Sathish Ninan, J.
1. These appeals arise from the decree in a suit for specific performance of an agreement for sale. The suit was decreed by the trial court. RFA 428/2019 is filed by the 4th defendant, RFA 219/2025 is filed by the third defendant, and RFA 220 of 2025 is filed by defendants 1 and 2.
2. The plaintiffs are brothers. The second defendant is the wife of the first defendant. The third defendant is the brother of the first defendant. The fourth defendant is the alienee of the plaint schedule properties.
3. On 27.04.2007, the first defendant, on his behalf and on behalf of defendants 2 and 3, entered into Ext.A1 agreement for sale with the first plaintiff. Under Ext.A1, the plaint schedule properties, four in number, were agreed to be conveyed by defendants 1 to 3 in favour of the first plaintiff. The period fixed was two months. The total consideration fixed was ₹ 47.5 lakhs. On the date of Ext.A1 an amount of ₹ 4 lakhs was paid towards advance sale consideration. Thereafter, on 07.05.2007, a further amount of ₹ 2.5 lakhs was paid towards sale consideration. Such payment is undisputed and is evidenced by Ext.A2 receipt. According to the plaintiffs, subsequently, an amount of ₹ 1.5 lakhs was also paid towards the sale consideration.
4. As per the plaint averments the circumstance leading to execution of Ext.A1 agreement is as follows:-
5. Plaint schedule item Nos.1 and 2 belong to the first defendant. Plaint schedule item No.3 belongs to defendants 1 and
2. The wife of the second plaintiff viz. Reeja is a co-sharer over item 3. Plaint schedule item No.4 belongs to defendants 1 and 3. There were suits pending between the second plaintiff and defendants 1 and 2, before the Munsiff's Court, Koothuparmba.
6. O.S. No.363/2003 was filed by the first defendant as plaintiff, against the second plaintiff herein and his wife-Reeja as defendants, for prohibitory injunction against trespass into the plaint schedule item No.3. OS 163/2004 was instituted by the said Reeja, against defendants 1 and 2 for fixation of boundary which again related to plaint schedule item No.3. In the said suit, when the Advocate Commissioner visited the properties, an agreement was entered into between the parties whereby defendants 1 to 3 agreed to convey the properties to the second plaintiff. However, since the second plaintiff was a party to the litigations, Ext.A1 agreement was executed with the first plaintiff. The real purchaser is the second plaintiff. Ext.A1 agreement is entered into for the second plaintiff and the entire funds for the transaction is provided by the second plaintiff.
7. The understanding was that, the Commissioner will measure out the property and thereafter the sale deed could be executed. Within the period fixed under Ext.A1, on 20.06.2007, the first plaintiff issued Ext.A11 notice demanding performance of the agreement. Later, the Commissioner visited the property. On 18.10.2009 the 4th defendant filed an impleading application in the said suits claiming that he had purchased the plaint schedule properties under Exts.A8 and A9 Sale Deeds dated 06.11.2008. The 4th defendant alleges that he is a bonafide purchaser without notice of Ext.A1 agreement. It is also alleged that defendants 1 and 2 are partners in a business and that the proposed sale was for their business purposes. Alleging failure on the part of the defendants to perform the agreement, the suit was filed for specific performance. There is an alternate prayer for refund of advance sale consideration and for damages.
8. Defendants 1 and 2 filed a joint written statement. They did not deny Ext.A1. But it was contended that there is no privity of contract with the second plaintiff. It was also contended that the first plaintiff did not have sufficient funds to proceed with the transaction and that he was not ready and willing to perform the agreement. The alleged payment of ₹ 1.5 lakhs towards advance sale consideration was also denied.
9. The third defendant denied Ext.A1 agreement. It was contended that he had not authorised the first defendant to enter into the agreement. He also contended that he did not receive any amount under the agreement for sale.
10. The fourth defendant contended that he is a bonafide purchaser for value and without notice of Ext.A1 agreement.
11. The trial court found that the plaintiffs were ready and willing to perform Ext.A1 agreement, and that the fourth defendant had notice of the agreement. Accordingly a decree for specific performance was granted.
12. We have heard Sri.Santheep Ankarath and Sri.K.P.Sudheer, on behalf of the respective appellants-defendants, and Sri.T. Krishnanunni, the learned Senior Counsel for the respondent- plaintiff.
13. The points that arise for determination in these appeals are:-
(i) Are defendants 2 and 3 bound by Ext.A1 agreement?
(ii) Is there privity of contract between the second plaintiff and defendants 1 to 3?
(iii) Has the first plaintiff established his readiness and willingness to perform Ext.A1 agreement?
(iv) Was the trial court right in having exercised the discretion under Section 20 of the Specific Relief Act in favour of the plaintiff to grant a decree for specific performance?
14. The signatories to Ext.A1 agreement are the first plaintiff and the first defendant. As narrated supra, the plaint schedule properties belongs to defendants 1 to 3. Ext.A1 agreement narrates that the first defendant has executed the agreement on behalf of defendants 2 and 3 also as duly authorised by them. The plaint averment to the said effect is not denied in the joint written statement filed by defendants 1 and 2. No attempt is made even at the stage of evidence to deny such authorisation. Though the third defendant filed a written statement denying the alleged authorisation, he did not mount the witness box to controvert the same. Therefore, it can only be found that the first defendant had entered into Ext.A1 agreement on behalf of defendants 2 and 3 also, as duly authorised by them. Defendants 2 and 3 are, along with the first defendant, bound by Ext.A1 agreement.
15. The second plaintiff is not a signatory to Ext.A1 agreement. It is the specific case of the plaintiffs that the real, intended purchaser was the second plaintiff and that it was the second plaintiff who was to pay the entire sale consideration. However, a reading of Ext.A1 agreement reveals that it is an agreement entered into by the first plaintiff on his own behalf.
16. According to the plaintiffs though the real purchaser was the second plaintiff Ext.A1 agreement was executed in the name of the first plaintiff in view of the pendency of OS 363/2003 and OS 163/2004 between the second plaintiff and his wife and defendants 1 and 2. The said explanation does not stand to reason. The mere pendency of the suits did not prevent the second plaintiff from entering into the agreement. The second plaintiff has even signed Ext.A1 as a witness. Nothing prevented him from entering into the agreement by himself. The fallacy of the contention is that, the first plaintiff, as PW2, admitted that he was also one of the parties in OS 363/2013 which was later transferred to the Subordinate Judge’s Court and was renumbered as OS 107/2013. So also, the plaintiffs’ case that the parties wanted to await the commissioner’s report and the decree in the suits to convey the property, does not stand to logic.
17. Though it is claimed that the consideration for the transaction was to be paid by the second plaintiff, there is no evidence to find that the advance sale consideration was paid by him. Going by the recitals in Ext.A1 agreement, the amount of ₹ 4 lakhs paid towards advance sale consideration on the date of Ext.A1 was paid by the first plaintiff. Ext.A2 is the receipt dated 07.05.2007 with regard to payment of a further amount of ₹ 2.5 lakhs towards advance sale consideration. The said receipt is also in favour of the first plaintiff. There is no evidence to find that the said amounts proceeded from the second plaintiff and was accepted by the defendants acknowledging the same. Suffice to notice that, there is no material to find that Ext.A1 agreement was entered into on behalf of the second plaintiff and that there is privity of contract between the second plaintiff and defendants 1 to 3.
18. Now, the question of readiness and willingness of the first plaintiff to perform Ext.A1 agreement needs to be considered. Pertinently, the entire case set up in the plaint and also in the evidence of the first plaintiff as PW2 is, the readiness of the second plaintiff or that of the plaintiffs. We have already held that the second plaintiff is a stranger to Ext.A1 agreement. Hence his readiness and willingness is inconsequential.
19. It would be appropriate to refer to certain portions of the plaint which mentions about the agreement and the readiness and willingness. At paragraph 3 it is stated thus:-
“... a consensus to the effect that the defendants No.1 to 3 could sell the plaint schedule items to the 2nd plaintiff and the 2nd plaintiff could purchase the same from them for the price fixed by them ”
Further it is stated thus :-
“For the said reason of pendency of civil suit between the 2nd plaintiff and D1 & D2 in the court, the said sale agreement was happened to be executed in the name of the first plaintiff even though the real promise is to sell the property to the 2nd plaintiff and the price was to be paid by him.”….“Hence the 2nd plaintiff is also joined and the relief is being sought for the 2nd plaintiff as well.”
At paragraph 4 of the paint it is stated thus :-
“As per the agreement the plaintiffs were liable to pay Rs.2.5 Lakhs out of the sale price to the D1 on 07.05.2007. The 2nd plaintiff had in fact paid the said amount to him in time.”…...“Subsequently, the D1 had also received Rs.1.5 Lakhs from the 2nd plaintiff towards the sale price.”
At paragraph 6 of the plaint it is stated thus :-
“The plaintiffs have even been ready and willing to comply with the sale agreement and to get the conveyance effected.”…….“At that time plaintiffs had also on 20.06.2007 caused a registered notice to be issued to the D1.”
At paragraph 8 of the plaint it is stated thus :-
“The D1 to D3 are bound to execute and register necessary sale deed with respect to the plaint schedule properties in favour of the 2nd plaintiff or in the alternative to the first plaintiff in performance of the sale agreement. The plaintiffs are and have been ever ready and willing to perform their part of the sale agreement and they will remain to be so.”
The reliefs claimed in the suit read thus :-
“1) Granting specific performance of the sale agreement by execution and registration of the sale deed in respect of the plaint schedule properties by the D1 to D3 in favour of the 2nd plaintiff or alternatively in the name of the 1st plaintiff;
2) Allowing the plaintiffs to deposit the balance sale price due, after deducting the cost of proceedings therefrom;
3) Allowing cost of proceeding to the plaintiffs from the defendants;
4) By way of ancillary relief to the main relief, setting aside the documents No.3402/08 and 3403/08 of the S.R.O. Mattennur;
5) By way of alternative relief, directing the D1 to D3 to refund Rs.10,24,000/- to the plaintiffs by way of advance price with interest thereon @ 12% from the date of suit till realisation and
6) Recovering Rs.10 lakhs to the plaintiffs from D1 to D3 by way of damages;
7) And granting all such other reliefs as may be just and necessary in the circumstances of the case.”
The reliefs claimed are all for “the plaintiffs” or “the second plaintiff”. Even the main relief claimed in the plaint is, for execution of conveyance in favour of “the second plaintiff”. It is only the alternate prayer which seeks for conveyance in the name of the first plaintiff. Evidently, the readiness and willingness of the first plaintiff has not been pleaded.
20. Now coming to the evidence of the first plaintiff, he was examined as PW2. In his chief examination he has sworn to thus :-
Evidently, the first plaintiff does not depose about his readiness and willingness, independent of the second plaintiff, to perform Ext.A1 agreement. Though the defendants had specifically challenged the financial capacity, the first plaintiff was unable to produce any material to show the source or availability of funds with him, to proceed with the agreement.
21. The only evidence that has come on record with regard to the source of money for performance of Ext.A1 are Exts.A10 and A10(a) documents which evidence availing of loans for the second plaintiff. Of course, it would be open for the first plaintiff to raise funds through the second plaintiff. However, there is no case that the first plaintiff was ready and willing to perform the agreement and that the second plaintiff had agreed to provide funds to the first plaintiff for the transaction. PW2 admitted that apart from Exts.A10 and A10(a) there is no other material to prove the availability of funds. He deposed thus :-
Exts.A10 and A10(a) reveal that the loans were availed on 03.04.2007. However Ext.A1 agreement was entered into only on 27.04.2007, ie. more than three weeks prior to the agreement. There is no reason why the entire funds for the execution of the sale deed was arranged even three weeks prior to the very execution of the agreement itself. The second plaintiff as PW1 would depose that the loan amount of ₹40 lakhs availed by him on 03.04.2007 was kept with him till the filing of the suit in the year 2010 after which it was invested for the purchase of another property. Such claim is highly improbable. Before this Court the 4th defendant who is the appellant in RFA 428/2019 has filed IA 2/2025 seeking initiation of proceedings against the plaintiffs and the witnesses PWs.3 and 4, for giving false evidence before the court. In the affidavit filed in support thereof, referring to Exts.P10 and P10(a) it is sworn to thus :-
“It is understood with all conviction that the loans availed as per Exhibits P10 and P10(a) were not availed for the purpose of the present transaction in question. The same was availed for payment of balance consideration in so far as yet another civil suit that was pending in the very same court i.e. Principal Sub Court, Thalassery in which 2nd plaintiff was the power attorney holder of the plaintiff in that suit. It is understood that in the said suit during the course of trial the trial court had ordered the plaintiff in the suit to deposit an amount of Rs. 38,22,351/-. The said amount is understood to have been paid by drawing a banker's cheque drawn on Kannur District co-operative Bank, Mattannur branch in favour of Sub Court, Thalassery and the date of the said cheque was 4.4.2007.”
The averments as above, that the loans availed under Exts.A10 and A10(a) were deposited in another suit viz. OS 161/2006 on 04.04.2007, is not denied by plaintiffs 1 and 2 by filing a counter affidavit. The loans were availed from the Kannur District Co-operative Bank on 03.04.2007 and the deposit was made on the next day. Though at the request of the appellants, RFA 542/2017 which arises from the decree and judgment in OS 161/2006 above referred to was listed along with these appeals, since the said appeal is not connected to the present appeals, the same was delinked. Order XIII Rule 10 empowers the court to inspect the records in any other suit or proceedings. We have perused the records in OS 161/06 from which RFA 542/2017 arises. I.A.No.1649 of 2007 in O.S.161/2006 is an application filed by the plaintiff therein through the second plaintiff herein. In the affidavit filed in support of the application is stated that an amount of ₹ 38,22,351/- has been deposited in the suit through cheque drawn on Kannur District Co-operative Bank. It appears that the funds raised under Exts.A10 and A10(a) were deposited in the said suit. Be that as it may, it would be sufficient to notice that the loans availed under Exts.A10 and A10(a) were much prior to the entering into Ext.A1 agreement and there is no material to find that the said amount was available at the disposal of the first plaintiff.
22. It is trite that in a suit for specific performance the plaintiff is not bound to jingle money in his pocket, he is bound to prove his readiness and willingness to perform the agreement from the date of execution of the agreement till the date of suit and thereafter till execution. Thus, on the above discussions, it is evident that the first plaintiff has failed to prove his readiness and willingness to perform Ext.A1 agreement.
23. Even taking it to be that the first plaintiff has proved his readiness and willingness to perform Ext.A1 agreement, that by itself does not impel the court to grant a decree for specific performance. The relief of specific performance has its roots in equity. A person who approaches the court seeking such relief has to come with clean hands. Improper conduct in his part disentitles him for the equitable relief of specific performance. The law in that regard is too well settled and we do not think it necessary to cite any decisions in that regard. The plaintiff's case, as averred in the plaint, with regard to the circumstance leading to execution of Ext.A1 agreement has been mentioned first above: the pendency of the suits OS 363/2003 and OS 163/2004 between the 2nd plaintiff, his wife and the defendants 1 and 2, and the settlement arrived therein. However, Exts.A11 and A3 notices sent by the first plaintiff prior to the suit reveal an entirely different story. Its contents indicate that the circumstances relied on in the plaint is a subsequently developed story.
24. Ext.A11 notice was issued by the first plaintiff to the first defendant. Under Ext.A11, the first plaintiff sought performance of Ext.A1 agreement. The contents thereof are of significance. Therein he has alleged that, material facts with regard to pendency of the suits for fixation of boundary was suppressed from him while entering into Ext.A1 agreement. The assertion is that he was unaware of the suits and dispute regarding boundary. The relevant portion reads thus :-
This is totally against the plaint case that Ext.A1 agreement was entered into during the course of Commissioner's measurement in OS 363/2003 and OS 163/2004 and that the agreement was executed in favour of the first plaintiff since the second plaintiff was a party to the said suits. So also, in Ext.A11 notice there was no case that Ext.A1 agreement was entered into on behalf of the second plaintiff. Similarly Ext.A3 notice has also been sent by the first plaintiff to the first defendant on similar lines. Therefore, it is evident that the plaintiff's case lacks bonafides. Totally inconsistent and mutually destructive cases have been set up in Exts.A11 and A3 notices on the one hand and in the plaint on the other.
25. So also, according to the plaintiffs, after the payment of ₹ 4 lakhs as advance on the date of Ext.A1, a further amount of ₹ 2.5 lakhs was paid on 07.5.2011 and an amount of ₹ 1.5 lakhs was paid thereafter. The payment of ₹ 1.5 lakhs is categorically denied by the defendants. The date of such payment is neither pleaded nor the source proved. The plaintiffs have not attempted to prove such payment. No endeavour is made before us to justify the plaintiffs claim of payment of the said amount. It can only be held that there has been no such payment of ₹ 1.5 lakhs as claimed. Raising a false claim with regard to payment of such amount towards advance sale consideration, is yet another factor which needs to go into the zone of consideration of the court while deciding whether the equitable jurisdiction is to be invoked in their favour, to grant a decree for specific performance.
26. Even the plaintiffs admit that the first defendant was in need of money which resulted in Ext.A1 agreement for sale. Ext.A1 was entered into on 27.04.2007. The suit has been filed only on 17.05.2010. The circumstance leading to entering of the agreement for sale and the lapse of time after which specific performance is sought, is yet another fact to decline the discretionary relief for specific performance.
27. On the circumstances as noted above, we are of the opinion that this is a fit case where the discretion is to be exercised to decline grant of the equitable relief for specific performance. The trial court has omitted to consider the above aspects. The decree granting the relief of specific performance is liable to be set aside and we do so.
28. The relief of specific performance having been negatived, the plea of the 4th defendant that he is a bona fide purchaser for value and without notice of Ext.A1 agreement loses significance. Anyhow, the first defendant as DW1 would in his cross examination admit that the 4th defendant was informed about Ext.A1 agreement. The 4th defendant was unable to establish otherwise. Hence the claim of the 4th defendant that he purchased the property without notice of Ext.A1 agreement, fails.
29. The plaint contains an alternate relief for refund of the advance sale consideration with interest. The payment of ₹ 4 lakhs on the date of Exts.A1 and ₹ 2.5 lakhs on 7.5.2007 are not in dispute. Defendants 1 to 3 are liable to repay the amount with interest. Considering the prevailing rate of interest in banking transactions we are of the opinion that grant of interest at the rate of 9% per annum from 07.05.2007 till date of suit and thereafter at the same rate till date of decree, and thereafter at the rate of 6% per annum till date of realisation, is just and reasonable.
30. Though a relief of damages of ₹ 10 lakhs is claimed, the plaintiffs have not pleaded under what head the damages has resulted nor has any evidence being adduced upon the same. Hence the said claim is only to be dismissed and we do so.
In the result, these appeals are allowed. The decree and judgment of the trial court are set aside. The suit will stand decreed allowing the first plaintiff to realise an amount of ₹ 6.5 lakhs with interest at the rate of 9% per annum from 07.05.2007 till date of decree (23.01.2026) and thereafter at the rate of 6% per annum till realisation, from defendants 1 to 3. The first plaintiff shall be entitled for proportionate costs throughout.
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