(Prayer: Second Appeal filed under Section 100 CPC, 1908 to set aside the decree and judgment dated 13.06.2023 passed in A.S. No.22 of 2020, on the file of the Principal District Court, Villupuram, reversing the Judgment and decree dated 26.07.2019 passed in O.S. No.95 of 2015, on the file of the II Additional Subordinate Court, Villupuram.)

1. This Second Appeal is preferred as against the decree and judgment dated 13.06.2023 passed in A.S. No.22 of 2020, on the file of the Principal District Court, Villupuram, reversing the Judgment and decree dated 26.07.2019 passed in O.S. No.95 of 2015, on the file of the II Additional Subordinate Court, Villupuram.

2. The unsuccessful defendants before the first appellate Court have preferred the present Second Appeal. The respondent as plaintiff filed the above suit in O.S. No.95/2015 on the file of the II Additional Sub Court, Villupuram, against the defendant Murugan, for the relief of specific performance of the sale agreement dated 01.03.2012 marked as Ex.A1, which has been notarized on 03.03.2012. The 2nd defendant is the subsequent purchaser, while the appeal was pending. The trial court, partly decreed the suit directing the 1st defendant to repay a sum of Rs.1,00,000/- with interest and dismissed the specific performance relief and the counter claim of returning certain document was allowed, against which, the plaintiff preferred the appeal suit in A.S. No.22/2020 on the file of Principal District Judge, Villupuram. The first appellate court allowed the appeal and dismissed the counter claim. Aggrieved by this, the present Second appeal is preferred.

3. At the time of admission the following substantial questions of law have been framed.

                   (a) Whether the first appellate court was justified in allowing the first appeal, without deciding maintainability of first appeal, when the first appellant have filed counter claim for Mandatory injunction to direct the respondent to hand over the original title documents relating to the suit properties and decree was passed in his favour, and the respondent allowed the said decree attain as final and no separate appeal was filed against the counterclaim decree as mandated under Order XX, Rule 19(2) of CPC?

                   (b) Whether the first appellate court was justified in allowing the appeal, deciding that Specific Relief Amendment Act, 2017 has retrospective effect, without considering the judgment of Hon’ble Supreme Court, reported in Smt. Katta Sujatha Reddy & another Vs- Siddamsetty Infra Projects Pvt Ltd, & others, 2022 Livelaw, (SC) 712, deciding as follows: “Specific Relief Act, 1963; Section 10 2018 amendment to the Specific Relief Act is prospective and cannot apply to those transactions that took place prior to its coming into force”.

                   (c) Whether the first appellate court was justified in deciding that the appellant has proved his ready and willingness, when as per recitals of Ex.A.1 sale agreement dated 01.03.2012 the period of completion of contract was fixed to one year, and the period was expired on 28.02.2013, but the respondent has issued suit notice on 09.04.2013, long after the said period and it itself is sufficient to decide that the respondent not proved his ready and willingness?”

4. Mr. S. Natarajan, the learned counsel for the appellants / defendants submits that the 1st defendant had borrowed a sum of Rs.1,00,000/- on 01.03.2013 from the plaintiff as loan. At that time, the plaintiff obtained signed blank papers from the 1st defendant and the same is fabricated as suit agreement. The 1st defendant never entered into a sale agreement with the plaintiff for a consideration of Rs.2,95,000/- and received a sum of Rs.2,50,000/- as advance and agreed to receive the balance of Rs.45,000/- within a period of one year as alleged by the plaintiff. The 1st defendant never intended to sell his property to the plaintiff. The further contention of the learned counsel is that, the plaintiff has taken away the original documents from the 1st defendant's house. The learned counsel would further contend that, the first appellate court erroneously dismissed the counter claim of the 1st defendant, though the plaintiff has not filed any appeal against the judgment rendered by the trial court in respect of the counter claim. He would submit that, the law is well settled that even if erroneous, an inter party judgment binds the party if the court of competent jurisdiction has decided the lis. He would further submit that, the counter claim will have the same effect as a cross suit, so as to enable the court to pronounce a final judgment in the same suit, both on the original claim and on the counter claim. The counter claim has to be proceeded independently. Any order passed in the counter claim is considered to be a decree against which an independent appeal can be filed under Section 96 CPC. The principle of Res Judicata also applies as between two stages in the same litigation to the extent that a court, whether the trial court or a higher court having at an earlier stage decided a matter in one way will not allow the parties to re agitate the matter again at a subsequent stage of the same proceedings, because, at an earlier stage of the litigation, a court has decided an interlocutory matter in one way and no appeal has been taken there from or no appeal did lie, a higher court cannot, at a later stage of the same litigation, consider the matter again. His further contention is that, unless the executant is known to the notary personally, the notary must insist on written identification of an executant by an advocate in order to minimize the possibility of cheating by personification. To support his contentions, he has relied upon the following judgments:

                   1. Prataprai Trumbaklal Mehta vs. Jayant Nemchand Shah and another reported in 1991 SCC OnLine Bom 205.

                   2. Satyadhyan Ghosal and others vs. Deorajin Debi (smt) and another reported in 1960 SCC OnLine SC 15

                   3. A.V. Murugan vs. K. Maheswari and others reported in 2019 SCC OnLine Mad 39139

                   4. S. Ramachandra Rao vs. S. Nagabhushana Rao and others reported in 2022 SCC OnLine SC 1460.

5. On the other hand, Mr. A.P. Neelamegavannan, the learned counsel for the respondent / plaintiff submits that Ex.A1 sale agreement was notarized on 03.03.2012. The said notary public was examined as P.W.2. He had produced the notary ledger in which, the above sale agreement is entered. P.W.2 also deposed about the receipt of Rs.2,50,000/- by the 1st defendant at the time of executing the sale agreement. Since the 1st defendant failed to perform his part of contract, the plaintiff was constrained to file the above suit for the relief of specific performance. During pendency of the appeal suit, the 1st defendant sold the property to the 2nd defendant and since the same is barred as lis pendens, the 2nd defendant cannot claim any right over the suit property. In the case of a document executed by a Notary, it must be presumed that the document is a valid one. His further contention is that, the possession of original title deeds and revenue records by the plaintiff corroborates genuine transaction and payment of consideration. The subsequent possession by others is unauthorized. The attesting witness confirmed the execution. Merely because in the sale agreement the purpose of sale of the property was stated to be for business expenses, the documents which otherwise can be said to be an agreement to sell, will not become a loan agreement or security document. Once execution of agreement to sell for sale consideration has been believed and it has been found that plaintiff was always ready and willing to perform his part under the agreement, the suit for specific performance has to be decreed. He would also contend that, in a suit for specific performance, sale agreement between the parties need not be registered and that the relief of specific performance is no longer a discretionary relief. Though it not to be applicable retrospectively after the amendment act, still can be a guide to courts. To support his contentions he relied upon the following judgments:

                   1. Sughar Singh Vs. Hari Singh (dead) through LRs & others reported in 2021 SCC Online SC 1006.

                   2. Kirpal Kaur and another vs. Ritesh and others reported in 2022 SAR Online (SC) 281.

                   3. C. Ramya vs. C. Ganambal and others reported in 2020 (2) MWN (Civil) 614.

                   4. Shyam Kumar Inani vs. Vinod Agrawal & others reported in 2024 SAR Online (SC) 860.

Hence, it is contended that the first appellate court rightly allowed the appeal suit in favour of the plaintiff, which warrants any interference by this court.

6. Heard on both sides. Records perused.

7. The plaintiff claims that there was a sale agreement on 01.03.2012 for the suit property and the same was notarized on 03.03.2012, with a sale price of Rs.2,95,000/-. The plaintiff paid Rs.2,50,000/- as advance and agreed to pay the remaining Rs.45,000/- within a year. The plaintiff alleges that he was ready and willing to perform his part of the contract, but the 1st defendant delayed the sale and sold the property to the 2nd defendant during pendency of the appeal suit. The 1st defendant denies the execution of sale agreement and claims that he borrowed Rs.1,00,000/- from the plaintiff for his business, purchasing and reselling old cars. At that time, he provided some documents as security. He never intended to sell the suit property to the plaintiff. The trial court partly decreed the suit in favour of the plaintiff directing the defendant to pay Rs.1,00,000/- with interest and also directed the plaintiff to return the title deed to the defendant based on a counter claim. The plaintiff preferred the appeal suit. The first appellate court found the sale agreement as valid and enforceable and also held that the plaintiff had shown readiness and willingness to perform his obligation and viewed that when readiness and willingness to perform the contract is no longer discretionary when the necessary conditions are fulfilled.

8. Specific Performance before the 2018 amendment was an equitable remedy particularly, when a sale agreement was executed for loan transactions. The courts will not enforce a contract not intended to sell the property. If evidence indicates that the agreement was executed as security for a loan, specific performance is refused, and only refund of the advance can be granted. Courts look beyond the documents title, i.e., 'agreement to sell' to determine if it was intended as a loan security, relying on factors like transaction value versus market value, possession of property and source of funds. The courts can refuse specific performance, ruling that the registered sale agreement was merely a security for a loan transaction, not intended to sell the property. Under Section 20 of the Specific Relief Act, 1963, the court has the discretion to deny specific performance, particularly if the agreement is unconscionable or not a true sale. In such cases, the court often decrees refund of the advance amount with interest rather than transferring the property. Section 92 of the Evidence Act pertains to the admissibility of similar evidence and provides exceptions to the hearsay rules, particularly allowing evidence to contradict statements made under certain conditions.

9. The 1st defendant's contention is that he had received only Rs.1,00,000/- as loan from the plaintiff and handed over the original deeds to the plaintiff. However, the 1st defendant admits the signature in Ex.A1 sale agreement. His contention is that, the plaintiff has fabricated the signed blank paper, tendered by him at the time of the said borrowal. It is not in dispute that, the said sale agreement was notarized. The said notary was examined as P.W.2 on the side of the plaintiff. He had categorically admitted that he had no direct knowledge about the transaction between the parties. As rightly pointed out by the learned counsel for the 1st defendant, it is the responsibility of a notary to satisfy himself that the original document intended to be executed before him was executed for the purpose recited in the document. It is equally responsible for him to satisfy himself about the identity of the original document by making all reasonable enquiries including insistence of identification of a member of the public by a legal practioner known to the Notary. Unless the executant is known to the Notary personally, the Notary must insist on written identification of the executant by an Advocate in order to minimize the possibility of cheating by personification. In the present case, P.W.2 failed to depose about satisfying himself the above conditions. Since P.W.2 was not aware of the transaction itself, mere notarizing the sale agreement will not establish the fact that the sale agreement was executed for selling the property. Moreover, it is the case of the plaintiff that the 1st defendant received Rs.2,50,000/- as advance on the date of execution of sale agreement, i.e., on 01.03.2012. Whereas, P.W.3, deposed that on 03.03.2012, when the sale agreement was notarized, the plaintiff has tendered Rs.2,50,000/- as advance to the 1st defendant. Again he deposed that, at the time of notarizing the sale agreement, he was standing downstairs in the office of the Notary Public. Hence, the plaintiff failed to prove the tendering of Rs.2,50,000/- to the 1st defendant, which supports the case of the defendants. However, the 1st defendant has categorically admitted in his written statement and during his examination about receiving Rs.1,00,000/- from the plaintiff as loan for his business. His evidence is corroborated by D.W.2, Sub Inspector of Police. She had deposed that during her enquiry, plaintiff has accepted about tendering Rs.1,00,000/- to the 1st defendant and about the custody of the title deeds with him. There is nothing on record to discredit the evidence of D.W.2. Further, the sale agreement is dated 01.03.2012. The plaintiff has approached the defendant for performance of contract only on 15.02.2013. He had sent the legal notice only on 09.04.2013 and filed the suit on 03.03.2015. According to the plaintiff, the balance sale consideration is only Rs.45,000/-. The plaintiff has waited for 23 months for paying the meagre amount of Rs.45,000/- and get the sale executed. No valid explanation tendered by the plaintiff for the enormous delay in calling upon the 1st defendant to perform his part of contract. It only goes to show that the said sale agreement is only for a loan transaction.

                   9.1. Furthermore, the alleged sale agreement is dated 01.03.2012. The Hon'ble Supreme Court in Smt. Katta Sujatha Reddy and another vs. Siddamsetty Infra Projects Pvt. Ltd., & others reported in 2022 LiveLaw(SC) 712 has held as under:

                   “Specific Relief Act, 1963; Section 10 of 2018 amendment to the Specific Relief Act is prospective and cannot apply to those transactions that took place prior to its coming into force”.

While so, the first appellate court erred in holding that the Specific Relief Amendment Act, 2018 has retrospective effect. Moreover, without any appeal preferred by the plaintiff as against the judgment and decree in the counter claim, as mandated under Order XX, Rule 19(2) of CPC, the first appellate court erred in dismissing the counter claim preferred by the defendants. Since the plaintiff failed to prove that he had paid Rs.2,50,000/- as advance to the 1st defendant, the trial court rightly directed the first defendant to pay the admitted sum of Rs.1,00,000/- with interest at the rate of 12% per annum from 01.03.2013 till the date of decree and 6% interest till the date of realization. Further, the first appellate court was not justified in deciding that the plaintiff has proved his readiness and willingness, without deciding whether the suit agreement was executed with an intend to sell the property. Hence, the judgment and decree passed by the first appellate court is liable to be set aside and the judgment and decree passed by the trial court is restored. All the substantial questions of law are answered in favour of the appellants.

10. In the result,

i. The Second Appeal is allowed. No costs. Consequently connected miscellaneous petition is closed.

ii. The decree and judgment dated 13.06.2023 passed in A.S. No.22 of 2020, on the file of the Principal District Court, Villupuram, is set aside.

iii. The Judgment and decree dated 26.07.2019 passed in O.S. No.95 of 2015, on the file of the II Additional Subordinate Court, Villupuram, is restored.