The Kerala High Court in Thomas v. Merlin Construction Company (P) Ltd. modified a trial court decree in a suit for specific performance concerning an agreement for sale of land, refusing specific performance while granting a decree for the return of advance money under Order XII Rule 6 of CPC. The Division Bench of Justice V. Chitambaresh and Justice K. Ramakrishnan held that where not all co-owners of ancestral land joined the agreement and the transaction demonstrated characteristics of a financial loan, specific performance is inequitable. Relying on the admission of the defendants regarding receipt of advance funds, the court decreed repayment of Rs. 75,000 with 12 percent annual interest.
Legal Context and Precedents
The dispute arose from an agreement for sale of four items of property measuring 94.80 cents in Thrissur District. For students reviewing procedural pleadings, studying civil procedure and limitation class notes clarifies the standards for alternative prayers in civil suits. Furthermore, examining contractual obligations under the Specific Relief Act connects directly with topics covered in contract law previous year model question papers regarding voidable contracts and non-joinder of necessary parties in joint property transactions.
Judgment of the High Court: A.S. No. 591 of 1998 and Cross Objections
IN THE HIGH COURT OF KERALA AT ERNAKULAM
V. CHITAMBARESH & K. RAMAKRISHNAN, JJ.
A.S. No. 591 of 1998 & Cross Objections
Dated this the 24th day of June, 2016
AGAINST THE JUDGMENT & DECREE IN OS 1090/1992 of PRL. SUB COURT, THRISSUR DATED 29-08-1997
APPELLANTS (DEFENDANTS): THOMAS AND OTHERS
BY ADVS. SRI. K. RAMACHANDRAN, SRI. JOJI VARGHESE, SRI. T.P. ELDHOSE, SRI. D. NARENDRANATH, SRI. M. HARISHARMA
RESPONDENT (PLAINTIFF): MERLIN CONSTRUCTION COMPANY (P) LTD.
BY ADV. SRI. P.R. VENKETESH
JUDGMENT
Chitambaresh, J.
1. The defendants in a suit for specific performance of an agreement for sale and in the alternative for return of the amount paid as advance are the appellants. The plaint claim is rested on Ext.A1 agreement for sale allegedly entered into between the plaintiff and the defendants in regard to 4 items of property totalling to 94.80 cents. The plaintiff asserted that a sum of Rs. 5,75,000 was paid as advance to the defendants out of the total consideration of Rs. 14,22,000 and that it has always been ready and willing to perform its part of the contract. The defendants on the other hand contended that Ext.A1 agreement for sale was executed as a security for a loan of Rs. 75,000 obtained by them from one Ittiachen. The defendants maintained that they had no intention to sell the property and that they had not received Rs. 5,75,000 as advance from the plaintiff as alleged.
2. The court below decreed the suit in part granting specific performance of the agreement for sale in respect of item Nos. 1 and 2 and directing return of the proportionate advance amount with interest in respect of item Nos. 3 and 4. The defendants have filed A.S. No. 591 of 1998 against the decree for specific performance in respect of item Nos. 1 and 2 and the plaintiff has filed the Memorandum of Cross Objections against the refusal of specific performance in respect of item Nos. 3 and 4.
3. We heard Sri K. Ramachandran, Advocate on behalf of the appellants and Sri P.R. Venketesh, Advocate on behalf of the respondent quite in extenso. We were also taken through the oral and documentary evidence on record.
4. Ext.A1 agreement for sale is seen executed by the mother Kochumariam, three sons (Thomas, Varghese and Johny) and two daughters (Philomina and Mary). It is the case of the defendants that another son by name Joy and another daughter by name Elsamma also have a share in the property left behind by deceased Poulose. The plaintiff does not dispute the fact that Joy and Elsamma are the children of deceased Poulose who are also entitled to a share in the property along with the other defendants.
5. The plaintiff could not have obtained a valid conveyance of the entire 94.80 cents in the absence of Joy and Elsamma joining Ext.A1 agreement for sale or the proposed sale deed. The plaintiff has no case that Joy and Elsamma had authorised the other defendants to execute Ext.A1 agreement for sale on their behalf or had ratified the agreement subsequently.
6. The court below has refused specific performance in respect of item Nos. 3 and 4 for the reason that Joy and Elsamma had not joined Ext.A1 agreement for sale. The same reasoning applies with equal force to item Nos. 1 and 2 as well since Joy and Elsamma have a share in all the four items of property left behind by deceased Poulose. The court below was therefore not justified in granting specific performance in respect of item Nos. 1 and 2 while refusing the same in respect of item Nos. 3 and 4.
7. Ext.A1 agreement for sale is dated 13.9.1991 and the period fixed for performance was six months which expired on 13.3.1992. The plaintiff issued Ext.A2 notice demanding performance only on 22.8.1992 which was replied to by Ext.A3 notice dated 1.9.1992 by the defendants denying the agreement. The suit was filed only on 16.10.1992 and the plaintiff has not explained the delay in demanding performance after the expiry of the period fixed in Ext.A1 agreement for sale.
8. The evidence of PW1 (Managing Director of the plaintiff) and DW1 (1st defendant) when read together indicates that the transaction between the parties was in the nature of a loan arrangement rather than a genuine agreement for sale. The plaintiff was not put in possession of any portion of the property in part performance of Ext.A1 agreement for sale even though a substantial portion of the sale consideration was allegedly paid as advance.
9. The grant of a decree for specific performance is discretionary and the court is not bound to grant such relief merely because it is lawful to do so. The discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles. In the facts and circumstances of the case, we are of the considered opinion that the plaintiff is not entitled to a decree for specific performance of Ext.A1 agreement for sale.
10. The defendants have admitted in their written statement that they had received a sum of Rs. 75,000 from the said Ittiachen in connection with the transaction. The defendants are willing to repay the sum of Rs. 75,000 with interest and the plaintiff is also not averse to receive the amount in the circumstances. Therefore a judgment on admission in terms of Order XII Rule 6 of the Code of Civil Procedure, 1908 is passed for a sum of Rs. 75,000 in favour of the plaintiff against the defendants. The said amount will carry interest at 12% per annum from the date of Ext.A1 agreement (13.9.1991) till the date of payment by the defendants. The defendants are at liberty to move appropriately for return of the documents allegedly retained by the said Ittiachen in the course of transaction.
11. The Appeal Suit is allowed in part and the Memorandum of Cross Objections is dismissed. No costs.