C.S. VENKATESHversusMURTHY (D) BY LRS. & ORS.

676                      [2020]REPORTS
               SUPREME COURT    2 S.C.R. 676                [2020] 2 S.C.R.


A                              C.S. VENKATESH
                                        v.
                    A.S.C. MURTHY (D) BY LRS. & ORS.
                         (Civil Appeal No. 8425 of 2009)
B                             FEBRUARY 07, 2020
             [S. ABDUL NAZEER AND DEEPAK GUPTA, JJ.]
             Specific Relief Act, 1963 – s.16(c) – Plaintiff (since deceased)
      alleged that site in question was allotted in his favour – He
      commenced construction of building thereon – Since he did not
C
      have sufficient funds, defendants advanced money on condition of
      payment of interest – Plaintiff failed to pay it except for two months
      – Since the defendants were in need of accommodation, the plaintiff
      put them in possession of the schedule property by executing
      mortgage deed – As plaintiff could not pay the interest regularly,
D     defendants asked him to execute a nominal sale deed – Plaintiff
      executed sale deed dated 23.04.1975 in favour of the defendants
      for Rs.35,000/- – After defendants having received Rs.35,000/-
      advanced by them, the plaintiff demanded that the defendants
      execute reconveyance deed in terms of the agreement of
      reconveyance dated 23.04.1975 – However, the defendants failed
E
      to execute sale deed – Plaintiff filed suit against defendants inter
      alia for specific performance of agreement of reconveyance dated
      23.04.1975 in respect of the schedule property – Dismissed by trial
      court negativing plaintiff’s claim that sale deed was a nominal one
      obtained as a security for the amount advanced by the defendants
F     – High Court allowed plaintiff’s appeal – Held: Real character of
      the transaction has to be ascertained from the provisions of the
      documents viewed in the light of surrounding circumstances – Since
      two documents were executed on the same day, the transaction cannot
      be a mortgage by way of conditional sale in view of the express
      provisions contained in s.58(c) of the 1882 Act – Perusal of recitals
G
      contained in the sale deed shows that the property was agreed to be
      sold absolutely for Rs.35,000/- – Since the execution of the
      reconveyance deed has already been established, question of
      holding the sale deed to be nominal cannot be accepted – Plaintiff
      alleged that he was ready to pay Rs.35,000/- and called upon the
H
                                       676
   C.S. VENKATESH v. A.S.C. MURTHY (D) BY LRS. & ORS.                    677


defendants to execute the re-conveyance deed – However, in para          A
11 of the plaint it is pleaded that the plaintiff was running contract
business wherein he suffered heavy loss and as such he gave up the
business – Mere plea that he is ready to pay the consideration,
without any material to substantiate this plea, cannot be accepted –
Judgment of High Court set aside and that of trial court is restored
                                                                         B
– Transfer of Property Act, 1882 – s.58(c).
      Allowing the appeal, the Court
       HELD: 1.1 A reading of the sale deed marked at Exhibit
P-8, along with other surrounding circumstances, would clearly
indicate that it is an outright sale. The real character of the          C
transaction has to be ascertained from the provisions of the
documents viewed in the light of surrounding circumstances.
Since two documents were executed on the same day, the
transaction cannot be a mortgage by way of conditional sale in
view of the express provisions contained in Section 58(c) of the
Transfer of Property Act, 1882. A perusal of the recitals contained      D
in the sale deed at Exhibit P-8 shows that the property was agreed
to be sold absolutely for a total consideration of Rs.35,000/-. The
language employed in this document is plain and unambiguous
and the intention of the parties is also very clear from its recitals.
Even the evidence led by the parties does not indicate to the            E
contrary. The intention of the parties was to make the transaction
a sale. Since the execution of the reconveyance deed has already
been established, question of holding the sale deed to be nominal
cannot be accepted. [Paras 12-13][682-G-H; 683-A-B, D-E]
       1.2 The words ‘ready and willing’ imply that the plaintiff        F
was prepared to carry out those parts of the contract to their
logical end so far as they depend upon his performance. The
continuous readiness and willingness on the part of the plaintiff
is a condition precedent to grant the relief of performance. If the
plaintiff fails to either aver or prove the same, he must fail. To
adjudge whether the plaintiff is ready and willing to perform his        G
part of contract, the court must take into consideration the
conduct of the plaintiff prior, and subsequent to the filing of the
suit along with other attending circumstances. The amount which
he has to pay the defendant must be of necessity to be proved to
be available. Right from the date of the execution of the contract
                                                                         H
678            SUPREME COURT REPORTS                      [2020] 2 S.C.R.


A     till the date of decree, he must prove that he is ready and willing
      to perform his part of the contract. The court may infer from the
      facts and circumstances whether the plaintiff was ready and was
      always ready to perform his contract. The plaintiff alleged that he
      was ready to pay Rs.35,000/- to the defendants and called upon
      them to execute the re-conveyance deed. However, in para 11 of
B     the plaint it is pleaded that the plaintiff was running contract
      business wherein he suffered heavy loss and as such he gave up
      the business. It is also pleaded that at present the plaintiff has no
      business or profession and has no source of income. He has no
      property, either movable or immovable. Mere plea that he is ready
C     to pay the consideration, without any material to substantiate this
      plea, cannot be accepted. It is not necessary for the plaintiff to
      produce ready money, but it is mandatory on his part to prove
      that he has the means to generate the consideration amount.
      Except the statement of PW-1, there is absolutely no evidence
      to show that the plaintiff has the means to make arrangements
D     for payment of consideration under the reconveyance agreement.
      The trial court rightly held that the plaintiff was not ready and
      willing to perform his part of the contract. The High Court was
      not justified in reversing the well-reasoned judgment of the trial
      court. [Paras 15, 20, 23][683-G-H; 684-A-B; 685-F-H; 686-A-B,
      E-F]
E
            N.P. Thirugnanam (Dead) by LRs. v. Dr. R. Jagan Mohan
            Rao and Others (1995) 5 SCC 115 : [1995] 2 Suppl.
            SCR 53; Pushparani S. Sundaram and Others v. Pauline
            Manomani James (deceased) and Others (2002) 9 SCC
            582; Umabai and Anr. v. Nilkanth Dhondiba Chavan
F           (Dead) by LRs. and Anr. (2005) 6 SCC 243 : [2005] 3
            SCR 521 – relied on.
            Manjunath Anandappa URF Shivappa Hanasi v.
            Tammanasa and Others (2003) 10 SCC 390 : [2003] 2
            SCR 1068; Pukhraj D. Jain and Others v. G.
G           Gopalakrishna (2004) 7 SCC 251 : [2004] 1 Suppl.
            SCR 324 – referred to.
                                 Case Law Reference
      [1995] 2 Suppl. SCR 53         relied on               Para 16

H     (2002) 9 SCC 582               relied on               Para 17
   C.S. VENKATESH v. A.S.C. MURTHY (D) BY LRS. & ORS.                        679


[2003] 2 SCR 1068                 referred to              Para 18           A
[2004] 1 Suppl. SCR 324           referred to              Para 18
[2005] 3 SCR 521                  relied on                Para 19
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8425
of 2009.                                                                     B
     From the Judgment and Order dated 21.08.2006 of the High Court
of Karnataka at Bangalore in Regular First Appeal No. 626 of 2001.
      S. N. Bhat, Adv. for the Appellant.
     Trideep Pais, Ms. Sanya Kumar, N.K. Verma, Ms. Anjana
                                                                             C
Chandrashekar, Advs. for the Respondents.
      The Judgment of the Court was delivered by
      S. ABDUL NAZEER, J.
       1. This appeal is directed against the judgment and decree in RFA
No.626 of 2001 dated 21.08.2006 passed by the High Court of Karnataka        D
at Bangalore, whereby the High Court has allowed the appeal and set
aside the judgment and decree in O.S. No. 3308 of 1988 passed by the
Civil Judge, Bangalore City.
       2. A.S.C. Murthy was the plaintiff in the suit. He died during the
pendency of the suit. Therefore, his wife Smt. Jayashree was brought         E
on record as his legal representative. She is the first respondent in this
appeal. C.S. Venkatesh, the appellant herein, was defendant No.2 in the
suit. C. Sethurama Rao, was the defendant No.1 in the suit. He also
died during the pendency of the suit, therefore, his wife Smt. C.S.
Lalithamma was brought on record as his legal representative. She is         F
arrayed as respondent No. 2A in this appeal. Defendant Nos. 3 and 4
are respondent Nos. 3 and 4 in this appeal. The parties are hereinafter
referred to in their respective capacities before the trial court.
      3. The subject matter of the suit was the property situated at Site
No. 522, 17th Main Banashankari, I Stage, First Block, Srinagar, Bangalore   G
– 560 050 (hereinafter referred to as ‘the schedule property’).
       4. A.S.C. Murthy had filed the above suit against defendants for
specific performance of the agreement of reconveyance dated 23.04.1975
in respect of the schedule property and alternatively to declare that the
sale deed dated 23.04.1975 executed by him in favour of the defendants
                                                                             H
680             SUPREME COURT REPORTS                            [2020] 2 S.C.R.


A     is null and void. It was alleged in the plaint that the City Improvement
      Trust Board, Bangalore (for short ‘CITB’) had allotted the site in question
      in favour of the plaintiff. Thereafter, he commenced construction of the
      building on the said site. Since he did not have sufficient funds, he
      approached the defendants for certain financial assistance. Accordingly,
      the defendants advanced a sum of Rs.2,000/- as loan. Subsequently, a
B
      further sum of Rs.10,000/- was advanced on the condition of payment
      of interest at the rate of 18% p.a. However, the plaintiff failed to pay the
      interest on the said sum as agreed, except for a period of two months.
      Since the defendants were in need of accommodation, the plaintiff put
      them in possession of the schedule property by executing a deed of
C     mortgage dated 11.10.1973. According to the plaintiff, the defendants
      have advanced, in all, a sum of Rs.29,000/-. As the plaintiff could not
      pay the interest regularly, the defendants asked the plaintiff to execute a
      nominal sale deed in order to ensure prompt payment of interest.
      Accordingly, the plaintiff executed a deed of sale dated 23.04.1975 in
      favour of the defendants for a sale consideration of Rs.35,000/- by
D
      receiving Rs.6000/-, the difference in the sale price. It was alleged that
      the sale deed was executed as a security for the amount advanced by
      the defendants. It was contended that the defendants executed an
      agreement of reconveyance in respect of the schedule property dated
      23.04.1975 in favour of the plaintiff. It was also agreed that the defendants
E     were put in possession of the schedule property on the understanding
      that they need not pay rent and the plaintiff need not pay interest on the
      amount advanced by them to the plaintiff. After the expiry of five years
      and the defendants having received the sum of Rs.35,000/- advanced by
      them, the plaintiff demanded that the defendants execute a reconveyance
      deed in terms of the agreement of reconveyance dated 23.04.1975.
F
      However, the defendants have failed to execute sale deed.
            5. The second defendant filed the written statement admitting the
      execution of the mortgage deed dated 11.10.1973 and borrowing of a
      sum of Rs. 29,000/- by the plaintiff. It was contended that the defendants
      agreed to reconvey the property and executed the reconveyance
G     agreement prior to the execution of the sale deed. However, the plaintiff
      did not agree for reconveyance. The plaintiff gave up his demand for
      reconveyance and executed the sale deed. It was contended that even
      otherwise the reconveyance agreement was not to be acted upon. It
      was further contended that the plaintiff had borrowed the loan from the
H     bank on different occasions by mortgaging the title deeds of the property.
   C.S. VENKATESH v. A.S.C. MURTHY (D) BY LRS. & ORS.                            681
                   [S. ABDUL NAZEER, J.]

As the plaintiff failed to discharge his debt to the bank, the defendants        A
paid the said dues in order to save the schedule property from auction.
It was also contended that there was no plea or proof regarding readiness
and willingness to perform the plaintiff’s part of the contract as required
under Section 16(c) of the Specific Relief Act, 1963 (for short ‘the Act’).
It was denied that the sale deed dated 23.04.1975 was nominal and was
                                                                                 B
executed for the purpose of security for the loan advanced by the
defendants.
       6. On the basis of the pleadings of the parties, the trial court framed
the relevant issues. In support of the suit claim, wife of the deceased
plaintiff was examined as PW-1 and exhibited documents P-1 to P-19 in
her evidence. The second defendant was examined as DW-1 and exhibits             C
D-1 to D-15 were marked in his evidence. On consideration of the
evidence of the parties and materials on record, the trial court came to a
conclusion that the plaintiff has established the execution of agreement
of reconveyance. The Court also came to a conclusion that the sale
deed dated 23.04.1975 was not a nominal one, as contended by the                 D
plaintiff. The Court recorded a finding that the plaintiff has averred in
the plaint that there was sufficient plea in relation to readiness and
willingness of the plaintiff to perform his part of the contract. However,
it was held that the plaintiff had failed to prove that he was ready and
willing to perform the contract. Consequently, the trial court dismissed
the suit.                                                                        E

       7. The plaintiff filed R.F.A. No. 626 of 2001, challenging the
judgment and decree of trial court. The High Court on consideration of
the rival contentions of the parties held that the sale deed executed by
the plaintiff in favour of the defendants was security for the loan advanced
by the defendants. Consequently, the High Court allowed the appeal.              F
The defendants were directed to execute a deed of reconveyance in
respect of the schedule property in favour of the plaintiff.
       8. Appearing for the appellant/defendant No.2, Shri S.N. Bhat,
learned counsel submits that the suit filed by the plaintiff was for specific
performance of an agreement to reconvey. Therefore, he has to plead              G
and prove his readiness and willingness to pay the consideration amount
to the defendants. In this case, the plaintiff has failed to plead and prove
his readiness and willingness. He had no financial capacity to pay the
consideration amount. He did not discharge the earlier debt owed by
him to Sri Thyagaraja Co-operative Bank and the defendants had to pay            H
682             SUPREME COURT REPORTS                           [2020] 2 S.C.R.


A     off the debt in order to save the property. He had no capacity to pay the
      consideration amount. It is further argued that the sale deed dated
      23.04.1975 was not a nominal sale deed, as contended. The High Court
      instead of upholding the well-reasoned judgment of the trial court has
      set aside the said judgment and decreed the suit.
B           9. On the other hand, Ms. Sanya Kumar, learned advocate
      appearing for the respondent-plaintiff has sought to justify the impugned
      judgment and decree of the High Court.
           10. We have carefully considered the submissions of the learned
      counsel made at the Bar.
C            11. The suit filed by the plaintiff was for specific performance of
      the agreement of reconveyance dated 23.04.1975. Alternatively, he had
      also sought for a declaration that the sale deed dated 23.04.1975 was
      null and void and not binding on the plaintiff. On appreciation of the
      materials on record, the trial court has held that the plaintiff has proved
D     the existence and execution of agreement of reconveyance. It has
      negatived the plaintiff’s claim that the sale deed was a nominal one.
      However, the High Court has held that the plaintiff had executed the
      sale deed in favour of the defendants as security for the loan advanced
      by the defendants and that it cannot be considered a sale. Further, the
      High Court has directed specific performance of the agreement of
E     reconveyance. Therefore, the first question for consideration is whether
      the sale deed dated 23.04.1975 executed by the plaintiff in favour of the
      defendants is a nominal sale deed obtained as security for the loan
      advanced by the defendants.
             12. Execution of the sale deed and the deed of reconveyance are
F     not in dispute. According to the plaintiff, he could not pay the interest
      except for two months after the execution of the sale deed and that the
      understanding between the parties was that the defendants need not
      pay any rent and plaintiff need not pay the interest on the amount
      advanced by them to the plaintiff. It was contended that sale deed was
G     executed to ensure prompt payment of the amounts. But a reading of
      the sale deed marked at Exhibit P-8, along with other surrounding
      circumstances, would clearly indicate that it is an outright sale.
            13. It is settled that the real character of the transaction has to be
      ascertained from the provisions of the documents viewed in the light of
      surrounding circumstances. Since two documents were executed on the
H
   C.S. VENKATESH v. A.S.C. MURTHY (D) BY LRS. & ORS.                           683
                   [S. ABDUL NAZEER, J.]

same day, the transaction cannot be a mortgage by way of conditional            A
sale in view of the express provisions contained in Section 58(c) of the
Transfer of Property Act, 1882. A perusal of the recitals contained in the
sale deed at Exhibit P-8 shows that the property was agreed to be sold
absolutely for a total consideration of Rs.35,000/-. The plaintiff has also
stated that since possession has already been delivered earlier under a
                                                                                B
deed of mortgage, delivery of possession under this document does not
arise. It was further stated that henceforth neither himself nor his heirs
have any right, title or interest in the property and that the plaintiff is
entitled to water, air, right of easement, etc. concerning the property
together with all rights, title and interest and right of disposal of the
property. The defendant, his son and grandson, etc. unto posterity are          C
entitled to enjoy the property without any obstruction or trouble either by
the plaintiff or from anyone claiming under him. He has delivered the
possession certificate issued by the CITB and Khata certificate for
transfer of Khata from Bangalore City Corporation. Thus, the language
employed in this document is plain and unambiguous and the intention of
                                                                                D
the parties is also very clear from its recitals. Even the evidence led by
the parties does not indicate to the contrary. Thus, a careful perusal of
all the clauses of the sale deed and the evidence on record would clearly
show that the intention of the parties was to make the transaction a sale.
We are also of the view that since the execution of the reconveyance
deed has already been established, question of holding the sale deed to         E
be nominal cannot be accepted.
       14. The next question for consideration is in relation to compliance
of Section 16(c) of the Act by the plaintiff. Though a question was raised
before the trial court that there are no pleadings as regards the plaintiff’s
readiness and willingness to perform the contract, the trial court has          F
rightly held that there is sufficient compliance of Section 16(c) of the
Act to the extent of pleadings. Therefore, the question to be considered
is whether the plaintiff was ready and willing to perform his part of the
contract.
        15. The words ‘ready and willing’ imply that the plaintiff was          G
prepared to carry out those parts of the contract to their logical end so
far as they depend upon his performance. The continuous readiness and
willingness on the part of the plaintiff is a condition precedent to grant
the relief of performance. If the plaintiff fails to either aver or prove the
same, he must fail. To adjudge whether the plaintiff is ready and willing
                                                                                H
684               SUPREME COURT REPORTS                             [2020] 2 S.C.R.


A     to perform his part of contract, the court must take into consideration
      the conduct of the plaintiff prior, and subsequent to the filing of the suit
      along with other attending circumstances. The amount which he has to
      pay the defendant must be of necessity to be proved to be available.
      Right from the date of the execution of the contract till the date of decree,
      he must prove that he is ready and willing to perform his part of the
B
      contract. The court may infer from the facts and circumstances whether
      the plaintiff was ready and was always ready to perform his contract.
             16. In N.P. Thirugnanam (Dead) by LRs. v. Dr. R. Jagan
      Mohan Rao and Others1, it was held that continuous readiness and
      willingness on the part of the plaintiff is a condition precedent to grant of
C     the relief of specific performance. This circumstance is material and
      relevant and is required to be considered by the court while granting or
      refusing to grant the relief. If the plaintiff fails to either aver or prove the
      same, he must fail. To adjudge whether the plaintiff is ready and willing
      to perform his part of the contract, the court must take into consideration
D     the conduct of the plaintiff prior to and subsequent to the filing of the suit
      along with other attending circumstances. The amount of consideration
      which he has to pay to the defendant must necessarily be proved to be
      available.
             17. In Pushparani S. Sundaram and Others v. Pauline
E     Manomani James (deceased) and Others2, this Court has held that
      inference of readiness and willingness could be drawn from the conduct
      of the plaintiff and the totality of circumstances in a particular case. It
      was held thus:
               “So far these being a plea that they were ready and willing to
F              perform their part of the contract is there in the pleading, we have
               no hesitation to conclude, that this by itself is not sufficient to hold
               that the appellants were ready and willing in terms of Section
               16(c) of the Specific Relief Act. This requires not only such plea
               but also proof of the same. Now examining the first of the two
               circumstances, how could mere filing of this suit, after exemption
G              was granted be a circumstance about willingness or readiness of
               the plaintiff. This at the most could be the desire of the plaintiff to
               have this property. It may be for such a desire this suit was filed

      1
          1995 (5) SCC 115
      2
          2002 (9) SCC 582
H
    C.S. VENKATESH v. A.S.C. MURTHY (D) BY LRS. & ORS.                         685
                    [S. ABDUL NAZEER, J.]

       raising such a plea. But Section 16(c) of the said Act makes it         A
       clear that mere plea is not sufficient, it has to be proved.”
     18. Similar view has been taken by this Court in Manjunath
Anandappa URF Shivappa Hanasi v. Tammanasa and Others3 and
Pukhraj D. Jain and Others v. G. Gopalakrishna4.
       19. The judgment of this Court in Umabai and Anr. v. Nilkanth           B
Dhondiba Chavan (Dead) by LRs. and Anr.,5 is almost similar to the
case at hand where the plaintiff had filed a suit for specific performance
of the agreement to re-convey property. The plea of the plaintiff was
that the transaction was one of mortgage and the sale stood redeemed
and the plaintiff was discharged from the debt and he was ready to pay         C
the defendant the amount for the property only in the alternative that the
plea of mortgage was not accepted by the Court, would show that his
readiness was conditional. The plaintiff did not have any income and
could not raise the amount required for re-purchase of the property. In
the totality of the circumstances, it was held that the plaintiff was not
ready and willing to perform the contract. The conditions laid for the         D
specific performance of the contract are in para 30, which is as under:
       “30. It is now well settled that the conduct of the parties, with a
       view to arrive at a finding as to whether the plaintiff-respondents
       were all along and still are ready and willing to perform their part
       of contract as is mandatorily required under Section 16(c) of the       E
       Specific Relief Act must be determined having regard to the entire
       attending circumstances. A bare averment in the plaint or a
       statement made in the examination-in-chief would not suffice.
       The conduct of the plaintiff-respondents must be judged having
       regard to the entirety of the pleadings as also the evidences brought   F
       on records”.
       20. In the instant case, the plaintiff has alleged that he was ready
to pay Rs.35,000/- to the defendants and called upon them to execute
the re-conveyance deed. However, in para 11 of the plaint it is pleaded
that the plaintiff was running contract business wherein he suffered heavy     G
loss and as such he gave up the business. It is also pleaded that at
present the plaintiff has no business or profession and has no source of

3
  2003 (10) SCC 390
4
  2004 (7) SCC 251
5
  (2005) 6 SCC 243                                                             H
686             SUPREME COURT REPORTS                               [2020] 2 S.C.R.


A     income. He has no property, either movable or immovable. Mere plea
      that he is ready to pay the consideration, without any material to
      substantiate this plea, cannot be accepted. It is not necessary for the
      plaintiff to produce ready money, but it is mandatory on his part to prove
      that he has the means to generate the consideration amount. Except the
      statement of PW-1, there is absolutely no evidence to show that the
B
      plaintiff has the means to make arrangements for payment of consideration
      under the reconveyance agreement.
             21. It is relevant to state here that before filing the suit, the plaintiff
      had filed an application before the competent authority under the
      Karnataka Debt Relief Act seeking extinguishment of the debt and
C     delivery of the property back to him. No doubt, the application was
      dismissed by the authority. But the fact remains that the intention of the
      plaintiff was not to pay the amount as per the re-conveyance agreement.
             22. The deed of re-conveyance, contains a clause for payment of
      interest on the consideration amount of Rs.35,000/-. However, the plaintiff
D     has pleaded that there is no agreement to pay the interest. This shows
      that the plaintiff was not ready to perform his part of the obligation as
      per the agreement. Further, the plaintiff had mortgaged the property
      with the bank and the bank had obtained an award against the plaintiff.
      When the suit property was put up for auction, the defendants paid the
E     entire amount to the bank which was payable by the plaintiff under this
      award. This aspect also indicates the conduct of the plaintiff.
             23. Taking an overall view of the matter, the trial court has rightly
      held that the plaintiff was not ready and willing to perform his part of the
      contract. The High Court, in our view, was not justified in reversing the
F     well-reasoned judgment of the trial court.
             24. In the result, this appeal succeeds and it is accordingly allowed.
      The judgment of the High Court in R.F.A. No.626 of 2001 dated
      21.08.2006 is set aside and the judgment and decree passed by the trial
      court in O.S. No.3308 of 1988 dated 12.04.2001 is restored.
G            25. There will be no order as to costs.


      Divya Pandey                                                       Appeal allowed.



H