Supreme Court of India
S.V.R. MUDALIAR (DEAD) BY LRS. AND ORS.versusMRS. RAJABU F. BUHARI (DEAD) BY LRS. AND ORS.
- Citation
- 1995 INSC 264
- Decided
- 17 April 1995
- Disposal
- Appeal(s) allowed
- Bench
- K RAMASWAMY
Holding
The "Record of Fact" is genuine, Kamal was an agent, the gentlemen's understanding is a valid and enforceable contract, and specific performance is appropriate despite delay, price rise, and assignment.
Summary
The plaintiff S.V.R. Mudaliar sold two properties to Mrs. Rajabu Buhari in 1959 and, based on a written "gentleman's understanding" recorded as a "Record of Fact" (Ex.P1), expected the properties to be reconveyed if the purchase price was repaid within three years, with a 10% solatium. One property was reconveyed, the other was not, leading to a suit for specific performance. The trial court decreed in favour of the plaintiff, but the Madras High Court's Letters Patent Bench reversed, doubting the genuineness of Ex.P1 and the agency of Kamal, who signed it. On appeal, the Supreme Court held that Ex.P1 was genuine, Kamal was an agent, the gentlemen's understanding formed a valid and enforceable contract, and specific performance could be granted despite the long delay, rise in property prices, and the plaintiff's assignment of rights to third parties. The Court restored the trial court decree ordering reconveyance of the second property.
Issues considered
- Whether the document titled "Record of Fact" (Ex.P1) is genuine.
- Whether Kamal, who signed Ex.P1, acted as an agent of the defendants, making the agreement binding on them.
- Whether the "gentleman's understanding" creates a legally enforceable contract capable of specific performance.
- Whether the discretion under Section 20 of the Specific Relief Act permits denial of specific performance due to the passage of time, increase in property value, or assignment of the plaintiff's rights to third parties.
Legislation cited
- Specific Relief Act, 1963s. 15(b), s. 20(2), s. 20(3)
Subjects
specific performancereconveyancegentleman's agreementassignment pendente litediscretion under Section 20rise in property priceagencycontract enforceabilitySpecific Relief Act
Judgment
A S.V.R. MUDALIAR (DEAD) BY LRS. AND ORS.
v.
MRS. RAJABU F. BUHARI (DEAD) BY LRS. AND ORS.
\ .
APRIL 17, 1995
B [K. RAMASWAMY AND B.L. HANSARIA, JJ.]
Specific Relief Act, 1963-Sections 20(2) and (3}-Specific peifonnance
for reconveyance of property-Sale deeds-Understanding to reconvey proper-
tie~ocuments executed by agents of both panies-Valid and enforceable
c contract for reconveyance-Panies ad idem-Prices having risen during pen-
dency of litigation-Assignment of interest to outsiders-Whether plaintiff can
seek decree for specific peifonnance-Held, Yes.
Appellant-plaintiff sold two of his properties ostensibly to Mrs. B.
D The sale deeds were registered on 31.3.1959. The plaintiff's case was that
before these properties had been sold there was a 'gentlemen's under-
standing' between him and Mr. B, husband of Mrs. B that in case the
purchase amounts as per the sale deeds were repaid within three years, '
the properties would be reconveyed. This understanding was put in writing \-
subsequently under the title 'Record of fact', Ex.Pl. Plaintiff pleaded that
E though the sale deeds were in the name of Mrs. B, the real purchaser was
,,
Mr.Band Mrs. B was only an ostensible owner; that Ex Pl had been signed
by one K as an agent of the couple, who were impleaded as defendants in
the suit. Of the two properties sold, only one, styled as 'Serles Garden' was
reconveyed in May, 1960. The suit for specific performance was filed for
F seeking a decree for the reconveyance of the second property.
The trial court decreed the suit, which decree came to be reversed in
appeal by the Letters Patent Bench, which regarded the 'Record of fact',
Ex Pl not as a genuine document mainly because the sale deed did not
contain a stipulation regarding the reconveyance of the properties sold by
G the plaintiff. Even Ex.plS, by which Selers Garden was resold, did not
mention about the same having been done pursuant to any contract of
reconveyance. As in support of proof of Ex. P.1, the plaintiff had examined,
H
apart from himself, bis agent, the appellate court did not feel satisfied
about there being credible evidence in this regard. When the trial began,
another signatory to P.1 who had played prominent part throughout
\
-
•
312
S.V.R. MUDALIAR "· RAIAJlU F. llUI i..IRi
having died, was not available for exan1t11ation. The onl)'·other signator:· A •
was K, who could not be examined even as a court '~itness. 'l'ht> L-tttl..'r.''
~ > Patent Bench set aside t.he decree. Hence this appeal.
The respondent, apart from mentioning about silence of sale deeds
relating to any agreement of reconveyance, urged that the agreement had
created no legal obligation and as such was not enforceable as the evidence B
adduced by the plaintiff would itself show that Pl bad not seen the light
of the day; that this document was described by PWl in bis evidence as a
-- 'letter' and queries were raised as to why Pl was not signed by Mr. B and
why the plaintiff himself did not sign the same; that such an agreement,
even if enforceable, could be so done only against the executant of the
original contract;that the remedy of specific performance being discretion·
ary, the same might not be granted at this length of time, ntore su wheu
c
the appellant had assigned their interest to some outsiders.
As to why in sale deeds no mention was made. about P.1, it was D
explained by the plaintiff in his evidence stating that his legal advisor R
had advised accordingly. R was a legal advisor both lo the plaintiff and
/ the respondent. The appellants referring to sub-sec. (I) of Sec.20 of the
Specific Relief Act contended that the relief of specific perforrnance was
said to be discretionary only in the sense that the court may not act
arbitrarily and nothing beyond this and while exercising the discretion, E
judicial conscience and judicial statesmanship alone are the guiding fac-
tors. Defending the delay in the disposal of the case and the rise in prices
during interregnum, he urged that the delay not having been occasioned
by any act of the plaintiff, he should not be punished for the same on the
principle . of 'actus cun·ae nenzinern gravabit'-an act of the court shall F
prejudice no man. As regards the rise in prices, the submission was that
it should not weigh with the court in refusing the relief if otherwise due.
Regarding the plaintill's successor in interest having assigned the right to
third parties in the meantime, it was urged that all assignments pendente
lite could not be regarded. as champertous, the san1e would depend on the
facts of each case and that an assignee had the right to pray for specific G
performance under clause (b) of section 15 of the Specific Relief Act.
.- 1 On the question as to whether K had signed P 1, the trial Judge even
wanted to examine this K as a court witness, but according to him, K was
kept out by the defendants, because of which some adverse inference had H
314 SUPREME COURT REPORTS (1995] 3 S.C.R.
A been drawn against them by the trial conrt.
The appellants, urged that law permits an adverse inference to be
drawn, where a party in possession of best evidence withholds tht same, '.
even if the onus of proving the fact in que~tion were not to be on him; that
though the appellate court was within its right to take a different view on
B a question of fact, that should be done after adverting to the reasons given
by the trial Judge in arriving at the finding in question that an appellate
court should interfere with the judgment under appeal not because it was
not right, but when it was shown to be wrong. The questions to be examined
were (i) whether parties were ad idem; (ii) whether the agreement of the
C type described as 'gentlemen's understanding' permitted the plaintiff to
seek a decree for specilic performance.
-
Allowing the appeal, this Court
HELD : 1.1. Even if the document of reconveyance was a letter which
D came into existence that showed that something in writing had been put
on record and it might be because of this that P.1 was described a 'Record
of Fact' and it being on a letterhead of the plaintiff, might have been loosely
described as 'letter' of PWl. On the question as to whether parties were \.
ad idem, the case of the plaintiff received support from a letter from the
plaintiff to Mr. B which mentioned about the understanding in question.
E Therefore, it would not be correct to doubt the existence of Pl because of
non-mentioning about any stipulation to reconvey in the sale deed and for
that matter for Ex PIS having not mentioned about it. Pl was genuine
document. [319-C, 320-B, E]
2 1. Before reversing a finding of fact, the appellate court has to bfar
F
in mind the reasons ascribed by the trial court. [322-B)
Rani Hemant Kumari v. Maharaja Jagadhindra Nath, 10 CWN 630,
relied on.
G Dollar Co. v. Collector of Madras, [1975) Supp. SCR 403, referred to.
2.2. A perusal of the appellate judgment showed that the Bench was
not satisfied if K who had taken part in the documents and K referred in
Pl were the same. This view was not sound because though the defendants \ _
might have had many K as employees, bot they had only one employee,
H named MH K and it was this K who had signed ~l. p22-D, El
S.V.R. MUDALIAR v. RAJ ABU F. BUHARI 315
• 3.1. This Court was satisfied about the genuineness of Pl, so also A
about K who bad signed the same as being an agent of the defendants,
because of which the understanding recorded in Pl had to be regarded as
binding on the defendants. The understanding having had consent of Mr.
B acting as an agent of Mrs. B, there was nothing to doubt that the
understanding given by Mr. B had to be regarded as binding on Mrs. B.
The leading role played by Mr. ii in the entire episode was writ large and B
there was no escape from the conclusion that the consent of Mr. B had to
be regarded as a consent given by Mrs. B. Therefore. there did exist an
understanding to reconvey the two properties as recorded in the document.
This conclusion received support from reconveyance of 'Serles Garden'
--~
•/ I
within the period of three years and that too at the added solatium of 10%. C
Therefore, the transfer of 'Serles Garden' back to the plaintiff was in
discharge of the legal obligation contained in Pl, as both the period during
which it was transferred and for the sum it was so done, fitted in well with
the terms embodied in P.1. (322-H, 323-A, B, C, El
3.2. The agreement of the type described as 'gentlemen's under- D
standing' was a valid and enforceable contract which was the basis for the
jurisdiction to order specific performance. The understanding was such
j which was meant to be acted upon because terms and conditions of
reconveyance had.been clearly mentioned and document was executed by
the agents of both the sides. It was, therefore, intended to create legal E
obligation. An enforceable contract had come into existence on the parties
executing Pl. They were ad idem and the plaintiff was within his rights to
seek specific performance of the same. (324-8, 325-C, F]
CommissinnerofWealth Tax, Bhopal v.Abdul Hussain Mul/a Muham-
mad Ali (dead) by Lrs., (1988] 3 SCC 562 and Mayawanti v. Kaushalya F
Devi, (1990] 3 SCC 1, relied on.
Rose and Frank Co. v. J.R. Crompton and Bros. Ltd., (1924] All E.L.R.
245, distinguished.
G
3.3. Ex.Pl had been executed by K as an agent of the defendants and
what had been agreed upon by him had to bind the principals.
(325-H, 326-A]
Annapoorani Ammal v. B. Ihangapalam, (1989] 3 SCC 287, distin-
gu~~ H
'
)
316 SUPREME COURT REPORTS {1995}3 S.C.R.
A 4.1. Though what has been stated in sub-sections (2) and (3) of
Section 20 of the Specific Relief Act, is not exhaustive, but is illustrative,
yet the intention or the legislature has been well reflected, both as regards
the granting or the relief and non-granting or the same. (326-F] ' -·
4.2. Merely because the prices had risen during the pendency or
B litigation, the courts were not to deny the relief of specific performance, if
otherwise due. This factor should not normally weigh against the suitor in
exercise or discretion by a court in a case or the present nature. (327-B, CJ
S.V Sankaralinga Nadar v. P.T.S. Ratnaswami Nauar, AIR (1952)
Mad 389 and Mir Abdul Hakeem Khan v. Abdul Mannan Khadri, AIR i--:~
C (1972) AP 178, approved.
4.3. Ir in a case the act of the third party could be regarded akin to
champertous, the relief of specific performance may be refused, indeed,
should be refused. In the present case, however, the assignees themselves
D applied to this court for impleading them as appellants and put on record
the deeds of assignment, a persual of which showed that the need for
assignment was felt for pressing reasons. There had been no hide and seek
with the court and the legal representatives of the original plaintiff having
received a sum of about Rs. 13 lacs pursuant to the contract of assignment L
this court would not be justified in refusing the relief of specific perfor-
E mance, i£ the conduct of the respondents was also borne in mind which
was tainted inasmuch as they departed from truth to bolster their case and
went to the extent of not complying with the desire of the trial Judge in
allowing K to be examined even as a court witness. Such parties who play
foul with equity cannot be allowed to use the shield of equity to protect
F them. [327-F to H, 328-A]
T.M. Balakrishna Mudaliar v. M. Satyanararyana Rao, (1993] 2 SCC
740, relied on.
Gopalakrishnaji v. Mohamed Hazi Latif!, AIR (1968) SC 1413,
G referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 224 of
1974.
From the Judgment and Order dated 10.5.72 of the Madras High
H Court in O.S.A. No. 8 & 9 of 1966.
S.V.R. MUDAL!AR v. RAJABU F. BUHARI [HANSAR!Af.] 317
;.. , K. Parasaran, C.S. Vaidyanathan, Harish Salve, V. Balaji, A.T.M. A
Sampath, P.N.Ramalingam, V.Balachandran, M.Liquat Ali, M.Abdul
Nazir, K.V. Mohan, Shivram, S.R. Selia, J.B. Dadachanji, S. Sukumaran,
Ms. Meenakshi Grover, C. Mukund and K. Swami for the appearing
parties.
B
The Judgment of the Court was delivered by
HANSARIA, J. This litigation is about three and half decades old by
now inasmuch as the suit for specific performance for reconveyance of the
property sold by the plaintiff was filed in 1962. It was decreed by the trial
court (a single Judge of the Madras High Court) on 10.11.65. The Letters C
Patent Bench, however, on appeal being preferred, set aside the decree on
10.5. 72. Hence this appeal by special leave by the plaintiff. As the plaintiff
died in 1980, his legal representatives have pursued the appeal. It may also
be stated that during the pendency of this appeal the appellants assigned
their right to two outsiders sometime in September, 1988. We would have, D
I therefore, to see, in case we were to agree with the plaintiff regarding there
having been a contract for reconveyance, which is the real bone of
contention between the parties, whether in view of the aforesaid assign-
ment, a decree for specific relief is still called for, keeping in view the fact
that such a relief is discretionary.
E
2. We may note relevant facts. These are that the original plaintiff,
SY Ramakrishna Mudaliar, was a man of means at one point of time, to
run into rough weather, which required mortgage of some of his properties.
It is to repay the mortgage debt that the plaintiff sold two of his properties
ostensibly to Mrs. Rajabu Fathima Buhari (Mrs. Buhari) described in F
Schedules 'A' and 'B' of the plaint. The sale deeds in respect of these
properties were executed on 26.3.59 (Ex.P 2) and 31.3.59 (Ex.P.3); both
were, however, registered on 31.3.1959. The plaintiffs case is that before
these properties had been sold there was a 'gentleman's understanding'
between him and Mr. Buhari, husband of Mrs. Buhari, on 24.3.59 that in
case the purchase amounts as per the sale deeds were repaid within three G
years, the properties would be reconveyed, when in addition to sale price,
10% thereof shall be paid as solatium of the actual amount spent on
improvement, if any. This understanding was put in writing subsequently
under the title "Record of Fact", which was exhibited during the course of
the trial as Ex.Pl. Plaintiffs another case was that though the sale deeds H
318 SUPREME COURT REPORTS [1995] 3 S.C.R.
A were in the name of Mrs. Buhari, the real purchaser was Mr. Buhari. To ' <
put it differently, Mrs. Buhari was only an ostensible owner. The third
important facet of the plaintiffs case was that Ex.Pl had been signed by
one Kamal as an agent of the couple, who were impleaded as defendants
in the suit. As, however, of the two properties sold, only one styled as
'Serles Garden' was reconveyed in May, 1960, the suit was filed for seeking
B a decree for the reconveyance of the second property, described in
Schedule 'A' to the plaint. '(_
3. As already noted the trial court decreed the suit, which decree
came to be reversed in appeal by the Letters Patent Bench. The following
C questions are to be answered to dispose of the appeal:-
(1) Whether Ex.Pl is a genuine document. This needs determination
because the Letters Patent Bench has allowed the appeal of the defendants
principally on the ground that this document is a result of fabrication.'
D (2) If the aforesaid document be genuine, whether Kamal who is said \_
to have signed the same was an agent of the defendants.
(3) Whether the understanding given by Mr. Buhari, could be en-
forced against Mrs. Buhari. This would also require determination of the
question whether Mrs. Buhari was a name lender.
E
(4) In case the factual basis of the plaintiffs case be correct, the legal
question to be decided would be whether in the facts and circumstances
of the case, more particularly the assignment of t)ie right by the successor-
in-interest of the plaintiff in favour of third persons, granting of the relief
of specific performance is called for, which the statute has left to the
F discretion of the Court.
GENUINENESS OF EX.P. 1.
4. The Letters Patent Bench of the lligh Court regarded Ex.Pl not
as a genuine document mainly because Exs.P .2 and 3 do not contain a
G stipulation regarding the reconveyance of the properties sold by the
plaintiff. Not only this, even Ex.P.15, by which Selers Garden was resold,
does not mention about the same having been done pursuant to any
contract of reconveyance. This apart, as in support of proof of Ex.P.1, the
plaintiff had examined, apart from himself, his agent Narayana Iyer, the
H appellate court did not feel satisfied about there being credible evidence
S.V.R. MUDALIAR v. RAJABU F. BUHARI [HANSARIA,·J.] 319
in this regard. It may be mentioned that when i;,/trial began, another A
l- I
signatory to P.l, Shri VS Rangachari, who had played prominent part
throughout, having died was not available for examination. The only other
signatory to Ex.P.1 is aforesaid Kamal, who could not be examined by the
trial judge even as a court witness.
5. Shri Vaidyanathan, learned counsel representing Mrs. Buhari, has, B
apart from mentioning about silence of Exs. P 2,3 and 15 relating to any
agreement of reconveyance, urged that the evidence adduced in the case
by the plaintiff would itself show that P.l had not seen the light of the day
on 24.3.59. The basic submission in this regard is that this document was
described by PWl Narayana in his evidence as a 'letter'. We do not think C
if we should go by labels, because even if it was a letter which came into
existence that shows that something in writing had been put on record; and
it may because of this that P.1 was described as 'Record of Fact' and it
being on a letterhead of the plaintiff, might have loosely described as
'letter' of PWl.
D
•
_( 6. As to why in Exs.P.2,3 and 15 no mention was made about P.l,
• has been sufficiently explained by PW2 (the plaintiff) in his evidence,
whose purport is that Shri Rangachari who had played a vital role in the
entire episode, had advised accordingly. The evidence clearly shows that
Rangachari was a legal advisor both to the plaintiff and Mr. Buhari. On E
PW.2 being specifically asked as to why Exs.P2 and P3 did not contain the
recital about reconveyance, his answer was :
"I wanted it to be included in the sale deed Rangachari told
me that the gentlemen's agreement is binding on Mr. Buhari to
reconvey the property and so need not be included in the sale F
deed".
7. Shri Salve, appearing for Mr. Buhari, puts his weight (and he has
enough of it) to the submissions of Shri Vaidyanathan and asks why is it
that P .1 was not signed by Buhari; and why is it that the plaintiff himself
did not sign the same? The queries do not stop here as, the fulcrum senior G
lawyer asks why was the sale not in the nature of conditional sale? When
-1
first two questions were put to the plaintiff his short, simple and unsophis-
ticated answer was that the confidence-inspiring advocate Rangachari had
stated that signing by the two agents in the presence of the two principals
would meet the requirement of law.· And it does, as actS done by agents H
)
320 SUPREME COURT REPORTS [1995] 3 S.C.R.
A within the permitted field do bind the principals. The first two questions
raised by Shri Salve may be answered also by pointing out that we have \ ,
seen lesser mortals signing big inter-country agreements in presence of
higher-ups. The third poser is no doubt pertinent, but as there are many
ways of getting a thing done, all concerned might have thought that instead
B of making the sales conditional, for reasons not quite known, the situation
demanded that the arrangement of the type gone into was better suited.
All important question is whether parties were ad idem; if so, how did
they express. their meeting of mind is not material. And on their agreeing
as recorded in P.l, we are in no doubt.
C 8. The case of the plaintiff in this regard receives support from P.28
which is a letter from the plaintiff to Mr. Buhari, dated 1st Feb. 1961, which
mentions about the understanding in question. Though the Division Bench
of the High Court has held that Ex.P.28 is also a fabricated document, we
find ourselves unable to agree with it on this point. There is some force in
the case of the plaintiff that the defendants challenged about the under-
D standing in question after the death of Rangachari.
9. According to us, therefore, it would not be correct to doubt the
\-
existence of P.1 because of non-mentioning about any stipulation to recon-
vey in Exs. P 2 and 3 and for that matter for Ex.P.15 ha,ing not mentioned
E about it; nor do the questions raised by Shri Salve take away the ring of
truth, the plaintiff's case has in this regard. So, we hold that P.l is a genuine
document, as opined by the trial Judge.
WP.ETHER KAMAL WAS AN AGENT OF THE DEFENDANTS
F JO. We now come to the rule played by Kamal. Acc0rding to the
pl.tint;U lull name ot Kamal who had signed Ex.Pl is MH Kamal, son of
MS Mt•hamroed Hasan, who at the relevant time was residing at Nos. 5/
and 58, 3rd Main Roa<l, Gandhi Nagar. As per the second. defendant, who
alone appeared in the witness box, there were many Kamals in his employ-
ment anJ the signature appearing in P.1 is not of MH Kamal, who at some
G puint of tim" was in employment of the defendants.
11. The trial Judge has dealt with this aspect in detail and to find out
•\e truth as to whether MH Kamal had signed Pl, he even wanted to
\ -
e:xJmine this Kamal as a court witness; but, according to him, Karna] was
H kepl out by the defendants, because of which some adverse inference has
S.V.R. MUDALIAR v. RAJ ABU F. BUHARI [HANSARIA, J.] 321
been drawn against them by him. A
- 12. Mr. Parasaran, appearing for the appellants, fully supports the
finding of the trial Judge in this regard and, according to him, law permits
an adverse inference to be drawn, where a party in possession of best
evidence withholds the same, even if the onus of proving the fact in B
question were not to be on him. To support him on the legal submission,
the learned counsel has relied on a three-Judge Bench decision of'this
Court in Gopalakrishnaji v. Mohamed Hazi Latiff, AIR (1968) SC 1413. In
that case this Court while stating as above observed that a party cannot
rely on abstract doctrine of onus.
c
13. According to the learned counsel for the respondents, the case
of the defendants on this score finds support from none other than
aforesaid Kamal, if what has been stated by him in his affidavit filed before /
this Court is borne in mind. That affidavit is a part of IA No. 2, in which
the prayer is to direct examination of MH Kamal as a witness in the D
appeal. Shri Salve has drawn our attention to the account of salary and
I batta paid to Kamal, as mentioned in the enclosure to the affidavit, accor<l-
ing to which, for the year 31.3.63 batta paid was Rs. 124 and salary _was Rs.
525. The learned counsel brings to our notice that in earlier years the batta
had ranged about four times more and the salary more than that, which
would go to show that after 31.3.62 Kamal was in the service not upto E
31.3.63, but for a few months after 31.3.62, as in the case of the defendants.
There seems to be some force in this contention.
14. We, therefore, do not propose to decide this fact by drawing any
adverse inference against the respondent; but would do so on the basis of F
evidence led by the plaintiff. As already stated, this evidence has received
better treatment at the hand of trial Judge, who, while holding that Kamal
had acted as an agent of the defendants, referred to many circumstances
also. Shri Parasaran has submitted that though the appellate court is within
its right to take a different view on a question of fact, that should be done
after adverting to the reasons given by the trial Judge in arriving at the G
~,
finding in question. Indeed, according to Shri Parasaran an appellate court
/! should interfere with the judgment under appeal not because it is not right,
but when it is shown to be wrong, as observed by three-Judge Bench of
this Court in Dollar Co. v. Collector of Madras, [1975] Supp. SCR 403. As
to this ob:.:ervation, the contention of Shri Vaidyanathan is that what was H
322 SUPREME COURT REPORTS (1995] 3 S.C.R.
A sated therein was meant to apply when this Court examines a matter under
Article 136. Who do not, however, think if this meaning can be ascribed to I '
what was observed.
15. There is no need to pursue the legal principle, as we have no
doubt in our mind that before reversing a finding of fact, the appellate
B court has to bear in mind the reasons ascribed by the trial court. This view
of ours finds support from what was stated by the Privy Council in Rani
Hemant Kumari v. Maharaj a Jagadhindra Nath, 10 ·CWN 630, wherein,
while regarding the appellate judgment of the High Court of judicature at
Fort William as "careful and able", it was stated that it did not "come to
C close quarters with the judgment which it reviews, and indeed never
discusses or even alludes to the reasoning of the Subordinate Judge."
16. Shri Salve has taken pains to satisfy us that it is not quite correct
to submit that the Division Bench did not take note of circumstantial
evidence noted by the trial Judge. To satisfy us in this regard, our attention
D has been invited to what was stated by the Bench at page 291 of Vol.IL A
perusal of this part of the appellate judgment shows that two circumstances
mentioned by the trial Judge were traverssed, but all were not. This apart,
first circumstance was not regarded as connecting Kamal with the defen-
dants mainly because the Bench was not satisfied if Kamal who had taken
E part In the documents marked as Ex.P9, 10, 64 and 65, and the Kamal
referred in Pl are the same. We do not, however, think that this view is
sound because though the defendants might have had many Kamals as
employees but they had only one employee, named MH Kama~ son of
Mohammad Hasan, and it is this Kamal who had signed Ex.P.l. As to the
second circumstance relatable to issuance of Ex.P.28, we have already
F observed that we do not agree with the view of the Division Bench qua
this.
WHETHER MRS. BUHARI WAS A BENAMIDAR OF MR. BUHARI
17. The trial Judge has answered this question in favour of the
G plaintiff; the Division Bench has observed that it is not necessary to advert
to this aspect of the case of the plaintiff. We also propose to traverse the
path taken by the appellate court and resist from giving our finding on this
aspect of the case. We have taken this stand because we are satisfied about
the genuineness of Ex.P.1; so also about Kamal who had signed the same
H as being an agent of the defendants, because of which the understanding
"\...
S.V.R. MUDALIAR v. RAJABU F. BUHARI [HANSARIA,J.] 323
_>... _I
recorded in Ex.P.l has to be regarded as binding on the defendants. For A
the sake of completeness, we may also observe that the understanding
having had consent of Mr. Buhari, and there being evidence a-galore about
Mr. Buhari acting as an agent of Mrs. Buhari, there is nothing to doubt
that the understanding given by Mr. Bu:hari has to be regarded as binding
on Mrs. Buhari The leading role played by Mrs. Buhari in the entire B
episode is writ large and there is no escape from the conclusion that the
consent of Mr. Buhari has to be regarded as a consent given by Mrs.
f
Buhari.
18. We, therefore, conclude that there did exist an understanding to
reconvey two properties as recorded in the document executed on 24.3.59. C
This conclusion of ours receives support from reconveyance of 'Serles
Garden' within the period of 3 years as stipulated in Ex. P. 1 and that too
at the added solatium of 10%. This property having been sold at Rs. 85,000,
10% of the same comes of Rs. 8,500 and Ex.P.15 evidences the sale at Rs.
95,000. Though it is correct that Rs. 85,000 and 10% of that comes to Rs. D
I 93,500, it may as weli"be that this figure was rounded to Rs. 95,000. In this
context Shri Vaidyanathan's submission, however, is that 'Serles Garden'
was sold back, not pursuant to the agreement to reconvey, but because
Mrs. Buhari could not get a lessee despite advertisement having been put
in 'The Hindu' and 'The Mail', as evidenced by Exs.Dl to D4. Though this
contention has some cutting edge, we were inclined to ihink, on the totality E
of facts, that the transfer of Serles Garden back to the plaintiff was in
discharge of the legal obligation contained P.l, as both the period during
which it was transferred and for the sum it was so done, fit in well with
the terms embodied in P .1.
F
IS A CASE FOR SPECIFIC PERFORMANCE MADE OUT IN LAW?
19. Being satisfied that the parties had agreed as recorded in Ex.Pl,
the question to be examined is whether the agreement of the type at hand,
described as "gentlemen's understanding" in Ex.Pl, permitted the plaintiff G
to seek a decree for specific performance. According to learned counsel
for the respondents, the agreement has created no legal obligation and as
such is not enforceable. The second point urged is that such an agreement,
even if enforceable, can be so done only against the executant of the
original contract. The final submission is that the remedy of specific
performance being discretionary, the same may not be granted at this H
324 SUPREME COURT R2PORTS (1995] 3 S.C.R.
A length of time; more so, when the appellants have assigned their interest ' ,
to some outsiders.
20. So far as the first submission is concerned, we agree that it is a
valid and enforceable contract which is the basis for the jurisdiction to
order specific performance, as pointed out in Mayawanti v. Kaushalya Devi,
B (1990] 3 sec 1. The point for determination is whether the agreement as
recorded in Ex.Pl is enforceable. It has been contended on behalf the
respondents that while agreeing as embodied in the document the parties
had no intention to create any legal interest, because of which the agree-
ment cannot be enforced. Strong reliance has been placed, in support of
C this submission, on the decision of House of Lords in Rose and Frank Co.
v. J.R. Crompton & Bros. Ltd., (1924] ALL E.L.R. (Reprint) 245. In that
case, after noting what had been agreed upon, the House of Lords came
to the conclusion that the parties had not intended that the document
should be legally enforceable.
D 21. As the aforesaid decision was arrived at on the basis of what was
contained in the document, it would be pertinent to note the clause in
question, which read as below :
11
This arrangement is not entered into, nor is this memorandum
written, as a formal or legal agreement, and shall not be subject
E
to legal jurisdiction in the law courts either of the United States
or England, but it is only a definite expression and record of the
purpose and intention of the three parties concerned, to which
they each honourably pledge themselves with the fullest confidence
- based on past business with each other - that it would be carried
F through by each of the three parties with mutual loyalty and
friendly co- operation."
22. The decision being on the facts of the case canriot apply to facts
here which are different; and we do think that what was agreed upon in
G the present case is much different, as would appear from Ex.Pl which
reads as below :
11
Record of Fact 11
This is to record the gentlemen's understanding between Mr.
H S.V.R. and Mr. A.M. Buhari that Mr. Buhari will see to it that in
S.V.R. MUDALIAR v. RAJABU F. BUHARI [HANSARIA, J.] 325
case the purchase amounts as per the sale deeds in favour of Mrs. A
A.M.B. Buhari is repaid within 3 years from this date, the proper-
ties will be reconveyed to Mrs. S.V.R. who will also have to pay in
addition to sale price 10 per cent thereof as solatium of the actual
amount spent on improvement if any. 11
23. The aforesaid show that though what has been recorded was
B
described as 1'gentlemen's understanding11 , according to us, the under-
standing was such which was merit to be acted upon. We have taken this
'iew because terms and conditions of reconveyance have been clearly
mentioned and document executed by the agents of both the sides. It was,
therefore, intended to create legal obligation. In this context, Shri C
Parasaran has brought to our notice a decision of this Court rendered in
Commissioner of Wealth Tax, Bhopal v. Abdul Hussain Mui/a Muhammad
Ali, (Dead) By LRs., (1988] 3 SCC 562, in which after referring to the
decision of the House of Lords in the aforesaid case and some other
decisions, as well as what has been stated in legal treatise, it was observed D
in para 24 that the proposition that in addition to the existence of an
agreement and the· presence of consideration, there is also a third ekment
in the form of intention of parties to c.reate legal relations, is one which
j has not passed unchallenged. The Bench observed that it is not possible to
accept the argoment that an agreement will not, by itself, yield legal
obligations unless it is one which can reasonably be regarded as having E
been made between the parties in contemplation of legal consequences.
From the averments made in Ex.Pl and the legal position being what has
been noted in this case, we are satisfied that an enforceable contract had
come into existence on the parties executing Ex.Pl. According to us, they
were ad idem and the plaintiff was within his rights to seek specific F
performance of the same.
24. On the second legal question raised, we may not spend much time
because the prop of this submission being what was held by this Court in
Annapoorani Ammal v. G. 71zangapalam, [1989] 3 SCC 287, whose facts
were entirely different; the ratio o_f that decision cannot be called in aid by G
the respondents. In that case the mother of the <:ppellant who had allegedly
executed the 'yadast' was not the owner of the property because of which
it was held that the suit against the appellant filed for reconveyance of the
property on the basis of 'yadast' could not have been decreed. In our case
Ex.Pl had been executed by Kamal as an agent of the defendants and what H
326 SUPREME COURT REPORTS (1995] 3 S.C.R.
A had been agreed upon by him has to bind the principals.
25. We now come to the main legal submission, which is that the
relief of specific performance being discretionary, we may not grant the
' <
same for two reasons in the main : (1) lapse of about 33 years after filing
of the suit during which per'.nd price of the property has gone up enor-
B mously; and (2) the plaintiffs legal representatives having assigned their
right of re-purchase, the assigness are the real person interested in getting
back the property, and we may not allow the same, as what they had
-
purchased was not the property as such, but litigation, which could be said
to be akin to champerty.
c
26. Shri Parasar.an contends that the relief of specific performance
is said to be discretionary only in the sense that the court may not act
arbitrarily and nothing beyond this, and while exercising the discretion
judicial conscience and judicial statesmanship alone are the guiding factors.
D That this is the legal position is sought to be sustained by referring to sub-
section (1) of section 20 of the Specific Relief Act, 1963, in which, it has
been stated that the jurisdiction to decree the specific performance is
discretionary, but the discretion is not arbitrary; it is sound and reasonable
and is to be guided by judicial principles. As to when the court may not
exercise discretion to grant the decree for specific performance has been
E mentioned in sub-section (2); whereas sub-section (3) states as to when the
court may properly exercise its discretion to decree specific performance.
No doubt what has been stated in these two sub-sections is not exbaustive,
but is illustrative, yet the intention of the legislature has been well reflected,
both as regards the granting of the relief and non-granting of the same.
F Clause (c) of sub-section (2) states that if granting of specific performance
would make it "inequitable", the court may not grant the relief. It is this
part of the statutory provision which is sought to be relied by the learned
counsel for the respondents by contending that it would be inequitable to
grant specific performance for the aforesaid two reasons.
G 27. In so far as the delay in the disposal of the case and the rise in.
process during interregnum, Shri Parasaran urges that the delay not having
been occasioned by any act of the plaintiff, he may not be punished for the
same on the principle of 11actus curiae neminem gravabit" - an act of the
court shall prejudice no man. As regords the rise in prices, the submission \-
H is that it should not weigh with the court in refusing the relief if otherwise
~-
SVR MUDALIAR v. RAJABU F. BUHARI (HANSARIA, J.] 327
due, as opined in S. V. Sankaralinga Nadar v. P. T.S. Ratnaswami Nadar, A
AIR (1952) Madras 389, which decision was cited with approval in Mir
Abdul Hakeem Khan .v. Abdul Mannan Khadri, AIR (1972) Andhra
·~
Pradesh 178. We are in agreement with this view because of the normal
trend of rise in prices of properties situate especially in metropolitan city
like Madras, where the property in question is situate. If merely because
the prices have risen during the pendency of litigation, we were to deny
B
the relief of specific performance if otherwise due, this relief could 'iardly
be grartted in any case, because by the time the litigation comes to an end
.,,. sufficiently long period is likely to elapse in most of the cases. This factor,
I therefore, should not normally weigh against the suitor in exercise of
discretion by a court in a case of the present nature. c
28. The final onslaught is on the ground that the plaintiffs succes-
sors-in-interest having assigned the right to third parties in the meantime,
we may not grant the relief because the assignees have, as already noted,
purchased litigation and so the transaction could be described as champer-
tous. Shri Parasaran, however, contends that all assignments pendente lite
D
cannot be regarded as champertous; the same would depend on the facts
of each case. It is also urged that an assignee has the right to pray for
4 specific performance because he is one who has to be regarded as "repre-
sentative-in-interest", of which mention has been made in clause (b) of
section 15 of the aforesaid Act dealing with the persons who may obtain E
•
specific performance. That an assignee would be such a person was ac-
cepted by this Court in T.M. Balakrishna Muda/iar v. M. Satyanarlll}'ana
Rao, [1993) 2 sec 740.
29. We are of the view that if in a case the act of the.third party could F
--- j
be regarded akin to champertous, the relief of specific performance may
be refused; indeed, should be refused. In the present case, however, we
find that the assignees themselves applied to this Court for impleading
them as appellants and put on record the deeds of assi!l'll"ent, a perusal .
of which shows that the need for assignment was felt for pressing reasons.
There has been no hide and seek with the court and the legal repre- G
sentatives of the original plaintiff having received a sum of about Rs. 13
lacs pursuant to the contract of assignments entered between September
- t to November 1988, we do not think if we would be justified in refusing the
relief of specific performance, if the- conduct of the respondents is also
borne in mind, about which one could say that the same is tainted inasmuch H
328 SUPREME COURT REPORTS [1995J 3 S.C.R.
A as they departed from truth to bolster their case and went to the extent of
not complying with the desire of the trial Judge in allowing aforesaid
Kamal to be examined even as a court witness. Such parties who play foul
with equity cannot be allowed to use the shield of equity to protect them.
30. The result of the foregoing discussion is that we allow the appeal,
B set aside the impugned judgment of the Letters Patent Bench and restore
that of the trial Judge and decree the suit for specific performance. The
respondents or their successors-in-interest would reconvey the property
mentioned in Schedule 'A' of the plaint within a period of 1 month, failing
which it would be open to the trial Judge to execute the required docu- ~
C ment(s). In the facts and circumstances of the case, the parties are left to
bear their own costs throughout.
IA. Nos. I, 2 & 5 of 1994
31. I.A. nos. 1 and 2 are dismissed. I.A. No. 5 is allowed; the cause
D title may be amended accordingly.
R.A. Appeal allowed.
\.
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