The unsuccessful plaintiff in O.S. No. 68 of 1988 on the file of the Subordinate Judge, Villupuram is the appellant.
2. The Plaintiff/appellant has filed O.S. No. 68 of 1988 for specific performance of the contract praying to direct the defendants 1 to 4, 6 and 7 to execute a sale deed in his favour conveying the suit property to him after deposit of the balance sale consideration; directing the defendants to deliver possession of the suit property to him and for costs.
3. For the sake of convenience, the parties shall be referred to as they were arrayed in the suit.
4. According to the plaintiff, the first defendant Kannan @ Annamalai was the owner of the suit property and for the purpose of purchasing it, the plaintiff has entered into a registered agreement of sale on 27.05.1987, Ex.A4. The defendants 2, 3 and 6 are the legal heirs of the deceased first defendant. According to the plaintiff, the deceased Kannan agreed to sell the suit property to the plaintiff for a sum of Rs.47,000/- and the sale has to be completed within one year from the said date. On execution of the agreement, the deceased Kannan received Rs.20,000/- from the plaintiff and agreed to clear the encumbarance in the suit property before the said date. As per the agreement, the plaintiff was always ready and willing to perform his part of the contract, but the first defendant failed and neglected to fulfil his obligations. It was also contended by the plaintiff that the first defendant executed mortgage deeds in respect of the suit property in favour of the plaintiff and his wife on 29.12.1984, 08.05.1986 and received various sums, but the first defendant has not repaid the mortgage loan. When the Plaintiff demanded the first defendant to repay the loan amount, he agreed to adjust the said debt amount out of the balance consideration payable by the plaintiff. According to the plaintiff, during the third week of April 1988, the defendants 1, 4 and 5 conspired together and brought into existence some documents to defeat his right as an agreement holder. Therefore, when encumbrance certificate was applied for and obtained, he was shocked to note that the first defendant, for and on behalf of the defendants 2 and 3, has executed a sale deed in favour of the fourth defendant. Immediately thereafter, the first defendant executed a settlement deed in favour of the defendants 2 and 3 herein on 19.06.1987, however, for the reasons best known to the first defendant, the same was cancelled by executing a revocation deed dated 30.12.1987. Immediately after coming to know the fradulent act, the plaintiff has sent a notice dated 02.05.1988. Even though the defendants received the notice, no reply was sent and hence the suit came to be filed.
5. The first defendant filed a written statement and also an additional written statement. The main defence of the first defendant was that the plaintiff has manipulated and fabricated the alleged registered deed of agreement dated 27.05.1987. In view of the fact that the first defendant was a drunkard, taking advantage of his drunkenness, fraud has been committed by the plaintiff by obtaining the signature of the first defendant in blank stamp papers and it has been pressed into the service by the plaintiff. It is totally false to state that the first defendant agreed to sell the suit property to the plaintiff. He would further contend that the plaintiff was never ready and willing to perform his part of the contract and above all these things, the agreement of sale cannot bind him nor the second and third defendants, who are admittedly minors. Therefore, even if any sale agreement was in existence, it will not take away the shares of defendants 2 and 3. Further, since the property has been sold subsequently on 07.01.1988, the present suit for specific performance, based on the agreement on 27.05.1987, is legally not sustainable. Only after issuance of the suit notice, the first defendant came to know that the plaintiff has fabricated an agreement. It is also false to state that the defendants 4 and 5 conspired to get the sale deed dated 07.01.1988 to defeat the right of the plaintiff, therefore, the plaintiff is not entitled to the suit relief.
6. The minor defendants 2 and 3 were represented by the Court Guardian and Court Guardian has filed a written statement contending that the minors share will not be affected by the sale agreement under which the plaintiff claiming right as an agreement holder. The minors can never accept to purchase or sell the property as there was no legal necessity to sell the property. If at all there exist any mortgage deeds, the first defendant alone is liable to repay such debts and it will not deprive the minor defendants right over the property. Moreover, the mortgage were incurred neither for family necessity nor for the benefit of the minors and therefore, the alleged mortgage or sale of the property will not deprive the minors from getting their share.
7. The Fourth Defendant, who is the wife of the fifth defendant, has filed written statement contending that originally her husband, fifth defendant entered into the suit premises as a tenant during March 1982 under the first defendant. The first defendant used to receive amount from the fifth defendant periodically for his family and other expenses. In order to settle the debt due to the fifth defendant, the first defendant agreed to sell the suit property in the name of the fourth defendant. Therefore, an agreement dated 26.02.1987 came to be entered into between the first defendant and fourth defendant for a sale consideration of Rs.42,000/- out of which Rs.17,500/- was paid on the same day as sale advance. The remaining amount was to be paid within one year for which the first defendant agreed. The first defendant also agreed to execute the sale deed for himself and on behalf of the minor defendants 2 and 3. Accordingly, on 07.01.1988, Ex.B2, after receiving the remaining sale consideration, a sale deed was executed by duly discharging the first defendant from the debts incurred by him. The Plaintiff is also having his shop just opposite to the suit property and he is fully aware of all these transactions. The allegation that the fourth and fifth defendants are aware of the agreement of sale entered into between the first defendant and plaintiff is false. Even if the sale agreement dated 27.05.1987 between the first defendant and plaintiff is true, it is later in point of time than the agreement of sale entered into by the 4th defendant with the first defendant on 26.02.1987.
8. The sixth defendant filed written statement supporting the case of the defendants 4 and 5 and repudiating the claim of the plaintiff. According to the sixth defendant, the plaintiff exploited the first defendant's weakness for liquor and manipulated the alleged agreement dated 27.05.1987 in his favour. The sixth defendant, who is the wife of the first defendant, would contend that her husband never executed any agreement of sale in favour of the plaintiff and the same has been fabricated by the plaintiff.
9. Even during the pendency of the suit, the first defendant died and his legal heirs have been brought on record.
10. Before the court below, the Plaintiff examined himself as PW1 and three other witnesses as PWs 2 to 4, besides Ex.A1 to A13 were marked. On behalf of the defendants, the fifth defendant was examined as DW1 and three other witnesses were examined as Dws 1 to 4 besides Ex. B1 to B42 were marked. The trial Court after framing necessary issues and on perusal of the evidence let in by both the sides came to the conclusion that the plaintiff is not entitled to a decree as prayed for and dismissed the suit. Aggrieved against the dismissal of the suit, the plaintiff has preferred the present appeal.
11. Heard both parties. In this appeal, the defendants 2, 3, 6 and 7 have been set exparte. The defendants 4 and 5, who are the subsequent purchasers of the suit property alone contested the appeal. Even though the minors, defendants 2, 3 and 7 have been declared as major and also served, they have not chosen to contest the appeal.
12. The points for consideration in this appeal are
i) Whether the plaintiff is entitled to a decree of specific performance as per agreement dated 27.05.1987, Ex.A4.
ii) Whether the sale agreement dated 25.07.1987. Ex.A4 was executed by the first defendant as Kartha of the family in favour of the plaintiff and it would bind the minor children of the first defendant.
13. In this appeal, first it has to be considered whether the fourth defendant is a bonafide purchaser of the suit property under Ex.A11 = Ex.B2, sale deed dated 07.01.1988.
14. The learned counsel for the plaintiff/appellant would specifically contend that the plaintiff has entered into the sale agreement on 27.05.1987 to purchase the property for sale consideration of Rs.47,000/- and he paid an advance of Rs.20,000/- and the balance of sale consideration was agreed to be paid by the plaintiff within two years. He contend that the sale agreement itself was registered on 27.05.1987 and once it is registered, the presumption is it is a valid document, accepted by all the parties concerned and it will bind every one concerned. He would also contend that Ex.A5, A6 and A7 are admittedly registered mortgage deeds executed by first defendant in favour of the plaintiff and his wife. Ex.A5 and A6 are mortgaged for a sum of Rs.4,000/- and Rs.2,500/- respectively. The third mortgage is Ex.A7 executed in favour of the wife of the plaintiff for a sum of Rs.9,000/-. When admittedly the plaintiff has given money to the vendor/first defendant for which the suit property was also mortgaged in favour of the plaintiff, it is clear that the first defendant was having money transaction with the plaintiff right from 1984. He would also specifically contend that on executing Ex.A7, Mortgage deed dated 26.02.1987, the first defendant has received a sum of Rs.9,000/- and the mortgage deed has been executed in favour of the plaintiff's wife. The fourth and fifth defendants, knowing fully well about the transaction the plaintiff had with the first defendant, have purchased the suit property and claiming themselves to be a bonafide purchaser.
15. The learned counsel for the plaintiff/appellant would further contend that admittedly, the agreement of sale, Ex.A4 dated 27.05.1987 is a registered document. The sale deed dated 07.01.1988, Ex.A11 has been executed by the first defendant in favour of the fourth defendant only to defeat the rights of the plaintiff and to escape from the payment of mortgage debt. Admittedly the mortgage in respect of the suit properties created by the first defendant is also substituting but ignoring it, the fourth defendant has purchased the suit property. The sale agreement between the first defendant and the fourth defendant dated 26.02.1987, Ex.B1 has come into existence only to defeat the rights of the plaintiff and to create encumbrance over the right of the plaintiff. He would further contend that the very purpose of introducing alleged agreement of sale on 26.02.1987 marked as Ex.B1 is only to create encumbrance over the registered sale agreement dated 27.05.1987, Ex.A4 and to show that the agreement was prior in date. Even assuming, but not admitting that any such agreement would have come into force when sale agreement was executed on 27.05.1987, anybody in normal course would apply for encumbarance certificate in respect of the property which they seek to purchase. Inasmuch as the registered agreement of sale dated 27.05.1987 namely Ex.A4 was in existence, the first defendant ought not to have executed the sale deed in favour of the fourth defendant. Therefore, a combined reading of Ex.A4 dated 27.05.1987, Ex.B1, dated 26.02.1987 and Ex.B2 dated 07.01.1988 would clearly indicate the intention of the defendants 4 and 5 to create encumbrance over the property. The court below, without properly appreciating the oral and documentary evidence on record has erroneously dismissed the suit and prayed for setting aside the decree and judgment of the court below.
16. The learned counsel for the defendants 4 and 5 would contend that the defendants 4 and 5 are bonafide purchasers for valuable sale consideration. The agreement of sale dated 27.05.1987, Ex.A4 will not bind the defendants 4 and 5 inasmuch as it came into existence only after the first defendant and the fourth defendant entered into an agreement of sale dated 26.02.1987, Ex.B1. The plaintiff has taken advantage of the drunkenness of the first defendant and obtained signatures in blank papers and made it appear that the first defendant had executed a sale agreement in favour of the plaintiff. As far as minors shares are concerned, the first defendant had executed the sale deed dated 07.01.1988, Ex.B2 in favour of the fourth defendant inclusive of the share of the minors and received the sale consideration.
17. In this background, the rival contention of the parties has to be analysed. It is evident from the pleadings that the deceased first defendant Kannan @ Annamalai was the owner of the suit property and he had several money transactions with the plaintiff. In order to prove the past transaction, the plaintiff has filed Exs.A5, A6 and A7 registered mortgage deeds executed by first defendant in favour of the plaintiff and his wife. Under Exs.A5 and A6, the suit property was mortgaged for a sum of Rs.4,000/- and Rs.2,500/- respectively in favour of the plaintiff. Under Ex.A7 dated 26.02.1987, the first defendant had executed yet another registered mortgage deed in favour of the wife of the plaintiff for a sum of Rs.9,000/-. Curiously, on the same day namely 26.02.1987, the first defendant is said to have executed an agreement of sale dated 26.02.1987 with the defendants 4 and 5 and it was not registered. According to the plaintiff, when the plaintiff had demanded the first defendant to repay the mortgage amount, he expressed his inability to repay the amount and instead, he agreed to sell the suit property in favour of the plaintiff for a sale consideration. Accordingly, the plaintiff has entered into a registered agreement of sale on 27.05.1987, Ex.A4 and on such execution, the first defendant also received a sum of Rs.20,000/- as advance. Therefore, it is clear that there were money transactions between the plaintiff and the first defendant and ultimately, it resulted in the execution of the agreement of sale dated 27.05.1987, which was also registered. As per the agreement, the plaintiff was always ready and willing to perform his part of the contract, but the first defendant failed and neglected to fulfil his obligations. Since the first defendant avoided and evaded to execute the sale in favour of the plaintiff, the plaintiff applied for encumbrance certificate and only then he came to know that the property was sold by the first defendant in favour of the defendants 4 and 5. Immediately the plaintiff has sent a notice dated 02.05.1988. It is evident that the said notice was received by the defendants 4 and 5, but there was no reply forthcoming. Had the contention of the defendants 4 and 5 is true that the plaintiff had exploited and taken advantage of the drunkenness of the first defendant and created the registered agreement of sale, they could have very well replied to the notice sent by the plaintiff denying the contents of the notice, but it was not done.
18. It is evident from the pleadings that the plaintiff, first defendant and defendants 4 and 5 are having shops opposite or adjacent to each other. The Plaintiff entered into the agreement of sale with the first defendant and got it registered. Subsequent to the agreement of sale dated 27.05.1987, Ex.A4, the property was sold to the fourth defendant by the first defendant by means of a sale deed dated 07.01.1988, Ex.B2. It is also very clear from the pleadings that the defendants 4 and 5, in their written statement, have not stated anything as to whether they have applied for encumbrance certificate before getting the sale deed executed in their favour by the first defendant. A normal prudent man would not purchase a property by a sale deed without verifying the encumbrances over the property. Had the defendants 4 and 5 verified the encumbrances, the existence of agreement of sale dated 27.05.1987, Ex.A4 between the plaintiff and first defendant would have come to light. The defendants 4 and 5 also contend that they have orally entered into an agreement of sale dated 26.02.1987 with the first defendant, exactly on the date on which the first defendant subjected the property to mortgage by receiving a sum of Rs.9,000/- with the wife of the plaintiff. Therefore, the theory put forward by the defendants 4 and 5 cannot be accepted. Inasmuch as the plaintiff's agreement of sale dated 27.05.1987 is a registered one, it will prevail over the oral agreement of sale said to have entered into with the first defendant by the defendants 4 and 5. Moreover, the plaintiff had issued a notice dated 02.05.1988 to the defendants, which was also received by the third defendant under an acknowledgment dated 10.05.1988, Ex.A3. If really the third defendant had purchased the property from the first defendant on 07.01.1988 for a valuable sale consideration, on receipt of the notice dated 02.05.1988, after four months from the date of purchase, the third defendant ought to have naturally retorted by stating that she had purchased the property for a valuable sale consideration. But the third defendant remained silent without sending any reply, which is fatal to her case.
19. The court below found that Ex.A4, agreement of sale entered into between the plaintiff and the first defendant was registered in the office of the Sub-Registrar, Kallakurichi, but it was not registered with the Sub-Registrar, Ulundurpet where the property is situate and the plaintiff has also not explained the reasons as to why the agreement of sale was registered with the office of the Sub-Registrar, Kallakurichi, therefore, the court below held Ex.A4, registered agreement of sale is not genuine. The fact remains that Ex.A4 is registered with the competent registration authorities. If really the subject matter of the property do not come within the jurisdiction of the Sub-Registrar, Kallakurichi, the agreement of sale would not have been entertained by the Sub-Registrar, Kallakurichi for registration and the plaintiff would have been directed to approach the Sub-Registrar, Ulundurpet. This is evident that Sub-Registrar, Kallakurichi has the territorial jurisdiction to entertain the agreement of sale for registration. The fact remains that the agreement of sale is registered with the competent registration authorities thereby the plaintiff had created encumbrance over the suit property. When there is a subsisting encumbrance over the suit property, ignoring the same, the defendants 4 and 5 have purchased the property from the first defendant under Ex.B2, sale deed dated 07.01.1988. These aspects were not properly considered by the court below while dismissing the suit filed by the plaintiff.
20. In this connection I am fortified by the decision of the Division Bench of this Court reported in (Jayaraman (died) & Others vs. Dalavai Nagarajan & others) 2004 1 Law weekly 622 of the Division Bench of the Madras High Court wherein in para Nos. 21 "21. .......Further one of the issues framed was whether the defendants 2 to 5 have obtained the deed of sale in a bona fide manner and in considering the issue, the question regarding the genuineness of the agreement dated 18.11.1983 was gone into. As a matter of fact, the parties also understood the issue in that manner and evidencewas let in on this aspect. Further, the burden is on the defendants 2 to 5 to prove the validity and genuineness of the agreement dated 18.11.1983 (Ex.B-18) and hence, the submission of learned senior counsel that there was no pleading regarding the genuineness of Ex.B-18 agreement and therefore the evidence let in on the genuineness of Ex.B-18 should be accepted and Ex.B-18 should be declared valid is not acceptable.
44. On the other hand, Mr.Ashokan, learned counsel for the first respondent submitted that the defendants 2 to 5 are not bona fide purchasers for value as the facts clearly show that the sale transaction was concluded in a hurried manner to defeat the claims of the plaintiff and hence, they cannot be regarded as bona fide purchasers at all. He relied upon the decision of the Supreme Court in R.K.Mohammed Ubaidullah v. Hajee C.Abdul Wahab (2000) 6 SCC 402) wherein the Supreme Court held that the subsequent purchaser must prove that he is a bona fide purchaser for value without notice and the burden of proof of good faith is on the purchaser who pleads that he is an innocent purchaser. He also submitted that the case of the defendants 2 to 5 has to fail as the transferees have not paid the entire sale consideration before they had notice of the agreement dated 25.02.1984 as the payments in the instant case were made only subsequent to the notice dated 15.05.1984 and hence, under the provisions of
section 27(b) of the Specific Relief Act, 1877 the defendants are not entitled to any relief. He also relied upon the decision of this Court in M/s.Futnani Dairy Farm v. Rangaswamy Naar (1994 1 MLJ 119) wherein Mr.M.Srinivasan,J. (as His Lordship then was) presiding over the Bench held that where the entire consideration has not been paid to the vendor, the purchaser is not entitled to claim the benefit of
Section 19(b) of the Specific Relief Act.
48. As far as the enquiry that should have been made by the plaintiff is concerned, we are of the view that the decisions relied upon by the learned senior counsel deal with the case of duty of the purchaser. In this case, the purchasers are the defendants 2 to 5 and they must establish that they made a proper enquiry. Therefore the submission of the learned senior counsel that the plaintiff should have made prior enquiry does not carry any conviction as he was still an agreement holder on the date of suit and the defendants 2 to 5 were the purchasers and they must establish that they purchased the property for value and the consideration was paid and they got the sale in good faith and the payment of consideration was made without prior notice of the suit agreement.
50. Learned senior counsel submitted that the hardship would be caused to the defendants 2 to 5 if the sale in their favour is set aside. Learned senior counsel submitted that the property is situate in a busy locality in Dharapuram town and the plaintiff has taken an unfair advantage and taking into consideration the hardship that would be caused to the appellants, the relief of specific performance should be denied to the plaintiff. However, we are unable to accept the submission of the learned senior counsel for the reason that the appellants/defendants 2 to 5 are not bona fide purchasers without notice of the agreement of sale, Ex.A-1 and the impression that is gained is that the sale deed was executed on 02.05.1984 just before the expiry of three months period stipulated in the sale agreement. Further, we are of the view that the defendants 2 to 5 had knowledge of the suit agreement of sale and further, the plaintiff fulfilled all the requirements for the grant of the relief of specific performance. The fact that hardship would be caused to the defendants 2 to 5 cannot stand in the way of the plaintiff from getting the necessary prayed for by him. Further, the plaintiff has deposited the entire sale consideration and it is also stated that during the pendency of the appeal the sale deed was excuted on 23.02.1993 in favour of the plaintiff through the Court. Therefore the hardship that would be caused to the defendants 2 to 5 is not germane when the plaintiff is entitled to the relief."
21. The facts involved in the Division Bench case was that the plaintiff and the first defendant entered into a written agreement of sale on 25.02.1984, but subsequently, the first defendant sold the property to defendants 2 to 5 on 02.05.1984 pursuant to an agreement dated 18.11.1983. According to the plaintiff, the defendants 2 to 5 purchased the property knowing fully well the subsistence of the agreement of sale dated 25.02.1984 and that the defendants 2 to 5 are not bonafide purchasers. The Division Bench held that if the facts and circumstances taken together in the light of the evidence let in, it would indicate that the agreement dated 18.11.1983 is not a valid and genuine agreement and that the defendants 2 to 5 have not established the genuineness and validity of the agreement dated 18.11.1983. The burden is on the defendants 2 to 5 to establish the genuineness of the agreement of sale dated 18.11.1983. The said decision of the Division Bench is squarely applicable to the facts of the case on hand. In this case also, the defendants 4 and 5 failed to establish the genuineness and validity of the unregistered agreement, Ex.B1 dated 26.02.1987 entered into with the first defendant, when the registered agreement Ex.A4 dated 27.05.1987 entered into between the plaintiff and the first defendant was subsisting.
22. In (P.Samiappa Gounder & 2 others v. P.K.Rajan & 3 others)2006 4 Law weekly 255, the learned single Judge of this Court held as follows:-
"37. Relying upon the above evidence, learned counsel for the first respondent has contended that as per
Section 19(b) of the Specific Relief Act, D.W.6 cannot be considered as a bona fide purchaser in good faith and without notice of the original contract.
Section 19(b) of the Specific Relief Act reads as follows:-
"19. Relief against parties and persons claiming under them by subsequent title.-- Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against--
(a) ...
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;"
38. In this juncture, learned counsel for the first respondent has relied upon the decision of a Division Bench of this Court in Munisamy.R. And 6 others v. P.Pandiarajan and 3 others (1993-1-L.W.186) wherein it was held that the subsequent purchaser in good faith and without any notice of prior contract should prove that he made necessary enquiry about the prior encumbarance with reference to the property and also had taken steps to discharge the subsisting liabilities over the same. On the basis of the dictum of law laid down in the said decision if the evidence of D.W.2, D.W.4, D.W.8 and D.W.9, creditors of the vendors under Exs.A-20 and A-21 is scrutinised, one would come to the irresistable conclusion that the encumbarances as spoken to by the said witnesses have not been quoted in the sale deed Exs.A-20 and A-21 so as to show that D.W.6 had discharged the liabilities. On the contrary, as referred to above, Exs.A-20 and A-21, the sale deeds are silent with reference to any encumbarance subsisting over the suit property. It follows that the subsequent purchaser, namely, D.W.6 cannot be considered as a transferee for value, who has paid the money in good faith and without notice of the original contract under Ex.A1. For the reasons aforesaid, this Court finds tha the appellant in A.S.No.544 of 1992/6th defendant has not discharged the burden of proving that he is a bona fide purchaser of the suit property for value and without notice of the prior contract under Ex.A-1.
23. In that case, the plaintiff entered into an agreement of sale on 30.05.1986 with the defendants 1 to 3, but the defendants 1 to 3 sold the property subsequently to the sixth defendant on the ground that the plaintiff failed to pay the entire balance amount within the period stipulated in the agreement. The learned single Judge, after analysis of oral and documentary evidence held that the sixth defendant cannot be considered as a bonafide purchaser in good faith and without notice of the original contract.
24. In (Muniswamy & six others vs. P. Pandiarajan, & three others) 1993 1 Law weekly 186, a Division Bench of this Court held as under:-
"20.
Section 19(b) of the Specific Relief Act relates to the relief against the claim of the susequent transferee, which reads as follows:-
"19. Except as otherwise provided by this chapter, specific performance of a contract may be enforced against ......
(b)any other person claoming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of original contract."
The onus initially lies on the subsequent purchaser that he had no knowledge of any previous contract and then the onus shifts on the plaintiff, the previous contracter, toshow that the subsequent purchaser was not a bona fide purchaser for value. It is seen from Ex.B1 that the major consideration is only to discharge the mortgage debt under Ex.A3 in favour of the plaintiff for Rs.35,500/- by the first defendant. In paragraph 8 of the written statement the seventh defendant had stated that the transaction of sale in favour of him is a bonafide transaction made in good faith and for valuable consideration and that he had made enquires and ascertained that there was no encumbarance. The only encumbarance of a mortgage in favour of the plaintiff had been duly provaid for and the sale deed has been properly executed. In paragraph 4 of the written statement also he has set out the objects of the purchase, namely, to inform to the defendants 8 to 10 that he required the premises for his own use and occupation and he wants to occupy after demolition and reconstruction and after evicting them. The learned counsel for the respondent rightly contended that if his intention is to demolish the building and to occupy, he is bound to discharge the mortgage created earlier. The seventh defendant says that after he obtained the sale deed, he issued a notice on 11.07.1981 under Ex.B2 to the three tenantsdefendants 8 to 10, about nine months after the execution of the sale deed. If really he wanted to pay money he would have done it earlier. Though in the evidence he would state that the plaintiff agreed to receive the mortgage amount 3 or 4 days after securing the house and he obtained the sale deed and he did not subsequently say that any attempt has been made to discharge the mortgage deed. What all was now contended was that the time fixed for payment under the mortgage is for three years time for redemption hence he is not bound to pay. In this connection the learned counsel for the appellant relied on a decision reported in Marwadi Sumermal Jamatraj v. Bandade Thukkappa Alias Thukkappa, wherein it has been held as follows:-
"This section protects a transferee who has "paid his money". If he has not paid any money, Then it rather difficult to literally apply this section. If he has not paid the whole of the consideration, as in Himatlal Motilal v. Vasudev Ganesh, (36 Bombay 446), it again cannot be said that he has paid the money; for he has paid only a part of it. Where, however, a portion of the consideration was in adjustment of an outstanding debt and the remainder was paid in cash, the transferee thereby paid to the transferor all that had been paid under the contract and can therefore lit erally said to have "paid this money". The facts of this case therefore attract S.27 and render the suit contract unenforceable against the respondents."
25. In this case, the Division Bench held that the failure on the part of the subsequent purchaser to discharge the mortgage and failure to make any enquiry of the person in possession cannot enure to their benefit to hold that such purchase was made in good faith. In this case, the defendants 4 and 5, without even applying for an encumbrance certificate to ascertain whether there are any subsisting encumbrance in the property to be purchased by them, purchased the property from the first defendant, when, on that date, the registered agreement of sale entered into between the plaintiff and the first defendant was in force. Moreover, the plaintiff, first defendant and defendants 4 and 5 are residing and or carrying business adjacent to each other therefore, the defendants 4 and 5 failed to establish that they had no knowledge about the execution of agreement of sale between the plaintiff and the first defendant.
26. In (M/s. Futnani Dair Farm v.Rangasamy Nadar (Srinivasan, J.) 1994 (1) MLJ 119, the Division Bench of this Court held in para 27, as follows:-
"27. In any event, it is admitted that the entire consideration has not been paid to the first defendant. Hence, defendants 2 and 3 are not entitled to claim the benefit of Sec.19(b) of Specific Relief Act. Dealing with the corresponding Section in the old Specific Relief Act viz., Sec.27(b), this Court has held in Sinna Ponnu v. Singaru Udayar, (1969) 2 M.L.J. 358, that the transferee must have paid the entire consideration in order to claim the protection under Sec.27(b) of the Specific Relief Act and if for any portion of the price a security alone had been executed, the transferee cannot calim to be a transferee "who has paid his money". It was held that the words "who has paid his money" in the section are not equivalent to the words "who has agreed to pay his money either in whole or in part". That judgment applies on all fours to this case."
27. In that case, the Division Bench found that the plaintiff entered into an agreement of sale dated 20.09.1982 with the first defendant and on execution of such sale agreement, possession was handed over to the plaintiff. While so, on 11.10.1982, the first defendant executed and registered a sale deed in favour of the second defendant in violation of the agreement in favour of the plaintiff. The Division Bench held that the second defendant failed to establish that he had paid the sale consideration in favour of the first defendant, while so, he is not entitled to the benefit under Sec. 19 (b) of Specific Relief Act. In the case on hand, the defendants 4 and 5 have not produced any documentary evidence to prove that the sale consideration had been paid to the first defendant and therefore, the decision of the Division Bench will squarely apply to the facts and circumstances of the case on hand.
28. In (Ethirajulu Naidu and another vs. Bole Naidu (died) and others) 1989 2 MLJ 357 wherein in para-7, it was held as follows:-
"7. ............... The sale transaction in favour of defendants 3 and 4 were on 19.05.72 as per Ex.B.1 and B.2. Hence, the interference is legitimate that the entry relating to the suit agreement Ex.A.1 stood reflected in the records available in the sub-Registrar's Office at Arakkonam anterior to the sale transaction Ex.B1 and B2 on 19.05.1972 and if there had been a genuine and a honest enquiry with regard to the title and subsisting encumbarance by defendants 3 and 4, certainly such enquiry would have revealed the above position.......... Defendants 3 and 4 must further prove that they are bona fide purchasers and this element has been demonstrated to be totally lacking. In this view, we are not persuaded to interfere in this letters patent appeal and accordingly, the same is dismissed......."
29. In this case, the Division Bench found that even prior to the execution of the sale deed in favour of the defendants 3 and 4 on 19.05.1972, under Ex.B1, the suit agreement, under Ex.A1, which was registered, stood reflected in the records available in the office of the Sub-Registrar, Arakonam anterior to the sale transaction under Ex.B1 and B2. If there had been a genuine and honest enquiry with regard to the title and subsisting encumbrance by the defendnats 3 and 4, certainly such enquiry would have revealed the above position. In this case, the plaintiff entered into an agreement of sale dated 27.05.1987, Ex.A4 with the first defendant, which is prior to Ex.B2, sale deed dated 07.01.1988 entered into by the first defendant with the defendants 4 and 5. As mentioned above, the defendants 4 and 5 have not taken any genuine or bonafide steps to ascertain as to whether there was any subsisting encumbrance in the property to be purchased by them and therefore, the defendants 4 and 5 cannot claim themselves to be bonafide purchaser of the suit property.
30. In all the above decisions, the Division Bench of this Court categorically stated that in the event of the sale consideration have not been fully paid including the non discharge of the mortgages stated in the sale deed, the subsequent sale cannot be a valid one and that the subsequent purchaser cannot be construed as a bonafide purchaser. In this case, it has been categorically admitted that the mortgages, which are subsisting in respect of the suit property, in favour of the plaintiff and his wife, has not been cleared by the defendants 4 and 5, who claims to be subsequent purchaser. Moreover, the defendants 4 and 5 have not taken the necessary steps to verify the encumbrances over the property before transacting with the first defendant.
31. The learned counsel for the defendants 4 and 5 relied upon the decision of the Punjab and Haryana High Court, reported in (Devinder Singh @ Dalvinder Singh and others vs. Mansha Singh and others) AIR 2003 Punjab and Haryana 166 and contend that the subsequent purchaser is entitled to impeach the validity of the sale agreement between his vendor and original agreement holder. No doubt, the subsequent purchaser has a legal right to challenge the validity of an agreement which came into existence earlier, provided a purchaser who purchased the property for valuable consideration without notice is entitled to such relief under exceptional circumstances. But in this case, even as per the written statement, the fourth defendant never claimed that she has purchased the property without notice. Moreover, the plaintiff, first defendant and the defendants 4 and 5 are either residing or carrying on business adjacent to each other and therefore, the defendants 4 and 5 cannot contend that they have no knowledge about the earlier sale agreement by their vendor with the plaintiff. Moreover, the defendants 4 and 5 have not chosen to verify the enrumbrances in the suit property before venturing to purchase the same, therefore, the said judgment will not come to the rescue of the defendants 4 and 5. Moreover, in that judgment, the learned single Judge of Punjuab and Haryana High Court held that the question of bonafide purchaser are question of facts and the onus to prove the good faith and bonafide purchaser is on the one who set up such plea. In this case, even though the defendants 4 and 5 claim that they are bonafide purchaser, such a purchase was made by them when the agreement of sale dated 27.05.1987, Ex.A4 entered into between the plaintiff and the first defendant was in force. Even otherwise, the defendants 4 and 5 have not proved by any oral or documentary evidence that consideration was paid to the first defendant for having purchased the suit property under Ex.A2 dated 07.01.1988.
32. One another factor to be considered is the first defendant had subjected the suit property for mortgage with the plaintiff on three occasion and received money. These transactions are made by means of a registered mortgage deeds. Therefore, when once the fourth defendant pleads that she had purchased the property for a valuable consideration from the first defendant, the first and foremost duty which a purchaser has to do is to clear the encumbrances from the property purchased. In this case, even today, the mortgage deeds entered into by the first defendant with the plaintiff and his wife subsists and it is an encumbrance over the suit property. Moreover the defendants 4 and 5 did not plead in the written statement that they are bonafide purchaser for valuable consideration without notice. The defendants 4 and 5 have also not pleaded that they have passed on the sale consideration to the first defendant or the mode or manner of payment made to the first defendant. Therefore, I am of the view that there is no consideration, much less valid sale consideration, paid by the defendants 4 and 5 to the first defendant to purchase the property and the sale deed dated 07.01.1988, Ex.B2 has emanated to defeat and deceive the plaintiff collusively. Therefore, I answer the first question in favour of the plaintiff and against the defendants 4 and 5 and the plaintiff is entitled to the suit relief.
33. Lastly it was argued by the defendants 4 and 5 that the minor share ought not to have been included by first defendant at the time of entering into the agreement of sale, Ex.A4 dated 27.05.1987 and if at all the the first defendant can execute the sale agreement in favour of the plaintiff relating to his share alone. At this point of time, this argument of the defendants 4 and 5 cannot be accepted because, the minors have been included as a party to the suit and this appeal, they were served, but they have not come forward to contest the appeal. Moreover, the minors have now attained majority. As held by the Honourable Supreme Court in (Sri Narayan Bal and others vs. Sridhar Sutar and others) AIR 1996 SC 2371, when the sale in favour of the fourth defendant has not been questioned by the minors, even after their majority, the sale made by the Kartha of the family can be construed to have been conveyed by including the shares of the minors. It was also held that the joint Hindu family by itself is a legal entity capable of acting through its Karta and other adult members of the family in management of the joint Hindu family property. The Honourable Supreme Court, in para No. 5 and 6, held as follows:-
"5. With regard to the undivided interest of the Hindu minor in joint family property, the provisions afore-culled are beads of the same string and need be viewed in a single glimpse, simultaneously in conjunction with each other. Each provision, and in particular
Section 8, cannot be viewed in isolation. If read together the intent of the legislature in this beneficial legislation becomes manifest. Ordinarily the law does not envisage a natural guardian of the undivided interest of a Hindu minor in joint family property. The natural guardian of the property of a Hindu minor, other than the undivided interest in joint family property, is alone contemplated under
Section 8, whereunder his powers and duties are defined. Section
12 carves out an exception to the rule that should there be no adult member of the joint family in management of the joint family property, in which the minor has an undivided interest, a guardian may be appointed; but ordinarily no guardian shall be appointed for such undivided interest of the minor. The adult member of the family in the management of the Joint Hindu Family property may be a male or a female, not necessarily the Karta. The power of the High Court otherwise to appoint a guardian, in situations justifying, has been preserved. This is the legislative scheme on the subject. Under
Section 8 a natural guardian of the property of the Hindu minor, before he disposes of any immovable property of the minor, must seek permission of the Court. But since there need be no natural guardian for the minor's undivided interest in the Joint family property, as provided under
Sections 6 and
12 of the Act, the previous permission of the Court under
Section 8 for disposing of the undivided interest of the minor in the joint family property is not required. The joint Hindu family by itself is a legal entity capable of acting through its Karta and other adult members of the family in management of the joint Hindu family property. Thus
Section 8 in view of the express terms of
Sections 6 and
12, would not be applicable where a joint Hindu family property is sold/disposed of by the Karta involving an undivided interest of the minor in the said joint Hindu family property. The question posed at the outset therefore is so answered.
6. In the instant case the finding recorded by the Courts below is that Jagabandhu, the eldest male member in the family acted as a Karta in executing the sale and had joined with him the two widows for themselves and as guardians of the minor members of joint Hindu family, as supporting executants. That act by itself is not indicative of the minors having a divided interest in the joint Hindu family property commencing before or at the time of the sale. In this view of the matter,
Section 8 of the Act can be of no avail to the appellant's claim to nullify the sale."
34. As far as the minors are concerned, they have attained majority, but they have not chosen to contest this appeal even though they were served. When they were minors, on their behalf, the first defendant had entered into various mortgage deeds by subjecting the suit property for mortgage and in order to repay the same, he had agreed to sell the suit property for a valuable consideration with the plaintiff. Even in the agreement of sale Ex.A4 dated 27.05.1987, the first defendant had categorically stated that he is agreeing to sell the property for repayment of the loans availed from the plaintiff, for family necessity. Therefore, the sale agreement dated 27.05.1987 will bind the minors. In any event, now the minors have attained majority and inspite of notice, they have not chosen to contest this appeal and remained exparte. Therefore, even this argument made by the learned counsel for the defendants 4 and 5 is liable to be rejected and accordingly, it is rejected. Therefore the second question framed for consideration is answered in favour of the plaintiff.
35. In the result, the decree and Judgment passed in O.S.No.68 of 1988. dated 22.11.1993 on the file of the Subordinate Judge, Villupuram is set aside and the first appeal is allowed. However, there shall be no order as to costs.
15.12.2009 Index : Yes / No Internet : Yes / No ogy/rsh To The Subordinate Judge ' Sub Court Villupuram B. RAJENDRAN, J rsh/ogy AS No. 312 of 1996 15.12.2009