Supreme Court of India
M/S J.P. BUILDERS & ANR.versusA. RAMADAS RAO & ANR.
- Citation
- 2010 INSC 799
- Decided
- 22 November 2010
- Disposal
- Dismissed
- Bench
- P SATHASIVAM
Holding
The Supreme Court upheld the High Court’s decree for specific performance, confirming the plaintiff’s readiness and willingness, rejecting the contention that the contract was contingent or impossible, allowing marshalling under TPA s.56, affirming the High Court’s jurisdiction to hear the writ, its award of costs, and its directions to the bank, and dismissed the appeals.
Issues considered
- Whether the plaintiff proved ‘readiness and willingness’ under Specific Relief Act 1963 s.16(c) for specific performance.
- Whether the agreement constituted a contingent contract and was impossible to perform under Contract Act 1872 ss.31‑32.
- Whether the plaintiff could invoke the right of marshalling under Transfer of Property Act 1882 s.56 despite not pleading it.
- Whether the High Court could entertain a writ petition under Art 226 of the Constitution together with the appeal.
- Whether the High Court was justified in awarding costs to the plaintiff.
- Whether the High Court could issue directions to the bank that do not conflict with the Recovery Tribunal’s orders.
Legislation cited
- Code of Civil Procedure, 1908s. 35, s. 96
- Constitution of Indias. Article 136, s. Article 226
- Indian Contract Act, 1872s. 31, s. 32
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993
- Specific Relief Act, 1963s. 16(c)
- Transfer of Property Act, 1882s. 56, s. 81
Subjects
specific performancereadiness and willingnesscontingent contractdoctrine of impossibilitymarshallingTransfer of Property ActSection 56Section 81Recovery of Debts ActArticle 226Article 136costscivil proceduremortgagesale agreement
Judgment
[2010] 15 (ADDL.) S.C.R. 538
MIS J.P. BUILDERS & ANR.
v.
A. RAMADAS RAO & ANR.
(Civil Appeal Nos. 9821-9822 of 2010)
NOVEMBER 22, 2010
B
[P. SATHASIVAM AND ANIL R. DAVE, JJ.]
Specific Relief Act, 1963:
'
c s.16(c) - Suit for specific performance of contract -
"Readiness and willingness" - Connotation of - HELD:
Clause (c) of s.16 mandates that the person seeking specific
performance must prove that he has performed or has been
ready and willing to perform the essential terms of the contract
0 which are to be performed by him - It is a condition precedent
for obtaining the relief - The onus is on the plaintiff - In the
instant case, the plaintiff has proved his readiness and
willingness to perform his part of obligation under the contract.
Contract Act, 1872:
E
ss. 31 and 32 - Contingent contract - Suit land
mortgaged to Bank - Owners entering into agreement for sale
with plaintiff and undertaking to discharge their loans and to
execute sale deed in favour of plaintiff after discharge of
F mortgage - HELD: Clauses in the agreement to discharge
the loan of the Bank and handover the original title deeds to
the plaintiff cannot be construed as impossible event so as
to affect t/1e terms of the contract to become void - Nor can it
be said that the contract was a contingent contract - Doctrine
G of impossibility cannot be permitted to become a device for
destroying the sanctity of a contract - Doctrines - Doctrine
of impossibility.
Transfer of Property Act, 1882:
H 538
I
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 539
ss.56 and 81 -:- Plea of marshalling - Suit for specific A
performance of agreement for sale of suit property which was
mortgaged to Bank - Decree of specific performance granted
- Appeal before High Court - Plea of marshalling raised as : ~·
,; .-
the suit property was brought to auction by orders of ORT,
along with other properties of vendors - HELD: Plea of B
marshalling being pure question of law based upon the
decree obtained cannot simply be thrown out merely because
the same was not specifically pleaded - In the instant case,
High Court has rightly granted the relief to the plaintiff -
Merely because proceedings are pending before ORT, it is c
not a bar for approaching civil court for relief u/s 56 of TP Act
- Recovery of Debts Due to Bank and Financial Institutions
Act, 1963.
Constitution of India, 1950:
D
Article 226 - Writ petition involving same property as in
pending appeal before High Court - HELD: There is no bar
for the Division Bench of the High Court which has jurisdiction
to hear the appeal, to hear writ petition when the same is
, connected with the main issue - Besides, in the instant case, E
no such objection was raised before the High Court.
Article 136 - Jurisdiction of Supreme Court - HELD:
Even if leave is granted, irrespective of the nature of the
subject matter, the appellant must show the exceptional and
F
special circumstances and, if there is no interference by the
Court, substantial and great injustice would result.
Code of Civil Procedure, 1908:
s. 35 - Costs - HELD: In asmuch as the plaintiff after G
valuing the suit and paying. substantial court fee, secured a
decree for specific performance, though he could not secure
a relief in its entirety, the plaintiff is entitled to his costs.
Jurisdiction:
H
540 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A Appeal and writ petition before High Court arising out of
decree of specific performance, and directions of ORT in
respect of same property - Direction by High Court to Bank
vis-a-vis orders of ORT - HELD: High Court after taking into
consideration various connected issues in respect of the
s same properties and several orders passed by Civil Court
and ORT and the fact that the borrower has other properties
to satisfy the claim of the Bank, issued directions/clarifications
safeguarding the interests of all parties, which do not run
counter to orders of ORT, and, therefore, need not be
c interfered with - Recovery of Debts Due to Bank and
Financial Institutions Act, 1963.
Appellants nos. 1 and 2, offered to respondent no.2-
Bank various properties, including the suit property (30
acres and 86 cents of lands), as security for the principal
D as well as interest amount payable by MIS 'AA', a sister
concern of appellant no. 1 of which appellant no. 2 was
the sole proprietor. On 15.8.2005, the appellants entered
into a Memorandum of Understanding (MoU) (Ext. A-2)
with respondent no. 1 for sale of the suit property at the
E rate of Rs. 14 lakhs per acre and the latter paid Rs. 1 lakh
as advance. On 3.2.2006, respondent no. 1 entered into
a sale agreement (Ext. A-3) with the appellants for
purchase of the suit property at the enhanced rate of Rs.
18 lakhs per acre for a total consideration of
F Rs.5,55,48,0001- and paid a sum of Rs. 24 lakhs in
addition of Rs. 1 lakh already paid. On 18.4.2006, a
further sum of Rs. 50 lakhs was paid. On 7.8.2006,
respondent no. 1 filed O.S. No. 336 of 2006 before the
Principal District Judge against the appellants and the
G Bank. The suit was partly decreed. Relief of specific
performance was allowed directing appellants no. 1 and
2 specifically to perform their part of the obligations
arising out of the agreement for sale dated 3.2.2006 (Ext.
A-3) by executing the sale deed in favour of respondent
no. 1 on receipt of the balance sale consideration of Rs.
'.
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 541
4,80,48,000/ subject to the mortgage of the Bank. A
Respondent no. 1 filed an appeal (A.S. No. 708 of 2009)
before the High Court challenging the rejection· of his ·
prayer of mandatory injunction b.Y the trial court for
directing the appellants to discharge the loan in respect
of ORT proceedings and claiming cos~. Applications for B
interim relief were also filed. The appellants also filed an
·.· appeal ( A.S. No. 946 of 2009) before the High Court
challenging the decree for specific performance.
Meanwhile the Bank filed an O.A. before the Debts C
Recovery Tribunal. The Presiding Officer, ORT, by his
order dated 15.5.200~, held the Bank entitled to recover
a sum of Rs. 11,08,41,875/- from MIS 'AA'. Consequently,
a recovery certificate and sale notification dated
23.10.2009, bringing to sale the suit property, were
issued. D
Respondent no. 1 filed a writ petition (W.i:>. No. 23405
·of 2009) before the High Court praying for a writ of
mandamus for bearing the respondents from bringing to
auction the suit property forming the subject matter of the E
decree in his favour in 0.5. No. 336 of 2006 on the file of
the Principal District Judge.
Ultimately, the Division Bench of the High Court
partly allowed A.S. No. 708 of 2008 filed by respondent F
no.1 directing him to deposit the balance sale
consideration with 18% interest from the date of filing of
the suit and also directed the appellants to execute the
sale deed conveying the suit property to respondent no.
1; the Bank was directed to proceed against the various
other properties of the appellants being the subject G
matter of O.A. No. 491 of 1999 for recovering the balance·
amount. The review petitions of the appellants having
been dismissed, they filed the appeals.
The' questions for consideration before the Court H
542 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A were: (i) whether the plaintiff had established "readiness
and willingness" in terms of s. 16(c) of the Specific Relief
Act, 1963 and the courts below were right in granting the
decree for specific performance; (ii) whether the
agreement for sale was a contingent contract and
B impossible to fulfil and whether the courts below were
justified in granting the relief to the plaintiff; (iii) whether
the right of marshalling as provided in s. 56 of the
Transfer of Property Act, 1882 was available to the plaintiff
in the suit for specific performance and whether the High
c Court was justified in granting the relief in the absence
of any pleading and issue before the trial court; (iv)
whether the High Court was justified in hearing the writ
petition filed under Article 226 of the Constitution of India
along with the regular first appeals filed u/s 96, CPC; (v)
whether the High Court was justified in granting costs to
0
the plaintiff; and (vi) whether the High Court was justified
in issuing the directions to the Bank vis-a-vis the orders
of the Debts Recovery Tribunal.
Dismissing the appeals, the Court
E
HELD: 1.1. "Readiness and willingness" is enshrined
in clause (c) of s. 16(c) of the Specific Relief Act, 1963.
This clause provides that the person seeking specific
performance must prove that he has performed or has
F been ready and willing to perform the essential terms of
the contract which are to be performed by him. The
words "ready" and "willing" imply that the person was
prepared to carry out the terms of the contact. The
distinction between "readiness" and "willingness" is that ·
G the former refers to financial capacity and the latter to the
conduct of the plaintiff wanting performance. Generally,
readiness is backed by willingness. [para 8-9] [561-G-H;
562-A-B]
1.2. Section 16(c) of the Specific Relief Act, 1963
H mandatE!S "readiness and willingness" on the part of the
'
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 54~
plaintiff and it is a' condition precedent for obtaining relief A
of grant of specific performance. It is also clear that in a
suit for specific performance, the plaintiff must allege and
prove a' continuous "readiness and willingness" to
perform the contract on his part from the date of the
contract. The onus is on the plaintiff. It is settled law B
that even in the absence of specific plea by the opposite
party, it is the mandate of the statute that plaintiff has to
comply with Section 16(c) of the Specific Relief Act and
when there is non-compliance with this statutory mandate,
the Court is not bound to grant specific performance and c
is left with no other alternative but to dismiss the suit. It
·is also clear that readiness to perform must be
established throughout the relevant points of time.
"Readiness and willingness" to perform the part of the
contract has to be determined/ascertained from the 0
conduct of the parties. [para 12] [563-E-H; 562-A]
N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao & Ors.,
1995 (2) Suppl. SCR 53 = (1995) 5 SCC 115; P.D'Souza
vs. Shondrilo Naidu, 2004 (3) Suppl.· SCR 186 = (2004) 6
sec 649 - relied on. E
R. C. Chandiok & Anr. vs. · 'wni Lal Sabharwal & Ors.,
1971 SCR 573 = (1970) 3 SCC 140 - referred to.
1.3. Insofar as readiness and willingness on the part
F
of the plaintiff in the instant case is concerned, apart from
the specific plea in the plaint and his assertion in the
witness box at the time of trial, about the payment and
advance of substantial amount, he also placed the
relevant materials in the form of letters to show that he
was corresponding with the Bank for early settlement of G
the dues. The plaintiff has demonstrated by placing oral
and documentary evidence that on the date of execution
of Ex. A-3, he has. paid further advance of Rs. 24 lakhs
and Rs. 50 lakhs on 18.04.2006. In order to prove that he
had sufficient means of finance, the plaintiff has produced H
544 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A documents under Exts. A-12 and A-13. In his evidence
as PW-1, he has asserted that he had ready cash and
also produced Fixed Deposit Receipt (Ex.A-11 ), proof of
Savings Bank Accounts (Exts. A-12 and A-13). Exts. A-
11 to A-13 coupled with assertion made in the oral
s -evidence of PW-1, would amply show that plaintiff had
suffh:ient ca.sh and financial capacity to complete the
transaction. Under Ext. A-4, he had intimated that he is
prepared to get the sale executed. The Courts below are,
therefore, right in arriving at a conclusion that the plaintiff
c has proved and complied with the mandates provided u/
s 16 (c) of the Specific Relief Act. [para 17-18) [566-A-B;
567 -A-E-G; 566-B-C]
1.4. Further, the plaintiff is required to pay the
balance amount of consideration only on the event of a
D demand made for payment of further amount by the
defendants on the basis of the confirmation letter to be
obtained from the bank as per the agreement for sale
under Ext. A-3. Absolutely, there is no evidence as to any
demand made by defendant Nos. 1 and 2 from the
E plaintiff for further payment of sale price. Defendant Nos.
1 and 2 did not lead any oral evidence in support of their
·claim. They also avoided the witness box. As rightly
pointed out by the High Court, mere withdrawal of Rs.
10,01,000/- deposited in "No-lien account" by the plaintiff
F has no significance since subsequent to the same both
parties have entered into agreement for sale (Ext.A-3) on
03.02.2006 on which date the plaintiff has also paid a
further advance of Rs. 25 lakhs, and further obtained
advance of Rs. 50 lakhs from the plaintiff on 18.04.2006
G and made endorsement in the agreement for sale (Ext.A-
3). These facts have been clearly explained by PW-1 in
his evidence and he also asserted that the same fact was
orally informed to defendant Nos. 1 and 2. There is no
reason to disbelieve the assertion of PW-1. [para 18) [567-
H F-G; 568-A-B-G-H; 569-A-C]
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 545
1.5. With the materials placed, specific assertion in the A
plaint, oral and documentary evidence as to execution of
agreement, part-payment of sale consideration, having
sufficient cash and financial capacity to execute the sale
deed, bank statements as to the moneys in fixed deposits
and saving accounts, the plaintiff has proved his B
"readiness" and "willingness" to perform his part of
obligation under the contract. The concurrent findings
of the trial court as well the High Court as to readiness
and willingness to perform plaintiff's part of the
obligations under the contract, in the absence of any c
acceptable contra evidence, is confirmed. [para 19] [569-
D-F]
2.1 . .Contingent contract has been defined in s.31 and
method of enforcement is stated in s.32 of the Contract
Act, 1872. It is clear that if the condition prescribed or D
even described in the contract is impossible,
undoubtedly, such contracts become void and not
enforceable in terms of s. 32. In the instant case, among
various clauses, Clauses 4, 6, 7 in the MoU (Ext. A-2) were
highlighted by the appellants to contend uncertain events E
and impossible conditions at ··1e hands of the Bank. But
the agreement for sale dated 03.02.2006 is a fresh
agreement and, therefore, Clauses 4, 6 and 7 of the MoU
(Ext. A-2) would not govern the parties. It is relevant to
note that in the plaint, this aspect has been specifically F
pleaded wherein it was highlighted that the plaintiff
sought for performance of contract strictly in accordance
with the original Memorandum of Understanding (MoU)
dated 15.08.2005 as merged with the agreement for sale
. dated 03.02.2006 entered into between the plaintiff and G
the defendant Nos. 1 and 2 for sale and purchase of the
suit property. As per Clause 3, 4 and 6 in Ex. A-3, the
vendor and defendant Nos. 1 and 2 have undertaken to
discharge their loans and hand over title deeds. In view
of E~t. A-3, the conditions incorporated in. Ext. A-2 need H
546 SUPREME COURT REPORTS (2010] 15 (ADDL.) S,C.R.
A not be complied with and it cannot be said that the
contract was a contingent contract and unless and until
a letter of confirmation issued by the Indian Bank, the
same is not enforceable. The vendors have agreed to
sell the property but agreed to execute the sale deed after
B discharge of the mortgage in favour of the defendants.
It was only the execution of the sale deed which was
postponed to a future date. The clauses referred in Ext.
A-3 do not insist the sale deed is to be executed only after
the acceptance of OTS proposal by the Bank. [para 21-
C 22) (570-C-D-F-H; 571-A-G; 572-C-E)
2.2. Clause 4 of Ext. A-3, makes it clear that to
discharge the loans of the Bank, tlie vendors are free to
make a request to the purchaser, namely, the plaintiff, to
make further advance and after getting the amount from
D the plaintiff, defendant Nos. 1 and 2 have to secure
documents from the Bank. The trial Court as well as the
High Court held that there is no material to show tha·t
defendant Nos. 1 and 2 made any attempt to comply with
Clause 4 in Ex. A-3 by requiring the plaintiff to make
E further advance. The conduct of the plaintiff in keeping
the required money, no doubt, in his SB account for the
purpose of meeting the demand of defendant Nos. 1 and
2 cannot be ignored. [para 22) (572-F-H; 573-A)
F 2.3. Even otherwise, the agreement to discharge the
loans of the Bank and handover the original title deeds
to the plaintiff cannot be construed as impossible event
so as to affect the terms of contract to become void. The
contract in question did not come to an end on this
ground and such contract is not a contingent contract
G and undoubtedly, the Court has jurisdiction to grant relief
in terms of the contract. Obtaining No Objection
Certificate (NOC) from the authority concerned, clearance
of NOC from Income Tax Department or any other State/
Central authority, securing title deeds after clearing
H
J.P. BUILDERS & ANR. v. A.. RAMADAS RAO & ANR. 547
certain loans are incidental and implied covenant on the A
part of the vendors to do the needful to give effect to the
agreement. [para 22-23] [573-B-E]
2.~. It is also relevant to note that thoug_h defendant
·Nos. 1 and 2, at the first instance offered OTS for Rs. 148 8
· lakhs, the Bank, after taking into consideration various
aspects claimed Rs. 629.60 lakhs as their proposal. It
.was'.!~~t an impossible performance consjdering the
amount borrowed by the sister agency of defendant no.1
'and· various properties possessed by defendant Nos. 1 C
and 2 in ,, prime localities of the city and in and around the
sub-urban areas. The contract in question is capable of
perfor'mance and the plea of the appellants that it is a
contirigknt contract and incapable of performance cannot
be accepted. Besides, this was not an issue before the
D
frial Court and such plea was not raised in the written !
statement. Further, defendant Nos. 1 and 2 did not
bother to e.xplain all salient features by entering the
wi~ess box in support of their claim. The plaintUf has
esfablished that he has parti;!lly performed his part of
obligations by paying the advance amount of Rs. 25 iaKhs E
and another Rs. 50 lakhs in addition to the initial deposit
of Rs. 1 Lakh. The plaintiff has proved his readines.s and
willingness and financial ability to complete the sale
• transaction. [para 24-25] [573-F~H; 574-A-C]
F
2.5. The court will not apply the doctrine of
impossibility to assist a party which does not want to fulfil
its obligations under them contract. The said doctrine
cannot be permitted to become a device for destructing
the sanctity of contract. [para 34] [579-E]
G
3.1. The doctrine of marshalling rests upon the
principle that a creditor who has the means of satisfying
his debt out of several funds shall not, by the exercise
of his right, prejudice another creditor whose security
H
548 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A comprises only one of the funds. Section 56 of the
Transfer of Property Act, 1882 deals with the right of
subsequent purchaser to claim marshalling. The High
Court after noting that the plaintiff had paid substantial
amount as advance and secured decree for specific
B performance came to the conclusion that the right of
marshalling is available to the plaintiff. The concept as
in s.56 applies to sales in a manner similar to s. 81 which
applies to mortgages alone. [para 27-28) [575-A-B-E]
C 3.2. In the instant case, in view of the sale agreement
which results into decree for specific performance, the
plaintiff is entitled to insist upon defendant Nos. 1 to 3 to
have the mortgage debt satisfied out of the properties not
sold to the plaintiff and in any case if the sale proceeds
are not sufficient, then only to proceed against the said
D suit properties. It is not in dispute that the plea of
marshalling and applicability of s.56 of the T.P. Act was
not raised before the trial Court. However, if the entire
plaint is considered, the plaintiff has claimed a larger
relief. Even otherwise, the plea of marshalling being pure
E question of law based upon the decree obtained for
specific performance, cannot simply be thrown out merely
because the same was not specifically pleaded. [para 29-
30) [575-F-G; 577-D-E]
F Anathula Sudhakar vs P. Buchi Reddy (Dead) By Lrs.
And Ors. 2008 (5) SCR 331 = (2008) 4 SCC 594; Bachhaj
Nahar vs. Nilima Manda/ and Anr. 2008 (14) SCR 621 =
(2008) 17 sec 491 - held inapplicable.
3.3. It is significant to note that the relief has been
G prayed in the plaint by paying substantial court fee of Rs.
41,66,326.50. In such circumstances, when a party is able
to secure substantial relief, namely, decree for specific
performance with clearance of mortgage amount, it is the
duty of the court to mould the relief so as to render
H substantial justice between the parties. In this regard, the
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 549
High Court has adopted the right course in granting relief A
to the plaintiff. [para 32] [578-G]
3.4. Merely because for recovery of the loan secured
by banks, a special Act, namely, RecovE!ry of Debts due
to Banks and Financial Institutions Act, 1993 has been
B
enacted, it is not a bar for approaching the civil court to
apply for other relief such as s.56 of the T.P. Act. By
issuing the direction on the application of s. 56 of the T.P.
Act, the Division Bench has not modified or eroded the
order passed by the ORT. On the other hand, it is an
admitted fact that the Bank has accepted the impugned C
verdict of the High Court and did not challenge the same
before this Court by filing an appeal. Further, by granting
such a relief, the Bank is not prejudiced in any way by
bringing other properties for sale first, to satisfy the
mortgage debt payable by defendant Nos. 1 and 2. In fact, D
the High Court was conscious and safeguarding the
interests of the Bank observed that if sale proceeds of
other items of properties are not sufficient to satisfy the
debt payable to the Bank by defendant Nos. 1 and 2, in
that event, Bank can proceed against the suit properties. E
(para 33] (578-H; 579-A-D]
4. As regards the High Court hearing the writ petition
along with the appeals, the writ petition was filed by the
very same plaintiff impleading defendant Nos. 1 and 2, M/ F
s 'A A', which is a sister concern of defendant No. 1, and
defendant no.3-Bank, apart from Union of India, praying
for issuance of a writ of mandamus forbearing the
respondents from bringing to auction the suit property,
forming the subject matter of the decree in his favour in G
O.S. No 336 of 2006 on the file of the Principal District
Judge. It is not in dispute that the parties in the appeals
as well as in the writ petition are one and the same
except Union of India against whom the writ petitioner
has not sought any relief. It is also not in dispute that H
550 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A the subject matter of the /is and properties are one and
the same in both the appeals and the writ petition. There
is no bar for the Division Bench which has jurisdiction
to hear appeal, to hear writ petition when the same is
connected with the main issue. In fact, no serious
B objection was raised before the High Court for hearing
the writ petition along with the appeal. On the other hand,
on the earlier occasion, when the parties filed special
leave petitions against certain interim orders, this Court
requested the High Court to dispose of all the matters
C together. It is relevant to point out that no clarification
or direction was sought in respect of the said order
... passed by the Supreme Court. (para 35] [579-F-H; 580-
1
A-D]
Brahm Parkash vs. Manbir Singh & Ors., (1964] 2 SCR
D 324; Sain Ditta Mal vs. Bulagi Mal & Sons and others AIR
(34) Lahore 230; and Karam Singh Sobti vs. Smt Shukla
Bedi, AIR 1962 Punjab High Court at Delhi 477 - referred
to.
E 5. Section 35 CPC speaks about costs. Though, in
the grounds raised in the appeal, no serious argument
was advanced about the award of costs, the appellants
have agitated the award of cost by the High Court in
favour of the plaintiff. Inasmuch as the plaintiff after
F valuing the suit paid a substantial court fee of Rs.
41,66,326.50 and, ultimately, secured a decree for specific
performance though he could not secure a relief in its
entirety, the plaintiff is entitled for his costs. It is not in
dispute that the court has granted the major relief,
G namely, decree for specific performance subject to
clearance of the mortgage debt. In the circumstances, the
High Court rightly ordered costs payable by the
contesting defendant Nos. 1 and 2 to the plaintiff. [para
40] (583-E-H]
H 6. As regards directions to the Recovery Officer/
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 551
I
Tribunal, the High Court took into consideration various A
connected issues in respect of the same properties and
several orders passed by the Civil Court and the ORT and
the fact that defendant Nos. 1 and 2 have sufficient other
properties in prime locations in the city and other nearby
places and also of the fact that the Bank was also party B
to both these proceedings. The Bank also accepted the
impugned order of the High Court and did not file any
appeal before this Court. The directions/clarifications
issued by the High Court do not run counter to the orders
of ORT/Recovery Officers, on the other hand, it C
safeguards the interest of all parties. Only because of the
delay on the part of defendant Nos. 1 and 2 in not settling
the dues of the Bank at the appropriate time, in the recent
times, property value has risen to some extent. On this
ground, the direction of the High Court about the sale of
the said properties cannot be interfered with: [para 41] · D
[684-A-F] .
Allahabad Bank vs. Canara Bank & Anr., 2000 (2) -
=
SCR 1102 (2000) 4 SCC 406, State Bank of India vs. Allied
Chemical Laboratories & Anr., (2006) 9 SCC 252, India E
Household and Healthcare Ltd. vs. LG Houshold and
Healthcare Ltd. 2007 (3) SCR 726 = (2007) 5 SCC 510 -
referred to.
7. So far as interference under Article 136 of the F
Constitution of India is concerned, even after issuance
of· notice in the special leave petition and after grant of
leave, irrespective of the nature of the subject matter, the
appellants must show that exceptional and special
circumstances exists and, if there is no interference by G
this Court, substantial and grave injustice will result and
that the case has features of sufficient gravity to warrant
a decision from this Court on merits. [para 46] [589-0-E]
Balvantrai Chimanlal Trivedi, Manager Raipur Manfg.
Co. Ltd., Ahmedabad vs. M.N. Nagrashna and Others AIR H
552 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 1960 SC 407; Balvantrai Chiman/a/ Trivedi vs. M.N.
Nagrashna and Others, AIR 1960 SC 1292; Taherakhatoon
(D) By Lrs. vs. Salambin Mohammad, 1999 (1) SCR 901 =
(1999) 2 sec 635; Chandra Singh and Ors. VS. State of
Rajasthan and Anr. 2003 (1) Suppl. SCR 674 = (2003) 6
B sec 545 - relied on.
Case Law Reference:
1995 (2) Suppl. SCR 53 relied on para 9
2004 (3) Suppl. SCR 186 relied on para 11
c
1971 SCR 573 referred to para 12
2008 (5) SCR 331 held inapplicable para 31
2008 (14) SCR 621 held inapplicable para 31
D
AIR (34) Lahore 230 referred to para 37
AIR 1962 Punjab High Court at Delhi 477 referred
to para 37
[1964] 2 SCR 324 referred to para 38
E
2000 (2) SCR 1102 referred to para 41
(2006) 9 sec 252 referred to para 41
2007 (3 ) SCR 726 referred to para 41
F
AIR 1960 SC 407 relied on para 43
AiR 1960 SC 1292 relied on para 44
1999 (1) SCR 901 relied on para 45
G 2003 (1) Suppl. SCR 674 relied on para 46
CIVIL APPELLATE JURISDICTION : Civil Appeal No,s.
9821-9822 of 2010.
From the Judgment & Order dated 23.2.2010 of the High
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 553
Court of Judicature at Madras in A.S. No. 708 of 2008 and A
Judgment order dated 29.4.2010 in Review Application No. 37
of 2010 in A.S. No. 708 of 2008.
WITH
C.A. Nos. 9824-9825 & 9826 of 2010. B
L. Nageshwar Rao, Nalini Chidambaram, R.F. Nariman,
K.V. Viswanathan, Bhargava V. Desai, Rahul Gupta, Nikhil
Sharma, Pallavi Mohan, K.K. Mani, R. Thiagarajan, Vasudha
Thiagarajan, Abhishek Krishna, Himanshu Munshi for the C
appearing parties.
The Judgment of the Court was delivered by
P. SATHASIVAM, J. 1. Leave granted in all the Special
Leave Petitions. D
2. These appeals seek to challenge the common judgment
and order dated 23.02.2010 passed by the Division Bench of
the High Court of Judicature at Madras in A.S. Nos. 708 of 2008
and 946 of 2009 and W.P. No. 23405 of 2009 whereby the High
· Court partly allowed A.S. No. 708 of 2008 confirming the decree E
for specific performance granted by the Principal District Court,
Chengalpet in O.S. No. 336 of 2008 and dismissed A.S. No.
946 of 2009 preferred by the appellants herein. By the same
order, the High Court disposed of W.P. No. 23405 of 2009 with
certain directions. By a subsequent order dated 29.04.2010, F
the High Court dismissed the Review Application No. 37 of
2010 in A.S. No. 708 of 2008 and Review Application No. 47
of 2010 in W.P. No. 23405 of 2009 preferred by the appellants
herein.
G
Brief facts:-
3. (a) The subject matter of the suit is a total extent of 30
acres 86 cents of land in Senthamangalam Village,
Sriperumbadur Taluk, Kancheepuram District comprised in H
554 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A 38 items. Mis J.P. Builders-Appellant No. 1 and Shri J.P.
Paramanandam-Appellant No. 2 herein are the owners of
the suit property which they acquired under various sale
deeds. The sister concern of Mis J.P. Builders viz., Mis
Anand Agency has availed certain financial assistance
B from the Indian Bank, (hereinafter referred to as 'the· Bank')
and for the said assistance Appellant Nos. 1 and 2 herein
offered their various properties including the suit property
as security for the principal as well as interest amount
payable by Mis Anand Agency of which Appellant No. 2
is the sole proprietor.
c
(b) On 15.08.2005, the appellants entered into a
Memorandum of Understanding (MoU) (Ex. A-2) with
Respondent No. 1 herein for sale of the suit property at a
sale consideration of Rs.14 lakhs per acre and a sum of
D Rs. 1_lakh was paid as advance by way of cheque on the
same day. Balance sale consideration was to be paid
within three months from the date of obtaining confirmation
letter from the Bank.
E (c) On 10.10.2005, Mis J.P. Builders, by a letter
addressed to the AGM, Indian Bank, Asset Recovery
Management Branch 11, offered a sum of Rs. 100 lakhs as
full and final settlement of the dues of its sister concern,
Mis Anand Agency, which was declined by the Bank by
letter dated 15.10.2005 advising them to .revise the offer
F
with substantial improvement. By letter dated 23.01.2006,
the Bank stated that Appellant No. 2 herein had not made
any improvement in his One Time Settlement (in short
'OTS') proposal of Rs. 100 lakhs and hence the Bank is
proceeding to enforce its rights under the Securitization
G and Reconstruction of Financial Assets and Enforcement
of Security Interests Act, 2002 (hereinafter referred to as .
'the Act'). By letter dated 01.02.2006, Appellant No. 2
offered a sum of Rs. 148 lakhs as one time settlement of
the loans availed by Mis Anand Agency.
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 555
[P. SATHASIVAM, J.]
(d) On 03.02.2006, Respondent No. 1 entered into a Sale A
Agreement with the appellants for purchase of the suit
property. The sale price of Rs. 14 lakhs per acre was
enhanced to Rs. 18 lakhs per acre and the total sale
consideration was fixed at Rs. 5,55,48,000/-. On the same
day, Respondent No. 1 had paid a sum of Rs. 24 lakhs B
by way of cheque as further advance to Appellant No.2 in
addition to Rs. 1 lakh already paid. On 18.04.2006, a
further payment of Rs. 50 lakhs was made by Respondent
No. 1.
(e) On 26.04.2006, the Bank rejected the OTS offer of Rs.
c
148 lakhs stating that since the amount offered is very low,
the Bank has decided to pursue the recovery application
filed before the Debts Recovery Tribunal, (hereinafter
referred to as 'ORT') Chennai for the recovery of the dues
of the Bank. Again, by letter dated 15.05.2006, the Bank D
stated that out of court settlement can be done if an offer
of Rs. 629.60 lakhs by working out interest at PLR i.e. 11 %
compound on the principal outstanding as on 31.03.1993
be made. However, since the settlement amount was
more than the sale consideration for the suit property, the E
Appellant No. 2 could not agree to pay the same.
(f) On 26.07.2006, Respondent No. 1 issued a legal notice
to the appellants calling upon them to liquidate the loans
out of the amounts received from him and retrieve the F
original documents from the Bank in order to execute the
sale deed. By letter dated 27.07.2006, the Appellant No.
1 replied to the notice stating that the first respondent had
not paid the balance sale consideration in spite of
repeated requests and raised doubt that the first G
respondent is no longer interested to buy the suit property,
therefore, a legal notice was sent calling upon Respondent
No. 1 to pay a sum of Rs. 1 crore as liquidated damages.
(g) On 07.08.2006, Respondent No. 1 filed O.S. No. 336
of 2006 before the Principal District Judge, Chengalpet H
556 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A against the appellants and the Bank. By judgment and
decree dated 30.04.2008, the Principal District Judge,
Chengalpet decreed the suit partly, granting the relief of
specific performance directing appellant Nos. 1 & 2 herein
to specifically perform their part of the obligations arising
B out of the agreement for sale (Ex. A-3) dated 03.02.2006
by executing the sale deed in favour of Respondent No. 1
on receipt of the balance sale consideration of Rs.
4,80,48,000/- subject to the mortgage of the Bank. Further
the relief in respect of permanent injunction restraining the
c appellants from alienating or encumbering or dealing with
the subject property was granted. The prayer for mandatory
injunction for directing the appellants to discharge the loan
in respect of ORT proceedings pending on the file of DRT-
1, Chennai, thereby retrieve the documents and deliver the
D same to Respondent No. 1 at the time of execution and
registration of sale deed was refused. Challenging the
rejection of the prayer of mandatory injunction and failure
to award costs, Respondent No. 1 filed A.S. No. 708 of
2009 before the High Court of Madras along with interim
applications being M.P. Nos. 1 and 2 of 2008. On
E
01.02.2009, Respondent No. 1 filed another interim
application in M.P. No. 1 of 2009 in A.S. No. 708 of 2008.
By order dated 18.04.2009, the Division Bench of the High
Court passed an order of injunction in M.P. No. 1 of 2008
and M.P. No. 1 of 2009 restraining the appellants herein
F from alienating, encumbering or dealing with the suit
property pending appeal.
(h} On 06.10.2006, the Bank filed OA No. 491 of 1999
withdrawing its OTS offer of Rs. 629.60 lakhs and called
G upon the appellants to pay the total amount due along with
future interest, costs and charges. By order dated
15.Q.5.2009, the Presiding Officer, ORT-I, Chennai,
disposed of O.A. No. 491 holding that the Bank is entitled
to recover a sum of Rs. 11,08,51,875/- from Mis Anand
H Agency. Pursuant to the order, the Recovery Officer
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 557
[P. SATHASIVAM, J.]
issued the recovery certificate being D.R.C. No. 102 of A
2009 and also issued the 1st sale notification dated
23.10.2009 bringing to sale the suit property. The upset
price wa~ fixed at Rs. 27 crores and the date of sale was
fixed as 25.11.2009.
(i) Challenging the decree for specific performance B
granted by the Principal Judge, Chengalpet, the appellants
filed A.S. No. 946 of 2009 before the High Court which was
admitted by the Division Bench on 20.10.2009. On
16.11.2009, Respondent No. 1 filed a writ petition being
W.P. No. 23405 of 2009 before the High Court praying for C
a writ of mandamus for bringing the suit property in O.S.
No. 336 of 2006 on the file of the Principal District Judge,
Chengalpat in his favour and also filed Miscellaneous
Petition in the aforesaid writ petition being M.P. No. 1 of·
2009 praying to stay the auction sale of the property D
covered by the decree dated 30.04.2008 made in O.S. No.
336 of 2006. On the same day, the interim applications
bearing M.P. Nos. 2 & 3 of 2009 in A.S. 708 of 2008 were
also listed and the same were dismissed by the Division
Bench. E
0) Questioning the auction sale proposed to be conducted
by the ORT, on 19.11.2009, Respondent No. 1 filed I.A.
Nos. 1 to 3 in D.R.C. No. 102 of 2009 in O.A. No. 491 of
1991 before the Recovery Officer, ORT-I, Chennai praying
F
for release of the scheduled property and stay of auction
sale. On 23.11.2009, the Recovery Officer, ORT-I, Chennai
dismissed the said applications. On 24.11.2009,
Respondent No. 1 filed SLP (C) No. 31358 of 2009 before
this Court challenging the order dated 16.11.2009 passed
by the Division Bench of the High Court in M.P. No. 1 of G
2009 in W.P. No. 23405 of 2009. Respondent No. 1 also
filed another SLP (C) Nos. 19154-55 of 2009 challenging
the order dated 18.04.2009 passed by the Division Bench
of the High Court in M.P. No. 1 of 2008 and M.P. No. 1 of
2009 in A.S. No. 708 of 2008 and order dated 16.11.2009 H
558 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C R.
A in M.P. Nos. 2 & 3 of 2009 in A.S. No. 708 of 2008. On
the very same day, i.e. on 24.11.2009, this Court passed
an order to continue auction but not to declare the result.
On 11.12.2009, this Court dismissed the SLPs filed by
Respondent No. 1.
B (k} n 23.02.2010, the Division Bench, by impugned
judgment, partly allowed A.S. No. 708 of 2008 filed by
Re1pondent No. 1 herein directing him to deposit the -
balance sale consideration of Rs.4,80,48,000/- with 18%
inttftst from the date of filing of the suit and also directed
c the appellants herein to execute the sale deed conveying
the suhject property to Respondent No. 1 and the Bank was
directed to proceed against the various other properties
of the appellants being the subject matter of O.A. No. 491
of 1999 for recovering the balance amount. The
D appellants preferred Review Petition No. 37 of 2010
before the High Court which was dismissed on
29.04.2010. Being aggrieved by the impugned judgment
dated 23.02.2010 and order dated 29.04.2010, the
appellants have'preferred these appeals by way of special
E leave petitions before this Court.
4. Heard Mr. L. Nageswara Rao and Mrs. Nalini
Chidambaram, learned senior counsel for the appellants and
Mr. R.F. Nariman, learned senior counsel for respondent No.1
F and Mr. Himanshu Munshi, learned counsel for respondent
No.2-Bank.
5. Mr. L.N. Rao and Mrs. Nalini Chidambaram appearing
for the appellants after taking us through the pleadings,
judgment of the trial Court as well as the impugned judgment
G of the High Court raised the following contentions:
(i) The plaintiff has not established "readiness and
willingness" in terms of Section 16(c) of the Specific
Relief Act, 1963, hence the Courts below ought not
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 559
[P. SATHASIVAM, J.]
to have granted discretionary relief of decree for A
specific performance.
(ii) Inasmuch as the agreement being a contingent
contract, which is impossible to fulfil and cannot be
implemented, in such circumstance, whether the B
Courts below are justified in granting the relief in
favour of the plaintiffs.
(iii) Whether the right of marshaling by subsequent
purchaser as provided in Section 56 of the Transfer
of Property Act, 1882 (hereinafter referred to as 'the C
T.P. Act') is available to a decree holder in a suit
for specific performance and whether the High
Court is justified in granting such a relief in the
absence of any pleading and issue before the trial
Court. D
(iv) Whether the High Court is justified in hearing a writ
petition filed under Art. 226 of the Constitt.1tion of
India along withcithe regular first appeaJ filed under
Section 96 C.P.C. E
~v) Whether the High Court is justified in issuing ceFtatl'i
directions to the Bank which are contrary to the
orders passed by the competent forum, namely,
Debts Recovery Tribunal. ·
F
(vi) Whether the High Court is justified in gjJnting cost·
in favour of the plaintiff when the same was right1y
disallowed by the trial Court.
6. On the other hand, Mr. R.F. Nariman, learned senior G
counsel for the first respondent, by drawing our attention to all
the relevant materials relied on by the trial Court and the
appellate Court supported the ultimate decision oLthe High
Court. He submitted that -
(i) The plaintiff has established his readiness
.- ,
and
• ~r
H
·,
560 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A willingness all along and the same was rightly
accepted by the trial Court and confirmed by the
High Court.
(ii) The contract in question is not a contingent contract
B in terms of Sections 31 and 32 of the Indian
Contract Act, 1872.
(iii) In view of the fact that the plaintiff has prayed for
larger relief and the trial Court has confined to
lesser relief of decree for specific performance, the
c plea of marshaling being a question of law and
taking note of equity and justice, the High Court
rightly applied the said principle and there is no
error warranting interference on this ground.
D (iv) The subject matter of the appeals and the relief
prayed for in the writ petition were interconnected,
hence the High Court is justified in disposing of the
writ petition along with the appeals.
(v) Inasmuch as the plaintiff has succeeded partial
E relief at the hands of the trial Court after paying
substantial court fee, the High Court is justified in
awarding cost which was omitted by the trial court.
(vi) In any event, in view of the materials placed and the
F ultimate decision by both the Courts below,
interference by this Court exercising jurisdiction
under Art. 136 is not warranted. Even after grant
of leave, this Court has ample power to dismiss the
appeal without going into all the issues.
G
7. We have considered the rival contentions and perused
all the relevant materials in the form of oral and documentary
evidence.
Readiness and Willingness
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 561
{P. SATHASIVAM, J.]
8. Section 16(c) of the Specific Relief Act, 1963 provides A
for personal bars to relief. This provision states that specific
performance of a contract cannot be enforced in favour of a
person,
(a) who would not be entitled to recover compensation 8
for its breach; or
(b) who has become incapable of performing, or
violates any essential term of, the contract that on
his part remains to be performed, or acts in fraud
of the contract, or wilfully acts at variance with, or C
in subversion of, the relation intended to be
established by the contract; or
(c) who fails to aver and prove that he. has performed
or has always been ready and willing to perform the o
essential terms of the contract which are to be
performed by him, other than terms the performance
of which has been prevented or waived by the
defendant.
Explanation.- For the purposes of clause (c),- E
(i) where a contract involves the payment of money,
it is not essential for the plaintiff to actually tender
to the defendant or to deposit in court any money
except when so directed by the court;
(ii) the plaintiff must aver performance of, or F
readiness and willingness to perform, the contract
according to its true construction."
Among the three sub-sections, we are more concerned about
sub-section(c). "Readiness and willingness" is enshrined in G
clause (c) which was not present in the old Act of 1877.
However, it was later inserted with the recommendations of the
9th Law Commission's report. This clause provides that the
person seeking specific performance must prove that he has
performed or has been ready and willing to perform the
H
562 SUPREME COURT REPORTS [20·10] 15 (ADDL.) S.C R.
A essential terms of the contract which are to be performed by
him.
9. The words "ready" and "willing" imply that the person
was prepared to carry out the terms of the contact. The
distinction between "readiness" and "willingness" is that the
8
former refers to financial capacity and the latter to the conduct
of the plaintiff wanting performance. Generally, readiness is
backed by willingness.
10. In N.P. Thirugnanam vs. Dr. R. Jagan Mohan Rao & ·
C Ors., (1995) 5 SCC 115 at para 5, this Court held:
" ..... Section 16(c) of the Act envisages that plaintiff must
plead and prove that he had performed or has always
been ready and willing to perform the essential terms of
D the contract which are to be performed by him, other than
those terms the performance of which has been prevented
or waived by the defendant. The continuous readiness
and willingness on the part of the plaintiff is a condition
precedent to grant the relief of specific performance. This
circumstance is material and relevant and is required to
E
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 the conduct of the
F plaintiff prior and subsequent to the filing of the suit
alongwith otner attending circumstances. The amount of
consideration which he has to pay to the defendant must
of necessity be proved to be available. Right from the date
of the execution till date of the decree he must prove that
G he is ready and has always been willing to perform his part
of the contract. As stated, the factum of his readiness and
willingness to perform his part of the contract is to be
adjudged with reference to the conduct of the party and
the attending circumstances. The court may infer from the
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 563
[P. SATHASIVAM, J.]
facts and circumstances whether the plaintiff was always A
ready and willing to perform his part of the contract."
11. In PD'Souza vs. Shondrilo Naidu, (2004) 6 SCC 649
paras 19 and 21, this Court observed:
"It is indisputable that in a suit for specific performance of 8
contract the plaintiff must establish his readiness and
willingness to perform his part of contract. The question as
to whether the onus was discharged by the plaintiff or not
will depend upon the facts and circumstance of each case.
'No strait-jacket formula can be laid down in this behalf.... C.
'The readiness and willingness on the part of the plaintiff
to perform his part of contract would also depend upon the
question as to whether the defendant did everything which
was required of him to be done in terms of the agreement
for sale." D
12. Section 16(c) of the Specific Relief Act, 1963
mandates "readiness and willingness" on the part of the plaintiff
and it is a condition precedent for obtaining relief of grant of
specific performance. It is also clear that in a suit for specific E
performance, the plaintiff must allege and prove a continuous
"readiness and willingness" to perform the contract on his part
from the date of the contract. The onus is on the plaintiff. It
has been rightly considered by this Court in R. C. Chandiok &
'· Anr. vs. Chuni Lal Sabharwal & Ors., (1970) 3 SCC 140 that
F
"readiness and willingness" cannot be treated as a straight
jacket formula. This has to be determined from the entirety of
the facts and circumstances relevant to the intention and
conduct of the party concerned. It is settled law that even in
the absence of specific plea by the opposite party, it is the
mandate of the statute that plaintiff has to comply with Section G
16(c) of the Specific Relief Act and when there is non-
compliance with this statutory mandate, the Court is not bound
to grant specific performance and is left with no other alternative
but to dismiss the suit. It is also clear that readiness to perform
must be established throughout the relevant points of time. H
564 SUPREME COURT REPORTS [2010] 15 (ADDL) S.C.R.
A "Readiness and willingness" to perform the part of the contract
has to be determined/ascertained from the conduct of the
parties.
13. In the light of the above principles, let us consider
B whether the plaintiff has established his case for decree for
specific performance.
14. Mr. L.N. Rao and Mrs. Nalini Chidambaram
vehemently contended that the plaintiff has miserably failed to
prove that he has fulfilled his obligation both under Ex. A-2
C (MoU) and Ex. A-3 - Agreement for Sale and in those
circumstances, defendants 1 & 2 are not bound to convey the
suit property in favour of the plaintiff. It is not in dispute that on
15.08.2005, the defendants entered into a MoU with
respondent No.1 for sale of the suit property at a sale .
D consideration of Rs. 14 lakhs per acre and a sum of Rs. 1 lakh
was paid as advance. Balance sale consideration was to be
paid within three months from the date of obtaining confirmation
letter from the second respondent-Bank. It is seen from the
materials that on 10.10.2005, Mis J.P. Builders, by a letter
E addressed to the AGM, Indian Bank Assets Recovery
Management Branch 11, offered a sum of Rs. 100 lakhs as full
and final settlement of the dues of its sister concern which was
declined by the Bank advising to revise the offer with substantial
improvement. By a letter dated 23.01.2006, the Bank stated
F that defendant No.2 herein had not made any improvement in
his one time settlement proposal of Rs. 100 lakhs and hence
the Bank is proceeding to enforce its rights under the Act. It is
further seen that on 01.02.2006, the appellant No.2 offered a
sum of Rs. 148 lakhs as one time settlement. Within two days
G of the said offer i.e. 03.02.2006 the plaintiff entered into a Sale
Agreement with the defendants for purchase of the suit property.
The sale price of Rs. 14 lakhs per acre was enhanced to Rs.
18 lakhs per acre and the respondent No.1 had paid a sum of
Rs. 24 lakhs as further advance to defendant No.2. It is further
H seen that on 18.04.2006, a further payment of Rs. 50 lakhs was
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 565
[P. SATHASIVAM, J.] .
made by the plaintiff. It is also seen that on 15.05.2006, the A
Bank rejected the one time settlement offer of Rs. 148 lakhs
stating that out of court settlement can be done if an offer of
Rs. 629.60 lakhs by working out interest at PLR i.e. 11%
compound on the principal outstanding as on 31.3.1993 be
made. For this, defendant No.2 could not agree to pay the B·
same.
15. A perusal of the recitals in the Agreement for Sale
(Ex.A-3) are to the effect that to discharge the bank loan and
for the business purpose of the vendors, the appellants have
decided to sell the properties and offered the same for sale C
and the Respondent No. 1 has agreed to purchase the said
property. In Ex. A-3, it is stated that defendant Nos. 1 & 21
vendors have undertaken to discharge the loans and hand over
the original title deeds of the said property to the plaintiff within
three months from the date of the agreement for scrutiny of title. D
It is relevant to mention here that Ex. A-3, was executed on
03.02.2006. The recital also shows that the plaintiff has to pay
further advance, if any, required by the vendors to release the
documents from the Bank, It is. the definite case of the plaintiff
that defendant Nos. 1 & 2 had agreetlto liquidate the property E
and hand over the original title deeds for which the plaintiff had
paid further advance of Rs. 24 lakhs and on 18.04.2006, he
had paid Rs.SO lakhs.
16. We have already adverted to the initial OTS proposal F
dated 01.02.2006 expressing sec~nd defendant's willingness
to pay for Rs. 148 lakhs since the bank has expressed its
inability to consider, by letter dated 15.05.2006, the bank has
conveyed that OTS will be accepted if the offer is given for Rs.
629.60 lakhs by working out compound interest at 11%. In the ·
plaint, there is a specific averment that the plaintiff even on G
18.4.2006 has paid a further advance of Rs. 50 lakhs.
17. In his oral evidence before the Court, the plaintiff - PW-
1 had reiterated and in fact asserted that he was always ready
with ,the money and duly pursuing the OTS along with Defendant H
566 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R
A Nos. 1 & 2. Insofar as readiness and willingness on the part
of the plaintiff is concerned, apart from the specific plea in the
plaint about the payment and advance of substantial amount,
.he also placed the relevant materials in the form of letters to
show that he was corresponding with the Bank for early
B settlement of the dues. In other words, the assertion in the form
of specific plea in the plaint and correspondence in the form
of letter, his assertion in the witness box at the time of trial, the
Courts below are right in arriving at a conclusion that the plaintiff
has proved and complied with the mandates provided under
c Section 16 (c) of the Specific Relief Act.
18. Mrs. Nalini Chidambaram before the High Court as well
as before us by basing reliance on clause 4 of the MoU (Ex.
A-2) contended that the balance sale consideration has to be
paid within one week of the receipt of Confirmation Letter from
D the Bank and absolutely there is no material to show that the
plaintiff was ready with the money within the prescribed period
of one week. It is also pointed out that in addition to the same,
plaintiff has to pay the amount to clear the bank loan and without
paying the amount within the prescribed period, the plaintiff has
E committed breach of his obligations, hence, the plaintiff is not
permitted to blame the defendant which would arise only after
the performance of the plaintiffs obligation. In order to prove
her stand, learned senior counsel for the appellants heavily
placed reliance on Clauses 4, 6 and 7 of Ex. A-2. In the light
F of the said claim, we perused various clauses in Ex. A-2 as
well the subsequent agreement for sale dated 03.02.2006, Ex.
A-3. As rightly pointed out by the Division Bench, defendant
Nos. 1 & 2 had entered into an agreement to sell the suit
property to discharge loans and handover the original title
G deeds has been reiterated both in Ex. A-2 and Ex. A-3.
However, it is to be noted that after execution of Ex. A-3, i.e.
agreement for sale dated 03.02.2006, defendant Nos. 1 & 2
have undertaken to discharge the loans and handover the
original title deeds to the plaintiff. No doubt, as per Ex. A-3,
H plaintiff has to pay further advance, if required by the vendors
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 567
[P. SATHASIVAM, J.]
to release the documents from the Bank. The plaintiff has A
demonstrated by placing oral and documentary evidence that
on the date of execution of Ex. A-3, he has paid further advance
of Rs. 24 lakhs and Rs. 50 lakhs on 18.04.2006. It was pointed
out that the plaintiff has settled Rs. 75 lakhs out of the sale
consideration and for the balance sale price he has deposited B
a sum of Rs. 2,45,00,000/- in Indian Overseas Bank, Sowcarpet
Branch, Chennai. The deposit receipt of the said amount is
produced as Ex. A-13. In order to prove that he had sufficient
means of finance, the plaintiff has produced documents under
Ex. A-12 and Ex. A-13. In his evidence as PW-1, the plaintiff c
has asserted that he was having ready cash and also
produced Ex. A-11, Fixed Deposit Receipt (FDR dated
19.04.2006 in his name) in Indian Overseas Bank for Rs.
'2,45,00,000 with date of maturity as 18.07.2006. Ex. A-12 is
the certificate issued· by the Indian Bank, Alwarpet Branch, D
Chennai stating that the plaintiff is maintaining Savings Bank
Account No.726244658 in their bank and the balance as on
20.04.2007 is Rs. 1,50,00,444/- Ex. A-13 is the Certificate
issued by Indian Overseas Bank stating that credit balance of
plaintiffs savings bank account No. 6874 is Rs. 304, 12,574.08 E
as on 21.04.2007. lfwe analyse Ex. A-11 to Ex.A-13 coupled
with assertion made in the oral evidence of PW-1, it would
amply show that plaintiff was having sufficient cash and financial
capacity to complete the transaction. Further the plaintiff is
required to pay the balance amount of consideration only on
the event of a demand made for payment of further amount by F
the defendants on the basis of the confirmation letter to be
obtained from the bank as per the agreement for sale under
Ex. A-3. Absolutely, there is no evidence as to any demand
made by defendant Nos. 1 & 2 from the plaintiff for further
payment of sale price. Inasmuch as under Ex. A-4, he had G
intimated that he is prepared to get the sale executed while
perusing the aforesaid bank deposit receipts, it is clearly
revealed that the plaintiff was endowed with the means to pay
the sale consideration and had ever been prepared to do the
same. On the other hand, it is not the case of Defendant Nos. H
568 SUPREME COURT REPORTS (2010] 15 (AODL.) S.C.R.
A 1 & 2 that they have asked for further advance and that the
plaintiff did not respond for their request. As rightly pointed out
by the trial Court and commended by the High Court, it is not
clear that why Defendant Nos. 1 & 2 fail to led oral evidence in
support of their claim. It is also not clear why they have avoided
B the witness box, though it is stated that the plaintiff had admitted
the stand of Defendant Nos. 1 & 2 which is factually incorrect
and unacceptable. The only objection pointed out was that for
effective OTS, even though, the plaintiff has deposited
Rs.10,01,000/- in the "No lien account" of second defendant,
c the plaintiff has surreptitiously withdrawn the said amount which
had upset the settlement talks between defendant Nos. 1 & 2 _
and the 3rd defendant-Bank on the other side. It is true that as
per clause 4 of Ex. A-2 MoU, the plaintiff has agreed to pay
further advance to defendant Nos. 1 & 2 to enable them to pay
0 and clear the bank loan obtained by their sister concern namely,
M/s Anand Agency, wherein defendant No.1 - J.P. Builders
have stood as guarantors to the said loan. It is equally true that
in the letter (Ex. B-1 ), addressed to the Assistant General
Manager of the Bank, the plaintiff has stated that he has
E deposited Rs.10,01,000/- in a "No-lien account" towards M/s.
Anand Agency and that he has proposed to purchase the
property from them which was mortgaged to the Bank and after
acceptance of the compromise settlement, the amount can be <
appropriated towards the compromise arrived. In the same
letter, the plaintiff has also informed that if the compromise
F settlement is not materialized, the said deposit may be
released to him. However, as pointed out earlier, one time
settlement offer of Rs. 148 lakhs was not acceptable by the
Bank and because of the same, the plaintiff withdrew the said
deposit and the bank by a letter (Ex. B-2), informed the second
G defendant about the same. As rightly pointed out by the High
Court, mere withdrawal of Rs. 10,01,000/- deposited in "No-
lien account" by the plaintiff has no significance since
subsequent to the same both parties have entered into Ex. A-
3, Agreement for sale on 03.02.2006 and on which date the
H plaintiff has also paid a further advance of Rs. 25 lakhs. These
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 569
[P. SATHASIVAM, J.]
·facts have been clearly explained by PW-1 in his evidence and A
he also asserted that the same fact was orally informed to
Defendant Nos: 1 & 2. We have already pointed out that there
is no reason to disbelieve the assertion of PW-1. As rightly
pointed out by Mr. R.F. Nariman, learned senior counsel for the
first respondent-plaintiff that after receipt of Ex. B-2 Defendant B
Nos. 1 & 2 have not raised any protest but on the other.hand
they proceeded to further advance of Rs. 50 lakhs from the
plaintiff on 18.04.2006 and made endorsement in Ex. A-3
--
agreement for sale. In those circumstances, as rightly pointed
out and correctly appreciated by the High Court, withdrawal of c
Rs. 10,01,000 from "No-lien account" ot M/s Anand Agency
by the plaintiff would not lead to the conclusion that the plaintiff
had committed breach and was not ready to per;form his part
of the contract.
19. With the materials placed, specific assertion in the D - '"
plaint, oral and documentary evidence as to execution of
agreement, part-payment of sale consideration, having sufficient
cash and financial capacity to execute the sale deed, bank
statements as to the moneys in fixed deposits and saving
accounts, we are of the view that the plaintiff has proved his E
"readiness" and "willingness" to perform his part of obligation
under the contract. The concurrent findings of the trial court as
well the High Court as to readiness and willingness to perform
plaintiff's part of the obligations under the contract, in the
absence of any acceptable contra evidence is to be confirmed. F
We agree with the conclusion arrived at by the trial Court as
well as by the High Court on the readiness and willingness on
the part of the plaintiff and reject the argument of the learned
senior counsel for the appellants.
-\ G
Contingent Contracts
· 20. By pointing out various clauses in the MoU (Ex. A-2),
Ms. Nalini Chidambaram, learned senior counsel for the ·
appellants heavily contended that inasmuch as the contract was
depending upon uncertain events of the Indian Bank/agreeing H
570 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A for OTS, the contract entered is contingent depending on the
move of the Indian Bank. According to her, inasmuch as
various clauses insists certain impossible conditions at the
hands of the Indian Bank, the contract entered into between the
plaintiff and defendants become impossible and void. Though
B such an argument was advanced before us, there was no such ~
specific plea in their written statement and the Trial Court has
not framed separate issue and considered the same.
Irrespective of the above position, in view of the assertion made
by learned senior counsel, we intend to discuss and give our
c answer.
21. Chapter Ill of the Indian Contract Act, 1872 deals with
Contingent Contracts. Contingent contract has been defined
in Section 31 and method of enforcement is stated in Section
32 which reads as under:
D
"31. "Contingent contract" defined.- A "contingent
contract" is a contract to do or not to do something, if some
event, collateral to such contract, does or does not happen.
32. Enforcement of contracts contingent on an event
E
happening.- Contingent contracts to do or not to do
anything if an uncertain future event happens, cannot be
enforced by law unless and until that event has happened.
If the event becomes impossible, such contracts become
void."
F
It is clear that if the condition prescribed or even described in
the contract is impossible, undoubtedly, such contracts become
void and not enforceable in terms of Section 32. The events
enumerated in the contract, according to Ms. Nalini
G Chidambaram are (a) a letter specifying the balance due to the
bank (b) an undertaking later from the Bank that it will receive
the said balance amount (c) they will handover the original
documents directly to the plaintiff. While elaborating the said
points, learned senior counsel highlighted that for executing the
H sale deed, getting confirmation or clearance letter from the
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & Al<JR. 571
[P. SATHASIVAM, J.]
Indian Bank on payment of the dues to the Bank and getting A
original documents have been emphasized in various clauses
in the MoU (Ex. A-2). Among various clauses, she highlighted
Clauses 4, 6, 7 in the MoU (Ex. A-2). No doubt, those conditions
have been enumerated in the above referred clauses. She also
brought to our notice that the Indian Bank not only declined the B
OTS offer of Rs 148 lakhs but got a decree for Rs. 8,51,825.29
- from the ORT. The very same contentions were raised before
the High Court. Mr. R. F. Nariman, by drawing our attention to
Ex. A-3 contended that Agreement for Sale dated 03.02.2006
is a fresh agreement hence clause 4, 6 and 7 of the MoU (Ex. c
A-2) would not govern the parties. We have once again perused
various clauses in Ex. A-2 as well as subsequent agreement
for sale Ex. A-3. It is relevant to note that in the plaint, in
paragraph 7, this aspect has been specifically pleaded wherein
it was highlighted that the plaintiff sought for performance of 0
contract strictly in accordance with the original Memorandum of
Understanding (MoU) dated 15.08.2005 as emerged with the
agreement for sale dated 03.02.2006 entered into between the
plaintiff and the defendant Nos. 1 and 2 in Chennai for sale and
_ purchase of the suit property. In fact, this was specifically E
mentioned by the plaintiff in his rejoinder notice dated
31.07.2006 addressed to defendant Nos. 1 and 2 and even after
receipt of the same, they have not chosen to send any reply
disputing the same. In those circumstances, we agree with the
conclusion arrived at by the High Court, namely, after the parties
entered into Ex. A-3 agreement for sale, Clauses 4, 6 and 7 of F
the MoU (Ex A-2) would not govern the parties. On the other
hand, as per Clause 3, 4 and 6 in Ex. A-3, the vendor and
defendant Nos. 1 and 2 have undertaken to discharge their
loans and hand over title deeds. The relevant clauses, namely,
3, 4 and 6 of Ex. A-3 are as follows. G
" ...... 3. The balance of sale consideration shall be paid by
the PURCHASER TO THE VENDORS on or before the
Registration of the Deed of Sale.
H
572 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R
A 4. The Vendor undertake to discharge the Loans and hand
over the ORIGINAL TITLE DEEDS relating to Schedule
mentioned properties to the PURCHASER, within three
months from this date for scrutiny of title. HOWEVER, the
purchaser has to pay further advance if any required by the
B VENDORS, to release the documents from Bank.
6. The sale shall be completed within six months from the
date of production of ORIGINAL DOCUMENTS by the
VENDORS to the Purchaser. .... "
C 22. If we accept the above stand .and conduct of the parties
and fresh terms as mentioned above in Ex. A-3, the conditions
incorporated in Ex. A-2 need not be complied with and it cannot
be contended that the contract was a contingent contract and
unless and until a letter of confirmation issued by the Indian
D Bank, the same is not enforceable. As rightly pointed out by
Mr R. F Nariman, the vendors have agreed to sell the property
but agreed to execute the sale deed after discharge of the
mortgage in favour of the defendants. In other words, it was
only the execution of the sale deed which was postponed to a
E future date. The clauses referred above in Ex A-3 do not insist
the sale deed is to be executed only after the acceptance of
OTS proposal by the Bank. It is true that the first OTS offered
by defendant Nos. 1 and 2 was not acceptable by the Bank.
When the Bank offered OTS for Rs. 629.60 lakhs, it was not
F acceptable by the defendant Nos 1 and 2. Clause 4 of Ex. A-
3, makes it clear that to discharge the loans of the Bank, the
vendors are free to make a request to the purchaser, namely,
the plaintiff, to make further advance and after getting the
amount from the plaintiff, defendant Nos. 1 and 2 have to secure
G documents from the Bank. The trial Court as well as the High
Court held that there is no material to show that the defendant
Nos. 1 and 2 made any attempt to comply with Clause 4 in Ex.
A-3 by requiring the plaintiff to make further advance. In the
earlier paragraphs, we have also highlighted the conduct of the
H plaintiff in keeping the required money, no doubt, in their SB
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 573
[P. SATHASIVAM, J.]
account for the purpose of meeting the demand of the defendant A
Nos. 1 and 2. Even otherwise, the agreement to discharge the
loans of the Bank and handover the original title deeds to the
plaintiff cannot be construed as impossible event and it would
affect the terms of contract to become void, more particularly,
when the plaintiff deposited substantial amount facilitating the B
defendant Nos. 1 and 2 to meet their requirement for fulfilling .,
the contract. As rightly observed by the High Court, in the light
of various clauses in the agreement agreed to by both the
parties, the same cannot be termed as a contingent contract.
23. As stated earlier, merely because the contract insist
c
settlement of a loan of the bank and handover the title deeds
to the plaintiff from the bank are not impossible events in the
light of the performance made by the plaintiff, the contract in
question did not come to an end on this ground and such
contract is not a contingent contract and undoubtedly, the Court D
has jurisdiction to grant relief in terms of the contract. Obtaining
No Objection Certificate (NOC) from the authority concerned,
clearance of NOC from Income Tax Department or any other
State/Central authority, securing title deeds after clearing certain
loans are incidental and implied covenant on the part of the E
vendors to do the needful to give effect to the agreement.
24. It is also relevant to point out that though defendant Nos.
1 and 2, at the first instance offered OTS for Rs. 148 lakhs, the
Bank, after taking note of various aspect~ claimed Rs. 629.60 F
lakhs as their proposal. As rightly pointed out by Mr. R.F.
Nariman, it was not an impossible performance considering the
amount borrowed by the sister agency of the 1st defendant and
various properties possessed by defendant Nos. 1 and 2 in
prime localities of Chennai and in and around the sub-urban G
areas of Chennai.
25. We are satisfied that the contract in question is capable
of performance and the contention of the learned senior counsel
for the appellants that it is a contingent contract and is incapable
of performance cannot be accepted. We have already pointed H
574 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A out that this was not an issue before the trial Court and such
plea was not raised in the written statement. We have also
pointed out that defendant Nos. 1 and 2 did not bother to
explain all salient features by entering the witness box in
support of their claim. We have already highlighted that the
8 plaintiff has established that he has partially performed his part
of obligations by paying the advance amount of Rs. 25 lakhs
and another Rs. 50 lakhs in addition to the initial deposit of Rs.
1 Lakh. We also hold that plaintiff has proved his readiness
and willingness and financial ability to complete the sale
c transaction. Accordingly, we reject the second contention also.
Marshalling
26. It is the claim of the plaintiff before the High Court that
having secured a decree for specific performance as per
D Section 56 of the T.P. Act, 1882, by applying the principles of
Marshalling, directions may be issued to the Bank to exhaust
its remedy from other items of property which are located in
the prime places in Chennai before bringing the properties
covered in the agreement of sale.
E
27. In order to understand the claim of the plaintiff and the
stand taken by the defendant Nos. 1 and 2, it is useful to refer
Section 56 of the T. P. Act.
"56. Marshalling by subsequent purchaser.-lf the owner
F of two or more properties mortgages them to one person
and then sells one or more of the properties to another
person, the buyer is, in the absence of a contract to the
contrary, entitled to have the mortgaged-debt satisfied out
of the property or properties not sold to him, so far as the
G same will extend, but not so as to prejudice the rights of
the mortgagee or persons claiming under him or of any
other person who has for consideration acquired an
interest in any of the properties."
H Similar to this is Section 81 of the T. P. Act which speaks about
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 575
[P. SATHASIVAM, J.]
marshalling securities. The High Court after noting that the A
plaintiff had paid substantial amount as advance and secured
decree for specific performance, came to the conclusion that
the right of marshalling is available to the plaintiff. Section 56
deals with the right of subsequent purchaser to claim
marshalling. It should be contrasted with Section 81 which B
refers to marshalling by a subsequent mortgage. The concept
as in Section 56 applies to sales in a manner similar to Section
81 which applies to mortgages alone.
28. The concept of marshalling by subsequent purchaser
can be explained by the following illustration. Suppose A owns C
properties X and Y. Both these properties are mortgaged to
C. Later, A sells property X to B. Now, B will be entitled to insist
that his vendor A, shall satisfy his mortgage debt out of property
Y (unsold) in the first instance as far as possible. If after property
Y is exhausted there still remains balance of debt, only then D
property X will be drawn upon. As stated earlier, Section 56
deals with the concept of marshalling in a transaction involved
in subsequent sale, on the other hand, Section 81 is applicable
only to mortgages. The doctrine of marshalling rests upon the
principle that a creditor who has the means of satisfying his E
debt out of several funds shall not, by the exercise of his right,
prejudice another creditor whose security comprises only one
of the funds.
29. As rightly pointed out, in view of the sale agreement F
which results into decree for specific performance, the plaintiff
is entitled to insist upon defendant Nos. 1 to 3 to have the
mortgage debt satisfied out of the properties not sold to the
plaintiff and in any case if the sale proceeds are not sufficient
then to proceed against the said suit properties. Learned G
senior counsel for the appellants strongly objected the
application of the principle of marshalling by subsequent
purchaser by the High Court wheri the plea of marshalling was
not taken by the plaintiff in the trial Court. In other words,
according to them, without taking such plea before the trial court,
H
576 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A the same cannot be taken for the first time before the Appellate
Court. It is not in dispute that the plea of marshalling and
applicability of Section 56 of the T.P. Act was not raised before
the trial Court. However, if we consider the entire plaint, which
is available in the appeal paper-book, the plaintiff has claimed
B a larger relief. In para 12 of the plaint, the plaintiff has prayed
for the following reliefs.
(i) "directing the Defendant Nos. 1 and 2 to specifically
perform the Agreement for Sale Deed dated
03.02.2006 in respect of the suit schedule
c mentioned property which is more fully described
in the schedule hereunder, by executing a Deed of
Sale or Deeds of Sale and register a valid
conveyance in favour of the Plaintiff or his nominee
or nominees on a date to be fixed by this Court
D and/or in default, direct the officer of this Court to
convey the suit schedule mentioned property on
behalf of the 1st and 2nd Defendants herein in favour
of the plaintiff or his nominee or nominees on a date
to be fixed by this Court on receipt of the balance
E sale consideration of Rs. 4,80,48,000/- payable by
the Plaintiff to them.
(ii) For a mandatory injunction directing the 1st and 2nd
Defendants to discharge the loan payable to the 3rd
Defendant Bank in respect of ORT proceedings
F
pending on the file of ORT, Chennai as per the
terms of the contract dated 03.02.2006 thereby
retrieve the documents and deliver the same to the
plaintiff at time of execution and registration of Sale
Deed or Sale Deeds in favour of the plaintiff or his
G nominee or nominees either in one lot or in pieces
as the case may be.
(iii) Not pressed, deleted.
H (iv) For a permanent injunction restraining the
•
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 577
[P. SATHASIVAM, J.]
Defendants 1 and 2, their men, servants, agents, A
or any one claiming through them or authorized by
them in any manner alienating, encumoering or
dealing with the suit schedule mentioned property
either by way of sale, mortgage, lease, joint-
development, or otherwise, or putting up any B
construction thereon except in accordance with law.
(v) To grant such further or other reliefs; an
(vi) To award the costs of this suit."
c
30. As observed by the High Court, the plaintiff was under
an impression that the trial Court would grant the entire relief
as claimed and he did not anticipate tnat he could get a part
of relief sought for by him. In this circumstance, learned senior
counsel appearing for the plaintiff was right in highlighting that
0
there was no occasion for the plaintiff to raise the plea of
marshalling at the time of filing of the suit. Even otherwise, as
rightly observed by the High Court, the plea of marshalling being
pure question of law based upon the decree obtained for
specific performance, cannot simply be thrown out merely E
because the same was not specifically pleaded.
31. Mrs. Nalini Chidambaram strongly contended that in
the absence of any plea the claim of marshalling cannot be
applied to the plaintiff. In support of her stand she relied on
Anathu/a Sudhakar vs P. Buchi Reddy (Dead) By Lrs. And F
Ors. (2008) 4 sec 594 wherein this Court held "no amount of
evidence or arguments can be looked into or considered in the
absence of pleadings and issues, is a proposition that is too
well settled." Absolutely, there is no dispute about the said
proposition. In the said decision, the High Court in a Second G
Appeal arising from a suit for bare injunction while reversing
the decision of the first Appellate Court, examined various
aspects relating to title and recorded findings and proceeded
to discuss and grant relief in the absence of pleadings and
H
5"18 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A issues regarding title. Similar view has been expressed in
Bachhaj Nahar vs. Nilima Manda/ and Anr (2008) 17 SCC
491. It is relev'ant to extract the principles enunciated in para
23 of the judgment which are as follows.
"23. It is fundamental that in a civil suit, relief to be granted
B
can be only with reference to the prayers made in the
pleadings. That apart, in civil suits, grant of relief is
circumscribed by various factors like court fee, limitation,
parties to the suits, as also grounds barring relief, like res
judicata, estoppel, acquiescence, non-joinder of causes of
c action or parties, etc., which require pleading and proof.
Therefore, it would be hazardous to hold that in a civil suit
whatever be the relief that is prayed, the court can on
examination of facts grant any relief as it thinks fit. In a suit
for recovery of rupees one lakh, the court cannot grant a
D decree for rupees ten lakhs. In a suit for recovery
possession of property 'A', court cannot grant possession
of property 'B'. In a suit praying for permanent injunction,
court cannot grant a relief of declaration or possession.
The jurisdiction to grant relief in a civil suit necessarily
E depends on the pleadings, prayer, court fee paid, evidence
let in, etc."
In those circumstances, while reiterating the principles laid down
above, we hold that the same are not applicable to the case
F on hand.
32. We have already demonstrated the relief prayed in the
plaint by paying substantial court fee of Rs. 41,66,326.50. In
such circumstance, when a party is able to secure substantial
relief, namely, decree for specific performance with clearance
G of mortgage amount, it is the duty of the Court to mould the
relief so as to render substantial justice between the parties.
In this regard, we accept the course adopted by the High Court
in ~iranting relief to the plaintiff.
H 33. We are also satisfied that merely because for recovery
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 579
[P. SATHASIVAM, J.]
of the loan secured by banks, a special Act, namely, Recovery A
of Debts due to Banks and Financial Institutions Act, 1993 has
been enacted which is not a bar for the civil Court to apply to
other relief such as Section 56 of the T.P. Act. We are also
satisfied that by issuing such direction on the application of
Section 56 of the T.P. Act, the Division Bench has not modified B
or eroded the order passed by the ORT. On the other hand, it
is an admitted fact that the Bank has accepted the impugned
verdict of the High Court and did not challenge the same before
this Court by filing an appeal. We are also satisfied that by
granting such a relief, the Bank is not prejudiced in any way by c
bringing other properties for sale first to satisfy the mortgage
debt payable by defendant Nos. 1 and 2. In fact, the High Court
was conscious and also observed that if sale proceeds of other
items of properties are not sufficient to satisfy the debt payable
to the Bank by defendant Nos. 1 and 2, in that event, Bank can
0
proceed against the suit properties.
34. We are also conscious of the fact that the said doctrine
cannot be permitted to become a device for destructing the
sanctity of contract. The court will also not apply the doctrine
of impossibility to assist a party which does not want to fulfill E
its obligations under the contract.
About Writ Petition:
35. It is relevant to note that during the pendency of the
appeals before the High Court, the very same plaintiff filed Writ F
Petition No. 23405 of 2009, impleading defendant Nos. 1 and
2, Mis ,Anand Agency which is a sister concern of defendant
No. 1 and 3rd deferidant-Bank apart from Union of India, praying
for issuance of a writ of Mandamus forbearing the respondents
from bringing the scheduled property forming the subject matter G
of the decree in his favour in O.S. No 336 of 2006 on the file of
the Principal District Judge, Chengalpet by way of auction. He
also prayed for certain other directions. Objections were raised
by the appellants about the hearing of the writ petition along
H
580 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R
A with the appeals. We have already adverted to the facts leading
to the filing of two regular First Appeals before the High Court.
It is not in dispute that the parties in those appeals as well as
in the writ petition are one and the same except Union of India
against whom the writ petitioner has not sought any relief. It is
B also not in dispute that the subject matter of the /is and
properties are one and the same in both the appeals and the
writ petition. There is no bar for the Division Bench which has
jurisdiction to hear appeal, to hear writ petition when the same
is connected with the main issue. In fact, no serious objection
c was raised before the High Court for hearing the writ petition
along with the appeal. On the other hand, on the earlier
occasion, when the parties have filed special leave petitions
against certain interim orders, this Court requested the High
Court to dispose of all the matters together. It is relevant to
~
0 point out that no clarification or direction was sought in respect
of the said order passed by this Court.
36. Mr. R.F. Nariman, learned senior counsel has pointed
out that the writ petitioner has highlighted the applicability of the
principle of marshalling. He pointed out that in grounds U) and
E (k), the factual aspects about applicability of marshalling have
been highlighted. Since the appellants have seriously objected
that in the absence of any material, the High Court ought not to
have considered the same, we reproduce th.e said grounds
hereunder:
F
U) "When there are other properties belonging to the
Judgment Debtors are available for auction sale for
realization of the D.R.C. issued the suit properties
are brought to auction sale, leaving out the other
valuable properties of the Respondent Nos. 1 & 2
G
at Chennai and the property covered by the decree
situate at Senthamangalam village are brought to
sale and the said action of the respondents would
defeat and frustrate the decree for specific
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 581
[P. SATHASIVAM, J.]
performance granted in favour of the petitioner A
herein.
(k) When there are more than one property belonging
to the borrowers are available leaving out all the
properties including the 3 valuable properties at
8
Chennai are left from auction sale and the property
situate at Senthamangalam village (forming the
decree property) would demonstrate that the
respondent bank with tacit understanding with the
borrowers is attempting to destroy the rights of the C
Decree Holder who is holding a decree for specific
performance which has not been stayed by the
High Court, Madras and the respondent bank is not
willing to receive the monies offered by the
petitioner on behalf of the Respondents 4, 5 and 6
ever since the inception of the suit in August 2006 D
till date which would demonstrate the motive of the
bank in indulging in dilatory tactics, the
Respondents 2 and 3 in collusion and connivance, .
of the respondents 4, 5 and 6 are bringing the
property covered by the decree solely with a view E
to frustrate the decree secured by the petitioner
herein."
Though the plea of 'marshalling' has not been specificaily
mentioned but all the required details have been referred to. It ·· F
is not clear whether any objection/counter has been filed by the
respondent Nos. 4 to 6 therein (respondent Nos. 1 & 2 herein)
about those factual details. Irrespective of the same, we have
already concurred with the High Court in applying the said
pr~nciple considering the larger relief prayed for in the suit and G
the plaintiff was having a decree for specific performance /
subject to clearance of mortgage loan with the Bank.
37. In Sain Ditta Mal vs. Bu/agi Mal & Sons and others,
AIR (34) 1947 Lahore 230, the High Court after adverting to
H
582 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A Section 56 of the Transfer of Property Act has held that this
equitable doctrine exists for the benefit of the buyer alone.
Following the said decision of the Lahore High Court, Karam
Singh Sobti vs. Smt Shukla Bedi, AIR 1962 Punjab High Court
at Delhi 477 reiterated the same principle.
B
38. The principle laid down in Brahm Parkash vs. Manbir
Singh & Ors., [1964] 2 SCR 324 at 335 is also relevant to
quote:.
"The other submission of learned counsel was that the
c learned Judges failed to give effect to the last portion of
Section 56 under which marshalling is not to be permitted
so as to prejudice the rights inter alia of the mortgagees
or other persons claiming under him i.e. under the original
mortgagor. Learned counsel pointed out that the appellant
D having proved his mortgage and the fact that it was
subsisting, the learned Judges of the High Court ought to
have held that any direction as to marshalling must
necessarily prejudice him. We are unable to agree that this
follows as any matter of law. The question of prejudice is
E purely one of fact which has to be pleaded and the
necessary facts and circumstances established. It is
obvious that the question of prejudice would be intimately
connected with the value of the property against which the
mortgagee is directed to proceed in the first instance. If
F even after paying off such a mortgage there is enough left
for payment over to the subsequent encumbrancer referred
to in the last portion of Section 56 it would be manifest that
there would be no question of prejudice. If therefore the
appellant desired to invoke the benefit of the last portion
of Section 56 he should have made some plea as to the
G
value of the property and shown how it would prejudice his
rights as a subsequent encumbrancer. He however made
no such plea and no evidence was led as to the value of
the property. Even at the stage of the appeal in the High
Court the contention that to allow marshalling in favour of
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 583
[P. SATHASIVAM, J.]
the subsequent purchaser - Mukhamal would result in A
prejudice to him was admittedly never put forward before
the learned Judges. As the point is one not of pure law but
springs from the factual inadequacy of the property
mortgaged to him to discharge his debt it is too late for
the appellant to raise such a plea in this Court." B
It is clear that the application of the principle of marshalling may
cause prejudice to the other party, but their Lordships have held ____ _
that the said prejudice is a pure question of fact and depends
upon various factors.
c
39. In the light of the details and materials highlighted in
the earlier paragraphs and as discussed by the High Court, we
are satisfied that the High Court is right in applying the principle
of marshalling in favour of the plaintiff that too by safeguarding
the interest of the 3rd defendant-Bank. In fact, the Bank did not D
challenge the impugned judgment of the High Court.
Accordingly, we reject the contrary arguments made in respect
of applying the principle of marshalling at the appellate stage.
Cost
E
40. Though no serious argument was advanced about the
award of cost, in the grounds raised in the appeal, the
appellants have agitated the award of cost by the.High Court
in favour of the plaintiff. Section 35 of the CPG speaks about
Cost. Inasmuch as the plaintiff after valuing the suit paid a F
substantial court fee of Rs. 41,66,326.50 and ultimately he
secured a decree for specific performance though he could not
secure a relief in its entirety, the plaintiff is entitled for his cost.
It is not in dispute that the court has granted the major relief,
namely, decree for specific performance subject to clearance G
of the mortgage debt. In those circumstances, the High Court
having noticed the payment of substantial court fee ordered cost
payable by the contesting defendant Nos. 1 and 2 to the
plaintiff. We agree with the said direction.
H
584 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A pirection to the Recovery Officer/Tribunal
41. Learned senior counsel for the appellants contended
that the jurisdiction of Recovery officerfTribunal is exclusive and
no other Court can go into their order for which they relied on
B Allahabad Bank vs. Canara Bank & Anr., (2000) 4 SCC 406,
State Bank of India vs. Allied Chemical Laboratories & Anr.,
(2006) 9 SCC 252, India Household and Healthcare Ltd. vs.
LG Houshold and Healthcare Ltd., (2007) 5 SCC 510. We
are conscious of the principles enunciated in these decisions.
C However, in our case, the High Court taking note of the fact that
it had considered various connected issues in respect of the
same properties in which both the Civil Court and the ORT
passed several orders and the fact that defendant Nos. 1 and
2 are having sufficient other properties in prime locations at
Chennai and other places nearby Chennai and also of the fact
D that the Bank was also party to both these proceedings and
accepted the impugned order of the High Court and not filed
any appeal before this Court, we feel that the direction/
clarification issued by the High Court does not run counter to
the orders of ORT/Recovery Officers, on the other hand, it
E safeguards the interest of all parties. Only because of the delay
on the part of the defendant Nos. 1 and 2 in not settling the dues
of the Bank at the appropriate time, in the recent times, property
value has risen to some extent. On this ground, we cannot
interfere with the direction of the High Court about the sale of
F the said properties.
Interference under Article 136 of the Constitution of India
42. Though we have exhaustively dealt with the merits of
the appeals, Mr. R.F. Nariman, learned senior counsel for
G Respondent No. 1 highlighted that even after grant of leave,
there is no obligation on the part of this Court to go into all
aspects and decide after giving reasons. According to him, in
view of the concurrent findings by the Trial Court and the High
Court about the decree for specific performance and other ·
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 585
[P. SATHASIVAM, J.]
relief by the High Court based on the question of law and equity, A
this Court has ample power to dismiss all the appeals even
without assigning any reason.
43. In Balvantrai Chimanlal Trivedi, Manager Raipur
Manfg. Co. Ltd., Ahmedabad vs. M.N. Nagrashna and Others, B
AIR 1960 SC 407, while considering the scope of Article 136
of the Constitution of India, a three-Judge Bench of this Court
has concluded:
"5. The question then arises whether we should interfere
in our jurisdiction under Article 136 of the Constitution, C
when we are satisfied that there was no failure of justice.
In similar circumstances this court refused to interfere and
did not go into the question of jurisdiction on the ground
that this Court could refuse interference unless it was
satisfied that the justice of the case required it: see A.M. D
Allison vs. B.L. Sen, (1957) SCR 359: ((S) AIR 1957 SC
227). On a parity of reasoning we are of opinion that as
we are not satisfied that the justice of the case requires
interference in the circumstances, we should refuse to
interfere with the order of the High Court dismissing the E
writ petition of the appellant. We accordingly dismiss the
appeal, but having regard to the peculiar circumstances
of the case which we have referred to above we order that
each party will bear its own costs of this appeal."
44. In Balvantrai Chimanlal Trivedi vs. M.N. Nagrashna
F
and Others, AIR 1960 SC 1292, the Constitution Bench of this
Court, while considering the jurisdiction of this Court under
Article 136, has held:
" .... It is necessary to remember that wide as are our G
powers under Article 136, their exercise is discretionary;
and if it is conceded, as it was in the course of the
arguments, that this Court could have dismissed the
appellant's application for special leave summarily on the
ground that the order under appeal had done substantial H
586 SUPREME COURT REPORTS [2010] 15 (ADDL.) S.C.R.
A justice, it is difficult to appreciate the argument that
because leave has been granted this Court must always
and in every case deal with the merits even though it is
satisfied that ends of justice do not justify its interference
in a given case. In the circumstances we are of opinion
B that this Court was not bound to decide the question of
jurisdiction on the facts and circumstances of this case
when it had come to the conclusion in dealing with an
appeal under Article 136 of the Constitution that there was
no failure of justice. The review application therefore fails
c and is hereby dismissed with costs."
45. In Taherakhatoon (D) By Lrs. vs. Salambin
Mohammad, (1999) 2 SCC 635, the following point arose for
consideration.
D "(2) Whether the discretionary power available to this Court
at the time of grant of special leave continues with the
Court even after grant of special leave and when the
appeal is being heard on merits and whether, this Court
could declare the law and yet not interfere or could mould
E the relief? Or whether, once the law is declared, this Court
is bound to grant possession and the mandatory
injunction?
Their Lordships have held:
F 15. It is now well settled that though special leave is
granted, the discretionary power which vested in the Court
at the stage of the special leave petition continues to
remain with the Court even at the stage when the appeal
comes up for hearing and when both sides are heard on
G merits in the appeal. This principle is applicable to all kinds
of appeals admitted by special leave under Article 136,
irrespective of the nature of the subject - matter. It was so
laid down by a Constitution Bench of five learned Judges
of this Court in Pritam Singh v. State. In that case, it was
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 587
[P. SATHASIVAM, J.]
argued for the appellant that once special leave was A
granted and the matter was registered as an appeal, the
case should be disposed of on merits on all points and
that the discretionary power available at the stage of grant
of special leave was not available when the appeal was
being heard on merits. 8
20. In view of the above decisions, even though we are now
dealing with the appeal after grant of special leave, we are
not bound to go into merits and even if we do so and
declare the law or point out the error - still we may not C
interfere if the justice of the case on facts does not require
interference or if we feel that the relief could be moulded
in a different fashion. We have already referred to the
various circumstances of the case which show that the
plaintiff, on her own admission, had knowledge of the
trespass in December 1967 and did not raise any D
objection to the construction of the two rooms though she
was the adjacent neighbour: She gave notice only after 7
years in 1974 and she filed suit in 1975. These two rooms
have been there for the last 30 years. In those
circumstances, we declare the law by holding that the High E
Court while dealing with a second appeal under Section
100 CPC erred in not framing a substantial question of law
and that it also erred in interfering with a pure question of
fact relating to the genuineness of the agreement. We
declare that this was not permissible in law. Even while so F
declaring, we hold that in the peculiar circumstances
referred to above, this is not a fit case for interference and
that in exercise of our discretion under Article 136, - a
discretion which continues with us even after the grant of
special leave, - the decree passed by the High Court G
dismissing the suit for possession need not be interfered
with and the two rooms need not be demolished. The
plaintiff could be adequately compensated by way of
damages ...... "
H
588 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A 46. In Chandra Singh and Ors. vs. State of Rajasthan and
Anr. (2003) 6 SCC 545, a three-Judge Bench, after following
the principle in Taherakhaton (supra), held:
"42. In any event, even assuming that there is some force
B in the contention of the appellants, this Court will be
justified in following Taherakhatoon v. Salambin Mohd.
wherein this Court declared that even if the appellants'.
contention is right in law having regard to the overall
circumstances of the case, this Court would be justified in
declining to grant relief under Article 136 while declaring
c the law in favour of the appellants.
43. Issuance of a writ of certiorari is a discretionary
remedy. (See Champa/al Binani v. CIT) The High Court
and consequently this Court while exercising their
D extraordinary jurisdiction under Article 226 or 32 of the
Constitution of India may not strike down an illegal order
although it would be lawful to do so. In a given case, the
High Court or this Court may refuse to extend the benefit
of a discretionary relief to the applicant. Furthermore, this
E Court exercised its discretionary jurisdiction under Article
136 of the Constitution of India which need not be
exercised in a case where the impugned judgment is found
to be erroneous if by reason thereof substantial justice is
being done. [See S.O.S. Shipping (P} Ltd. v. Jay
F Container Services Co. (P) Ltd.] Such a relief can be
denied, inter a/ia, when it would be opposed to public
policy or in a case where quashing of an illegal order would
revive another illegal one. This Court also in exercise of
its jurisdiction under Article 142 of the Constitution of India
G is entitled to pass such order which will do complete justice
to the parties.
45. This Court said that this principle applies to all kinds
of appeals admitted by special leave under Article 136,
irrespective of the nature of the subject-matter. So even
H
J.P. BUILDERS & ANR. v. A. RAMADAS RAO & ANR. 589
[P. SATHASIVAM, J.]
after the appeal is admitted and special leave is granted, A
the appellants must show that exceptional and special
circumstances exist, and that, if there is no interference,
substantial and grave injustice will result and that the case
has features of sufficient gravity to warrant a review of the
decision appealed against on merits. So this Court may B
declare the law or point out the lower court's error, still it
may not interfere if special circumstances are not shown
to exist and the justice of the case on facts does not
require interference or if it feels the relief could be moulded
in a different fashion.
c
46. The observations made in paras 15-20 of
Taherakhatoon can be usefully applied to the facts and
circumstances of the case on hand."
It is clear from the above decisions, even after issuance of o
notice in the special leave petition and after grant of leave,
irrespective of the nature of the subject matter, the appellants
must show that exceptional and special circumstances exists
and if there is no interference by this Court substantial and
grave injustice will result and that the case has features of E
sufficient gravity to warrant a decision from this Court on merits.
Conclusion
47. In the light of the above discussion, more particularly,
. the factual findings rendered by the trial Court and the Appellate F
Court-High Court in respect of grant of decree for specific
performance and application of principle of marshalling under
Section 56 of the Transfer of Property Act, we are in entire
agreement with the conclusion arrived by the High Court. We
have also gone through the elaborate order of the High Court G
in review petitions filed by the appellants. As a matter of fact,
after highlighting the jurisdiction under review, the Division
Bench of the High Court had taken pains to discuss once again
and rendered a finding on all aspects with which we fully agree.
H
590 SUPREME COURT REPORTS (2010] 15 (ADDL.) S.C.R.
A Inasmuch as we are confirming the impugned judgment of the
High Court in toto, there is no need to refer the affidavit of
undertaking filed by the first respondent herein and the
objection raised by the appellants as to the contents of the
same. Since we confirm the conclusion and ultimate decision
8 of the High Court, we grant further time of three months from
today for deposit of the balance amount as directed by the High
Court in paragraph 85. In case defendant Nos. 1 and 2 fail to
comply with the said directions in executing the sale deed, the
trial Court is directed to execute the sale deed incorporating
C all the directions and observations made in the judgment of the
High Court. Consequently, all the appeals are dismissed as
devoid of any merit with no order as to costs.
R.P.
I
Appeals dismissed.
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