)
26. Meanwhile, the Plaintiff’s suit was dismissed for default on
18.09.1990 and was ultimately restored only on 05.02.1994.
Thereafter the suit was amended and Smt. Kishori Nayak and her
husband were impleaded as additional Defendants, in 1998.
27. Additional reliefs for compensation to the tune of
Rs.12,29,030.80 and Rs.2,68,29,038.80 were added. The
challenge to the inventory proceedings was also incorporated by
way of the amendment.
28. On 14.11.1995, the 7th and 8th Defendants, viz., the sister
Smt. Kishori and her husband, who had obtained the suit property
in the inventory proceedings, sold the same to the 9th
Defendant-Syscon Consultants Pvt. Ltd. Thereafter, the Plaintiff
sought amendment for cancelling that sale also. It may be stated
that the 9th Defendant purchased the suit property for a sum of
Rs. 34,00,000/- knowing fully well that the said property was in
litigation and the fate of some of the litigations.
29. Though, there were certain other factual aspects as well, it
is not necessary to refer to the same. Suffice it to note that Civil
Suit Nos. 88/1987 and 105/1987 were tried together as per orders
of High Court of Bombay dated 19.04.1990 in Appeal from Order
No. 54/89 with Civil Application No. 192/89.
30. By common judgment dated 31.12.2001, the Trial Court
disposed of both suits upholding the right of 7th and 8th
Defendants (the sister and her husband). The Defendants 1 to 6
were directed to refund the advance of Rs. 50 thousand with
interest @ 21 per cent per annum from the date of institution of
the suit to the Plaintiff and further Defendants 1 to 8 were
directed to refund an amount of Rs.17 lakhs to the Plaintiff with
interest @ 6 per cent per annum from 12.05.1993.
31. Aggrieved, the Plaintiff filed First Appeal No. 179/2003
before the High Court of Judicature at Bombay, Panaji Bench, Goa.
During the pendency of the appeal, on 08.10.2003, the entire
decree amount was deposited before the High Court.
32. As per the impugned judgment, the High Court allowed
the appeal in part, and partly reversed the trial court judgment
therein. To the extent of the share of Defendants 1 to 6, in the suit
property, the suit was decreed. Defendants 1 to 6 were permitted
to withdraw the amount deposited in court after the decree was
being fully satisfied. Thus, the appeals at the instance of the
Defendants and one by the Plaintiff for the 1/4th share of
Defendants 7 and 8 and another at the instance of Defendant 9,
the purchaser.
33. Being a first appeal, the High Court has in fact dealt with
the issues as framed by the Trial Court. The following were the
issues framed by the Trial Court and their findings:
“ISSUES FINDINGS
(1)Whether the plaintiff
proves that the plaintiff
is entitled for specific
performance of contract
dated 4.9.85?
Negative
(2) Whether the plaintiff
proves that order in
Inventory Proceedings
No.55/90/A is liable to be
vitiated as obtained by
fraud and also illegal to
the extent of allotment
of the suit property to
the defendant No.7?
Negative
(3) Whether the plaintiff
proves that the
defendants No. 7 and 8
lost right of preemption,
even if they had the said
right under law?
Negative
(4) Whether the plaintiff
proves that the
defendants No. 1 to 6
are liable to pay to the
plaintiff a sum of
Rs.12,29,030.80 as
compensation for breach
of contract in addition to
the specific
performance?
Negative
(5) Whether the plaintiff
proves that defendants Partly in affirmative
22Page 23
No.1 to 6 are also liable
to pay to the plaintiff
compensation of
Rs.2,68,29,038.80 in lieu
of specific performance?
(6) Whether the
defendants No.7 and 8
prove that they have
right of preemption in
respect of the suit
property and that the
agreement dated 4.9.85
entered between the
plaintiff and the
defendant nos. 1 to 6 is
null and void?
Affirmative
(7) Whether the
defendants No.7 and 8
are justified in selling the
suit property to the
defendant No.9 within
their own rights?
Affirmative
(8) What relief? What
order? As per law.”
34. On issue no.1, the High Court took the view:
“107. … Respondent Nos. 1 to 6 never
objected per se to perform the agreement. They,
to put it mildly, expressed their inability to perform
even their part of the agreement on the ground
that Respondent No.7 had raised a claim as
regards her one-fourth share in the property. Their
bona fides are, therefore, put to the test when the
Appellant submitted that it was willing to accept at
least or even the share of the Respondent Nos. 1
to 6 in the suit property without claiming any
reduction in the price. Surely, Respondent Nos. 1
to 6 then cannot have any objection whatsoever to
a decree to the extent of their share in the suit
property.”
35. Regarding sale of the suit property by Defendants 7 and 8
to Defendant 9, it was held that Defendant 9 admittedly bought
the property with the full knowledge of the litigations, and hence,
Defendant 9 was not entitled to any equities. Thus, issue no. 1
was answered in the affirmative in favour of the Plaintiff, limited
to the extent of share of Defendants 1 to 6.
36. On issue no.2, the High Court was of the view that the
Plaintiff was deliberately kept in the dark about the inventory
proceedings. It was also noted by the High Court that despite
granting time to produce evidence on the relinquishment of their
rights by Defendants 7 and 8, nothing was done. It was further
noted that the Inventory Court was not informed of the deed of
declaration or about the agreement in litigation or about the
mortgage of the suit property to the Cooperative Bank. None of
Defendants led any evidence. The Plaintiff was denied an
opportunity in the inventory proceedings to protect their interest.
The High Court further held that even assuming that the inventory
proceedings were not conducted fraudulently, the orders passed
therein could not bind the Plaintiff as it was not a party thereto.
37. On issue no.3, it was held that since Defendants 7 and 8
did not exercise their right of preemption, they lost their right.
And, on issue no. 6, it was held that the suit agreement dated
04.09.1985, between the Plaintiff and Defendants 1 to 6 was
legally valid and not void.
38. On issue no.4, regarding compensation, the Court though
held that the Plaintiff was entitled to damages, but no decree was
granted since the Plaintiff made a statement that in case specific
performance was granted it would not insist on a decree for
compensation.
39. On issue no.7, it was held that Defendants 7 and 8 were
entitled to sell only one quarter interest in the suit property and
not the three quarter interest of Defendants 1 to 6 and the suit
was decreed accordingly. There was no separate decree in the suit
filed by Defendants 7 and 8.
40. A suit for specific performance, being a suit for equitable
relief, this Court has the duty to see what ultimately is the justice
of the case. The suit property, no doubt is jointly owned by
Defendants 1 to 8. But the agreement for sale was only by the
Defendants 1 to 6. They not only excluded the sister and her
husband but made two deliberate and wrong representations:
that Defendants 1, 3 and 5 are the only children of Late
Vishwanta Purshotam Sinai Gaitonde and that the suit property
was the only estate left by their parents. The agreement for
specific performance, no doubt, contained a clause that the
sellers would make a good and marketable title of the property.
Fully conscious of the fact that there was another heir namely the
sister and that the property had already been mortgaged to the
Cooperative Bank, a very significant clause was incorporated in
the agreement to the effect that the vendors could execute a
proper conveyance in favour of the purchasers and in that regard,
the vendors would make any other person or persons to join them
so as to convey an absolute title to the purchaser or to redeem
any charge or encumbrance. This clause clearly shows that the
Defendants 1 to 6, though acted ill-advisedly by not joining the
sister and her husband in the agreement and by not disclosing
the mortgage, had still genuinely intended to execute the sale
covering both the eventualities namely, joining the sister and her
husband and redeeming the mortgage (see Clause 6 of the
Agreement of Sale extracted at pages 3-4).
41. At one stage, Defendants 1 to 8 apparently were sailing
together, faced with the distress sale of the suit property by the
bank. It was in that context that the Defendants 1 to 6 made a
request to the Plaintiff that in case the Plaintiff cleared the loan
liability, they would get in the sister also for the conveyance of
the property and settle the whole dispute. The letter which is
Exhibit- PW1/F in the suit, which is dated 14/11/1991 reads as
follows:
“Sale of Property at Canacona.
Further to the discussion of the undersigned with
your Shri A.A. Tandale, this is to confirm that the
undersigned and all his brothers and sister are
agreeable to settle the dispute with you amicably
on the following terms:
(a) You should pay off the entire loan
outstanding with the Madgaon Urban
Co-op. Bank.
(b) All the parties jointly including the bank
shall take a consent decree from the Court
and put an end to litigation.
(c) Upon completion of the above steps, we
shall execute deed of conveyance in your
favour.
We expect your co-operation in implementing
this compromise with maximum expedition.
This is however without prejudice to our
rights and contentions in the pending suits.”
Thereafter, Defendants 1 to 6 left the Plaintiff to their fate by
permitting the auction sale to take place and consequently
wanted the agreement to get frustrated.
42. As far as Defendants 7 and 8 are concerned, they not
only went back on their undertaking in Court to pay the dues to
the bank so as to avert the auction sale, they have not pursued
their claim if any, to the title to the property as per the liberty
granted to them by judgment dated 10th October, 1994 of the
High Court in Writ Petition No. 277 of 1994. The High Court
apparently was clear in its mind, that if at all Defendants 7 and 8
wanted to save the situation by exercising their right to
preemption under the Portuguese Laws, they could still do that
within six months. Yet, nothing was done. In any case, more than
six months after the judgment dated 10.10.1994, they sold the
suit property on 14.11.1995 when as a matter of fact Defendants
1 to 8 had by their conduct forfeited all rights and interests in
respect of the suit property. Thus, there is no question of right of
preemption available to Defendants 7 and 8.
43. It may not also be wholly out of context to take note of the
fact that the Defendants 7 and 8 chose, with the assent of
Defendants 1 to 6 in the inventory proceedings, the suit property,
fully knowing that the property was disputed. Normally, one would
avoid a disputed property or leave a disputed property to the
authors of the dispute, i.e., the brothers in this case. It would also
be relevant to note that none of the Defendants 1-8 told the
District Judge in the inventory proceedings that the property was
already in dispute, and that two civil suits were pending, in which
case the District Judge would have certainly taken note of the
litigation.
44. Under the agreement, the time for performance starts
within one month from the date of the vendors making out a
marketable title to the property. The agreement also contained a
provision to join any other person or persons to convey an
absolute title to the purchasers or for redeeming any mortgage.
And thus, the suit by the Plaintiffs originally had the Bank as a
party Defendant, and, after clearing the loan, the Bank was
deleted from the array of parties and Smt. Kishori and her
husband were joined as Defendants 7 and 8.
45. It was vehemently contended by learned Senior Counsel
Shri Dhruv Mehta that it was not necessary to give notice of
inventory proceedings to anybody other than the members of the
family who are entitled to succeed to the estate or disclose any
charge on the property. We are afraid that this submission cannot
be appreciated. So long as there is no bar for transferring the
undivided interest in the estate by any of the legal heirs, any
charge or liability to the estate was also to be disclosed in the
inventory proceedings so that the estate could be partitioned
taking note of such charges, and in case of litigation, the
proceedings would have awaited the outcome thereof.
46. Defendants 7 and 8, viz., Smt. Kishori and her husband
knew very well when they instituted the inventory proceedings
that there was an agreement for sale of one of the items in the
estate executed by her brothers and their wives and that a suit for
specific performance of that agreement had already been pending
in Court. And yet, it was not disclosed. Interestingly, and if not
shockingly, the Defendants 1 to 6 also did not disclose before the
court in the inventory proceedings anything about the mortgage
to the bank. Thus, in any case, Defendants 7 and 8 had full
knowledge of the suit for specific performance and also the
liability to the Cooperative Bank when they chose the disputed
property as their share in the inventory proceedings and yet, they
were not prepared to even clear the liability to the Cooperative
Bank. It was the Plaintiff who paid the money and averted the
auction sale and redeemed the property. Had the Plaintiff not
cleared the dues to the Bank, the property would have been
auctioned, divesting Defendants 7 and 8 of their rights and
interests in the property.
47. The issue of lis pendens, in any case, on facts, is clear in
the sense that even assuming for argument’s sake that Civil Suit
No. 88 of 1987 stood dismissed at the time of the order in the
inventory proceedings, Civil Suit No. 105 of 1987 in respect of the
same property, wherein a declaration and injunction had been
sought by Defendants 7 and 8 (Plaintiffs in Suit No. 105 of 1987),
was pending. Both suits were directed to be tried together as well.
It is significant to note that there was only one set of issues
framed for the purpose of trial of both suits. It is also significant to
note that even according to Defendants 1 to 6 in their written
statement, their stand was:
“….The plaintiffs in the said suit have inter alia
challenged the enforceability and legality of the
agreement dated 4.09.85 which is the subject
matter of this suit also…”
The inventory proceedings, thus, would have been subject to
the result of the suits. As far as the transfer of property to
Defendant 9 is concerned, the Plaintiff’s Suit for Specific
Performance No. 88 of 1987 stood restored and its Suit No. 329 of
1992 stood pending on the date (14.11.1995) when Defendant 9
purchased the suit property which would also be subject to the
result of the pending suits.
48. In view of the conduct of the parties, which we have
explained above, we do not think that this is a fit case to exercise
our discretionary jurisdiction under Article 136 of the Constitution
of India. Three prominent features of this case stare us in the
face. First and foremost, on reading the correspondence between
the parties, we are satisfied that the Plaintiff has throughout been
ready and willing to perform its obligations under the Agreement
to Sell. In particular, a reference may be made to the letters dated
08.04.1986 and 15.04.1987 and the legal notice dated
08.04.1987. The other unique feature of this case is that the suit
property is an island off the coast of Goa which is not readily
capable of valuation – indeed when asked to give us the present
market value, both sides were unable to do so. This fact also
shows that monetary compensation would not suffice and be an
adequate alternative to specific performance.
49. The third unique feature of this case is that, as has been
pointed out hereinabove, the Plaintiff went to the extent of
discharging the mortgage with the Bank by paying a sum of Rs.
17 lakhs which was almost three times the amount of the
consideration mentioned in the agreement, i.e., Rs. 6,50,000/-.
Clause 9 of the Agreement to Sell is set out hereunder:-
“If the Vendor fails and or neglects to
complete the sale after the title being made out as
aforesaid or otherwise to carry out any one or
more of the obligations on his part as herein
contained or enjoyed upon by any law for the time
being in force the Purchaser shall be at liberty to
enforce specific performance of this Agreement or
recover the earnest money with interest at 21%
per annum.”
50. It is clear that Defendants 1 to 6 failed or neglected to
complete the sale even after clear title was made out when the
obstacle of the mortgage was removed. Clause 9 specifically
states that if after the title is made out, the vendor fails and
neglects to complete the sale, and/or to carry out any of the
obligations on his part as contained in the Agreement, the
purchaser shall be at liberty to enforce specific performance of
the Agreement or recover the earnest money with interest at 21
per cent per annum at their option. Having clearly opted
throughout to enforce specific performance, we are of the view
that justice of the case requires that Clause 9 must be applied in
favour of the Plaintiff. After inducing the plaintiff as per PW-1/F
letter to pay Rs.17 lakhs to the cooperative bank to clear the dues
on the clear understanding that the defendants 1 to 8 would
thereafter execute the sale deed, they cannot go back. The clear
title stood made out at that stage and the agreement was
enforceable thereafter.
51. There is also a long line of judgments based on the
equitable principle which states that even if the undivided share
of one of the other heirs of the property cannot be transferred,
the remaining share of the other heirs certainly can be
transferred.
52. In Kartar Singh v. Harjinder Singh and others1
, at
paragraph-6, it has been held that :
“6. As regards the difficulty pointed out by
the High Court, namely, that the decree of specific
performance cannot be granted since the property
will have to be partitioned, we are of the view that
this is not a legal difficulty. Whenever a share in
the property is sold the vendee has a right to
apply for the partition of the property and get the
share demarcated. We also do not see any
difficulty in granting specific performance merely
because the properties are scattered at different
places. There is no law that the properties to be
1
(1990) 3 SCC 517
35Page 36
sold must be situated at one place. As regards the
apportionment of consideration, since admittedly
the appellant and respondent's sister each have
half share in the properties, the consideration can
easily be reduced by 50% which is what the First
Appellate Court has rightly done.”
53. In Sardar Singh v. Krishna Devi (Smt) and another2
,
at paragraph-17, it has been held that:
“17. In view of the finding that the appellant
had half share in the property contracted to be
sold by Kartar Lal, his brother, the agreement of
sale does not bind the appellant. The decree for
specific performance as against Kartar Lal became
final. Admittedly the respondent and her husband
are neighbours. The appellant and his brother
being coparceners or co-owners and the appellant
after getting the tenant ejected both the brothers
started living in the house. As a prudent purchaser
Joginder Nath ought to have made enquiries
whether Kartar Lal had exclusive title to the
property. Evidence of mutation of names in the
Municipal Register establishes that the property
was mutated in the joint names of the appellant
and Kartar Lal and was in joint possession and
enjoyment. The courts below, therefore, have
committed manifest error of law in exercising their
discretion directing specific performance of the
contract of the entire property. The house being
divisible and the appellant being not a consenting
party to the contract, equity and justice demand
partial enforcement of the contract, instead of
refusing specific performance in its entirety, which
would meet the ends of justice. Accordingly we
hold that Joginder Nath having contracted to
2
(1994) 4 SCC 18
36Page 37
purchase the property, it must be referable only in
respect of half the right, title and interest held by
Kartar Lal, his vendor. The first respondent being
successor in interest, becomes entitled to the
enforcement of the contract of the half share by
specific performance. The decree of the trial court
is confirmed only to the extent of half share in the
aforestated property. The appeal is accordingly
allowed and the decree of the High Court is set
aside and that of the trial court is modified to the
above extent. The parties are directed to bear
their own costs throughout.”
54. In A. Abdul Rashid Khan (Dead) and others v.
P.A.K.A. Shahul Hamid and others.3
, at paragraph-14, it has
been held that:
“14. Thus we have no hesitation to hold,
even where any property is held jointly, and once
any party to the contract has agreed to sell such
joint property agreement, then, even if other
co-sharer has not joined at least to the extent of
his share, he is bound to execute, the sale deed.
However, in the absence of other co-sharer there
could not be any decree of any specified part of
the property to be partitioned and possession
given. The decree could only be to the extent of
transferring the share of the Appellants in such
property to other such contracting party. In the
present case, it is not in dispute that the
Appellants have 5/6 share in the property. So, the
Plaintiffs suit for specific performance to the
extent of this 5/6th share was rightly decreed by
the High Court which requires no interference.”
3
(2000) 10 SCC 636
37Page 38
55. In Surinder Singh v. Kapoor Singh (Dead) Through
Lrs. and others4
, at paragraphs- 3 and 20, it has been held that:
“3. A Letters Patent Appeal filed by the
Plaintiffs-Respondents herein against the said
judgment and decree came to be allowed by a
Division Bench of the High Court by reason of the
impugned judgment holding that as the property
was owned by the Appellant and the said Tajinder
Kaur in equal share, in view of Kartar
Singh (supra), a decree for specific performance
could be granted in favour of the
Plaintiffs-Respondents herein in respect of the
share of the Appellant subject to his right to apply
for partition of the property for getting his share
demarcated. As regard apportionment of the sale
consideration, it was directed that the same would
be reduced by 50% as the Appellant would only be
entitled thereto. As regard the objection of the
Appellant herein that no relief could be granted as
the plaintiffs-Respondents failed to mention
Khasra Nos. 39/4 and 39/3/2 in the plaint, the
Division Bench held that such omission was
inadvertent. It was pointed out that such an
objection was raised only at the time of argument
whereupon the plaintiffs filed an application for
amendment of plaint. It was held:
"...We are of the view that the trial
court was not justified in dismissing
the application on technical grounds.
Decree was sought for the entire land
i.e. 153 K 19M. Copies of the
4
(2005) 5 SCC 142
agreement as well as jamabandi for
the relevant year were also attached
with the plaint. Agreement as well as
jamabandi clearly indicate that relief
sought was with regard to the land
measuring 153 K 19M which also
includes Khasra Nos. 39/4 and 39/3/2.
In this view of the matter, prayer of
the plaintiffs for amendment of the
plaintiff is allowed. Plaint would be
deemed to have included Khasra Nos.
39/4 and 39/3/2 apart from other
Khasra numbers mentioned in the
plaint."
20. The Appellant furthermore misled the
plaintiffs-respondents by representing that he
had the requisite authority to enter into an
agreement for sale on behalf of his sister,
which was found to be incorrect. In this
situation, we are of the view that the equity
lies in favour of grant of decree for specific
performance of the contract in respect of the
share of the Appellant rather than refusing
the same. In any event if the Appellant and/or
his sister have claim as regard the arrears of
rent, the same can be adjudicated upon by
the appropriate court in an appropriate
proceeding. We are, therefore, unable to
accept the said contention of Mr Talwar.”
56. In Gajara Vishnu Gosavi v. Prakash Nanasaheb
Kamble and others.5
, at paragraphs- 9 to 13, it has been held
that:
“9. Be that as it may, three courts have
recorded the concurrent findings of fact that
partition had never been given effect to in respect
of the suit property. Therefore, Housabai could
transfer her share. But the question does arise as
to whether without partition by metes and bounds,
she could put her vendee Anjirabai in possession.
10. In Kartar Singh v. Harjinder Singh (1990)
3 SCC 517 : AIR 1990 SC 854, this Court held that
where the shares are separable and a party enters
into an agreement even for sale of share
belonging to other co-sharer, a suit for specific
performance was maintainable at least for the
share of the executor of the agreement, if not for
the share of other co-sharers. It was further
observed:
“6. As regards the difficulty pointed
out by the High Court, namely, that the
decree of specific performance cannot be
granted since the property will have to be
partitioned, we are of the view that this is
not a legal difficulty. Whenever a share in
the property is sold, the vendee has a right
to apply for the partition of the property
and get the share demarcated.”
11. In a recent judgment in Ramdas v.
Sitabai and Ors. (2009) 7 SCC 444 : JT (2009) 8 SC
224 to which one of us (Dr. B.S. Chauhan J.) was a
party placing reliance upon two earlier judgments
of this Court in M.V.S. Manikayala Rao v. M.
5
(2009) 10 SCC 654
40Page 41
Narasimhaswami and Ors. AIR 1966 SC 470; and
Sidheshwar Mukherjee v. Bhubneshwar Prasad
Narain Singh and Ors. AIR 1953 SC 487 this Court
came to the conclusion that a purchaser of a
coparcener's undivided interest in the joint family
property is not entitled to possession of what he
had purchased. He has a right only to sue for
partition of the property and ask for allotment of
his share in the suit property.
12. There is another aspect of the matter. An
agricultural land belonging to the
coparceners/co-sharers may be in their joint
possession. The sale of undivided share by one
co-sharer may be unlawful/ illegal as various
statutes put an embargo on fragmentation of
holdings below the prescribed extent.
13. Thus, in view of the above, the law
emerges to the effect that in a given case an
undivided share of a coparcener can be a subject
matter of sale/transfer, but possession cannot be
handed over to the vendee unless the property is
partitioned by metes and bounds, either by the
decree of a Court in a partition suit, or by
settlement among the co-sharers.”
57. The vehement contention, advanced by learned Senior
Counsel Shri Dhruv Mehta, based on Article 2177 of the
Portuguese Civil Code, 1867 that there was an absolute bar for
transfer of any portion of the estate or a specific item of the
estate, need not detain us both on account of factual matrix and
on law. As we have already noted hereinabove, Defendants 1-8
had already given up on their right in the suit property by not
taking steps to avoid the distress sale at the instance of the Bank.
Though, there are different translated versions of the provision,
we may extract Article 2177 as provided by Defendants 7 and 8 in
their Appeal:
“It is not lawful to a co-owner, however, to
dispose a specific part of the thing held indivisibly,
without the same being allotted to him in partition;
and a transfer of the right, which he has to the
share belonging to him, may be restricted in
accordance with the law.”
Suffice it to say, Article 2177 does not prohibit alienation of
undivided interest, which is in tune with the principle underlying
Section 44 of the Transfer of Property Act, 1882.
58. The conduct of the Defendants 7 and 8 also needs to be
specifically commented on. Despite specifically getting reserved a
liberty to proceed further after the redemption of the property by
the Plaintiff, nothing was done by them. They also did not
exercise their right of preemption available under the Portuguese
Law. Conspicuously, none of the defendants entered the witness
box despite the voluminous and clinching evidence tendered by
the Plaintiff, obviously to avoid inconvenient questions,
particularly, based on PW-1/F extracted hereinabove. In that view
of the matter, it is also not necessary to deal with the various
other contentions advanced by learned Senior Counsel on both
sides since they have no bearing on the ultimate conclusion.
59. In our view, no substantial or grave injustice is caused to
the Defendants: on the contrary, the justice of the case, on facts,
is in favour of the Plaintiff, and therefore, no interference under
Article 136 of the Constitution of India is required. Once, it is
found that justice of the case on facts does not require
interference, this Court, even at the appellate stage, is well within
its discretion to stay its hands off, as held in Taherakhatoon (D)
by Lrs. v. Salambin Mohammad6
.
60. Thus, viewed from any angle, justice was done to the
Plaintiff as per the decree granted to them by the High Court and
no injustice is caused to the Defendants, in particular, Defendant
No. 9, who, with open eyes, purchased litigation. As we have
decided not to interfere with the judgment of the High Court in
6
(1999) 2 SCC 635
favour of the Plaintiff, we also dismiss the Plaintiff’s appeal
against the impugned judgment seeking the entire property.
61. We, however, find it difficult to agree with the reasoning of
the impugned judgment on many aspects, and hence, while
dismissing all the appeals, including the appeal of M/s Primella
Sanitary Products Private Limited, we leave the questions of law
open. The Contempt Petition (Civil) No. 89 of 2016 also stands
dismissed as we see no contemptuous conduct on part of the
alleged contemnors.
62. There shall be no order as to costs.
....….…………………………….J.
(KURIAN JOSEPH)
….….…………………………….J.
(ROHINTON FALI NARIMAN)
NEW DELHI;
SEPTEMBER 19, 2016.
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