Slapped with a decree for specific performance by the trial court and having failed to succeed in the lower appellate court, the defendant in O.S.No.396/1997 before the Munsiff Court, Ottapalam has come up in appeal.
2. The case had a checkered carrier. It is interesting to note that the parties are siblings. Basis for the suit is Ext.A1 document dated 11.02.1994 an agreement entered into between the plaintiff and the defendant whereby the first party agreed to pay a sum of ₹ 22,000/- with interest and transfer a property belonging to him in lieu of transfer of a property owned by the defendant in his favour. Ext.A1 agreement is self explanatory. It is unnecessary to refer to it in detail. Suffice to say that on calling upon the defendant to honour the agreement, he failed to do so. Therefore, the suit was laid.
3. The suit was resisted on the ground that the contract is unenforceable. It is also contended that there is nothing to show that the plaintiff was ready and willing to perform his part of the contract. It is also pointed out that the agreement was inequitable, unfair and provides undue advantage to the plaintiff. On the basis of these contentions, he prayed for a dismissal of the suit.
4. Issues were raised by the trial court. The evidence consists of the testimony of PWs 1 and 2 and documents marked as Exts. A1 to A3 from the side of the plaintiff. Defendants examined DW1.
5. Initially, the trial court decreed the suit. The aggrieved defendant carried the matter in appeal and he succeeded in the appellate court. That brought the plaintiff before this Court in R.S.A.No.1051/2009. This Court allowed the appeal and remanded the matter to the lower appellate court for fresh consideration reserving the liberty of the parties to adduce further evidence in the case. After the matter went back to the lower appellate court, the plaintiff sought to amend the plaint incorporating a schedule and pleading with respect to B schedule property which he had to assign in favour of the defendant to get the property of the defendant assigned in his favour. It is not disputed before this Court that an amendment so moved was not opposed and it was allowed and incorporated. Thereafter, the appeal was dismissed. That brings the defendant before this Court.
6. At the time of admission, the following substantial questions of law were formulated:
“(i) Is not a sale different from an exchange since the sale is transfer for the exchange of money, and an exchange being a transfer either way on mutually, is not the courts having power to compel specific performance only of a sale and not of an exchange?
(ii) Is not the suit not maintainable as what is sought is specific performance of an exchange?”
7. Fortunately for this Court, facts are not in dispute nor is the right to the respective properties.
8. Sri. G. Sreekumar (Chellur), the learned counsel appearing for the appellant based his arguments on the legal issues involved. According to the learned counsel, unlike in a contract for sale, this being a contract of exchange, cannot be treated on par of the contract of sale and it cannot be specifically enforced as in the case of a contract for sale. Elaborating on the issue, it was contended that while in the case of contract for sale, transfer of ownership is in exchange of money, in the case of exchange as defined under Section 118 of Transfer of Property Act, it may either be money or some other thing. The learned counsel went on to point out that in the case of exchange, one person gives one thing and the other person gives another thing as consideration. Till this transaction is completed, one of the parties is at liberty to withdraw and that makes the contract unenforceable. In the case of exchange as defined under Section 118 of Transfer of Property Act, there is an essential ingredient of mutuality which cannot be enforced by any court of law. It is contended that in the case on hand, it may not be possible to say that the defendant can be compelled to accept the ownership of the property to be assigned by the plaintiff for which he is not inclined to accept. This essential aspect has been lost sight of by the courts below and therefore the decree needs to be interfered with.
9. Sri. Santheep Ankarath, the learned counsel appearing for the respondents on the other hand contended that the distinction that is now sought to be drawn is without substance. One has to look at Section 10 of the Specific Relief Act to see whether the contract is enforceable. It draws no distinction between a contract for sale and an exchange. Even in the case of a contract for sale, there may be unwillingness on the part of one party to perform his part of the contract, then the court compels him to do so. There is no difference when one seeks an enforcement of a contract for exchange also. The learned counsel relied on the decision reported in Calico Dyeing and Printing Works v. Commissioner of Income Tax [1966 ITR 221 Bombay]. It is also pointed out that at no point of time, the defendant expressed his willingness to accept the property under Ext.A1, nor did he express his unwillingness to go through the transaction. It is therefore contended that there is no merit in the contentions now raised by the learned counsel for the appellant.
10. After having heard the learned counsel on both sides and perused the relevant portions of Transfer of Property Act and Specific Relief Act, it appears that there may not be much substance in the contentions raised by the learned counsel for the appellant. Recollecting the facts for understanding the provisions of law, the plaintiff agreed to pay a sum of ₹ 22,000/- with interest thereon to defendant and also transfer a portion of his property in lieu of the defendant transferring his property in favour of the plaintiff. There is a history behind the transaction which need not be gone into in this proceeding. There is no dispute regarding the title to the property nor is there any dispute regarding the execution of Ext.A1 contract.
11. Sale is defined as follows:
“Sale is a transfer of ownership in exchange for a price paid or promised or part- paid and part-promised.”
and exchange is defined as follows:
“When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an exchange.”
12. A plain reading of sale and exchange clearly reveal that all sales may be exchanges but all exchanges may not be sales. Sale is in fact a transfer of ownership in exchange for money. Whereas, exchange means transfer of ownership which may either be for money or for something else. It cannot be disputed that both are contracts.
13. The learned counsel appearing for the appellant was not able to show that Ext.A1 is not an executory contract or in other words, it is clear from Ext.A1 that something more had to be done so as to complete the transaction. It cannot be treated to be an executed contract.
14. Now one may turn to Section 10 of the Specific Relief Act which reads as follows:
“10. Cases in which specific performance of contract enforceable.--
Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced---
(a) when there exists no standard for ascertaining actual damage caused by the non- performance of theact agreed to be done; or
(b) when the act agreed to be done is such that compensation in money for its non- performance would not afford adequate relief.”
15. The section draws no distinction between an exchange or a contract for sale. A contract for sale or a contract for exchange may not as such confer rights over the immovable property but may have other legal consequences. However, to say that a contract for exchange cannot be specifically enforced is something which cannot be countenanced.
16. There can be no manner of doubt that an agreement for exchange it is a contract and going by Section 10, the court may in its discretion hold that every contract may be enforced unless of course the contingencies made mention in the provisions exist.
17. In the case on hand, the appellant agreed to transfer his property in lieu of the plaintiff paying a sum of ₹ 22,000/- with 12% interest and also transferring a portion of his property. Obviously, there is mutuality between the two parties.
18. It cannot be disputed that a contract creates mutual obligations and rights. It is difficult to accept the plea by the learned counsel for the appellant that rights and the obligations available under an agreement for exchange cannot be specifically enforced. No law seems to prohibit the same. May be that it does not stand on par with a contract for sale. But there is transfer of rights from one person to another under certain conditions and circumstances. When one party fails to honour his part of the agreement, another party can certainly approach the court seeking enforcement. In that regard, there seems to be no difference between an agreement for sale and an exchange.
19. In the decision reported in Calico Dyeing and Printing Works v. Commissioner of Income Tax [1966 ITR 221 Bombay], the Bombay High Court had occasion to consider a case where for transfer of ownership, consideration was in payment of money and transfer of shares. The learned Judges of the High Court held that it is a contract for sale and it can be specifically enforced. Even otherwise, the very definition of exchange when read along with Section 10 of the Specific Relief Act does not preclude the enforcement of an agreement for exchange.
20. The contentions raised by the learned counsel for the appellant that he cannot be called upon to accept a property which he is not inclined to hold and that precludes the court from granting specific performance also cannot be accepted. It is not the desire or the wish of the parties that matters in a suit for specific performance. The suit for specific performance is concerned with mutual obligations and rights and when one party fails to discharge his obligations, the court compels him to do so or if he fails to do that, the court takes upon himself to discharge the same.
In the light of the above principle, the contention raised by the learned counsel for the appellant has to fail.
This appeal is without merits and is accordingly dismissed. There will be no order as to costs.
P.BHAVADASAN JUDGE ds