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A.M. Gandhisan Vs. Ayyasami - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtChennai High Court
Decided On
Reported in(1979)1MLJ270
AppellantA.M. Gandhisan
RespondentAyyasami
Cases ReferredRamaswamy Gnunier v. Venkatachalam
Excerpt:
- .....was no deception practised on the defendant at the time when he entered into the agreement for sale exhibit a-1.9. all the same, the question that falls for consideration is whether the plaintiff would be entitled to a decree for specific performance on the facts and circumstances of the case. it is well-known that the relief of specific performance is an equitable relief and it is in the discretion of the court in the light of the facts and circumstances of the case either to refuse or grant the relief for specific performance. at the same time it should not be lost sight of that the discretion to be exercised by the court should not be arbitrary but based on sound judicial principles. section 20(1) of the specific relief act reads as follows:20(1). the jurisdiction to decree.....
Judgment:

S. Padmanabhan, J.

1. The plaintiff in O.S. No. 16 of 1978 on the file of the learned Subordinate Judge, Tirupattur, North Arcot, is the appellant. The defendant in the action (respondent herein) is the owner of the plaint schedule property which is of the extent of 9 acres and 51 cents of dry land with a house therein. On 9th November, 1972, the defendant executed an agreement for sale in favour of the plaintiff undertaking to sell the property to him for a sum of Rs. 14,000. On the date of Exhibit A-1 he received from the plaintiff an advance of Rs. 1,000. The stipulation in the agreement was that the defendant should execute the sale deed within three months from the date of Exhibit A-1 on receipt of Rs. 13,000 and if he committed a breach of the agreement, he should pay the plaintiff Rs. 3,000 as damages. Similarly, if the plaintiff failed to take the sale deed on payment of Rs. 13,000 he had to pay the defendant Rs. 3,000 by way of damages. The defendant did not comply with the terms of the agreement. Therefore the plaintiff issued Exhibit A-2 notice to the defendant on 23rd January, 1973 calling upon him to execute the salt; deed in terms of Exhibit A-1. Since the defendant did not send any reply, the plaintiff filed the suit for specific performance of the agreement for sale evidenced by Exhibit A-1. It is averred in the plaint that Exhibit A-1 agreement for sale was executed by the defendant pursuant to a panchayat and in the presence of the panchayatdars. The plaint further mentions the fact that prior to the execution of A-1, the agreement for sale, the defendant had purchased the suit property under Exhibit B-4 dated 1st August, 1972. According to the plaintiff though in the document the sale consideration is mentioned as Rs. 20,000 the defendant really paid only Rs. 10,000. This averment has been evidently u made to show that actually the plaintiff agreed to purchase the property from the defendant for Rs. 4,000 more than what the latter paid to purchase the property under Exhibit B-4 the defendant paid Rs. 20,000.

2. The defendant filed a written statement to the effect that at the time when he executed Exhibit A-1 he was not aware of the contents of the document and that he could neither read nor write Tamil. He was informed by the plaintiff and the panchayatdars that he would be paid a sum of Rs. 22,000 which is made up of Rs 20,000 which he paid for taking Exhibit B-4. sale deed and Rs. 2,000 which he spent on the purchase of stamp papers. In fact, according to the defendant, it was on the basis of these representations that were made to him he signed Exhibit A-1. He therefore contended that the plaintiff is not entitled to a decree for specific performance.

3. From the nature of the pleadings the trial Court raised the following three points for consideration.

1. Was the defendant deceived in entering into the suit agreement of sale?

2. Is the plaintiff entitled to specific performance?

3. To what relief, is the plaintiff entitled?

4. The trial Court found that no deception was practised on the defendant by the plaintiff in the matter of execution of Exhibit A-1, agreement for sale, by the defendant but that Exhibit A-1 agreement for sale was vitiated by unfairness. In this view, the trial Court refused to grant the discretionary relief for specific performance in favour of the plaintiff The trial Court, therefore, negatived the plaintiff's, claim to the relief for specific performance but passed a decree in favour of the plaintiff for the return of a sum of Rs. 1,000 paid as advance under Exhibit A-1. The plaintiff, aggrieved by the refusal of the trial Court to grant a. decree for specific performance in his favour, has filed the above appeal.

5. In support of his appeal, Mr. G.K. Selvarajan strenuously contends that when once the trial Court has come to the conclusion that the defendant executed Exhibit A-1, agreement for sale with full knowledge of the contents therein and that no deception was practised on the defendant by the plaintiff in the matter of the execution of Exhibit A-1, the trial Court should have, as a matter of course, granted a decree for specific performance. On the contrary Mr. R.S. Venkatachari, learned Counsel appearing for the defendant/respondent, contends that the trial Court has found that the agreement Exhibit A-1, is vitiated by unfairness and consequently it has refused to the plaintiff the relief for specific performance which is after all an equitable remedy in the discretion of the Court and the trial Court having properly exercised its discretion in one way, it is not for the appellate Court to reverse the decision of the trial Court in the absence of anything to show that the discretion exercised by the trial Court was either perverse or absolutely unreasonable in the eye of law.

6 Before considering the question as to which of these rival contentions should prevail, it is necessary to state the relevant facts. Admittedly, the suit property belonged to one deceased Chennappa Naidu, the paternal uncle of the plaintiff. The said Chennappa Naidu had no sons but four daughters and therefore, it is the case of the plaintiff that he has been in possession and management of those properties on behalf of the said daughters of Chennappa Naidu. While, so the plaintiff himself had an idea to purchase this property and as a matter of fact, the husbands of the four daughters of the original owner, the deceased Chennappa Naidu entered into an agreement for sale of the suit property with the plaintiff under Exhibit B-3 dated 2nd June, 1972. The consideration mentioned in Exhibit B-3 is Rs. 10,000. However, the daughters of Chennappa Naidu who are, the owners of the property came to know of Exhibit B-3, agreement for sale, by their husbands and they remonstrated with the result that Exhibit B-3, fell through. Just two months later the four daughters of Chennappa Naidu executed Exhibit B-4 in favour of the defendant for Rs. 20,000.

7. It is admitted by the plaintiff that the defendant is an illiterate person. At the same time Mr. Selvarajan, learned Counsel, would submit to the Court that on that score alone it cannot be taken that the defendant is not a man of the world and therefore, he cannot be easily deceived into signing any paper without his being made aware of the contents of the same. Therefore, the learned Counsel pleads that the finding of the trial Court that the defendant was aware of the contents of Exhibit A-1 at the time he signed the same cannot be challenged.

8. Mr. R.S. Venkatachari, appearing for the defendant (respondent) also was not able to point out any piece of material evidence in the case to show that the defendant was not aware of the contents of Exhibit A-1 at the time he signed the same. It can, therefore, be taken as established that there was no deception practised on the defendant at the time when he entered into the agreement for sale Exhibit A-1.

9. All the same, the question that falls for consideration is whether the plaintiff would be entitled to a decree for specific performance on the facts and circumstances of the case. It is well-known that the relief of specific performance is an equitable relief and it is in the discretion of the Court in the light of the facts and circumstances of the case either to refuse or grant the relief for specific performance. At the same time it should not be lost sight of that the discretion to be exercised by the Court should not be arbitrary but based on sound judicial principles. Section 20(1) of the Specific Relief Act reads as follows:

20(1). The jurisdiction to decree specific performance is discretionary, and the Court is not bound to grant such relief merely because it is lawful to do so; but the discretion of the Court is not arbitrary but sound and reasonable, guided by judicial principles and capable of correction by a Court of appeal.

10. Section 20(2) of the Specific Relief Act reads thus:

20(2). The following are oases in which the Court may properly exercise discretion not to decree specific performance.

(a) Where the terms of the contract or the conduct of the parties at the time of entering into the contract or the other circumstances under which the contract was entered into are such that the contract, though not voidable, gives the plaintiff an unfair advantage over the defendant, or

(b) Where the performance of the contract would involve some hardship on the defendant which he did not foresee, whereas its non-performance would involve no such : hardship on the plaintiff;

(c) Where the defendant entered into the contract under circumstances which though not rendering the contract voidable, makes it inequitable to enforce specific performance.

Explanation. 1.--Mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b).

Explanation. 2.--The question whether the I performance of a contract would involve : hardship on the defendant within the meaning of Clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.

(3) The Court may properly exercise discretion to decree specific performance in any case where the plain till has done substantial acts or suffered losses in consequence of a contract capable of specific performance.

(4) The Court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the other party.

11. In this case, it is clear that under Exhibit B-4 the defendant paid Rs. 20,000 to his vendor for the purchase of the property. It cannot be also disputed that he must have spent another Rs. 2,000 towards stamp and registration charges for taking the sale deed. However, the plaintiff has stated in his plaint that the consideration for Exhibit B-4 is not Rs. 20,000 but only Rs. 10,000. The trial Court has rejected this plea of the plaintiff and found that a sum of Rs. 20,000 is the consideration for Exhibit B-4 and not Rs. 10,000 as alleged by the plaintiff. A perusal of Exhibit B-4 would show that Rs. 15,000 was paid in cash and for the balance, a promissory note under Exhibit B-5 dated 1st August, 1972 was executed by the defendant in favour of Kullammal one of the vendors. The fact that this promissory note was executed in favour of Kullammal for the balance of consideration due under Exhibit B-4 sale deed is corroborated by Exhibit B-7, dated 18th September, 1972 a release deed executed by Rajammal and others to the defendant wherein a reference is made to Exhibit B-5, promissory note. Apart from this, the defendant has examined himself as D.W. 2. and one of his vendors Kullammal as D.W. 1 and D.W. 3 who is the scribe of Exhibit B-4. All of them have stated that the consideration for Exhibit B-4 was Rs. 20,000. It can, therefore, be safely taken that the real consideration that passed under Exhibit B-4 was Rs. 20,000 and not Rs. 10,000. No doubt P.Ws. 1 to 3 have stated that before the panchayatdars the defendant said that he paid only Rs. 10,000 for his purchase under Exhibit B-4 and not Rs. 20,000. This evidence has not been accepted by the trial Court My attention has not been drawn to any clinching circumstance which could persuade me to come to the conclusion that the consideration for Exhibit B-4 was not Rs. 20,000 but only Rs. 10,000. In fact, the learned Counsel for the appellant did not canvass the finding of the trial Court on this aspect. Therefore, the attempt made by the plaintiff in the plaint to give some reason for the defendant agreeing to sell the property in his favour for Rs. 14,000 when he had parted with Rs. 20,000 and spent an additional sum of Rs. 2,000 for the purchase of the property just three months prior to the date of Exhibit A-1 has miserably failed.

12. The learned Counsel would, however, urge before me that though the property admittedly belonged to his paternal uncle, the same was in his possession and enjoyment for a long time and the daughters of Chennappa Naidu were, therefore, not in a position to put the defendant in possession of the property on the basis of Exhibit B-4. The plaintiff himself was not willing to surrender possession of the property. In the circumstances, the defendant found himself in a position of not being able to get possession of the property which he obtained under Exhibit B-4. It was in these circumstances, a panchayat was held and in order to settle the matter between the plaintiff and the defendant, the panchayatdars suggested the plaintiff purchasing the property on payment of Rs. 14,000 and it was on this basis that Exhibit A-1 the agreement for sale, was entered into by the defendant with the full knowledge of the contents and the terms of Exhibit A-1. From the very case of the plaintiff as now put forward by him which was not put forward in the pleadings, one thing is clear that the plaintiff was in possession of the property belonging to the vendors under Exhibit B-4 for and on their behalf. His attempt to somehow appropriate the property for himself at a low price of Rs. 10,000 failed in view of the fact that the agreement Exhibit B-3 entered into by the husbands of the owners of the property failed. Naturally, therefore, he was not in a position to reconcile himself to the defendant purchasing the property and he therefore decided not to part with the possession of this property. It is not contended before me nor has it been pleaded that the plaintiff has been in possession of the property under some legal right such as, as a cultivating tenant or a mortgagee or any other right known to law. On the other hand, it is his specific case that he has been in possession of the suit property only for and on behalf of the four ladies. It is in this background we have to consider the question whether the plaintiff attempted to overreach the illiterate defendant in the matter of taking Exhibit A-1 agreement for sale. When the plaintiff refused to part with the possession but retained the same, for which he had no right in law, and compelled the defendant practically to enter into the agreement for sale, he was not acting on terms of equal footing with the defendant; but for the fact that the plaintiff wag in possession of the property and was not willing to surrender possession to the defendant peacefully, the latter would not have entered into an agreement for sale for the low sum of Rs. 14,000, particularly when he had parted with Rs. 20,000 and spent a further sum of Rs. 2,000, in all Rs. 22,000 for taking Exhibit B-4 sale. deed. I have therefore no hesitation in agreeing with the Court below that Exhibit A-1 agreement for gale is unfair.

13. The plaintiff obtained Exhibit A-1 agreement for sale from the defendant by using his possession, which had not legal origin, against the defendant and refusing to surrender possession to the defendant which the latter wait entitled to get in terms of Exhibit B-4. There is no doubt that the terms of Exhibit A-1 are such which give the plaintiff an unfair advantage over the defendant and that it was entered into under the circumstances which would make it inequitable to enforce specific performance.

14. The learned Counsel for the appellant urges that the mere fact that the defendant with open eyes agreed to sell the property for Rs. 14,000 even though he had paid Rs. 20,000 Under Exhibit B-4 would not be sufficient to release specific performance. He relies on Explanation 1 of Section 20 of the Specific Relief Act to show that mere inadequacy of consideration, or the mere fact that the contract is onerous to the defendant or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of Clause (a) or hardship within the meaning of Clause (b). The learned Counsel relies on a Bench decision of this Court reported in Muthukumaraswami Gounder v. Ranga Rao (1965) 78 L.W. 136. In the said decision, Jagadisan, J., speaking for the Bench has laid down the law thus:

Mere mental distress, however, acute it may be would not be sufficient in law to enable the distressed individual to get out of clumsy bargains which he might have made. An onerous bargain 13 not one which can be resisted to be performed unless it is established that it is also unconscionable or that the plaintiff has taken an improper advantage of his position See Davis v. Maushwe Co. (1911) 38 I.A. 155 : I.L.R. Cal. 805 : 21 M.L.J. 1127. Improvidence on the part of the defendant as such would not be a proper ground for refusing specific performance. Where no other element is, present except that the bargain is bad, it is not the rule in equity to deny specific performance. However wide the jurisdiction of the Court may be to grant succour to persons who have been victimised there is no power to grant relief to a person whose only complaint is that the bargain is foolish and improvident. If the Court were to strike down a bargain on the ground that it was not wise on the part of one of the contracting parties to have entered into it, it would be assuming on overriding power to interfere with the freedom of contract.

15. In that particular case it should be noticed that there was no other element present except the bargain was bad. The learned Judge has found that the evidence on record was not sufficient to establish that the price of Rs. 9500 offered by the plaintiff and accepted by the first defendant was so grossly inadequate as to suggest that the plaintiff took advantage of the ignorance or illiteracy of the first defendant. The learned Judges relied on the following passage from Fry in his book on Specific Performance:

To make a contract for an insufficient consideration incapable of enforcement by the purchaser, would be practically to prevent a man from selling his property at less than its value however impossible it might be to sell it at its value, however desirous he might be to sell it for the price actually obtained, however desirable it might be for his interest that he should do so, and however unwilling or unable the purchaser might be to purchase at its full value. The freedom of contract including in it the freedom to enter into enforceable contracts, should never be infringed without sufficient cause. But furthermore, if inadequacy of consideration short of fraud were a bar to specific performance, the question would arise as to the amount of inadequacy which should so operate, a question not easy to answer.

Though on the facts of that case, the propositions of law laid down by the learned Judges are unexceptionable, I am afraid that the said decision may rot help the present appellant We find the following rule stated in Fry on Specific Performance at pages 190 and 191:

Whenever there are evidence of distress in the party against whom performance is sought, or he is an illiterate person, or whenever there are any circumstances of surprise, or want of advice, or anything which seems to import that there was not a full entire and intelligent consent to the contract, the Court is extremely cautious in carrying it into effect. Still, it is not the doctrine of the Court that a man cannot contract without his Solicitor at his elbow, or that a man in insolvent circumstances, or in prison, is disabled from selling his estate; and if a contract made under such circumstances will bear the careful examination of the Court and the full light of day, it will be specifically enforced.

In Halsbury's Laws of England, Volume 36, at page 299, we find the following proposition:

Again, there may be circumstances in the position or mental state of the party against whom specific performance is sought, such as to render it inequitable that he should be forced by the Court to perform his contract, such as, for instance, intoxication intimidation and duress, mental weakness not amounting to incapacity to contract, distress, illiteracy, want of advice, or similar circumstances appearing inconsistent with intelligent consent. In all such cases it need not be shown that the plaintiff was guilty of intentional unfairness.

Again at page 301, in paragraph 428 it is stated as follows:

Another form of oppressiveness which may prevent specific performance may limply consist in the fact that performance would involve great hardship, even though without any impropriety on the part of the plaintiff. Such hardship may be either obvious on the face of the contract, or more or less latent and due to collateral matters; the latter case leads more readily to the Court's giving effect to the hardship and refusing performance.

The expression 'unfair advantage' in Section 20(2) of the Specific Relief Act arose for interpretation before a Bench pf this Court in Rangasami Gounder v. Periamuthu Counder : (1977)1MLJ231 , Ramaprasada Rao, J., laid down the dictum as follows:

The expression 'unfair advantage' appearing in Section 20(2) of the Specific Relief Act is not one of art but is one which is pregnant with meaning. The unfair advantage should be such that on an overall appreciation of the situation the Courts which are to adjudicate upon the subject-matter should come to a conclusion that the party which is complaining of such an unfair advantage should have been tricked and that there was a designed approach on the part of the plaintiff to victimise the alleged affected party In the light of Explanation 1 to the section, mere inadequacy of consideration is no ground to refuse the discretionary relief of specific performance. There is a mountain of difference between inadequacy of price and gross inadequacy of price. Even in cases where the price is grossly inadequate. Courts require an additional dose of proof that by reason of such a design on the part of an avaricious purchaser, the vendor has been victimised.

Considering the facts of this case in the light of the principles laid down by the proposition found in Fry on Specific Performance and Halsbury s laws of England and on the principles laid down in the decisions above referred to, I have no hesitation to conclude that it would be inequitable and hard and even unconsionable to grant a decree for specific performance against the defendant in this case. As has already been found by me, the defendant purchased the property for Rs. 20,000 just three months prior to the date of Exhibit A-1 The plea of the plaintiff that the real consideration for Exhibit B-4 was only Rs. 10,000 has been found to be false. The plaintiff has no pica that the market value of the property as on the date of Exhibit B 4 as well as on the date of Exhibit B-1 was only Rs. 10,000. There is evidence to show that under Exhibit B-3 the plaintiff attempted to purchase this property for a sum of Rs. 10,000 in June, 1972 and that, that attempt miserably tailed. It is the plaintiff'8 own case that because he was in possession of the property and that because he refused to surrender possession to the defendant pursuant to Exhibit B-4 the sale deed taken by him from Kullammal and others that the defendant agreed to sell the property to him for Rs. 14,000. It is clear from these circumstances that the plaintiff took an unfair advantage and used his possession against the defendant to compel him to sell the property to him under Exhibit A-1 for a sum of Rs. 14000 an amount far less than the amount for which he purchased the very property under Exhibit B-4. I therefore hold that the trial Court had not arbitrarily refused to exercise the discretion. I am rot persuaded to disagree with the said exercise of the discretion by the trial Court and grant the relief of the specific performance to the plaintiff at the stage of this appeal.

16. The plaintiff is also disentitled to the equitable remedy on another ground. To justify his having taken Exhibit A-1 for a consideration of Rs. 14,000 he came forward with a plea that the real consideration for Exhibit B-4 was only Rs. 10000 and not Rs. 20000. That has been found to be false by the trial Court. That no attempt has been made before me to justify the said finding of the trial Court would show the paucity of evidence on the side of the plaintiff to substantiate the plea. On the other hand, before me the appellant's counsel had to rely upon the fact that it was because he was in possession of the property, the defendant was not able to get possession from him that he agreed to cell the property for the low figure of Rs. 14,000. Ismail, J., in Ramaswamy Gnunier v. Venkatachalam : (1976)1MLJ243 , has stated that the falsity of the case put forward by the plaintiff would disentitle him from obtaining the discretionary relief of specific performance of agreement. On this ground also viz., that the plaintiff did not come to Court with clean hands but that he set up a false case that the consideration for B-4 was not Rs. 20,000 but only Rs. 10,000 certainly, to gives the impression to the Court that Exhibit A-1 agreement for sale had been entered into for a reasonable and proper price. Hence the plaintiff has to be refused the relief he has asked for. The trial Court has passed a decree in favour of the plaintiT for' the return of Rs. 1,000 paid as advance. That decision is proper. I therefore confirm the judgment and decree of the trial Court and I dismiss the appeal with costs.


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