CMs-221 & 222-C-2015

These applications were moved during pendency of the appeal, but vide an order dated 09.12.2022 of the Coordinate Bench, the same were ordered to be heard along with the main case.

By way of CM-221-2015, it was pointed out that during pendency of the appeal, appellant Sukh Pal had expired; that his legal heirs were not aware about the pendency of this appeal, or any order against alienation in the absence of any entry in the revenue record and they had executed a registered sale deed No. 8975 dated 21.08.2012.

Both the applications [CMs-221 & 222-C-2015] are allowed. Subsequent events are taken on record, and subsequent transferees are permitted to be impleaded as respondents No.2 to 4. However, they will be bound by final outcome of this appeal.

RSA-2485-1995 (O&M)

This regular second appeal under Section 100 of the Code of Civil Procedure, 1908 is directed against the concurrent judgments and decrees passed by the learned trial Court dated 29.01.1994 and the learned First Appellate Court dated 22.07.1995, whereby the suit instituted by the plaintiff-Raja Ram (now represented through his legal representatives) for specific performance of an alleged agreement to sell dated 09.03.1989 was decreed, and the defendant-Sukhpal (now represented through his legal representatives) was directed to execute the sale deed in respect of the suit land.

2. The defendant has approached this Court contending that the findings recorded by the Courts below suffer from perversity, having been returned without proper appreciation of material evidence, in disregard of settled principles governing proof of execution of agreements to sell and the mandatory requirement of readiness and willingness under Section 16(c) of the Specific Relief Act, 1963.

3. Since the appeal arises from concurrent findings of fact, this Court is conscious of the limitations on its jurisdiction under Section 100 CPC. However, where such findings are shown to be based on misreading of evidence, non-consideration of material circumstances, or an erroneous approach to the law resulting in manifest injustice, interference by the High Court is not only permissible but obligatory.

4.1 Brief Factual Background : The suit filed by the plaintiff was founded upon an agreement to sell dated 09.03.1989 (Ex.P1), whereby the defendant allegedly agreed to sell his 1/3rd share measuring 6 kanal 16 marla out of the total land measuring 20 kanal 9 marla situated in village Bhupani, District Faridabad, for a total consideration of Rs.60,000/-. It was pleaded that a sum of Rs.500/- was paid as earnest money vide receipt (Ex.P2) on the date of the agreement, and another sum of Rs.500/- was paid vide receipt (Ex.P3) on 10.01.1990, leaving a balance consideration of Rs. 59,000/-. The target date for execution and registration of the sale deed was fixed as 31.12.1990, though it was pleaded that time was not the essence of the contract.

                   4.2 The plaintiff asserted that he was always ready and willing to perform his part of the contract and that he appeared before the Sub Registrar on the target date with the balance sale consideration, but the defendant failed to perform his obligation, allegedly on account of escalation in land prices. On these averments, a decree for specific performance, and in the alternative for damages, was sought.

5. The defendant denied the execution of any agreement to sell and pleaded that the amounts of Rs.500/- each were advanced as loans and that his signatures and thumb impressions were obtained on blank papers under the guise of executing pronotes and receipts. It was further pleaded that the alleged agreement and receipts were forged and fabricated. Defendant also pleaded that he had no subsisting ownership in the suit property on the alleged date of agreement, as his share had already fallen to the share of his brother under a prior family settlement dated 16.07.1987. On these pleadings, dismissal of the suit was sought.

6. Findings of the Courts Below : After framing necessary issues and taking evidence, the learned trial Court, upon appraisal of the evidence led by the parties, decreed the suit holding that the agreement to sell stood proved and that the plaintiff had established his readiness and willingness to perform his part of the contract. The appeal preferred by the defendant was dismissed by the learned First Appellate Court, which affirmed the findings of the trial Court.

7. It is against these concurrent findings that the present second appeal has been preferred.

8.1 Contentions raised on behalf of the parties : Learned senior counsel appearing on behalf of the appellant-defendant assailed the concurrent judgments passed by the Courts below by contending that the findings recorded are wholly perverse and unsustainable in law. It was argued that the Courts below accepted the alleged agreement to sell dated 09.03.1989 (Ex.P1) in a mechanical manner, without adverting to the glaring contradictions and inconsistencies appearing in the evidence led by the plaintiff.

                   8.2 It was submitted that although the defendant admitted receipt of two sums of Rs.500/- each, the said amounts were never paid as earnest money but were advanced as small loans, and that his signatures and thumb impressions were obtained on blank papers under the pretext of executing pronotes and receipts. According to learned counsel, the improbability of a land owner agreeing to sell valuable agricultural land for a consideration of Rs.60,000/- upon receipt of a paltry sum of Rs. 500/- each constituting less than one percent of the total consideration, by itself casts serious doubt on the genuineness of the alleged agreement.

                   8.3 Learned senior counsel further contended that the preparation of the agreement itself is shrouded in suspicion. Attention is drawn to the contradictory testimonies of PW1, PW2 and the plaintiff himself regarding the authorship and typing of the document, as well as to the non-examination of Ram Saroop, a material attesting witness. It was argued that the Courts below failed to draw the legally permissible adverse inference from such non-examination.

                   8.4 Assailing the finding on readiness and willingness, learned senior counsel submitted that the plaintiff utterly failed to discharge the mandatory burden cast upon him under Section 16(c) of the Specific Relief Act. It was argued that the alleged application and affidavit said to have been filed before the Sub Registrar were never proved in accordance with law and could not have been relied upon merely because they were marked as exhibits. Learned counsel emphasized that the plaintiff neither produced any documentary evidence to demonstrate his financial capacity nor led any reliable oral evidence to show availability of funds on the relevant date. It was contended that even the First Appellate Court, despite being the final Court of facts, failed to reappraise the evidence and affirmed the trial Court's findings in a cursory and legally unsustainable manner, in violation of Order XLI Rule 31 CPC.

9. Learned counsel appearing for respondents No.2 to 4, who are stated to be subsequent purchasers, supported the submissions advanced on behalf of the appellant and contended that the decree for specific performance could not be sustained once the foundational agreement itself was not proved in accordance with law.

10.1 Per contra, learned senior counsel appearing on behalf of the respondent-plaintiff supported the impugned judgments and contended that no interference is warranted in the present second appeal. It was argued that the defendant having admitted his signatures and thumb impressions on the agreement and receipts, the plea of fraud or misuse of blank papers is wholly untenable and was rightly rejected by the Courts below.

                   10.2 Learned counsel further submitted that the plaintiff had specifically pleaded readiness and willingness in the plaint and had entered the witness box to affirm the same. It was argued that the defendant did not specifically traverse these pleadings in the written statement and, therefore, the issue stood sufficiently established. According to learned counsel, once the plaintiff proved his presence before the Sub Registrar on the target date, the requirement of readiness and willingness stood satisfied, and no further documentary proof of financial capacity was necessary.

                   10.3 It was also contended that the scope of interference under Section 100 CPC is extremely limited and that the High Court cannot reappreciate evidence merely because another view is possible. Learned counsel urged that the concurrent findings recorded by the Courts below do not suffer from perversity and are based on a plausible appreciation of evidence, and therefore, deserve to be upheld.

11. Substantial Questions of Law : Upon hearing learned senior counsel for the parties and on a careful examination of the record, this Court is satisfied that the present appeal gives rise to the following substantial questions of law within the meaning of Section 100 of the Code of Civil Procedure, 1908:-

                   - Whether the concurrent findings recorded by the Courts below holding the execution of the agreement to sell dated 09.03.1989 (Ex.P1) to be duly proved are vitiated by perversity, having been recorded without considering material contradictions in the testimony of the plaintiff's witnesses, the non-examination of a material attesting witness, and the suspicious circumstances surrounding the preparation and execution of the document?

                   - Whether the Courts below committed a substantial error of law in decreeing the suit for specific performance without recording a lawful and sustainable finding on continuous readiness and willingness as mandated under Section 16 (c) of the Specific Relief Act, 1963, despite the absence of any cogent oral or documentary evidence demonstrating the plaintiff's financial capacity to perform his part of the contract?

                   - Whether mere exhibition of documents allegedly evidencing the plaintiff's presence before the Sub Registrar on the target date, without formal proof in accordance with the provisions of the Indian Evidence Act, 1872, could legally form the basis for recording a finding in favour of the plaintiff on the issue of readiness and willingness?

                   - Whether the First Appellate Court, being the final Court of facts, discharged its statutory obligation under Order XLI Rule 31 CPC while affirming the judgment of the trial Court in a cursory manner, without independent re-appraisal of the evidence and without dealing with material inconsistencies, improbabilities, and legal infirmities pointed out in the appeal?

                   - Whether payment of a nominal amount constituting less than two percent of the total sale consideration, in the absence of any plausible explanation or surrounding circumstances, could have been accepted as earnest money for a concluded contract of sale, without examining its bearing on the genuineness and enforceability of the alleged agreement?

                   - Whether the concurrent findings recorded by the Courts below are sustainable in law, when they are founded on selective appreciation of evidence, non-consideration of relevant material, and an erroneous approach to settled principles governing decrees for specific performance, thereby attracting the well-recognised exceptions permitting interference by the High Court under Section 100 CPC?

12. Analysis and Findings : The rival submissions of both the sides have been duly considered, and the record has been examined with the assistance of learned senior counsel appearing for the parties.

13. Since the aforesaid substantial questions of law are inter linked and arise from a common appreciation of evidence and application of settled legal principles, they are taken up together for consideration.

Scope of Interference in Second Appeal :

14. At the outset, it is necessary to reiterate that the jurisdiction of this Court under Section 100 CPC is undoubtedly circumscribed. Ordinarily, concurrent findings of fact are not to be interfered with. However, it is equally well settled that where such findings are recorded by ignoring material evidence, by misreading evidence, or by adopting an approach which no reasonable judicial mind would approve, such findings are rendered perverse and give rise to a substantial question of law.

15. Hon'ble Supreme Court in Illoth Valappil Ambunhi (dead) by LRs v. Kunhambu Karanavan, 2019 SCC OnLine SC 1336; and Kashmir Singh v. Harnam Singh and another, 2008 (12) SCC 796 has authoritatively held that perversity itself furnishes a valid ground for interference in second appeal. Likewise, in Municipal Committee, Hoshiarpur v. PSEB and others, 2010 SCC OnLine SC 1178, it has been held that findings based on selective appreciation of evidence or non-consideration of relevant material are legally unsustainable.

16. It is in the aforesaid backdrop that the present case is required to be examined.

Execution of the Agreement to Sell - Whether Duly Proved :

17. Learned senior counsel for the appellant has vehemently contended that the execution of the agreement to sell dated 09.03.1989 (Ex.P1) was accepted by the Courts below without any meaningful scrutiny of the surrounding circumstances and contradictions in evidence. This submission deserves serious consideration.

18. A careful perusal of the record reveals that the very preparation of Ex.P1 is enveloped in suspicion. PW1 Ram Pratap Rai, an Advocate, claims to have prepared the agreement after getting it typed through a petition-writer, whose identity he is unable to disclose. PW2 Jugal Kishore, a regular deed-writer and attesting witness, categorically denies having typed this document Ex.P1 and professes ignorance regarding the typist. Ironically, the plaintiff Raja Ram examined as PW3 himself contradicts both these witnesses by stating that the document was typed by PW2.

19. These inconsistencies go to the root of the matter. When witnesses are unable to consistently depose as to who prepared the document, their assertion that the contents were read over and explained to the parties becomes inherently doubtful. The improbability is further compounded by the fact that despite the availability of a regular deed-writer, the document was allegedly routed through an Advocate, thereby avoiding entry in any deed-writer's register, a circumstance which lends credence to the defendant's version.

20. Equally significant is the non-examination of Ram Saroop, a common attesting witness to the agreement Ex.P1, as well as both receipts Ex.P2 & Ex.P3. In a case where execution is specifically denied and fraud is alleged, the withholding of a material witness attracts an adverse inference under Section 114 (g) of the Indian Evidence Act, 1872. The Courts below failed to draw such inference altogether.

21. The trial Court, rather, merely reproduced the statements of witnesses and recorded a bald conclusion that the agreement stood proved, without analysing the contradictions or suspicious circumstances. The First Appellate Court, despite being the final Court of facts, endorsed these findings in a cursory manner, without any independent re-appraisal. Such an approach clearly falls foul of the duty cast upon the appellate Court under Order XLI Rule 31 CPC.

Paltry Earnest Money and Probabilities of the Transaction

22. Another circumstance rightly highlighted by learned senior counsel for the appellant relates to the payment of earnest money. Admittedly, against a total sale consideration of Rs.60,000/-, only Rs.500/- was paid on the date of agreement, and another Rs.500/- after nearly ten months.

23. While inadequacy of earnest money may not, by itself, invalidate an agreement, the payment of less than two percent of the consideration, without any explanation, assumes significance, when viewed cumulatively with the suspicious manner of execution and contradictory evidence. It renders the plaintiff's version improbable and lends support to the defence plea that the amounts were advanced as loans and the documents were fabricated by misuse of signatures.

24. The Courts below failed to examine this aspect in its proper legal perspective, thereby recording findings which cannot be said to be based on a reasonable appreciation of evidence.

Readiness and Willingness -Section 16(c) of the Specific Relief Act, 1963:

25. Even assuming for the sake of argument that execution of the agreement stood proved, the plaintiff was still required to strictly comply with the mandatory requirement of Section 16(c) of the Specific Relief Act, 1963.

26. The law on this aspect is no longer res integra. In Ram Awadh (dead) by LRs v. Achhaibar Dubey, 2000 AIR SC 860, Hon'ble Supreme Court held that the obligation under Section 16(c) is mandatory and cannot be diluted even if the defendant's defence is weak. This principle has been reiterated in Sukhwinder Singh v. Jagroop Singh and another, 2020 (1) RCR (Civil) 951; C.S. Venkatesh v. A.S.C. Murthy (Dead) by LRs and others, 2020 (2) RCR (Civil) 71 and most recently in R. Shama Naik v. G. Srinivasiah, 2024 SCC OnLine SC 3586, wherein it has been clarified that readiness relates to financial capacity, while willingness relates to conduct, and both must be established by evidence.

27. In the present case, the plaintiff relied upon an application and an affidavit allegedly marking his presence before the Sub Registrar on 31.12.1990. Shockingly, none of the document was proved in accordance with law. No witness proved their execution, nor were these documents put to the defendant's witnesses. Their mere exhibition could not have been treated as proof.

28. Apart from the abovesaid unproved documents, the plaintiff produced no material whatsoever to demonstrate his financial capacity. No bank statement, no account books, no evidence of source of funds was placed on record. His bald oral assertion that he possessed Rs.50,000/- falls far short of the legal requirement. As held by this Court in Jamal v. Naresh Kumar, 2023 (1) RCR (Civil) 364, mere oral testimony, in the absence of documentary corroboration, cannot establish financial readiness.

29. The argument advanced on behalf of the respondent that absence of a specific denial in the written statement absolves the plaintiff of his burden is wholly misconceived. Readiness and willingness is a matter between the Court and the plaintiff, as rightly held in Ram Awadh and Sukhwinder Singh (supra). The Courts below, therefore, committed a manifest error of law in recording a finding in favour of the plaintiff on this issue.

Failure of the First Appellate Court :

30. The First Appellate Court, which was the final Court of facts, failed to independently reappraise the evidence and address the material infirmities highlighted by the defendant - appellant. The judgment merely affirms the trial Court's findings without discussion, thereby violating the mandate of Order XLI Rule 31 CPC. Such a failure vitiates the appellate court's judgment and renders it legally unsustainable.

Authorities Relied Upon by the Plaintiff :

31. The judgments relied upon by Ld. Senior Advocate for the respondent - plaintiff do not advance his case. Decisions concerning lis pendens in Chander Bhan (dead) through LR Sher Singh v. Mukhtiar Singh and others, 2024 INSC 377, or the discretionary nature of specific performance post-amendment, as observed in Sughar Singh v. Hari Singh (dead) through LRs and others, Law Finder Doc Id # 1901166, cannot dilute the mandatory statutory requirement under Section 16(c), especially when the amendment itself is prospective. Similarly, Basavaraj v. Padmavathi and another, 2023 LiveLaw (SC) 17 does not absolve a plaintiff from proving financial capacity, as it merely holds that adverse inference cannot be drawn in absence of a specific direction. Here, the plaintiff independently failed to discharge his burden.

Cumulative Effect and Perversity :

32. When the entire evidence is examined cumulatively, it becomes evident that the concurrent findings recorded by the Courts below are founded on selective appreciation of evidence, non-consideration of material contradictions, and an erroneous application of settled principles governing specific performance. Such findings, in the considered opinion of this Court, are perverse and attract the well-recognised exceptions permitting interference under Section 100 CPC.

Conclusion :

33. In view of the discussion and findings recorded hereinabove, this Court is satisfied that the concurrent judgments and decrees passed by the learned trial Court dated 29.01.1994, and the learned First Appellate Court dated 22.07.1995 suffer from perversity arising out of misreading and non-consideration of material evidence, as well as from an erroneous application of the settled principles governing the grant of relief of specific performance.

34. The substantial questions of law framed are accordingly answered in favour of the appellant and against the respondent-plaintiff.

35. Consequently, the present second appeal is allowed. The impugned judgments and decrees passed by the Courts below are hereby set aside. The suit filed by the plaintiff seeking a decree for specific performance of the alleged agreement to sell dated 09.03.1989 (Ex.P1) stands dismissed. In the facts and circumstances of the case, there shall be no order as to costs.

36. Pending applications, if any, also stand disposed of.